Document:

Filed by Automated Filing Services Inc. (604) 609-0244 - US Geothermal Inc. - Exhibit 10.29

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 4:00 P.M. on
April 20, 2006 to 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 CONSIDERATION of 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 County State: 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 to
commence operations for the drilling of the well by the
Operator at the conclusion of one well for
Fortuna US,LP., expected to be completed toward the end of June, 2006,
with at least two weeks advance notice to Operator, if
possible.

3. DEPTH:

3.1 Well Depth: The well(s)
shall be drilled to a depth of approximately 6,500’ MD +/- feet,
or N/A formation, whichever is deeper, but the Contractor shall not be
required hereunder to drill said well(s) below a maximum depth of 7,000
feet, 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 not include: 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 not include: 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 not include: Actual trucking,
      permits, dozer(s), cranes, fork lifts, 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+/- 	   $15,000.00 per day
      plus fuel 	    $15,000.00
      per day plus fuel 
	  	 	$_        _
      per day plus fuel 	$_        _
      per day plus fuel 
	  		$_        _
      per
      day              
    	$_        _
      per
      day              
    
	Using Operator’s drill pipe $15,000.00
      per 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 
	  	  	  	  	   Directional or 	  	  
	Straight Hole 	N/A 	Size 	       Grade 	Uncontrollable Deviated Hole 	Size 	Grade 
	per ft. 	  	  		$  per ft. 	  	  
	per ft. 	  	  		$  per ft. 	  	  
	per ft. 	  	  		$  per ft. 	  	  

Directional or uncontrolled deviated hole will be deemed to
exist when deviation exceeds N/A  degrees or when the change
of angle exceeds N/A degrees 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 4 hours for any one rig repair job or 24 hours
  for any calendar month. Thereafter, Contractor shall be compensated at a rate
  of $ 0 per 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: $15,000.00 per 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 10 percent for 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 5
percent 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/A
      percent 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:

          5.1
Payment 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 shall be mailed as follows:

          5.2
Disputed Invoices and Late Payment: Operator shall pay all invoices within
30 days 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
1/2 percent 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 additional
well(s) by providing Contractor 45 days notice of intent
to extend the term of the contract by a specified number of
wells for the first 6 months of the contract, and by 25 days advance
notice thereafter, or by mutual agreement with Contractor.
Every 6 months after the commencement date of the contract, the Contractor
may adjust 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 still
apply, 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 as liquidated damages
and not as a penalty a sum equal to the Standby Rate with Crews
(Subparagraph 4.6) for a period of 0 days or a lump 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 Contractor commences 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 for
N/A days 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 the
convenience 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:

     8.1 Contractor 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.
     8.2 Subject 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”.
     8.3 Each 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.
     8.4 Contractor
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.
     8.5 If 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 cost of
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 all
Upon 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 

	25.1 Understaffed 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, 2006 which 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 30 days 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 on 
	  	Size 	Size 	Weight 	Grade 	Setting Depth 	Cement Time 
	Conductor 	in. 	___in. 	lbs/ft. 	  	___ft. 	N/A
      hrs.        
	Surface 	in. 	___in. 	lbs/ft. 	  	___ft. 	N/A
      hrs.        
	Protection 	in. 	in. 	lbs/ft. 	  	ft. 	N/A
      hrs.        
	  	In. 	in. 	lbs/ft. 	  	ft. 	hrs. 
	Production 	in. 	in. 	lbs/ft. 	  	ft. 	N/A
      hrs.        
	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) 	Water Loss (cc) 

 

 

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 $5,000,000.00 combined single limit per occurrence
      for Bodily Injury and Property Damage.

	 	 	 
	 	3.3 	
      Automobile Public Liability Insurance with limits of
      $ 1,000,000 for the death or injury of each person and
      $ 1,000,000 for each accident; and Automobile Public
      Liability Property Damage Insurance with limits of $ 1,000,000
      for 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/A for each death or injury to one
      person and $ N/A for 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. 32 the 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 and 
	  	  	At The Expense Of 
	  	Item 	Operator 	 	 Contractor
	  	  	  	  	  
	6.1 	Cellar and runways	 X 	  	  
	6.2 	Fuel (located at Rig Storage
      Tank)	 X 	  	  
	6.3 	Fuel Lines (length – on location)
    	  	  	X 
	6.4 	Water at source, including
      required permits 	X 	  	  
	6.5 	Water well, including required
      permits 	X 	  	  
	6.6 	Water lines, on location 	X 	  	  
	6.7 	Water storage tanks 500
      Bbls capacity 	  	  	X 
	6.8 	Labor to operate water pump (on
      location) 	  	  	X 
	6.9 	Maintenance of water
      well, if required 	  	N/A 	  
	6.10 	Water Pump 	  	  	X 
	6.11 	Fuel for water pump 	X 	  	  
	6.12 	Mats for engines and boilers, or
      motors and mud pumps 	 	 	X 
	6.13 	Transportation of Contractor’s
      property: 	  	  	  
	  	       
         Move in 	Expense of	  	  
	  	       
         Move Out 	Expense of	  	  
	  	       
         Infield Moves 	Expense of	  	  
	6.14 	Materials for “boxing in”
      rig and derrick 	  	N/A 	  
	6.15 	Special strings of drill pipe and
      drill collars as follows: 	  	  	  
	  	  	X 	  	  
	  	  	  	  	  
