On August 22, 1998, approximately 1630 mountain daylight time, an Aerospatiale SA315B helicopter, N49525, was substantially damaged when it impacted terrain following a loss of engine power while maneuvering approximately 12.5 miles south of Naturita, Colorado. The commercial pilot, the sole occupant onboard, received minor injuries. Geo-Seis Helicopters, Inc., under Title 14 CFR Part 133, was operating the aircraft. Visual meteorological conditions prevailed, and no flight plan was filed. According to the operator, witnesses, and the pilot, the flight was transporting a 1,250-pound compressor on a 50-foot line. As the pilot was conducting his approach to a hover and was passing through about 100 feet above ground level, ground personnel said they heard a screeching noise and saw a 5-foot orange-colored flame coming from the engine exhaust. The helicopter settled and impacted terrain in a level attitude, but with sufficient force to cause substantial damage to the landing skids, airframe, tail boom, rotor blades, and tail rotor. The pilot did not release the load prior to landing due to the proximity of ground personnel. According to the pilot, while conducting his approach with the external load, he heard a "whirling" sound from the engine and the engine started to lose power. He said "It did not appear to be a total failure, just a gradual loss of power." As the helicopter descended through about 25 feet above the ground, the pilot said he executed a flare and landed in a small hole in some trees. Ground crewmen came to the aircraft and used the on board hand held fire extinguisher to put out a fire in the exhaust stack. They also shut off the fuel valve, electric power, and assisted the pilot, who was later transported to Saint Mary's Hospital in Grand Junction, Colorado, where he was examined. The examination revealed he had compression fractures to his lumbar spine. According to the operator, the allowed maximum gross weight of the helicopter for the conditions present was 4,900 pounds and the actual gross weight was 4,350 pounds. The altitude at the accident site was 6,300 feet, the temperature was 90 degrees Fahrenheit, the helicopter had 35 gallons of fuel aboard, the pilot weighed 172 pounds and the load weighed 1,200 pounds. According to calculations, these weather conditions would provide a density altitude of 9,500 feet. Performance charts indicate the helicopter was capable of hovering out of ground effect at the above weights and conditions. A review of the pilot's certification and training records provided documentation that he received his last FAR Part 133 and 135 proficiency checks from a designated check airman on January 29, 1998, and a proficiency check from the FAA on January 26, 1997. Records also provided information that he received a proficiency check from the Department of Interior, Office of Aviation Services (OAS), on external load operations and other OAS missions, on January 8, 1998. An examination of the engine and engine records was conducted. The engine log, power trend graphs, and engine oil sample analysis documents provided no evidence of engine abnormalities. The inlet, compressor section, and burner section appeared normal. The turbine section provided evidence of heat discoloration and erosion damage to the stators and outer 1/3 portion of the turbine blades on the gas generator. Pieces of the turbine blades and stator vanes were found in the exhaust casing at the accident site. (See attached photographs.) The engine fuel control and fuel pump were removed and functionally tested on a certified test bench at the facilities of Roberts Aircraft. Both units operated within normal parameters. See attached test data log.