Reggie Larsen - Director, IR Keith Larsen - CEO Steve Richmond - CFO

Joe McCann - Euro Pacific Capital Noel Parks - Ladenburg Thalmann Pedrick Hunter - Global Hunter Michael Kamperman - Prometheus Wealth Management Mike Jacobson - Oak Ridge Financial

Good morning, my name is Will and I will be your conference operator today. At this time, I would like to welcome everyone to the U.S. Energy Corp. Third Quarter 2014 Selected Highlights, Financial Results and Operations Update Conference Call. All lines have been placed on mute to prevent any background noise. I would now like to turn the conference over to Mr. Reggie Larsen, Director of Investor Relations of U.S. Energy Corp. Sir, you may begin your conference.

Thank you, Will. Good morning, ladies and gentlemen, and thank you for joining us today. With me this morning is Keith Larsen, Chief Executive Officer; Steve Richmond, Chief Financial Officer, as well as members of the Company’s management team. In terms of agenda for the call, Keith will provide you with an overview of our highlights, financial results and operating initiatives for the quarter ended September 30, 2014 and we’ll [Audio Gap] question-and-answer session. As a preliminary matter, I would like to note that during this call, we may make forward-looking statements which may be identified by the words will, anticipate, expect, and similar words that are based on the beliefs and assumptions of U.S. Energy's management. These and all statements other than statements of historical fact are forward-looking statements within the meaning of Section 21E of the Securities and Exchange Act of 1934 and Section 27A of the Securities Act of 1933. The forward-looking statements are subject to numerous risks and uncertainties, including those described in the Form 10-Q for the quarter ended June 30, 2014, which we filed on Monday of this week and our other filings with the SEC, all of which are incorporated herein by reference. Relevant non-GAAP reconciliations are available on the Company’s Web site which is located at www.usnrg.com. I'd now like to turn the call over to Keith.

