U.S. Energy Corp. (USEG): Business Model Canvas [Apr-2026 Updated]

• The company acquired an active Class II injection well in April 2025, which maintains active permits approved by the $\text{EPA}$ under the Safe Drinking Water Act's Underground Injection Control Program ($\text{UIC}$).
• U.S. Energy Corp. planned to submit a Monitoring, Reporting, and Verification ($\text{MRV}$) plan to the $\text{EPA}$ for the Class II well during the second quarter of 2025.
• Class II wells are used to inject fluids associated with oil and natural gas production, with approximately $180,000$ such wells estimated to be in operation across the United States.

U.S. Energy Corp. (USEG) - Canvas Business Model: Key Activities

You're looking at the core actions U.S. Energy Corp. ($\text{USEG}$) is taking to execute its pivot from a traditional energy producer to an integrated industrial gas company. This involves a dual focus: developing the new helium/$\text{CO}_2$ assets while managing the existing oil and gas business for cash.

Development of the Kevin Dome Industrial Gas Asset in Montana

The primary activity centers on unlocking the value within the Kevin Dome structure in Northwest Montana. This effort includes upstream development, where drilling operations for new wells began in the Spring of 2025, with the second and third wells spudding in May 2025. A third-party resource assessment confirmed significant scale, showing 1.28 BCF of net helium and 443.8 BCF of net $\text{CO}_2$ resources in the initial target area. Furthermore, three high-deliverability wells achieved a combined peak production of 12.2 MMcf/d, featuring a premium gas composition of 0.47% helium and 85.2% $\text{CO}_2$. Also, $\text{USEG}$ strengthened this position by acquiring approximately 2,300 net acres with $\text{CO}_2$ rights adjacent to the structure in April 2025 for \$0.2 million.

Construction of the 17.0 MMcf/d Industrial Gas Processing Facility

A critical activity is building the infrastructure to process the raw gas stream. The initial processing facility is designed with a capacity of 17.0 MMcf/d. The estimated capital expenditure ($\text{capex}$) for this plant is approximately \$15M. Construction was scheduled to commence in July 2025, with the goal of delivering first revenues in the first half of 2026. This plant is key because it purifies the helium and separates the $\text{CO}_2$ for sequestration or other uses, creating multiple revenue streams.

Operating Legacy Oil and Gas Production to Generate Cash Flow

To fund the transition and maintain a debt-free balance sheet, $\text{USEG}$ continues to operate its legacy assets, though this segment is shrinking due to divestitures in 2024. For the second quarter of 2025, total oil and gas sales were approximately \$2.0 million, with oil sales accounting for 91% of that revenue. Total hydrocarbon production for that quarter was about 48,816 $\text{BOE}$, which was 69% oil. To be fair, this revenue is down significantly from \$6.1 million in Q2 2024. Lease operating expenses ($\text{LOE}$) for Q2 2025 were approximately \$1.6 million, or \$32.14 per $\text{BOE}$.

Executing Carbon Management and $\text{CO}_2$ Sequestration Projects

$\text{USEG}$ is actively executing its carbon management strategy, which is integrated with the new gas processing facility. The company projects it will permanently sequester up to 240,000 metric tons of $\text{CO}_2$ annually. This is supported by the acquisition in April 2025 of an active Class II injection well permitted by the $\text{EPA}$, which is intended to sequester $\text{CO}_2$ from the processing facility. The plan included submitting a Monitoring, Reporting, and Verification ($\text{MRV}$) plan to the $\text{EPA}$ during Q2 2025. The captured $\text{CO}_2$ stream is also planned to support Enhanced Oil Recovery ($\text{EOR}$) on their legacy oil and gas assets.

Disciplined Capital Allocation and Share Repurchase Program

The company emphasizes disciplined capital allocation, which includes returning capital to shareholders. $\text{USEG}$ executed a share repurchase program, buying back 832,000 shares year-to-date ($\text{YTD}$) in Q1 2025, which represented about 2.5% of outstanding shares at that time. The overall repurchase program, authorized for up to \$5.0 million, was extended until June 30, 2026, with approximately \$3.8 million remaining available as of January 29, 2025. The company maintained a strong liquidity position, ending Q1 2025 with approximately \$30.5 million in cash, following a \$10.5 million net proceeds equity offering in January 2025.

