Riverton, WY-based U.S. Energy Corp. and its subsidiary Crested Corp. announced Friday that their Rocky Mountain Gas Inc. (RMG) company is expanding both the Roland and the Anderson coalbed methane pilot programs on its Clearmont, WY properties. Under the current program, the companies plan to drill and complete six new wells, place four previously drilled and completed wells on pump, and construct the necessary water and natural gas gathering systems and water containment reservoirs.

During 2001 there were 24 wells drilled and completed on the Clearmont properties, which consisted of eight wells to the 400 foot deep Roland coal, 14 wells to the 900 foot deep Anderson coal and two deep test wells (drilled to 2200 feet and 1543 feet) that encountered significant coal intervals below 900 feet. Of these wells, four Roland and four Anderson wells were put on pump, under a temporary water discharge permit, to begin the dewatering process, the companies said. All eight wells have experienced good water flows and gas shows during the initial stages of dewatering, which is typical for coalbed methane wells in the Powder River basin. Based on these initial results and the desire to accelerate the dewatering process over a larger area in both coals, U.S. Energy Corp. and Crested Corp. have begun new work programs.

Six new wells are currently being drilled and completed in the Anderson coal. When they are finished, they will be placed on pump. Two additional wells that were previously drilled and completed in the Anderson will also be placed on pump, bringing the total number of wells in the Anderson pilot dewatering program to 12. The companies added that two previously drilled and completed Roland wells will be put on pump, expanding the Roland pilot dewatering program from four wells to six. Carrizo Oil & Gas, Inc.’s wholly owned subsidiary CCBM, Inc. is funding the work programs. RMG is the operator with an average 50% working interest in these wells.

In other related news, RMG said that it has received a permanent water discharge permit from the Wyoming Department of Environmental Quality that covers five water containment reservoirs and 59 well locations (including all wells mentioned above) for the initial development of the Clearmont project.

“With the return of warmer weather, we are excited to be back in the field expanding on what we accomplished last fall,” said Peter G. Schoonmaker, president of RMG. “Early results from our Roland and Anderson pilots have been encouraging. We continue to make progress towards our stated goals of securing a gas sales contract in the coming weeks and commencing production later this year. In light of events in the Middle East and the current energy debate in Congress, many elected officials and energy analysts have pointed to coalbed methane production as a means to reduce the nation’s dependence on foreign sources for energy.”

Through RMG, U.S. Energy Corp. and Crested Corp. own working interests in over 250,000 gross acres prospective for coalbed methane in the Powder River basin of Wyoming and Montana and adjacent to the Greater Green River Basin in southwest Wyoming.

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