U.S. Energy Corp. and Crested Corp. Boards of Directors Approve and Execute Merger Agreement


Definitive Documents and Proxy/Prospectus to Be Prepared

RIVERTON, Wyo., Jan. 30 /- U.S. Energy Corp. (NASDAQ:USEG) and Crested Corp. (BULLETIN BOARD: CBAG) d/b/a USECC announced that on January 23, 2007, the boards of directors of U.S. Energy Corp. ("USE") and Crested Corp. ("Crested") approved and executed a Merger Agreement where Crested would merge into USE, by means of an offer to acquire the minority shares of Crested, based on an exchange ratio of one share of common stock of USE for every two shares of Crested common stock not held by USE (which owns 71% of the Crested common stock). The Merger Agreement also provides that USE would vote in line with the vote of a majority of the holders of the Crested minority shares.

Consummation of the merger is subject to execution of definitive documents; USE delivering to the Crested minority shareholders a proxy statement/prospectus (following declaration of effectiveness by the SEC of a Form S-4 to be filed by USE with the SEC) for a special meeting of the Crested shareholders; approval of the merger by the holders of a majority of the minority Crested shares; and satisfaction of customary representations and warranties to be contained in the definitive documents. The Board of Directors is recommending that approval of the merger agreement be given by the shareholders of Crested Corp. USE will not seek USE shareholder approval of the merger.

For information on the appointment of the special committees, please see the Forms 8-K filed by USE and Crested on January 24, 2007.

Keith G. Larsen, CEO of USE and Harold F. Herron, President of Crested jointly stated: "By merging the approximately 30% of Crested not already owned by USE, the structure and ownership of the company will be easier to understand for both USE and Crested shareholders and the investing public at a time when we see significant long-term opportunities in our industry. The combination of the two companies is expected to save approximately $500,000 per year in operating expenses, audit, compliance and legal fees, filing costs and other corporate fees and costs. As a combined company, we will continue to focus on aggressively pursuing business opportunities for the benefit of our shareholders. Further, it is anticipated that the merger will also provide existing Crested Shareholders greater liquidity through ownership of USE stock, which is listed on NASDAQ."

Source: U.S. Energy Corp.; Crested Corp.

CONTACT:
Keith G. Larsen,
CEO,
or
Mark Larsen, President,
both of U.S. Energy Corp.,
+1-307-856-9271

All Topics