While the DST, RFT and production tests provide useful information for predicting reservoir inflow performance, they require specialized equipment and result in a considerable increase in the cost of operations. Also, conventional, single well pressure transient tests do not provide information on vertical and horizontal permeability. The characteristic feature of the proposed technique is that the test can be conducted by making use of drilling facilities. The tests can be performed at various degrees of wellbore penetration into a formation, hence, the vertical and horizontal permeability can be determined based upon testing of just a single well. The test consists of two major steps. First, a desired drawdown is induced by pumping down the drillpipe and up the annulus a fluid with a density less than the drilling fluid. Upon obtaining a certain amount of oil, the well is shut-in for a pressure buildup. To demonstrate the feasibility of the proposed technique and to reveal the major merits and disadvantages, a computer program has been developed. The simulator enables prediction of flowing and shut-in bottomhole pressures and flow rates under the test conditions if the reservoir and wellbore data are known. Also, the paper consists of the description of the inverse problem. Namely, determination of the reservoir pressure and permeability if the flowing or shut-in bottomhole pressure is given.