---

NOTE: This form contract is a suggested guide only and use of
this form or any variation thereof shall be at the sole discretion and risk of
the user parties. Users of the form contract or any portion or variation thereof
are encouraged to seek the advice of counsel to ensure that their contract
reflects the complete agreement of the parties and applicable law. The
International Association of Drilling Contractors disclaims any liability
whatsoever for loss or damages which may result from use of the form contract or
portions or variations thereof.

|                                                        |  | *Revised July,*1998
|------------------------------------------------------- |  | -------------------
|INTERNATIONAL ASSOCIATION OF DRILLING
      CONTRACTORS | 
|DRILLING BID PROPOSAL                                   | 
|AND                                                     | 
|DAYWORK DRILLING
      CONTRACT-U.S.                    | 

TO:         
 Union Drilling, Inc.

Please submit bid on this drilling contract form for performing
the work outlined below, upon the terms and for the consideration set forth,
with the understanding that if the bid is accepted by U. S. Geothermal,
Inc.,this instrument will constitute a contract between us. Your
bid should be mailed or delivered not later than 4:00P.M. on
April 20, 2006to the following address: 1509 Tyrell Lane,
Suite B, Boise, ID 83706.

*********************

THIS AGREEMENT CONTAINS PROVISIONS RELATING TO
INDEMNITY,RELEASE OF LIABILITY, AND ALLOCATION OF
RISK

THIS AGREEMENT(The Contract) is made and entered into
on the date hereinafter set forth by and between the parties herein designated
as Operator and Contractor.

| | OPERATOR:   | U. S. Geothermal, Inc.    |                                 
| | ----------- | ------------------------- | --------------------------------
| | Address:    | 1509 Tyrell Lane, Suite B |                                 
| |             | Boise, ID 83706           | Attn: Kevin Kitz                
| |             |                           | 208-424-1027  Fax 208-724-1030 
| |             |                           |                                 
| | CONTRACTOR: | Union Drilling, Inc.      |                                 
| | Address:    | P.O. Drawer 40            |                                 
| |             | Buckhannon, WV 26201      | Attn: Byron Doc Musselman     
| |             |                           | 304-472-4610 - Fax: 304-473-3476

IN CONSIDERATIONof the mutual promises, conditions and
agreements herein contained and the specifications and special provisions set
forth in Exhibit A and Exhibit B attached hereto and made a part hereof,
Operator engages Contractor as an Independent Contractor to drill the
hereinafter designated well or wells in search of oil or gas on a daywork
basis.

For purposes hereof, the term daywork basis means Contractor
shall furnish equipment, labor, and perform services as herein provided, for a
specified sum per day under the direction, supervision and control of Operator
(inclusive of any employee, agent, consultant or subcontractor engaged by
Operator to direct drilling operations). When operating on a daywork basis,
Contractor shall be fully paid at the applicable rates of payment and assumes
only the obligations and liabilities stated herein. Except for such obligations
and liabilities specifically assumed by Contractor, Operator shall be solely
responsible and assumes liability for all consequences of operations by both
parties while on a daywork basis, including results and all other risks or
liabilities incurred in or incident to such operations.

| | 1. LOCATION OF WELL:                                                        |                                        
| | --------------------------------------------------------------------------- | ---------------------------------------
| | Well Name                                                                   |                                        
| | and Number: 4 Wells-RRG3, RRG6, RRG7, and RRG4.                             |                                        
| | Parish/                                                                     |                                        
| | County: Cassia CountyState: ID                                              | Field Name: Raft River Geothermal Field
| | Well Location and land description: Sections 23  26,
      Range 26E, T15S |                                        
| |                                                                             |                                        
| | 1.1 Additional Well Locations or Areas:                                     |                                        
| | Up to 7 additional redrills or new wells in same
      area.                |                                        

Locations described above are for well and Contract
identification only and Contractor assumes no liability whatsoever for a proper
survey or location stake on Operators lease.

2. COMMENCEMENT DATE:

Contractor agrees to use reasonable efforts tocommence operations for the drilling of the well by theOperator at the conclusion of one well forFortuna US,LP., expected to be completed toward the end of June, 2006,
with at least two weeks advance notice to Operator, ifpossible.

3. DEPTH:

3.1 Well Depth:The well(s)
shall be drilled to a depth of approximately 6,500 MD +/-feet,
or N/Aformation, whichever is deeper, but the Contractor shall not be
required hereunder to drill said well(s) below a maximum depth of 7,000feet, unless Contractor and Operator mutually agree to drill to a
greater depth.

4. DAYWORK RATES:

Contractor shall be paid at the
following rates for the work performed hereunder.

| | **4.1** | Mobilization:Operator shall pay
      Contractor a mobilization fee of $12,600.00 per
      day.This sum shall be due and payable in full at the time
      the rig is rigged up or positioned at the well site ready to spud.
      Mobilization does notinclude: Actual trucking,
      permits, dozer(s), cranes, fork lifts, etc.,which will be
      billed directly to the Operator.                          
| | ------- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |         |                                                                                                                                                                                                                                                                                                                                                                                                                     
| | **4.2** | Demobilization:Operator shall pay
      Contractor a demobilization fee $12,600.00 per
      day.This sum shall be due and payable in full at the time
      the rig is rigged up or positioned at the well site ready to spud.
      Demobilization does notinclude: Actual trucking,
      permits, dozer(s), cranes, fork lifts,etc., to UDI Vernal
      UT yard, which will be billed directly to the Operator.
| |         |                                                                                                                                                                                                                                                                                                                                                                                                                     
| | 4.3     | Infield Moving Rate:Operator shall pay
      Contractor a Infield Moving fee of $12,600.00 per
      day.This sum shall be due and payable in full at the time
      the rig is rigged up or positioned at the well site ready to spud.
      Mobilization does notinclude: Actual trucking,
      permits, dozer(s), cranes, forklifts, etc., which will be
      billed directly to the Operator.                 
| |         |                                                                                                                                                                                                                                                                                                                                                                                                                     
| | **4.4** | Operating Day Rate:For work performed
      per twenty-four (24) hour day with (2)  5-man crews working
      12-hour shifts, consisting of (1) driller and (4) crew members with
      (1) Tool Pusher,the operating day rate shall be:                                                                                                                                                                           

|                                               | Depth Intervals |                                   |                                 
|---------------------------------------------- | --------------- | --------------------------------- | --------------------------------
|From                                           | To              | Without Drill Pipe                | With Drill Pipe                 
|0                                              | 6,500 MD+/-    | $15,000.00per day
      plus fuel | $15,000.00per day plus fuel     
|                                               |                 | **$_        _**per day plus fuel  | **$_        _**per day plus fuel
|                                               |                 | **$_        _**per
      day      | **$_        _**per
      day    
|Using Operators drill pipe $15,000.00per day. |                

(U.S. Daywork Contract- Page 1)

---

Revised July 1998

If under the above column With Drill Pipe no day rates are
specified, the daywork rate per twenty-four hour day when drill pipe is in use
shall be the applicable daywork rate specified in the column Without Drill
Pipe plus compensation for any drill pipe actually used at the rates specified
below, computed on the basis of the maximum drill pipe In use at any time during
each twenty-four hour day.

|DRILL PIPE RATES PER 24-HOUR DAY
|--------------------------------
|                                
|Straight Hole                   
|per ft.                         
|per ft.                         
|per ft.                         

