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      USE Letter to SEC 3-22-06

    March
      23,
      2006

    Sent
      Via Fax (202) 551-3740

    United
      States Securities and Exchange Commission

    Division
      of Corporate Finance

    100F
      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

    Comment
      Letter dated March 21, 2006

    Supplemental
      Information

    Dear
      Ms.
      Gallagher;

    Thank
      you
      for your quick response to our letter of March 16, 2006. We accept the guidance
      given in your letter and will be filing all our response letters with you on
      EDGAR as required by Rule 101(a)(2) of Regulation S-T. We also have read and
      agree with your comments regarding the treatment of the Enterra Class D shares
      under SFAS 133.

    We
      will
      adjust all relevant accounts on our annual filing of Form 10K as well as re-file
      our Form 10 Q’s for the quarters ended June 30, 2005, and September 30, 2005. We
      have valued the “put” value of the conversion right under the Class D shares
      using the Black Scholes model. Volatility rates have been recalculated for
      each
      quarter and we have used the risk free interest rate of 4.38%.

    The
      result of these adjustments will result in the reversal of the deferred gain
      in
      the quarter ended June 30, 2005 and increase the gain on the sale of RMG by
      the
      same amount, $1,178,600. Additionally the value of the Enterra Trust shares
      increased at June 30, 2005 to $23.78 which will reflect an increase in net
      income of $2,662,200. The price of the Enterra Trust shares increased again
      during the third quarter to $24.71 which will result in a gain in net income
      again of an additional $802,000. At December 31, 2005 the share price of the
      Enterra Trust shares had

            United States Securities and Exchange Comission

          U.S.
            Energy Corp. Post-Effective Amendment No. 1 to Form S-1

          March
            22, 2006

          Page
            2 of 2

    decreased
      to $16.45 per share which will result in a decrease on the gain related to
      the
      derivative of $3,464,200. As the derivative is under water from the initial
      valuation of $19.00 per share there will be an additional $1,767,800 in the
      reduction of income in the form of a loss on the derivative.

    During
      the quarter ended March 31, 2006 we will again value the conversion feature
      of
      the of the Enterra Class D shares. At March 22, 2006 the market value of the
      Enterra Trust shares was $17.04. In the event that this price level is
      maintained at $17.04 we will again have income.

    During
      the second quarter ended June 30, 2006 the actual conversion will occur and
      the
      Enterra Class D shares will become marketable securities held for sale and
      will
      be accounted for as such.

    We
      would
      very much like to discuss this matter with you today if at all possible as
      I
      will be traveling tomorrow and we need to run these adjustments through our
      year
      end financials so we can timely file our Form 10K. Mr. Rounds is out of the
      office today so I will call and see if you are available for a phone call some
      time today with Mark Weber of Epstein Webber & Conover, PLC. We look forward
      to visiting with you and resolving this issue. Your assistance is greatly
      appreciated.

    Sincerely,

    /s/ Robert Scott Lorimer

    Robert
      Scott Lorimer,

    CFO/V.P.
      Finance

    cc.
      Keith
      Larsen - Chairman, U.S. Energy Corp.

    Mark
      Larsen - President, U.S. Energy Corp.

    Steve
      Rounds - Outside SEC Counsel

    Mark
      Weber - Epstein Weber & Conover, PLC