It must be remembered that this preference right to entrymen does not apply to claimants under the 640-acre or stock raising homestead law, be cause the minerals are specifically reserved by the terms of that act; or to cases where the knowledge of the existence of minerals was brought home to the entryman before entry and the claimant made entry under the act of July 17, 1914.
The right to lease lands situated within a known geological structure of an oil or gas producing well can only be secured by competitive bidding under rules and regulations established by the Secretary.
Under the sections providing for the obtaining of a permit to prospect for oil on lands not within a known structure, to be followed upon dis covery by a lease, under certain conditions, the applicant should first make location upon the ground by erecting thereon a monument of not less than 4 ft. high, constructed of some durable material, and post on the said monument a notice stating that an application for permit will be made within 30 days from the date of the posting of the notice; he should state thereon his name, the date of the notice, in with he should state the hour when he affixed the writing to the monuments, and if the land be surveyed, the description by sections or fractions thereof. If the land is unsurveyed, then he should describe it by reference to the courses and distances from such monument and such other natural objects and permanent monu ments as will reasonably identify the land, stating the amount thereof in acres.
The land should be in a reasonably compact form. In contiguous tracts within a limited radius may be included in a permit where conditions are such that, because of prior disposals, a reasonable area of contiguous land cannot be procured.
The applicant must be a citizen of the United States. He must so state in his application; he must also set forth the reasons why he thinks the land sought is "oil or gas" land; he must submit a showing of his financial ability to carry out drilling explorations, and must submit a bond in the sum of $1000 by way of undertaking to repair any damage that may result to the oil strata or deposits resulting from improper methods of operation, or failure to comply with the terms of the permit, By following the procedure described above the applicant can secure a permit to prospect for oil on three separate tracts in one State, no one of which is to be greater than 2560 acres in extent, and no two of which can be on the same structure.
The maximum number of permits to a corporation is not limited by permits of individual stockholders, but a corporation may have an interest in not more than three permits in same state, directly or indirectly. Indi viduals may hold direct interest in not more than three permits and his total interests as permittee and stock holder may not exceed an aggregate of 7680 acres in the same state.
An applicant under section 20, that is an entryman under agricultural land laws, may obtain his preference right, even though the land is situated within a known geolog cal structure in an oil producing field.
The permit grants an exclusive right for a period not to exceed 2 years. The permittee must begin drilling operations within 6 months from the date of the permit, and within 1 year drill one or more wells to a depth of not less than 500 ft'., and within 2 years from the date of the permit, not less than 2000 ft., unless valuable deposits of oil or gas shall sooner be dis covered. This period may be extended, if the Secretary of the Interior is satisfied that the permittee has been unable with the exercise of due dili gence to test the land in the time granted by the permit. The Secretary also has the power to cancel for want of exercise of diligence. , If the land sought is near territory being newly drilled, then every effort should be made to secure an early issue of the permit, because of the danger that oil or gas might be discovered by such drilling, and a known geologic structure of an oil or gas producing well established before issuance of the permit. In that case the applicant would lose his right to secure permit. If, however, the permit is granted, then his right to explore and drill the land has attached and is not defeated by the establishment of the known geologic structure.
An application is not assignable; all intervening rights would fail upon the surrendering of the first application. The permit, or lease, once obtained, may be assigned by, and with the consent of, the Secretary of the Interior.