Directional or uncontrolled deviated hole will be deemed to
exist when deviation exceeds N/Adegrees or when the change
of angle exceeds N/Adegrees per one hundred
feet.

Drill
pipe shall be considered in use not only when in actual use but also while it is
being picked up or laid down, When drill pipe is standing in the derrick, it
shall not be considered in use, provided, however, that if Contractor furnishes
special strings of drill pipe, drill collars, and handling tools as provided for
in Exhibit A, the same shall be considered in use at all times when on
location or until released by Operator. In no event shall fractions of an hour
be considered in computing the amount of time drill pipe is in use but such time
shall be computed to the nearest hour, with thirty minutes or more being
considered a full hour and less than thirty minutes not to be counted.

Operating
rate will begin when the drilling unit is rigged up at the drilling location and
ready to commence operations; and will cease when the rig is ready to be moved
off the location.

4.5
  Repair Rate:In the event it is necessary to shut down Contractors
  rig for repairs, excluding routine rig servicing, Contractor shall be allowed
  compensation at the applicable daywork rate for such shut down time up to a
  maximum of 4hours for any one rig repair job or 24hours
  for any calendar month. Thereafter, Contractor shall be compensated at a rate
  of $ 0per twenty-four (24) hour day. Routine rig servicing shall
  include, but not limited to, cutting and slipping drilling line, changing pump
  or swivel expendables, lubricating rig.

4.6
Standby Time Rate with Crews:$15,000.00per twenty-four (24)
hour day. Standby time shall be defined to include time when the rig is shut
down although in readiness to begin or resume operations but Contractor is
waiting on orders of Operator or on materials, services or other items to be
furnished by Operator.

4.7
Force Majeure Rate:$15,000.00 per twenty-four (24) hour day for 1st 3
days, and $10,000.00 for additional days thereafter,for any continuous
period that normal operations are suspended or cannot be carried on due to
conditions of force majeure as defined in Paragraph 17 hereof, It is, however,
understood that subject to Subparagraph 6.3 below, Operator can release the rig
in accordance with Operators right to direct stoppage of the work, effective
when conditions will permit the rig to be moved from the location.

4.8
Reimbursable Costs:Operator shall reimburse Contractor for the costs of
material, equipment, work or services which are to be furnished by Operator as
provided for herein but which for convenience are actually furnished by
Contractor at Operators request, plus 10percentfor such
cost of handling,

4.9
Revision In Rates:The rates and/or payments herein set forth due to
Contractor from Operator shall be revised to reflect the change in costs if the
costs of any of the items hereinafter listed shall vary by more than 5percent from the costs thereof on the date of this Contract or by the
same percent after the date of any revision pursuant to this Subparagraph:

| | (a) | Labor costs, including all benefits, of Contractors
      personnel;                                                                                                                                                                                                                                                                                                                                                        
| | --- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | (b) | Contractors cost of fuel, including all taxes and fees;
      the cost per gallon/MCF being N/A (Fuel supplied by
      operator)                                                                                                                                                                                                                                                                                           
| | (c) | Contractors cost of catering, when applicable;                                                                                                                                                                                                                                                                                                                                                                              
| | (d) | Contractors cost of spare parts and supplies with the
      understanding that such spare parts and supplies constitute N/Apercent of the Operating Rate and that the parties shall use the
      U.S. Bureau of Labor Statistics Oilfield Drilling Machinery and Equipment
      Wholesale Price Index (Code No. 1191-02) to determine to what extent a
      price variance has occurred in said spare parts and supplies;
| | (e) | If there is any change in legislation or regulations in
      the area in which Contractor is working or other unforeseen, unusual event
      that alters Contractors financial burden,                                                                                                                                                                                                                                    

5. TIME OF PAYMENT:

Payment
is due by Operator to Contractor as follows:

5.1Payment for mobilization, drilling and other work performed at applicable
day rates, and all other applicable charges shall be due, upon presentation of
invoice therefor, upon completion of mobilization, demobilization, rig release
or at the end of the month in which such work was performed or other charges are
incurred, whichever shall first occur. All invoices may be mailed to Operator at
the address hereinabove shown, unless Operator does hereby designate
that such invoices shallbe mailed as follows:

5.2
Disputed Invoices and Late Payment:Operator shall pay all invoices within
30days after receipt except that if Operator disputes an invoice
or any part thereof, Operator shall, within fifteen(15) days after receipt of
the invoice, notify Contractor of the item disputed, specifying the reason
therefor, and payment of the disputed item may be withheld until settlement of
the dispute, but timely payment shall be made of any undisputed portion. Any
sums (including amounts ultimately paid with respect to a disputed invoice) not
paid within the above specified days shall bear interest at the rate of 1
1/2percent or the maximum legal rate, whichever is less, per month from
the due date until paid. If Operator does not pay undisputed items within the
above stated time, Contractor may terminate this Contract as specified under
Subparagraph 6.3.

6. TERM:

**6.1 Duration of Contract:**This Contract shall remain in full force and effect until drilling
operations are completed on the well or wells specified in Paragraph 1 above, or
for a term of 60 days, commencing on the date specified:

6.2 Extension of Term:Operator may extend the term of this Contract for additionalwell(s) by providing Contractor 45 days notice of intent
toextend the term of the contract by a specified number of
wells for the first 6 months of the contract, and by 25 days advance
noticethereafter, or by mutual agreement with Contractor.
Every 6 months after the commencement date of the contract, the Contractor
mayadjust prices per the provisions of Subparagraph
4.9.

**6.3 Early
Termination:**     (a) By Either Party: Upon
giving of written notice, either party may terminate this Contract when total
loss or destruction of the rig, or a major breakdown with indefinite repair time
necessitates stopping operations hereunder. Such event shall result in no
early termination payment. Demobilization would stillapply, providing the loss was not caused by Contractors gross
negligence or willful
misconduct.     (b) By Operator:Notwithstanding the provisions of Paragraph 3 with respect to the depth to
be drilled, Operator shall have the right to direct the stoppage of the work to
be performed by Contractor hereunder at any time prior to reaching the specified
depth, and even though Contractor has made no default hereunder. In such event
Operator shall reimburse Contractor as set forth in Subparagraph 6.4
hereof.     (c) By Contractor:Notwithstanding the provisions of Paragraph 3 with respect to the depth to
be drilled, in the event Operator shall become insolvent, or be adjudicated a
bankrupt, or file, by way of petition or answer, a debtors petition or other
pleading seeking adjustment of Operators debts, under any bankruptcy or
debtors relief laws now or hereafter prevailing, or if any such be filed
against Operator, or in case a receiver be appointed of Operator or Operators
property, or any part thereof, or Operators affairs be placed in the hands of a
Creditors Committee, or, following ten days prior written notice to Operator If
Operator does not pay Contractor within the time specified in Subparagraph 6.2
all undisputed items due and owing, Contractor may, at its option, elect to
terminate further performance of any work under this Contract and Contractors
right to compensation shall be as set forth in Subparagraph 6.4 hereof. In
addition to Contractors right to terminate performance hereunder. Operator
hereby expressly agrees to protect, defend and indemnify Contractor from and
against any claims, demands and causes of action, including all costs of
defense, in favor of Operator, Operators joint venturers, or other parties
arising out of any drilling commitments or obligations contained in any lease,
farmout agreement or other agreement, which may be affected by such termination
of performance hereunder.

