We recently developed a numerical method, the Formation Temperature Estimation (FTE) model, to determine formation temperatures by inversion of borehole temperature (BHT) measurements (Cao et al., 1988a). For more than two BHT measurements, the FTE model can estimate (1) true formation temperature [Formula: see text], (2) mud temperature [Formula: see text] at the time the mud circulation stops, (3) thermal invasion distance R into the formation before the formation is at the true formation temperature, (4) formation thermal conductivity K perpendicular to the borehole, and (5) efficiency factor F for mud heating in the borehole after mud circulation has stopped. The method optimizes three free parameters: τ (diffusion time‐scale), ε (scaling parameter related to the thermal invasion distance R), and [Formula: see text] (normalized efficiency factor for mud heating.