U.S. Energy Corp. (USEG): PESTLE Analysis [Nov-2025 Updated]

You're holding the PESTLE analysis for U.S. Energy Corp. (USEG), and the story isn't about legacy oil anymore; it's a high-stakes pivot to industrial gas and carbon management. The company is defintely banking on its new $15 million gas processing plant and the Kevin Dome project, which is set to sequester about 240,000 metric tons $\text{CO}_2$/year. With Q3 2025 oil and gas sales dropping to $1.7 million, the shift is urgent, but the strong balance sheet-zero debt and roughly $11.4 million in available liquidity-gives them the runway. We need to look closely at how the pro-fossil fuel political environment clashes with the growing societal demand for carbon solutions to map out the real risks and opportunities for this transition.

U.S. Energy Corp. (USEG) - PESTLE Analysis: Political factors

Pro-fossil fuel administration prioritizes domestic oil/gas production and deregulation.

The political environment in 2025 is defintely favorable for U.S. Energy Corp., following the new administration's clear pivot toward fossil fuel dominance. The core policy is simple: maximize domestic production and strip away regulatory hurdles. On January 20, 2025, the President signed executive orders declaring a National Energy Emergency, directing agencies like the Department of Energy (DOE) and the Environmental Protection Agency (EPA) to remove existing regulatory barriers.

This push includes opening up previously restricted areas. For instance, the administration is actively pursuing new oil and gas drilling off the coasts of California and Florida, and a proposed schedule includes up to 21 sales off Alaska's coastline between 2026 and 2031. This signals a long-term commitment to expanding the addressable market for domestic producers like USEG. The goal is clear: cement the U.S. position as the world's largest oil and gas producer, a title it already holds.

Here's the quick math on the political tailwinds:

• Federal Land Access: Increased leasing and drilling permits on federal lands are expected.
• Regulatory Rollbacks: The EPA is scaling back environmental regulations, which will reduce compliance costs for existing operations.
• Export Focus: Legislation like the 'Unlocking our Domestic LNG Potential Act' is being pushed to streamline the export permitting process for liquefied natural gas (LNG), which will increase global demand for U.S. natural gas.

Streamlined permitting for energy projects accelerates development timelines for infrastructure.

One of the most immediate opportunities for USEG is the acceleration of infrastructure projects, especially pipelines and LNG facilities. The Federal Energy Regulatory Commission (FERC) and Congress are actively working to cut red tape. In November 2025, for example, the House Natural Resources Committee approved the Standardizing Permitting and Expediting Economic Development Act (SPEED Act) in a 25-18 vote. This Act is designed to create clear milestones and accountability for permitting all types of energy projects, which should cut down on the multi-year delays that plague new construction.

Also, the EPA announced new guidance in September 2025 on New Source Review (NSR) preconstruction permitting. This change provides flexibility to start certain non-emissions-related construction activities, like installing cement pads, before obtaining the full Clean Air Act permit. This small change allows USEG to shave months off project timelines. FERC is also exploring 'blanket authorizations' for certain activities at LNG plants and hydroelectric projects, further fast-tracking maintenance and upgrades. Getting projects online faster means revenue starts sooner.

Uncertainty exists around the future of Inflation Reduction Act (IRA) tax credits for energy investments.

While the political winds favor fossil fuels, the clean energy side of the ledger-which includes some of USEG's nascent carbon capture and storage (CCS) initiatives-faces significant uncertainty. The fate of the Inflation Reduction Act (IRA) tax credits is being debated by the new administration and Congress, especially as they look to address the expiration of the Tax Cuts and Jobs Act (TCJA) provisions at the end of 2025.

This policy volatility is already having a tangible effect. Since the new administration took office, $15.5 billion in new clean energy projects and factories have been canceled, including $1.4 billion in May 2025 alone. This uncertainty is preventing financing deals because investors can't reliably calculate future returns on projects relying on credits like the Production Tax Credit (PTC) or Investment Tax Credit (ITC). The good news is that business-facing credits, such as the enhanced 45Q tax credit for carbon capture and the 45V credit for clean hydrogen, have stronger bipartisan support and are less likely to be fully repealed. Still, any changes to the structure or value of these credits could immediately impact the internal rate of return (IRR) on USEG's clean energy investments.

Geopolitical tensions continue to cause oil price volatility, affecting legacy oil sales.

The global political landscape is a constant source of volatility for crude oil prices, which directly impacts USEG's legacy oil sales revenue. Geopolitical risk premiums remain high, driven by conflicts in the Middle East and the continued impact of sanctions on Russian energy exports.