*(U.S. Daywork Contract- Page 2)*

---

Revised July 1998

6.4 Early Termination Compensation:

(a) Prior to Commencement:
In the event Operator terminates this Contract prior to commencement of
operations hereunder, Operator shall pay Contractor asliquidated damages
and not as apenalty asum equal to the Standby Rate with Crews
(Subparagraph 4.6) for a period of 0 days or alump sum of
N/A.

(b) Prior to Spudding: If
such termination occurs after commencement of operations but prior to the
spudding of the well, Operator shall pay to Contractor the sum of the following:
(1) all expenses reasonably and necessarily incurred and to be incurred by
Contractor by reason of the Contract and by reason of the premature termination
of the work, including the expense of drilling or other crew members and
supervision directly assigned to the rig; (2) ten percent (10%) of the amount of
such reimbursable expenses; and (3) a sum calculated at the standby rate for all
time from the date upon which Contractor commences any operations hereunder down
to such date subsequent to the date of termination as will afford Contractor
reasonable time to dismantle its rig and equipment provided, however, if this
Contract is for a term of more than one well or for a period of time, Operator
shall pay Contractor, in addition to the above, the force majeure rate, less any
unnecessary labor, from that date subsequent to termination upon which
Contractor completes dismantling its rig and equipment until the end of the term
or until Contractorcommences operation with another
Operator, whichever occurs first.

(c) Subsequent to
Spudding: If such termination occurs after the spudding of the well,
Operator shall pay Contractor ( 1 ) the amount for all
applicable daywork rates and all other charges and
reimbursements due to Contractor; but in no event shall such sum, exclusive of
reimbursements due, be less than would have been earned forN/Adays at the applicable day
rate Without Drill Pipe and the actual amount due for drill pipe used in
accordance with the above rates; or(2) at the election of Contractor
and in lieu of the foregoing, Operator shall pay Contractor for all expenses
reasonably and necessarily incurred and to be incurred by reason of this
Contract and by reason of such premature termination plus a lump sum of $
Actual Costs. If the termination subsequent to spudding is for theconvenience of the Operator, and not due to documented substandard
performance of the Contractor.provided, however, if this
Contract is for a term of more than one well or for a period of
time, Operator shall pay Contractor, in addition to the above, the
force majeure rate less any unnecessary labor from the date of termination until
the end of the term or until Contractor commences operation with another
Operator, whichever occurs first.

7. CASING PROGRAM:

Operator shall have the right to
designate the points at which casing will be set and the manner of setting,
cementing and testing. Operator may modify the casing program, however, any such
modification which materially increases Contractors hazards or costs can only
be made by mutual consent of Operator and Contractor and upon agreement as to
the additional compensation to be paid Contractor as a result thereof.

8. DRILLING METHODS AND PRACTICES:

8.1Contractor shall
maintain well control equipment in good condition at all times and shall use all
reasonable means to prevent and control fires and blowouts and to protect the
hole.     8.2Subject to the terms hereof,
and at Operators cost, at all times during the drilling of the well, Operator
shall have the right to control the mud program, and the drilling fluid must be
of a type and have characteristics and be maintained by Contractor in accordance
with the specifications shown in Exhibit
A.     8.3Each party hereto agrees to
comply with all laws, rules, and regulations of any federal, state or local
governmental authority which are now or may become applicable to that partys
Operations covered by or arising out of the performance of this Contract. When
required by law, the terms of Exhibit B shall apply to this Contract. In the
event any provision of this Contract is inconsistent with or contrary to any
applicable federal, state or local law, rule or regulation, said provision shall
be deemed to be modified to the extent required to comply with said law, rule or
regulation, and as so modified said provision and this Contract shall continue
in full force and effect.     8.4Contractor
shall keep and furnish to Operator an accurate record of the work performed and
formations drilled on the IADC-API Daily Drilling Report Form or other form
acceptable to Operator. A legible copy of said form signed by Contractors
representative shall be furnished by Contractor to
Operator.     8.5If requested by Operator,
Contractor shall furnish Operator with a copy of delivery tickets covering any
materiel or supplies provided by Operator and received by Contractor,

9. INGRESS, EGRESS. AND LOCATION:

Operator hereby assigns to
Contractor all necessary rights of ingress and egress with respect to the tract
on which the well is to be located for the performance by Contractor of all work
contemplated by this Contract. Should Contractor be denied free access to the
location for any reason not reasonably within Contractors control, any time
lost by Contractor as a result of such denial shall be paid for at the
applicable rate. Operator agrees at all times to maintain the road and location
in such a condition that will allow free access and movement to and from the
drilling site in an ordinarily equipped highway type vehicle. If Contractor is
required to use bulldozers, tractors, four-wheel drive vehicles, or any other
specialized transportation equipment for the movement of necessary personnel,
machinery, or equipment over access roads or on the drilling location, Operator
shall furnish the same at its expense and without cost to Contractor. The actual
cost of repairs to any transportation equipment furnished by Contractor or its
personnel damaged as a result of improperly maintained access roads or location
will be charged to Operator. Operator shall reimburse Contractor for all amounts
reasonably expended by Contractor for repairs and/or reinforcement of roads,
bridges and related or similar facilities (public and private) required as a
direct result of a rig move pursuant to performance hereunder.

10. SOUND LOCATION:

Operator shall prepare a sound
location adequate in size and capable of properly supporting the drilling rig,
and shall be responsible for a conductor pipe program adequate to prevent soil
and subsoil wash out. It is recognized that Operator has superior knowledge of
the location and access routes to the location, and must advise Contractor of
any subsurface conditions, or obstructions (including, but not limited to,
mines, caverns, sink holes, streams, pipelines, power lines and telephone lines)
which Contractor might encounter while en route to the location or during
operations hereunder. In the event subsurface conditions cause a cratering or
shifting of the location surface, or if seabed conditions prove unsatisfactory
to properly support the rig during marine operations hereunder, and loss or
damage to the rig or its associated equipment results therefrom, Operator shall,
without regard to other provisions of this Contract, including Subparagraph 14.1
hereof, reimburse Contractor to the extent not covered by Contractors
insurance, for all such loss or damage including payment of force majeure rate
during repair and/or demobilization if applicable.

11. EQUIPMENT CAPACITY:

If applicable hereunder,
operations shall not be attempted under any conditions, which exceed the
capacity of the equipment, specified to be used hereunder. Contractor shall make
final decision as to when an operation or attempted operation would exceed the
capacity of specified equipment.

12. TERMINATION OF LOCATION LIABILITY:

When Contractor has complied with
all obligations of the Contract regarding restoration of Operators location,
Operator shall thereafter be liable for damage to property, personal injury or
death of any person which occurs as a result of conditions of the location and
Contractor shall be relieved of such liability; provided, however, if Contractor
shall subsequently reenter upon the location for any reason, including removal
of the rig, any term of the Contract relating to such reentry activity shall
become applicable during such period.

