A micro-cap stock tapped into the future of resource development

Trevor Abes

Introducing US Energy

A company meriting closer inspection is US Energy (NASDAQ:USEG), market capitalization US$45 million, whose stock is down by almost 80 per cent since 2021, despite advancing a value proposition, diversified across energy, industrial gas and carbon management, on track to rapidly increase revenue and expedite a path to profitability.

This article is disseminated in partnership with US Energy Corp. It is intended to inform investors and should not be taken as a recommendation or financial advice.

Leveraging a wholly-owned asset base in Montana, including its Big Sky Carbon Hub processing facility and nearby Cut Bank oil field, the company is working to meaningfully participate in three complementary markets:

The oil market, whose widespread infrastructure makes it the most convenient commodity to execute industrial processes and get ourselves from A to B in this generation and the next.
The helium market, valued at US$7.5 billion and expected to double over the next decade, where supply is currently constrained by conflict in the Middle East, specifically Qatar, which provides about a third of the world’s supply, highlighting the need for robust resources in safe jurisdictions for everything from MRI scans, to car airbags, to the heating of nuclear reactors, to semiconductor and fibre optic cable manufacturing.
The carbon market, safely sequestering CO2 and re-using it across a variety of industrial applications, potentially qualifying for lucrative US tax credits while reducing the amount of carbon in the atmosphere, thus actively contributing to lowering our burden on the environment.

Let’s take a closer look at US Energy’s asset base to better understand the company’s position at the intersection of energy demand, critical resources and federal policy designed to catalyze the renewable energy transition.

The Big Sky Carbon Hub processing facility

In March, US Energy reached a positive final investment decision to build its 164,000-acre Big Sky Carbon Hub processing facility located on Montana’s Kevin Dome, an almost 2,000-square-kilometre geologic structure that has hosted naturally-occurring CO2 for millions of years. The facility’s vertically integrated operations will be equipped to produce helium, as well as sequester and redeploy CO2, exploiting a phase-1 resource estimated at:

1.3 billion cubic feet (Bcf) of helium, representing US$429 million in the ground at the US Geological Survey‘s average North American price of US$330 per thousand cubic feet (mcf) in 2025, though some analysts see the potential for prices surpassing US$2,000 per mcf should Middle East tensions persist.
444 Bcf of CO2, representing between US$444 million-US$1.3 billion in the ground, based on the US Energy Information Administration‘s estimate of about US$1-US$3 per mcf.

Collectively, these resources entail more than 50 years of production, making Big Sky one of the largest industrial gas operations in the US. The phase-1 facility will be designed for inlet capacity of 8 million cubic feet per day (MMcf/d), facilitating estimated annual production of ~12 MMcf of helium and the sequestration of ~125,000 metric tons of CO2, the latter equating to the removal of 25,000 combustion vehicles from the road every year. A phase-2 plant envisioned by 2030, discussed later in this article, will leverage a modular design enabling capital-efficient throughput expansion.

Helium

Big Sky’s helium output is supported by three wells expected to deliver stable, low-decline production capable of supplying the processing facility for numerous years before the need for additional drilling, with shared infrastructure with CO2 operations allowing US Energy to reduce costs versus pure-play helium producers.

US Energy is in advanced negotiations for a long-term helium offtake agreement with a global industrial gas company and expects to close a deal in Q2 2026, positioning the facility to generate revenue from the very beginning of its productive life in Q1 2027.

CO2

The company will extract CO2 as a helium by-product, making Big Sky the first carbon hub in the Western US, with only 20 comparable facilities in operation across the country today – see slide 7 of the March 2026 investor deck – as well as the first facility to extract the gas without relying on energy-intensive natural gas combustion, ethanol fermentation, ammonia production or direct air capture, squarely aligning it with the global push towards sustainability.

From a policy standpoint, US Energy believes Big Sky’s carbon will qualify for tax credits under Section 45Q of the US tax code, entailing the company to collect US$85 per metric ton of captured carbon – in addition to any subsequent gas sales – amounting to an estimated US$130 million in phase-1, credit-based revenue over a 12-year period.

To this end, US Energy has filed two Monitoring, Verification and Reporting applications with the US Environmental Protection Agency, each of which would allow it to capture 150,000 metric tons of carbon per year. Approvals are expected in summer 2026.

The Cut Bank oil field

US Energy rounds off its three-pronged value proposition with energy production from its owned and operated ~29,000-acre Cut Bank oil field, where total reserves were last estimated at 925 million barrels of oil (mbo), with proved reserves of 1.5 mbo valued at US$18.4 million as of Q4 2025 (see slide 3 of the investor deck).

The field, operated by US Energy’s experienced field team since January 2022, is currently yielding about 240 barrels of oil per day (bopd), with predictable operating costs, a low-decline profile of 8 per cent, versus 25-40 per cent for shale, and output positioned to increase exponentially thanks to Big Sky’s planned CO2-enhanced oil recovery operations.

CO2-enhanced oil recovery

US Energy will use part of the carbon unlocked through Big Sky’s helium operation for CO2-enhanced oil recovery (EOR), which will involve injecting the gas into the Cut Bank reservoir to form a homogenous mixture that is more easily extracted from rock surfaces than oil alone.

Leadership estimates that it will be able to increase Cut Bank’s average production to ~6,400 bbl/d over the coming years, exploiting more than 170 Class-II injection wells permitted for EOR, representing an estimated ~70 million barrels of incremental output through at least three phases of development (see slide 9 of the investor deck), all while keeping CAPEX low thanks to controlling feedstock and keeping OPEX low thanks to the US Energy team’s deep familiarity with the land package.

