FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
[X] Quarterly report pursuant to section 13 or 15(d) of the Securities
Exchange Act of 1934 For the fiscal quarter ended November 30, 2000 or
[ ] Transition report pursuant to section 13 or 15(d) of the Securities
Exchange Act of 1934 For the transition period from ____ to ____
Commission file number 0-6814
U.S. ENERGY CORP.
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(Exact Name of Company as Specified in its Charter)
Wyoming 83-0205516
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
877 North 8th West, Riverton, WY 82501
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(Address of principal executive offices) (Zip Code)
Company's telephone number, including area code: (307) 856-9271
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Not Applicable
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(Former name, address and fiscal year, if changed since last report)
Check whether the Company: (1) has filed all reports required to be filed
by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the
preceding 12 months (or for such shorter period that the Company was required to
file such reports), and (2) has been subject to such filing requirements for the
past 90 days.
YES X NO
----- -----
State the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.
Class Outstanding at January 12 2001
-------------------------------------------- --------------------------------
Common stock, $.01 par value 9,041,261 Shares
<PAGE>
U.S. ENERGY CORP. and SUBSIDIARIES
INDEX
Page No.
PART I. FINANCIAL INFORMATION
ITEM 1. Financial Statements.
Condensed Consolidated Balance Sheets
November 30, 2000 and May 31, 2000...................................3-4
Condensed Consolidated Statements of
Operations for the Three and Six Months Ended
November 30, 2000 and 1999.............................................5
Condensed Consolidated Statements of Cash Flows
Six Months Ended November 30, 2000 and 1999............................6
Notes to Condensed Consolidated
Financial Statements...................................................7
ITEM 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations.......................8-11
PART II.OTHER INFORMATION
ITEM 4. Submission of Matters to be a Vote of Security Holders................12
ITEM 6. Exhibits and Reports on Form 8-K......................................12
Signatures............................................................12
2
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PART I. FINANCIAL INFORMATION
ITEM 1. Financial Statements.
U.S. ENERGY CORP. AND SUBSIDIARIES
Condensed Consolidated Balance Sheets
ASSETS
<TABLE>
<S> <C> <C>
November 30, May 31,
2000 2000
-------------- --------------
(Unaudited)
CURRENT ASSETS:
Cash and Cash Equivalents $ 1,701,900 $ 916,400
Accounts receivable:
Trade, net of allowance for doubtful accounts 1,697,700 1,055,000
Affiliates 75,400 508,900
Assets held for resale and other 1,003,800 846,800
Inventory 153,400 129,700
-------------- -------------
TOTAL CURRENT ASSETS 4,632,200 3,456,800
INVESTMENTS
Affiliates 18,000 9,600
Restricted investments 9,503,000 9,361,000
------------- -------------
9,521,000 9,370,600
PROPERTIES AND EQUIPMENT 27,464,400 27,705,800
Less accumulated depreciation,
depletion and amortization (10,954,000) (10,948,900)
------------- -------------
16,510,400 16,756,900
OTHER ASSETS:
Accounts and notes receivable:
Real estate sales 50,100 58,600
Employees 311,500 295,200
Deposits and other 833,200 938,000
------------- -------------
1,194,800 1,291,800
------------- -------------
$ 31,858,400 $ 30,876,100
============= =============
</TABLE>
See notes to condensed consolidated financial statements.
