SEC Form SC 13D filed by U.S. Energy Corp.

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

SCHEDULE 13D

UNDER THE SECURITIES EXCHANGE ACT OF 1934

(Amendment No. __)*

U.S. Energy Corp.

(Name of Issuer)

Common Stock, $0.01 par value per share

(Title of Class of Securities)

911805307

(CUSIP Number)

John A. Weinzierl

1616 S Voss Rd, Suite 530

Houston, Texas 77057
(832) 856-6580

(Name, Address and Telephone Number of Person Authorized to Receive Notices and Communications)

January 5, 2022

(Date of Event which Requires Filing of this Statement)

If the filing person has previously filed a statement on Schedule 13G to report the acquisition that is the subject of this Schedule 13D, and is filing this schedule because of §§240.13d-1(e), 240.13d-1(f) or 240.13d-1(g), check the following box. ☐

Note: Schedules filed in paper format shall include a signed original and five copies of the schedule, including all exhibits. See §240.13d-7 for other parties to whom copies are to be sent.

* The remainder of this cover page shall be filled out for a reporting person’s initial filing on this form with respect to the subject class of securities, and for any subsequent amendment containing information which would alter disclosures provided in a prior cover page.

The information required on the remainder of this cover page shall not be deemed to be “filed” for the purpose of Section 18 of the Securities Exchange Act of 1934 (“Act”) or otherwise subject to the liabilities of that section of the Act but shall be subject to all other provisions of the Act (however, see the Notes).

(1) In his capacity as Chief Executive Officer and Manager of Lubbock Energy Partners LLC, Mr. Weinzierl may be deemed to beneficially own the shares of Common Stock held by Lubbock Energy Partners LLC, as discussed below.

(2) Does not include shares of Common Stock held by the Separately Filing Group Members (as defined below in Item 2. The Reporting Persons (as defined below) believe that they and the Separately Filing Group Members together as a “group” may be deemed to collectively beneficially own in the aggregate 19,905,736 shares of the Issuer’s Common Stock, or 77.8% of the Common Stock, as of the date of this Schedule 13D (when not including the 200,000 shares of Common Stock held directly by Mr. Weinzierl and/or any other shares of Common Stock held directly by any other of the principals or members of the Separately Filing Group Members who are not directly party to the Nominating and Voting Agreement, and therefore not subject to its terms and conditions, except as control persons of the entities party thereto).

(3) Represents restricted stock shares subject to time-based vesting, which vest at the rate of (a) 1/4th of such shares on January 17, 2022, and (b) 1/4th of such shares on the last day of each six months thereafter for the following eighteen months, subject to the Reporting Person’s continued service to the Company.

* Based on information provided by the Issuer as of January 26, 2022, reflecting 25,582,037 shares of Common Stock of the Issuer outstanding as of such date.

(1) In his capacity as Manager of Lubbock Energy Partners LLC, Mr. Marsh may be deemed to beneficially own the shares of Common Stock held by Lubbock Energy Partners LLC, as discussed below.

(2) Does not include shares of Common Stock held by the Separately Filing Group Members (as defined below in Item 2. The Reporting Persons (as defined below) believe that they and the Separately Filing Group Members together as a “group” may be deemed to collectively beneficially own in the aggregate 19,905,736 shares of the Issuer’s Common Stock, or 77.8% of the Common Stock, as of the date of this Schedule 13D (when not including the 200,000 shares of Common Stock held directly by Mr. Weinzierl and/or any other shares of Common Stock held directly by any other of the principals of members of the Separately Filing Group Members who are not directly party to the Nominating and Voting Agreement, and therefore not subject to its terms and conditions, except as control persons of the entities party thereto).

* Based on information provided by the Issuer as of January 26, 2022, reflecting 25,582,037 shares of Common Stock of the Issuer outstanding as of such date.

* Based on information provided by the Issuer as of January 26, 2022, reflecting 25,582,037 shares of Common Stock of the Issuer outstanding as of such date.