The market reaction to these tensions is swift and sharp. For example, on November 14, 2025, WTI crude jumped 2.39% to settle at $60.09 per barrel, and Brent crude rose 2.19% to $64.39 per barrel in a single day due to supply disruption fears. Earlier in the year, Middle East tensions saw Brent crude spike from $69/b to $79/b in the week of June 12 to June 19, 2025. For the near term, analysts project a wide price range of $50-$90 per barrel through 2026, reflecting this persistent instability. This table shows the recent price swings driven by political events:

This volatility means USEG must maintain a robust hedging strategy and keep spare capacity flexible to capitalize on price spikes, but it also increases the risk profile for long-term capital planning.

U.S. Energy Corp. (USEG) - PESTLE Analysis: Economic factors

Q3 2025 Oil and Gas Sales Dropped to \$1.7 Million

The economic landscape for U.S. Energy Corp. is defined by a deliberate transition away from traditional oil and gas, which is clearly reflected in the Q3 2025 results. Total oil and gas sales for the quarter ended September 30, 2025, were approximately $1.7 million. This represents a significant drop from the $5.0 million reported in the same quarter of the prior year, a decrease that is a direct consequence of the Company's asset divestiture program executed throughout 2024. The remaining hydrocarbon production for Q3 2025 was approximately 35,326 BOE (barrels of oil equivalent), with oil sales making up the vast majority at 91% of the total revenue. This dwindling revenue stream underscores the urgency and necessity of the Company's pivot to industrial gas. Honestly, the legacy assets are now just a bridge to the new business model.

Here's the quick math on the Q3 2025 production and revenue:

Strong Balance Sheet is a Capital Project Anchor

Despite the near-term revenue decline, the Company maintains a strong financial foundation, which is crucial for funding its new capital-intensive industrial gas project. U.S. Energy Corp. operates with zero outstanding debt as of Q2 2025, a rare position for a growth-focused energy company. This debt-free status, plus a disciplined approach to capital, provides significant flexibility. The Company reported approximately $11.4 million in available liquidity at the end of the third quarter of 2025. This cash position is the primary anchor for the transition, allowing the Company to fund the approximately $10-$15 million initial processing facility without taking on new debt immediately.

Global Helium Demand Provides a Premium Market

The shift to industrial gas is driven by a highly favorable global market for helium, a non-hydrocarbon product. Global helium demand is projected to be robust, expected to increase from 5.9 BCF in 2023 to 8.7 BCF in 2030. This surge is defintely tied to high-growth sectors like semiconductor manufacturing, aerospace, and healthcare. The new industrial gas product is entering a premium market where competitors have secured contracts exceeding $1,000/mcf for high-purity helium with major entities like NASA.

The Company's Montana project, which targets a high-value composition of 0.5% helium and 85% CO2, is positioned to capitalize on this demand. The initial processing facility is designed to provide capacity of roughly 8.0-10 MMcf per day, which could translate to annual helium revenues between $15-$20 million once fully operational.

• Demand is set to double over the next decade.
• Helium is critical for semiconductor manufacturing.
• Projected annual helium revenue: $15-$20 million.

Fiscal Uncertainty from Interest Rates and Tax Policy

The broader U.S. economic environment introduces fiscal uncertainty, particularly for large capital projects like the industrial gas facility. The projected Federal funds rate for the Q4 2025 average is around 5.3%, which makes financing capital expenditures (CAPEX) more expensive, even for a company with no current debt if they were to seek a line of credit or bond financing for future phases. The total well-to-well cycle CAPEX for the helium project is estimated at $20-$25 million.

Also, a new federal tax bill, the One Big Beautiful Bill Act (OBBBA), was enacted on July 4, 2025, fundamentally changing clean energy credits. While the OBBBA curtailed credits for traditional wind and solar, it extended the Section 45Z clean fuel production credit through 2029. What this estimate hides, however, is the complexity of the new tax landscape. The Company's plan to use Class II injection wells for Carbon Sequestration (CO2) is intended to qualify for tax credit incentives, but the new, complex Foreign Entity of Concern (FEOC) rules, which apply to taxable years beginning after July 4, 2025, create administrative hurdles and risk for all energy projects. The fiscal uncertainty is less about the tax credit's existence and more about the administrative burden and compliance risk of the new rules.

