GeoResources, Yuma Enter Bakken Zavanna Project

Acquired undivided 75% interest in undeveloped leasehold interests of Zavanna LLC in McKenzie County, ND.

GeoResources Inc., Houston (Nasdaq: GEOI) and privately held, Houston-based Yuma Exploration and Production Co. Inc. have acquired an undivided 75% interest in undeveloped leasehold interests of Zavanna LLC from U.S. Energy Corp., Riverton, Wyo., (Nasdaq: USEG) for $16.7 million.

The assets include undeveloped acres in its Yellowstone and SE HR Zavanna leasehold in McKenzie County, North Dakota.

U.S. Energy retains the remaining 25% interest in the undeveloped acreage and its original working interest and production in 10 gross (2.3 net) wells drilled and/or in progress to date. Of these 10 wells, five are currently producing and it is anticipated that the remaining five gross wells will be completed by mid-year 2012.

U.S. Energy chief executive Keith Larsen says, “With the closing of our second Williston Basin asset sale in the last six weeks, the company has realized $30.4 million in sale proceeds which has significantly enhanced our balance sheet. The undeveloped acreage sale did not impact our current Williston Basin production which consists of 30 gross (9.7 net) wells, or our $28 million borrowing base with BNP Paribas. Also, under our full cost pool accounting, we anticipate that this transaction will reduce our depletion, depreciation and amortization rate which should result in lower operating costs in 2012.”