(1) Does not include shares of Common Stock held by the Separately Filing Group Members (as defined below in Item 2. The Reporting Persons (as defined below) believe that they and the Separately Filing Group Members together as a “group” may be deemed to collectively beneficially own in the aggregate 19,905,736 shares of the Issuer’s Common Stock, or 77.8% of the Common Stock, as of the date of this Schedule 13D (when not including the 200,000 shares of Common Stock held directly by Mr. Weinzierl and/or any other shares of Common Stock held directly by any other of the principals of members of the Separately Filing Group Members who are not directly party to the Nominating and Voting Agreement, and therefore not subject to its terms and conditions, except as control persons of the entities party thereto).

Item 1. Security and Issuer

This Statement relates to the common stock, $0.01 par value per share (the “Common Stock”), of U.S. Energy Corp., a Wyoming corporation (the “Issuer” or the “Company”). The principal executive offices of the Issuer are located at 675 Bering Drive, Suite 390, Houston, Texas, 77057.

Item 2. Identity and Background

(a) This Schedule 13D is being filed by John A. Weinzierl, an individual, Wallis T. Marsh, an individual, and Lubbock Energy Partners LLC, a Texas limited liability company (“Lubbock” and together with Mr. Weinzierl and Mr. Marsh, the “Reporting Persons”). Mr. Weinzierl is the Chief Executive Officer and Manager of Lubbock and therefore may be deemed to beneficially own (and have shared voting and dispositive power over) the 6,568,828 shares of Common Stock held by Lubbock. Mr. Marsh is the Manager of Lubbock and therefore may be deemed to beneficially own (and have shared voting and dispositive power over) the 6,568,828 shares of Common Stock held by Lubbock. Mr. Weinzierl separately holds 200,000 shares of Common Stock in his own name.

(b) The principal business address of the Reporting Persons is 1616 S Voss Rd, Suite 530, Houston, Texas 77057.

(c) The principal business of Lubbock is the acquisition, development, management and disposition of oil and gas properties and assets. The principal occupation of Mr. Weinzierl is an owner and executive of operating and capital financing companies in the oil and gas industry The principal occupation of Mr. Marsh is an owner and executive of operating and capital financing companies in the oil and gas industry. Mr. Weinzierl also serves as Chairman of the Board of Directors of the Issuer.

(d) The Reporting Persons have not, during the last five years, been convicted in a criminal proceeding (excluding traffic violations or similar misdemeanors).

(e) The Reporting Persons have not, during the last five years, been party to a civil proceeding of a judicial or administrative body of competent jurisdiction and as a result of such proceeding was or is subject to a judgment, decree or final order enjoining future violations of, or prohibiting or mandating activities subject to, federal or state securities laws or finding any violation with respect to such laws.

(f) Mr. Weinzierl is a citizen of the United States. Mr. Marsh is a citizen of the United States.

As discussed under Item 4 hereof, the Reporting Persons may be deemed to be members of a “group” within the meaning of Section 13(d)(3) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), comprised of the Reporting Persons and the following persons (the “Separately Filing Group Members”):

Mr. Weinzierl is also the owner of 33 1/3% of the outstanding membership interests of the limited liability company that owns 100% of the Membership Interests of Synergy, but in his capacity as a member of the parent of Synergy, he does not have voting or dispositive control over the shares of the Issuer held by Synergy, and he is therefore not deemed to beneficially own such shares, and such shares have not been included in his beneficial ownership as disclosed throughout this Schedule 13D.

It is the understanding of the Reporting Persons that the Separately Filing Group Members are filing separate Schedule 13Ds pursuant to Rule 13d-1(k)(2) under the Exchange Act addressing their respective statuses as members of a “group” with the Reporting Persons.

The Reporting Persons do not assume responsibility for the information contained in such Schedule 13Ds filed by the Separately Filing Group Members, except to the extent such information has been provided by the Reporting Persons. Based on information provided by the Separately Filing Group Members, the Reporting Persons believe that they and the Separately Filing Group Members together as a “group” may be deemed to collectively beneficially own in the aggregate 19,905,736 shares of the Issuer’s Common Stock, or 77.8% of the Common Stock, as of the date of this Schedule 13D (when not including the 200,000 shares of Common Stock held directly by Mr. Weinzierl and/or any other shares of Common Stock held directly by any other of the principals or members of the Separately Filing Group Members who are not directly party to the Nominating and Voting Agreement, and therefore not subject to its terms and conditions, except as control persons of the entities party thereto). The Reporting Persons expressly disclaim beneficial ownership of any securities beneficially owned or acquired by the Separately Filing Group Members.