Thanks Reg and good morning everybody. To begin I would like to thank the audience for attending today’s call and for following the Company’s progress throughout the year. At the quarter’s end we have participation interest in 130 gross, 19.6 net producing wells primarily located in South Texas and in the Williston Basin of North Dakota. During the three months ended September 30, 2014 the Company produced quarterly company record of 142,484 barrels of oil equivalent which is a 40% increase over the same period of 2013 and a 22% increase over the second quarter of 2014. Average net daily production during the quarter was 1,549 barrels of oil equivalent. The meaningful uptake in production comes primarily from our Buda Limestone formation drilling program in the Booth Tortuga acreage block in South Texas. As a result of our production growth the Company recognized 9.9 million in revenues during the third quarter of 2014 which is a 15% increase as compared to 8.6 million during the same period of the prior year. For the nine months ended September 30, 2014 the Company recognized 27.3 million in revenues which is a 12% increase in revenues as compared to 24.4 million during the same period of 2013. Both increases are primarily due to higher oil and gas sales volumes when compared to the same period of the prior year. Looking ahead we remain in a good position to fund our forward drilling programs. At September 30, 2014 we had 4.4 million in cash and cash equivalents, and an additional 16.5 million in borrowing capacity under our 24.5 million line of credit with Well Fargo. During the nine months ended September 30, 2014 we have received an average of 3 million per month from our producing wells with an average operating cost of 588,000 per month, including work over cost and production taxes of 255,000. Our average net cash flows of 2.2 million per month from oil and gas production before non-cash completion expense. In the financial and operational release that was published on Monday which is available on our Web site we presented an EBITDAX table showing earnings before interest, income taxes, depreciation, depletion and amortization, accretion of discount on asset retirement obligation, non-cash impairments, unrealized derivative gains and losses, and non-cash stock compensation expense which we refer to as modified EBITDAX, and a reconciliation of modified EBITDAX to net income. Modified EBITDAX was 4.6 million for the three months ended September 30, 2014 an increase of 33% when compared to modified EBITDAX of 3.5 million for the same period of 2013. Modified EBITDAX was 12.9 million for the nine months ended September 30, 2014 an increase of 12% compared to a modified EBITDAX of 11.6 million for the same period of 2013. The production and financial metrics that I have just stated have resulted in net income after taxes of 243,000 or $0.01 per share during the nine months ended September 30, 2014. Now moving on to our oil and gas operations, during the quarter our primary focus continued to be on our active drilling programs in South Texas and our development drilling programs in the Williston Basin of North Dakota. In South Texas the Company currently participates in approximately 35,200 gross or 9,130 net acres in Zavala and Dimmit counties. At the quarter’s end we had 33 gross, 8.9 net producing wells and 2 gross 0.63 net wells being drilled or waiting completion. I’ll begin with the Booth Tortuga acreage block that is located in Zavala and Dimmit counties Texas. This block is operated by Contango Oil & Gas Company. Thus far, we have primarily targeted the Buda Limestone formation in the prospect. We have an approximate 30% working interest and an approximately 22% net revenue interest in the acreage. The Beeler number 19 well was spud June 10, 2014 and began producing mid-July 2014 well averaged 1,198 BOE per day during the first 30 days of the production and that was 73% oil. The Beeler 20 well was spud July 3, 2014 and began producing late July 2014, the well averaged 835 BOE per day during the first 30 days of production and that was 65% oil. The Beeler 26 well was spud September 12th. The well was currently in the early flow back stage of production. Beeler 24 well was spud October 24th, during the drilling of the well Contango proposed coring and testing the Eagle Ford formation before completing the well, results of the coring are currently being evaluated. Lastly the Beeler number 22 well is currently scheduled to be drilled late in the fourth quarter of 2014 to finish up the year of continuous drilling and testing in the Booth Tortuga acreage block. We are working with continue to plan and schedule next year’s drilling program for both the Buda Limestone and the Eagle Ford formations. During the second quarter of this year, under an Area of Mutual Interest Election, the Company acquired a 7.5% working interest and 800 gross 16 net acres in the Booth Tortuga prospect. This acreage is operated by a private Texas-based company which has drilled two productive wells in the acreage. The acreage block lies between the Beeler number 16 and the Beeler number 9 well locations for reference. First well in the program the Bruce Weaver number 2 well was spud on June 6, 2014. The well was drilled to a total depth of 13,290 feet which is including approximate 6,700 foot lateral. The well was completed naturally without fracture stimulation and began producing in the first week of August. The well had an early peak initial production rate of 810 barrels of oil equivalent per day 75% oil, during the first 30 days of production the well averaged approximately 731 barrels of oil equivalent per day, and that was 76% oil. The second well in the program the Bruce Weaver number 1 re-entry well was spud August 8th. The well was drilled to a total depth of 10,130 feet which included an approximate 3,280 foot lateral. The well was completed naturally without fracture stimulation and began producing the first week of September. The well had an early peak initial production rate 639 barrels of oil equivalent 79%, during the first 30 days of production well averaged approximately 688 barrels of oil equivalent per day and that was 82% oil. I’ll now move on to our second quarter 2014 Dimmit County acquisition. On May 7, 2014, the company entered into a Participation Agreement with U.S. Enercorp., a private South Texas-based oil and gas company to acquire 33% of the seller’s interest and approximately 12,100 gross, 3,384 net acres in Dimmit County, Texas. The first well in the program the South McKnight number 1305 well targeting the Buda Limestone formation was spud on May 5, 2014 and was drilled to a measured depth of approximately 11,300 feet including an approximate 