WITNESSETH, That for and in consideration of the attached application and of the mutual covenants and agreements hereinafter provided, and the rights and privileges hereby granted, the parties hereto agree as follows:

1. That this agreement is made on the basis of the statements and representations made by the applicant in the attached application, which statements and representations the applicant warrants to be true and correct; it being further agreed that in case such statements and representations shall be found by the Secretary of the Interior to be untrue or incorrect in any material respect, such finding shall render this agreement subject to cancellation by said Secretary at his option and on notice to the party of the second part.

2. That commencing on the date of this agreement, and continuing for the period pending the determination by the Secretary of the Interior of the title to the land embraced in the attached application, or such other disposition of the same as may be authorized by law, under the rules, regulations, and practice of the land department of the United States, said applicant and all persons claiming by, through or under him, as indicated in the attached application, shall be authorized to work and operate in and upon said lands for the production of oil and gas therefrom, in the manner and on the terms and conditions herein provided and not otherwise.

3. That the applicant shall conduct all drilling, pumping, and other operations for the production, storage, and sale of the oil and gas products from said land in workmanlike manner in accordance with approved practices and methods of operation for the prevention of waste or damage to said lands, or to other lands, for oil and gas producing purposes; and to this end applicant agrees to comply promptly and at his own expense with all reasonable rules, regulations, and requirements of the said Secretary of the Interior, his duly authorized agents and representatives for the prevention of damage and waste as aforesaid.

4. That all of the oil and gas products of a marketable character arising from the operations provided for in the last preceding paragraph shall be sold and disposed of in accordance with the contract or contracts for the sale and purchase of such products submitted with, and as a part of, the attached application, or such other contract or contracts as may hereafter be entered into with the approval of the Secretary of the Interior.

5. That one-eighth of the gross proceeds, arising from the sale of such oil and gas products, as provided in the preceding paragraph, shall be deposited by the purchaser or purchasers thereof, in the national bank designated in said application, to be held by said bank in escrow, as in this contract provided, such payments to be made monthly on or before the tenth day of each month for all oil and gas sold during the preceding month; the balance (seven-eighths of such gross proceeds) shall be paid to the party or parties entitled thereto; full and detailed statements of accounts of sales and purchases, as aforesaid, shall be made by said purchaser in triplicate, one to accompany the payment to said bank, one to the Chief of Field Division of the General Land Office in whose division said land is situated, and one to the party of the second part.

6. That said portion of the gross proceeds, to be deposited in said bank in escrow, as provided in the last preceding paragraph shall be subject to change by the Secretary of the Interior at any time on 30 days notice: Provided, That in case such portion shall be increased, it shall be optional with the second party to continue under this agreement: Provided further, That notice to discontinue operations hereunder shall be filed in the proper United States Land Office within 10 days after the receipt of notice of such increased amount to be deposited in escrow.

7. That all interest accruing on the portion of such gross proceeds, deposited in said bank in escrow as aforesaid, shall be added to the principal at regular intervals in accordance with the previous understanding with said bank as indicated in the attached application; that in case the land department of the United States shall

finally determine that under the law, rules, and regulations controlling the granting of patents to mineral lands, said second party is entitled to a patent to the land and premises described and applied for in said mineral application, and embraced by this contract, then and in that case, on the issuance of said patent the Secretary of the Interior shall so certify to said bank, whereupon said bank shall be authorized and deemed instructed by the parties hereto, to pay over all moneys deposited therein under the terms hereof, with accumulated interest, to the second party; but in case the land department of the United States shall finally determine, in accordance with the law, its rules, regulations, and practice, that the second party is not entitled to patent for the lands and premises embraced in this agreement, and same shall be finally rejected, then on receipt of the certificate of the Secretary of the Interior to that effect, said bank shall be authorized, and it shall be deemed to be instructed by the parties hereto, to pay over all of said payments and accrued interest to the Treasurer of the United States, whereupon all and every claim, right, title, or interest in said funds and accumulated interest, either on the part of the second party or any person claiming by, through or under him, shall cease and terminate; in either of the cases above described, operations under this contract shall cease and terminate on the issuance of the certificate of the Secretary of the Interior as aforesaid; but in case this contract shall, under any of the provisions hereof, be canceled prior to the final determination of the matter of said application for patent, any moneys theretofore deposited in escrow shall nevertheless remain so deposited until said application for patent shall be finally approved or rejected.

