The Chargé in Mexico (Schoenfeld) to the Secretary of State

No. 2830

Sir: I have the honor herewith to enclose clipping from the Diario Oficial of September 14, 1926, covering the text of a Presidential order dated August 24, last, modifying the order of the Department of Industry of June 8, 1926, with regard to the granting of petroleum drilling permits.

The Department will observe that this decree is substantially in the terms of the proposed draft thereof, transmitted in Mr. Lane’s despatch No. 2773, of September 3, 1926,71 and that, with the possible exception of the change in the amount of bond required in the decree of June 8 and signature thereof by the President personally, the objections advanced by the United States in its recent notes on the subject have not been met.

. . . . . . . . . . . . . .

I have [etc.]

H. F. Arthur Schoenfeld
[Page 684]

Executive Decree of August 24, 1926, Regulating the Issuance of Provisional Permits for Drilling Petroleum Wells

Order to the Department of Industry, Commerce, and Labor

Special conditions governing provisional permits to drill petroleum wells on lands the acquired rights to which have not been fully proved by the petitioning companies:

The permits shall be essentially provisional, and shall be subject to the beneficiaries proving legally their rights within the period indicated for this purpose in each case, which can never extend beyond December 31 of the current year.
In order that these permits may be issued, the petitioning company or person must first execute a bond for $100,000 (one hundred thousand pesos), to the satisfaction of this Department for each one of the wells drilled upon the lands on which he has not yet proved his rights, to guarantee the value of the rights of the Nation to the petroleum which may be extracted from each one of the wells drilled on these lands, in case the beneficiary of the permits shall not fully prove the legality of those rights within the period indicated for this purpose.
If, as a result of the provisions of the foregoing articles, the permits should be canceled, the beneficiary thereof shall be obliged to refund the value of the national rights to the petroleum which may have been extracted under the permit, and if he does not do so, that Department shall realize upon the bond furnished, making use of the compulsory economic authority, to which the bondsmen must expressly submit.
These permits are authorized for the sole purpose of not interrupting petroleum exploitation, and they shall be continued in their provisional character until the rights of the beneficiaries are legally proved; and it shall be stated in the permits that their issuance confers no rights whatsoever upon the beneficiaries, and that by the mere use thereof the beneficiaries signify their absolute conformity to all the conditions enumerated in this Decree.

The Order of June 8 of the present year is hereby revoked.

Sufragio Efectivo. No Reelección.

The President of the Republic,
P. Elías Calles
, Rúbrica

Let it be fulfilled.

The Minister of Industry, Commerce, and Labor,
L. N. Morones
, Rúbrica
  1. Not printed.
  2. File translation revised.