EXHIBIT 4.5

                                  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.


                                       53