SECURITIES AND EXCHANGE COMMISSION

                             Washington, D.C. 20549

                                    FORM 8-K

                                 CURRENT REPORT

                    Pursuant to Section 13 and 15(d) of the
                        Securities Exchange Act of 1934


Date  of  Report  (date  of earliest event reported): February 17, 2004 (January
30, 2004)


                                U.S. ENERGY CORP.
                                -----------------
             (Exact Name of Registrant as Specified in its Charter)

             Wyoming                   0-6814                     83-205516
-------------------------------    -------------             -------------------
(State  or  other  jurisdiction    (Commission               (I.R.S.  Employer
       of incorporation)             File No.)               Identification No.)


Glen  L.  Larsen  Building
877  North  8th  West
Riverton,  WY                                                       82501
-------------                                                  -------------
(Address  of  Principal  Executive  Offices)                    (Zip  Code)


       Registrant's telephone number, including area code: (307) 856-9271


                                 Not Applicable
                                 --------------
              (Former Name, Former Address or Former Fiscal Year,
                          if Changed From Last Report)




ITEM  2.  ACQUISITION  OF  ASSETS

     General.  On  January  30,  2004,  RMG  I,  LLC  ("RMG  I"), a wholly-owned
subsidiary  of  Rocky  Mountain  Gas,  Inc.  ("RMG"),  purchased coalbed methane
properties from Hi - Pro Production, LLC for $6,800,000. RMG is a majority-owned
subsidiary  of  U.S.  Energy  Corp.  ("USE"),  and a subsidiary of Crested Corp.

     The  purchased  properties  (all located in the Wyoming Powder River Basin)
include  247  completed  wells;  138  wells  now are producing approximately 6.0
million cubic feet of gas per day (Mmcfd), or approximately 3.2 Mmcfd net to RMG
I,  and  40,120 undeveloped fee acres. As a result of the purchase, RMG succeeds
Hi  -  Pro  as the contract operator for 89% of the wells. RMG I owns an average
58%  working  interest in the producing wells and a 100% working interest in all
of  the  undeveloped  acreage.

     The  transaction  was  structured  as  an asset purchase, with RMG I as the
purchaser,  in  connection with the establishment of a mezzanine credit facility
for  up  to  $25,000,000  of  secured  loans to acquire and develop more coalbed
methane  properties.  RMG  will  utilize  RMG  I  for  future acquisitions (none
presently  under  contract  or  agreement  in  principle). See "Mezzanine Credit
Facility."  A substantial portion of the cash consideration paid to Hi - Pro was
funded  with  the  initial  advance  on  the  credit  facility.

     RMG  negotiated  the  purchase  based  on  the  $7,113,000  present  value,
discounted  10%,  of  gas  reserves  recoverable  (and  the estimated future net
revenues to be derived) from, the proved reserves in the Hi - Pro properties, as
stated  in a reserve report as of November 1, 2003 prepared by Netherland Sewell
and  Associates, Inc. ("NSAI," Houston, Texas), independent petroleum engineers.
The  $6,800,000  purchase price reflects a deduction, negotiated by the parties,
to  account  for  the decrease in gas production from November 2003 (compared to
the  original  estimate  in  NSAI's  report)  due to the impact on production of
deferred  maintenance  on  the  properties,  and  the  expected  cost  of  such
maintenance  work  after  closing.

     Terms  of  the  Purchase.  The  purchase  price  of  $6,800,000  was  paid:

     $776,655.91  cash  by  RMG.
     $588,344.09  net  revenues  from  November  1,  2003  to  December 31, 2003
          retained  by  Hi  -  Pro.(1)
     $500,000.00  by USE's 30 day promissory note (secured by 166,667 restricted
          shares  of  USE  common  stock,  valued  at  $3.00  per  share).
     $600,000.00  by  200,000  restricted  shares of USE common stock (valued at
          $3.00  per  share).(2)
     $700,000.00  by  233,333  restricted  shares of RMG common stock (valued at
          $3.00  per  share).(3)
     $3,635,000.00  cash,  loaned  to  RMG  I  under  the  credit  facility
     -------------
          agreement.(4)
     $6,800,000.00

     (1)  RMG  paid  November  2003  through  January  2004  operating  costs at
          closing.  Net  revenues from the purchased properties for January 2004
          will  be  credited  to  RMG  I's obligations under the credit facility
          agreement.

     (2)  USE has agreed to file a resale registration statement with the SEC to
          cover  public  resale  of  these  200,000  shares.

     (3)  From  November  1,  2004  to November 1, 2006, the RMG shares shall be
          convertible at Hi-Pro's sole election into restricted shares of common
          stock  of  USE.  The number of USE shares to be issued to Hi-Pro shall
          equal  (A)  the  number  of  RMG shares to be converted, multiplied by
          $3.00  per share, divided by (B) the average closing sale price of the
          shares  of  USE for the 10 trading days prior to notice of conversion.
          The  conversion  right  is  exercisable  cumulatively,  as to at least
          16,666  RMG  shares  per  conversion.

