Geothermal energy has become an attractive renewable source of energy around the globe. Developing effective geophysical methods for geothermal exploration is vital for studying these resources. It is well known that electric conductivity is an important indicator of the location of geothermal sources. The objective of the paper is to demonstrate the effectiveness of the new geophysical method based on the highly-sensitive SQUID (Superconducting Quantum Interference Device) magnetic measurements of the controlled source time domain electromagnetic (SQUID TEM) data for geothermal resource exploration. We have deployed highly-sensitive SQUID magnetic sensors to study the geothermal sources in the Geothermal Project Area in Southern Sumatra, Indonesia. We have also developed a large-scale 3D inversion method for interpreting the collected SQUID TEM data and reconstructing the 3D distribution of the resistivity of the subsurface. Field data inversion revealed several conductive anomalies, which may correspond to geothermal targets.