A near-term path to exponential revenue and earnings growth

Construction at Big Sky is slated to kick off in Q2 2026, following the execution of an engineering, procurement and construction agreement with CANUSA EPC, a top construction and engineering services provider with a more than 2,000-project track record, which will oversee engineering, equipment procurement, fabrication, construction and commissioning under a fixed-scope structure.

CANUSA has since initiated capital spending, mobilizing its project team, while initiating procurement of long-lead equipment, putting US Energy on track to deliver on an accelerated development schedule. Here’s a breakdown:

Beginning in spring 2026, CANUSA will begin to install about 10 miles of in-field gathering pipelines.
Pipeline and overall facility commissioning is targeted for Q3 2026.
Initial helium sales and carbon management operations will then follow in Q1 2027, with about 50 per cent of revenue expected to stem from oil, 35 per cent from carbon management and 15 per cent from helium.

US Energy estimates that it will need about US$32 million to complete phase-1 development at Big Sky, and expects to be able to cover the full amount through cash on hand, plus an existing debt facility the company is in advanced discussions to expand and close on before spending needs arise.

Should the debt facility close as planned, US Energy envisions that it will almost triple revenue from US$7.3 million in 2025 to more than US$20 million in 2027 (see slide 10 of the investor deck), while growing EBITDA from a US$10.3 million loss to a more than US$10 million gain, respectively, offering the market a strong catalyst to turn investor sentiment around.

This turnaround would likely continue into the next decade, with Big Sky’s phase-2 facility, subject to US$30 million in CAPEX, expected to triple revenue once again to more than US$60 million in 2031, nearly quintupling EBITDA to almost US$50 million, with profitable growth forecasted to continue showing up on US Energy’s income statements in subsequent years thanks to the benefits of scale.

US Energy’s turnkey leadership team

Besides robust assets and in-demand commodities, US Energy’s major competitive advantage when it comes to turning its value proposition into reality is a leadership team that knows its target industries with a thoroughness, attainable only through decades of dedication, that should help investors sleep soundly at night. Let’s meet a few key members now:

Ryan Smith, Director, President and Chief Executive Officer, who brings more than 20 years in energy industry experience split between capital markets and executive leadership, including almost a decade with the company and tenures at Canaccord Genuity and Wells Fargo Energy Group.
Tug Eiden, Vice President of Commercial Development, whose more than 25 years of operational and engineering experience span carbon capture and storage and oil exploration and production with the likes of BP, Anadarko and EOG Resources.
Mark Zajac, Chief Financial Officer, who has built a more than 30-year track record specializing in compliance, IPOs and M&A across the energy value chain.
John Weinzierl, Chairman, who oversaw the production of more than 1 bcf equivalent of gas per day across six states as CEO of Memorial Resource Development, an oil and gas producer he co-founded in 2011 and led into a public listing, making him a congruous choice to guide US Energy’s board of directors, whose more than a century of oil and gas exploration, production and corporate finance experience significantly de-risks the company’s path to cash flow.

In more than capable hands, US Energy finds itself on the verge of radically transforming its operations, evolving from a micro-scale oil producer to a multi-revenue-stream company poised to garner increasing market share by meeting both energy and industrial gas demand.

Logically, readers should then ask themselves why the market has yet to key into US Energy’s potentially exponential growth story.

A deep value stock hidden in plain sight

As we’ve shown in this article, investors in US Energy benefit from a multi-year runway for the market to gradually recognize the diversified cash about to flow into the company’s income statements. That said, at the present moment, this thesis may be a hard sell for the average investor, who might be reluctant to:

Buy shares in an unprofitable company, despite the high-conviction data supporting its path forward.
Buy shares in a micro-cap stock, especially one down by almost 80 per cent over the past five years, fearful of the volatility the asset class has a reputation for stirring up, failing to realize that this is simply the price of admission for getting in early on an underappreciated company.
Allocate into an industry in turmoil, as is the case with oil and gas, with the Strait of Hormuz, responsible for the safe passage of about 20 per cent of the world’s oil, currently caught in the midst of a war between the US, Israel and Iran.

These conditions set the stage for market-tested investors to step up to the plate and build positions in US Energy today, recognizing, as stated in slide 13 of the investor deck, that the company is trading at less than 3x EV/2027E EBITDA, well short of up to 10x for its peers, with this multi-bagger gap set to narrow as soon as Q1 2027 and the company’s multiple set to grow for decades to come, should it successfully iterate on Big Sky’s modular plant design.

Increased cash flow would, in turn, open the door for strategic M&A, the construction of additional carbon hubs and the further compounding of revenue and returns, as the company becomes progressively more synonymous with sustainable energy and industrial gas production.

With only 53 million shares outstanding and investor pessimism so pronounced and demonstrably unfounded, it would be a waste to let US Energy’s substantial, de-risked leverage to the future of resource development and production pass you by without dusting off your due diligence process.

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This article was prepared by InvestorsHub/ADVFN as part of a paid marketing or advertising arrangement. InvestorsHub/ADVFN has received compensation from the issuer or a related party for the creation and distribution of this content. This material is provided for informational and promotional purposes only and should not be considered investment advice, a recommendation, or an endorsement of any securities. Readers should conduct their own independent research and consult a qualified financial professional before making any investment decisions.