     (4)  See  "Mezzanine  Credit  Facility."

     PROPERTIES  PURCHASED.

     -     RESERVE  DATA

     The  following  estimates  of  gas  reserves recoverable from the purchased
properties  are based on NSAI's reserve report as of November 1, 2003, using the
Colorado  Interstate  Gas  prices paid or estimated to be paid to Wyoming Powder
River  Basin  producers.  NSAI  has estimated the future net revenues therefrom,
based on a $4.50 per Mcf price in 2003, $4.29 per Mcf in 2004, and $4.25 per Mcf
in  2005.

     PDP  is proved developed producing; PDNP is proved developed non-producing;
and  PUD  is  proved  undeveloped.




                     RESERVES       NET  PRESENT
                      (Mmcf)       VALUE  (THOUS.)

               Gross        Net   (discounted 10%)
              -------  -------  -----------------
                       
TOTAL PROVED
PDP           5,521.7    2,767.0    $   5,182
PDNP            839.1      503.9    $     894
PUD           1,092.1      763.5    $   1,037
              -------    -------    ---------

Total         7,452.8    4,034.5    $   7,113


     The  present  value,  discounted 10% value ("PV10 value") was prepared on a
pre-income  tax basis, and is not intended to represent the current market value
of  the  estimated  gas  reserves  purchased  from  Hi - Pro. Note that the PV10
discount  factor has been calculated net of ad valorem and production taxes, but
before  income  taxes.  The  PV10  discount  factor  is  not  the  same  as  the
standardized  measure  of  present value calculations which are determined on an
after-income  tax  basis.

     There  are  numerous  uncertainties inherent in estimating gas reserves and
their  estimated  values.  Reservoir  engineering  is  a  subjective  process of
estimating  underground  accumulations  of  gas that cannot be measured exactly.
Estimates  of  economically recoverable gas, and the future net cash flows which
may  be  realized  from the reserves, necessarily depend on a number of variable
factors  and  assumptions,  such as historical production from the area compared
with  production  from  other  areas,  the  assumed  effects  of  regulations by
government  agencies,  assumptions  about future gas prices and operating costs,
severance and excise taxes, development costs, and work-over and remedial costs.
The  outcomes  in  fact  may  vary  considerably  from  the  assumptions.

     Estimates of the economically recoverable quantities of gas attributable to
any  particular  property, the classification of reserves as to proved developed
and  proved  undeveloped  based on risk of recovery, and estimates of the future
net  cash flows expected from the properties, as prepared by different engineers
or by the same engineers but at different times, may vary substantially, and the
estimates  may  be  revised  up  or  down  as  assumptions  change.

     It  is likely that actual production volumes, revenues from production, and
the amount of money spent on the properties, will vary from the estimates. These
variances  could  be  material.

     The  PV10  discount  factor,  which  is  required  by  the  SEC  for use in
calculating  discounted  future  net  cash  flows for reporting purposes, is not
necessarily  the  most  appropriate  discount factor, based on interest rates in
effect  in  the  financial  markets, and risks associated with the gas business.

     The business of exploring for, developing, or acquiring reserves is capital
intensive.  To  the  extent  operating cash flow is reduced and external capital
becomes  unavailable  or  limited,  RMG's  ability to make the necessary capital
investment  to maintain or expand the gas reserves asset base would be impaired.
There  is  no  assurance  future  exploration,  development,  and  acquisition
activities  will result in additional proved reserves. Even if revenues increase
because  of higher gas prices, increased exploration and development costs could
neutralize  cash  flows  from  the  increased  revenues.

     -     FUTURE  PLANS

     RMG  plans  to  immediately  drill  5  proven undeveloped locations (to the
Wyodak  coal  formation),  and  begin a remedial workover program on a number of
existing  wells,  and upgrade the gas gathering and pipeline facilities included
in  the  purchase.  This  program,  designed  to enhance production quickly from
current  levels,  is  estimated  to  cost approximately $640,000. A loan to fund
these  costs  under  the  mezzanine  credit  facility  has  been approved by the
lenders.

     Current production on the North and South Properties all is from the Wyodak
coal  formation  (200  to 600 feet from surface). The existing infrastructure on
the  properties  (gathering  lines,  compressors,  and  water  disposal)  will
significantly  reduce  drilling and completion costs for new wells to the deeper
Moyer  and  Dannar  coals (900 to 1,100 feet). Subject to raising capital, up to
120  wells  could be drilled and completed on the properties in 2004 and 2005 to
the  deeper  coals,  all  on  locations now producing from the Wyodak coal. This
development  activity  is  contingent upon obtaining future financing. It is not
expected that funding for this activity would be available through the mezzanine
credit  facility.

MEZZANINE  CREDIT  FACILITY.