Here's a quick look at the key operational and financial metrics supporting these activities as of the latest reported periods:

The company's key activities are clearly focused on de-risking the industrial gas project by securing resources and sequestration capacity, while using the legacy business as a financial bridge. Finance: draft 13-week cash view by Friday.

U.S. Energy Corp. (USEG) - Canvas Business Model: Key Resources

The Key Resources for U.S. Energy Corp. (USEG) as of late 2025 are centered on its strategic Montana assets, financial strength, and operational capabilities in industrial gas and carbon management.

The company's physical and financial assets form the foundation of its evolving business model:

• Vast acreage position across the Kevin Dome, Montana (industrial gas): This includes approximately 2,300 net acres with $\text{CO}_2$ rights acquired in April 2025, highly contiguous to existing holdings in the helium-rich Kevin Dome structure.
• Proved Developed Producing (PDP) oil and gas reserves with $22.3 million PV-10: The Present Value $\text{PV-10}$ of reserves, discounted at 10% at SEC pricing, stood at \$22.3 million as of July 1, 2025.
• Clean balance sheet with zero debt and over $6.7 million cash (Q2 2025): Total debt outstanding was \$0, with a cash balance of \$6,728,000 as of June 30, 2025, contributing to total liquidity of \$26.7 million.
• Class II permitted injection well for $\text{CO}_2$ sequestration: An active, EPA-permitted Class II injection well is secured, supporting a sustained injection rate of 17.0 MMcf/d across two wells, representing 240,000 metric tons of annual $\text{CO}_2$ sequestration capacity.
• Proprietary technical expertise in industrial gas extraction and processing: Demonstrated by three high-deliverability wells achieving a combined peak production rate of 12.2 MMcf/d, with a premium gas composition of 0.47% helium and 85.2% $\text{CO}_2$.

Here's a quick look at the core financial and reserve metrics supporting these resources:

The technical capabilities are directly tied to the performance of the industrial gas wells. The resource base itself is substantial, with the Kevin Dome project revealing net resources of 1.28 BCF of helium and 443.8 BCF of net $\text{CO}_2$ resources in the initial target area.

The company's balance sheet strength, featuring zero debt and significant liquidity, is a key enabler for the planned capital expenditure, which management indicated for the first processing facility could be "under \$10 million."

U.S. Energy Corp. (USEG) - Canvas Business Model: Value Propositions

Supply of non-hydrocarbon helium to high-tech industrial markets.

U.S. Energy Corp. (USEG) is positioning its Kevin Dome project to support the growing demand for helium, particularly in semiconductor production. The company reported a discovery of 1.28 BCF of net helium resources as of Q2 2025. Three drilled wells achieved a combined peak production rate of 12.2 MMcf/d, with a premium gas composition containing 0.47% helium. Based on a finalized processing plant capacity of 17 MMCF/d and an assumed inlet concentration of 0.75% helium, projected annual revenue from helium recovery is estimated between $15 million and $20 million.

Integrated carbon management service, sequestering up to 240,000 metric tons $\text{CO}_2$/year.

The integrated service leverages the high $\text{CO}_2$ content in the produced gas stream. U.S. Energy Corp. (USEG) has achieved sustained injection of 17.0 MMcf/d across two wells, which equates to an annual sequestration capacity of approximately 240,000 metric tons of $\text{CO}_2$. This capability is supported by the acquisition of an active Class II injection well in April 2025, which is EPA-permitted for $\text{CO}_2$ storage. The company planned to submit its Monitoring, Reporting, and Verification (MRV) plan to the EPA in September 2025.

Low-carbon footprint energy and industrial gas production.

The focus on non-hydrocarbon gas production, specifically helium and $\text{CO}_2$, contributes to a lower environmental footprint compared to traditional energy operations. The gas composition from the new wells is 85.2% $\text{CO}_2$, which is then sequestered rather than vented.

Stable, long-life legacy oil and gas production for near-term cash flow.

While the strategic pivot is toward industrial gases, legacy assets provide near-term financial support. For the full year 2024, total daily production averaged 1,136 Boe/d, with oil production at 702 Bbl/d. Revenue from oil and gas sales for Q2 2025 was $2.0 million, a decrease from $6.1 million in Q2 2024, reflecting ongoing divestitures of non-core assets. The legacy assets are characterized as having low decline rates.

Financial flexibility due to a debt-free capital structure.

U.S. Energy Corp. (USEG) maintains a pristine balance sheet, which is a significant differentiator. The company was reported as entirely debt-free or having zero debt outstanding as of Q1 and Q2 2025. This structure enhances financial flexibility for funding the industrial gas development.

