Dispute cooking over possible gas discovery in Santa Clarita Valley.

A group of "junior" companies exploring for oil and gas in the Santa Clarita Valley hope to strike it rich soon, and their possible finds have already been published. But industry experts dispute the field's actual potential, and the field's operator has disclaimed any responsibility for reports on the matter.

The group of six companies, five of which are based in Canada, have used a record-size rig to drill more than 15,000 feet down into the earth. The 170-foot-tall rig has uncovered indications that gas may be present in a portion of the rock.

Specifically, it hit a 200-foot vertical section where the drill moved through the rock at a faster pace than normal, indicating the presence of softer, porous or sponge-like rock. The mud coming up the well from this section contained gas, leading some partners in the consortium to believe a giant reservoir of gas may lie there.

"We know there is gas down there," said David Hite, director of Vancouver, B.C.-based Ossa Resources Inc., a partner with a 30 percent interest in the deal. But he conceded that no one will actually know if the gas can be produced commercially until the area is tested, which should be within the next 90 days.

"We definitely have something there. We just don't know if it's going to be commercially viable," he said.

Robert Grey, president of Vancouver-based Riva Petroleum Inc., agreed. If the gas proves commercially producable, "you could have a major gas field," he said.

Investors have gotten wind of the news. Clive Stockdale, an analyst with Vancouver-based L.O.M. Securities, published a report June 9 on the project, dubbed the Pico Anticline Prospect.

"It could well be that over 150 feet of gas-bearing reservoir has been encountered," the report states, but goes on to caution that the well is speculative.

Also, the Calgary Sun published an article dated June 17 citing the project's developments.

"The drill bit reportedly chewed into an unexpected 'bonus formation' that yielded gas shows for about 60 meters," the article states.

The newspaper also quoted a "veteran Calgary oilman" as saying "at that depth, natural gas is very compressed. They may have already found a large reserve."

Officials at the companies involved, however, said they themselves have released no reports touting the possible gas discovery.

Yet "there was an incredible rumor mill," said Adam Smith, director of Vancouver-based Loumic Resources Ltd., one of the smaller partners. "The grapevine seems to be very efficient in oil projects."

Since the possible gas discovery was made, though, stock prices of all the smaller companies involved in the project have doubled, Smith said.

For example, the stock of Loumic Resources has risen from 70 cents a share before the discovery to $1.49 a share June 23.

The consortium involved in the Pico Anticline Prospect is comprised of five junior partners that analysts dub promotional, speculative companies, and Ardmore, Okla.-based Noble Affiliates Inc., a good-sized, reputable oil company. Noble Affiliates is listed on the New York Stock Exchange, while the five smaller companies are penny stocks, four of which are traded on the Vancouver Stock Exchange and one of which is traded on the American Stock Exchange.

Noble Affiliates, whose Samedan Oil Corp. subsidiary has an 8 percent interest in the project and is the project's operator, is disclaiming responsibility for the optimistic claims that are being made.

Noble Affiliates "denied responsibility for information released by others about the potential or drilling status of its Towsley No. 1 well, which the company terms a 'wildcat exploratory oil well,'" a June 12 press release states.

"We believe it is premature to discuss the size of a possible discovery or, for that matter, whether hydrocarbons in commercial quantities will be found at all," the release goes on to state.

Meanwhile, analysts are wary of pegging the field's actual potential.

"It's a high-risk well," said one oil industry source familiar with the deal. "I don't think I'd buy any of those stocks."

Another source expressed a little more faith in the project. "It's very much a wildcat, but it's a legitimate play," he said. A wildcat well is one that is being drilled in unexplored territory.

"The chances of a wildcat ever hitting are pretty dreadful," the source said, but "it's not just a total joke."

John Kaiser, director of research at Vancouver-based Pacific International Securities, also tried to put the project into perspective. "Basically this is a wildcat play that a group of juniors is trying to prove is a field that was overlooked by the bigger players," he said.

"The probabilities are low that they will be successful," Kaiser said. "If they were high, you wouldn't have a bunch of small companies drilling. Chevron would have drilled a long time ago."

Chevron owns 3,000 of the 5,400 acres being explored, but has leased the mineral rights of the land to the consortium.