US Energy Corp. Nears Completion of Industrial Gas Processing Plant with 17 MMCF Capacity

U.S. Energy Corp. is developing an industrial gas processing plant with a capacity of 17 MMCF. The plant is expected to be online soon, marking a significant step towards helium production in the US. This development is part of the company's ongoing efforts to expand its operations in the energy sector.

U.S. Energy Corp. (NASDAQ: USEG) has made significant strides in its industrial gas processing plant development, with a capacity of 17 MMCF (million cubic feet) expected to come online soon. This marks a pivotal moment in the company's efforts to expand its operations in the energy sector and meet growing global demand for helium, a critical component in semiconductor production.

The company has been actively drilling new wells and finalizing plant designs. In 2025 alone, USEG has worked over two existing wells and drilled two new wells, totaling four wells expected to produce sufficient volume to utilize the upcoming processing plant. The most recent wells were budgeted at $1.3 million per well, a significant decline from the initial $1.8 million per well [1].

The processing plant, originally planned as a nitrogen-based plant for $5-$6 million, has been expanded to a CO2 processing plant with a capacity of 17 MMCF/d for an expected cost of $15 million. This shift is driven by the vast CO2 deposits in USEG's acreage and the potential for higher helium recovery rates [1]. The company also acquired an injection well for $200,000 in April to support CO2 sequestration, which can unlock carbon dioxide sequestration tax credits [1].

U.S. Energy Corp. is expected to generate revenue from this project by April 2026. The company projects the current market floor for helium at $400/MCF, with an inlet concentration of 0.75% helium. This could generate $19 million in annual revenue. Assuming a conservative EBITDA conversion rate of 33%, this equates to $6 million in EBITDA, neglecting CO2 sales or tax credits [1].

U.S. Energy Corp. maintains a strong balance sheet, with zero debt and $10.5 million in cash on hand at the end of Q1. The company's PV-10 reserves are estimated at $28.7 million, offset by $14 million in asset retirement obligations. The company's ongoing oil and gas sales provide a slight reprieve to its cash outflows, but it may need to access the debt markets or sell assets by the end of Q3 to cover capital expenditures [1].

With the completion of the processing plant, USEG aims to diversify its revenue streams, including CO2 sales and tax credits from CO2 sequestration. This strategic move positions the company to benefit from the growing demand in high-tech growth markets and the energy transition towards net-zero power [2].

In summary, U.S. Energy Corp.'s progress in developing its industrial gas processing plant is a significant step towards meeting the growing demand for helium and expanding its operations in the energy sector. The company's strategic approach to revenue diversification and its strong balance sheet position it well for future growth.

References:
[1] https://seekingalpha.com/article/4795824-us-energy-stock-inching-closer-to-helium-production
[2] https://www.newerahelium.com/corporate/about/