– Court Authorizes Use of Up to $1.2 Million of Cash Collateral – …

– Court Authorizes Use of Up to $1.2 Million of Cash Collateral –

– Motions Granted Support Customers, Employees and Business Partners, Ensuring Business as Usual at USEB –

NEW YORK–LAWFUE – Law News, Law Jobs Network –U.S. Biogas Corp. (“USEB” or “the Subsidiary”), a U.S.-based renewable energy business, announced today that the U.S. Bankruptcy Court for the Southern District of New York has granted approval of the Subsidiary’s critical “first day pleadings”, including the use of up to $1.2 million cash collateral that will facilitate USEB’s continued normal business operations. The Court action follows USEB’s November 30, 2006 announcement that it had voluntarily filed for reorganization under Chapter 11 of the U.S. Bankruptcy Code. USEB’s Chapter 11 filing did not include USEB’s parent company, U.S. Energy Systems, Inc. (Nasdaq: USEY), or the parent company’s other subsidiary, a UK-based natural gas exploration and development business, UK Energy Systems (UKEY). Moreover, neither USEY’s nor UKEY’s operations are affected by USEB’s Chapter 11 filing.

“We are pleased with the court’s prompt approval of USEB’s critical first day pleadings,” said Asher E. Fogel, Chairman of USEB and Chief Executive Officer of USEY. “USEB’s ability to use up to $1.2 million of cash collateral, along with the approval of other key first day pleadings, ensures that USEB will maintain normal business operations while we work to establish a viable capital structure for USEB through reorganization.”

With approvals granted on Friday by Judge Robert D. Drain, USEB has now received court authorization to, among other things:

— Use up to $1.2 million of cash collateral to pay obligations incurred in ongoing postpetition operations;

— Pay employee wages, salaries and benefits without interruption; and

— Continue to use existing bank accounts and cash management systems on an interim basis.

The USEB Chapter 11 case number is 06-12827(RDD).

USEB’s legal advisor in the Chapter 11 filing is Hunton & Williams LLP.

Additional information is available on the Company’s website at: http://www.useyinc.com.

About U.S. Energy Systems, Inc.

U.S. Energy Systems, Inc. is an owner of green power and clean energy and resources. USEY owns and operates energy projects in the United States and United Kingdom that generate electricity, thermal energy and gas production.

Certain matters discussed in this press release are forward-looking statements, and certain important factors may affect the Company’s actual results and could cause actual results to differ materially from any forward-looking statements made in this release, or which are otherwise made by or on behalf of the Company. Such factors include, but are not limited to, the effect of the USEB’s Chapter 11 filing, access to needed financing or refinancing on acceptable terms, our ability to continue as a going concern, revisions in the initial estimates in the fair market value of the acquired assets, failure to realize the estimated savings or operating results of the acquisition, and other risks associated with acquisitions generally, including risks relating to managing and integrating acquired businesses, changes in market conditions, the impact of competition, changes in local or regional economic conditions, and the amount and rate of growth in expenses, dependence on management and key personnel, changes in federal or state laws and their interpretation with respect to regulation, energy policy and other business issues, the inability to commence planned projects in a timely manner, our ability to continue our growth strategy, and the ability to complete acquisitions, as well as other risks detailed from time to time in U.S. Energy’s Securities and Exchange Commission filings, including its Annual Report on Form 10-K for the year ended December 31, 2005 as well as the 10-Q for the period ended September 30, 2006. We do not undertake to update any of the information set forth in this press release.

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