Here's a quick look at the key financial and operational metrics supporting these value propositions as of the latest reporting periods in 2025:

The value propositions are supported by tangible assets and financial positioning:

• Supply of non-hydrocarbon helium with 1.28 BCF in net resources.
• Carbon sequestration capacity of 240,000 metric tons annually achieved through sustained injection of 17.0 MMcf/d.
• Projected helium revenue potential up to $20 million annually from the 17 MMCF/d plant.
• Balance sheet strength with zero debt and $26.7 million in liquidity as of Q2 2025.
• Legacy oil and gas production averaged 1,136 Boe/d in 2024.

U.S. Energy Corp. (USEG) - Canvas Business Model: Customer Relationships

You're looking at how U.S. Energy Corp. (USEG) manages its various customer groups as it pivots hard into industrial gases. The relationships are a mix of legacy transactional business and future-focused, committed supply deals.

Direct, long-term B2B contracts for helium sales (off-take agreements)

The relationship here is future-oriented, centered on the Montana Kevin Dome project. U.S. Energy Corp. is actively working to secure these agreements, targeting to finalize helium off-take agreements by the end of 2025. The planned industrial gas processing facility, estimated at $15,000,000, is designed to process approximately 17,000,000 cubic feet of raw gas per day. This raw stream is expected to yield a premium gas composition of 0.47% helium from the wells tested. The company projects the current market floor for helium rests at $400/MCF, which could generate an estimated $19 million in annual revenue from the process stream, assuming an inlet concentration of 0.75% helium. First revenues from this new platform are anticipated during the first half of 2026.

Transactional sales for traditional oil and gas to refiners/marketers

This segment is characterized by market-based, transactional sales, which saw a significant reduction as U.S. Energy Corp. executed its divestiture program. The revenue from these legacy assets still forms the immediate cash flow base.

The proved developed producing (PDP) oil and gas reserve base as of March 31, 2025, consisted of approximately 2.0 million barrels of oil equivalent (BOE).

Service-based relationships with regional producers for CO₂ management

The CO₂ management relationship is being established through the infrastructure being built in Montana. The industrial gas processing facility is designed to permanently sequester up to 240,000 metric tons of CO₂ annually. The gas stream processed is expected to be 84% to 85% CO₂. The infrastructure platform is being designed to support third-party volumes, creating opportunities for service relationships, such as potential tolling agreements, with regional producers. The company also has 443.8 BCF of net CO2 resources contingent upon economics and future development. The Class II injection well acquired has permits approved by the U.S. Environmental Protection Agency (EPA) under the Safe Drinking Water Act's Underground Injection Control Program.

Investor relations focused on capital discipline and shareholder returns

Investor communication emphasizes a disciplined approach, especially following the elimination of debt. U.S. Energy Corp. was entirely debt-free at the end of Q1 2025, ending that period with approximately $30.5 million in available liquidity. The company repurchased approximately 832,000 shares year-to-date in 2025, representing roughly 2.5% of its float. The focus on cost control is evident in the reduction of overhead.

• Normalized cash general and administrative (G&A) expenses for Q1 2025 were $1.6 million.
• This represented an 18% decrease from the $2.0 million reported in Q1 2024.
• The company raised approximately $11.9 million from a public offering in Q3 2025.
• Total share repurchases since May 2023 through February 2025 were greater than 1.0 million shares at an average price of $1.28 per share.

You should monitor the progress on the processing plant construction, which was set to begin in July 2025.

U.S. Energy Corp. (USEG) - Canvas Business Model: Channels

You're looking at how U.S. Energy Corp. (USEG) gets its services and products to market as of late 2025. It's a dual-pronged approach, balancing legacy hydrocarbon sales with the build-out of its industrial gas and carbon management future.

Direct sales team for industrial gas and carbon management services

The channel for the emerging industrial gas business is currently tied directly to project milestones. The engineering for the initial processing facility, designed for 17.0 MMcf/d capacity, was finalized, with construction starting in July 2025, requiring approximately $15M in capex. This facility is key to monetizing helium and providing carbon management services. The carbon management channel is active through sustained injection of 17.0 MMcf/d across two wells, projecting sequestration of ~240,000 metric tons CO2/year. The company's contingent resource estimates for this channel include 1.28 BCF of net helium and 443.8 BCF of net CO2 resources in the initial target area.