Next Step: Finance must model the helium project's internal rate of return (IRR) using a discounted cash flow (DCF) analysis that incorporates a 5.3% cost of debt proxy and the new OBBBA tax credit compliance costs by year-end.

U.S. Energy Corp. (USEG) - PESTLE Analysis: Social factors

Growing societal demand for carbon management solutions supports the $\text{CO}_2$ sequestration business model.

The social pressure to address climate change is no longer a niche concern; it's a core driver of corporate strategy and a major investment theme. This growing societal demand for carbon management solutions directly validates U.S. Energy Corp.'s (USEG) pivot to $\text{CO}_2$ sequestration.

The global Carbon Management System Market is estimated at \$16.11 billion in 2025, and it's on a clear upward trajectory, forecast to grow at a Compound Annual Growth Rate (CAGR) of up to 15.07% through 2030. North America, where USEG operates, holds a significant market share of over 32.7% in 2025. This isn't just a regulatory play; it's a massive, capital-driven shift.

For USEG, this translates into a clear revenue opportunity. The company is actively sequestering an equivalent of approximately 240,000 metric tons of $\text{CO}_2$ annually across two wells in Montana. Crucially, the federal 45Q tax credit offers up to \$85 for every tonne of $\text{CO}_2$ stored permanently, making the $\text{CO}_2$ a valuable resource, not just a waste product. The EPA Monitoring, Reporting, and Verification (MRV) plan for this was submitted in October 2025, which is the immediate next step to unlock those federal carbon credits. That's a clear path to monetizing an environmental solution.

Increased electricity demand from AI data centers and electrification drives the need for stable energy sources.

The massive, and frankly, underestimated, energy appetite of Artificial Intelligence (AI) data centers is creating a structural demand shock in the power market. This is a huge social and economic trend that requires stable, 24/7 energy sources, which USEG's Enhanced Oil Recovery (EOR) and industrial gas projects can help address.

US data-center power demand is forecast to rise to 61.8 GW in 2025, representing a 22% increase from the prior year. By 2027, global data center power demand is expected to increase 50% compared to 2023 levels, with some forecasts projecting an increase of up to 165% by 2030. Deloitte estimates data centers will consume about 536 terawatt-hours (TWh) globally in 2025. This is a serious demand spike. The sheer scale of this growth means utilities and large corporations are desperate for reliable, dispatchable power.

Here's the quick math on the demand surge:

USEG's strategy of utilizing $\text{CO}_2$ from its industrial gas operations for EOR on legacy oil assets in Montana provides a stable energy source while simultaneously capturing and sequestering the $\text{CO}_2$. It's a pragmatic, two-for-one solution to the energy transition problem.

USEG's shift to a low-impact, non-hydrocarbon helium source aligns with environmental, social, and governance (ESG) investor focus.

ESG is no longer a check-the-box exercise; it's a capital allocation filter for firms like BlackRock. USEG's core asset, the Kevin Dome, is a major advantage here because its gas resource is naturally non-hydrocarbon-dominated. This makes the helium a 'cleaner' industrial gas product.

The gas composition at Kevin Dome is approximately 85.2% $\text{CO}_2$ and 0.47% helium. The helium is extracted from a $\text{CO}_2$-rich system, not a methane or conventional oil/gas system. This allows the company to position itself as a 'U.S.-based supplier of clean helium' while the primary byproduct, $\text{CO}_2$, is captured and sequestered. This is a strong alignment with the 'E' in ESG, as it reduces the carbon intensity of a critical industrial gas supply.

This is a defintely smart way to attract capital in the current environment.

• Extract critical helium (1.28 BCF net resources confirmed).
• Capture the primary byproduct (443.8 BCF net $\text{CO}_2$ resources).
• Sequester $\text{CO}_2$ for federal tax credits (up to \$85/tonne).

Local community acceptance in Montana is crucial for the Kevin Dome project's long-term operational stability.

In the energy business, social license to operate is as important as a drilling permit. For the Kevin Dome project, local community acceptance in Montana is a non-negotiable factor for long-term operational stability.

The state of Montana has a specific legal framework that makes local consent critical. State law dictates that the surface owner owns the pore space, and a carbon storage project requires the consent of 60 percent of the pore space owners. This means that USEG must engage effectively with landowners and local officials, not just state and federal regulators.

Previous federal studies on the Kevin Dome project already set a precedent for extensive stakeholder engagement, emphasizing 'amicable relationships with local residents' through open-house meetings and regular communication. USEG is benefiting from Montana's relatively receptive geology and less regulatory gridlock compared to other CCUS hubs, but this only holds if the company maintains that positive social standing. Losing local trust can halt a project faster than any regulatory delay.

