SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 and 15(d) of the
Securities Exchange Act of 1934
Date of Report (date of earliest event reported): July 3, 1996
U.S. ENERGY CORP.
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(Exact Name of Registrant as Specified in its Charter)
Wyoming 0-6814 83-0205516
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(State or other (Commission (I.R.S. Employer
jurisdiction of File No.) Identification No.)
incorporation)
Glen L. Larsen Building
877 North 8th West
Riverton, WY 82501
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(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number, including area code: (307) 856-9271
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Not Applicable
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(Former Name, Former Address or Former Fiscal Year,
if Changed From Last Report)
Item 5
On July 3, 1996 the three member arbitration panel (the "Panel")
issued an order confirming the Panel's April 18, 1996 Order and
Award (the "Award") in favor of Registrant and its majority owned
subsidiary Crested Corp. doing business as the joint venture
USECC, in the proceedings initiated by Nukem, Inc. of Stamford,
CT ("Nukem") and its 100% owned subsidiary Cycle Resource
Investment Company ("CRIC") concerning the Sheep Mountain
Partners ("SMP") uranium operations in Wyoming. The SMP
Partnership was formed in December 1988 between USECC and
Nukem/CRIC to develop and mine uranium ore from the SMP mines in
Wyoming to be milled into uranium concentrates (U3O8) and market
U3O8 worldwide. Disputes arose between the partners and
arbitration proceedings were commenced by Nukem/CRIC in June
1991. Hearings on a consensual arbitration involving the parties
were commenced on June 27, 1994 and consumed some 73 hearing days
which ended on May 31, 1995.
On April 18, 1996, the Panel awarded USECC a net of approximately
$7,400,000 in damages against Nukem. An amount of $4,800,000 was
also awarded to USECC from funds held in SMP bank accounts for a
total of $12,200,000. Additional amounts of cash and significant
sources of low price uranium may also be available to SMP as a
result of the Award.
USECC petitioned the U.S. District Court for the District of
Colorado (the "Court") for confirmation of the award and Nukem
filed two motions to set aside portions of the Award, alleging
that significant portions of the Award were erroneous. Nukem was
seeking to set aside potentially $16 million which the Panel had
awarded USECC. On May 24, 1996, the Court remanded the Award to
the Panel for consideration of these motions. On July 3, 1996,
the Panel entered a new order essentially affirming its earlier
Award. With respect to the principal claim of error alleged in
the Nukem motions, concerning the award of more than $16 million
of damages and interest to USECC attributable to Nukem's
unauthorized use of SMP uranium supply contracts to obtain rights
to purchase U3O8 from the Commonwealth of Independent States
("CIS"), the Panel affirmed the amount of its award to USECC. In
so doing the Panel stated that, "There was wrongdoing on the part
of Nukem when it used what were clearly partnership contracts to
obtain financial benefits for itself alone.... Our Award . . .
is premised upon wrongdoing by Nukem and a judgment by us that
Nukem ought not to be permitted to profit from that wrongful
conduct." The Panel affirmed the Award granting SMP the rights
to purchase CIS uranium, the uranium acquired pursuant to those
rights and the profits therefrom, which are impressed with a
constructive trust in favor of SMP. The Panel further stated,
"We thus conclude that there is no inconsistency and no double
recovery and no subtraction that ought to be made from profits
already realized...."
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The Panel did correct a portion of the award to reimburse
$137,700 to CRIC for U3O8 it purchased, out of a bank account in
Riverton, WY. The Panel also made a correction to have the
$136,500 previously awarded to USECC paid out of the First
Interstate Bank of Riverton account rather than the Norwest Bank
account in Denver, CO. USECC called a mathematical error to the
Panel's attention which was made by Nukem after the close of
evidence in the amount of $265,313.83. The Panel did not
consider that error because it was not directed by the Court to
do so and it remains for the Court to resolve that issue.
In addition to the Petition for Confirmation of the Award, USECC
also filed with the Court a petition for appointment of a
receiver for the SMP partnership and motions to dissolve the
partnership and for an order directing distribution of the
escrowed proceeds in the SMP bank accounts. These matters are
expected be considered by the Court in the near future.
The Sheep Mountain Partners Arbitration/Litigation was reported
in Item 3 - Legal Proceedings in Registrant's Form 10-K for
fiscal year ended May 31, 1995, the Award was reported in
Registrant's Form 8-K dated as of April 18, 1996, and the action
of the Court remanding the Award to the Panel for consideration
of the Nukem motions was reported in Registrant's Form 8-K dated
as of May 24, 1996.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act
of 1934, the Registrant has duly caused this report to be signed
on its behalf by the undersigned hereunto duly authorized.
U. S. ENERGY CORP.
July 17, 1996 By: s/ Max T. Evans
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MAX T. EVANS, Secretary
