SECURITIES AND EXCHANGE COMMISSION
                    Washington, D.C.  20549

                          FORM 10-QSB

[X]   QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE
                SECURITIES EXCHANGE ACT OF 1934

     For the quarterly period ended:  September 30, 2000

OR

[  ]  TRANSITION REPORT UNDER SECTION 13 OR 15(d)
                  OF THE EXCHANGE ACT

For the transition period from __________ to __________

             Commission File No. 33-55254-32

                  CHANCELLOR GROUP, INC.
 ___________________________________________________________
  (Exact name of small business issuer as specified in its
                         charter)

Nevada                                   87-0438647
________                                 ____________
(State or other jurisdiction of	         (I.R.S. Employer
Incorporation or organization)	          Identification  No.)

     1800 E. Sahara, Suite 107, Las Vegas, Nevada  89104
_____________________________________________________________
 (Address of principal executive offices, including zip code)


Issuer's Telephone Number:  (702) 938-0261


______________________________________________________
 (Former name, former address and former fiscal year,
              if changed since last report)


Check whether the Issuer (1) filed all
reports required to be filed by Section 13 or
15(d) of the Exchange Act during the past 12
months (or for such shorter period that the
registrant was required to file such
reports), and (2) has been subject to such
filing requirements for the past 90 days.

Yes   X      No
    ____       ____


As of September 30, 2000, 25,870,361 shares of common stock
were outstanding.

Transitional Small Business Disclosure Format:

Yes    X   No
     ____    ____

<PAGE>



TABLE OF CONTENTS
Form 10-QSB
3rd Quarter Ended September 30, 2000


Chancellor Group, Inc.

                                                           Page

PART I:  FINANCIAL INFORMATION

            Item 1.

            Consolidated Balance Sheet                       2
            Consolidated Statement Of Operations             3
            Consolidated Statement Of Cash Flows             4
            Notes To Consolidated Financial Statements       5


            Item 2.

            Management's Discussion And
            Analysis Or Plan Of Operation                    8

PART II:  OTHER INFORMATION                                  9


SIGNATURES                                                  10


<PAGE>



              PART I.   FINANCIAL INFORMATION


<PAGE>                              1




ITEM 1.                CHANCELLOR GROUP, INC.
                     CONSOLIDATED BALANCE SHEET
                         SEPTEMBER 30, 2000
                             (UNAUDITED)

                               ASSETS


Cash                                  $    34,205
                                    _____________

       Total current assets                34,205


Oil and gas properties                    414,030
                                    _____________

Total Assets                          $   448,235
                                    =============


            LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities

     Accounts payable                 $   436,377
                                     ____________
       Total current liabilities          436,377

                                     ____________

Total Liabilities                         436,377
                                     ____________


Stockholders' equity

     Common stock: $.001 par
       value, 250,000,000 shares
       authorized, 25,870,361
       shares issued
       & outstanding                      25,870
     Preferred Series B stock:
       $1,000 par value,
       250,000 shares authorized,
       48,000 issued and outstanding  48,000,000

     Paid in capital                 (46,475,515)

     Accumulated deficit             ( 1,538,497)
                                    ____________

Total Stockholders' Equity                11,858
                                    ____________
Total Liabilities And
 Stockholders' Equity               $    448,235
	 						                            ============

See Notes to Consolidated Financial Statements


<PAGE>	                               2



                         CHANCELLOR GROUP, INC.
                  CONSOLIDATED STATEMENT OF OPERATIONS
                              (UNAUDITED)



                                Three Months Ended    Nine Months Ended
                                   September 30,        September 30,
                                2000          1999    2000        1999
                                ____          ____    ____        ____


Sales                        $       -     $       -  $       -   $       -

Operating expenses             302,475        46,550    577,114     208,988
                             _________     _________  _________   _________
Income (loss) from
 operations                   (302,475)     ( 46,550)  (577,114)   (208,988)
                             _________     _________  _________   _________

Income (loss) before provision
 for income taxes             (302,475)     ( 46,550)  (577,114)   (208,988)

Provision for income tax             -             -          -           -
                             _________     _________  _________   _________


Net income (loss)            $(302,475)    $( 46,550) $(577,114)  $(208,988)
                             =========     =========  =========   =========

Net income (loss) per share
(Basic and fully diluted)    $(   .01)    $(      *)  $(   .03)   $(   .01)
                             =========     =========  =========   =========

Weighted average number of
common shares outstanding   22,602,028    18,760,361 21,130,917  18,097,028
                            ==========    ========== ==========  ==========
*less than $.01 per share