	  		 	  	  
	6.16 	Kelly joints, subs, elevators,
      tongs and slips for use with special drill pipe 	X 	  	  
	6.17 	Drill pipe protectors for Kelly
      joint and each joint 	  	  	  
	  	of drill pipe running inside of
      Surface Casing as required, 	  	  	  
	  	for use with normal strings of
      drill pipe 	X 	  	  
	6.18 	Drill pipe protectors for Kelly
      joint and drill pipe running 	  	  	  
	  	inside of Protection Casing 	X 	  	  
	6.19 	Rate of penetration recording
      device (single pen) 	X 	  	  
	6.20 	Extra labor for running and
      cementing casing (Casing crews) 	X 	  	  
	6.21 	Casing tools  	 X	  	  
	6.22 	Power casing tongs 	X 	  	  
	6.23 	Laydown and pickup machine 	X 	  	  
	6.24 	Tubing tools 	X 	  	  
	6.25 	Power tubing tong 	X 	  	  
	6.26 	Crew Boats,
      Number:...... 	  	N/A 	  
	6.27 	Service Barge
	  	N/A 	  
	6.28 	Service Tug Boat
    	  	N/A 	  
	6.29 	Rat Hole 	X 	  	  
	6.30 	Mouse Hole 	X 	  	  
	6.31 	Reserve Pits 	X 	  	  
	6.32 	Upper Kelly Cock (4 1⁄2” string
      only)	 	 	X 
	6.33 	Lower Kelly Valve (4 1/2 “ string
      only)		 	X
	6.34 	Drill Pipe Safety Valve (Bit
      Float) (4 1⁄2” string only)	 	 	X 
	6.35 	Inside Blowout Preventer 	X 	  	  
	6.36 	Drilling hole for or driving for
      conductor pipe 	X 	  	  
	6.37 	Charges, cost of bonds for public
      roads 	X 	  	  
	6.38 	Portable Toilet 	X 	  	  
	6.39 	Trash Receptacle 	X 	  	  
	6.40 	Linear Motion Shale Shaker 
    	 	 	X
	6.41 	Shale Shaker Screens 	X 	  	  
	6.42 	Mud Cleaner  	 X	  	  
	6.43 	Mud/Gas Separator(if required )
    	Expense of	 	Provided
  by
	6.44 	Desander 	X 	  	  
	6.45 	Desilter 	X 	  	  
	6.46 	Degasser 	X 	  	  
	6.47 	Centrifuge 	X 	  	  
	6.48 	Rotating Head 	  	  	X 
	6.49 	Rotating Head Rubbers 	X 	  	  
	6.50 	Hydraulic Adjustable Choke 	X 	  	  
	6.51 	Pit Volume Totalizer 	X 	  	  
	6.52 	Communications, type (CELLULAR
      TELEPHONE ) 	X 	 	 
	6.53 	Forklift, 	Expense of	 	Provided
  by
	6.54 	Corrosion Inhibitor for
      protecting drill string 	X 	  	  
	6.55 	Mud pump expendables (see other
      provisions). 	Expense of	 	Provided
  by
	6.56 	Inspection and repair of drill
      string 	X 	  	  
	6.57 	Cleaning of steel pits and mud
      pumps 	Expense of		Provided by
	6.58 	Boiler Charge @ $35.00 per hour
      utilized 	Expense of 	 	Provided by
	6.59 	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, are
incorporated 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)

Exhibit “D”

(U.S. Daywork Contract – Exhibit “D” Page
1)

Exhibit “E”

(U.S. Daywork Contract – Exhibit “E” Page
1)

Exhibit “F”

U.S. Daywork Contract – Exhibit “F” Page
1)

Exhibit “G”

U.S. Daywork Contract – Exhibit “G” Page
1)Filed by Automated Filing Services Inc. (604) 609-0244 - US Geothermal Inc. - Exhibit 10.30

	RECORDING REQUESTED BY 	 
	  	 
	 	 
	WHEN RECORDED MAIL TO 	 
	 	 
	 	 
	 	 
	 	 
	 	 
	SPACE ABOVE THIS LINE FOR RECORDER’S USE 	 
	 	 

HOT SPRINGS RANCH
GEOTHERMAL LEASE AND AGREEMENT

               THIS
  GEOTHERMAL LEASE AND AGREEMENT, (herein sometimes referred to as “Lease”)
  made and entered as of the 24th day of May, 2006 by and between JR Land and
  Livestock Inc., hereinafter referred to as “Lessor”, whether one or
  more, and U.S. Geothermal Inc., a Delaware corporation, hereinafter referred
  to as “Lessee”;

WITNESSETH:

          1.      Purpose.
That Lessor, for and in consideration of Ten Dollars ($10.00) in hand paid to
Lessor by Lessee, the rentals provided for hereinafter, and other good and
valuable consideration, the receipt and adequacy of which are hereby
acknowledged, and in consideration of the covenants and agreements hereinafter
contained has granted, leased, let and demised and by these presents does grant,
lease, let and demise exclusively to Lessee, its grantees, successors and
assigns, upon and subject to the terms and conditions hereinafter set forth, all
that certain land, geothermal and mineral rights for real property located in
the County of Malheur, State of OREGON, more particularly described in Exhibit
“A” attached hereto and by this reference made a part hereof (hereinafter
referred to as the “leased rights” ), including all roads, streets, alleys,
easements and rights of way owned or claimed by Lessor, on, within, or adjoining
the lands above described. This Lease shall cover all the interest in the leased
rights now owned or hereafter acquired by Lessor. Lessee further grants Lessor
an Area Of Influence, which shall extend 1 mile beyond the boundary of the
property described in Exhibit A, into which any property acquired by Lessee
shall become subject to the terms and conditions of this Lease.

