Abstract: The Damintun sag is a Cenozoic continental basin, whose geological settings such as stratigraphy, tectonics and magmatic rocks provide good conditions for conductive geotherm. The main heat source is the mantle. The sandy conglomerate layer of Shahejie formation serves as thermal reservoir, covered by Quaternary, Neogene Guantao and Minghuazhen formations and partly Paleogene Dongying formation. The basement faults and multi-staged secondary faults in the sag form good passageways for heat and water in the geothermal field. With Neogene average geothermal gradient of 2.9℃/100 m and Paleogene of 3.18℃/100 m, the underground hot water in certain depth can reach the expected temperature for exploitation of geotherm.