FARMINGTON — Merrion Oil & Gas announced Monday that a joint venture with a Denver-based company to develop the San Juan Basin Mancos Shale formation has been terminated.

"It's unfortunate that things didn't work out," said T. Greg Merrion, the company's president, in a press release. "However, we now have the opportunity to find a new partner with a stronger focus on the development of this new resource play."

Although the release did not identify the company, a July Daily Times story said Merrion officials had previously formed a partnership with Bill Barrett Corp. of Denver "to test the potential for oil production in the Mancos Shale."

The story said Barrett planned to drill two horizontal wells on Merrion acreage in the fall if the necessary permits could be acquired.

But no wells were drilled under the two-year agreement, said Merrion Investment Manager George Sharpe in a telephone interview.

Asked whether the termination had anything to do with the potential of the shale to yield commercial quantities of oil, Sharpe said, "Absolutely not. It was a business decision on both sides."

"We think it's actually a good opportunity for Merrion to find a partner that will be a little more aggressive," Sharpe said. He said the Denver company had decided to focus its resources on proven plays.

"We really like them and we like the deal we had with them," Sharpe said. "It was a situation where it just didn't work out.



Merrion controls a total of about 30,000 acres in the basin, most of which is "very favorably located in the Mancos oil window near ongoing drilling activity," the release stated.

"A number of drilling permits are ready to go, or in the works," the release said.

The San Juan Basin produces large amount of natural gas, which contributed to a glut that drove down prices. The Mancos Shale formation has provided hope that expanded oil production in the basin could revive a flagging Four Corners economy heavily dependent on oil and gas production.

Chris Roberts may be reached at; 505546-4624. Follow him on Twitter