By the use of such methods as Lessee may desire, Lessee, and
its designated representatives, shall have the sole and exclusive right to
utilize the leased rights, including but not limited to the right to explore
for, drill for, test, develop, operate, produce, extract, take, remove or sell
Hot Water, Steam and Thermal Energy and Extractable Minerals, and to store,
utilize, process, convert and otherwise treat such Hot Water, Steam and Thermal
Energy, and to extract any Extractable Minerals during the term hereof and to
transport same, and to inject or reinject effluents into the well or any wells
drilled pursuant to the leased rights; or inject water, gas or other fluid or
substances by artificial means into formations containing Hot Water, Steam or
Thermal Energy. Further, Lessee, its designated representatives and anyone
purchasing Leased Substances (as hereinafter defined) from Lessee are hereby
granted the use of any easements owned by Lessor across said land, to the full
extent of any such rights held by Lessor. In the event this Lease should
terminate with respect to a portion of the rights granted Lessee, it shall
nevertheless continue in full force and effect to any rights of way and any
easements appurtenant thereto that are being used from time to time when such
termination occurs and shall continue in effect so long as such rights of way
and easements or any of them 

1

continue to be used from time to time for the purposes above
described or for the production and utilization of Geothermal Resources from
lands in the vicinity thereof by Lessee, its designated representatives, or
anyone who has purchased, or is purchasing, Leased Substances from Lessee, their
successors and assigns. The possession by Lessee of the leased rights shall be
sole and exclusive for the purposes hereof and for purposes incident or related
thereto. Lessee agrees to conduct its activities in a manner which will not
unreasonably interfere with any rights reserved to Lessor.

          2.      Term.
This Lease shall be for a term of ten (10) years from and after the date hereof
(hereinafter referred to as the “Primary Term”) and so long thereafter as Leased
Substances, or any of them, are derived or produced in commercial quantities
from the well or through the leased rights, or lands, rights or facilities
pooled, unitized or combined therewith, and for so long as Lessee is prevented
from producing same, or the obligations of Lessee hereunder are suspended, for
the causes hereinafter set forth, or this Lease is continued in force by reason
of any other provision hereof.

                    If
at the expiration of the Primary Term, Lessee is then engaged in operations for
drilling, reworking, recompleting, redrilling or enhancement of the well, or any
well developed in exercise of the leased rights, or any well on or lands pooled,
unitized or combined therewith, this Lease shall remain in force so long as any
such drilling, reworking, recompleting, redrilling or enhancement operations are
prosecuted (whether on the same or different wells) with no cessation of such
operations for more than six (6) months, and if such operations result in
production or the establishment to the satisfaction of the Lessee of the
existence of Sufficient Power Potential or Extractable Minerals in Commercial
quantities, such well or wells will be deemed to have been completed during the
primary term of this Lease.

          3.      Primary
Term Consideration. It is understood and agreed that the initial consideration
paid, FIFTEEN THOUSAND DOLLARS ($15,000.00) upon the execution hereof, covers
both the rental in full hereunder for a period of one (1) year from the date of
this Lease and for all other rights conferred hereunder. Thereafter, on or
before said anniversary date, Lessee shall pay or tender to Lessor an annual
rental in the following amounts:

	 	Year 2 	$20,000.00 
	 	Year 3 	$25,000.00 
	 	Year 4 	$30,000.00 and each year
      thereafter 

which shall constitute rental until the next anniversary date
hereof, until such time as from the drilling of a well or wells on the leased
land, or lands pooled, unitized or combined therewith, there has been
established to the satisfaction of the Lessee the existence of Sufficient Power
Potential or Extractable Minerals in Commercial quantities. Upon such
establishing as aforesaid, Lessee may nevertheless continue to pay or tender
annual rental payments on or before each anniversary date, until Lessee has
commenced the actual sale of one or more Leased Substances, and so long as such
annual rental payments to be paid or tendered, whether beyond the Primary Term
or not, this lease shall remain in force and effect. All payments so paid or
tendered shall be deemed advance royalties. Lessee shall have the right to
reimburse itself for any such payments of one-half (1/2) of any royalties which
shall thereafter become payable hereunder. So long as such payments are paid or
tendered each well or wells shall be deemed to be actually producing one or more
Leased Substances in Commercial Quantities under the terms hereof; provided,
however, that if within five (5) years after the date of expiration of the
Primary Term hereof Lessee shall have failed to make, or make arrangements for
(by executed contract or contracts) a bona fide Commercial sale of one or more
Leased Substances (or electric energy generated therefrom) then Lessor, at its
option, may consider Lessee in default hereunder. Additionally, should Lessee
fail to make any annual payment herein provided for on or before a particular
anniversary date, Lessor may, at its option, consider Lessee in default
hereunder.

2

          4.      Lessee
shall conduct all work in compliance with the applicable laws and regulations of
the state of Oregon and the United States of America. Lessee shall be fully
responsible for compliance with all applicable Federal, state, and local
statutes, regulations, and ordinances relating to such work, and for reclamation
bonding and any bonding required for geothermal wells. Lessor agrees to
cooperate with Lessee in Lessee’s application for governmental licenses,
permits, and approvals, all costs of which shall be borne by Lessee.

                    Lessee
shall fence all excavations (including sumps and settling ponds), and, upon the
termination of the Lease, Lessee shall level and fill all sump holes and
excavations, shall remove all debris and shall leave the locations or premises
used by Lessee in a clean and sanitary condition.

