Chevron said it secured an agreement with Argentine oil company YPF to develop the Vaca Muerta formation in Neuquen province in Argentina.
The U.S. Energy Department's Energy Information Administration estimates Argentina has 774 trillion cubic feet of technically recoverable shale gas resources, the third most in the world. Oil reserves are estimated at 2.5 billion barrels. Its Vaca Muerta region is considered one of the best shale reserve areas in the world.
Chevron Vice Chairman George Kirkland said the YPF deal is a unique opportunity for the company.
"Vaca Muerta could become an important contributor to Chevron's long term production growth," he said in a statement Thursday.
Chevron said it would explore shale resources over a 49,400-acre site in the Vaca Muerta play.
Chevron's existing assets in Argentina have produced, on average, 21,000 barrels of crude oil and 4 million cubic feet of natural gas.