3
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U.S. ENERGY CORP. AND SUBSIDIARIES
Condensed Consolidated Balance Sheets
LIABILITIES AND SHAREHOLDERS' EQUITY
<TABLE>
<S> <C> <C>
November 30, May 31,
2000 2000
---------------- ----------------
(Unaudited)
CURRENT LIABILITIES:
Accounts payable and accrued expenses $ 1,404,800 $ 1,683,800
Deferred GMMV purchase option -- 4,000,000
Current portion of long-term debt 359,800 284,100
Line of credit 850,000 650,000
--------------- ---------------
TOTAL CURRENT LIABILITIES 2,614,600 6,617,900
LONG-TERM DEBT 1,111,700 900,100
RECLAMATION LIABILITIES 8,906,800 8,906,800
OTHER ACCRUED LIABILITIES 2,842,500 3,073,500
DEFERRED TAX LIABILITY 1,144,800 1,144,800
MINORITY INTERESTS 1,158,800 1,124,600
COMMITMENTS AND CONTINGENCIES
FORFEITABLE COMMON STOCK $.01 par value;
396,608 shares issued,
forfeitable until earned 2,584,600 2,584,600
PREFERRED STOCK,
$.01 par value; 100,000 shares authorized
200 shares issued and outstanding 1,840,000 1,840,000
SHAREHOLDERS' EQUITY:
Common stock, $.01 par value;
20,000,000 shares authorized;
8,763,155 shares issued 87,700 87,700
Additional paid-in capital 37,797,700 37,797,700
Accumulated deficit (25,100,400) (30,071,200)
Treasury stock, at cost, 944,725 shares (2,639,900) (2,639,900)
Unallocated ESOP contribution (490,500) (490,500)
--------------- --------------
TOTAL SHAREHOLDERS' EQUITY 9,654,600 4,683,800
--------------- --------------
$ 31,858,400 $ 30,876,100
=============== ==============
</TABLE>
See notes to condensed consolidated financial statements.
4
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U.S. ENERGY CORP. AND SUBSIDIARIES
Condensed Consolidated Statements of Operations
(Unaudited)
<TABLE>
<S> <C> <C> <C> <C>
Three Months Ended Six Months Ended
November 30, November 30,
------------ ------------
2000 1999 2000 1999
---- ---- ---- ----
REVENUES:
Contract drilling and construction $123,300 $ 763,100 $2,242,300 $ 763,100
Commercial operations 510,300 619,100 1,934,500 1,702,400
Gain on sales of assets 449,500 -- 584,100 --
Management fees and other 220,200 310,200 355,800 429,900
Mineral sales 132,600 32,800 165,900 67,100
Oil sales 37,700 35,200 77,900 46,100
Kennecott settlement, net 7,132,800 -- 7,132,800 --
Interest 293,900 166,500 350,100 392,400
---------- ---------- ---------- -----------
8,900,300 1,926,900 12,843,400 3,401,000
COSTS AND EXPENSES:
Contract drilling and construction 426,500 303,900 2,117,900 306,600
Commercial operations 761,900 922,000 1,799,900 1,847,600
General and administrative 1,134,300 1,182,400 2,114,300 2,348,200
Mineral operations 767,400 848,700 1,666,700 1,398,100
Gas operations 113,600 -- 113,600 --
Oil production 9,500 15,000 30,700 16,900
Interest 78,900 9,500 114,100 14,400
---------- ---------- ----------- ----------
3,292,100 3,281,500 7,957,200 5,931,800
---------- ---------- ----------- ----------
INCOME (LOSS) BEFORE MINORITY
INTEREST AND EQUITY IN LOSS
OF AFFILIATES 5,608,200 (1,354,600) 4,886,200 (2,530,800)
MINORITY INTEREST IN LOSS
OF CONSOLIDATED SUBSIDIARIES 132,300 39,500 159,600 104,500
EQUITY IN LOSS OF AFFILIATES -- (2,500) -- (2,900)
---------- ---------- ----------- ----------
INCOME (LOSS) BEFORE
INCOME TAXES 5,740,500 (1,317,600) 5,045,800 (2,429,200)
PROVISION FOR INCOME TAXES -- -- -- --
---------- ---------- ----------- ----------
NET INCOME (LOSS) $5,740,500 $(1,317,600) $5,045,800 $(2,429,200)
PREFERRED STOCK DIVIDENDS (64,300) -- (75,000) --
---------- ---------- ----------- ----------
NET INCOME (LOSS) TO
COMMON SHAREHOLDERS $5,676,200 $(1,317,600) $4,970,800 $(2,429,200)
========== =========== ========== ============
NET INCOME (LOSS)
PER SHARE, BASIC $ 0.73 $ (0.16) $ 0.64 $ (0.30)
========== =========== ========== ============
NET INCOME (LOSS)
PER SHARE, DILUTED $ 0.69 $ (0.16) $ 0.61 $ (0.30)
========== =========== ========== ============
BASIC WEIGHTED AVERAGE
SHARES OUTSTANDING 7,818,430 8,025,672 7,818,430 7,992,667
========== =========== ========== ============
DILUTED WEIGHTED AVERAGE
SHARES OUTSTANDING 8,215,038 8,025,672 8,215,038 7,992,667
========== =========== ========== ============
</TABLE>
See notes to condensed consolidated financial statements.
