U.S. Energy Corp. (USEG)

[LouisDesyjr]

Lights out? Maybe not yet but still not good

10Q report for Q1 2015:
http://www.sec.gov/Archives/edgar/data/101594/000010159415000012/form10_q.htm

Current assets $5.6 million
Current liabilities $9.5 million

Q1 gross income of negative $2.8 million, so it is making problems worse for the company.

There is 83 million in equity, with 68 million in oil and gas properties (net of depreciation) plus 21 million in undeveloped properties. The problem is that all of this land is probably being carried as an asset at its purchase price, which is not what it is worth on the market today with the decline in oil and gas prices.

I am expecting that in order to stay in business, USEG will need to sell off large amounts of their land in order to stay in business.

I estimate that with the shortfall in current assets to current liabilities of $3.9 million plus losing another $2.8 million each quarter for the next three quarters, they will need to raise $12.3 million before the end of the year to stay keep current on their bills. Since the only place they can get money is from selling land, and the land is probably not worth what they paid for it, I expect they will need to sell at least $25 million worth of land from the balance sheet to get the $12.3 million in cash they need to survive.

That would mean I expect equity to be $58 million (or less) when they file the 10K report for 2015.

At this time, I do not expect they will end up bankrupt, as long as the land can be sold in this low oil price environment.

Louis J. Desy Jr.