Douglas daily dispatch., 1926-12-29
MEXICO ISSUES.
STATEMENT ON
DRILLING BONDS.

MEXICO CITY, Dec. 2S Especial to
The Dispatch) AT the request. of
several Of the petroleum companies
the department of industry, com-
merce and labor has issued an op.n.
ion on the laws applying theF guar
antee bonds which must be deposited
before drilling permits can be issued
on lands, title to which has not We
been fully established. The opinion
says:
Some petroleum companies have
asked for an explanation regarding
the ruling made by this department.
with date of June g and revised
August "a last for the drilling Of
wells on lands on which the rights
OF the, petitioning companies or in
oividuals has not been properly JUS
titled
'The intention of the department
when it ISSUED this authorization was
none other than to acceed to the
written petition of companies which
offered to put up such guarantee as
the government might require, to
it's satisfaction, in order to obtain
permits in the cases where there
rights We're not fully Justified; ana,
with the purpose of not interrupting
the exploitation, to the danger OF
the industry and of the institutions.
and individuals which, due to obli-
cations contracted, might suffe.
some financial embarrassment
through the paralyzation of their
work.
.sAs may be seen, this department
issued the authorization guided by
an ample spirit of cooperation ana
Interpreting the law in the mos,
liberal sense, in it's constant desire
to give to the industry all the fa-
cilities which are compatible with
the legal precepts.
sAs the first ruling of June
called for an unlinEted guarantee
to safeguard the drilling and ex-
ploitation which might be carried
out under this disposition and some
companies stated they they We're no.
IN a, position to put up a guarantee
of this nature; and, since veery dis.
position must be general in its ap.
plieation, once again an effort was
made to give added facilities and
the revision of August "a modified
the unlimited guarantee for fixed
guarantee of one hundred thousanc
pesos, which was the sureAy bona
which was to be put up for the
purpose according to the provisions
of the first authorization already
mentioned.
IF. then, drilling permits are only
to be granted to those who justify
their rights over the lands which
they wish to drill, the department,
in giving this large measure of fa-
cilities, was obliged to see that thic
lberality be duly guaranteed.
The surety bond established hao
two purposes:
4. To guarantee the amount OF
any royalty which might become
cue the nation, in the event that the
land should be national property;
"2. To give moral backing to the
authorization issued.
'And, if the beneficiary company
through the drilling permits, cannot
substantiate its rights by any or the
means granted it by our laws, it is
logical that the nation should find
itself in the position to demand the
legal participation corresponding to
1T, if the lands are national property
and, in case they are not, that the
rights of third parties be protected,
but if the beneficiaries do not pay
the participation which legally corr
responds to THE federal government,
the department would find itself
legally empowered to make the
surety bond effective without THIS
Implying that it deprives the inter.
ested parties of the judicial resources
which the law grants in such cases,
if they believe that the measure is
violatory of their rights.
IF after the provisional permit .is
granted, the beneficiary should not
justify his acquired rights on the
land and should ask a concession,
this shall be issued preferentially
always safeguarding the nights of
third parties.
surety bond, it is believed that this
should be done before drilling i:
started: without it being the pur,
pose of the department to cause IN
necessary expenses, since, If tn,
drilling should prove unproductive
this same bond may be used for new
drilling which may be authorized
under similar conditions or will bu
cancelled if the said bond is not used
for this purpose.
when the organic law of article,
81 of the cnstitution in the pet
roleum branch went into effect, the
owners of petroleum lands who. prior
to May l, 1917, exercised the powers
granted to the owners of the sur.
face by articles ten of the law of
November 22 1884, four of the law
of June A. 1882, and two of the law