Item 1.01. Entry into a Material Definitive Agreement

On August 24, 2009, U.S. Energy Corp. ("USE") and Brigham Oil & Gas, L.P. a Delaware limited partnership wholly-owned by Brigham Exploration Company (a Delaware corporation), entered into a Drilling Participation Agreement (the "DPA"). The DPA provides for USE and Brigham to jointly explore for oil in the Bakken and Three Forks formations, in up to 19,200 gross acres in a portion of Brigham's Rough Rider prospect in Williams and McKenzie Counties, North Dakota.

The DPA expires on December 31, 2010, however, USE will continue to hold the working interests it earns prior to expiration.

USE's total drilling and completion expenditures for the initial six wells are expected to be in the range of $17.5 million to $19 million.

For further information, please see USE's press release of August 26, 2009, attached to this Report.