U.S. Energy Corp. (NASDAQ:USEG) shares are trading higher following the announcement of a strategic asset sale in East Texas.

The company has executed definitive documents for the sale of certain assets located in Anderson, Chambers, Henderson and Liberty Counties. The transaction is expected to close on or before December 31, 2024, pending customary closing conditions.

The sale, valued at $6.825 million in cash proceeds, is part of U.S. Energy's ongoing efforts to streamline operations and focus on higher-growth opportunities.

The divested assets consist of 122 wells with an average production of approximately 1.1 million cubic feet per day of natural gas and 168 barrels of oil per day for the quarter ending September 30, 2024. The assets generated about $136,000 per month in net cash flow, based on realized commodity prices of $72.99 per barrel for oil and $2.21 per thousand cubic feet for natural gas.

U.S. Energy plans to use the proceeds from the sale to fund its industrial gas project in Montana, which is expected to provide significant growth opportunities. CEO Ryan Smith said the divestment would strengthen the company's liquidity and balance sheet while reducing exposure to non-core assets.

The transaction is part of a broader strategy to monetize legacy assets and allocate resources towards scalable and high-return projects, including the Montana industrial gas initiative. This move underscores U.S. Energy's commitment to refining its portfolio for future growth and operational efficiency.

Price Action: USEG shares are trading higher by 4.46% to $1.640 premarket at last check Friday.

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