5
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U.S. ENERGY CORP. AND SUBSIDIARIES
Condensed Consolidated Statements of Cash Flows
<TABLE>
<S> <C> <C>
Six Months Ended
November 30,
------------
2000 1999
---- ----
(Unaudited) (Unaudited)
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss) $ 4,970,800 $(2,429,200)
Adjustments to reconcile net income (loss) to net cash
Provided by (used in) operating activities:
Minority interest in loss
of consolidated subsidiaries (159,600) (104,500)
Increase in reclamation liabilities -- --
Depreciation 405,900 285,900
Equity in loss from affiliates -- 2,900
Gain on sale of assets (584,100) --
Deferred purchase option (4,000,000) --
Other 193,800 91,300
Net changes in assets and liabilities (802,900) (690,300)
------------ ------------
NET CASH PROVIDED BY (USED IN)
OPERATING ACTIVITIES 23,900 (2,843,900)
CASH FLOWS FROM INVESTING ACTIVITIES:
Increase in cash from acquisition of subsidiary -- 37,600
Development of mining properties -- (38,900)
Development of gas properties (387,600) --
Proceeds from sale of property and equipment 1,048,700 --
Increase in restricted investments (142,000) (80,000)
Purchase of property and equipment (236,400) (1,514,600)
Change in notes receivable, net -- (7,400)
Investments in affiliates (8,400) (145,300)
------------ -----------
NET CASH PROVIDED BY (USED IN)
INVESTING ACTIVITIES 274,300 (1,748,600)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from long-term debt 632,300 186,600
Net proceeds from lines of credit 200,000 --
Repayments of long-term debt (345,000) (147,600)
------------ ------------
NET CASH PROVIDED BY
FINANCING ACTIVITIES 487,300 39,000
------------ ------------
NET INCREASE (DECREASE) IN CASH
AND CASH EQUIVALENTS 785,500 (4,553,500)
CASH AND CASH EQUIVALENTS AT
BEGINNING OF PERIOD 916,400 10,173,000
------------ ------------
CASH AND CASH EQUIVALENTS AT
END OF PERIOD $ 1,701,900 $ 5,619,500
============ ============
SUPPLEMENTAL DISCLOSURES:
Income tax paid $ -- $ --
============ ============
Interest paid $ 114,100 $ 31,400
============ ============
</TABLE>
See notes to condensed consolidated financial statements.
6
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U.S. ENERGY CORP. & SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements
1) The Condensed Consolidated Balance Sheet as of November 30, 2000, the
Condensed Consolidated Statements of Operations and Cash Flows for the three and
six months ended November 30, 2000 and 1999 have been prepared by the Company
without audit. The Condensed Consolidated Balance Sheet as of May 31, 2000, has
been taken from the audited financial statements included in the Company's
Annual Report on Form 10-K for the period then ended. In the opinion of the
Company, the accompanying financial statements contain all adjustments
(consisting of only normal recurring accruals) necessary to present fairly the
financial position of the Company as of November 30, 2000 and May 31, 2000, the
results of operations and cash flows for the three and six months ended November
30, 2000 and 1999.
