Sept. 9 (Bloomberg) -- Petroleo Brasileiro SA and BG Group Plc said the deepwater Guara field off Brazil holds between 1.1 billion and 2 billion barrels of oil. The shares gained.

Petrobras, Brazil’s state-controlled oil company, ended tests on the exploratory well at Guara in the so-called pre-salt region and will build a production platform, the company said yesterday in a statement. Initial output may be as much as 50,000 barrels of oil equivalent a day by 2012, Petrobras said.

Petrobras is spending billions to tap oil deposits off Brazil’s coast including the Tupi field, the largest discovery in the Americas since Mexico’s Cantarell in 1976. The Rio de Janeiro-based company plans to spend a record $174.4 billion over the next five years to boost crude output by 53 percent.

“There is notable precedent for share price uplift on the announcement of reserves success in Brazil for the companies participating in the region,” Jason Kenney, an Edinburgh-based analyst at ING Wholesale Banking, said in a note. ING had previously estimated the size of the discovery in the range of 500 to 650 million barrels of oil equivalent.

Petrobras is the operator of Guara, with a 45 percent stake; Reading, U.K.-based BG has 30 percent and Repsol TPF SA, with headquarters in Madrid, has 25 percent. The companies will use a 120,000 barrel-a-day floating production, storage and offloading vessel, known as an FPSO, to develop Guara.

‘Significant Resources’

Petrobras last year made a discovery in Guara, part of the BM-S-9 area that also includes the fields known as Carioca and Iguacu. The company said April 16 that Iguacu contained “significant” resources while declining to estimate its size.

“We believe that this is good news for Petrobras,” Paula Kovarsky, an analyst at Itau Unibanco Holding SA, wrote today in a note to clients.

Petrobras rose 12 centavos to 33.00 reais. BG, the U.K.’s third-biggest gas producer, rose as much as 4.1 percent to 1,098 pence and gained 40 pence, or 3.8 percent, to close at 1,095 pence in London. Repsol climbed as much as 3.3 percent and closed up 2.8 percent at 17.56 euros in Madrid.

“Guara is only one of the wells drilled in the BM-S-9 block (where the company also drilled Carioca, Iguaçu and is drilling Abaré), which means that the block’s potential could be significantly higher,” said Kovarsky, who reiterated that she has an “outperform” recommendation on Petrobras.

‘Material Contribution’

“It is clear that the Santos Basin pre-salt will make a very material contribution to the production and cash flow of BG Group for many years to come,” BG Chief Executive Officer Frank Chapman said in a statement today.

Petrobras wants to increase output to about 3.66 million barrels a day by 2013, compared with 2.4 million barrels a day in 2008, the company has said. Repsol said the estimate of recoverable reserves at Guara is equivalent to between two and four years of Spain’s oil and gas demand.

“The discoveries of the last few years represent significant contingent resources which will guarantee the growth in reserves and production in the coming years,” Repsol said in a statement.

While the share prices of the companies involved look set to benefit, ING’s Kenney urged caution given the “technical complexity of the finds, the sizeable capital requirements of the discoveries” as well as the effort needed to commercialize them.

Pre-Salt Region

The pre-salt region runs 800 kilometers (500 miles) along the Brazilian coast and has oil deposits beneath a layer of salt resting as deep as 3,000 meters (9,843 feet) below the ocean surface and another 5,000 meters under the seabed.

Petrobras said yesterday it restarted tests at the Tupi field after completing repair work ahead of schedule. A well was shut in July because of a technical problem.

To contact the reporters on this story: Steven Bodzin in Caracas at sbodzin@bloomberg.net; Heloiza Canassa in Sao Paulo at hcanassa@bloomberg.net

Last Updated: September 9, 2009 16:21 EDT