U.S. Energy Corp. (USEG) - PESTLE Analysis: Technological factors

Core technology is Carbon Capture and Storage (CCS) for permanent $\text{CO}_2$ sequestration

The core of U.S. Energy Corp.'s technological pivot is a full-cycle, integrated industrial gas platform that hinges on Carbon Capture and Storage (CCS). This isn't just a side project; it's central to monetizing the massive $\text{CO}_2$ resource at the Kevin Dome in Montana. The company has strategically acquired an active Class II injection well, which is already permitted by the EPA under the Safe Drinking Water Act's Underground Injection Control Program. This infrastructure is critical for the secure, permanent sequestration of the $\text{CO}_2$ separated from the raw gas stream.

Honestly, this dual-focus technology-extracting high-value helium while simultaneously sequestering the co-produced $\text{CO}_2$-is what makes the economics work. It creates two distinct revenue streams: one from the sale of industrial gas and another from carbon management. The company is actively advancing its Monitoring, Reporting, and Verification (MRV) plan with the EPA, a key step toward potentially realizing $\text{CO}_2$ tax credits.

The captured $\text{CO}_2$ stream will also serve a secondary purpose: Enhanced Oil Recovery (EOR) on U.S. Energy Corp.'s legacy oil and gas assets, creating a vertically integrated platform.

New \$15 million gas processing plant is being built to separate high-value helium and $\text{CO}_2$ streams

To be clear, the entire transition hinges on the new processing facility. U.S. Energy Corp. is moving forward with the construction of its initial gas processing plant at the Kevin Dome, with capital deployment expected to begin in the third quarter of 2025 (Q3 2025) or early 2026.

The estimated cost for this new facility is approximately \$15 million. This is a significant capital expenditure, but it's funded primarily through the company's strong balance sheet and a modest, strategic use of debt. The plant's design is finalized, and it's built for scale, targeting a processing capacity of approximately 17 million cubic feet of raw gas per day (17 MMcf/d).

Here's the quick math on the plant's function:

• Process capacity: 17 MMcf/d of raw gas.
• Output 1: High-purity helium for sale to third-party end-users.
• Output 2: Recycled $\text{CO}_2$ for sequestration or Enhanced Oil Recovery (EOR).

The facility is expected to be operational and deliver its first revenues in the first half of 2026.

Successful flow testing of wells confirms a premium gas composition of $\sim$0.5% helium and $\sim$85% $\text{CO}_2$

The technology is only as good as the resource it processes, and the reservoir composition is defintely premium. Successful flow testing of the three high-deliverability industrial gas wells drilled in the $\text{CO}_2$ and helium-rich Duperow Formation confirmed a high-value gas composition.

The combined peak production rate from these three wells reached a substantial 12.2 MMcf/d. This validates the quality and scale of the resource, which is crucial for securing helium off-take agreements.

To preserve reservoir value until the processing infrastructure is online, flows were subsequently restricted to about 8.0 MMcf/d and then shut in.

The premium composition is detailed below, which is well above the commercially viable threshold for helium (generally considered to be 0.3%):

Advanced well drilling and reservoir modeling are key to monetizing the 1.28 BCF net helium resource

The technological sophistication extends to the upstream side, where advanced well drilling and reservoir modeling are essential to converting contingent resources into proved reserves. The company's focus is on the Duperow Formation within the Kevin Dome structure, a known geologic structure for its helium-rich and $\text{CO}_2$-dominated gas systems.

A third-party resource assessment by Ryder Scott confirms the scale of the asset, validating the company's development strategy. This report, based on the initial target development area, provides the foundation for long-term monetization planning.

The confirmed contingent resources are significant, providing a clear path to becoming a major U.S.-based industrial gas supplier:

• Net Helium Resources: 1.28 billion cubic feet (BCF).
• Net $\text{CO}_2$ Resources: 443.8 BCF.

Monetizing this 1.28 BCF net helium resource requires precise drilling and reservoir management, which U.S. Energy Corp. is executing on with three high-deliverability wells completed in 2025. This technical execution is the biggest near-term opportunity for unlocking shareholder value.

