The board of Repsol has signed off on a compensation deal with Argentina worth $5 billion in connection with the government's 2012 seizure of the Spanish oil major's stake in top oil company YPF.
The much-anticipated deal, reached after almost two years of bitter dispute, includes two groups of dollar-denominated Argentina public bonds, a fixed set with a nominal value of $5 billion and a complementary package with a nominal value of $1 billion.
Both Repsol and the now state-led YPF will also agree to desist from legal action over the expropriation as part of the deal, which was approved by the Spanish company's board of directors in a Tuesday meeting and followed a preliminary agreement reached in December.
"To finally reach a friendly agreement on this contentious issue that has taken two years I would say is extremely positive," chief executive Antonio Brufau said in a statement.
The deal is positive "because it liberates resources from the legal and management points of view. It is positive for Argentina", he continued.
"We have started a new chapter where we are stronger from a financial point of view and have enormous enthusiasm."
The administration of populist leader Cristina Fernandez de Kirchner said in April 2012 that it would expropriate Repsol's 51% stake in YPF amid escalating enthusiasm for the geological potential of the Vaca Muerta shale.
Argentina also claimed the Spanish company had failed to invest sufficiently in the country, a claim Repsol vigorously denied.
Repsol originally claimed it was owed in the range of $10 billion and took legal action against companies, including US supermajor Chevron, that partnered with the re-nationalised YPF.
Repsol said last week it would take an impairment charge of $1.75 billion to write down the value of its stake.
The formalisation of the final agreement will provide a major boost to investors with an eye to Argentina encouraged by the initial accord, and further open the door to development of the country's promising shale sector.
Argentina is estimated by the US Energy Information Administration to have the world's second-largest shale gas resources at 802 trillion cubic feet, and fourth-largest shale oil resources at 27 billion barrels.