Prospects for Brazil's Santos Basin offshore oil patch brightened Wednesday, as better-than-expected estimates for the Guara field offset recent news of dry wells and concerns about changes to the country's oil laws.

Tuesday night, Brazilian state-run energy giant Petroleo Brasileiro SA (PBR), or Petrobras, estimated Guara's recoverable reserves at 1.1 billion to 2 billion barrels of light oil and natural gas. That was the third reserve estimate for the Santos Basin's so-called subsalt cluster.

The announcement recaptured some of the region's recently tarnished image after much-anticipated wells turned up dry in July and August. The dry wells also undercut Brazilian government and Petrobras claims that the subsalt held "zero risk" for exploration, a key tenet used to change the regulatory framework governing the local oil industry.

Tuesday's news helped boost shares of block partners Petrobras, BG Group PLC (BG.LN) and Spain's Repsol YPF SA (REP). Petrobras is lead operator of the BM-S-9 block, with a 45% stake. BG Group holds a 30% share, while Repsol has the remaining 25%.

Petrobras shares traded slightly higher, rising 0.6% to 33.06 Brazilian reals ($18.14) as of 1733 GMT Wednesday. BG Group's shares rose 3.8% to 1,095 pence in London and Repsol's New York-listed shares gained 3.6% to $25.59.

"In our view, recent setbacks in the Santos Basin subsalt (Corcovado-2 and Guarani) leave room for positive market reactions on good news, such as this," Credit Suisse said in a research note.

BG Group was behind last month's disappointing news, when preliminary tests at the Corcovado-2 prospect failed to confirm the presence of hydrocarbons, despite signs of natural gas. That followed July's announcement by Exxon Mobil Corp. (XOM) and Hess Corp. (HES) of a dry well at the Guarani prospect.

The two dry wells were the first high-profile failures in the so-called subsalt region. The subsalt discoveries were made under a thick layer of salt in the Santos Basin, off the coast of Sao Paulo and Rio de Janeiro states. The oil lies under more than 2,000 meters of water and a farther 5,000 meters of sand, rock and a shifting layer of salt, making development pricey and complicated.

Petrobras has so far released estimates for three subsalt fields: Tupi, Iara and Guara. The three fields combined hold recoverable reserves of between 9.1 billion and 14 billion barrels of oil equivalent, or BOE.

Guara's proximity to Tupi and Iara should yield additional synergies, allowing the fields to share infrastructure, Rio de Janeiro-based investment bank BB Investimentos said in a research note.

Guara is located in the BM-S-9 block, about 55 kilometers southwest of the BM-S-11 block's Tupi discovery. Tupi, the Western Hemisphere's largest oil find in more than 30 years, was estimated to hold recoverable reserves of between 5 billion and 8 billion barrels of oil equivalent, or BOE.

Tupi's sister field, Iara, and Guara were expected to be developed in concert, with production pilots set for 2013 and 2014, respectively. But given Guara's high productivity, it's possible a pilot production program set for 2014 could be brought forward, according to Credit Suisse.

Meanwhile, there are eight more discoveries in the Santos Basin yet to receive resource estimates. Credit Suisse recently pegged a net risked estimate for the cluster of 18.4 billion BOE.

The Santos Basin remains one of the world's most promising oil frontiers compared with other recent discoveries. Recoverable reserves at Guara are nearly double last week's announcement of the Tiber-1 prospect in the Gulf of Mexico.

Tiber-1, the deepest oil well ever drilled by the industry, will yield recoverable reserves of between 600 million and 900 million BOE. Petrobras' U.S. unit, Petrobras America, holds a 20% stake in the discovery. BP PLC (BP) is the operator with a 62% stake, while ConocoPhilips (COP) has 18%.

-By Jeff Fick, Dow Jones Newswires; 55-21-2586-6085; jeff.fick@dowjones.com