U.S. Geothermal Inc.

U.S. Geothermal Inc.

May 17, 2011 09:01 ET

U.S. Geothermal Commences Well Repairs at Raft River

BOISE, IDAHO--(Marketwire - May 17, 2011) - U.S. Geothermal Inc. ("U.S. Geothermal") (TSX:GTH)(NYSE Amex:HTM), a leading renewable energy company focused on the development, production and sale of electricity from geothermal energy, today announced the signing of a Repair Services Agreement ("RSA") between its wholly owned subsidiary US Geothermal Services ("USG Services") and Raft River Energy I LLC for the repair of two production wells at Unit 1 of the Raft River project.

The members of Raft River Energy I LLC have approved the RSA for the repair of production wells RRG-2 and RRG-7. Under the terms of the RSA, USG Services will fund and manage the repairs with a budget of up to $1.65 million. The cost of the repairs will be repaid from future project cash flow. A fee of 12.75 percent of the actual repair cost incurred will be paid to USG Services. The outstanding balance of the repair cost will also earn USG Services interest income at the rate of 12.0 percent per-annum.

Production well RRG-2 was shut down in June 2010 after a pump failure. Production well RRG-7 has a leak in a cement seal that failed where two steel casing sections overlap, allowing cooler geothermal fluid to enter the well bore. The flowing production temperature in RRG-7 has declined from 299°F to 240°F over the past two years. A pump rig was mobilized to the Raft River site on May 16 and began working on well RRG-2. Upon successful completion of the repair program, the annual average output of the plant is expected to increase 25% from a current level of 8 megawatts annual average to approximately 10 megawatts.

In addition to the well repairs, a flow stimulation technique called deflagration will be applied to wells RRG-2 and RRG-7 which may increase fluid flow from the known production zones. Deflagration has been used successfully in geothermal wells that contain productive zones that have been damaged by drilling mud or drill cuttings during drilling operations, with demonstrated increases in well permeability of up to 50 percent. Additional power generation may be realized from the well stimulation program.

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About U.S. Geothermal Inc.:
U.S. Geothermal Inc. is a leading renewable energy development company that is operating geothermal power projects at Raft River, Idaho and San Emidio, Nevada. The Neal Hot Springs project will be the company's third operating power project. The company holds geothermal energy rights to 69,500 acres comprising six advanced stage geothermal development projects. The San Emidio project is currently undergoing construction of a new 8.6 net MW binary cycle power plant.

The information provided in this news release may contain forward-looking statements within the definition of the Safe Harbor provisions of the US Private Securities Litigation Reform Act of 1995. These statements are based on U.S. Geothermal Inc.'s current expectations and beliefs and are subject to a number of risks and uncertainties that can cause actual results to differ materially from those described, including but not limited to, the results from the well repairs at Raft River. Readers are cautioned to review the risk factors identified by the company in its filings with Canadian and US securities agencies. Forward-looking statements are based on management's expectations, beliefs and opinions on the date the statements are made. U.S. Geothermal Inc. assumes no obligation to update forward-looking statements if management's expectations, beliefs, or opinions, or other factors, should change.

The NYSE Amex and the TSX do not accept responsibility for the adequacy of this release.

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