Item 3. Source and Amount of Funds or Other Consideration

On January 5, 2022 (the “Closing Date”), the Issuer closed the acquisitions (the “Closing”) contemplated by those certain three separate Purchase and Sale Agreements (as amended to date, the “Purchase Agreements”), previously entered into by the Issuer on October 4, 2021, with each of (a) Lubbock Energy Partners LLC (“Lubbock”); (b) Banner Oil & Gas, LLC, Woodford Petroleum, LLC and Llano Energy LLC (collectively, “Banner”), and (c) Synergy Offshore LLC (“Synergy”, and collectively with Lubbock and Banner, the “Sellers”), which were previously disclosed in Current Reports on Form 8-K filed by the Issuer with the Securities and Exchange Commission (the “SEC” or the “Commission”) on October 6, 2021 and October 27, 2021.

Pursuant to the Purchase Agreements, the Issuer acquired certain oil and gas properties from the Sellers, representing a diversified, conventional portfolio of operated, producing, oil-weighted assets located across the Rockies, West Texas, Eagle Ford, and Mid-Continent. The acquisition also included certain wells, contracts, technical data, records, personal property and hydrocarbons associated with the acquired assets (collectively with the oil and gas properties acquired, the “Acquired Assets”).

The purchase price for the Acquired Assets was (a) $125,000 in cash and 6,568,828 shares of Common Stock, as to Lubbock; (b) $1,000,000 in cash, the repayment of $3.5 million in liabilities, and 6,790,524 shares of Common Stock, as well as the novation of certain hedges which had a mark to market loss of approximately $3.1 million as of the closing date, as to Banner; and (c) $125,000 in cash and 6,546,384 shares of Common Stock, as to Synergy. The aggregate purchase price under all the Purchase Agreements was $1.25 million in cash, 19,905,736 shares of Common Stock (the “PSA Shares”), and the repayment of $3.5 million in debt, as well as the novation of the hedges discussed above. The initial base purchase price remains subject to customary working capital and other adjustments following the Closing.

Pursuant to the closing of the Purchase Agreement entered into with Lubbock, the Issuer, among other things, as discussed above, issued Lubbock 6,568,828 shares of Common Stock.

The description of the Purchase Agreement between the Issuer and Lubbock above is not complete and is qualified in its entirety by the full text thereof incorporated by reference herein.

Mr. Weinzierl, as a newly appointed member of the Board of Directors of the Company was granted equity consideration in connection with his appointment to the Board of Directors. Specifically, on January 17, 2022, the Board of Directors awarded him 200,000 restricted Common Stock shares as consideration for serving as Chairman of the Board of Directors of the Company. Such restricted common stock shares were issued under the Company’s 2021 Equity Incentive Plan (the “Plan”), and vest at the rate of (a) 1/4th of such shares on the grant date, and (b) 1/4th of such shares on the last day of each six months thereafter for the following eighteen months, subject to his continued service to the Company, and subject to the terms of the Restricted Stock Award Agreements evidencing such award (the “Vesting Terms”).

Separately, each of Batchelor and King, as newly appointed members of the Board of Directors of the Company were, on January 17, 2022, awarded 40,000 restricted Common Stock shares each, which are subject to the Vesting Terms.

Item 4. Purpose of the Transaction

The information set forth in Item 3 is hereby incorporated by reference into this Item 4.

The Reporting Persons acquired the securities pursuant to the Purchase Agreement with Lubbock. In the future, depending on general market and economic conditions affecting the Issuer and other relevant factors, the Reporting Persons may purchase or acquire additional securities of the Issuer or dispose of some or all of the securities they currently own from time to time in open market transactions, private transactions or otherwise.

