SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                   FORM 10-QSB

            [X]   QUARTERLY REPORT UNDER SECTION 12(g) OF THE
                  SECURITIES EXCHANGE ACT OF 1934

               For the quarterly period ended: September 30, 2001

                                       OR

            [ ]  TRANSITION REPORT UNDER SECTION 12(g)
                 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


Check whether the Issuer (1) filed all reports required to be filed by Section
12(g) 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, 2001, 41,987,261 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, 2001

                             Chancellor Group, Inc.
<TABLE>
<CAPTION>
                                                                      Page

<S>                                                                   <C>
PART I:  FINANCIAL INFORMATION

             Item 1.

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


            Item 2.

            Management's Discussion and
            Analysis or Plan of Operation                              10

PART II:  OTHER INFORMATION                                            12


SIGNATURES                                                             14
</TABLE>



 <PAGE>



                         PART I.   FINANCIAL INFORMATION


                                        1


<PAGE>
<TABLE>
<CAPTION>
ITEM 1. FINANCIAL STATEMENTS

                             CHANCELLOR GROUP, INC.
                           CONSOLIDATED BALANCE SHEET
                               SEPTEMBER 30, 2001
                                   (UNAUDITED)

                                     ASSETS

<S>                                                            <C>
Cash                                                           $       807
                                                               -----------

       Total current assets                                            807

Equipment (net of
  accumulated depreciation of $488)                                  1,596
Deposits                                                               500
Other receivables                                                   31,449
Oil and gas properties                                              84,905
                                                               -----------

Total Assets                                                   $   119,257
                                                               ===========


                      LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities

     Accounts payable                                          $   189,383
                                                               -----------
       Total current liabilities                                   189,383
                                                               -----------

Total Liabilities                                                  189,383
                                                               -----------

Stockholders' equity
     Common stock: $.001 par value, 250,000,000 shares
       authorized, 41,987,261 shares issued and
       outstanding                                                  41,987
     Preferred Series B stock:
       $1,000 par value, 250,000 shares authorized,
       none issued and outstanding                                       -
     Paid in capital                                             2,955,907
     Accumulated deficit                                       ( 3,094,325)
                                                               -----------
Total Stockholders' Equity                                         (70,126)
                                                               -----------
Total Liabilities And
 Stockholders' Equity                                          $   119,257
                                                               ===========
</TABLE>
See Notes to Consolidated Financial Statements

                                             2
<PAGE>
<TABLE>
<CAPTION>
                             CHANCELLOR GROUP, INC.
                      CONSOLIDATED STATEMENTS OF OPERATIONS
                                   (UNAUDITED)



                                     Three Months Ended              Nine Months Ended
                                         September 30,                  September 30,
                                      2000           2001         2000            2001
                                   ---------      ---------    ---------        -----------
<S>                                <C>            <C>           <C>             <C>
Sales                              $       -      $       -     $        -      $     4,909

Operating expenses                   302,475        153,500      577,114          1,345,848
                                   ---------      ---------    ---------        -----------
Income (loss) from
 operations                         (302,475)      (153,500)    (577,114)        (1,340,949)
                                   ---------      ---------    ---------        -----------

Other income (expense):

 Interest expense                                                                   (56,127)
 Loss on equipment disposal         ( 20,595)                                       (20,595)
                                   ---------      ---------    ---------        -----------
Total other income (expense)        ( 20,595)                                       (76,722)
                                   ---------      ---------    ---------        -----------

Income (loss) before provision
 for income taxes                   (302,475)      (174,095)    (577,114)        (1,417,671)

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


Net income (loss)                  $(302,475)     $(174,095)    $(577,114)      $(1,417,671)
                                   =========      =========     =========       ===========

Net income (loss) per share
(Basic and fully diluted)          $(   .01)     $(       *)    $(   .03)       $ (     .04)
                                   =========     ==========     =========       ===========

Weighted average number of
common shares outstanding         22,602,028     41,595,594     21,130,917       34,823,728
                                  ==========     ==========     ==========      ===========

*less than $.01 per share
</TABLE>

See Notes to Consolidated Financial Statements


                            3

<PAGE>
<TABLE>
<CAPTION>
                             CHANCELLOR GROUP, INC.
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                                   (UNAUDITED)

                                                                 Nine Months Ended
                                                                   September 30,
                                                                  2000          2001
                                                               -----------    -----------
<S>                                                            <C>            <C>
Cash Flows From Operating Activities:
   Net income (loss)                                           $  (577,114)   $(1,417,671)