     RMG I has signed a credit agreement with Petrobridge Investment Management,
LLC  (Houston  ,  Texas)  as lead arranger, and institutional lenders, for up to
$25,000,000 of loans to RMG I. The loan commitment is through June 30, 2006. All
loans will have a three year term from funding date with annual interest at 11%,
and  may  be  repaid  without  penalty  at  any  time.

     Funding  to  acquire  and/or improve any project is subject to the lenders'
approval  of  the  transaction  and RMG I's development plan for the properties.

     The  first  loan ($3,700,000 on January 29, 2004) under the credit facility
has  been  applied  to  the  Hi  -  Pro  asset  purchase  and transaction costs.

     Terms  for  all  loans  under  the  credit  facility include the following:

     Principal is not amortized, but interest must be paid monthly. All revenues
     from the properties owned by RMG I (including all current and new wells) is
     paid to a lock box account controlled by the lenders, from which is paid by
     the  lenders  the  lease  operating  costs and RMG I general administrative
     expense  (both  as  approved by the lenders). No revenues will be available
     for  RMG  operations  until  all  loans  are  paid  off. Revenues to RMG as
     contract  operator  of  the properties is not paid to the lock box account.

     The  loans are secured by all of RMG I's properties (to date, only the Hi -
     Pro  properties)  and  by  RMG's  equity  interest  in  RMG  I.

     The lenders, in the aggregate, receive an overriding royalty interest of 3%
     of  production  from the wells producing when an acquisition is closed, and
     2%  of  production  from  new  wells  on an 8/8ths' basis. For the Hi - Pro
     properties,  the 3% rate applies to all wells (producing and to be drilled)
     to  the  Wyodak  formation,  and  2% to all wells to deeper formations. The
     average working interest on the Hi - Pro properties is 58%, resulting in an
     average  overriding  interest of 1.74% on the wells now producing. Override
     payments  to  the  lenders  are  not  applied  to  the  loan  balances. The
     percentage  of  overrides  on  future  properties  may  vary.

     Negative  covenants:  RMG  I will not permit the ratio of (a) total debt to
     EBITDA  to  exceed  2.00  to 1.00; (b) EBITDA to interest expense and rents
     (lease expense) to be less than 3.00 to 1.00; (c) current assets to current
     liabilities  to  be  less than 1.00 to 1.00; or (d) PV 10 (proved developed
     producing  reserves)  to total debt to be less than 1.00 to 1.00. All these
     ratios  are to be determined quarterly. In addition, RMG I shall not permit
     net  sales  volume of gas from its properties to be less than 270 Mmcf, 230
     Mmcf, 230 Mmcf and 210 Mmcf for each quarter in 2004, or less than 180 Mmcf
     per  quarter  in  2005  and  the  first  two  quarters  of  2006.

     The  main  events  of  default, if any, likely would be failure of net cash
flow  to pay monthly interest, or failure to comply with the negative covenants.
However,  note  that the preceding only summarize some of the credit line terms,
and  is  qualified in its entirety by the full text of the agreement, filed with
this  report  as  an  exhibit.

     At  closing  of  the  Hi - Pro acquisition, USE issued to the participating
lenders  three  year  warrants  to  purchase a total of 318,465 shares of common
stock  of USE (subject to vesting) at $3.30 cash per share. At closing of the Hi
- Pro Acquisition, warrants on 63,693 shares vested. The remaining warrants will
vest  at  the rate of the right to buy one USE share for each $78.50 which RMG I
subsequently  borrows  under the credit facility. Regardless of when vested, all
warrants  will expire on the earlier of January 30, 2007, or the 180th day after
USE  notifies the warrant holders that USE' stock price has achieved or exceeded
$6.60 per share for a consecutive 15 business day period. USE has agreed to file
a  registration  statement  with  the  SEC to cover public resale of the warrant
shares.

     ITEM  7.  FINANCIAL  STATEMENTS  AND  EXHIBITS.

     (a)  and  (b)  On  or  before April 15, 2004, USE will file, on Form 8-K/A,
audited  statements  of working interest revenues and expenses for the producing
wells  bought  by  RMG  I  from Hi - Pro, for the three years ended December 31,
2003. None of this financial information had been prepared by Hi - Pro as of the
closing  date  of  January  30,  2004.  The  information is in the gathering and
sorting  stage  as  of  the date of this report, but no prior period information
presently  can  be  filed.

     (c)  Exhibits.

          (2)  Purchase and Sale Agreement (for the Hi - Pro assets), with three
               amendments.

          (10) Credit  Agreement,  without  schedules,  exhibits or annexes; the
               nature of these items is described in the table of contents. Upon
               request,  a  copy  of  any  such  item  will  be  provided to the
               Commission  supplementally.

                                   SIGNATURES

     Pursuant  to  the  requirements of the Securities Exchange Act of 1934, the
Registrant  has  duly  caused  this  Report  to  be  signed on its behalf by the
undersigned  hereunto  duly  authorized.

                                        U.S.  ENERGY  CORP.



Dated:  February  13,  2004             By: /s/  Robert Scott Lorimer
                                            -----------------------
                                            Chief Financial Officer