Abstract: A method of performing a formation rate analysis from pressure and formation flow rate data. Pressure and flow rate data are measured as fluid is withdrawn from a formation. Variable system volume is accounted for. The pressure and flow rate data are correlated using a multiple linear regression technique. Time derivative terms related to pressure and flow rate are smoothed using a summation technique, thereby providing better correlations than using the time derivatives directly. Formation parameters comprising formation permeability, formation pressure, and fluid compressibility may be determined from the correlation.