13. INSURANCE

During the life of this Contract,
Contractor shall at Contractors expense maintain, with an insurance company or
companies authorized to do business in the state where the work is to be
performed or through a self-insurance program, insurance coverages of the kind
and in the amounts set forth in Exhibit A, insuring the liabilities
specifically assumed by Contractor in Paragraph 14 of this Contract. Contractor
shall, if requested to do so by Operator, procure from the company or companies
writing said insurance a certificate or certificates that said insurance is in
full force and effect and that the same shall not be canceled or materially
changed without ten (10) days prior written notice to Operator. For liabilities
assumed hereunder by Contractor, its insurance shall be endorsed to provide that
the underwriters waive their right of subrogation against Operator. Operator
will, as well, cause its insurer to waive subrogation against Contractor for
liability it assumes and shall maintain, at Operators expense, or shall self
insure, insurance coverage of the same kind and in the same amount as is
required of Contractor, insuring the liabilities specifically assumed by
Operator in Paragraph 14 of this Contract.

(U.S. Daywork Contract- Page 3)

---

Revised July 1998

14. RESPONSIBILITY FOR LOSS OR DAMAGE. INDEMNITY. RELEASE OF
LIABILITY AND ALLOCATION OF RISK:

14.1 Contractors Surface
Equipment:Contractor shall assume liability at all times for damage to or
destruction of Contractors surface equipment, regardless of when or how such
damage or destruction occurs, and Contractor shall release Operator of any
liability for any such loss, except loss or damage under the provisions of
Paragraph 10 or Subparagraph 14.3.     14.2
Contractors In-Hole Equipment:Operator shall assume liability at all times
for damage to or destruction of Contractors in-hole equipment, including, but
not limited to, drill pipe, drill collars, and tool joints, and Operator shall
reimburse Contractor for the value of any such loss or damage; the value to be
determined by agreement between Contractor and Operator as current repair costs
or 100 percent of current like condition replacement costof
such equipment delivered to the well
site.     14.3 Contractors
Equipment-Environmental Loss or Damage:Notwithstanding the provisions of
Subparagraph 14.1 above, Operator shall assume liability at all times for damage
to or destruction of Contractors equipment caused by exposure to highly
corrosive or otherwise destructive elements, including those introduced into the
drilling fluid.     14.4 Operators Equipment:Operator shall assume liability at all times for damage to or destruction of
Operators equipment, including, but not limited to, casing, tubing, well head
equipment, and platform if applicable, regardless of when or how such damage or
destruction occurs, and Operator shall release Contractor of any liability for
any such loss or damage.     14.5 The Hole:In the event the hole should be lost or damaged, Operator shall be solely
responsible for such damage to or loss of the hole, including the casing
therein. Operator shall release Contractor of any liability for damage to or
loss of the hole, and shall protect, defend and indemnify Contractor from and
against any and all claims, liability, and expense relating to such damage to or
loss of the hole.     14.6 Underground Damage:Operator shall release Contractor of any liability for, and shall protect,
defend and indemnify Contractor from and against any and all claims, liability,
and expense resulting from operations under this Contract on account of injury
to, destruction of, or loss or impairment of any property right in or to oil,
gas, or other mineral substance or water, if at the time of the act or omission
causing such injury, destruction, loss, or impairment, said substance had not
been reduced to physical possession above the surface of the earth, and for any
loss or damage to any formation, strata, or reservoir beneath the surface of the
earth.     14.7 Inspection of Materials
Furnished by Operator:Contractor agrees to visually inspect all materials
furnished by Operator before using same and to notify Operator of any apparent
defects therein. Contractor shall not be liable for any loss or damage resulting
from the use of materials furnished by Operator, and Operator shall release
Contractor from, and shall protect, defend and indemnify Contractor from and
against, any such liability.     14.8
Contractors Indemnification of Operator:Contractor shall release Operator
of any liability for, and shall protect, defend and indemnify Operator, its
officers, directors, employees and joint owners and its third party
contractors and subcontractors,from and against all claims, demands,
and causes of action of every kind and character, without limit and without
regard to the cause or causes thereof or the negligence of any party or parties,
arising in connection herewith in favor of Contractors employees or
Contractors subcontractors or their employees, or Contractors invitees, on
account of bodily injury, death or damage to property. Contractors indemnity
under this paragraph shall be without regard to and without any right to
contribution from any insurance maintained by Operator pursuant to paragraph 13.
If it is judicially determined that the monetary limits of insurance required
hereunder or of the indemnities voluntarily assumed under Subparagraph 14.8
(which Contractor and Operator hereby agree will be supported either by
available liability insurance, under which the insurer has no right of
subrogation against the indemnities, or voluntarily self-insured, in part or
whole) exceed the maximum limits permitted under applicable law, it is agreed
that said insurance requirements or indemnities shall automatically be amended
to conform to the maximum monetary limits permitted under such
law.     14.9 Operators Indemnification of
Contractor:Operator shall release Contractor of any liability for, and
shall protect, defend and indemnify Contractor, its officers, directors,
employees and joint owners and its third party contractors and
subcontractors,from and against all claims, demands, and causes of
action of every kind and character, without limit and without regard to the
cause or causes thereof or the negligence of any party or parties, arising in
connection herewith in favor of Operators employees or Operators contractors
or their employees, or Operators invitees, other than those parties identified
in Subparagraph 14.8 on account of bodily injury, death or damage to property.
Operators indemnity under this paragraph shall be without regard to and without
any right to contribution from any insurance maintained by Contractor pursuant
to paragraph 13. If it is judicially determined that the monetary limits of
insurance required hereunder or of the indemnities voluntarily assumed under
Subparagraph 14.9 (which Contractor and Operator hereby agree will be supported
either by available liability insurance, under which the insurer has no right of
subrogation against the indemnities, or voluntarily self-insured, in part or
whole) exceed the maximum limits permitted under applicable law, it is agreed
that said insurance requirements or indemnities shall automatically be amended
to conform to the maximum monetary limits permitted under such
law.     14.10 Liability for Wild Well:Operator shall be liable for the cost of regaining control of any wild well,
as well as for cost of removal of any debris, and shall release Contractor of,
and Operator shall protect, defend and indemnify Contractor from and against any
liability for such cost.     14.11 Pollution and
Contamination:Notwithstanding anything to the contrary contained herein,
except the provisions of Paragraphs 10 and 12, it is understood and agreed by
and between Contractor and Operator that the responsibility for pollution and
contamination shall be as follows:      (a)Unless otherwise provided herein, Contractor shall assume all responsibility
for, including control and removal of, and shall protect, defend and indemnify
Operator from and against all claims, demands and causes of action of every kind
and character arising from pollution or contamination, which originates above
the surface of the land or water from spills of fuels, lubricants, motor oils,
pipe dope, paints, solvents, ballast, bilge and garbage, except unavoidable
pollution from reserve pits, wholly in Contractors possession and control and
directly associated with Contractors equipment and
facilities.     (b)Operator shall assume
all responsibility for, including control and removal of, and shall protect,
defend and indemnify Contractor from and against all claims, demands, and causes
of action of every kind and character arising directly or indirectly from all
other pollution or contamination which may occur during the conduct of
operations hereunder, including, but not limited to, that which may result from
fire, blowout, cratering, seepage or any other uncontrolled flow of oil, gas,
water or other substance, as well as the use or disposition of all drilling
fluids, including, but not limited to, oil emulsion, oil base or chemically
treated drilling fluids, contaminated cuttings or cavings, lost circulation and
fish recovery materials and fluids. Operator shall release Contractor of any
liability for the foregoing.     (c)In the
event a third party commits an act or omission which results in pollution or
contamination for which either Contractor or Operator, for whom such party is
performing work, is held to be legally liable, the responsibility therefor shall
be considered, as between Contractor and Operator, to be the same as if the
party for whom the work was performed had performed the same and all of the
obligations respecting protection, defense, indemnity and limitation of
responsibility and liability, as set forth in (a) and (b) above, shall be
specifically applied.     14.12 Consequential
Damages:Neither party shall be liable to the other for special, indirect or
consequential damages resulting from or arising out of this Contract, including,
without limitation, loss of profit or business interruptions including loss or
delay of production, however same may be
caused.     14.13 Indemnity Obligation:Except as otherwise expressly limited herein, it is the intent of parties
hereto that all indemnity obligations and/or liabilities assumed by such parties
under terms of this Contract,(including, without limitation),
Subparagraphs 14.1 through 14.12 hereof, be without limit and without regard to
the cause or causes thereof (including preexisting conditions), strict
liability, regulatory or statutory liability, breach of warranty (express or
implied), any theory of tort, breach of contract or the negligence of any party
or parties, whether such negligence be sole, joint or concurrent, active or
passive. The indemnities, and releases and assumptions of liability extended by
the parties hereto under the provisions of Paragraph 14 shall inure to the
benefit of the parties, their parent, holding and affiliated companies and their
respective officers, directors, employees, agents and servants and its third
party contractors and subcontractors.The terms and provisions of
Subparagraphs 14.1 through 14.12 shall have no application to claims or causes
of action asserted against Operator or Contractor by reason of any agreement of
indemnity with a person or entity not a party hereto.

