UPDATE 1-Chevron agrees terms of Argentina shale investment -YPF

Wed May 15, 2013 5:13pm EDT

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BUENOS AIRES May 15 (Reuters) - Argentine energy company YPF signed an agreement with U.S. oil major Chevron Corp on Wednesday to define the terms and conditions of Chevron's investment of up to $1.5 billion in Argentina's vast Vaca Muerta shale field.

The joint pilot project will include the drilling of more than 100 non-conventional wells over the next 12 months, YPF said in a statement. The two companies signed a letter of intent in December to partner on investments.

Anticipation of the announcement drove YPF shares up 12.26 percent in Buenos Aires trade.

"Chevron's $1.5 billion investment is expected to go toward the massive development of non-conventional resources in Vaca Muerta, specifically in the areas of Loma La Lata Norte and Loma Campana in Neuquen province," YPF said.

YPF, which was renationalized last year as Argentina battles to reverse a long decline in natural gas and oil output, aims to drill 132 oil wells at the Vaca Muerta shale formation in Patagonia this year.

A couple walks along the rough surf during sunset at Oahu's North Shore, December 26, 2013. REUTERS/Kevin Lamarque

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