The Reporting Persons do not currently have any plans or proposals which relate to or would result in the following described:

(a) The acquisition by any person of additional securities of the Issuer, or the disposition of securities of the Issuer;

(b) An extraordinary corporate transaction, such as a merger, reorganization or liquidation, involving the Issuer or any of its subsidiaries;

(c) A sale or transfer of a material amount of assets of the Issuer or any of its subsidiaries;

(d) Any change in the present board of directors or management of the Issuer, including any plans or proposals to change the number or term of directors or to fill any existing vacancies on the board, provided that the Reporting Persons reserve the right to appoint another designee to the Board of Directors of the Issuer pursuant to, and plan to take such actions as required by, and may take such actions from time to time permitted by, the terms of the Nominating and Voting Agreement, discussed below, from time to time;

(e) Any material change in the present capitalization or dividend policy of the Issuer;

(f) Any other material change in the Issuer’s business or corporate structure, including but not limited to, if the Issuer is a registered closed-end investment company, any plans or proposals to make any changes in its investment policy for which a vote is required by section 13 of the Investment Company Act of 1940;

(g) Changes in the Issuer’s charter, bylaws or instruments corresponding thereto or other actions which may impede the acquisition of control of the Issuer by any person;

(h) Causing a class of securities of the Issuer to be delisted from a national securities exchange or to cease to be authorized to be quoted in an inter-dealer quotation system of a registered national securities association;

(i) A class of equity securities of the Issuer becoming eligible for termination of registration pursuant to section 12(g)(4) of the Act; or

(j) Any action similar to any of those enumerated above.

On January 4, 2022, and effective as of the Closing on January 5, 2022, the Board of Directors (the “Board”) of the Issuer (i) increased the size of the Issuer’s Board of Directors from five members to seven members (with one of the then members of the Board resigning from the Board effective immediately prior to Closing), and appointed (a) Mr. John A. Weinzierl, the Chief Executive Officer of Lubbock, who was designated by Lubbock, as a director and Chairman of the Issuer; (b) Mr. Joshua Batchelor, the co-Managing Partner of Sage Road, which indirectly controls and manages certain funds that own a majority interest of the Banner entities, who was designated by Banner, as a director of the Issuer; and (c) Mr. Duane H. King, the Chief Executive Officer of Synergy, who was designated by Synergy, as a director of the Issuer. Such actions were required pursuant to the Purchase Agreements, and the Nominating and Voting Agreement, discussed below.

At Closing, the Issuer and each of the Sellers (including Lubbock) entered into a Nominating and Voting Agreement. Pursuant to the Nominating and Voting Agreement, the Issuer was required to (a) increase the number of directors on the Board from five to seven, (b) cause the resignation or removal of a member from the Board, and (c) cause to be appointed to the Board one person designated by each of Lubbock, Synergy and Banner (each a “Nominating Party”), with the result that, as of the date that the Closing occurred (the “Closing Date”, which date was January 5, 2022), the Board was required to be comprised of: (i) one person designated by each Nominating Party (each a “Seller Nominated Person”) and (ii) four then current members of the Board, all of which actions were taken prior to Closing, as discussed above, including the Issuer’s Board appointing Mr. Weinzierl to the Board to fill one of the vacancies created thereon.

The Nominating and Voting Agreement also provides that each Nominating Party will have the right to designate for nomination to the Board two nominees (for so long as such Nominating Party holds at least 15% of the Issuer’s outstanding Common Stock) and one nominee (for so long as such Nominating Party holds at least 5% of the Issuer’s Common Stock), for appointment at any stockholder meeting or via any consent to action without meeting of the stockholders of the Issuer. The Nominating and Voting Agreement also requires the Board to include such nominees in the slate of directors up for appointment at each meeting of stockholders where directors will be appointed, and take other actions to ensure that such persons are elected to the Board by the stockholders of the Issuer.

If any Nominating Party’s Seller Nominated Party ceases for any reason to serve on the Board, such Seller Nominated Party will be provided the right to appoint another person to the Board, who shall be appointed to the Board pursuant to the power to fill vacancies given to the Board without a stockholder vote, by the Bylaws of the Issuer.