Traditional commodity sales channels for crude oil and natural gas

The legacy hydrocarbon sales channel saw significant volume contraction following 2024 divestitures. For the quarter ending September 30, 2025, total oil and gas sales were reported at $1.7 million. Oil sales were the dominant component of this revenue stream, accounting for 91% of the total revenue for Q3 2025. Production volumes reflect this shift away from legacy assets; Q3 2025 saw total hydrocarbon production of approximately 35,326 BOE. To be fair, the company is streamlining its operations, with Lease Operating Expenses (LOE) dropping to $1.0 million in Q3 2025 from $3.1 million in Q3 2024, largely due to fewer producing assets.

Here's a quick look at the recent sales and capacity metrics:

Third-party gathering and processing agreements (tolling) for regional volumes

The infrastructure being built is explicitly designed to support external producers. The processing platform is being designed to support third-party volumes. This creates a channel for generating gathering and processing fees alongside helium sales and CO2 management from the Kevin Dome asset. While the design capacity is 17.0 MMcf/d, the specific revenue or volume secured through third-party tolling agreements as of late 2025 isn't detailed in the latest reports.

Investor roadshows and public filings for capital market access

Accessing capital markets is a critical channel for funding the transition, and U.S. Energy Corp. has been active. The company raised approximately $11.9 million from a public offering to support strategic initiatives in Q3 2025. This capital supports the ~$15M capex for the processing plant. The balance sheet remains debt-free, ending Q1 2025 with $10.502M in cash and $30.502M in total liquidity, though this reduced to $11.4M by the end of Q3 2025. The company also executed a share repurchase program, buying back 832,000 shares year-to-date in Q1 2025, representing about 2.5% of the float.

Investor engagement channels included:

• D. Boral Capital Inaugural Global Conference on May 14, 2025.
• 37th Annual Roth Conference from March 17 to March 18, 2025.
• Public filings, such as the Q3 2025 earnings report released November 12, 2025.

The company's stock traded between a 52-week low of $0.940 and a high of $6.400 as of December 5, 2025.

Finance: draft 13-week cash view by Friday.

U.S. Energy Corp. (USEG) - Canvas Business Model: Customer Segments

You're looking at the customer base for U.S. Energy Corp. (USEG) as of late 2025, and honestly, the numbers show a business in transition, heavily weighted toward legacy commodity sales but clearly pivoting toward industrial gases and carbon management.

The customer base is segmented across both legacy hydrocarbon extraction and the emerging industrial gas/carbon capture platform. The financial data from the third quarter ending September 30, 2025, gives us a clear picture of where the current revenue is coming from, which directly relates to the commodity purchasers.

The table above shows that for the commodity purchasers segment-refiners, pipelines, and others buying legacy oil and gas-revenue was approximately $1.751 million in Q3 2025, representing the vast majority of the total reported revenue for that quarter. Oil alone accounted for over 90% of the Q2 2025 revenue, suggesting this remains the primary immediate customer group for the legacy assets.

For regional oil and gas producers needing $\text{CO2}$ sequestration services, U.S. Energy Corp. is building the infrastructure to serve this market. This segment is currently being developed through strategic asset acquisition, not necessarily direct service revenue yet. As of April 2025, the company acquired $\text{2,300}$ net acres with $\text{CO2}$ rights and an active Class II injection well for $0.2 million. This infrastructure is designed to support the sequestration of $\text{CO2}$ captured from their upcoming industrial gas processing facility. The confirmed resources underpinning this future service are substantial:

• $\text{CO2}$ Resources: 444 billion cubic feet (Bcf)
• Helium Resources: 1.3 billion cubic feet (Bcf)

The industrial gas end-users segment is the ultimate destination for the purified $\text{CO2}$ and helium. While specific revenue figures for these end-users (like electronics, medical, or food/beverage for $\text{CO2}$ carbonation) aren't broken out in the latest reports, the entire strategy centers on developing a low-emission industrial gas platform. The facility construction, set to break ground after Q3 2025, has a capital expenditure (capex) of sub-$10 million and is designed to serve both U.S. Energy Corp. and third-party producers, meaning they are actively targeting external buyers for their processed gases.