15. AUDITS:

If any payment provided for
hereunder is made on the basis of Contractors costs, Operator shall have the
right to audit Contractors books and records relating to such costs. Contractor
agrees to maintain such books and records for a period of two (2) years from the
date such costs were incurred and to make such books and records available to
Operator at any reasonable time or times within the period.

16. NO WAIVER EXCEPT IN WRITING:

It is fully understood and agreed
that none of the requirements of this Contract shall be considered as waived by
either party unless the same is done in writing, and then only by the persons
executing this Contract, or other duly authorized agent or representative of the
party.

17. FORCE MAJEURE:

Except for the duty to make
payments hereunder when due, and the indemnification provisions under this
Contract, neither Operator nor Contractor shall be responsible to the other for
any delay, damage, or failure caused by or occasioned by a Force Majeure Event.
As used in this Contract, Force Majeure Event includes: acts of God, action of
the elements, warlike action, insurrection, revolution or civil strife, piracy,
civil war or hostile action, strikes, differences with workmen, acts of public
enemies, federal or state laws, rules and regulations of any governmental
authorities having jurisdiction in the premises or of any other group,
organization or informal association (whether or not formally recognized as a
government), inability to procure material, equipment or necessary labor in the
open market, acute and unusual labor or material or equipment shortages, or any
other causes (except financial) beyond the control of either party. Neither
Operator nor Contractor shall be required against its will to adjust any labor
or similar disputes except in accordance with applicable law. In the event that
either party hereto is rendered unable, wholly or in part, by any of these
causes to carry out its obligation under this Contract, it is agreed that such
party shall give notice and details of Force Majeure in writing so the other
party as promptly as possible after its occurrence. In such cases, the
obligations of the party giving the notice shall be suspended during the
continuance of any inability so caused except that Operator shall be obligated
to pay to Contractor the Force Majeure Rate provided for in Subparagraph 4.7
above.

(U.S. Daywork Contract- Page 4)

---

Revised July 1998

18. GOVERNING LAW:

This Contract shall be construed,
  governed, interpreted, enforced and litigated, and the relations between the
  parties determined in accordance with the laws of the state of Idaho.

19. INFORMATION CONFIDENTIAL:

Any and allUpon written request by Operator,information obtained
by Contractor in the conduct of drilling operations on this well, including, but
not limited to, depth, formations penetrated, the results of coring, testing and
surveying, shall be considered confidential and shall not be divulged by
Contractor or its employees, to any person, firm, or corporation other than
Operators designated representatives,

20. SUBCONTRACTS BY OPERATOR:

Operator may employ other contractors
  to perform any of the operations or services to be provided or performed by
  it according to Exhibit A -

21. ATTORNEYS FEES

If this Contract is placed in the
hands of an attorney for collection of any sums due hereunder, or suit is
brought on same, or sums due hereunder are collected through bankruptcy or
arbitration proceedings, the prevailing party shall be entitled to recover
reasonable attorneys fees and costs.

22. CLAIMS AND LIENS:

Contractor agrees to pay all
valid claims for labor, material, services, and supplies to be furnished by
Contractor hereunder, and agrees to allow no lien by such third parties to be
fixed upon the lease, the well, or other property of the Operator or the land
upon which said well is located.

23. ASSIGNMENT:

Neither party may assign this
Contract without the prior written consent of the other, and prompt notice of
any such intent to assign shall be given to the other party. In the event of
such assignment, the assigning party shall remain liable so the other party as a
guarantor of the performance by the assignee of the terms of this Contract. If
any assignment is made that materially alters Contractors financial burden,
Contractors compensation shall be adjusted to give effect to any increase or
decrease in Contractors operating costs.

24. NOTICES AND PLACE OF PAYMENT:

Notices, reports, and other
communications required or permitted by this Contract to be given or sent by one
party to the other shall be delivered by hand, mailed or telecopied to the
address hereinabove shown. All sums payable hereunder to Contractor shall be
payable at its address hereinabove shown unless otherwise specified herein.

25. SPECIAL PROVISIONS: Operator agrees to pay a daily
bottom-hole bonus, plus 38% payroll per employee to help retain crews, as
outlined below:

| | Crew Members | $75.00/day
| | ------------ | ----------
| | Driller      | $75.00/day
| | Tool pusher  | $75.00/day

|25.1Understaffed Rates:Contractor will
      credit Operator at a rate of $60.00 per hour for each man-hour short on
      the tour. (see paragraph 4.4, page 1.)
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------
|                                                                                                                                                                 
|                                                                                                                                                                 
|26. ACCEPTANCE OF CONTRACT:                                                                                                                                      
|                                                                                                                                                                 
|The foregoing Contract is agreed to
      and accepted by Operator this 25th day of May, 2006.                                                                   

| | Operator: U. S. Geothermal, Inc.
| | --------------------------------
| |                                 
| | By: /s/ Daniel Kunz             
| | Dan
      Kunz                  
| | Title: President                

The foregoing Contract is accepted
  by the undersigned as Contractor this 20th day
  of April, 2006which is the effective date of this agreement,
  subject to rig availability, and subject to all of its terms and provisions,
  with the understanding that unless said Contract is thus executed by Operator
  within 30days of the above date, Contractor shall be in no manner
  bound by its signature thereto.

| | Contractor: Union Drilling,
      Inc.
| | --------------------------------------
| |                                       
| | By: /s/ Byron L. Musselman            
| | **Byron Doc Musselman**             
| |                                       
| | Title: General Manager                

(U.S. Daywork Contract- Page 5)

---

Revised July 1998

EXHIBIT A

To Daywork Contract dated: April 20, 2006

Operator: U. S. Geothermal,
Inc.Contractor: Union Drilling, Inc.

