lifting costs, à reasonable interest on capital honestly and wisely invested, and the Government royalty; and shall include recommendations as to action to be taken in the public interest. 4. The application for reduction of royalty must contain the following information: (a) Serial number of lease and land district. (b) Name and address of each holder of the record or legal title. (c) Name and address of operators or sublessees, if any. (d) Description by legal subdivision of land for which application is filed. (e) Plat showing location, field number, and status of each well that has been drilled. (f) A tabulated statement showing for each month of a period of not less than 6 months next prior to the date of filing of application: (1) The aggregate amount of oil subject to royalty in conformity with the provisions of section 3 of the operating regulations: (2) The number of wells counted as producing in accordance with said section of the operating regulations; and (3) The average production per well per day as determined from oil subject to royalty and count of producing wells. (g) A detailed statement of expenses and costs of operating the wells, and all facts tending to show whether the wells can be successfully operated upon the royalty fixed in the lease and whether the operator is in good faith doing everything that may be reasonably expected in economic operation. This statement should include full information as to whether, and if so what, royalties are paid to others than the United States, efforts made to reduce them, and agreement of the holders of the lease and of royalty holders to a permanent reduction of all other royalties from the leasehold to an aggregate not in excess of one-half the Government royalty. AMENDING CIRCULAR NO. 1073, INSTRUCTIONS UNDER SECTION 27 OF THE LEASING ACT OF FEBRUARY 25, 1920 (41 STAT. 437), AS AMENDED BY THE ACT OF APRIL 30, 1926 (44 STÁT. 373) DEPARTMENT OF THE INTERIOR, Registers, United States Land Offices. GENERAL LAND OFFICE, Washington, August 1, 1927. GENTLEMEN: Circular No. 1073 (51 L. D. 475), approved June 18, 1926, concerning limitations of holdings under section 27 of the act of February 25, 1920 (41 Stat. 437), as amended by the act of April 30. 1926 (44 Stat. 373), is hereby amended by adding thereto the following paragraph: While under section 27 as so amended, the limitations as to holdings under the act are governed by the number of acres and not by the number of permits which may be held by the same person, association, or corporation, provided the combined area does not exceed the limitations fixed, there appears to have been no purpose to change the area which may be acquired under lease at a royalty of 5 per cent in case of discovery. Accordingly, oil and gas permits will not be issued nor assignments of such permits approved to the same applicant where the result would be to enable such applicant to acquire under section 14 of the act a right to lease at 5 per cent royalty a larger area than he would be entitled to lease at such royalty had the areas of all the permits been embraced in a single permit and discovery made thereon. The DIRECTOR GEOLOGICAL SURVEY. The COMMISSIONER GENERAL LAND OFFICE. GENTLEMEN: The following procedure for abandonment of wells on oil and gas prospecting permits is approved and you will govern yourselves accordingly. 1. Whenever, in the opinion of the supervisor of oil and gas operations, any well on a prospecting permit should be plugged and abandoned, he shall call upon the permittee to perform the necessary work. (See Operating Regulations, sec. 1 (a) and (e).) If steps to perform the required work are not taken with reasonable promptness, the supervisor shall report to the Geological Survey stating the conditions that exist, the efforts made by him to have them corrected, and the results thereof, and the approximate cost of abandoning properly each well involved, and shall make specific recommendation as to the action to be required of the permittee. 2. The Geological Survey will promptly notify the General Land Office, specifying the abandonment work necessary by the permittee. 3. The General Land Office will immediately serve notice by registered mail on the permittee at his record address, through the register of the local land office, allowing 15 days from receipt of notice within which to initiate proceedings looking to the abandonment in accordance with the operating regulations. 4. The General Land Office will transmit by registered mail to the home office of the surety company, bonding the permittee, a copy of such notice, advising the surety company that unless its principal takes steps to comply with the order within the time allowed the Government will protect its interests through appropriate proceed ings and will thereafter look to the surety company for reimbursement under the bond. 5. The General Land Office will send two copies of such notices to the Geological Survey, one copy of each notice to be forwarded to the appropriate supervisor of oil and gas operations, Geological Survey. 6. At the expiration of the time allowed the register will report to the General Land Office with evidence of service, at the same time sending a copy of his report to the supervisor of oil and gas operations. 7. Upon receipt of such information from the local land office the supervisor will, if the facts then before his office warrant, confirm the register's report by a report to the Geological Survey. 8. Upon receipt of such report from the supervisor the Geological Survey will immediately notify the General Land Office, reporting all facts in detail including the estimated cost of abandoning each well involved. 9. Upon receipt of such reports from the register and from the Geological Survey the General Land Office will call on the home office of the surety company, furnishing an estimate of the cost of the necessary work and allowing the company 15 days to elect to make the abandonment of its own motion under the supervision of the oil and gas supervisor, Geological Survey, or to indicate what action, if any, it desires to take if and when the work is undertaken by the Government. 10. The General Land Office will notify the Geological Survey of the action taken by the surety company. 11. The Geological Survey will notify the supervisor, and if the Surety company does not elect to perform the work on its own motion will, pursuant to the fiscal regulations of that office, authorize the supervisor to proceed with the necessary work of abandonment. 12. On receipt of such authorization from the Geological Survey as may be necessary in a particular case, the supervisor will proceed with the work, keeping a detailed account by well and job of all expenditures. Vouchers submitted by the supervisor for payment should be separated from other expenditures and should be marked to indicate the job to which they relate by serial number of the case record, the name of the permittee, and name of the surety company. 