                    Lessee
shall replace all fences which the Lessee removed for its purposes and repair
all fences which Lessee damaged, and if and when so required by the Lessor, will
provide a proper livestock guard at any new point of entry upon lands used by
Lessee.

                    Lessee
shall have reasonable access to and use of water from the leased land for
Lessee’s drilling, testing and exploration operations thereon, in the vicinity
thereof, or on land or lands pooled, unitized or combined therewith provided
that such use shall not interfere with Lessor’s own use for domestic,
commercial, stock or agricultural purposes, nor interfere with any legal or
contractual commitments of Lessor relating thereto and existing on the date
hereof.. Lessor shall be allowed to enter on to the Lands during the term of the
lease for regular water monitoring activities of all wells or water sources.

                    Lessee
shall protect Lessor’s interest in the leased rights against liens of every
character arising from its operations thereon. Lessee, at its own expense, prior
to commencing operations pursuant to the leased rights, shall obtain, and
thereafter while this Lease is in effect shall maintain, adequate Workers
Compensation Insurance. Lessee shall protect Lessor against damages of every
kind and character arising out of the operations or working of Lessee or those
under Lessee’s control pursuant to the leased rights, but Lessee shall not be
liable hereunder in the event of the negligence or willful misconduct of parties
other than Lessee.

          5.      Royalty.
Royalties shall be payable as follows:

          (a)      With
respect to Hot Water, Steam or Thermal Energy (collectively to be referred to as
“Energy Produced”) produced, saved and sold by Lessee and then used by the
purchaser for the generation of electric power, Lessee shall pay to Lessor as
royalty Ten Percent (10%) of the market value of such Hot Water, Steam or
Thermal Energy produced from the well or in exercise of the leased rights at and
as of the point of origin on the land associated with the well or the leased
rights, which market value shall be deemed to be the gross proceeds received by
Lessee from such sale at the point of origin, unless the sale occurs at a
location other than the point of origin, in which case the market value shall be
deemed to be the gross proceeds received by lessee from such sale less all costs
and expenses of processing and transportation between the point of origin and
the point of sale.

          (b)      With
respect to Hot Water, Steam or Thermal Energy produced, saved and used for the
generation of electric power which is then sold by Lessee, Lessee shall pay to
Lessor as royalty, a percent of the actual revenue, net of transmission losses
and other transmission charges (hereinafter called “Gross Proceeds”) received by
Lessee from the sale of electric power under the following schedule based on the
date that Lessee’s power plant achieves commercial operation:

3

	Years 1 through 5 	3% of Gross Proceeds 
	Years 6 through 15 	4% of Gross Proceeds 
	Each Year Thereafter 	5% of Gross Proceeds
  

          (c)      With
respect to Energy Produced, saved and sold by Lessee and which is used for any
purpose other than the generation of electric power, Lessee shall pay to Lessor
as royalty Five Percent (5%) of the gross proceeds received by Lessee from the
sale of Energy Produced, as such, produced from the well or in exercise of the
leased rights at and as of the point of origin on the land associated with the
well or the leased rights.

          (d)      With
respect to Extractable Minerals, Lessee shall pay as royalty to Lessor Five
Percent (5%) of the net proceeds received by Lessee from the sale of any gases
(as herein defined) and from the sale of effluents (containing minerals and/or
minerals in solution) produced and sold from the well or in exercise of the
leased rights, or, in the event Lessee extracts from the effluents minerals
and/or minerals in solution, Five Percent (5%) of the proceeds received by
Lessee from the sale of minerals and/or minerals in solution contained in and
extracted from such effluents less costs of transportation and extraction. If
Lessee consumes Leased Substances or electric power generated therefrom, by
either use or exchange, for purposes other than its operations with respect to
the well or the leased rights, then such Leased Substances or electric power
generated therefrom shall be deemed sold for royalty purposes and the
above-described royalty shall be paid on the same value basis as if such Leased
substances or electric power generated therefrom had been sold by Lessee at the
time of production under Lessee’s then existing sales contract.

          (e)      With
respect to Energy Produced, Extractable Minerals, or Hot Water, Steam, or
Thermal Energy produced, saved, sold or used by Lessee, on lands that fall
within the Area of Influence, which are used for any purpose, Lessee shall pay
as royalty to Lessor 1.0% of Gross Proceeds received by Lessee from the
sale.

                    Lessee
shall pay to Lessor on or before the twenty-fifth day of each month the
royalties accrued and payable for the preceding calendar month, or on or before
the twenty-fifth day of the month next following that in which Lessee receives
payment therefor from the purchaser thereof, whichever method may be chosen by
Lessee from time to time, and in making such royalty payments Lessee shall
deliver to Lessor statements setting forth the basis for computation and
determination of such royalty.

                    Lessee
shall not be required to account to Lessor for or to pay any royalty on Hot
Water, Steam, Thermal Energy or Extractable Minerals produced by Lessee which is
not utilized, saved and sold, or which is used by Lessee in its operations with
respect to the well or the leased rights for or in connection with the
developing, recovering, producing, extracting and/or processing of Hot Water,
Steam, Thermal Energy and/or minerals in solution or in facilities for the
generation of electric power, or which are unavoidably lost.

                    Lessee
shall have the right from time to time and at any time to commingle (for
purposes of storing, transporting, utilizing, selling and processing, or any of
them) the Leased Substances, or any of them, that are produced or extracted from
the well or in exercise of the leased rights or lands pooled, unitized or
combined therewith, with Geothermal Resources, or any of them, produced from
other lands or units in the vicinity of the well or the land associated with the
leased rights, and in the event of such commingling, Lessee shall meter, gauge,
or measure the production from the well or in exercise of the leased rights, or
from the unit or units, including leased and other units or lands, as the 

4

case may be, and compute and pay
Lessor’s royalty payable under the provisions hereof on the basis of such
production so determined or allocated, as the case may be.

