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      USE Letter to SEC 1-16-06

    January
      16, 2006

    Fax
      202.845.1281

    United
      States Securities and Exchange Commission

    Division
      of Corporation Finance

    100
      F
      Street, N.E.

    Washington,
      D.C. 20549-7010

    Attn: Jennifer
      Gallagher

    Re: U.S.
      Energy Corp.

    Post-Effective
      Amendment No. 1 to Form S-1

    Filed
      October 25, 2005

    File
      No.333-115477

    Form
      10-K
      for the Fiscal Year Ended December 31, 2004

    Filed
      April 15, 2005

    File
      No.
      0-06814

    Form
      10-Q
      for the Period Ended September 30, 2005

    Filed
      November 14, 2005

    Supplemental
      Information

    Dear
      Ms.
      Gallagher:

    We
      have
      reviewed the November 18, 2005 comment letter, and propose to make conforming
      changes in future periodic reports (beginning with the Form 10-K for the year
      ended December 31, 2005). We submit to you that while the subject disclosures
      in
      the periodic reports certainly need clarification and correction, those
      disclosures, taken alone, are not of sufficient gravity to warrant amending
      prior reports.

    In
      addition, we propose to amend the Form S-1 only to clean up the inadvertent
      omissions of execution date and the prior audit firm consent, and other respects
      to update disclosures for the passage of time since the initial filing. If
      the
      staff does not concur with our position on future conforming changes in periodic
      reports, we will file amendments to those documents, then amend the S-1 as
      necessary. However, in that event, because the 2004 audited financial statements
      in the S-1 will go stale on February 14, 2006, we may withdraw the Form S-1
      and
      file a Form S-3 (after the new Form 10-K for year ended December 31, 2005 has
      been filed) for the selling shareholders now identified in the Form
      S-1.

    If
      needed, we would be pleased to arrange a conference call with the staff to
      further explain our proposed responses.

          Securities
            and Exchange Commission

          Division
            of Corporation Finance

          Supplemental
            Information

          January
            16, 2006

          Page
            2
of
            9

    Post-Effective
      Amendment No. 1 to Form S-1

    Exhibits

            1.

              Please
                file consent from your predecessor accountant in an amendment to
                the Form
                S-1.

    Response:

    The
      consent of Grant Thornton, our predecessor independent accountant, was
      inadvertently omitted. If we file an amendment to the Form S-1, we will file
      the
      consent. In the meantime, if desired by the staff. we will file a short-form
      amendment to include the consent.

    Signatures

            2.

              Please
                revise to specify the date your document was
                signed.

    Response:

    Thank
      you. The S-1 was signed on October 25, 2005, but the date was inadvertently
      omitted from the filing. If we file an amendment to the Form S-1, the execution
      date will be disclosed. In the meantime, if desired by the staff, we wil file
      a
      short-form amendment to include the original execution date.

    Form
      10-K for the Fiscal Year Ended December 31, 2004

    Financial
      Statements, page 56

    Balance
      Sheets, page 60

            3.

              We
                note you present $2,599,000 and $2,726,600 as deferred gain on sale
                of
                asset on your consolidated balance sheets at December 31, 2004 and
                2003.
                Similarly, we note you added an additional line item in your subsequent
                reports on Form 10-Q for the deferral of gain on the sale of Rocky
                Mountain Gas, Inc. at June 30 and September 30, 2005. Disclose the
                origin
                of these account balances in the applicable filings, including the
                terms
                under which they were generated, and the circumstances under which
                you
                will recognize the gain into income. Also disclose how each element
                of
                consideration was valued, and the manner by which you will account
                for
                changes in value until realization occurs. Please submit detailed
                computations of your gains, showing the amounts ascribed to each
                component, including book values of assets and liabilities
                relieved.

    Response:

    We
      reported $1,279,000 at December 31, 2004 and $1,295,700 at December 31, 2003
      as
      deferred gain on the sale of assets. The dollar amounts stated in the comment
      are the forfeitable dollar amounts reported for the years ended December 31,
      2004 and 2003. As the balance of this

            Securities
              and Exchange Commission

            Division
              of Corporation Finance

            Supplemental
              Information

            January
              16, 2006

            Page 3
              of
              9

    comment
      relates to deferred gain calculations, we are responding to the deferred gain
      on
      sale of asset line item.

