U.S. Energy stock soars 57% on 5-year helium supply deal

Shares of U.S. Energy Corp. (NASDAQ: USEG) soared as much as 57% on Monday after the company announced a five-year helium sales agreement with an investment-grade industrial gas company, securing a significant revenue stream for its Big Sky Carbon Hub in Montana.

"This contract establishes long-term, contracted helium revenues and meaningfully de-risks Phase 1 commercial operations at Big Sky," said Ryan Smith, President and Chief Executive Officer of U.S. Energy.

The agreement is for up to 1.2 million cubic feet of helium per month at a fixed price of $285 per thousand cubic feet (MCF). The buyer will purchase 100% of the helium produced during the five-year term, with the contract including take-or-pay provisions.

This deal is a critical development for U.S. Energy, transforming its Big Sky project from a development-stage asset to a contracted industrial gas platform. The agreement provides a fully funded Phase 1 capital stack and long-term contracted cash flow, with commercial operations targeted for the first quarter of 2027.

Big Sky Carbon Hub

The Big Sky Carbon Hub is an integrated project that includes helium extraction, carbon management services, and oil production. The helium sales agreement complements the company's carbon management strategy, with CO2 recovery and sequestration representing a distinct revenue stream. U.S. Energy is also pursuing Section 45Q tax credits for its carbon management activities.

Helium Market Dynamics

The helium market is currently experiencing a supply shortage, with increasing demand from the semiconductor, healthcare, and aerospace industries. The recent disruption to shipping through the Strait of Hormuz has further constrained global supply, pushing long-term contract prices higher. U.S. Energy's agreement at a fixed price of $285 per MCF reflects the strength of the current market.

This article is for informational purposes only and does not constitute investment advice.