From the time when Lessee shall commence Commercial production
from said Lands, Lessee shall then pay Lessor the geothermal royalty set forth
herein, or the annual payments, whichever shall be the larger. This change from
annual lease payments to geothermal royalty payments shall occur at the time
when geothermal royalties exceed annual lease payments in any given year.

          6.      Use
of Lease. Lessee shall have the right to drill such well or wells as Lessee may
deem desirable for the exercise of the leased rights, including wells for
injection or reinjection purposes, and shall have the further right to dispose
in any such wells waste brine, water and other substances, waste products from a
well or wells, power plants or other facilities. Lessee shall further have the
right for testing purposes, to freely transfer Leased Substances and Geothermal
Resources and to inject such leased Substances and Geothermal Resources into
well or into any wells developed pursuant to the leased rights.

          7.      Land
Compensation. In return for actual surface use of leased land required for well
site, pipeline, transmission and plant operations hereunder, or if producing
agricultural lands are required by Lessee to be taken out of production, either
temporarily or permanently for Lessee’s operations, including but not limited to
as a result of Lessee’s use of water from the leased lands, Lessee shall
compensate Lessor at the annual rate of $ 200 per acre for such lands so
affected for the duration of their use. For greater clarity, if Lessee requires
2 acres of producing agricultural land, but its use impacts 10 acres, the rate
would apply to the 10 acres. For these purposes any pipelines or transmission
lines shall be deemed to require a 10 foot wide ground area. All pipelines shall
be insulated as per typical project specifications and shall be colored
according to industry norms or permit requirements as may be imposed. Lessee
shall further be responsible for any costs associated with the redesign and/or
relocation of structures or sprinkling equipment affected by Lessee’s
operations.

          8.      Commingled
and Unit Operations. Lessee may, at any time or from time to time, as a
recurring right for drilling, development, production or operating purposes,
pool, unitize or combine all or any part of the leased rights into a unit with
any other land or lands or lease or leases (whether held by Lessee or others)
adjacent, adjoining or in the immediate vicinity of the land on which the well
is located or with which the leased rights are associated, which Lessee desires
to develop or operate as a unit. Such unit shall be deemed created either upon
Lessee recording in the office of the county recorder a written declaration of
such unit or upon Lessee giving written notice of such unit to Lessor. Any well
(whether or not Lessee’s well) commenced, drilled, drilling and/or producing or
being capable of producing in any part of such unit shall for all purposes of
this Lease be deemed a well commenced, drilled, drilling and/or producing in
exercise of the leased rights, and Lessee shall have the same rights and
obligations with respect thereto and to drilling and producing operations upon
the lands from time to time included within any such unit as provided under this
Lease provided, however, that notwithstanding this or any other provision or
provisions of this Lease to the contrary:

          (a)      Production
as to which royalty is payable from any such well or wells drilled upon any such
unit, whether located upon the leased rights or other lands, shall be allocated
to the well and leased rights in the proportion that the acres of geothermal
rights associated with the leased rights bears to the total geothermal acreage
of such unit, and such allocated portion thereof shall for all purposes of this
Lease be considered as having been produced pursuant to the leased rights and
the royalty payable under this Lease shall be payable only upon that proportion
of such production so allocated thereto, and 

5

          (b)     
If any taxes of any kind are levied or assessed (other than taxes on the land
and on Lessor’s improvements), any portion of which is chargeable to Lessor
under Paragraph 14 hereof, then the share of such taxes to be borne by Lessor as
provided in the Lease, shall be in proportion to the share of the production
from such unit allocated to the well and leased rights.

                    Allocation
of unit production whether to the well and the leased rights or to other lands
in the unit, shall continue after any termination of all or any part of this or
any other lease covering lands in the unit until any exploration, drilling,
remedial drilling or production operations are begun on the lands so terminated,
or until contracts regarding any such operations are entered into, whereupon all
such terminated lands shall be excluded in the production to be allocated to the
respective lands in such unit. In the event of the failure of Lessor’s, or any
other owner’s, title as to any portion of the rights or land included in any
such unit, such portion of such land or associated land shall likewise be
excluded in allocating production from such unit, provided, however, Lessee
shall not be held to account for any production allocated to any lands excluded
from any such operating unit unless and until Lessee has actual knowledge of the
circumstances requiring such exclusion. Any exclusion shall be deemed effective
the first day of the month next following the date upon which such exclusion
becomes finally established.

                    Lessee
may, at its sole option, at any time when there is no Commercial production in
such unit, terminate, enlarge or diminish such unit either by Lessee recording
in the office of the county recorder a written declaration thereof, or by Lessee
giving written notice thereof to Lessor.

          9.      Inspection
by Lessor. Lessor, or its agents, at Lessor’s sole cost and risk, may during
normal hours of operation examine the any working, installations, structures, or
operations of Lessee constructed or undertaken pursuant to the leased rights,
and may at reasonable times inspect the books and records of Lessee with respect
to matters pertaining to the payment of royalties to Lessor.