Well Name and Number: 4 Wells-RRG3, RRG6, RRG7, RRG4,And possible 7 un-named                                                
Cassia County, ID

SPECIFICATIONS AND SPECIAL PROVISIONS

1. CASING PROGRAM (See Paragraph 7)As Designated
by Operator.

Hole
    Casing
    
    
    Approximate
    Wait onSize
    Size
    Weight
    Grade
    Setting Depth
    Cement TimeConductor
    in.
      ___in.
    lbs/ft.
    
      ___ft.
    N/Ahrs.Surface
    in.
      ___in.
    lbs/ft.
    
      ___ft.
    N/Ahrs.Protection
    in.
    in.
    lbs/ft.
    
    ft.
    N/Ahrs.In.
    in.
    lbs/ft.
    
    ft.
    hrs.Production
    in.
    in.
    lbs/ft.
    
    ft.
    N/Ahrs.Liner
    in.
    in.
    lbs/ft.
    
    ft.
    hrs.In.
    in.
    lbs/ft.
    
    ft.
    hrs.


2. MUD CONTROL PROGRAM (See Subparagraph 8.2)As
Designated by Operator.

|Depth Interval (ft) |    |          |                    |                 
|------------------- | -- | -------- | ------------------ | ----------------
|From                | To | Type Mud | Weight (lbs./gal.) | Viscosity (Secs)





Other mud specifications: As determined by Operators
representatives.



3. INSURANCE(See Paragraph 13) See attached
Exhibit D.

| | 3.1 | Adequate Workers Compensation: Insurance complying with
      State Laws applicable or Employers Liability Insurance with limits of
      $1,000,000.00- covering all of Contractors employees
      working under this Contract.                                                                                                                                                                  
| | --- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |     |                                                                                                                                                                                                                                                                                                                                                                                                       
| | 3.2 | Commercial (or Comprehensive) General Liability
      Insurance, including contractual obligations as respects this Contract and
      proper coverage for all other obligations assumed in this Contract. The
      limits shall be $5,000,000.00combined single limit per occurrence
      for Bodily Injury and Property Damage.                                                                   
| |     |                                                                                                                                                                                                                                                                                                                                                                                                       
| | 3.3 | Automobile Public Liability Insurance with limits of
      $ 1,000,000for the death or injury of each person and
      $ 1,000,000for each accident; and Automobile Public
      Liability Property Damage Insurance with limits of $ 1,000,000for each accident.                                                                                                                                     
| |     |                                                                                                                                                                                                                                                                                                                                                                                                       
| | 3.4 | In the event operations are over water, Contractor shall
      carry in addition to the Statutory Workers Compensation Insurance,
      endorsements covering liability under the Longshoremens & Harbor
      Workers Compensation Act and Maritime liability including maintenance and
      cure with limits of $ N/Afor each death or injury to one
      person and $ N/Afor any one accident.
| |     |                                                                                                                                                                                                                                                                                                                                                                                                       
| | 3.5 | Other Insurance: As deemed necessary by the
      Contractor to provide adequate property protection of its equipment and
      other assets.                                                                                                                                                                                                                                                         

4. EQUIPMENT, MATERIALS AND SERVICES TO BE FURNISHED BY
CONTRACTOR:

The machinery, equipment, tools,
materials, supplies, instruments, services and labor hereinafter listed,
including any transportation required for such items, shall be provided at the
well location at the expense of Contractor unless Otherwise noted by this
Contract.

**4.1 Drilling
Rig:**

Complete
drilling rig, designated by Contractor as its Rig No. 32the major
items of equipment being: See attached inventory-Exhibit C, page 1.

Drawworks:       Make and
Model:

Engines:            
Make, Model, and H.P.

No. on Rig

Pumps: No. 1 Make, Size, and Power

No. 2 Make. Size, and Power

Mud Mixing Pump: Make, Size, and Power

Boilers:           
Number. Make, H.P. and W.P.

Derrick or Mast: Make. Size, and Capacity



Substructure: Size and Capacity

Rotary Drive: Type

Drill Pipe: Size                                   
  in.                   
  ft.                   
  Size                                    
  in.                   
  ft.

Drill Collars: Number and Size -

(U.S. Daywork Contract  Exhibit APage
1)

---

Revised July 1998

Blowout Preventers: See attached inventory-Exhibit C,
page 1.

|Size | Series or Test Pr. | Make & Model | Number
|---- | ------------------ | ------------ | ------



|B.O.P. Closing Unit:
Hydraulic
|------------------------------
|B.O.P. Accumulator:           

| | 4.2  | Derrick timbers                                                      
| | ---- | ---------------------------------------------------------------------
| | 4.3  | Normal strings of drill pipe and drill collars specified
      above.
| | 4.4  | Conventional drift indicator. ( Sureshot Totco type
    )            
| | 4.5  | Circulating mud pits.                                                
| | 4.6  | Necessary pipe racks and rigging up material.                        
| | 4.7  | Normal storage for mud and chemicals.                                
| | 4.8  | Shale Shaker.                                                        
| | 4.9  |                                                                      
| | 4.10 |                                                                      
| | 4.11 |                                                                      
| | 4.12 |                                                                      
| | 4.13 |                                                                      
| | 4.14 |                                                                      
| | 4.15 |                                                                      
| | 4.16 |                                                                      
| | 4.17 |                                                                      

5. EQUIPMENT. MATERIALS AND SERVICES TO BE FURNISHED BY
OPERATOR:

The machinery, equipment, tools,
materials, supplies, instruments, services and labor hereinafter listed,
including any transportation required for such items, shall be provided as the
well location at the expense of Operator unless otherwise noted by this
Contract.

