This document details the progress to date on the 'Optimization of Mud Hammer Drilling Performance--A Program to Benchmark the Viability of Advanced Mud Hammer Drilling' contract for the quarter starting January 2005 through March 2005. The DOE and TerraTek continue to wait for Novatek on the optimization portion of the testing program. The latest indication is that the Novatek tool would be ready for retesting only late 2005. Smith International's hammer was tested in April of 2004 and was covered in the 2Q 2004 report and Impact Testing was covered in part 3Q 2004. Accomplishments included the following: A proposal submitted for a paper in the Society of Petroleum Engineers' 2005 Annual Technical Conference and Exhibition was accepted. 'Single Cutter Testing Improves Understanding of Deep-Well Hammer Drilling Performance' was co-authored by Sid Green/Arnis Judzis/Alan Black (TerraTek), John Rogers (DOE-NETL and Project Manager for the work), and David Curry/Umesh Prasad (Hughes Christensen). TerraTek continues to work with Novatek as requested to ensure progress in testing their updated mud hammer. Specifically engineering continued on a Novatek hammer fluid flow shroud and control systems via slip rings at TerraTek.