2) Certain information and footnote disclosures normally included in
financial statements prepared in accordance with accounting principles generally
accepted in the United States have been condensed or omitted. It is suggested
that these financial statements be read in conjunction with the Company's May
31, 2000 Form 10-K. The results of operations for the periods ended November 30,
2000 and 1999 are not necessarily indicative of the operating results for the
full year.
3) The consolidated financial statements of the Company include 100% of the
accounts of USECB Joint Venture ("USECB" or "USECC") which is owned 50% by the
Company and 50% by the Company's subsidiary, Crested Corp. (Crested). The
consolidated financial statements also reflect 100% of the accounts of its
majority-owned and controlled subsidiaries: Energx Ltd. (90%), Crested (52%),
Plateau Resources Limited (100%), Sutter Gold Mining Co. (63%), Yellow Stone
Fuels Corp. ("YSFC") (35.9%), Four Nines Gold, Inc. (50.9%), Ruby Mining Company
(91%), Northwest Gold, Inc. (96%) and Rocky Mountain Gas, Inc. (82%). All
material intercompany profits and balances have been eliminated.
4) Accrued reclamation obligations and standby costs of $11,749,300 at
November 30, 2000 and $11,980,300 at May 31, 2000 are the reclamation liability
at the SMP mining properties and the Shootaring Uranium Mill. The reclamation of
these properties will not be commenced until such time as all the uranium
mineralization contained in the properties is produced or the properties are
abandoned. It is anticipated that neither of these events will occur for
sometime into the future. The reclamation work may be performed over several
years and is bonded with either cash or certain of the Company's real estate
assets.
5) On September 11, 2000, the Company entered into a Settlement agreement
with Kennecott related to the pending legal dispute. In connection with this
Settlement agreement, the Company has transferred its ownership interests in the
GMMV to Kennecott, including its ownership interest in the Sweetwater Mill, the
Jackpot Mine, the Big Eagle Mine and shop, and all patented and unpatented
mining claims. The Company received various machinery and equipment held by the
GMMV at the Jackpot Mine and $3.25 million from Kennecott. During the six months
ended November 30, 2000, the company received $1.625 million and also received
$1.625 million in January 2001. In addition, Kennecott has assumed all the
liabilities of the GMMV, including all reclamation and bonding requirements,
except the reclamation liability associated with the Green Mountain Ion
Exchange.
6) Certain reclassifications have been made in the May 31, 2000 financial
statements to conform to the classifications used in November 30, 2000.
7
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U.S. ENERGY CORP. & SUBSIDIARIES
ITEM 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations.
The following is Management's Discussion and Analysis of significant
factors which have affected the Company's liquidity, capital resources and
results of operations during the periods included in the accompanying financial
statements. For a detailed explanation of the Company's Business Overview, it is
suggested that Management's Discussion and Analysis of Financial Condition and
Results of Operations for the six months ended November 30, 2000 be read in
conjunction with the Company's Form 10K for the year ended May 31, 2000.
Overview of Business
The Company is engaged in the mineral development and extraction business.
The Company has interests in a uranium mine and mill in southern Utah, uranium
mines in central Wyoming, a gold property in California, coalbed methane
properties in the Powder River Basin in Wyoming and Montana and various real
estate operations including a motel operation near Lake Powell, Utah.
All these business are operated in conjunction with the Company's
subsidiary Crested Corp. . ("Crested") through a joint venture between the two
companies, USECB Joint Venture ("USECB").
Liquidity and Capital Resources
During the six months ended November 30, 2000, the Company experienced an
increase in working capital of $5,178,700. At May 31, 2000 the Company had a
deficit in working capital of $3,161,100 as compared to working capital of
$2,017,600 at November 30, 2000.
Components in the increase of working capital were increased cash,
$785,500, accounts receivable trade, $642,700, other current assets, $157,000,
and inventory at $23,700 along with decreases in accounts payable and accrued
expenses, $279,000, and Deferred GMMV purchase option, $4000,000. These
increases in working capital were offset by reduced accounts receivable
affiliates, $433,500, and increases in the current portion of long-term debt,
$75,700 and the line of credit of $200,000.