          10.      Default
Notice. Upon the violation of any of the terms and conditions of this Lease by
Lessee (including but not limited to payment of rental, advance royalty and/or
royalty) and the failure of Lessee, as to monetary matters, to make payment, and
as to other violations, to begin in good faith to remedy the same, within sixty
(60) days after written notice from Lessor so to do, specifying in said notice
the nature of such default, then at the option of Lessor this Lease shall
forthwith cease and terminate and all rights of Lessee in and to the well and
the leased rights shall be at an end, except for each and any well then being
drilled, or capable of producing, or capable of being used for injection
purposes, and in respect to which Lessee shall not be in default, together with
the rights, rights of way and easements which may be retained by Lessee by
virtue of the granting clause of this Lease. 

          11.      Termination.
Notwithstanding any other provisions of this Lease, and in consideration of the
payment made by the Lessee to the Lessor for the execution of this Lease, Lessee
shall have the right at any time prior to or after default hereunder, to
quitclaim and surrender to Lessor all right, title and interest of Lessee in and
to the well and the leased rights, and thereupon all rights and obligations of
the parties hereto one to the other shall cease and terminate, save and except
as to any then accrued royalty obligations of Lessee then payable as to which
Lessee shall remain liable to Lessor, and save and except the rights, rights of
way and easements which may be retained by Lessee by virtue of the granting
clause of this Lease.

          12.      Partial
Ownership Interests. In the event Lessor at the time of making this Lease owns
an interest in the leased land less than One Hundred Percent (100%) of the
right, title and interest purportedly granted or leased hereby to Lessee, then
any payments due Lessor hereunder shall be paid to Lessor only in the proportion
which Lessor’s Interest bears to a One Hundred Percent (100%) interest in the
leased land.

6

Notwithstanding the foregoing, should Lessor hereafter acquire
any additional right, title or interest in or to the leased land, it shall be
subject to the provisions hereof to the same extent as if owned by Lessor at the
date hereof, and any increase in payments of money hereunder necessitated
thereby shall commence with the payment next following receipt by Lessee of
satisfactory evidence of Lessor’s acquisition of such additional interest.

          13.      Title.
Lessor hereby warrants and agrees to defend title to the leased rights and
agrees that Lessee, at its option, may pay and discharge any taxes, mortgages,
trust deeds or other liens or encumbrances existing, levied or assessed on or
against the well or the leased rights, and in the event Lessee exercises such
option, Lessee shall be subrogated to the rights of any holder thereof, and
shall have, among other rights, the right of applying to the discharge of any
such mortgage, tax or other lien or encumbrance any payments accruing to Lessor
hereunder.

          14.      Tax
Payments. Lessee shall pay all taxes levied on structures and improvements
constructed by Lessee pursuant to this Lease. In the event any taxes are levied
or assessed against the right to produce Leased Substances, or against any
Leased Substances on or in the land associated with the well or the leased
rights, or in the event any increase in the taxes levied or assessed against the
well or the leased rights shall be based upon the production of Leased
Substances from, or reserves of Leased Substances attributed to, the well or the
lease rights, then in either such event Lessee shall pay Ninety Percent (90%) of
any such taxes or increase, as the case may be, and Lessor shall pay Ten (10%)
thereof. Lessor shall pay all taxes levied and assessed against all structures
and improvements owned by Lessor or placed by or pursuant to permission of
Lessor.

          15.      Assignment.
The rights of either party hereunder may be assigned in whole or in part, and
the right and privilege to do so is hereby reserved by each party, and the
provisions hereof shall extend to the heirs, personal representatives,
successors and assigns of the parties hereto, but no change or division in
ownership of the well, rights, rentals or royalties, however accomplished, shall
operate to enlarge the obligations or diminish the rights of Lessee, and no such
change in ownership shall be binding upon Lessee until the expiration of thirty
(30) days after Lessee is furnished with written notice of such transfer or
assignment, together with a certified copy of the instruments of transfer or
assignment. In the event of assignment of this lease as to a segregated portion
of the leased right, the rentals payable hereunder shall be apportionable
between the several leasehold owners ratably according to the surface area of
each, and default in rental payment by one shall not affect the rights of other
leasehold owners hereunder. Lessee’s right of assignment expressly includes the
right to sublease all or any portion of its rights and obligations hereunder.
Lessee must notify the Lessor, in writing, within 30 days of any assignment.

          16.     
Force Majeure. The obligation of the Lessee hereunder shall be suspended and the
terms of this Lease shall be extended as the case may be, while Lessee is
prevented from complying therewith, in whole or in part, by strikes, lockouts,
riots, war or the results thereof, acts of God or the elements, fire, flood,
accidents, delays in transportation, inability to secure labor or material in
the open market, laws, orders, rules, or regulations of Federal, State, County,
Municipal, or other governmental agencies, authority, or representative, or any
other matter or condition beyond reasonable control of Lessee, whether or not
similar to the conditions or matters herein specifically enumerated, or while
litigation contesting Lessor’s title to the well or the leased rights or the
rights granted Lessee hereunder or litigation involving Lessee’s operations
hereunder shall be pending and undetermined or during any period when Lessee has
no market for the products it is then capable of producing from the leased
rights or the market price then available for such products will not produce an
acceptable profit. For so long as any of the above circumstances continue to
exist, Lessee, without impairment of its rights hereunder, shall be excused from
performance of al obligations hereunder except payment of taxes and protection
of the leased rights. It is expressly agreed that 

7

the prevention of settlement of any litigation or strike or
labor disturbance shall not be considered a matter subject to Lessee’s control
within the meaning of this Paragraph.

