U.S. Energy Corp. (NASDAQ: USEG) announced it has reached a final investment decision to build a processing facility at its Big Sky Carbon Hub in Montana, with commercial operations targeted for the first quarter of 2027.

The company signed an engineering, procurement, and construction agreement with CANUSA EPC under a fixed-scope contract structure. Capital spending has commenced on the project, according to the press release.

The facility is designed for approximately 8.0 million cubic feet per day of inlet capacity. At initial operations, the company expects annual production of approximately 12 million cubic feet of helium and approximately 125,000 metric tons of refined carbon dioxide.

U.S. Energy expects to qualify for approximately $85 per metric ton in Section 45Q federal tax credits, supporting an estimated $130 million in Phase 1 tax credit value. The Section 45Q program provides tax credits for carbon capture and sequestration projects.

The company plans to begin gathering pipeline installation in spring 2026, with commissioning targeted for the third quarter of 2026. Initial helium sales and carbon management operations are expected to commence in the first quarter of 2027.

Through strategic transactions over 18 months, U.S. Energy has assembled approximately 80,000 net acres in Montana's Kevin Dome. A third-party resource evaluation estimates a Phase 1 resource of approximately 1.3 billion cubic feet of helium and 444 billion cubic feet of naturally occurring carbon dioxide.

The Big Sky Carbon Hub combines helium production, carbon dioxide recovery and sequestration, and enhanced oil recovery operations. The company has three producing wells online that are expected to supply the initial processing facility.

U.S. Energy is in advanced negotiations for a long-term helium offtake agreement with a global industrial gas company and expects to finalize commercial terms during 2026.