8. That in case a portion of the land embraced in this agreement shall be finally patented to applicant, and patent shall be denied for the remainder thereof, then such escrow deposits and accumulated interest hereinabove provided for shall be paid to the applicant and to the Treasurer of the United States in such proportion as the area patented shall bear to the area for which patent shall be denied, as shown to said bank by the certificate of the Secretary of the Interior.

9. That the said purchaser of the oil and gas products and the said bank shall be furnished with copies hereof by the party of the first part, and same shall be deemed and constitute joint instructions to them respectively in so far as applicable.

10. That all the workings, operations, premises, equipment, books, and records of the second party, or any person claiming by, through, or under him, pertaining to, or included in, the subject-matter of this agreement, shall, at all times, be subject to inspection by the authorized representatives of the Department of the Interior, and such books, records, and accounts shall be kept and such reports made as the first party by the Secretary of the Interior or his authorized representatives shall, from time to time, direct.

11. Such deposits in escrow, when paid over to the Treasurer of the United States as herein provided, shall be and constitute full and complete payment, settlement, accord, and satisfaction of all claims of the United States for trespass for any and all oil and gas removed from said premises during the period of, and under and subject to, this agreement, as against the applicant, producer or purchaser of such oil or gas products, who shall have in good faith and without collusion done and performed each and every act herein required to be performed by him or it strictly in accordance with this agreement, even though said application for patent shall be denied.

12. That this contract shall be binding on the heirs, assigns, and legal representatives of the second party hereto.

13. That in no case and under no circumstances or conditions shall the United States become liable to any person whatsoever under or by reason of this contract, or any of its provisions.

14. That failure or default on the part of the second party to comply strictly with the terms hereof shall render this contract subject to cancellation by the Secretary of

the Interior at his option immediately on notice of such cancellation to the second party, and the decision of the said Secretary shall be final on the question of the existence of such failure or default.

15. That no Member of or Delegate to Congress, or Resident Commissioner, or officer or employee of the Department of the Interior, is or shall be admitted to any share or part in this agreement, or derive any benefit which may arise therefrom, and the provisions of section 3741 of the Revised Statutes of the United States, and sections 114, 115, and 116 of the Codification of the Penal Laws of the United States, approved March 4, 1909 (35 Stat., 1109), relating to contracts, enter into and form a part of this agreement, so far as the same may be applicable.

IN WITNESS WHEREOF, the said parties hereto have caused the execution of these presents by themselves or by their duly authorized officers, agents, or representatives, as of the......day of..

191

Secretary of the Interior.

RELATION OF GAS TO THE OIL LAWS.

In view of the fact that the "petroleum act" of February 11, 1897, does not mention gas (the "five claims act" of February 12, 1903, also fails to mention gas), two recent letters are of interest as indicating the practice of considering gas as included where oil alone is named. None of the withdrawal orders have specified natural gas, although it is mentioned in some of the recommendation letters transmitting the orders. The question was raised whether gas should be reserved to the United States in patents issued for withdrawn lands under the act of July 17, 1914. The following letter resulted:

DEAR MR. COMMISSIONER:

APRIL 26, 1915.

I inclose herewith communication from the Director of the Geological Survey, with respect to patents under the nonmineral laws for lands included within the limits of petroleum withdrawals, act July 17, 1914 (38 Stat., 509).

The act in question authorizes the allowance of nonmineral entries, selections, and locations upon lands withdrawn or classified as containing phosphate, nitrate, potash, oil, gas, or asphaltic minerals, patents when issued to contain a reservation to the United States

of the deposits on account of which the lands so patented were withdrawn, classified, or reported as valuable

*

*

*

As stated by the Director, there is such an intimate association and relation between oil and natural gas that lands withdrawn because of their oil deposits were also withdrawn because of their gas content, and I agree with the conclusion of the Director that every oil withdrawal constitutes a report that the lands withdrawn are also valuable for their deposits of gas. Under these circumstances, the reservation inserted in the patents above described should mention both oil and gas. Cordially yours,

The COMMISSIONER

OF THE GENERAL LAND OFFICE.