                    If
the permission of approval of any governmental agency is necessary before
drilling or producing operations may be commenced pursuant to the leased rights,
then if such permission or approval has been applied for at least thirty (30)
days prior to the date upon which such operations much be commenced under the
terms hereof, the obligation to commence such operations shall be suspended
until ninety (90) days after the governmental permit is granted or approval
given, of if such permit or approval is denied initially, then so long as Lessee
in good faith appeals from such denial or conducts further proceedings in an
attempt to secure such permit or approval and ninety (90) days thereafter.
Lessor agrees to fully support and cooperate with Lessee in securing permits and
authorizations to conduct geothermal operations on the leased rights, all costs
of which shall be borne by Lessee.

          17.      All
statements of production and royalty and all payments to be made by Lessee to
Lessor hereunder shall be sent to the person hereinafter set forth, at the
address indicated:

JR Land and Livestock Inc. 
C/o
Richard Jordan 
PO Box 188 
Westfall, OR 97920 

                    Lessee
shall, upon written notification of change of ownership in the well or leased
rights or in the rentals or royalties hereunder, as provided in Paragraph 12
hereof, divide and distribute the same to the new owners of such interest;
provided, however, that if at any time there are three or more persons entitled
to rentals or royalties hereunder, Lessee may, at its option, withhold payment
of such rentals or royalties until a majority in interest of such persons
designate in writing in a recordable instrument delivered to Lessee, a bank,
trust company or corporation, as a common agent and depositary, to receive all
payments due hereunder to such persons. Such designation may be changed at any
time in the same manner. Delivery of all statements and payments hereunder may
be made by depositing same in the United States mail duly addressed to Lessor at
the above address or addresses or to such agent and depositary, which shall
constitute full performance of Lessee’s obligation to make such delivery. In the
event that the amount payable under this Lease shall result in a payment of less
than Five Hundred dollars ($500.00) becoming due Lessor, Lessee may, at is
option, withhold and accrue sufficient periodic payments until the total due
Lessor exceeds Five Hundred Dollars ($500.00) .

          18.      Notice.
Any notice herein required, or permitted to be given, or furnished by one party
to the other shall be in writing. Delivery of such written notice to Lessor
shall be made in person, by depositing the same in the United States mail duly
certified or by express delivery and addressed to Lessor at PO Box 188,
Westfall, OR 97920 and delivery of such written notice to Lessee shall be made
in person, by depositing the same in the United States mail duly certified or
delivered by express delivery and addressed to Lessee at 1509 Tyrell Lane, Suite
B, Boise, Idaho 83706. Either party hereto may by written notice to the other
party change its address to any other location.

          19.      Definitions.
For the purposes of this Lease the following definitions shall apply:

          (a)     
The terms “Hot Water”, “Steam” and “Thermal Energy”, collectively referred to as
“Energy Produced”, each shall mean natural geothermal water and/or steam, and
shall also mean the natural heat of the earth and the energy present in,
resulting from or created by, or which may be 

8

extracted from, the natural heat of the
earth or the heat present below the surface of the earth, in whatever form such
heat or energy naturally occurs; 

          (b)      The
term “Extractable Minerals” shall mean any minerals in solution in the well
effluents and all minerals and gases produced from or by means of the well or
any well or wells developed in exercise of the leased rights or by means of
condensing steam or processing water produced from the effluents from any such
well or wells. Said terms shall also include any water so produced or obtained
from condensation or steam; provided, however, that the term “gases” shall not
include hydrocarbon gases that can be produced separately from the well
effluents; 

          (c)     
The term “Leased Substances” shall collectively mean the matter, substances and
resources defined in subparagraphs 18(a) and 18(b) that are subject to this
Lease; 

          (d)      The
term “Geothermal Resources” shall collectively mean the matter, substances and
resources defined in subparagraph 18(a) and 18(b) that are not subject to this
Lease but are located on adjacent land or lands in reasonable proximity thereto;

          (e)      The
term “Power Potential” shall mean, when used herein with respect to any well or
wells, the quantity, or units, of energy capable of being recovered from the Hot
Water, Steam or Thermal Energy produced therefrom by means of any energy
conversion or utilization facility (including, but not limited to, electrical
generating facilities) or equipment designed for use thereof; 

         (f)      The
term “Sufficient Power Potential” shall mean that Power Potential which, in the
sole judgment of Lessee shall be sufficient for the Commercial sale or
utilization thereof, or shall warrant the construction of facilities for the
Commercial sale or other utilization thereof, or shall justify additional
drilling or other operations in exercise of the leased rights; 

          (g)     
The term “Commercial” shall mean those qualities of Leased Substances produced,
sold or used, the value of which, after determining Lessee’s direct operating
costs (or extraction costs in the case of Extractable Minerals) will be capable
of providing a sufficient return to cause Lessee, in its sole judgment, to
continue production thereof or to elect to proceed with further development or
exploratory operations in exercise of the leased rights.

          20.      Severability.
In the event any part or portion or provision of this instrument shall be found
or declared to be null, void or unenforceable for any reason whatsoever by any
Court of competent jurisdiction, then and in such event only such part, portion
or provision shall be affected thereby, and such finding, ruling or decision
shall not in any way affect the remainder of this instrument or any of the other
terms or conditions hereof, which said remaining terms and conditions shall
remain binding, valid and subsisting and in full force and effect between the
parties hereto, it being specifically understood and agreed that the provisions
hereof are severable for the purposes of the provisions of this clause. In this
connection, this Lease shall not in any event extend beyond such term as may be
legally permissible under present applicable laws, and should be any such
applicable law limit the term hereof to less than that herein provided, then
this Lease shall not be void but shall be deemed to be in existence for such
term and no longer.