Notwithstanding the above, no person is required to be included as a nominee for election or appointment to the Board in the event such person is a Disqualified Person. A “Disqualified Person” is a person for whom the Board reasonably determines that the nomination, election or appointment of, or retention of such person on the Board, as applicable, would (a) violate the listing rules of Nasdaq or the rules and regulations of the Securities and Exchange Commission (SEC), (b) due to such person’s past, affiliations or otherwise, negatively affect the reputation of the Issuer, negatively affect the Issuer’s ability to complete future transactions, or disqualify the Issuer from undertaking any offering under applicable securities laws, or (c) violate the fiduciary duties that the Board owes to the Issuer or its stockholders; provided, however, that if the Board reasonably determines that any person is unfit for service on the Board for the reasons set forth above, then the applicable Nominating Party is entitled to designate an alternative or replacement person.

Further notwithstanding the above, the non-Nominating Party directors and Nominating Party directors are required to be apportioned between ‘independent’ and non-’independent’ directors as required by the rules of Nasdaq such that the Issuer continues in compliance with applicable Nasdaq rules.

Each Seller Nominated Person is entitled to the same expense reimbursement and advancement, exculpation, indemnification and insurance in connection with his or her role as a director as the other members of the Board, as well as reimbursement for documented, reasonable out-of-pocket expenses incurred in attending meetings of the Board or any committee of the Board of which such Seller Nominated Person is a member, if any, in each case to the same extent as the other members of the Board. The Issuer also agreed to continue to maintain directors’ and officers’ liability insurance coverage with respect to each Seller Nominated Person’s service on the Board for a period of at least six years after each such Seller Nominated Person’s service on the Board has concluded.

At all times when Lubbock holds at least 5% of the Issuer’s outstanding Common Stock and its appointee is John A. Weinzierl, each Seller is required to instruct its appointee on the Board to vote in favor of appointing Mr. Weinzierl as Chairman of the Board.

During the term of the Nominating and Voting Agreement, each Seller agreed to vote all securities of the Issuer which they hold in any manner as may be necessary to nominate and elect (and, if applicable, maintain in office) as a member of the Issuer’s Board, each of the Seller Nominated Persons and further to not remove any Seller Nominated Persons, unless such person is a Disqualified Person.

The agreement continues in effect from the Closing Date until the earlier of (a) the date mutually agreed by all the parties (the Issuer and each of the Sellers); and (b) the date that no Seller owns at least 5% of the outstanding shares of Common Stock of the Issuer; subject to certain rights and obligations which survive termination. Once a Seller’s ownership drops below 5% of the Issuer’s outstanding Common Stock, it no longer has any right to nominate any person under the Nominating and Voting Agreement, even if such Seller’s ownership increases above 5% of the Issuer’s Common Stock in the future.

The description of the Nominating and Voting Agreement above is not complete and is qualified in its entirety by the full text thereof incorporated by reference herein.

Due to the terms of the Nominating and Voting Agreement, the Reporting Persons and Separately Filing Group Members may be deemed a group for the purposes of Section 13(d)(3) of the Exchange Act.

Item 5. Interest in Securities of the Issuer

The information provided in Items 3 and 4 of this Schedule 13D is incorporated by reference herein.

(a) and (b) The aggregate number of shares of Common Stock beneficially owned by each Reporting Person and, for each Reporting Person, the number of shares as to which there is sole power to vote or to direct the voting thereof, shared power to vote or to direct the voting thereof, sole power to dispose or to direct the disposition thereof, or shared power to dispose or to direct the disposition thereof, are set forth on rows 7 through 11 and row 13 of the cover pages of this Schedule 13D and are incorporated herein by this reference thereto.

As of the close of business on January 26, 2022, Mr. Weinzierl beneficially owned in aggregate 6,768,828 shares of Common Stock representing 26.5% shares of the Company’s outstanding Common Stock and the other Reporting Persons beneficially owned in aggregate 6,568,828 shares of Common Stock representing 25.7% shares of the Company’s outstanding Common Stock.

Item 2 of this Schedule 13D, which identifies the Reporting Persons and the Separately Filing Group Members and discloses the voting provisions of the Nominating and Voting Agreement, is incorporated herein by this reference thereto.

