A U.S. appeals court said on Thursday it would rule by early next week on whether to stay a lower court decision to lift a six-month ban on deepwater oil drilling imposed by the Obama administration.

The U.S. Court of Appeals for the Fifth Circuit hopes to rule by early next week at the latest, Judge Eugene Davis said at the end of an hour-long, contentious oral argument.

The administration is fighting to get the moratorium reinstated, arguing that the time was needed to investigate the cause of the BP Plc well blowout in the Gulf of Mexico and ensure other rigs are operating safely.

The Obama administration said earlier on Thursday it will immediately issue a revised ban on deepwater drilling if the appeals court bars it from reinstating the six-month moratorium it imposed in the wake of the BP oil spill.

However, the administration will not impose a new drilling ban if the federal court in New Orleans supports its initial moratorium, an Interior Department official told Reuters.

Drilling companies like Hornbeck Offshore Services Inc and Diamond Offshore Drilling Inc have pressed to have the moratorium lifted, saying it was too broad and was causing significant economic harm.

The administration says it imposed the moratorium to allow for an investigation of the April 20 drilling rig explosion that killed 11 men and triggered the worst oil spill in U.S. history.

Now in its 80th day, the flow of oil is killing birds, sea turtles and dolphins, imperiling multibillion-dollar fishing and tourist industries at a time of high unemployment, and soiling the shores of all five U.S. Gulf Coast states.

BP's New York share price on Thursday rose about 2 percent, adding to gains of 24 percent in the previous eight trading days on talk company executives were seeking new investors and optimism the worst might be behind BP.

(Additional reporting by Mary Rickard in New Orleans; Writing by Ed Stoddard and Patricia Zengerle; Editing by Paul Simao)

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