U.S. Energy Corp.

Greetings and welcome to U.S. Energy Corporation fourth quarter and year end 2024 results conference call. At this time, all participants are in a listen only mode. A question and answer session will follow the formal presentation. If anyone should require operator assistance, please press star one, star zero on your telephone keypad. As a reminder, this conference call is being recorded. It is now my pleasure to introduce Mason McGuire, Vice President of Finance and Strategy. Thank you. You may begin.

Thank you, Operator, and good morning, everyone. Welcome to U.S. Energy Corp's fourth quarter and year-end 2024 results conference call. Brian Smith, our Chief Executive Officer, will provide an overview of our operating results and discuss the company's strategic outlook, and our Chief Financial Officer, Mark Zajac, will give a more detailed review of our financial results. Before this morning's market opening, US Energy issued a press release summarizing operating and financial results for the quarter and fiscal year ended December 31st, 2024. This press release, together with the accompanying presentation materials, are available in the investor relations section of our website at www.usenergy.com. Today's discussion may contain forward-looking statements about future business and financial expectations. Actual results may differ significantly from those projected in today's forward-looking statements due to various risks and uncertainties, including the risks described in our periodic reports filed with the Securities and Exchange Commission. Except as required by law, we undertake no obligation to update our forward-looking statements. Further, please note that non-GAAP financial measures may be disclosed during this call. A full reconciliation of GAAP to non-GAAP measurements are available in our latest quarterly earnings release and conference call presentation. With that, I'd like to turn the conference call over to Ryan Smith.

