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We live in the country outside of Eugene, OR. Our log home is about 25 years old. The exterior is stained with gray stain – interior is natural log with clear finish. Today while sweeping cobwebs from exterior logs I observed some type of fly enter a small, perfectly round hole. The fly turned around inside the hole and seemed to back further into the hole. The hole is small and about the size of a small nail head. Upon further inspection, I observed quite a few of these holes in one area

Sounds like Powder Post Beetle with the holes you are describing. The only good way to get rid of them is to have the house stripped and apply a good borate solution, then re-stain.

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