* To sell 5 mln shares at $5.25 each

* To use net proceeds for funding drilling programs

* Shares fall 13 percent

Dec 11 - Oil and gas company U.S. Energy Corp (USEG.O) said its offering of 5 million shares was priced at $5.25 apiece, a 6 percent discount to the stock's close on Thursday.

Shares of the company fell as much as 13 percent in Friday morning trade on Nasdaq.

The company said it intends to use the net proceeds from the offering to fund capital requirements under the drilling programs with Brigham Exploration Co (BEXP.O) and for other general corporate purposes.

In August, Brigham Exploration entered into a drilling participation agreement with U.S. Energy to accelerate drilling in some of Brigham's properties in the Bakken shale before lease expirations. [ID:nBNG492348]

U.S. Energy expects the offering to close around Dec. 16, and said underwriters will have an over-allotment option of 750,000 shares.

Madison Williams and Co LLC is the sole book-running manager for the offering.

Shares of U.S. Energy fell to a low of $4.84 before recouping some loses to trade down 8 percent at $5.10. (Reporting by Arundhati Ramanathan in Bangalore; Editing by Anne Pallivathuckal)