5,000 foot lateral. The well was fracture stimulated beginning the first week of August with 17 stages. The well had an early peak initial production rate of 279 barrels of oil equivalent per day and that was 57% oil. During the first 30 days of production the well averaged approximately 132 barrels of oil equivalent per day and 24% of that was oil. The second well in the program the Berry number 1 well, targeting the Buda Limestone formation, was spud on June 23rd. The well was drilled to a measured depth of approximately 11,000 feet, including a 4,600 foot lateral. The well was fracture stimulated beginning the last week of August with eight stages. The well had an early peak initial production rate of 470 barrels of oil equivalent 61% oil. During the first 30 days of production the well averaged approximately 199 barrels of oil equivalent per day and that was 44% oil. Due to the marginal economic result of first two test wells in the program, the operator proposed to drill the third well the South McKnight 1317 well, targeting the Eagle Ford formation. The well was spud on September 28th. The well was drilled to a measured depth of approximately 11,000 feet including an approximate 6,000 foot lateral. The well is scheduled to be fracture stimulated in mid-November with 20 stages. And we are looking forward to evaluating the results of this test in order to determine further development potential on a going forward basis. In summary in South Texas during the quarter the Company produced approximately 799 net barrels of oil equivalent per day from this region, which represents a 332% increase when compared to an average of 185 net barrels of oil equivalent per day in the same period of 2013 and a 49% increase when sequentially compared to the average daily production of 538 net barrels of oil equivalent per day during the second quarter. Now I’ll move on to the Williston Basin of North Dakota. The Company participates in 74,280 gross 2,939 net acres in Williams, McKenzie and Mountrail counties, North Dakota with numerous operators. At the quarter’s end we had 94 gross 10.18 net producing wells and six gross 0.9 net wells being drilled or waiting completion. During the three months ended September 30, 2014, we averaged approximately 666 net barrels of oil equivalent per day 87% oil from this area, which represents a 20% decrease when compared to an average 837 net barrels of oil equivalent per day 88% oil in the same period of 2013, and a slight increase when compared sequentially to the average daily production of 660 net barrels of oil equivalent per day in the second quarter. This year-over-year decrease was primarily due to normal production declines and to the divestiture of certain Williston Basin assets during the second quarter of 2014. That concludes the oil and gas operations portion of the call. Before moving on to question-and-answer portion I will touch briefly on two additional items that occurred during the quarter. On August 14th, condition upon the closing of a purchase and sale transaction between Anfield Resources and Uranium One the Company agreed to release Anfield from the future payment and royalty obligations stemming from the Company’s 2007 sale of its uranium properties to Uranium One. In return Anfield has agreed to pay the company the following; 2.5 million worth of Anfield common shares upon closing of the transactions, contemplated by the asset purchase agreement among Anfield and Uranium One. The shares would be held in escrow and released in tranches over a 36 month period. Two, 2.5 million in cash paid upon 18 months of continuous commercial operation of Shootaring Canyon. And three, an additional 2.5 million in cash paid upon 36 months of continuous commercial operation of the mill. Subsequent to the acceptance of this agreement Anfield has been granted conditional approval of the transaction by the Toronto Stock Exchange, in addition the Utah Division of Radiation Control was granted a conditional approval to transfer ownership of the Shootaring Canyon Uranium mill radioactive materials license from Uranium One to Anfield. Anfield has also recently announced that it has renewed nine mineral leases covering 5,700 acres on Utah State Trust Lands that lie within past producing uranium mining districts located in Southeastern Utah. We view their progress as a positive indicator of their intent to continue to work towards the closing of the transaction and ultimate payment to U.S. Energy. However, the timing of any potential future receive of funds from any of these contingencies is unknown at this time. Lastly on September 16, 2014 the Company announced that its President and COO Mark Larsen notified the Board of Directors that he will retire from his position as President and Chief Operating Officer effective December 31st. Mark has been employed by the company since June of 1984 and was appointed as President and Chief Operating Officer on August of 2005. Under his leadership the Company has transitioned from predominantly pursuing mining interest to a growing oil and gas producer. At the request of our Board of Directors Mark will remain in an advisory role during 2015 to oversee the advancement of the Mount Emmons molybdenum project. Mark will continue to serve on the Board of Directors through his current term which expires in June of 2016. I would like to thank Mark for his many contributions during his tenure here at U.S. Energy and on behalf of the Board of Directors and our staff we would like to wish him and his wife Ricky the best of luck in their future endeavors. Additionally, the Company has interviewed several qualified candidates and we are confident that the selected individual will be announced during the fourth quarter of this year. To wrap-up our prepared today, I would like to note that our activity in North Dakota and South Texas has produced meaningful production and revenue increases, as well as profitability during the first nine months of ’14. We have been very active in South Texas this year which has provided with a better understanding of our development potential in this region. Looking forward, we will continue to monitor our drilling commitments and well economics in the current oil price environment as we proceed through the fourth quarter 2014 and beyond. And we remain well positioned to continue to fund our drilling commitments through cash flow from operations if continued development as the appropriate course of action. In the meantime, we are focused on finding accretive acquisitions and believe that we will see favorable opportunities if the current commodity price environment persists. That concludes our prepared remarks for the day. Operator, would you please begin the Q&A session.

