US Energy (USEG) M&A Announcement summary

Deal rationale and strategic fit

• Acquisition of 164,000 operated acres in Montana's Kevin Dome targets helium and industrial gas production, leveraging non-hydrocarbon resources and carbon sequestration opportunities.

• Expands into high-growth helium markets, supporting sectors like semiconductors, healthcare, and aerospace.

• Diversifies business operations and cash flow streams, reducing reliance on legacy E&P assets.

• Builds on existing local operations, enabling seamless project development and leveraging community relationships.

• Sale of South Texas assets monetizes non-core assets, funding the helium acquisition and reducing debt.

Financial terms and conditions

• Wavetech: 82.5% ownership acquired for $2.0M cash, 4,845,900 shares of restricted stock, $12.5M carried working interest, and warrants contingent on helium sales.

• Synergy: LOI to acquire 87.5% working interest for $2.0M cash, 2,600,000 shares of restricted stock, $20.0M carried working interest, and 18% interest in carbon sequestration credits.

• Initial drilling costs for new wells are estimated at $1.2 million–$1.4 million each, reflecting shallow, conventional drilling.

• All-cash sale of South Texas assets valued at $6.5 million, with proceeds to fund helium asset development and debt reduction.

• The company maintains a strong balance sheet with low debt and intends to use internally generated, non-dilutive capital for development.

Synergies and expected cost savings

• Integration of helium and carbon sequestration growth opportunities with legacy assets.

• Existing operations and staff in the area provide operational efficiencies and reduce ramp-up time.

• The project’s scale allows for economic development without the need for a large number of wells.

• Existing local operations provide cost advantages in sourcing materials and labor.

• Anticipated low drilling costs and streamlined operations from divesting non-core assets.