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:  June 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 June 30, 2000, 20,805,361 shares of common stock
were outstanding.

Transitional Small Business Disclosure Format:

Yes    X   No
     ____    ____

<PAGE>



TABLE OF CONTENTS
Form 10-QSB
2nd Quarter Ended June 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
                            JUNE 30, 2000
                             (UNAUDITED)

                               ASSETS


Cash                                  $    10,069
                                    _____________

  Current assets                           10,069

Oil and gas properties                     35,905
                                    _____________

Total Assets                          $    45,974
                                    =============


            LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities

     Accounts payable                 $   266,377
                                     ____________
       Total current liabilities          266,377

                                     ____________

Total Liabilities                         266,377
                                     ____________


Stockholders' equity

     Common stock: $.001 par
       value, 250,000,000 shares
       authorized, 20,805,361
       shares issued
       & outstanding                      20,805
     Preferred Series B stock:
       $1,000 par value,
       250,000 shares authorized,
       48,000 issued and outstanding  48,000,000

     Paid in capital                 (47,005,186)

     Accumulated deficit             ( 1,236,022)
                                    ____________

Total Stockholders' Equity           (   220,403)
                                    ____________
Total Liabilities And
 Stockholders' Equity               $     45,974
	 						                            ============

See Notes to Consolidated Financial Statements


<PAGE>	                               2



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



                                Three Months Ended    Six Months Ended
                                     June 30,             June 30,
                                2000          1999    2000        1999
                                ____          ____    ____        ____


Sales                        $       -     $       -  $       -   $       -

Operating expenses             155,984       102,437    274,369     162,438
                             _________     _________  _________   _________
Income (loss) from
 operations                   (155,984)     (102,437)  (274,369)   (162,438)
                             _________     _________  _________   _________

Income (loss) before provision
 for income taxes             (155,984)     (102,437)  (274,369)   (162,438)

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


Net income (loss)            $(155,984)    $(102,437) $(274,369)  $(162,438)
                             =========     =========  =========   =========

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

Weighted average number of
common shares outstanding   20,805,361    18,587,028 20,805,361  18,587,028
                            ==========    ========== ==========  ==========
*less than $.01 per share

See Notes to Consolidated Financial Statements


<PAGE>	  	                            3


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

                                                 Six Months Ended
                                                     June 30,
                                                2000          1999
                                                ____          ____

Cash Flows From Operating Activities:

   Net income (loss)                         $(274,639)    $(162,438)

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

       Compensatory stock issuances            121,383       186,000
       Accounts pay. and accrued expenses       (1,829)     ( 44,685)
                                             _________     _________
         Net cash provided
         by (used for)
         operating activities                 (155,085)     ( 21,123)
                                             _________     _________

Cash Flows from Financing Activities:

     Sales of common stock                     146,350
     Contributed capital                        18,804        21,123
                                             _________     _________
         Net cash provided
         by (used for)
         financing activites                   165,154        21,123
                                             _________     _________

Net Increase (Decrease) In Cash                 10,069             -

Cash At The Beginning Of The Period                  -             -
                                             _________     _________

Cash At The End Of The Period                $  10,069     $       -
                                             =========     =========

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 June 30, 2000

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

Unproved oil and gas properties          $         -
Proved oil and gas properties                 35,905
Support equipment and facilities                   -
                                         -----------
                                              35,905
Less accumulated depreciation,
depletion, amortization, and
impairment                                (        -)
                                         -----------
Net capitalized costs                    $    35,905
                                         ===========


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

Property acquisition costs
     Proved                              $         -
     Unproved                                      -
Exploration costs                                  -
Development costs                                  -


Results of Operations for Oil and Gas Producing
Actvities for the Period Ended June 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 June 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                 -              -
     Extensions and discoveries                     -              -
     Production                                     -              -
     Sales of minerals in place                     -              -
                                              -------        -------
     End of period                                  -         249.50
                                              =======        =======
Proved developed reserves
     Beginning of period                            -              -
     End of period                                  -              -

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

     Future cash inflows                                $ 580,013,502
     Future production costs                             ( 77,681,437)
     Future development costs                            ( 22,535,000)
     Future income tax expenses                          (163,131,002)
                                                        -------------
                                                          316,666,063
     Future net cash flows (10% annual discount for
         estimated timing of cash flows)                 (120,536,224)
                                                        -------------
Standardized measures of discounted future net cash
     flows relating to proved oil and gas reserves      $(120,536,224)
                                                        =============

The following reconciles the change in the standardized measure of
discounted future net cash flow during the three months
ended June 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                     (   xx)
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       (   xx)
Accretion of discount                                              xx
Net change in income taxes                                     (   xx)
Other                                                          (   xx)
                                                        -------------
End of period                                           $(120,536,224)


<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. Chancellor Group, Inc., Radly, Lichfield,
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 2000.

The Company's officers and directors are currently implementing an extensive
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 drilling and
redevelopment projects.

Results of Operations

The results for the quarter ended June 30, 2000 show a net increase of
$10,379 current liabilities to $266,377, compared to $255,998 for the
previous quarterly period, ending March 31, 2000. The Company generated no
revenue during the period covered by this report. A comparison with figures
for the corresponding period last year is meaningless, as the Company had not
yet commenced trading.

The sole activity of the Company during the quarter was the restoration to
full regulatory compliance and the continued preparation for the growth,
financing, and development of the Company's business assets, including but
not limited to preparing for the pending relisting of the Company's common
stock on the OTC Bulletin Board.

During the quarter, the Company issued 820,000 shares of restricted common
stock.

Liquidity and Capital Resources

The consolidated Balance Sheet as of June 30, 2000 reports no material
increase in current or noncurrent assets. Current liabilities have decreased to
$266,377 during the year to date, compared to $255,998 in the previous quarter,
comprising increases in outstanding and unpaid executive compensation due to
an officer and director of the Company, and general operating expenses.

Day to day general operating expenses are 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 commenced
a series of restricted common stock placements to raise additional working
capital. During the quarter the Company received $136,350 in proceeds from
such placements, of which $86,350 was cash and $50,000 was a non-cash item,
and as of June 30, 2000 had a net cash balance of $10,069.

No addition from May 1999 was recorded in compensation due to the Company's
Chairman and Chief Executive Officer during the quarter ending June 30, 2000.
The Company and the Chairman and Chief Executive Officer have agreed that
unpaid compensation dating back to May, 1999 will not be recognized until a
new compensation agreement is negotiated and approved by the board, likely
in the 2000 third quarter. Consequently, the Company as of June 30, 2000
continued to owe cash compensation to the Chairman and Chief Executive
Officer in the net amount of $21,300.

The Company is presently in the process of undertaking a series of small
private placements of securities to raise up to $750,000. The company
believes it will raise all of this amount, or any such other amount as it
determines. These funds are to be used to pay all current indebtedness of
the Company, and enable it to meet certain other 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 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

	 In accordance with the requirements of the Exchange
Act, the Registrant has duly caused this Report to be
signed on its behalf by the undersigned, thereunto duly
authorized.

CHANCELLOR GROUP, INC.


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


Date:  August 29, 2000


<PAGE>