Item 2.06: Material Impairments

On July 9, 2012, the Company entered into a Letter of Intent to sell its Remington Village apartment complex in Gillette, Wyoming for $16.0 million. The transaction is subject to due diligence and the execution of definitive legal documents.

Remington Village is classified in the historical financial statements as held for sale and its operations have been reflected as discontinued operations. The current cost basis for Remington Village is $17.73 million. After selling costs, the Company expects to net $15.76 million from this sale. Accordingly, the Company expects to record a non-cash impairment of $1.97 million in the second quarter of 2012.

Item 9.01. Financial Statements and Exhibits.

Exhibit 99.1. Press Release dated July 12, 2012.

Safe Harbor Statement

Information provided in this report contains statements that are "forward-looking" statements, usually containing the words "will," "anticipates," "believe," "estimate," "project," "expect," "target," "goal," or similar expressions. Forward looking statements relate to, among other things, U.S. Energy's entry into a definitive agreement regarding the proposed sale, expected proceeds from the sale and the related impairment charge. These statements are made pursuant to the safe harbor provision of the Private Securities Litigation Reform Act of 1995. Forward-looking statements inherently involve risks and uncertainties that could cause actual results to differ materially from the forward-looking statements. U.S. Energy may not be able to complete the proposed transaction under the terms contemplated or at all, and the anticipated impairment charge could be greater than the company expects. Other factors that could cause or contribute to differences between the forward-looking statements and actual results include, but are not limited to, future trends in commodity and/or mineral prices, the availability of capital, competitive factors, and other risks described in the Company's filings with the SEC (including, without limitation, the Form 10-K for the year ended December 31, 2011, and the Form 10-Q for the quarter ended March 31, 2012).

The forward-looking statements referenced above are made only as of the date of this report. We undertake no obligation to update or revise the forward-looking statements, whether as a result of new information, future events or otherwise.