FARMINGTON — Two Farmington-based oil drilling companies have entered into a partnership to increase oil and natural gas drilling in the San Juan Basin.

LOGOS Resources, LLC and Merrion Oil and Gas Corp. have entered into an agreement to explore more than 20,000 acres in the Gallup and Mancos oil play in the southern part of the San Juan Basin. The acreage is a part of Merrion's lease holdings.

Specific terms of the deal were not disclosed.

The new partnership, which was initiated on June 1, could lead to the creation of more jobs, executives from both companies said.

"With each drilling rig that opens up, there are about 200 jobs associated with that," said T. Gregg Merrion, president of Merrion Oil and Gas.

Jay Paul McWilliams, president of LOGOS, said he expects to be drilling in the holdings by the end of the year.

"We have a large capital commitment," McWilliams said in a phone interview.

Earlier this year, LOGOS announced the company had secured a $100 million investment from ArcLight Capital Partners.

Merrion said the partnership with LOGOS started to form last year after a relationship with a Denver-based company dissolved.

About nine months ago, LOGOS and Merrion Oil worked together to explore smaller acreage, McWilliams said, adding that the partnership worked out well then.

Merrion added that Merrion Oil and Gas had additional holdings, and LOGOS needed more acreage.

"We had additional acreage, and they need more acreage," Merrion said.

Both McWilliams and Merrion plan for the partnership to be long-term.

Merrion said the holdings are in areas of the Mancos and Gallup play that have been producing oil from the Mancos Shale.

"We have lots of Mancos rights, and most of our rights are within the oil window," he said.

McWilliams said his company plans to develop both crude oil and natural gas from the wells.

"We think there is potential on both," he said, "We plan on developing both."

Merrion said he was excited about the new partnership.

"We are really happy to have partnered with LOGOS," he said. "We're really excited to be back in the game and part of the development of the Mancos."

Erny Zah is The Daily Times business editor. He can be reached at 505-564-4638.and Follow him @ernyzah on Twitter.