Yes, sir. (Operator Instructions) And our first question comes from the line of Joe McCann from Euro Pacific Capital. Your line is now open.

I just had a few questions. I had to step away for a second there so I might have missed if you mentioned anything about your recent production rates. You had nice growth during the quarter, but sometimes it’s hard to see what your run rate is going forward, so I was wondering if you had a data point at the end of the quarter October or something like that for production?

I just had a few questions. I had to step away for a second there so I might have missed if you mentioned anything about your recent production rates. You had nice growth during the quarter, but sometimes it’s hard to see what your run rate is going forward, so I was wondering if you had a data point at the end of the quarter October or something like that for production?

Yes let me take a quick look, the actual rate was 1,475.

Okay, that was at the end of quarter’s rate?

Okay, that was at the end of quarter’s rate?

Yes that was the last month of the quarter.

And with respect to our Buda wells you have --- you reported really good initial rates, 30 day rates and most of those as we know with the fractured carbonate I was just wondering if you can -- if you have any more information how those wells are holding up?

And with respect to our Buda wells you have --- you reported really good initial rates, 30 day rates and most of those as we know with the fractured carbonate I was just wondering if you can -- if you have any more information how those wells are holding up?

Well we haven’t put out the daily rate for obvious reasons Joe but certainly the most of our production increases came from those IPs and the consistent production on those wells. And I’d just like to say and I have maybe said this before and that is in anyone of these plays that we are in you have a handful of wells that are exceptional. In my opinion, you have got a lot of wells that are what I would call average and then you have the few wells that you are disappointed in. Unfortunately you don't know going in which wells are going to be which until they start producing but overall we're pleased with the performance of the Buda wells and certainly their economics.

And on that new acreage you are currently drilling at Eagle Ford well, are there any other Eagle Ford wells in that area?

And on that new acreage you are currently drilling at Eagle Ford well, are there any other Eagle Ford wells in that area?

Well there are some but not in the immediate area and again there is some mixed results there but we are just like we've said before we like South Texas because of the multi-formation potential there. There is also the Georgetown, there is some areas uphold from us and we've got a lot of data in the drilling the hole while the initial economic results have not been what we were hoping for but we are still evaluating the area and we still think there is a lot of potential in the different formations.

And you mentioned you were looking at some acquisitions -- or potentially looking at some acquisition opportunities. So I was just wondering if you had anything that was near-term that can potentially happen or what you are seeing out there?

And you mentioned you were looking at some acquisitions -- or potentially looking at some acquisition opportunities. So I was just wondering if you had anything that was near-term that can potentially happen or what you are seeing out there?

As you could probably imagine Joel there is lots of opportunities here. We are in a, what I consider a pretty unique potential here because of our very low den, our cash position and our 16 million available. There is other companies with the sub $80 oil which we think there is going to be a lot of opportunities. The answer is yes, we are looking at three prospects right now that have similar potential that we are seeing in South Texas.

Thank you. And our next question comes from the line of Noel Parks from Ladenburg Thalmann. Your line is now open.

With what we've with seen oil pricing, gas pricing at least for now have held up relatively well than somewhat more stable trading into the last year or so. So thinking back to some of the companies you partnered with I think for instance in the Gulf Coast a few years ago, were there any of those former partners active in any gas development that would have economics that could be attractive even in this range and I am assuming some of that those properties had pretty fast return of cash flow? Ladenburg Thalmann: With what we've with seen oil pricing, gas pricing at least for now have held up relatively well than somewhat more stable trading into the last year or so. So thinking back to some of the companies you partnered with I think for instance in the Gulf Coast a few years ago, were there any of those former partners active in any gas development that would have economics that could be attractive even in this range and I am assuming some of that those properties had pretty fast return of cash flow?