| | 5.1  | Furnish and maintain adequate roadway and/or canal to
      location, right-of-way, including rights-of-way_ for fuel and water lines,
      river crossings, highway crossings, gates and cattle guards.
| | ---- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | 5.2  | Stake location, clear and grade location, and provide
      turnaround, including surfacing when necessary.                                                                                              
| | 5.3  | Test tanks with pipe and fittings                                                                                                                                                                        
| | 5.4  | Mud storage tanks with pipe and fittings.                                                                                                                                                                
| | 5.5  | Separator with pipe and fittings.                                                                                                                                                                        
| | 5.6  | Labor to connect and disconnect mud tank, test tank, and
      separator.                                                                                                                                
| | 5.7  | Labor to disconnect and clean test tanks and
      separator.                                                                                                                                            
| | 5.8  | Drilling mud, chemicals, lost circulation materials and
      other additives.                                                                                                                           
| | 5.9  | Pipe and connections for oil circulating lines.                                                                                                                                                          
| | 5.10 | Labor to lay, bury and recover oil-circulating
    lines.                                                                                                                                                
| | 5.11 | Drilling bits, reamers, reamer cutters, stabilizers and
      special tools.                                                                                                                             
| | 5.12 | Contract fishing tool services and tool rental.                                                                                                                                                          
| | 5.13 | Wire line core bits or heads, core barrels and wire line
      core catchers if required.                                                                                                                
| | 5.14 | Conventional core bits, core catchers and core
      barrels.                                                                                                                                            
| | 5.15 | Diamond core barrel with head.                                                                                                                                                                           
| | 5.16 | Cement and cementing service.                                                                                                                                                                            
| | 5.17 | Electrical wireline logging services.                                                                                                                                                                    
| | 5.18 | Directional, caliper, or other special
services.                                                                                                                                                         
| | 5.19 | Gun or jet perforating services,                                                                                                                                                                         
| | 5.20 | Explosives and shooting devices.                                                                                                                                                                         
| | 5.21 | Formation testing, hydraulic fracturing, acidizing and
      other related services.                                                                                                                     
| | 5.22 | Equipment for drill stem testing.                                                                                                                                                                        
| | 5.23 | Mud logging services.                                                                                                                                                                                    
| | 5.24 | Sidewall coring service.                                                                                                                                                                                 
| | 5.25 | Welding service for welding bottom joints of casing,
      guide shoe, float shoe, float collar and in connection with installing of
      well head equipment if required.                              
| | 5.26 | Casing, tubing, liners, screen, float collars, guide and
      float shoes and associated equipment.                                                                                                     
| | 5.27 | Casing scratchers and centralizers.                                                                                                                                                                      
| | 5.28 | Well head connections and all equipment to be installed
      in or on well or on the premises for use in connection with testing,
      completion and operation of well.                               
| | 5.29 | Special or added storage for mud and chemicals.                                                                                                                                                          
| | 5.30 | Casinghead, API series, to conform to that shown for the
      blowout preventers specified in Subparagraph 4.1 above.                                                                                   
| | 5.31 | Blowout preventer testing packoff.                                                                                                                                                                       
| | 5.32 | Casing Thread Protectors and Casing Lubricants.                                                                                                                                                          
| | 5.33 | H2S training and equipment as necessary or as
      required by law.                                                                                                                                     
| | 5.34 |                                                                                                                                                                                                          
| | 5.35 |                                                                                                                                                                                                          
| | 5.38 |                                                                                                                                                                                                          
| | 5.37 |                                                                                                                                                                                                          
| | 5.38 |                                                                                                                                                                                                          
| | 5.39 |                                                                                                                                                                                                          
| | 5.40 |                                                                                                                                                                                                          
| | 5.41 |                                                                                                                                                                                                          

(U.S. Daywork Contract  Exhibit APage
2)

---

Revised July 1998

6. EQUIPMENT, MATERIALS AND SERVICES TO BE FURNISHED BY
DESIGNATED PARTY:

The machinery, equipment, tools,
materials,supplies, instruments, services, and labor listed as the
following numbered items, including any transportation required for such items
unless otherwise specified, shall be provided at the well location and at the
expense of the party hereto as designated by an X mark in the appropriate
column.

To Be Provided By andAt The Expense OfItem
    Operator
    
    Contractor6.1
    Cellar and runways
    **X**6.2
    Fuel (located at Rig Storage
      Tank)
    **X**6.3
    Fuel Lines (length  on location)
    
    
    X6.4
    Water at source, including
      required permits
    X6.5
    Water well, including required
      permits
    X6.6
    Water lines, on location
    X6.7
    Water storage tanks 500Bbls capacity
    
    
    X6.8
    Labor to operate water pump (on
      location)
    
    
    X6.9
    Maintenance of water
      well,if required
    
    N/A6.10
    Water Pump
    
    
    X6.11
    Fuel for water pump
    X6.12
    Mats for engines and boilers, or
      motors and mud pumps
    
    
    X6.13
    Transportation of Contractors
      property:Move in
    Expense ofMove Out
    Expense ofInfield Moves
    Expense of6.14
    Materials for boxing in
      rig and derrick
    
    N/A6.15
    Special strings of drill pipe and
      drill collars as follows:X6.16
    Kelly joints, subs, elevators,
      tongs and slips for use with special drill pipe
    X6.17
    Drill pipe protectors for Kelly
      joint and each jointof drill pipe running inside of
      Surface Casing as required,for use with normal strings of
      drill pipe
    X6.18
    Drill pipe protectors for Kelly
      joint and drill pipe runninginside of Protection Casing
    X6.19
    Rate of penetration recording
      device (single pen)
    X6.20
    Extra labor for running and
      cementing casing (Casing crews)
    X6.21
    Casing tools
    **X**6.22
    Power casing tongs
    X6.23
    Laydown and pickup machine
    X6.24
    Tubing tools
    X6.25
    Power tubing tong
    X6.26
    Crew Boats,
      Number:
    
    N/A6.27
    Service Barge
    
    N/A6.28
    Service Tug Boat
    
    N/A6.29
    Rat Hole
    X6.30
    Mouse Hole
    X6.31
    Reserve Pits
    X6.32
    Upper Kelly Cock (4 1⁄2 string
      only)
    
    
    X6.33
    Lower Kelly Valve (4 1/2  string
      only)
    
    
    **X**6.34
    Drill Pipe Safety Valve (Bit
      Float) (4 1⁄2 string only)
    
    
    X6.35
    Inside Blowout Preventer
    X6.36
    Drilling hole for or driving for
      conductor pipe
    X6.37
    Charges, cost of bonds for public
      roads
    X6.38
    Portable Toilet
    X6.39
    Trash Receptacle
    X6.40
    Linear Motion Shale Shaker
      
    
    **X**6.41
    Shale Shaker Screens
    X6.42
    Mud Cleaner
    **X**6.43
    Mud/Gas Separator(if required )
    Expense of
    
    **Provided
  by**6.44
    Desander
    X6.45
    Desilter
    X6.46
    Degasser
    X6.47
    Centrifuge
    X6.48
    Rotating Head
    
    
    X6.49
    Rotating Head Rubbers
    X6.50
    Hydraulic Adjustable Choke
    X6.51
    Pit Volume Totalizer
    X6.52
    Communications, type (CELLULAR
      TELEPHONE )
    **X**6.53
    Forklift,
    Expense of
    
    **Provided
  by**6.54
    Corrosion Inhibitor for
      protecting drill string
    X6.55
    Mud pump expendables (see other
      provisions).
    Expense of
    
    **Provided
  by**6.56
    Inspection and repair of drill
      string
    X6.57
    Cleaning of steel pits and mud
      pumps
    Expense of
    
    Provided by6.58
    Boiler Charge @ $35.00 per hour
      utilized
    **Expense of**
    
    Provided by6.59
    Extra labor or over 5 men per
      crew @ $60.00 per hour / man
    **Expense of**
    
    **Provided
  by**


(U.S. Daywork Contract  Exhibit APage
3)

