A system and method determine formation permeability and/or at least one property indicative of formation permeability of a subsurface geological reservoir having radial-flow. Pressure data is obtained with an observation probe during a formation test, wherein the observation probe is located at a setting position within an open hole wellbore formed within the reservoir. The system and method measure radial-flow response of the reservoir at or adjacent to the setting position of the observation probe by analyzing the collected pressure data. The formation permeability and/or at least one property indicative of the permeability of the reservoir is determined based on the measured radial-flow response of the reservoir at or adjacent to the observation probe.