See Notes to Consolidated Financial Statements


<PAGE>	  	                            3


                       CHANCELLOR GROUP, INC.
                 CONSOLIDATED STATEMENT OF CASH FLOWS
                             (UNAUDITED)

                                                Nine Months Ended
                                                  September 30,
                                                2000          1999
                                                ____          ____

Cash Flows From Operating Activities:

   Net income (loss)                         $(577,114)    $(208,988)

   Adjustments to reconcile net
   income (loss) to net cash
   provided by (used for)
   operating activities:

       Compensatory stock issuances            181,383       186,000
       Accounts pay. and accrued expenses      168,171      (  4,722)
                                             _________     _________
         Net cash provided
         by (used for)
         operating activities                  349,554      ( 27,710)
                                             _________     _________

Cash Flows from Financing Activities:

     Sales of common stock                     241,350
     Contributed capital                        20,415        27,710
                                             _________     _________
         Net cash provided
         by (used for)
         financing activites                   261,765        27,710
                                             _________     _________

Net Increase (Decrease) In Cash                 34,205             -

Cash At The Beginning Of The Period                  -             -
                                             _________     _________

Cash At The End Of The Period                $  34,205     $       -
                                             =========     =========


In September, 2000 the Company issued 4,500,000 common shares to
acquire Getty Petroleum, Inc., with net assets of $378,125
consisting of oil and gas leases.


See Notes to Consolidated Financial Statements


<PAGE>                           4


                      CHANCELLOR GROUP, INC.
            Notes to Consolidated Financial Statements
                           (Unaudited)


Note 1. Basis of Presentation

The accompanying unaudited financial statements have been
prepared in accordance with the instructions to
Form 10-QSB and do not include all of the information and
disclosures required by generally accepted accounting
principles for complete financial statements. All
adjustments which are, in the opinion of management,
necessary for a fair presentation of the results of
operations for the interim periods have been made and are
of a recurring nature unless otherwise disclosed herein.
The results of operations for such interim periods are not
necessarily indicative of operations for a full year.


<PAGE>                         5

                      CHANCELLOR GROUP, INC.
                Supplemental Information (Unaudited)
                  Period Ended September 30, 2000

Capitalized Costs Relating to Oil and Gas
Producing Activities at September 30, 2000
------------------------------------------

Unproved oil and gas properties          $         -
Proved oil and gas properties                414,030
Support equipment and facilities                   -
                                         -----------
                                             414,030
Less accumulated depreciation,
depletion, amortization, and
impairment                                (        -)
                                         -----------
Net capitalized costs                    $   414,030
                                         ===========


Costs Incurred in Oil and Gas Producing
Activities for the Period
Ended September 30, 2000
---------------------------------------

Property acquisition costs
     Proved                              $   378,125
     Unproved                                      -
Exploration costs                                  -
Development costs                                  -


Results of Operations for Oil and Gas Producing
Actvities for the Period Ended September 30, 2000
-------------------------------------------------

Oil and gas sales                        $         -
Gain on sale of oil and gas properties             -
Gain on sale of oil and gas leases                 -
Production costs                                   -
Exploration expenses                               -
Depreciation, depletion,
  and amortization                                 -
                                         -----------
                                                   -
Income tax expense                                 -
                                         -----------
Results of operations for oil and gas
  producing activities (excluding
  corporate overhead and financing
  costs)                                 $         -
                                         ===========


Reserve Information

     The following estimates of proved and proved developed reserve
quantities and related standardized measure of discounted net cash flow
are estimates only, and do not purport to reflect realizable values or
fair market values of the Company's reserves. The Company emphasizes that
reserve estimates are inherently imprecise and that estimates of new
discoveries are more imprecise than those of producing oil and gas
properties. Accordingly, these estimates are expected to change as future
information becomes available. All of the Company's reserves are located
in the United States.
     Proved reserves are estimated reserves of crude oil (including
condensate and natural gas liquids) and natural gas that geological and
engineering data demonstrate with reasonable certainty to be recoverable
in future years from known reservoirs under existing economic and operating
conditions. Proved developed reserves are those expected to be recovered
through existing wells, equipment, and operating methods.
     The standardized measure of discounted future net cash flows is
computed by applying year end prices of oil and gas (with consideration of
price changes only to the extent provided by contractual arrangements)
to the estimated future production of proved oil and gas reserves, less
estimated future expenditures (based on year end costs) to be incurred in
developing and producing the proved reserves, less estimated future income
tax expenses (based on year end statutory tax rates, with consideration of
future tax rates already legislated) to be incurred on pretax net cash flows
less tax basis of the properties and available credit, and assuming
continuation of existing economic conditions. The estimated future net cash
flows are then discounted using a rate of 10 percent a year to reflect
the estimated timing of the future cash flows.