Due to the terms of the Nominating and Voting Agreement, the Reporting Persons and Separately Filing Group Members may be deemed a group for the purposes of Section 13(d)(3) of the Exchange Act. The security interests reported in this Schedule 13D do not include security interests owned by the Separately Filing Group Members. The Separately Filing Group Members will file separate Schedule 13Ds reporting beneficial ownership of an aggregate of 13,336,908 shares of Common Stock. The Reporting Persons assume no responsibility for the information contained in such Schedule 13Ds or any amendment thereto. The Separately Filing Group Members and the Reporting Persons may be deemed to beneficially own in the aggregate 19,905,736 shares of Common Stock, which represents approximately 77.8% of the outstanding shares of Common Stock (when not including the 200,000 shares of Common Stock held directly by Mr. Weinzierl and/or any other shares of Common Stock held directly by any other of the principals or members of the Separately Filing Group Members who are not directly party to the Nominating and Voting Agreement, and therefore not subject to its terms and conditions, except as control persons of the entities party thereto).

The percentages of beneficial ownership disclosed in this Schedule 13D are based on an aggregate of 25,582,037 shares of Common Stock outstanding as of January 26, 2022, based on information furnished by the Issuer.

(c) Except for their acquisitions of shares of Common Stock on the Closing Date pursuant to the Purchase Agreements on the terms and conditions disclosed in Item 3 of this Schedule 13D, none of the Reporting Persons nor, to the Reporting Persons’ knowledge, the Separately Filing Group Members have effected any transactions in the Common Stock during the past 60 days.

(d) Except as stated in this Item 5, to the knowledge of the Reporting Persons, only the Reporting Persons have the right to receive or the power to direct the receipt of dividends from, or the proceeds from the sale of, the Common Stock of the Issuer reported by this Schedule 13D.

(e) N/A.

Item 6. Contracts, Arrangements, Understandings or Relationships with Respect to Securities of the Issuer

The information provided or incorporated by reference in Items 2, 3, 4 and 5 of this Schedule 13D, including, but not limited to the information regarding the Purchase Agreements and Nominating and Voting Agreement, is hereby incorporated herein by this reference thereto.

Registration Rights Agreement

Immediately prior to the Closing, on January 5, 2022, each Seller and the Issuer entered into a Registration Rights Agreement (the “RRA”). Pursuant to the RRA, the Issuer agreed:

● To use its commercially reasonable efforts to prepare and file an initial shelf registration statement under the Securities Act of 1933, as amended (the “Securities Act”) covering the resale of all of the shares of Common Stock issuable to the Sellers, on or before the 30th day after the date the RRA was entered into and use commercially reasonable efforts to cause such initial shelf registration statement to become effective no later than 60 days following the filing date (or, in the event of a “full review” by the Commission, the 90th day following the filing date; and

● To provide the Sellers certain piggy-back registration and participation rights associated with future registration statements and/or future registered offerings the Issuer may undertake in the future, subject to certain exclusions and exceptions.

The Issuer agreed to bear the full costs of such registration statements and to keep them effective indefinitely, as long as any Seller holds any shares of Common Stock included thereunder.

The RRA contains customary indemnification obligations of the parties and requires the Issuer to take commercially reasonable efforts for so long as the RRA remains in place, to allow for Rule 144 to be available for the sale of the Sellers’ shares of Common Stock issuable in connection with the Closing.

The RRA is to remain in place until such time as each Seller no longer holds any shares of Common Stock issuable in connection with the Closing.

The RRA requires the Sellers to comply with the prospectus delivery requirements of the Securities Act in connection with the sale of any registered shares, and also to refrain from selling any shares at any time the Issuer advises such Sellers that such registration statement can no longer be used for the sale of such shares.

The description of the RRA above is not complete and is qualified in its entirety by the full text thereof incorporated by reference herein.

The 200,000 shares of restricted Common Stock issued to Mr. Weinzierl are subject to the terms of the U.S. Energy Corp. Notice of Restricted Stock Grant and Restricted Stock Grant Agreement (2021 Equity Incentive Plan)(non-executive director awards – January 2022), the terms of which are incorporated by reference herein.

Item 7. Material to Be Filed as Exhibits

SIGNATURE

After reasonable inquiry and to the best of my knowledge and belief, I certify that the information set forth in this statement is true, complete and correct.

January 31, 2022

January 31, 2022

January 31, 2022

Lubbock Energy Partners, LLC

Chief Executive Officer