U.S. Energy Corp. (USEG) - PESTLE Analysis: Legal factors

New Administration is Eliminating or Modifying Numerous Biden-era Environmental and Climate Regulations

You need to be a trend-aware realist about the shifting sands in Washington. The new administration is actively pursuing a deregulatory agenda, which creates both short-term tailwinds and long-term uncertainty for U.S. Energy Corp. (USEG). In February 2025, the Council on Environmental Quality (CEQ) issued a memorandum aimed at expediting permitting approvals under the National Environmental Policy Act (NEPA). This was quickly followed by an interim final rule in April 2025 that rescinded the CEQ's own NEPA regulations, which is a clear move to streamline the process for energy projects.

However, the biggest legal risk and opportunity centers on the Environmental Protection Agency (EPA). In September 2025, the EPA proposed to effectively end the Greenhouse Gas Reporting Program (GHGRP) for most industrial sectors, which is a massive deregulatory push. This could save the petroleum and natural gas industry an estimated $256 million annually in compliance costs, but it also creates a direct conflict with carbon credit monetization.

The core issue is that the federal Section 45Q tax credit for carbon capture and storage is 'inextricably' tied to the GHGRP's Monitoring, Reporting, and Verification (MRV) requirements. If the GHGRP is eliminated, the legal framework for claiming those credits is immediately jeopardized. You are seeing a classic political whiplash scenario. Regulatory uncertainty is the new compliance cost.

USEG is Actively Pursuing Class II Injection Well Permits for $\text{CO}_2$ Disposal

U.S. Energy Corp. has made a key move to de-risk its Carbon Capture, Utilization, and Storage (CCUS) strategy in Montana. The company closed a strategic land acquisition in April 2025 for $0.2 million, which included an active Class II injection well in the Kevin Dome structure. This well is already permitted by the EPA under the Safe Drinking Water Act's Underground Injection Control Program (UIC), which accelerates their ability to sequester $\text{CO}_2$ from the upcoming industrial gas processing facility.

While that initial well is secured, the company is still expanding its permitted infrastructure. Management anticipates receiving additional Class II injection permits in June 2025. This is a critical near-term legal milestone, as the company plans to sequester approximately 250,000 metric tons of $\text{CO}_2$ annually once the processing plant is operational.

Compliance with EPA Monitoring, Reporting, and Verification (MRV) is Essential for Carbon Credit Monetization

The ability to monetize the Section 45Q tax credit-which is vital for the economics of the Montana Industrial Gas project-relies entirely on a successful, EPA-approved Monitoring, Reporting, and Verification (MRV) plan. The company intends to submit its MRV plan to the EPA for the Class II well in the second quarter of 2025 (Q2 2025), with a more specific target of July 2025.

This MRV plan must meet the requirements of EPA's Subpart RR of the Greenhouse Gas Reporting Program (GHGRP) or an approved alternative standard, like the International Organization for Standardization (ISO) standard, to qualify for the tax credit. The proposed elimination of the GHGRP by the EPA in September 2025 is a massive headwind here, requiring a defintely complex legal and lobbying strategy to ensure the 45Q tax credit remains viable for the project. If the MRV framework is removed, the entire financial model for the CCUS platform is at risk.

Here is the quick math on the compliance timeline:

The Company Faces Ongoing Legal and Compliance Costs Associated with its Legacy Oil and Gas Operations

While U.S. Energy Corp. is pivoting to industrial gas and CCUS, its legacy conventional oil and gas operations still carry material legal and financial liabilities. The company is actively divesting non-core assets, which is the right strategic move to reduce future abandonment and compliance costs. In 2024, these divestitures generated $13.5 million in net sales proceeds.

However, the cost of managing the remaining portfolio is clear in the financial statements. For the full year 2024, the Lease Operating Expense (LOE), which includes significant compliance-related costs, was $11.2 million, or $26.83 per Boe. This cost is still substantial, and in Q2 2025, the LOE per barrel actually rose to $32.14 per BOE on total LOE of $1.6 million, suggesting the remaining assets are higher-cost to operate and maintain compliance on.

The company's strategic shift also resulted in a net loss of $25.8 million for 2024, largely driven by a $11.9 million impairment of oil and natural gas properties and a $5.0 million loss on the sale of assets, which is the financial realization of shedding legacy legal and environmental liabilities.

Key financial markers of the legacy compliance burden:

• 2024 Lease Operating Expense: $11.2 million.
• Q2 2025 Lease Operating Expense per barrel: $32.14 per BOE.
• 2024 Cash General and Administrative Expense: $6.9 million.

The legal team must now focus on navigating the new deregulatory environment while simultaneously managing the financial tail of the old business.

