EXHIBIT 4.6

                       AMENDMENT TO 1989 STOCK OPTION PLAN
                           EFFECTIVE DECEMBER 13, 1996

                                   RESOLUTION

               WHEREAS,  on  December  22, 1995 the Board of  Directors  of U.S.
        Energy Corp.  ("USE" or the "Company")  adopted an amendment to the U.S.
        Energy Corp.  1989 Stock Option Plan (the "Plan")  whereby the number of
        shares  available  for issuance  under the Plan was increased to 925,000
        shares; and

               WHEREAS,  the Compensation  Committee  advised the Board, and the
        Board agreed that it was in the best  interest of the Company to request
        shareholder  ratification  of the Board's  decision to amend the Plan to
        increase the number of options  issuable to 925,000,  which would permit
        conversion of all outstanding non-qualified options to qualified options
        without  any other  change in the terms of such  options (as to exercise
        price, conditions of employment and terms of exercise); and

               WHEREAS,  ratification  of the December 22, 1995 Amendment to the
        Plan was submitted to  shareholders  for vote at the 1996 Annual Meeting
        of Shareholders on December 13, 1996; and

               WHEREAS,  the  shareholders of U.S. Energy Corp. by majority vote
        at the 1996 Annual  Meeting of  Shareholders  ratified  the December 22,
        1995  Amendment to the 1989 Stock Option Plan  increasing  the number of
        shares available for issuance to 925,000.

               NOW THEREFORE BE IT RESOLVED, that the Board of Directors of U.S.
        Energy does hereby convert all outstanding  non-qualified  stock options
        as of December  13,  1996,  granted  under the 1989 Stock Option Plan to
        qualified  options.  All other terms and  conditions of the Stock Option
        Agreements shall remain in full force and effect.