   Adjustments to reconcile net income (loss) to
    net cash provided by (used for) operating activities:
       Depreciation                                                                   679
       Amortization                                                               326,237
       Other receivables                                                          (31,449)
       Compensatory stock issuances                                181,383      1,152,130
       Accounts pay. and accrued expenses                          168,171       (215,401)
       Loss on property disposal                                                   20,595
                                                               -----------    -----------
      Net cash provided by (used for) operating activities         349,554     (1,499,641)
                                                               -----------    -----------

Cash Flows from Investing Activities:
     Fixed assets                                                                  (6,500)
     Oil and gas properties                                                       (80,323)
                                                               -----------    -----------
      Net cash provided by (used for) investing activities                        (86,823)
                                                               -----------    -----------

Cash Flows from Financing Activities:
     Sales of common stock                                         241,350        353,615
     Contributed capital                                            20,415              -
     Payments on notes payable                                                    (30,000)
                                                               -----------    -----------
      Net cash provided by (used for) financing activities         261,765        323,615
                                                               -----------    -----------

Net Increase (Decrease) In Cash                                     34,205        ( 6,993)

Cash At The Beginning Of The Period                                      -          7,800
                                                               -----------    -----------

Cash At The End Of The Period                                  $    34,205      $     807
                                                               ===========      ===========
</TABLE>

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.
In September, 2001 the Company removed $1,700,000 in notes payable from its
books pursuant to a corresponding asset of $1,700,000 in production rights being
returned to the lienholder.

See Notes to Consolidated Financial Statements

                              4
<PAGE>


                      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.

Principles of consolidation

The accompanying consolidated financial statements include the accounts of
Chancellor Group, Inc., and its wholly owned subsidiaries. All intercompany
accounts and transactions have been eliminated.

Net income (loss) per share

The net income (loss) per share is computed by dividing the net income (loss) by
the weighted average number of shares of common outstanding. Warrants, stock
options, and common stock issuable upon the conversion of the Company's
preferred stock (if any), are not included in the computation if the effect
would be anti-dilutive and would increase the earnings or decrease loss per
share.

Note 2. Acquisition

In January, 2001 the Company contracted to purchase certain oil and gas leases
in Greenwood County, Kansas containing proved, producing oil and gas reserves.
The Company issued $1,700,000 in notes to be paid over two years, toward the
purchase price of the same amount. In September, 2001 the Company returned the
leases to the lienholder, and reversed the notes payable for $1,700,000 off its
books.

Note 3. Contingencies

The Company has suffered recurring losses from operations. To meet working
capital needs and to fund business operations, the Company plans to continue
raising capital through accessing public markets, and through development of its
oil and gas properties.

The Company is also under a temporary restraining order from a Nevada Court
pursuant to a shareholders' action alleging mismanagement by directors and
officers. The order inhibits the Company's ability to issue further common stock
or acquire or dispose of assets until such time as the order is lifted by the
Court.


                               5
<PAGE>
                             CHANCELLOR GROUP, INC.
                      Supplemental Information (Unaudited)
                         Period Ended September 30, 2001

<TABLE>
<CAPTION>
                   Capitalized Costs Relating to Oil and Gas
                   Producing Activities at September 30, 2001
                   ------------------------------------------
<S>                                                            <C>
Unproved oil and gas properties                                $         -
Proved oil and gas properties                                       84,905
Support equipment and facilities                                         -
                                                               -----------
                                                                    84,905
Less accumulated depreciation, depletion,
amortization, and impairment                                    (        -)
                                                               -----------
Net capitalized costs                                          $    84,905
                                                               ===========
</TABLE>

<TABLE>
<CAPTION>
                    Costs Incurred in Oil and Gas Producing
                           Activities for the Period
                            Ended September 30, 2001
                    ---------------------------------------
<S>                                                            <C>
Property acquisition costs
     Proved                                                    $    65,000
     Unproved                                                            -
Exploration costs                                                        -
Development costs                                                   21,823
</TABLE>

<TABLE>
<CAPTION>
                Results of Operations for Oil and Gas Producing
               Activities for the Period Ended September 30, 2001
               --------------------------------------------------
<S>                                                            <C>
Oil and gas sales                                              $     4,909
Gain on sale of oil and gas properties                                   -
Gain on sale of oil and gas leases                                       -
Production costs                                                    27,937
Exploration expenses                                                     -
Depreciation, depletion, and amortization                          326,603
                                                               -----------
Income tax expense                                                       -
                                                               -----------
Results of operations for oil and gas producing
 activities (excluding corporate overhead and financing
 costs)                                                        $  (349,631)
                                                               ===========
</TABLE>


                                       6
<PAGE>

                             CHANCELLOR GROUP, INC.
                      Supplemental Information (Unaudited)
                         Period Ended September 30, 2001

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.