U.S. Energy Corp. (USEG) - PESTLE Analysis: Environmental factors

The Kevin Dome project is projected to sequester approximately 240,000 metric tons $\text{CO}_2$/year

U.S. Energy Corp. (USEG) is making a clear move into the carbon management space, shifting its environmental profile from a traditional oil and gas operator to an industrial gas company with integrated carbon capture, utilization, and storage (CCUS). This is a smart pivot.

The core of this strategy is the Kevin Dome project in Montana, which is designed to permanently sequester the carbon dioxide ($\text{CO}_2$) separated from the helium-rich gas stream. The company has achieved a sustained gas injection rate of 17.0 MMcf/d (million cubic feet per day) across two company-owned injection wells as of late 2025. This rate is projected to permanently sequester approximately 240,000 metric tons of $\text{CO}_2$ annually. They submitted the crucial Monitoring, Reporting, and Verification (MRV) plan to the Environmental Protection Agency (EPA) in October 2025, which is the necessary step to qualify for federal carbon credits, a key revenue stream.

Here's the quick math on the 2025 CCUS infrastructure development:

• Injection Capacity: Sustained rate of 17.0 MMcf/d $\text{CO}_2$.
• Annual Sequestration: Approximately 240,000 metric tons $\text{CO}_2$/year.
• Injection Wells: Two company-owned, active Class II permitted injection wells.

The strategy reduces the environmental footprint by producing non-hydrocarbon helium, minimizing methane emissions

The company's focus on non-hydrocarbon industrial gas production inherently lowers its environmental footprint compared to conventional oil and gas operations. The gas extracted from the Kevin Dome is unique, containing a high concentration of $\text{CO}_2$ (around 85%) and a valuable amount of helium (around 0.5%), but only a limited hydrocarbon stream. Most U.S. helium production is tied to heavy hydrocarbon gas streams, meaning it's a byproduct of methane-heavy natural gas extraction. That's a big difference.

By extracting helium from this $\text{CO}_2$-rich, non-hydrocarbon resource, U.S. Energy Corp. bypasses the significant methane emissions (a potent greenhouse gas) typically associated with traditional natural gas processing. This low-impact resource aligns with the growing market demand for sustainable industrial solutions, which is defintely a long-term competitive advantage.

Deregulation may reduce immediate compliance costs but increases long-term climate transition risk

The current U.S. federal policy environment, marked by a strong deregulatory push in 2025, aims to reduce environmental compliance costs for the energy sector. This is a short-term financial positive for companies with legacy hydrocarbon assets, like U.S. Energy Corp.'s oil and gas reserves, which had a proved developed producing (PDP) PV-10 of approximately $20.5 million as of October 1, 2025. The rollback of regulations, such as the proposed repeal of the 2009 EPA Endangerment Finding, can streamline operations and lower immediate capital expenditures on pollution controls.

But honestly, this deregulation increases the long-term climate transition risk. While a company saves money now, it faces greater exposure to future global carbon border adjustments, investor pressure, and state-level mandates that are counteracting federal policy. The estimated annual net benefits at risk from these regulatory rollbacks across the U.S. energy and environment sectors are a massive $153.3 billion. U.S. Energy Corp.'s CCUS strategy is a hedge against this, positioning them for a lower-carbon future despite the federal policy shift.

Climate change-driven extreme weather events increasingly impact energy infrastructure and operational resilience

Climate change is no longer an abstract risk; it's an operational reality for energy companies. Extreme weather events are becoming more frequent and intense, directly threatening energy infrastructure. The 2025 'Danger Season' saw a brutal June heat wave across the Midwest and Northeast, affecting over 70 million people, and the year included multiple Category 5 hurricanes. These events cause power outages, supply chain disruptions, and physical damage to assets.

For U.S. Energy Corp., whose core new assets are concentrated in the Kevin Dome structure in Montana, the risks manifest as:

• Supply Chain Disruption: Extreme weather elsewhere in the U.S. can delay the delivery of critical components for the new processing plant, which is budgeted at approximately $15 million and scheduled for construction in late 2025.
• Operational Resilience: While Montana is less prone to hurricanes, it faces increasing risks from drought, wildfires, and extreme cold snaps, which can disrupt field operations and transport logistics.

The private sector, including major U.S. corporations, now views climate engagement as a core business resilience strategy, citing the rising risks from extreme weather. You have to factor in the cost of hardening your infrastructure against these events, even if the federal government is downplaying the risk.