Finally, the institutional and retail investors segment is crucial, as they provide the capital to build out the new platform. The company raised approximately $11.9 million from a public offering to support strategic initiatives, including the Montana acquisitions. Investor activity in Q1 2025 showed 13 institutional investors adding shares, while only 3 decreased positions. Furthermore, the CEO, Ryan Lewis Smith, made 40 purchases totaling an estimated $38,225 in the last six months, signaling insider confidence to this customer group.

Finance: draft 13-week cash view by Friday.

U.S. Energy Corp. (USEG) - Canvas Business Model: Cost Structure

You're looking at the costs U.S. Energy Corp. faces as it pivots toward its industrial gas platform, which means capital outlays for new infrastructure are a major component right now. The cost structure is clearly split between ongoing operational expenses from the legacy business and significant upfront investment for the Montana project.

The capital expenditure for the processing plant has seen some adjustment in estimates. While initial plans discussed a figure around $15 million, management later indicated that the initial processing facility CapEx could be "under $10M" as of Q2 2025, reflecting design optimization.

Drilling and completion costs for the new industrial gas wells are substantial, representing direct investment into the core growth asset. For instance, two back-to-back wells being drilled in early 2025 were budgeted at approximately $1.2 million each.

Here's a look at the key recurring and project-related costs:

Regulatory and compliance costs for carbon sequestration are becoming a defined line item, tied directly to the CCUS strategy. The acquisition of a Class II injection well, which is critical for CO2 storage and has EPA-approved permits, cost $0.2 million. U.S. Energy Corp. plans to submit a Monitoring, Reporting, and Verification (MRV) plan to the EPA during Q2 2025. The long-term compliance goal involves sequestering approximately 250,000 metric tons of CO2 annually once the processing plant is operational.

You can see the breakdown of the major cost drivers below:

• Processing Plant Construction Estimate (Initial): $15 million
• Processing Plant Construction Estimate (Revised Q2 2025): Under $10M
• Cost per New Industrial Gas Well (Budgeted): Approximately $1.2 million each
• Planned Annual CO2 Sequestration Volume: 250,000 metric tons

Finance: draft 13-week cash view by Friday.

U.S. Energy Corp. (USEG) - Canvas Business Model: Revenue Streams

You're looking at the revenue side of the Business Model Canvas for U.S. Energy Corp. (USEG) as of late 2025. The story here is a pivot, moving from legacy hydrocarbon sales to high-value industrial gases and carbon capture monetization. Honestly, the current numbers reflect the impact of the 2024 divestiture program, but the future streams are where the management focus is clearly aimed.

The current, realized revenue is primarily from traditional energy sales, though this is shrinking as the company transitions its focus.

• Oil and gas sales for the third quarter ending September 30, 2025, totaled approximately $1.7 million.
• Oil sales accounted for 91% of this total revenue for Q3 2025.
• Total revenue for Q3 2025 was $1.7 million, a significant decrease from $4.9 million in Q3 2024.

The most significant expected revenue growth comes from the Montana industrial gas project, which is designed to unlock multiple monetization pathways once the processing facility is operational.

Revenue from carbon management services is tied directly to the successful capture and sequestration of the large volumes of CO2 being produced. This stream is heavily influenced by federal tax incentives.

• The project is designed to qualify for 45Q tax credits.
• The company achieved sustained injection rates of over 17 million cubic feet a day across two disposal wells during testing.
• This testing supports a sequestration capacity of approximately 240,000 metric tons of CO2 annually.
• The 45Q credit for CO2 used for enhanced oil recovery (EOR) is valued at $85 per metric ton for facilities placed in service after July 4, 2025.
• The EPA Monitoring, Reporting and Verification (MRV) plan submission was targeted for October 2025, with approval sought by Spring 2026 to capture these credits.

U.S. Energy Corp. is also planning for future fee-based revenue and has realized cash from past asset sales, which informs their current capital strategy. If onboarding takes 14+ days, churn risk rises, but here we are focused on the money coming in.

Processing and gathering fees from third-party tolling agreements are a stated goal to expand value capture, suggesting a future service revenue line, though no specific Q3 2025 figures are reported for this yet.

Proceeds from strategic divestitures relate to the ongoing strategy of monetizing non-core legacy assets to fund the pivot to industrial gases. The latest concrete proceeds mentioned relate to 2024 activity:

• All-cash proceeds of approximately $7.2 million were realized from a series of non-core asset divestitures completed in late 2024.
• A definitive agreement was struck in late 2024 to sell East Texas assets for $6.825 million in cash.

Finance: draft 13-week cash view by Friday.