---

Revised July 1998

7. OTHER PROVISIONS:

|1.  | Mud pumps are provided with standard size 6 inch liners
      and pistons. If other size of liners and pistons are requested or
      necessary, Operator will be responsible for the costs of acquiring and
      installing such liners and pistons.                                                                                                                                        
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                                                                                                                                                                                                                                                               
|2.  | Operator is responsible for the cost of any replacement
      mud pump expendables (pistons, rods, liners, valves, valve seats) damaged
      or replaced.                                                                                                                                                                                                                                    
|    |                                                                                                                                                                                                                                                                                                                                                                                               
|3.  | Labor hourly rate is $60.00 per man-hour in excess of
      5-man crew.                                                                                                                                                                                                                                                                                                                       
|    |                                                                                                                                                                                                                                                                                                                                                                                               
|4.  | Mobilization / demobilization operations: trucking
      charges will be invoiced directly to Operator.                                                                                                                                                                                                                                                                                       
|    |                                                                                                                                                                                                                                                                                                                                                                                               
|5.  | Union Drilling, Inc. will provide 8,000of 4 1⁄2
      Premium drill pipe for drilling. U. S. Geothermal, Inc.will be
      responsible for all corrosion control additives and for maintaining the
      drill string in like condition during drilling operations.                                                                                                                         
|    |                                                                                                                                                                                                                                                                                                                                                                                               
|6.  | Operator will be responsible for drill pipe and drill
      collar inspection and repairs at the completion of project. All
      downgrading of drill string will be invoiced using current like
      condition as the basis of charges. Contractor agrees to provide a
      certified inspection report on all drill pipe and drill collars setting
      the current like conditions.
|    |                                                                                                                                                                                                                                                                                                                                                                                               
|7.  | An additional rate of $35.00 per hour will be charged for
      every hour the boiler is operated.                                                                                                                                                                                                                                                                                            
|    |                                                                                                                                                                                                                                                                                                                                                                                               
|8.  | Operator will provide all mud, drilling soap and drilling
      chemicals including drill pipe corrosion.                                                                                                                                                                                                                                                                                     
|    |                                                                                                                                                                                                                                                                                                                                                                                               
|9.  | Operator will be responsible for the moving costs and
      services of Tool Pusher quarters, rental of man-camps and related costs,
      if required.                                                                                                                                                                                                                                       
|    |                                                                                                                                                                                                                                                                                                                                                                                               
|10. | Contractor will provide Forklift at $150.00 per day,
      which includes all maintenance and repairs.                                                                                                                                                                                                                                                                                        







|**Signed by the**       |                                           
|----------------------- | ------------------------------------------
|**Parties as correct:** |                                           
|                        | For Contractor/s/
      Byron L. Musselman
|                        | Union Drilling, Inc.                      
|                        |                                           
|                        |                                           
|                        |                                           
|                        |                                           
|                        | For Operator/s/
      Daniel Kunz         
|                        | U. S.
      Geothermal, Inc.              

(U.S. Daywork Contract  Exhibit APage
4)

---

Revised July, 1998

EXHIBIT B (See Paragraph 8.3)

The following clauses, when required by law, areincorporated in the Contract by reference as if fully set out:

|(1) | The Equal Opportunity Clause prescribed in 41 CFR
      60-1.4.                                                      
|--- | ---------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                      
|(2) | The Affirmative Action Clause prescribed in 41 CFR
      60-250.4 regarding veterans and veterans of the Vietnam era.
|    |                                                                                                                      
|(3) | The Affirmative Action Clause for handicapped workers
      prescribed in 41 CFR 60-741 .4.                          
|    |                                                                                                                      
|(4) | The Certification of Compliance With Environmental Laws
      prescribed in 40 CFR 15.20.                            







(U.S. Daywork Contract  Exhibit BPage
1)

---

Exhibit C

Union Drilling, Inc

Rig 32 Inventory

|Year 1982                | Model - Skytop Brewster BIR
      4610  5 axle                              
|------------------------ | -----------------------------------------------------------------------------
|                         | Depth rating w/4 1⁄2
      DP-10,000'                                         
|                         |                                                                              
|Drawworks                | Skytop Brewster 650 p/b Detroit 60 Series @ 475
      h/p                    
|Derrick                  | Skytop 109 x 310,000# capacity                                              
|Substructure             | 10 x 300,000# capacity                                                      
|Pony Sub                 | 5 1⁄2 x 300,000# capacity                                                     
|Rotary Table             | Ideco 23 x 44                                                              
|Traveling Blocks         | Ideco UTB 160 Ton 4 - sheaves w/ 1 1/8 line                                 
|Rotary Hose              | 3 x 55L x 3500 PSI                                                         
|Kelly & Bushings         | 5 1⁄4 hex w/varco drive bushings                                              
|Kelly spinner            | Foster Type 77                                                               
|Drill pipe spinners      | Graychain model 3570 hydraulic operated                                      
|Manual rig tongs         | Web Wilson type B with hydraulic makeup with
      torque gauge            
|Swivel                   | Ideco 200T                                                                   
|Rotating Head & Air Bowl | 10 x 5M, 12 x 3M                                                           
|Soap Pump                | Myers C-20 p/b hydraulic pump                                                
|Generator #1             | CAT SR4 320kw p/b Cat 3456E                                                  
|Generator # 2            | Cat SR4 250kw p/b Cat 3408                                                   
|Fuel Trailer             | 1972 Trailmobile 2-axle 8x38L                                              
|Doghouse                 | 1964 Trailmobile 2-axle 8x38L                                              
|Water Tank               | (1) 500 bbl. sq. tank,skidded                                                
|Pipe Tubs                | 4-(6) DP( (1) DC (1) junk                                                    
|Center Tub               | 1-8W x 32L w/v-door                                                        
|Mud Pump #1              | CE F-800 triplex p/b Cat 398 @800 h/p                                        
|Mud Pump #2              | CE F-800 triplex p/b cat 398 @800 h/p                                        
|Yellow dog pump          | (1) 5x6 centrifugal pump p/b 50 hp electric
      motor                      
|Mud Pit #1 (suction)     | 11W x 40L 380 bbL. capacity w/two 10 hp
      electric agitators and (1) 50
|                         | hp electric 5x6 centrifucal mixing pump                                      
|Mud Pit #2 (shale)       | 11W x 40L 400bbL. capacity                                                 
|Premix tank (Rental)     | 12W x 34L 400bbl. cap. W/10 hp elec agitator
      & 60 h/p mixing pump    
|Shale Shaker             | Brandt Cobra linear motion w/three screens                                   
|Gas Buster(Rental)       |                                                                              
|Wireline Unit            | 10,000 x .072 p/b electric mtr.                                             
|Blowout Preventors       | 11 x 3M Shaffer Type E doubleram w/ 4 1⁄2 rams
      (or)                    
|                         | 11 X 3M Shaffer Annular                                                     
|Choke Manifold           | 3 x 3M PSI w/dual adjustable chokes                                         
|Accumulator              | Koomey 3- station                                                            
|Boiler                   | Abco 80 psi w/steam heaters                                                  
|Drill Pipe               | 8,000 - 4 1⁄2 Grade X-95 16.60# premium w/4 1⁄2
      XH connections           
|Drill Collars            | 14- 6 1/2 with 4 1⁄2 H-90 connections                                        
|                         | 2-7 1⁄2 with 6 5/8 regular connections                                       
|Weight Indicator         | Behr                                                                         
|Auto Driller             | Satellite                                                                    
|Forklift (Rental)        | Cat TH-103 12,000#                                                           
|                         |                                                                              
|                         |                                                                              
|Updated 5-20-06          |                                                                              

(U.S. Daywork Contract  Exhibit CPage
1)

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Exhibit D



(U.S. Daywork Contract  Exhibit DPage
1)

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Exhibit E



(U.S. Daywork Contract  Exhibit EPage
1)

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Exhibit F



U.S. Daywork Contract  Exhibit FPage
1)

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Exhibit G



U.S. Daywork Contract  Exhibit GPage
1)

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