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The public faces a barrage of newspapers, telephone and direct

mail advertisements promising quick wealth and fortune through

"too good to be true" opportunities.

Perhaps you have been among those invited to take advantage of

such opportunity by entering a drawing for oil gas leases on

federal lands. The ad says: write for details or send a check to

cover the cost of filing fee and other services, and have your

name entered in the drawing.

It is really possible to strike it rich? How slim are the odds

and what are the risks?

The purpose of this report is to acquaint you with the procedures

involved regarding oil and gas leasing form the Government.


Lands that are not within any known geologic structure of a

producing oil and gas field, commonly known as "wildcat" lands,

are subject to leasing to the first qualified person making

application for a lease. Such lease is termed non competitive

since the applicant is entitled to the lease without competiting



Many tracts offered for non competitive leasing are in the

Western States where most of the public land is located. These

are the states of Alaska, California, Arizona, Colorado, Idaho,

Montana, Nevada, New Mexico, Utah, and Wyoming. Occasionally, a

few tracts in Washington and Oregon are offered.

Tracts in the Midwest and East are also put up for non

competitive leasing. The tracts are primary in Alabama, Arkansas,

Florida, Louisiana, Michigan, Mississippi and Ohio.


Each State Office of the Bureau of Land Management prepares and

posts a list of lands within its jurisdiction that are available

for releasing. These tracts range in size form 40 acres up to a

maximum of 10,240 acres. These list a may be viewed in the State

Offices or obtained from the State Offices by mail for a small

charge, usually $5 to $10 per list.

If any lands are available for releasing, the Bureau of Land

Management State Office posts its list on the first day of

business for the months of February, April, June, August,

October, and December. Applications are accepted until the close

of business on the 15th working day after the list is posted. If

more than one application is received for a given tract, a

drawing is held to decide who will get the lease. All application

for simultaneous oil and gas leases must be submitted to the

Wyoming State Office, which maintains a central computerized



Federal oil and gas leases may be obtained and held by any

citizen of the United States; however, no lease may be acquired

by a minor, but it may be issued to a legal guardian or trustee

in behalf of the minor. Associations of citizens and corporations

under the laws of the United States or of the State also qualify.

Aliens may not hold any interest in leases. They may, however,

own or control stock in a corporation holding leases, if the laws

of their country do not deny similar privileges to citizens of

the United States.

No person, association, or corporation may hold, own or control

oil and gas leases for than 246,080 acres in any one State.


Applications may be filed on any of the parcels shown on the list

posted in the BLM State Office. The parcel applied for must be

identified by the number shown on the list.

Each offer to lease must be submitted on a official Automated

Simultaneous Oil and Gas Lease Application (forms 3112-6), The

applications must be fully completed and personally signed in ink

by the applicant, or anyone authorized to sign on behalf of the

applicant, during the filing period.

Each part B application form must be accompanied by a non

refundable $75 filing fee for each parcel, and the first year's

rental of $1 per acre or fraction thereof.

Each applicant must contain the actual business or residential

address of the applicant. Addresses of third parties filing on

behalf of the applicant are not permitted.

An applicant may file, or have an interest in, only one

application for any one parcel; however, an applicant may file,

or have an interest in, one application each for as many

different parcels as he or she wishes.


After the close of the filing period on the 25th working day

after the list is posted, a computer-generated random selection

is conducted at the Wyoming State Office. Because of the heavy

volume of applicants that must be processed, selection does not

occur until the following month.

One applicant is randomly selected for each numbered parcel. If

the applicant selected is unacceptable or rejected, a reselection

will be made by computer from the remaining applications. Each

applicant is notified of the results of his application in the

random selection. The advance rental will be refunded to



It should be remembered that these lands have been leased

previously and are not known to contain deposits of oil or gas.

Neither the Bureau of Land Management nor any other Federal

agency can make any recommendation concerning the potential value

of any parcel offered for non competitive leasing.

Most applicants use a "Filing Service" to select parcels. Some

service charge a fee to evaluate parcels on the basis of

geological and marketing data; others offer maps and information

about the activities of oil companies operating in the area where

the various parcels are located. A third type of filing service

charges a fee for selecting a parcel from the list posted by the

Bureau and assisting the applicant in filing application.

Neither BLM, nor any other Federal agency, endorses any filing

service. None are in any way with the Federal Government.

Be wary of filing services that paint an overly optimistic

picture of your chances of winning and making money. Consider

these firms may file for hundreds and even thousands of clients

on a limited number of parcels, and the more interest these firms

can generate in drawings, the more applications will be filed on

each parcel, and the less chance each individual will have of

obtaining a lease.

The names of firms or individuals that specialize as filing

services may be located through business or professional

associations, through oil and gas trade publications or chambers

of commerce. They sometimes are listed under the heading "Federal

Leasing Services" in the yellow pages of telephone directories.

Anyone considering the use of a filing services should carefully

examine what services are offered and how big

a premium is being charged beyond the required $75 filing fee and

the advance rental that must be paid to BLM for each filing.

Possible source of information on a filing service are the Better

Business Bureau in the area where the firm is located and the

State, county or local consumer protection agency.


The lease grants the lessee the right to explore and drill for,

extract, remove and dispose of oil and gas deposits, except

helium, that may be found in leased lands. Such leases are issued

for a period of 10 years and so long thereafter as oil and gas

are produced in paying quantities. The lessee cannot build a

house on the land, cultivate the land, or remove any minerals

other than oil and gas from the leased land.

Before any drilling operation can commence, the lessee or his

operator must furnish a bond to assure compliance with all the

lease terms, including protection of the environment.


The value of oil and gas leases varies greatly. None of the

tracts offered has known potential for oil and gas production. In

certain cases, non competitive leases have brought substantial

profit to the winners. Generally, however, these leases average

only a few dollars per acre if resold.


Many people who acquire an oil and gas lease through the leasing

system do not intend to drill for oil or gas. Often the motive

for entering the drawing is to sell the lease to an oil company

for a profit.

If the lease is located in an area which may be attractive to

industry, interested buyers may make an offer.

A willing buyer may offer a lump sum for a lease. In some cases,

the original lessee can negotiate to retain a royalty interest in

any future production from the lease.


Any person who considers entering the oil and has drawing should

keep certain facts in mind:

* The land offered for leasing was formerly included in oil and

gas leases that expired, terminated, or were relinquished or


* The land involved is not recognized as being within a know

geological structure of a producing oil or gas field.

* Your offer to lease is strictly a gamble. Since a very

large percentage of the tracts won are never drilled on, your

parcel may not have any potential for oil and gas even if you win

the drawing.

* the more desirable parcels may attract hundreds, even thousands

of applications.


After carefully reading this report, if you wish to participate

in the drawings of your own, here is how to proceed:

Select the geographical area that interest

Locate the BLM State Office that is responsible for the area you

have selected. Write that state for information. The State Office

will send you application forms and tell you how much it will

cost you to receive by mail the list from which you must select

your tracts for the drawing.

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