On June 27, 1995, about 1000 central daylight time, a Hiller UH- 12E, operated by Sky Copters, Inc., Ulysses, Kansas, was substantially damaged following a loss of engine power and subsequent forced landing near Blue Rapids, Kansas. The pilot reported no injuries. The 14 CFR Part 137 aerial application flight originated in Ulysses, Kansas at 0627. Visual meteorological conditions prevailed and no flight plan was filed. In his written statement, the pilot reported that he visually checked the fuel level during his morning preflight. The tank was full except for the amount used to ferry the helicopter to the hanger. He reported that he uses a stop watch to back up the fuel quantity gauge and usually has two hours and twenty five minutes of usable fuel. He had flown 2 hours and 1.5 minutes prior to the accident and estimated he would normally have 10 or 11 gallons of usable fuel. He stated that he was in a ravine when the engine lost power. He "used some of the rotor RPM to get away from the ravine on to an area without rocks and trees." He flared and lowered the collective. The helicopter "hit the ground with probably ten miles per hour forward ground speed and low rotor RPM with a southwest heading. The helicopter rolled up on the toe of the skids and one of the main rotor blades struck the tail boom." He reported that the fuel quantity gauge indicated 40 pounds when he shut off the master switch. A Federal Aviation Administration (FAA) Inspector reported that the drain valve in the main fuel sump was leaking. The fuel quantity indicator displayed "low, not empty". No other evidence of preimpact mechanical malfunction was reported.