13. The supervisor will upon completion of the work submit to the Geological Survey an itemized detailed account with appropriate references to vouchers, contracts, etc.; this account will be made the basis for procedure to obtain reimbursement. 14. The Geological Survey will submit to the General Land Office a complete report, in duplicate, of the cost incurred in the work of abandonment. 15. The General Land Office will call on the home office of the surety company to make settlement for the amount due, submitting to the company an itemized statement and all related facts, and giving notice that unless the surety company makes settlement within 30 days from notice the entire matter will then be referred to the Department of Justice with recommendation that suit be instituted to recover the amount of expenditure made plus costs. 16. When the expenditure made in the matter of the abandonment is in excess of the bond obligation the supervisor of oil and gas operations will report specifically to the Geological Survey as to the advisability of bringing suit against the permittee to obtain judgment and execution for the full amount expended. 17. The procedure above outlined shall apply where applicable to other defaults by permittees or lessees. Yours very truly, E. C. FINNEY, First Assistant Secretary. [Reported, 52 L. D. 362] CIRCULAR NO. 1147 EXTENSIONS OF TIME FOR DRILLING UNDER OIL AND GAS PROS- DEPARTMENT OF THE INTERIOR, Registers, United States Land Offices. GENTLEMEN: The act of Congress approved January 11, 1922 (42 Stat. 356), provides that the Secretary of the Interior may if he shall find that any oil or gas permittee has been unable, with the exercise of diligence, to begin drilling operations or to drill wells of the depth and within the time prescribed by section 13 of the act of Congress approved February 25, 1920 (Forty-first Statutes, page 437), extend the time for beginning such drilling or completing it, to the amount specified in the act for such time, not exceeding three years, and upon such conditions as he shall prescribe. The act of April 5, 1926 (44 Stat. 236), authorizes the Secretary of the Interior to grant extensions for an additional period of two years if he shall find that the permittee has been unable, with the exercise of reasonable diligence, to begin drilling operations or to drill wells of the depth and within the time required by existing law, or has drilled wells of the depth and within the time required by existing law, and has failed to discover oil or gas, and desires to prosecute further exploration. By act approved March 9, 1928 (45 Stat. 252), the Secretary is given authority to extend for an additional period of two years any oil or gas prospecting permit issued under the act of February 25, 1920, or extended under the act of January 11, 1922, or as further extended under the act of April 5, 1926 if he shall find that the permittee has been unable, with the exercise of reasonable diligence, to begin drilling operations or to drill wells of the depth and within the time required by existing law, or has drilled wells of the depth and within the time required by existing law, and has failed to discover oil or gas, and desires to prosecute further exploration. SEC. 2. Upon application to the Secretary of the Interior, and subject to valid intervening rights and to the provisions of section 1 of this Act, any permit which has already expired because of lack of authority under existing law to See act of Congress approved Jan. 23, 1930 (Pub. No. 35). make further extensions, may be extended for a period of two years from the date of the passage of this Act. Accordingly, the owner of an oil and gas prospecting permit may secure an extension of time thereon for beginning or completing drilling operations by filing an application therefor showing that he is entitled to such extension under the provisions of one of said acts. The application may be filed in the district land office having jurisdiction over the land involved or in General Land Office, and must be under oath or accompanied by the affidavit of the permittee, or his attorney in fact, where such attorney has been given full control of operations under the permit, and corroborated by the affidavit of at least one disinterested person having knowledge of the facts. The applicant must show: (1) That the corners of the claim have been marked with substantial monuments and that a notice has been posted as required by paragraph 1 of the permit, as there is no provision of law under which the time may be extended for compliance with that require ment. (2) What efforts, if any, have been made to comply with the ternis of the permit, the reasons for delay in the full compliance therewith, and when he expects to commence or resume operations and any arrangements made to drill the permit lands; if the permittee has entered into a contract to drill the land, the application must be supported by the affidavit of the drilling contractor as to the terms of the contract, the means at his command for carrying out the same, and the time when he expects to begin drilling operations thereunder. (3) The drilling activities on the geologic structure on which the permit land is located, or within 10 miles thereof, and the location of any oil or gas well being drilled by section, township, and range, with full information as to when the well was begun, its approximate depth, and the prospects for discovery of oil or gas. Contribution development programs proposing a joint test by a group of permittees should be submitted to the department at their inception in order that it may be determined whether, upon the facts disclosed in a given case, any and all permittees proposing to contribute may do so with the assurance that so long as the test is diligently prosecuted through their efforts, but limited to the period provided for in the leasing act and the acts granting extensions, drilling on their own permits will be excused. If the application for extension of time is based on contribution made by the permittee toward sinking of a test well upon the structure, the location of the well, full disclosure of the amount and nature of such contributions and the conditions under which the same were made must be shown, which showing must be corroborated by the affidavit of one or more or the parties under whose authority the well is being drilled. Every application of this nature will be submitted to the Geological Survey for report, and if the report is unfavorable the application will be rejected subject to appeal. If the Survey shall report that it is without sufficient data as to structures in the region upon which to base any recommendation, only contributions by permittees, any portion of whose |