On September 11, 2000, the Company entered into a Settlement agreement with
Kennecott related to the pending legal dispute between the companies about the
GMMV operations. As a result of this settlement the Company received certain
GMMV equipment, a cash payment of $3,250,000 and the ability to recognize the
$4,000,000 deferred GMMV purchase option as revenues. This transaction resulted
in the increase of cash, the reclassification of the current liability for
deferred purchase option and the decrease in accounts payable trade. The
transaction also resulted in the reduction of accounts receivable affiliates as
the Company had an outstanding receivable from GMMV at May 31, 2000. Accounts
receivable trade at May 31, 2000 consisted primarily of amounts due the Company
for contract drilling and construction work. These receivables were mostly paid
off during the six months ended November 30, 2000. The Kennecott settlement
resulted in an increase of $1,625,000 in accounts receivable trade which reflect
the final payment due under the total cash payment of $3,250,000. This final
payment of $1,625,000 was received on January 4, 2001.
During the six months ended November 30, 2000, operations, investing
activities and financing activities generated $23,900, $274,300 and $487,300
respectively for a total increase in cash of $785,500. The increase in cash for
investing activities came primarily as a result of the sale of various pieces of
equipment during the six months ended November 30, 2000. This increase of
$1,048,700 was offset by the development of coalbed methane gas properties,
$387,600 the purchase of drilling and construction equipment during the quarter
ended August 31, 2000, $236,400, and an increase if $142,000 in restricted
investments.
The increase in cash from financing activities was a result of financing
the Company's annual insurance premiums, $219,400, the purchase of equipment,
$105,900, partial financing of the Company'sreal estate operations in southern
8
<PAGE>
Utah, $300,000 and additional draw downs on the Company's line of credit,
$200,000, These increases in long term debt were offset by payments of $345,000
on the debt.
Capital Resources
The primary source of the Company's capital resources are cash on hand;
collection of receivables; projected equity financing of its Coalbed methane
affiliate Rocky Mountain Gas, ("RMG"); sale of mine, construction and drilling
equipment; sale of partial ownership interest in mineral properties; proceeds
under the line of credit; receipt of final payment under the GMMV settlement;
potential settlement discussions with Phelps Dodge regarding a dispute on a
molybdenum property and final determination of the SMP arbitration/litigation.
The Company also will continue to receive revenues from its commercial
operations in southern Utah along with the rental and fixed base airport
operations in Wyoming.
The Company has a $1,000,000 line of credit with a commercial bank. The
line of credit is secured by various real estate holdings and equipment
belonging to the Company. At November 30, 2000, the line of credit had been
drawn down by $850,000. The line of credit is being used for short term working
capital needs associated with operations. On January 11, 2001 the line of credit
was completely paid down leaving the entire $1,000,000 line of credit available
to fund operational needs during the third and fourth quarters of Fiscal 2001.
The Company also has a $500,000 line of credit through its affiliate Plateau
Resources. This line of credit is for the development of the Ticaboo town site
in southern Utah. Plateau has drawn down this financing facility $300,000 which
is repayable over 10 years.
The Company entered into a settlement agreement with Kennecott Energy
("Kennecott") on September 11, 2000. This settlement agreement was entered into
to resolve all issues in a legal dispute among the companies who were partners
in the Green Mountain Mining Venture ("GMMV"). As a result of the settlement,
the Company received from Kennecott $1,625,000 during the six months ended
November 30, 2000 and $1,625,000 in January 2001. Kennecott assumed the
reclamation liabilities on the Sweetwater uranium mill and mining properties of
the GMMV. The Company is responsible for the reclamation clean up of the GMIX
plant which had been used in the recovery of uranium by other companies.
In addition to the above referenced cash resources, the Company through its
subsidiary RMG continues to seek either an equity or industry partner in the
financing of the coalbed methane operations. The Company also plans to either
privately sell or auction a significant portion of its equipment that has been
used in the mining and drilling business. It is anticipated that these sales
will occur in the fourth quarter of Fiscal 2001.
