On May 13, 1997, at 1250 central daylight time, a Schweizer 269C-1 helicopter, N107SM, was substantially damaged during a forced landing following a loss of engine power near Laredo, Texas. The commercial pilot and his passenger were not injured. The helicopter was owned by a private individual and being operated by Travland Helicopter Inc., of San Angelo, Texas, on a Title 14 CFR Part 91 flight. Visual meteorological conditions prevailed for the local seismic survey flight for which a flight plan was not filed. The helicopter departed from a field site near the accident site approximately 20 minutes before the accident. The pilot reported that the helicopter was in cruise flight at approximately 150 feet AGL conducting an airborne seismic survey when without warning, the engine lost power. The pilot added that he lowered the collective as he turned the helicopter into the prevailing 10 knot wind. During the landing flare of the autorotation the rotor RPM decayed and the helicopter landed hard. Examination of the aircraft by an FAA inspector revealed that the airframe, the skid landing gear assembly and the tail boom of the helicopter sustained structural damage. A review of the aircraft records revealed that the 1995 model helicopter had accumulated a total of 713 flight hours. A fuel sample was taken from the fuel filter sump, which is located between the fuel tank and the throttle body of the fuel injected engine. A substantial amount of water was found in the sample. FAA inspectors, accompanied by the operator to the helicopter, proceeded to the landing site serving as the helicopter base and inspected the fuel storage tank that was being used to refuel the helicopter. Examination of the fuel filter also revealed the presence of water and rust. In the enclosed Pilot/Operator Report, the pilot recommends "waiting for longer than 5 minutes before sumping the tank."