Shares in Irish oil and gas group Providence Resources jumped almost 10 per cent yesterday after the company said it had encountered better-than-expected hydrocarbon deposits at one of its wells in the Celtic Sea.

Providence, which is headed by Tony O'Reilly jnr, said it will now flow test the 50/11-3 Hook Head appraisal well, which lies 60km (40 miles) off the Co Waterford coast, to ascertain the quality of the oil or gas in the well.

The findings will also show the rate at which the resource can be extracted from the ground and how much is actually there.

The Hook Head field is estimated to contain about 70 million barrels of oil or 250 billion cubic feet of gas, an amount which would be enough to deem the project commercial. The results of the testing are expected in the next couple of weeks.

Analysts welcomed yesterday's news, with Davy analyst Job Langbroek reiterating earlier comments that a successful development in the Celtic Sea could unlock the value of the whole portfolio.

"The results so far are very positive for Providence - not only for Hook Head specifically, but also for the rest of its Celtic Sea portfolio," said Mr Langbroek.

Providence's shares closed up 9.7 per cent, at just over 10 cent. They are up 24 per cent so far this year compared to an overall decline in the value of the Irish market.

Providence has a 43.5 per cent interest in the Hook Head discovery.