<PAGE>                                 6

                        CHANCELLOR GROUP, INC.
           Supplemental Information (Unaudited) - Continued
                      Period Ended September 30, 2000

Reserve Information
-------------------
                                                Oil            Gas
                                               (Bbls)         (Bcf)
                                               ------         ------
Proved developed and undeveloped reserves
     Beginning of period                            -         249.50
     Revisions of previous estimates                -              -
     Improved recovery                              -              -
     Purchases of minerals in place                 -          99.00
     Extensions and discoveries                     -              -
     Production                                     -              -
     Sales of minerals in place                     -              -
                                              -------        -------
     End of period                                  -         348.50
                                              =======        =======
Proved developed reserves
     Beginning of period                            -              -
     End of period                                  -              -

Standardized Measure of Discounted Future
     Net Cash Flows at September 30, 2000

     Future cash inflows                                $ 1,477,550,041
     Future production costs                             (  245,054,769)
     Future development costs                            (   32,535,000)
     Future income tax expenses                          (  407,986,493)
                                                        ---------------
                                                            791,973,779
     Future net cash flows (10% annual discount for
         estimated timing of cash flows)                    489,051,180
                                                        ---------------
Standardized measures of discounted future net cash
     flows relating to proved oil and gas reserves      $   489,051,180
                                                        ===============

The following reconciles the change in the standardized measure of
discounted future net cash flow during the three months
ended September 30, 2000.

Beginning of period                                     $   120,536,224
Sales of oil and gas produced, net of production costs           (   xx)
Net changes in prices and production costs                   91,523,155
Extensions, discoveries, and improved recovery,
   less related costs                                                xx
Development costs incurred during the period which
   were previously estimated                                         xx
Net change in estimated future development costs                     xx
Revisions of previous quantity estimates                         (   xx)
Net change from purchases and sales of minerals in place    276,991,801
Accretion of discount                                                xx
Net change in income taxes                                       (   xx)
Other                                                            (   xx)
                                                        ---------------
End of period                                           $   489,051,180


<PAGE>                                  7


                       CHANCELLOR GROUP, INC.

ITEM 2.  Management's Discussion and Analysis or Plan of
         Operation

The Company was originally incorporated in Utah in 1986 and reincorporated in
Nevada in 1993. In July, 1995, the Company acquired all of the issued capital
of two Kentucky based gas operations, Delstar Gas Systems, Inc. ("DGS") and
Northstar Gas Systems, Inc. ("NGS"), covering gas reserves and gas
transmission systems respectively. In December 1995, the Company formed a
wholly owned subsidiary in the state of Kentucky, Delstar Resources, Inc.
("DRI"). This subsidiary acquired additional freehold real estate and gas
reserves for $5,425,000. In September, 1997, the Company acquired 100%
ownership of Radly Petroleum, Inc. ("Radly"), a Texas corporation, in exchange
for approximately 80% of the Company's outstanding common stock. In July 1998
the Company acquired 100% ownership of Lichfield Petroleum America, Inc.,
("Lichfield"), a Texas corporation. In September 2000, the Company acquired
all of the share capital of Getty Petroleum, Inc. ("Getty"), a Texas
corporation controlling additional strategic acreage and reserves of gas in
Pecos County, Texas. Chancellor Group, Inc., Radly, Lichfield, Getty,
DGS, NGS, and DRI operate and remain as separate legal entities. The Company
has taken an impairment writedown of the assets of DGS, NGS, and DRI until
such time as certain disputes relating to the original acquisition agreements
for DGS and NGS by and between the Company and the former owners of those
subsidiaires are resolved. Management expects that such dispute will be
resolved in its favour in 2001. On September 9, 2000, the Company entered
into a preliminary accord with Santa Barbara, California based Energy Transfer
Corporation ("ETC"), in which the Company and ETC agreed to enter into a
definitive agreement for the creation of a new jointly owned corporation to
exploit and commercialize certain alternative energy technology developed
by ETC.

The Company's officers and directors are now proceeding with the 2000/2001
implementation of a comprehensive business plan, through which the Company
will raise new equity capital to finance the initial development work of its
existing Texas gas assets, recover operating control of and finance the
redevelopment of the extensive Kentucky gas assets, and acquire interests in
several important new oil and gas drilling and development projects in the
continental United States of America, and elsewhere. The Company will also
provide funding to its new joint venture with Energy Transfer Corporation.

