UPDATE:Corcovado-1 Well In Brazil Contains Gas,Condensate-BG

BG Group PLC (BG.LN) has completed testing operations on the Corcovado-1 well in Brazil's prolific offshore pre-salt oil basin and discovered natural gas and condensate, the company said in a statement Wednesday.

Despite being a successful discovery, Corcovado has fallen short of previous wells in the Santos basin offshore Brazil, several of which have yielded multi-billion-barrel oil discoveries.

"Corcovado is very different to other plays (within Santos), we are drilling into much older reservoirs," said BG's Chief Executive Frank Chapman.

The two wells drilled on the Corcovado prospect have increased its understanding of the geology of the structure and identified additional potential on its flanks, he said.

The Corcovado result should not detract from, "a series of very good results which really throw the focus ... from exploration success to the economics and pace of development of existing discoveries," he said.

Early data from the Iracema well drilled in the north of the Santos basin is "very promising indeed," Chapman said.

Well tests on the multi-billion barrel Tupi oil discovery further south, "are doing a lot better than we imagined," he said. Pressure in the borehole has been maintained very well through the test, which has extracted more than a million barrels of oil equivalent, and it appears that there are no barriers to oil flow in the geology of the well, he said.

After positive well test results earlier this year, BG and its partners in the Guara field - Petroleo Brasileiro SA (PBR) and Repsol YPF (REP) - have agreed to build a second 120,000 barrel-a-day capacity floating production, storage and offtake vessel for the field, he said. First production is targeted from 2012, he said.

Company Web site: www.bg-group.com

-By James Herron, Dow Jones Newswires; [phone]; [e-mail]