The Company believes that these cash resources will be sufficient to
sustain operations during fiscal 2001. The capital resources at November 30,
2001, will not be sufficient, however, to provide funding for the Company's
maintenance and development of its coalbed methane gas business.
Capital Requirements
The Company has the obligation to fund the holding costs of the Sheep
Mountain uranium mines; the Plateau uranium mine and mill, Sutter Gold
properties; real estate commercial operations and the development of the coalbed
methane gas properties. Due to the holding costs of these properties and the
uncertainty of when they will become economic to operate the Company had
determined that it will either sell the properties or consider joint venture
partners on them.
In September 2000, the Company determined that the contract drilling and
construction work that it had been doing in the Powder River Basin of Wyoming
and Montana for others was not profitable and the payment for services performed
was too slow. As a result of this decision all operations on a contract basis
were stopped. The Company is currently in the process of evaluating which
equipment will be needed to develop the RMG properties. Any surplus equipment is
being sold or will be auctioned.
The Company through RMG is responsible to make delay rental payments on
coalbed methane leases. In addition RMG is committed to pay Quantum Energy
("Quantum") one final payment of $1,300,000 on or before January 31, 2001. If
9
<PAGE>
RMG does not make this final payment it may be extended to February 28, 2001 but
a penalty and interest will be required to be paid. If the $1,300,000 payment is
ultimately not made, RMG must assign 12% of its undivided 50% working interest
in the properties to Quantum.
On December 31, 2000 RMG and Quantum entered into an option and farmin
agreement with Suncor Energy America Inc. (Suncor"). The agreement grants an
option to Suncor to purchase 37.5% of RMG's and 12.5% of Quantum's interest in
111,633.77 acres of their coal bed methane properties. For this option Suncor is
obligated to pay $1,706,813 at closing which is scheduled on or before January
31, 2001. RMG will receive $1,280,110 of this option payment which will be used
to fund the $1,300,000 obligation to Quantum.
The option period is for 12 months from closing on 105,172.4 acres and 24
months on 6,461.37 acres. During this option period Suncor has committed to
conduct a $2,250,000 drilling program on the properties. RMG is obligated to
fund $250,000 of that drilling program. At the conclusion of the option periods
Suncor must elect to exercise its option or return the properties to RMG and
Quantum. Should Suncor elect to exercise its option the ownership interests in
the properties would be RMG -12.5%, Quantum - 37.5% and Suncor - 50%. Should
Suncor exercise its option it is obligated to pay an additional $3,926,600, of
which RMG would receive $2,944,900. Upon exercise of its option, Suncor is also
committed to pay an additional $841,380 as a disportional contribution to a
subsequent 18 month drilling program.
The Company has attended appeals hearings with the IRS in Denver Colorado
to discuss resolving issues raised in audits for fiscal 1995 and 1996. A final
settlement agreement has not yet been approved but it is believed that the
settlement will not have a material affect on the Company.
It is not anticipated that any of the Company's working capital will be
used in fiscal 2001 for the reclamation of any of its mineral property
interests. The future reclamation costs on the Sheep Mountain properties and the
GMIX plant are covered by a reclamation bond which is secured by a pledge of
certain of the Company's real estate assets and cash bonds. The reclamation bond
amount is reviewed annually by the state regulatory agencies.
Results of Operations
Revenues for the six months ended November 30, 2000, increased $9,566,200
over revenues for the same period of the previous year to $12,967,200. This
increase was primarily as a result of operations in the coalbed methane contract
drilling and construction businesses, the resolution of the GMMV litigation with
Kennecott and the gain on sales of assets.
During the six months ended November 30, 2000 the Company recorded
$2,242,300 in revenues from contract drilling and construction operations.
During the six months ended November 30, 1999 there was limited start up
activity in the contract drilling and construction business.