Noel I think that they are and certainly they and we are encouraged with $4 plus gas and with this arctic blast that we are enjoying here in Wyoming today in fact it was pointing to be below sea level last night that we will probably see some significant storage withdrawals and it’s pushing down into Texas. But as far as I was getting involved with a pure gas play at this time, mainly we are still focused on oil and believe that oil is going rebound that these resource plays that we are involved with both the Eagle Ford and the Bakken need certainly higher than 80 and in my opinion higher than $90 oil to continue. So I would expect to see some rigs being laid down.

And I guess maybe to broaden my question a little bit. Is there -- are you seeing anything on the conventional side of from where our peers posted in horizontal in the Bakken and in the Eagle Ford that looks like it could be reasonable evaluation reasonable return? Ladenburg Thalmann: And I guess maybe to broaden my question a little bit. Is there -- are you seeing anything on the conventional side of from where our peers posted in horizontal in the Bakken and in the Eagle Ford that looks like it could be reasonable evaluation reasonable return?

We are seeing some conventional and as I mentioned earlier that the candidates that we are seeking out here and I am fairly sure we are going to get has a lot of operational experience. So over the next year, you will see our company transform into an operational company as well and we are looking at conventional and especially in light of the higher costs on these resource plays and the lower price of oil.

And just any in the Buda -- any changes in the service environment that you've seen as we are on a few months of weaker oil prices? Ladenburg Thalmann: And just any in the Buda -- any changes in the service environment that you've seen as we are on a few months of weaker oil prices?

I don't think our operators have seen that yet, although I believe that it's coming. Everyone is going to have to be looking at ways to cut costs with these lower prices of oil or again they are going to be laying the rigs down, but that it takes time, it's only been short couple of months when the oil has really started to make it slide and where it will stop who knows but I would expect that service costs are going to start coming down.

And just the last one for the some of the deals you are looking at and entertaining, can you characterize what sort of maybe the land situation for these are, are any of these situations where there is lease expirations on the horizon that are driving a seller to act now or is it more just your seller is looking to exit for another reason? Ladenburg Thalmann: And just the last one for the some of the deals you are looking at and entertaining, can you characterize what sort of maybe the land situation for these are, are any of these situations where there is lease expirations on the horizon that are driving a seller to act now or is it more just your seller is looking to exit for another reason?

No I think it's more in the economics, it’s certainly not holding leases or having those type of observations but the economics even at $75-$78 oil, the economics and the prospects we are looking at is still attractive.

Thank you. And our next question comes from the line of Pedrick Hunter from Global Hunter. Your line is now open.

Just a question on the, in the Buda now there is a number of different operators down there, are you seeing I guess of the different operators drilling these wells and kind of a different manner or are they all following the same recipe or any differences there?

Just a question on the, in the Buda now there is a number of different operators down there, are you seeing I guess of the different operators drilling these wells and kind of a different manner or are they all following the same recipe or any differences there?

There are some differences specifically U.S. Enercorp tested both the upper zone of the Buda and the lower zone and as I mentioned, we’ve got a lot of data and that was part of the program we’re early in this program, we have got a lot of log well or well log data as well as other coring data. So, we’re still evaluating that and seeing if we can find the sweet spot. And as I mentioned, we’ve also fraced these wells and we thought that by fracing them we could unlock a little more of the oil, unfortunately the economics on the first couple of wells we’ve done has not been successful so far, although we’re making some oil that are not economic.

And then I just looking at the 2015, obviously there is lot of uncertainty with the commodity price environment, but any early thoughts there on just kind of how you are thinking about next year’s program either from a production growth or capital spending or just any kind of commentary you can provide?

And then I just looking at the 2015, obviously there is lot of uncertainty with the commodity price environment, but any early thoughts there on just kind of how you are thinking about next year’s program either from a production growth or capital spending or just any kind of commentary you can provide?

We do our budgeting through that -- the month of November we meet with our Board of Directors in December to approve our budget for next year. So I think it's a little premature to be counting on that. Although I would tell you this, generally I would expect to slowdown both in the Eagle Ford and the Bakken because of the lower oil prices.

: Thank you. And your next question comes from the line of Michael Kamperman from Prometheus Wealth Management. Your line is now open.