    In
      the
      Form 10-K for the year ended December 31, 2003, Note F-Mineral Claims
      Transactions, page 75 (Rocky Mountain Gas, second paragraph),we made the
      following disclosure on the deferred gain on the stock sale of Canyon Resources
      to Cactus Group LLC.

    “On
      August 1, 2003, the Company sold all of the stock of Canyon Resources as a
      result of Plateau entering into a Stock Purchase Agreement to sell all the
      outstanding shares of Canyon Homesteads, Inc. ("Canyon") to The Cactus Group
      LLC, a newly formed Colorado limited liability company. The Cactus Group
      purchased all of the outstanding stock of Canyon for $3,470,000. Of that amount,
      $349,300 was paid in cash at closing and the balance of $3,120,700 is to be
      paid
      under the terms of a promissory note.

    The
      sale
      did not qualify for gain recognition under the full accrual method. A gain
      of
      $1,295,700 was deferred and reported in the consolidated balance sheet at
      December 31, 2003. The sale will be recognized by the installment method as
      cash
      payments are received from the purchaser. An installment note receivable of
      $2,988,000 at December 31, 2003 will be reduced as payments are
      received.

    Pursuant
      to the promissory note, the Company is to receive $5,000 per month for the
      months of November 2003 to March 2004 and $10,000 for the months of November
      2004 to March 2005 and $24,000 per month for the months of April to October
      2004
      and $24,000 per month on a monthly basis after March of 2005 from The Cactus
      Group until August of 2008, at which time, a balloon payment of $2.8 million
      is
      due. The note is secured with all the assets of The Cactus Group and Canyon
      along with personal guarantees by the six principals of The Cactus Group. As
      additional consideration for the sale, the Company will also receive the first
      $210,000 in gross proceeds from the sale of either single family or mobile
      home
      lots in Ticaboo.”

    The
      amount of the deferred gain at December 31, 2003 was calculated as
      follows:

          Securities
            and Exchange Commission

          Division
            of Corporation Finance

          Supplemental
            Information

          January
            16, 2006

          Page 4
            of
            9

              Gross
                Proceeds

              $

              3,470,000

              Net
                Value of Assets

              &
                Liabilities

              (1,803,800

              )

              Commission
                on Sale

              (165,000

              )

              Amount
                due Cactus

              (48,800

              )

              Subtotal

              $

              1,452,400

              Deferred
                Gain

              (1,295,700

              )

              Net
                Gain

              $

              156,700

    The
      sale
      of Canyon Resources was accounted for under FAS-66 as a Real Estate Installment
      Sale. The basis for the accounting was that all of the assets owned by Canyon
      Resources were real estate. The assets consisted of a motel, a restaurant,
      a
      convenience store, a boat storage facility and a town site with electrical,
      curb
      and gutter, and water and sewer improvements. The amount of the sale deferred
      was calculated by using the total sales price of $3,470,000 as the denominator
      and the actual amount of cash received by the Company from the sale of $349,300
      as the numerator, which yielded 10%. Using this logic, only 10%, allowing for
      rounding, of the total gain from the sale was therefore recognized during the
      year ended December 31, 2003 with the balance being deferred until actually
      realized.

    Although
      the disclosure was shortened on the Form 10-K for the year ended December 31,
      2004, the primary components of the transaction are disclosed in Note F, page
      82. None of the details of the transaction have changed since the date of the
      transaction. During the year ended December 31, 2004 the amount of the deferred
      gain was reduced by $16,700 from the amount of deferred gain reported at
      December 31, 2003. The reduction of the gain is consistent with the disclosure
      made at December 31, 2003.

    The
      second part of the comment refers to the deferred gain on the sale of RMG.
      The
      sale of RMG is described in footnote 6, page 10, MD&A pages 18, 19 and 25
      for the quarter ended June 30, 2005. Although the transaction is described
      in
      these areas of the 10-Q, the deferred gain on the sale of RMG is not
      specifically identified.

