Norwegian energy company Statoil said Friday it signed an agreement with Argentine company YPF to explore parts of the "world-class" Vaca Muerta shale basin.

Statoil under the terms of the agreement took a 50 percent stake in the Bajo del Toro exploration permit in the Neuquén Basin alongside YPF. The Norwegian company said it would fund all of the costs associated with activities in the region.

This is the first formal step for Statoil into one of the largest unconventional oil and natural gas basins in the world.

"This is a light oil exploration project in a world-class unconventional resource play, the Vaca Muerta formation," Tom Dodson, Statoil's vice president for exploration and production, said in a statement. "The opportunity has an excellent fit with Statoil's sharpened strategy, and is in line with our exploration strategy of delivering profitable, high-quality resources."

Vaca Muerta, located in Neuquén province, is considered one of the best shale basins in Latin America. Analysis from consultant group Wood Mackenzie found parts of the basin are producing on average 646 barrels of oil equivalent per day, representing a mix of oil and natural gas. The study from Wood Mackenzie found production increases will be slow, but advances should accelerate by 2020.

All told, the Vaca Muerta shale contains about 16 million barrels of oil and 308 trillion cubic feet of natural gas. Statoil last year signed a technical study agreement with YFP to map exploration opportunities.

RBC Capital Markets said shale reservoirs in Argentina may have development costs that are considerably higher than their U.S. counterparts, but higher productivity could offset some of the expense.

Statoil reported adjusted earnings for the second quarter of $3 billion, up from the $913 million reported in the same period last year. The company attributed the gains to strong operational performance, improved production and higher prices for oil and natural gas.

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