I have a few questions, okay. Let me start with the income statement, I noticed there was a $700,000 retirement/severance charge and that was in the general and administrative expenses in the third quarter, would you be expecting that those expenses for general and administrative expenses in the fourth quarter will be going back down towards the levels you had in the first and second quarter of this year? Prometheus Wealth Management: I have a few questions, okay. Let me start with the income statement, I noticed there was a $700,000 retirement/severance charge and that was in the general and administrative expenses in the third quarter, would you be expecting that those expenses for general and administrative expenses in the fourth quarter will be going back down towards the levels you had in the first and second quarter of this year?

This is Steve Richmond, yes, those were one-time charges and we would expect the G&A to go back down to what we experienced during the first and second quarters.

One more Steve question on the income statement, you guys didn’t have a very conservative depreciation and amortization charge in the third quarter went up a little bit per barrel of oil equivalent. I was expecting it might go down a bit after you had the asset sale in the Bakken and those proceeds were used to reduce the carrying cost of your oil and gas assets on the balance sheet, can you explain while you guys seem to have a more conservative approach than most other E&P companies? Prometheus Wealth Management: One more Steve question on the income statement, you guys didn’t have a very conservative depreciation and amortization charge in the third quarter went up a little bit per barrel of oil equivalent. I was expecting it might go down a bit after you had the asset sale in the Bakken and those proceeds were used to reduce the carrying cost of your oil and gas assets on the balance sheet, can you explain while you guys seem to have a more conservative approach than most other E&P companies?

As you know there are a lot of assumptions that go into that and a big factor is how you allocate your unevaluated leasehold cost to evaluate it once you're drilling wells and early on when we were drilling Bakken wells, we weren’t -- companies weren’t seeing five or six wells per unit as they are now and so almost all of our leasehold costs related to the Bakken properties have been moved over into that pool. In addition, we’re seeing -- we had some high costs relative to two Bakken wells or Buda wells that we drilled with U.S. Enercorp during the quarter and those costs certainly affected that rate as well.

Then Keith let me move on to more operations, you have on the Booth Tortuga area 11 legacy Austin Chalk wells, most of those wells when they originally were drilled were very successful. Do you guys know approximately how many more Austin Chalk drilling locations you have in that area? Prometheus Wealth Management: Then Keith let me move on to more operations, you have on the Booth Tortuga area 11 legacy Austin Chalk wells, most of those wells when they originally were drilled were very successful. Do you guys know approximately how many more Austin Chalk drilling locations you have in that area?

Do not, but again Mike that’s why we got into this play was because of the potential Contango has not talked about drilling additional Austin Chalk wells but my next call with them which is going to be in the short-term, I’ll certainly ask them about that potential as well as the Eagle Ford and the Buda.

Well, there are several Austin Chalk wells on the lease if you go to the Texas Railroad Commission’s Web site, there is several Austin Chalk wells on the lease they have produced over 300,000 barrels of oil equivalent and are still -- they are still trickling something out, so I would think the economics of that could be very positive. Prometheus Wealth Management: Well, there are several Austin Chalk wells on the lease if you go to the Texas Railroad Commission’s Web site, there is several Austin Chalk wells on the lease they have produced over 300,000 barrels of oil equivalent and are still -- they are still trickling something out, so I would think the economics of that could be very positive.

I am not an engineer, but I would assume that those would have been developed in previous years, but certainly it’s the worth a question to be asked.

Well, these wells have been drilled on this lease apparently back in the 80s, 90s and the mid-2000s, there had not been an Austin Chalk well drilled in the last few years on the lease. Moving on to Contango on their conference call they mentioned that they have plans to focus on the Eagle Ford in 2015, you’ve mentioned that they are coring the well in the Booth Tortuga to check the Eagle Ford. Can you explain what they are planning on doing different in drilling the Eagle Ford well now than what they did three years ago when they drilled the Eagle Ford well, because I know they have mentioned they talk to EXCO Resources and have some insights from there? Prometheus Wealth Management: Well, these wells have been drilled on this lease apparently back in the 80s, 90s and the mid-2000s, there had not been an Austin Chalk well drilled in the last few years on the lease. Moving on to Contango on their conference call they mentioned that they have plans to focus on the Eagle Ford in 2015, you’ve mentioned that they are coring the well in the Booth Tortuga to check the Eagle Ford. Can you explain what they are planning on doing different in drilling the Eagle Ford well now than what they did three years ago when they drilled the Eagle Ford well, because I know they have mentioned they talk to EXCO Resources and have some insights from there?