                                       7
<PAGE>

                        CHANCELLOR GROUP, INC.
           Supplemental Information (Unaudited) - Continued
                      Period Ended September 30, 2001

<TABLE>
<CAPTION>
                              Reserve Information
                              -------------------
                                                          Oil        Gas
                                                         (Bbls)     (Bcf)
                                                         -----     ------
<S>                                                      <C>       <C>
Proved developed and undeveloped reserves
     Beginning of period                                      -     348.50
     Revisions of previous estimates                          -          -
     Improved recovery                                        -          -
     Purchases of minerals in place                           -          -
     Extensions and discoveries                               -          -
     Production                                               -          -
     Sales of minerals in place                               -          -
                                                         ------    -------
     End of period                                            -     348.50
                                                         ======    =======
Proved developed reserves
     Beginning of period                                      -          -
     End of period                                            -          -
</TABLE>

<TABLE>
<CAPTION>
                   Standardized Measure of Discounted Future
                      Net Cash Flows at September 30, 2001
                   -----------------------------------------

        <S>                                                    <C>
        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
                                                               ==============
</TABLE>



                                       8
<PAGE>

                        CHANCELLOR GROUP, INC.
           Supplemental Information (Unaudited) - Continued
                      Period Ended September 30, 2001


The following reconciles the change in the standardized measure of discounted
future net cash flow during the nine months ended September 30, 2001.

<TABLE>

<S>                                                            <C>
Beginning of period                                            $  489,051,180
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                                                  $  489,051,180
                                                               ==============
</TABLE>






                                       9
<PAGE>

                       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 January, 2001 the Company acquired for $1,700,000, certain
oil and gas leases containing over 5,000,000 barrels of proved developed and
producing reserves of light sweet crude oil, as well as natural gas ("The
Shinkle Field" located in Greenwood County, Kansas). In June 2001 the Glass
Mountain leases owned by Radly and Lichfield were reassigned to Getty, so that
the project acreage is controlled by a single entity. Radly and Lichfield will
be wound up in the 2001 fiscal 3rd. quarter. 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 subsidiaries are resolved. Management expects that such dispute will be
resolved in the Company's favor in a legal action planned to commence in the
2002 fiscal year.


Results of Operations

The results for the quarter ended September 30, 2001 show a net decrease of
$645,878 in current and total liabilities to $189,383, compared to $835,261 for
the previous quarterly period, ending June 30, 2001. Long term liabilities in
the same period decreased to nil. Total assets stated on the balance sheet,
which exclude the Company's oil and gas reserves, decreased during the quarter
from $1,866,410 to $119,257, reflecting the loss of the Company's Shikle Field
property. The Company generated a loss in the period under review of $174,095.
The Company generated no additional crude oil sales revenue during the period,
but did receive net proceeds of $4,313 from sales made in the second quarter,
during the period.

The sole activities of the Company during the quarter were the limited initial
production of crude oil from the Shinkle Field, and the preparation for the
growth, financing, and development of the Company's business and assets,
including in particular the commencement of work to restore to production the
newly acquired Shinkle Field property, in Greenwood County, Kansas. The Shinkle
Field contains approximately 5 million recoverable barrels of light crude oil,
classified "proved producing", in addition to substantial but not as yet not
formally qualified and quantified reserves of natural gas, and coal bed methane.

                                       10
<PAGE>


The Company incurred general and administrative expenses of $159,365 during the
period under review, compared to $616,861 during the second quarter to June 30,
2001.

During the quarter, the Company issued 6,125,000 shares of restricted and
non-restricted common stock. Included in this figure, is 5 million shares of
common stock issued to Rubin Investment Group on July 11, 2001, but which was
not paid for and is therefore not recognized, and subject to cancellation.


Liquidity and Capital Resources

The consolidated Balance Sheet as of September 30, 2001 reports a decrease in
total assets to $119,257. Current assets stood at $807 and long term assets were
$118,450. Current liabilities stood at $189,383 (compared to $835,261 at the end
of the previous quarter), comprised principally of accounts payable arising from
general day to day operations of the Company.

Day to day general operating expenses may from time to time be 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
made a series of restricted common stock placements to raise additional working
capital. During the quarter the Company received $99,125 in proceeds from such
placements, of which $13,125 was cash and $86,000 were non-cash items, and as of
September 30, 2001 had a net cash balance of $806.77.