Good morning, everyone, and thank you for joining us today. I'm pleased to share our fourth quarter results, highlight our key accomplishments in 2024, and provide an update on our strategic outlook and operational plans for the year ahead. Our results this quarter reflect the dedication and resilience of our operational team, as well as the strong momentum we've built throughout our recent business development efforts. In particular, I want to focus on our Montana project, where we continue to make significant progress. During the fourth quarter, we successfully drilled our first industrial gas well and have spent the past few months analyzing results to refine our development approach. Our focus remains on targeting economically promising production zones, which independent testing has confirmed contains significant non-hydrocarbon helium concentrations. While we initially anticipated further well testing in December and January, we made the strategic decision to wait for warmer weather to optimize operational efficiency. Montana experienced a particularly harsh winter, and while existing operations continued without any issue, launching new operations in these conditions introduced unnecessary risk, both to personnel and to equipment. With improved weather conditions, we are now well positioned to move forward. In early January, we completed another key milestone by acquiring approximately 24,000 net acres in Montana, further expanding our footprint across the most promising portions of the Keevan Dome. This acquisition is a cornerstone of our development strategy, targeting CO2-dominant pay zones with significant helium concentrations. Additionally, this transaction included an active producing well with recent gas analysis confirming material flow rates and helium production from the Dupreau zone. With this latest acquisition, U.S. Energy now controls the dominant land position across the Keevan Dome, totaling approximately 160,000 net acres. This strategic expansion allows us to control the development of a vast resource base, securing years of future growth potential. While we will continue to opportunistically acquire smaller, high-value acreage to further optimize our holdings, we are confident that our current position is robust and scalable. Looking ahead, we are gearing up for an active and highly strategic 2025. Beginning in April, we plan to initiate workover operations on two wells, the first being the industrial gas well that we drilled in the fourth quarter and the second being the producing well acquired in our most recent transaction. These operations will provide critical data including flow rates, reservoir characteristics, and gas composition. In June, we plan to commence drilling and completing two additional wells, marking the next phase of our development program. By the end of the second quarter, we anticipate having operational results from all four wells, providing valuable insights that will inform our full cycle development strategy. Once we analyze this data, We expect to move into the manufacturing phase of our gas processing plant. Our team of internal professionals and highly experienced consultants have spent months refining the plant design, and we are confident in our ability to execute this next step once our well development program is complete. Another important initiative underway is the carbon sequestration component of our Montana project. This effort is progressing in tandem with our acreage delineation and plant development. We have made substantial progress on both the operational and regulatory fronts and we believe our plan meets all necessary requirements to fully leverage federal incentives related to CO2 sequestration. Our focus includes optimizing our existing Class 2 injection permits, identifying and permitting future injection sites, and advancing our monitoring, reporting, and verification, or MRV, process. We expect to provide additional updates on this initiative in the second quarter. We're highly optimistic about the future of this project. Not only does our Montana asset represent a transformational opportunity for U.S. energy, but it also positions us as a leading player in the industrial gas sector. This initiative aligns with our strategy to create a full cycle industrial gas platform while efficiently deploying our capital to generate meaningful returns. Based on the data collected thus far, we believe our wells will support highly economic development, both at the field and infrastructure levels. Our capital spending plan remains disciplined and achievable, fully funded through our existing balance sheet and supplemented by our successful capital strategy. The development of these wells will further define our resource base and provide the necessary foundation for advancing our processing infrastructure and long-term production plans. It's also important to highlight the unique nature of our Keven Dome assets. The majority of helium production in the U.S. today is tied to hydrocarbons and produced as a byproduct of natural gas extraction. In contrast, our Montana project is non-hydrocarbon based, making it one of the lowest environmental footprint helium projects in the country. This distinction is a key competitive advantage as we move forward. Turning to our legacy oil and gas assets, 2024 was a very successful year in executing our strategy to monetize these properties and redeploy that capital into our Montana project. In July, we completed the sale of our South Texas assets for $6 million. followed by the sale of certain East Texas properties in December for $6.8 million. These transactions directly benefited U.S. Energy in two ways. First, they enabled us to fully eliminate our outstanding debt, leaving us with a clean balance sheet. And second, they provided additional capital to accelerate our Montana development efforts. These sales were executed with precision, thanks to the expertise of our ops and business development teams who have skillfully managed our legacy assets to maximize value in the current market. As we move through 2025, we will continue to take a disciplined approach, strategically investing in our Montana project while remaining opportunistic and monetizing non-core oil and gas assets. This measured capital strategy is expected to make 2025 a transformational year for U.S. energy. Unlike many of our peers, we have access to significant internally generated non-dilutive capital, allowing us to fund growth without unnecessary shareholder dilutions. U.S. Energy stands apart from other energy companies of similar scale. We have a highly economic and scalable development project supported by legacy E&P assets that require minimal capital to maintain production. This allows us to generate predictable cash flows while making strategic, high-return investments in our industrial gas development project. Our approach provides resilience against market volatility while positioning us to capitalize on emerging opportunities. Our commitment remains focused on operational excellence, disciplined financial management, and responsible resource development. As we look ahead, we are well positioned to drive sustained growth and create long-term value for our shareholders. On the capital allocation front, we continued executing our share repurchase program in 2024. To date, we have repurchased approximately 1.7 million shares, representing roughly 4% of our outstanding share count. Additionally, our executive team has consistently increased their personal holdings, underscoring our conviction that repurchasing our stock at current valuations represents one of the highest return opportunities for our free cash flow. We expect to continue this strategy moving forward. Maintaining a strong balance sheet remains a top priority. I'm pleased to report that we ended the year and currently sit completely debt-free with zero outstanding borrowings on our credit facility. And importantly, despite recent asset sales, Our borrowing capacity has remained unchanged. In closing, U.S. Energy is uniquely positioned as a first-moving, publicly traded, growth-oriented industrial gas company in the United States. Many of our competitors are constrained by complex equity structures, financial stress, and limited capital access. We do not share these limitations. As our distinctive position gains broader recognition in the market, we expect to unlock additional scalable and highly accretive growth opportunities. With that, I'll now turn the call over to our Chief Financial Officer, Mark Zajac, who will provide a detailed update on our financial results for the quarter.