Yes and I can give you some general terms the profit that was used and some of the more escrow wells were about double of what we used as well as some of the pressures and they were also targeting a different entry way into the formation. So there have been some new developments and we have been keeping a breadth as well as Contango has and we think that we have additional potential in the Eagle Ford and that’s what we are looking at and will be talking about over the next month on our budgeting for next year.

Staying on the Eagle Ford, Contango has a slide that shows in the Zavala, Dimmit area that the upside PV-10 potential and that is probably at a higher oil price in their slide than we have right now. But the upside PV-10 value for them if they drill this out would be $626 million. I mean most of that you guys have a 30% working interest there. Do you guys have any idea how many successful Eagle Ford wells you would have to drill in 2015 before you would be in a position to book perhaps a significant increasing reserves to that? Prometheus Wealth Management: Staying on the Eagle Ford, Contango has a slide that shows in the Zavala, Dimmit area that the upside PV-10 potential and that is probably at a higher oil price in their slide than we have right now. But the upside PV-10 value for them if they drill this out would be $626 million. I mean most of that you guys have a 30% working interest there. Do you guys have any idea how many successful Eagle Ford wells you would have to drill in 2015 before you would be in a position to book perhaps a significant increasing reserves to that?

I don’t know that’s an engineering question Mike, and certainly if we you had a couple you would be getting some PUD developments in the area and depending on who is around you and how much influence the engineers would give you potential for that would be that question and hopefully we will be visiting that next year some time.

One last question, the stock is significantly under value relative to your peers in the marketplace. What plans you guys have to try to increase the value of the shares for shareholders? Prometheus Wealth Management: One last question, the stock is significantly under value relative to your peers in the marketplace. What plans you guys have to try to increase the value of the shares for shareholders?

So I think just bringing on this new COO and giving him the operations where we will have more control on our future and predictability about what we can and cannot do, although I must say that I have been watching a lot of our peers and a lot of them are getting significant reductions as well. So I guess most recent parts company as whatever the saying is. But we are disappointed in the price of stock. And we understand there are some things that we have to get out there and do and show and we are coming of a record quarter, record revenues and certainly the cash flow was significant but I guess the message is being sent that we have to get into operations or change something or find the next Bakken and we are pursuing all of those. And I think that we are going to be successful in those as well.

Thank you. And our next question comes from the line of Mike Jacobson from Oak Ridge Financial. Your line is now open.

Reading through the 10-Q I see that currently we only have hedges through December of this year, a question, have you put any on for 2015 and then secondarily has the Board looked at positively monetizing some of them? Thank you.

Reading through the 10-Q I see that currently we only have hedges through December of this year, a question, have you put any on for 2015 and then secondarily has the Board looked at positively monetizing some of them? Thank you.

Sure Mike the answer is no. We do not have any hedges in 2015. We missed one, we were very close to pulling the trigger on the $90 floor 105 and we missed it by about a dollar. And as far as monetizing the hedges we have not discussed that with the Board at the last quarter meeting but we have had discussions in the past about monetizing and pretty much the reason that we put on hedges is not for a financial gain in the short-term but it’s to protect our cash flow on our drilling funding. So that’s where we are right now. I think the last month we received over $100,000 because the price of oil was down in our 600 barrel a day hedge. And who knows what’s going to happen for this month and the next month but certainly in the short-term oil prices certainly looked that being under some downward pressure.

I agree. With the price of the stock at some point in the strong cash position does the Board consider buying shares back in the open market?

I agree. With the price of the stock at some point in the strong cash position does the Board consider buying shares back in the open market?

Don’t think they would consider right now if we had to use of debt and that’s besides our cash flow and it depends on what our drilling programs but certainly we will be talking about the stock price in our December meeting. I am sure of that.

Thank you. And our next question comes from the line of George Gaspar, a private investor. Your line is now open.

