NEW YORK ( TheStreet) -- BP ( BP) shares surged more than 7% in late trading on Thursday after the company said the words that the world -- and the markets -- have been waiting to hear: the flow of oil into the Gulf of Mexico has stopped. BP official Kent Wells delivered the news at a press briefing on Thursday afternoon.
BP began its well integrity test on Thursday and had said the flow of oil was slowing as it closed the valves of the leaking Macondo well. BP has said that it will be 6 hours to 48 hours of testing before it can be assured that the new cap will stop the flow of oil into the Gulf of Mexico, until the relief wells can be drilled and permanently end the oil spill crisis. BP shares were already up 3% on Thursday ahead of the good news about the well, on a losing day for equities. BP began its well integrity test on Thursday and had said the flow of oil was slowing as it closed the valves of the leaking Macondo well. Kent Wells, BP senior vice president of exploration and production, made the good news official late on Thursday afternoon and BP shares surged by 7.5% in late trading. BP said the tests could take anywhere from 6 hours to 48 hours before it can be assured that the new containment can handle the pressure coming from the well after it closes off all the valves, and to make sure that ice crystals don't form within the cap. If successful, BP will not technically need to siphon oil to drillships at the surface, but it would keep doing so, according to BP and government officials, and that's the most important distinction in Thursday's news. The new containment cap has been put in place so that, in the event of a hurricane, BP can abandon oil capture operations involving ships at the surface and clamp down on the well to stop any oil from flowing into the Gulf. BP still plans to use the new flexible cap system to siphon up to 80,000 barrels of oil to ships on the surface, where oil and gas are stored or flared, as opposed to trying to use the cap itself to keep all of the oil within the well. BP has so far captured or flared a total of 749,000 barrels of oil and gas, according to the latest data provided by the oil company. BP was also cautiously optimistic with the early results from the test, with BP official Kent Wells saying during a teleconference on Thursday announcing the good news that it's early yet in the testing process.
The White House continued to evince cautious optimism, with White House spokesman Robert Gibbs saying even during the test delay on Wednesday that the effort to put the containment cap into operation "represents the best news that we've had in the preceding 85 days....We are approaching what we hope is the next phase in the Gulf -- understanding that that next phase is likely to take many years." President Obama said on Thursday after the BP announcement that the news was good, but preliminary, and he would have a more detailed statement about the latest turn of events in the Gulf on Friday. Transocean ( RIG) shares and Anadarko Petroleum ( APC) shares surged in late Thursday trading. Transocean shot up by 4% late in trading after what had been a losing day, and Anadarko rose by a similar amount near the close. Oil stocks rallied broadly on the news of the BP success capping the well, from the integrated oil majors to the offshore drillers and the oil services firms, putting a positive end to what had been a losing day. BP and Anadarko ended with the largest gains among oil and gas companies in the final, frenzied minutes of trading on Thursday. -- Written by Eric Rosenbaum from New York. Follow TheStreet.com on Twitter and become a fan on Facebook.