The Vargas Formation is a sedimentary formation on the left bank of Palena River in the western Patagonian Andes of southern Chile. The formation is made of black shale and sandstone that deposited in the Late Oligocene or Early Miocene epoch some 26 million years ago. The formation has contact across a fault plane with granitoids of Cretaceous age of the North Patagonian Batholith. The exposures of Vargas Formation are small and its fossils poorly preserved. Gastropods, bivalves, echinoderms, and planktic foraminifer fossils have been found in the formation.
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