Results of Operations

The results for the quarter ended Sept. 30, 2000 show a net increase of
$170,000 in current liabilities to $436,377 compared to current liabilities
of $266,377 for the previous quarterly period ending June 30, 2000. The
Company generated no revenue during the period covered by this report,
other than from sales of securities.

The primary activity of the Company during the quarter was the completion of
restoration to full regulatory compliance and the continued preparation for
the growth, acquisition, financing, and development of the Company's business
and assets. The Company acquired all of the capital of Getty Petroleum, Inc.
of Texas, and entered into a preliminary joint venture accord with Energy
Transfer Corporation of Santa Barbara, California.

During the quarter, the Company issued 5,065,000 shares of restricted common
stock.

Liquidity and Capital Resources

The consolidated Balance Sheet as of Sept. 30, 2000 reports an increase in
current assets during the quarter to $34,574, compared to $10,069 in the
previous quarter. Non current assets increased during the quarter to $414,030
compared to $35,905 in the previous quarter, due to the acquisition by the
Company of Getty Petroleum, Inc. Current liabilities have increased to
$436,377 during the year to date, (compared to $266,377 in the previous
quarter) comprising net increases in outstanding and unpaid executive
compensation due to officers and directors of the Company, and general
operating expenses.

Day to day general operating expenses are from time to time paid out of
pocket by officers of the Company, and from time to time these expenses are
invoiced to the Company for payment. Additionally during the quarter the
Company continued a series of restricted common stock placements to raise
additional working capital. During the quarter the Company received
$95,000 in cash proceeds from such placements and an additional $60,000
in non cash proceeds, and as of September 30, 2000 had a net cash balance
of $34,574. In addition, the Company issued 4,500,000 shares of restricted
common stock, valued at $378,125, to acquire all of the capital of Getty
Petroleum, Inc.

At a meeting of the Board of Directors held on July 24, 2000, the Board
recognized and approved back-entitlements dating back to May 1999
accumulating at the rate of $10,000 per month, to Mr. Rodgers, the Company's
Vice Chairman and acting President. The accumulated and unpaid compensation
payments due Mr. Rodgers have accordingly since been adjusted, as reflected
in the third quarter accounts of the Company, less amounts paid to
Mr. Rodgers or on his behalf, during the quarter. Compensation due to
Mr. Rodgers shall continue to accrue at $10,000 per month, less any payments
made, until the Company enters into a new employment contract with
Mr. Rodgers, likely in the first quarter of 2001. Consequently, as of
September 30, 2000, the Company owed Mr. Rodgers $176,800 in accumulated
and unpaid compensation.

The Company continues to undertake a series of small private placements of
securities to raise working capital funds. The Company believes it will raise
all its capital needs on a timely basis. These funds are used to pay all
current indebtedness of the Company, and enable it to meet its day to day
operating expenses, including the preparation of a prospectus or private
placement memorandum for the raising of $27 million in new equity capital
following readmission of the Company's securities for trading on the OTC
Bulletin Board.

Impact of inflation

The Company believes that its activities are not, at this time,
materially affected by inflation.



<PAGE>	                               	8


PART II.  OTHER INFORMATION


Item 1.	Legal Proceedings - None

Item 2.	Changes in Securities - None

Item 3.	Defaults Upon Senior Securities - None

Item 4.	Submission of Matters To A Vote of Securities Holders - None

Item 5.	Other Information - None

Item 6.	Exhibits and Reports on Form 8-K - None


<PAGE>                                 9


                         SIGNATURES

Pursuant to the requirements Section 12(g) of the Securities and Exchange
Act of 1934, the Registrant has duly caused this Report to be
signed on its behalf by the undersigned, thereunto duly authorized,
on November 1, 2000.

CHANCELLOR GROUP, INC.

By: /s/Ashraf Khan
Ashraf Khan, Chairman

Pursuant to the requirements of the Securities and Exchange Act of 1934, this
report has been signed below by the following persons on behalf on the
Registrant in the capacities indicated, on November 1, 2000.

/s/Ashraf Khan
Ashraf Khan
Chairman, Chief Executive Officer, and Director

/s/Shane X.G. Rodgers
Shane X.G. Rodgers
Vice Chairman, President, and Director

/s/William Stinson
William Stinson
Director

/s/Bassam Abu-Ghazaleh
Bassam Abu-Ghazaleh
Director


<PAGE>