          21.      Exclusive
Rights. Lessee shall have the exclusive rights to all Leased Substances and to
all power production from Leased Substances on and/or from leased land during
the term hereof, subject only to payment of the royalties to Lessor as set forth
herein.

9

          22.     
If more than one person is named as Lessor herein and one or more of them fails
to execute this Lease, said Lease shall nevertheless (when accepted by Lessee)
become effective as a lease from such of said named parties Lessor as may have
executed the same.

          23.      This
Lease may be executed in any number of counterparts and all such counterparts
shall be deemed to constitute a single lease and the execution of one
counterpart by any party Lessor shall have the same force and effect as if such
party had signed all the other counterparts.

          24.     
This Geothermal Lease and Agreement and all of the terms, covenants and
conditions hereof shall extend to the benefit of and be binding upon the
respective heirs, personal representatives, successors and assigns of the
parties hereto.

                    IN
WITNESS WHEREOF, the parties have caused this instrument to be duly executed as
of the date hereinabove first written.

	On behalf of, 	 	On behalf of, 
	JR Land and Livestock Inc. 	 	U.S. Geothermal Inc. 
	  	 	  
	  	 	  
	  	 	  
	/s/ Richard Jordan	 	/s/
      Douglas J. Glaspey
	Richard Jordan, President 	 	Douglas J. Glaspey, Chief Operating Officer
  
	Lessor 	 	Lessee 

10

	State of Idaho 	) 	On this 24th day of May, 2006, before me, 
	  	) 	 
	County of Ada 	) 	 
	  	  	 
	  	  	the undersigned Notary Public, personally
      appeared 
	  	  	Douglas J. Glaspey 
	  	  	(x) personally known to me 
	  	  	(  ) proved to me on the basis of
      satisfactory evidence 
	  	  	to be the person(s) whole name(s) Douglas J.
      Glaspey 
	  	  	subscribed to the within instrument, and
      acknowledged that 
	  	  	Douglas J. Glaspey, executed it. 
	  	  	 
	  	  	 
	  	  	WITNESS my hand and official seal. 
	 	 	 
	 	 	/s/ Amy Mitchell
	  	  	Notary’s Signature 
	  	  	Commission Expires: 7/29/2010
	  	  	 
	  	  	 
	  	  	 
	  	  	 
	State of Oregon 	) 	On this 24th day of May, 2006, before me, 
	  	) 	 
	County of Malheur 	) 	 
	  	  	 
	  	  	the undersigned Notary Public, personally
      appeared 
	  	 	Richard Jordan 
	  	  	(  ) personally known to me 
	  	  	(x) proved to me on the basis of satisfactory
        evidence 
	  	  	to be the person(s) whole name(s) Dick Jordan
    
	  	  	subscribed to the within instrument, and
      acknowledged that 
	  	  	Richard Jordan executed it. 
	  	  	 
	  	  	 
	  	  	WITNESS my hand and official seal. 
	 	 	 
	 	 	/s/ Kerry Baumgardner
	  	  	Notary’s Signature 
	  	  	Commission Expires: 4.03.10

11

EXHIBIT A

Hot Springs Ranch – 5,409 acres more or less

Lands located in Malheur County, Oregon

  	 	Township 18 South, Range 42 East W.M.
	 	Section 13: 	 SE1⁄4SW1⁄4, SW1⁄4SE1⁄4,
          E1⁄2SE 1⁄4 

	 	Section 24: 	 N1⁄2NW1⁄4 

	 	 	 

	 	Township 18 South, Range 43 East W.M.
	 	Section 5: 	 SW1⁄4SW1⁄4 

	 	Section 7: 	 Lots 2, 3, 4, SE1⁄4NW1⁄4,
          SW1⁄4NE1⁄4, E1⁄2NE1⁄4, SE1⁄4 , E1⁄2SW 1⁄4 

	 	Section 8: 	 All 

	 	Section 9: 	 All, EXCEPTING a parcel situated
          in the NW1⁄4NE1⁄4 and the E1⁄2NW1⁄4, 

	 	  	 More particularly described
          as follows: 

			 Beginning at the North quarter
          corner of Section 9, thence East 660 feet, thence South 660 feet, thence
          on a straight line in a Southwesterly direction to a point 330 feet
          North of the Southwest corner of the NW1⁄4NE1⁄4 of Section 9;
        

			 thence continuing South 660
          feet, thence on a straight line in a Southwesterly direction to a point
          which bears N 64o 00’ W 737.89 feet from the center quarter
          corner of Section 9; thence S 89o 26’ W 266.45 feet, 

	 	  	 thence N 20o 54’
          E 30.0 feet, thence N 18o 51’ E 129.0 feet, 

	 	  	 thence N 11o 01’
          E 145.5 feet, thence N 1o 51’ E 539.6 feet, 

	 	  	 thence N 43o 22’
          E 89.5 feet, thence N 16o 29’ W 89.3 feet, 

	 	  	 thence N 20o 15’
          E 353.0 feet, thence North 330 feet, 

			 thence on a straight line in
          a Northeasterly direction to a point 330 feet South of the North quarter
          corner of Section 9, thence North 330 feet to the point of beginning.
        

	 	Section 11: 	 W1⁄2, S1⁄2SE1⁄4 

	 	Section 15: 	 All 

	 	Section 16: 	 SW1⁄4 , W1⁄2NW1⁄4
          , NE1⁄4 

	 	Section 17: 	 All 

	 	Section 18: 	 All 

	 	Section 19: 	 All 

12

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