    The
      deferred gain on the sale of RMG is the difference between the net present
      value
      of the Enterra US Acquisitions Inc. shares, using a 10% discount rate that
      the
      Company and Crested received as consideration for the sale. The Company and
      Crested received a total of 682,345 shares of Acquisitions; the shares must
      be
      held for one year from June 1, 2005. Thereafter, the shares automatically
      convert on a one for one basis into units in Enterra, which will then be
      saleable on the Toronto Stock Exchange.

    The
      Acquisitions shares had a value of $19.00 per share (a total of $12,964,555).
      Using a 10% discount factor, the shares have a net present value of $11,785,959.
      The $1,178,596 difference between the value of the Acquisitions shares and
      the
      net present value was recorded as a deferred gain on the sale of RMG due to
      the
      uncertainty of what the value will be on June 1, 2006. This discount is
      appropriate; we will recognize the additional gain or loss when the shares
      are
      ultimately sold.

            Securities
              and Exchange Commission

            Division
              of Corporation Finance

            Supplemental
              Information

            January
              16, 2006

            Page 5
              of
              9

              Value
                of Acquisition Shares 682,345 @ $19

              $

              12,964,600

              Net
                Present Value of Shares

              (11,786,000

              )

              Deferred
                Gain

              $

              1,178,600

    We
      propose to make additional disclosure in the Form 10-K for the year ended
      December 31, 2005. We do not believe that the omission of this disclosure in
      the
      Form 10-Q requires an amendment to the Form 10-Q.

    Note
      B-Summary of Significant Accounting Policies, page 71

    Revenue
      Recognition, page 74

            4.

              In
                your disclosure you state management fees are for operating and overseeing
                coalbed methane production and oil production on the Fort Peck Reservation
                in Montana. It is our understanding that you do not hold an interest
                in
                this property. However, on page 49 you do state that management fee
                revenues increased in 2004 due to your acquisition of producing gas
                properties. Tell us the extent to which you have reported as revenue
                fees
                paid to you for operating properties in which you hold an interest.
                Please
                understand that any such management and service fees should be recorded
                as
                reimbursements of costs, offsetting the costs that were specifically
                incurred to provide the services, with any excess of fees over costs
                credited to the full cost pool, to comply with Rule 4-10(c)(6)(iii)
                and
                (iv) of Regulation S-X. Please revise your policy disclosure to describe
                your accounting for management fees and to include the amount of
                such fees
                that were credited to the full cost pool for each period presented.
                If you
                believe the amounts do not warrant disclosure due to immateriality,
                you
                may provide this information on a supplemental
                basis.

    Response:

    The
      breakdown of the management fees line item for the year ended December 31,
      2004
      is:

                Management
                  Fees RMG

                $

                796,300

                Oil
                  Sales

                143,800

                UPC
                  payments

                175,000

                N/R
                  Employee - Reserved

                47,300

                Miscellaneous

                17,500

                Total
                  Reported

                $

                1,179,900

    The
      management fee revenues from the sale of oil in Montana is correctly reported
      as
      management fees as we do not own the oil, but receive a fee from the Assiniboine
      Sioux tribes as the oil is produced. The revenues from UPC, notes receivable
      from employees and miscellaneous should be classified as “Other Revenues.” We
      propose that in future 1934 Act filings; we change the description to
“Management Fees and Other.”

              Securities
                and Exchange Commission

              Division
                of Corporation Finance

              Supplemental
                Information

              January
                16, 2006

              Page 6
                of
                9

    The
      fees
      for managing the RMG wells for RMG are recognized on wells in which RMG owned
      an
      interest. RMG’s portion of the operating costs of these wells exceeded the
      revenue recognized by the Company in its consolidated financial statements.
      As
      there is no excess revenue to credit against the full cost pool, the balance
      sheet and net earnings as well as earnings per share do not change by a
      reclassification. Lastly, all operations of RMG are now reported as discontinued
      operations, which we submit resolves any