Exxon Mobil Corp has made two big new oil discoveries and a natural gas find in the deepwater Gulf of Mexico, news that underscores the importance of the prolific basin to U.S. crude output.

Oil and gas exploration in the Gulf was halted by the U.S. government last year after the blowout at BP Plc's Macondo well, and activity in the Gulf remains at levels far below those seen before the oil spill.

Exxon estimated the new wells could produce about 700 million barrels of oil equivalent (BOE).

Seven hundred million barrels doesn't happen very often, John White, an analyst at Houston-based Triple Double Advisors in Houston, said. That's a lot of oil.

The lower tertiary geological formation which stretches across the deepwater Gulf, is thought to hold as much 15 billion barrels of oil. Recent large discoveries there include BP Plc's Kaskida, estimated to hold 3 billion barrels of oil.

Irving, Texas-based Exxon had reserves of 24.8 billion barrels oil equivalent at the end of last year.

Exxon shares were up 1 percent in afternoon trading.

The discoveries are the company's first in the Gulf since the government moratorium was lifted. The Irving, Texas, company was on the verge of drilling its Hadrian prospect when the government suspended deepwater activity.

(The discovery) speaks to the fact there are resources in the Gulf and if we have a tax and regulatory environment that will encourage us to find and produce our own domestic oil, the industry will respond, said Mark Routt, an energy industry consultant with KBC Advanced Technologies.

Exxon has not finished its development plan yet, and more drilling will be needed to further appraise how much oil is in the reservoir. Production could be years away.

The wells are located in the Keathley Canyon at a water depth of about 7,000 feet, 250 miles southwest of New Orleans.

Other operators in Keathley Canyon include Anadarko Petroleum Corp and Chevron Corp .

Last month, Noble Energy Inc said it had made an oil discovery at its Santiago prospect in the deepwater Gulf of Mexico. Noble was the first company to receive a drilling permit from U.S. regulators after the drilling halt.

Exxon owns a 50 percent interest in the three new wells, which are part-owned by Eni Petroleum U.S., part of Italy's Eni SpA , and Brazil's Petrobras
.

Exxon shares were up 83 cents at $80.83 in afternoon on the New York Stock Exchange. The stock was outperforming a flat CBOE index of oil companies <.OIX>. (Additional reporting by Matt Daily in New York and Bruce Nichols and Kristen Hays in Houston; Editing by John Wallace, Gunna Dickson, Dave Zimmerman)