As a result of the settlement of the Kennecott Litigation $7,132,800 was
recorded as income during the six months ended November 30, 2000. This revenue
has two components. (1) Non-cash revenues in the recognition of $4,000,000 of a
deferred GMMV purchase option payment that was received by the Company in 1997
and (b) the receipt of cash for the first payments from Kennecott as a result of
the settlement, $1,507,800 - net of accounts receivable from GMMV and (3) a
receivable in the amount of $1,625,000 as the final payment which was received
from Kennecott on January 4, 2001.
During the six months ended November 30, 2000 the Company recognized a gain
of $584,100 from the sale of equipment that were determined to be surplus. One
large component of this amount was the sale of certain GMMV assets that were
distributed to the Company upon the resolution of the GMMV litigation.
10
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Other increases in revenue were also recorded in the six months ended
November 30, 2000 in Commercial operations, $232,100, Oil sales, $31,800 and
mineral sales, $98,800. Commercial operations increased as a result of the
Company receiving its final net profits interest from The Brunton Company which
was sold in 1996. Mineral sales increased as a result of a delivery made under a
market related uranium contract. There were no similar sales during the same
period of the prior year.
Costs and expenses increased by $2,149,200 during the six months ended
November 30, 2000 over the same period of the prior year. This increase was as a
result of work performed in the coalbed methane business. Operations in the
coalbed methane contract drilling and construction work resulted in costs and
expenses of $2,117,900. In additional mineral operations increased by $268,600
due to work performed on equipment used in the contract drilling and
construction operations. General and administrative expenses decreased by
$233,900 during the six months ended November 30, 2000 due to overhead being
allocated to the drilling and construction business.
As a result of a decision which was made in September 2000 the Company and
USE curtailed all contract drilling and construction work for third parties.
Associated with these reductions were significant personnel reductions as well
as many reductions in corporate overhead. These reductions should account for
significant reductions in costs during the balance of the fiscal 2001.
Operations for the six months ended November 30, 2000, resulted in earnings
of $4,970,800 or $0.64 per share as compared to a loss of $2,429,200 for the
same six months in the previous year.
11
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ITEM 4. Submission of Matters to a Vote of Security Holders
On December 8, 2000 the annual meeting of shareholders was held for the
election of two directors.
Directors, John L. Larsen and Keith G. Larsen were elected for a term
expiring on the third succeeding annual meeting and until their successors are
duly elected or appointed and qualified. With respect to the election of the two
directors, the votes cast were as follows:
Name of Director For Against Abstain Withheld
John L. Larsen 8,435,903 3,285 61,359 900
Keith G. Larsen 8,435,903 3,285 61,359 3,731
The Registrant's Board of Directors consists of seven members of Messrs.
Don C. Anderson, Nick Bebout, H. Russell Fraser, John L. Larsen, Keith G.
Larsen, David W. Brenman and Harold F. Herron.
ITEM 6. Exhibits and Reports on Form 8-K
(a) Exhibits. None.
(b) Reports on Form 8-K. During the quarter ended November 30, 2000 the
Company filed two reports on Form 8-K. On September 12, 2000 under Item 5, the
Company reported the settlement of litigation with Kennecott concerning the
Green Mountain Mining Venture. On October 17, 2000 the Company reported the
affirmation by the Tenth Circuit Court of Appeals of the ruling of the United
States District Court of Colorado in the Nukem litigation. The Company also
filed a report after the quarter ended November 30, 2000 under Item 5 on Form
8-K on December 4, 2000 indicating it was filing an interim balance sheet with
footnotes to show that the Company had overcome a very brief period of
noncompliance with the National Market System requirements.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Company has duly caused this report to be signed on its behalf by the
undersigned, there unto duly authorized.
U.S. ENERGY CORP. (Company)
Date: January 12, 2001 By: /s/ Keith G. Larsen
-----------------------------------
KEITH G. LARSEN,
President
Date: January 12, 2001 By: /s/ Robert Scott Lorimer
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ROBERT SCOTT LORIMER,
Principal Financial Officer and
Chief Accounting Officer
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