BO SWEENEY,
Assistant Secretary.

The second letter is with regard to an application for a gas-pipe line under the act of May 21, 1896 (29 Stat., 127), which provides "that the right of way through the public lands * * * is hereby granted to any pipe line company or corporation formed for the purpose of transporting oils, crude or refined." The Commissioner, in a letter dated April 5, 1915, approved by the Secretary on April 24, 1915, says:

While the Wyoming and Colorado acts do not specifically grant gas pipe lines, I am inclined to believe, in view of the close analogy between the oil and natural gas industries, at least in so far as the production is concerned, that it would not be a forced construction of the act to hold it as applicable to gas pipe lines as well as to oil pipe lines.

ORDERS AND CORRESPONDENCE.

Under this heading orders of withdrawal, restoration, and modification are arranged according to dates of final approval, which do not invariably, especially in the later orders, correspond to the dates of recommendation. For example, Petroleum Reserve No. 32 was recommended by the Geological Survey on April 30, 1914, was forwarded by the Secretary of the Interior to the President on May 5, 1914, and was approved by the President on May 6, 1914. It is placed here under the date on which it became an effective order, and is headed, "Withdrawal of May 6, 1914." Other correspondence is, of course, given under dates of writing. The headings have been kept down to the smallest useful length and are suggestive rather than explanatory.

Letterheads have been omitted. Unless otherwise indicated, all letters and orders are dated Washington, D. C.

PERIOD PRIOR TO JUNE 30, 1907.

LETTER OF JANUARY 5, 1865, FROM REGISTER AND RECEIVER TO COMMISSIONER.

We have the honor to report that petroleum or coal oil, has recently been discovered upon portions of the public lands lying in T. 2 S., Rs. 1, 2, and 3 W., also T. 1 S., R. 2 W., Humboldt Meridian, the last recently surveyed under Act of Congress approved May 30, 1862. We are under the impression from all we can gather relative thereto, that petroleum or coal oil deposits in that section are extensive, and destined to become valuable.

In the absence of instructions or precedents applicable to cases of this kind we have thought it best to report the fact of such discoveries, and would respectfully ask for instructions thereto.

We enclose herewith a communication found in the Sacramento Union, from a resident of the section where the oil is found, as it contains information relative to the subject of this letter.

Very respectfully,

Your obedient servant,

JOHN KELEHER

Register

WILLIAM H. PRATT

Receiver.

LETTER OF MARCH 17, 1865, FROM COMMISSIONER TO REGISTER AND RECEIVER.

REG. & REC'R,

MARCH 17, 1865.

Humboldt, California.

GENTLEMEN:

I have received your Report of the 5th of January last,1 stating that “Petroleum or Coal Oil has recently been discovered upon portions of the public lands lying in T. 2 S., Rs. 1, 2 and 3 W., also T. 1 S. R. 2 W., Humboldt Meridian, the last recently surveyed under Act of Congress approved May 30, 1862.”

That "you are under the impression from all" you "can gather relative thereto, that Petroleum or Coal Oil deposits in that section are extensive and destined to become valuable."

At same time you enclose Slips on the subject "found in the Sacramento Union, from a resident of the section where the oil is found, as they contain information relative to the subject of this letter."

It is not the policy of the Government to deal with Petroleum tracts as ordinary public lands, any more than with auriferous or other mineral or saline lands. Hence, you will report the exact description of any and all tracts strictly of the character you mention, and will withhold the same from disposal by the Government, unless otherwise specially instructed.

Very respectfully,

Your Obt Sert

J. M. EDMUNDS
Commissioner.

WITHDRAWAL OF FEBRUARY 21, 1900 (LOS ANGELES).

REGISTER AND RECEIVER,

Los Angeles, California.

[Telegram.]

FEBRUARY 21, 1900.

Suspend from disposition until further orders: Townships eleven and twelve North, Range twenty-three West.

BINGER HERMANN

Commissioner.

WITHDRAWAL OF FEBRUARY 21, 1900 (SAN FRANCISCO).

REGISTER AND RECEIVER,

San Francisco, California.

[Telegram.]

FEBRUARY 21, 1900.

Suspend from disposition until further orders, Townships eleven and twelve North, Range twenty-four West, and Township thirty-two South, Range twenty-two East.