EXHIBIT 4.1

                                  AMENDMENT TO
                                U.S. ENERGY CORP.
                             1998 STOCK OPTION PLAN
                               AS OF MAY 25, 2001


               The first  paragraph  of existing  section  8(h) of the
          Plan is deleted and replaced with the following provisions:

               (h)  NONTRANSFERABILITY.  Except by will or the laws of
          descent  and  distribution,  and except for  transfers  to a
          Permitted Transferee, no Option, and no right or interest in
          any  Incentive   Stock   Option,   shall  be  assignable  or
          transferable.  Transfers to a Permitted  Transferee shall be
          authorized  only if (i) the transfer is a bona fide gift and
          not  payment  of   anything  to  any  person,   directly  or
          indirectly;  (ii) the  Optionee  receives  nothing of value,
          directly  or  indirectly,   for  the  gift;  and  (iii)  the
          transferred  Options continue to be subject to the identical
          terms and  conditions as the Options prior to such transfer.
          A  Permitted  Transferee  means (and shall be limited to) an
          Optionee's  Family Members:  child,  stepchild,  grandchild,
          parent,  stepparent,  grandparent,  spouse,  former  spouse,
          sibling,   niece,  nephew,   mother-in-law,   father-in-law,
          son-in-law,   daughter-in-law,   brother-  or  sister-in-law
          (including  adoptive  relationships);   anyone  sharing  the
          Optionee's household (but not as a tenant or employee), or a
          trust or other  entity  in which  the  Optionee  and  Family
          Members  hold  more  than 50% of its  beneficial  or  voting
          interest.  It is  intended  that the  preceding  comply with
          General  Instruction  A(1)(a)(5)  to Form S-8 adopted by the
          Securities and Exchange Commission.


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