Impact of inflation

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


                                       11
<PAGE>

PART II.  OTHER INFORMATION

   Item 1.      Legal Proceedings

   During the quarter under review the Company was named as a co-defendant in a
lawsuit filed by Graham Energy Inc. and Lichfield Petroleum Limited, a Belize
corporation, against Dan Rubin; Rubin Investment Group ( "RIG" ); and Chancellor
Group Inc. The lawsuit alleges that RIG acquired but did not pay for 2,800,000
shares of Chancellor common stock. Under the transaction, RIG was obligated to
pay $250,000 for the stock, but allegedly defaulted. Chancellor introduced RIG
to Lichfield in good faith. Lichfield claims in its lawsuit that Chancellor had
prior knowledge of a plan by RIG to obtain the stock without paying for it,
which claim is untrue. Lichfield prior to filing the lawsuit demanded that RIG
simply return the stock, which RIG had agreed to do. Notwithstanding this the
lawsuit seeks a cash settlement, likely because the Chancellor share price has
declined below 9 cents per share. Chancellor cannot determine why it was named
as defendant in this lawsuit as it merely and in good faith introduced RIG to
Childers after it, RIG, approached Chancellor unsolicited and asked if any of
our larger shareholders might want to sell a block of shares. RIG amongst other
things has a large business in the area of "block trades". The lawsuit was badly
drawn ( copy to be faxed to you ) as amongst other things plaintiffs seek to
regain Chancellor's Glass Mountain, Texas, leases even though Chancellor had
fully paid for them and had fulfilled all of its purchase obligations under the
terms of it's June 2001 agreement with Graham and others. Graham / Lichfield
seek to on very thin ground tie Chancellor into their claim against Rubin purely
on the apparent basis that the Texas leases were renewed at the same time as
Chancellor introduced RIG to Childers and Lichfield. Chancellor believes RIG
will settle the lawsuit with Lichfield in the normal course of business, and
does not presently believe it will have any liability pursuant to said lawsuit.
Notwithstanding the foregoing, RIG alleges that Lichfield is a non-existent
entity, as it can find no record in Belize of the corporation ever having
existed. It is nominally controlled by Canadian directors and shareholders who
Charles M. ("Mike" ) Childers claims he is only the agent for but who in turn
claim that he, Childers, is the true controlling party and that they, the
Canadians, are only agents and nominal shareholders and directors who take their
orders from Childers. Further and notwithstanding the foregoing, the Company was
advised but has not yet confirmed that on Thursday October 25, plaintiffs had
obtained a summary judgment against Chancellor in respect to the lawsuit.
Counsels advice is that in the circumstances the Company would have no
difficulty in vacating such a judgment.


                                       12
<PAGE>

On September 28th. a lawsuit was filed in Nevada by Koala Pictures Pty. Ltd. and
Axis Network Pty. Ltd., two Australian companies, against Chancellor Group Inc.,
and Shane Rodgers. Koala and Axis claim to be stockholders of Chancellor, which
Chancellor disputes. Chancellor notified these parties previously that for the
safety of the Company and in the interests of all its stockholders it could not
recognize Koala and Axis as shareholders due to the way in which they came to be
shareholders, or purported shareholders of the Company, including fraudulently
obtaining a stock certificate, amongst other things. Chancellor correctly
notified these parties that the board had determined that the matter of their
stock ownership would have to be dealt with by a Nevada court. The plaintiffs
responded by filing a lawsuit against Chancellor and Rodgers alleging corporate
mismanagement and abuse of the Company's funds and assets. The lawsuit also
alleged that the Company and Rodgers had engaged in a "pump and dump" scheme to
manipulate the share price of the Company and sell their stock. All of these
allegations are demonstrably false, and the Company believes the case to be
totally without foundation or merit, and will vigorously defend it. Subsequent
to the end of the third quarter and in order for the veracity of the more
serious elements of plaintiffs' claim to be determined, the court appointed a
temporary receiver to examine the affairs of the Company, although this
receivership was subsequently terminated on November 13, 2001.


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

Ashraf Khan and Bassam Abu-Ghazaleh resigned as directors of the registrant on
August 27th., 2001. Ashraf Khan also resigned as Chairman of the Board of
Directors and as Chief Executive Officer. Daniel Weinstock was appointed to the
Board as a director on August 29th, 2001. Mr. Weinstock resigned as a director
subsequent to the balance date.


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





                                       13
<PAGE>


                                   SIGNATURES

Pursuant to the requirements of Section 12(g) the Securities and Exchange Act of
1934, the Registrant has duly caused this report to be signed on its behalf by
the undersigned hereunto duly authorized, on December 12, 2001.

                                    CHANCELLOR GROUP, INC.


                                   By: /s/Shane Rodgers
                                       --------------------
                                       Shane Rodgers
                                       Chairman/CEO
                                       Director

Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed below by the following persons on behalf of the Registrant in
the capacities indicated, on December 12, 2001.

                                      /s/Shane Rodgers
                                      --------------------
                                      Shane Rodgers
                                      Chairman and Chief Executive Officer,
                                      Director

                                      /s/William H. Stinson
                                      ---------------------
                                      William H. Stinson
                                      Director





                                       14