U.S. Energy Corp. (USEG) filed Quarterly Report for the period ended 2009-09-30.
U.S. ENERGY CORP. (WYO) is in the general minerals business of acquiring exploring developing and/or selling or leasing of mineral properties and mining and marketing of minerals. It is now engaged in two principal mineral sectors: uranium and gold both of which are in the development stage. U.s. Energy Corp. has a market cap of $132.5 million; its shares were traded at around $6.2281 with and P/S ratio of 57.9. U.s. Energy Corp. had an annual average earning growth of 18.4% over the past 5 years.
Highlight of Business Operations:
At September 30, 2009, the Company had $11.7 million in cash and cash equivalents and $27.2 million in Treasury Bills with longer than 90-day maturities from date of purchase for a total of $38.9 million or $1.83 per outstanding common share. Its working capital (current assets minus current liabilities) was $40.1 million. As discussed below in Capital Resources and Capital Requirements, the Company projects that its capital resources at September 30, 2009 will be sufficient to fund its operations and capital projects through the balance of 2009. To fund projected oil and gas exploration beyond the end of calendar 2009, the Company will need to obtain additional capital. The Company is currently considering its alternatives, including sales of additional shares of its capital stock. Additionally, the Company is pursuing financing of its real estate property in Gillette, Wyoming and renewing its line of credit with a commercial bank. The line of credit in the amount of $5.0 million expired on October 1, 2009 and was fully available at that time. The Company is negotiating with the bank for its renewal.
Operations for the quarter ended September 30, 2009 resulted in a loss of $2.6 million. The net loss, after taxes was $1.7 million, or $0.09 per share, as compared to net income of $3.8 million, or $0.16 per share, during the quarter ended September 30, 2008. Net income at September 30, 2008 included a gain of $5.2 million, or $0.22 per share, from discontinued operations related to the sale of a portion of the Company s investment in Sutter Gold Mining Inc. (“Sutter”). The losses from continuing operations at September 30, 2009 and 2008 included $1.7 million and $865,000 in non cash items, respectively, consisting of depreciation, amortization, depletion, impairment on oil and gas properties, non cash compensation and non cash payment for services rendered. Depreciation, amortization and depletion expense increased $567,000 during the quarter ended September 30, 2009 over the prior year due primarily to the completion of the Company s multifamily housing complex, in the amount of $78,000, the amortization of full cost oil and gas capitalized costs in the amount of $475,000 and $14,000 from equipment.
The Company recognized $1.3 million in revenues during the quarter ended September 30, 2009 as compared to revenues of $569,000 during the same quarter of the prior year. Real estate revenues increased by $189,000 as a result of the completion of the multifamily housing complex in Gillette, Wyoming and oil and gas revenues increased $526,000 as a result of production from an oil and gas well completed in the fourth quarter of 2008. Real estate operations resulted in a net gain before taxes of $179,000. Oil and gas operations resulted in a loss of $258,000 during the quarter ended September 30, 2009. This loss is primarily as a result of an impairment of $405,000 taken during the quarter.
Other income and expenses – The Company recorded an equity loss from its investment in a geothermal partnership in the amount of $339,000 during the quarter ended September 30, 2009 with no similar losses reported during the prior year. The geothermal industry is a capital intensive business which will result in ongoing equity losses until such time as properties are sold or the Company sells its investment. Interest income decreased from $324,000 during the quarter ended September 30, 2008 by $236,000 to interest income of $88,000 at September 30, 2009. The decrease is a result of lower amounts of cash invested in interest bearing instruments and lower interest paid on those investments.
Operations for the nine months ended September 30, 2009 resulted in a loss of $7.0 million, or $0.33 per share, as compared to net income of $334,000, or $0.01 per share, during the nine months ended September 30, 2008. Net income for the nine months ended September 30, 2008 included a gain of $5.4 million, or $0.20 per share from discontinued operations related to the sale of a portion of the Company s investment in Sutter. The losses from continuing operations for the nine months ended September 30, 2009 and 2008 included $5.7 million and $2.8 million in non-cash items, respectively, consisting of depreciation, amortization, depletion, impairments taken on oil and gas properties, non-cash compensation and non-cash payment for services rendered. Depreciation, amortization and depletion expense increased $2.2 million during the nine months ended September 30, 2009 over the prior year due primarily to the completion of the Company s multifamily housing complex, in the amount of $451,000, and the amortization of full cost oil and gas capitalized costs in the amount of $1.8 million. Non-cash compensation decreased $852,000 during the nine months ended September 30, 2009 from those recorded during the same period of 2008 as a result of lower expenses related to the amortization of stock options and lower market prices for the Company s common stock related to equity compensation.
The Company recognized $4.1 million in revenues during the nine months ended September 30, 2009 as compared to revenues of $1.0 million during the same period of the prior year. Real estate revenues increased by $1.2 million as a result of the completion of the multifamily housing complex in Gillette, Wyoming. Oil and gas revenues increased $1.9 million as a result of production from an oil and gas well completed in the fourth quarter of 2008. Real estate operations resulted in a net gain before taxes of $629,000. Oil and gas operations resulted in a loss of $1.5 million which includes $1.8 million in non-cash depletion and amortization expense and an impairment of $1.5 million. The impairment was recorded as a result of depressed prices for natural gas and dry hole expenses which had been capitalized.
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