U.S. Energy Corp.

to a multi-decade production tail. We have approached the oil business with discipline. We're not adding incremental rigs or chasing growth for growth's sake. We're using CutBank as the captive CO2 outlet that completes our integrated value chain. With that operational and commercial picture in place, I'd like to turn it over to Mark to walk through the capital structure, where we've made significant progress this quarter.

Thanks, Ryan, and good morning, everyone. I want to keep my remarks focused on the capital structure. because that is where the most consequential financial work has happened this quarter. There are three pieces I'll cover, the phase one capital stack, the equity line of credit, and the path forward. First, the phase one capital stack is now complete. In March, we executed an equity offering that brought in capital needed to fund development and strengthen the balance sheet. On April 20, we amended our senior secured credit agreement, doubling the borrowing base to $20 million, fixing the interest margin at 200 basis points over the alternative base rate, and importantly, suspending quarterly financial covenant testing through the physical quarter ending March 31, 2027. The facility allows revolving borrowings through its May 31, 2029 maturity with no pre-maintenance penalties. These are favorable terms for a project under construction, and they provide the flexibility to execute construction without covenant pressure during the build phase. This capital stack will take us through completion of phase one and into revenue generation. Second, on the equity line of credit, we have not drawn on the ELOC since March 2nd, and concurrent with the closing of the expanded debt facility, we have formally suspended further use of the ELOC. We took this step deliberately to address a perceived dilution overhang associated with the facility. The message is clear. The equity capital structure is set for Phase 1, and the focus from here is execution, not further dilution. Third, the path forward as we transition from Phase 1 build to Phase 1 operations and begin positioning for phase two, the multi-stream nature of our platform opens capital avenues that were not available to us as a legacy EMP. Project finance debt becomes more accessible as we de-risk through our MRV approvals and contracted offtake. The 45Q tax credit stream itself becomes a financeable asset, either through a transferability or a structured monetization, representing a potential non-dilutive capital source not currently in our base case. Longer term, our existing senior secure facilities are appropriately sized today. We expect to transition to a larger, longer data facility as revenues and credit profile matures. From a near-term liquidity standpoint, we have the capital we need to deliver phase one into commercial operations in the first quarter of 2027. From here, the focus on capital side is optimization and pre-positioning rather than funding the build. With that, I'll hand it back over to Ryan.

Thanks, Mark. Let me close with how we see this path forward because I think This is where the gap between intrinsic value and where the stock trades is most apparent. Looking out over the coming quarters, we have a sequence of identifiable independent de-risking events. MRV approvals are anticipated this summer. Gathering and EOR prep installation is scheduled across the summer and fall. Plant commissioning is targeted towards the end of 2026 with first gas and first revenue in the first quarter of 2027. And alongside the operational catalysts, we're beginning to advance commercial discussions on direct merchant CO2 sales, a second monetization path beyond sequestration credits, and one we believe could meaningfully enhance unit economics with very modest incremental capital. Beyond those near-term milestones, the next layer of value is in how the platform scales. Phase two is the first step in that scaling, and it is entirely excluded from our base case financial model. Phase two is a second processing plan on the same footprint leveraging the same infrastructure, the same regulatory approvals, the same field operations, and the same commercial relationships. Our acreage, our permitted wells, and our geology already support two to three times the Phase I capacity with no new land and no new approvals. Because the heavy lifting is already done, the incremental capital required to execute Phase II is meaningfully lower on a per-unit basis. And as our credit profile matures and the asset de-risks, we would also expect the cost of capital to improve. When you compound these two effects, lower per unit capex and a lower cost of capital across a second standardized unit, the project economics become quite compelling. Our internal modeling supports project NPV that is multiples of where phase one stands today and equity returns that fundamentally re-rate the company. Alongside that operational scaling, there's also a financial dimension to how value can be realized. I mentioned $130 million of 45Q credit value across the first 12 years of Phase 1 operations. Under current rules, those credits are transferable. We have a credible pathway to monetize a significant portion of that stream ahead of the underlying schedule, either through a transferability transaction or a structured credit sale. That is a non-dilutive capital acceleration that, again, is not in our base case. We are working that work stream now, and we will share more as transactions advance towards execution. When you step back, those operational and financial elements ultimately shape how the market should evaluate this business. I'd like to close with a candid observation about valuation because it gets to the heart of why we made the strategic pivot in the first place. Small cap E&P companies traded roughly three times trailing EBITDA in today's market. Small and mid cap midstream and gas processing companies traded roughly eight times. Blue chip industrial gas companies traded roughly 17 times or significantly higher than that. Those are not our forecasts. Those are public market multiples that anyone can verify. Once phase one is operating, U.S. Energy is no longer a small-cap EMP. We're an industrial gas producer with a contracted offtake, a regulated carbon management business with policy-backed revenue, and a low-decline oil business that is integrated into the platform as the captive CO2 outlet. We don't need every part of that re-rating to happen for shareholders to do very well from here. Today, we traded a meaningful discount to our internally calculated Phase 1 NAV against a forward EBITDA multiple that is well below where any of those referenced categories trade. The arithmetic of closing even a portion of that gap is very significant. Our job between now and Phase 1 commissioning is to keep executing the operational and commercial milestones that allow the market to make that re-rating. To put a fine point on the quarter, we reached FID, we executed our EPC, we completed the Phase 1 cap stack. We signed a five-year take-or-pay helium offtake. Construction is underway. The commercial operations countdown is months and not years. And the macro backdrop for helium, for carbon management, and for American energy production has rarely been more favorable than it is now. I'm more confident in the business plan today than at any point since we set out on this path. I want to thank our team in Houston and Montana and across our partner network for outstanding execution this quarter. And I want to thank our shareholders for their continued support and patience as we transition through the build phase into the cash flow phase. We have a tremendous amount of work ahead of us, but the path is clearer today than it ever has been. Operator, with that, please open the line for questions.