Thank you. Keith just a little ongoing from one of the previous questions regarding the strategy that Contango is using on the Beeler 24 apparently trying doing this Eagle Ford penetration versus Buda. Do I understand and they implied in their release that they are really going to concentrate on Eagle Ford versus the Buda going forward, and I was kind of surprised to see them make that statements and basically they don’t have a lot of -- there isn’t much indication even on Beeler 24 that there is reason to suggest that going forward the concentration would be on Eagle Ford versus Buda wells. Can you explain some of what the strategy shift is here and actually does that appear as though when you are looking forward in this Beeler 20, is it the 22 that you are going to drill later this year and that apparently is going to be in Eagle Ford well also?

No that's going to be a Buda well. And that George, what we did going in is you might recall early on our laterals were only 4,000 to 4,200 but more recently there is to the extent these laterals up to the 9,000 to 9,500 feet. And so I think that the plans going forward is to watch the production and have the performance of Buda wells go and certainly watch the price of oil as well. I mean oil is not going to go anywhere and who wants to produce oil at 75 when I am believer anyway and I believe Contango is that we are going to see significantly higher price in the mid-term if not the shorter term. The other thing George is we have a lot of information and I guess the analogy I would use is the Bakken. When we first got in rigging up there they were testing new completion methods and how much propane to use and some of those wells became economic as the play developed if you will or matured. And I think that we certainly have the potential down there. We know that the Eagle Ford is at least up at the KM Ranch we have some pretty good wells that are near us if not within a mile or two of it so we still see potential there and I believe that Contango working with us is willing to put some money into that and see if figured out the new recipe.

And just a technical question again, in terms of the 24 testing in the Eagle Ford I assume that's in the vertical. And it’s a portion of the well yet, if there is some indications, does this get completed on a horizontal continuation in and with two pillars in order to really appropriately producing Eagle Ford versus the open-haul approach in Buda?

Well I think that both the Eagle Ford and the Buda and even possibly the Austin Chalk they are all potentials to come off that vertical as you know that you can go in and stop the casting and go out in any of those. So the answer would be yes that there is the potential to go out and do as a lateral off to anyone of those zones.

And in terms of trying to do the Eagle Ford and depending upon results, is there a way to really cast the well down into the Buda also or does -- would that require another well being drilled at that location?

Well I am not an engineer, but I think that you are going to target one of the other and there is actually the majority is still out as where those fracs go and they maybe going up into the Austin chalk and some of the fracs maybe going down and penetrating the Buda but I think predominantly when you are drilling an Eagle Ford well, you want to stay in what they call the sweet zone. And one of the things I might mention is all of the wells we drilled were tow up and the successful wells that escrow has had is tow down. And so that's another thing that they are discussing is using the tow down method as well as additional propane pressure. So like we were pleasantly surprised with the Buda, we may have another pleasant surprise with the Eagle Ford.

And then a question on this private partnership acquisition of the U.S. Enercorp participation, now the two wells obviously that were reported on here have been disappointing in the third is in the process of drilling the Eagle Ford, what is your commitment and with these marginal results on the first two and hopefully there is something better here on the third but beyond these particular three wells, what is your obligation going forward under this partnership into next year or can't that be scoped at this time?

Yes, the continuous drill obligation on the farming acreage that we have to drill a well every 180 days. So after the completion of this well, we've got 5.5 months to evaluate the results and decide if we want to continue on it and drill another well possibly a shallower well or to a different formation or to continue with depending on the success with this well, if you want to do another well in the same formation.

And then you didn't mention anything about there might not be any information about Crested Butte anything going on in the moly project area in terms of an update?

Well we continue to try to cut our costs the best we can by doing modifications to water treatment plants as well as the site and we are continuing down to the process to be -- the permitting process so we can enter into a scoping agenda for sometime hopefully next year but we are committed to the permitting we are also looking for partners, we are looking for joint venture partners and again much like oil the price of moly has taken a bit of a weakness as well, it's down to around $10 per pound.

And then your pursuits that you have going for a COO, I think you implied that you were hopeful of having this concluded by the end of the year, is that a specific target that you are looking at?

I am confident that we will have it filled by the end of the year.

Thank you. And there are no further questions at this time. This concludes today's conference. You may now disconnect.