Exploratory and development drilling in this district decreased 29 percent, from 701 wells in 1962 to 499 wells in 1963. Ninety-four new-field wildcats resulted in 8 discoveries, the most important of which was oil in the Devonian clastic section at the Texaco AG-1 well near Mexican Water in Arizona. Total exploratory drilling compared favorably with that of 1962 with 119 wells for 1963. Most of the activity as in the past was confined to the San Juan basin where proved major reserves of oil and gas provide the incentive for drilling. Geophysical activity decreased in the New Mexico part of the District but is on the increase in the northeastern part of Arizona where large tracts of Indian land are becoming available for leasing.