Santos is hopeful of a long-term future in Malaysia after the company and its PNG LNG partner, JX Nippon, made a significant oil discovery in a deepwater exploration well.

Santos revealed the news of the discovery March 25 in its dividend reinvestment plan (DRP) announcement.

The discovery was made at the Bestari-1 exploration well in the deepwater Block R production-sharing contract and is being evaluated with a view to planning an appraisal campaign.

Block R is located offshore Malaysia in water depths ranging from 100 m to 1,400m.

The Bestari-1 well encountered 67 m of net oil pay in multiple sand packages within the primary Miocene age formation at true vertical subsea depths ranging from 1,860 m to 2,702 m.

Santos said the oil bearing sands were of high quality with good porosity and permeability

In emailed comments to Oil and Gas Investor Australia, Santos Asia, WA & NT vice president John Anderson said the company had high hopes for the asset.

“We hope this is the first step in a long-term commitment to Malaysia and we are very encouraged by the Bestari-1 discovery and its similarities to some of the other world class fields in the area,” he said.

“While there is still a lot of work to be done in determining recoverable volumes, this is a large structural closure potentially capable of supporting significant column heights.

Santos completed the acquisition of a 20% interest in the block from JX Nippon (27.5% and operator) and Inpex (27.5%) in January. Petronas Carigali owns the remaining 25% interest.

Anderson said the move into the area was a testament to its strong relationship with partners JX Nippon, Inpex and Petronas.

Petronas is already a partner with Santos in the GLNG project in Queensland which is due to come on-stream later this year.

Under the DRP, Santos has issued 5.4 million shares at a price of $7.4192 per share to participants in the DRP for the 2014 final dividend and 14.3 million shares at $7.53 per share to the underwriter of the DRP for the 2014 final dividend.

Santos shares were trading 1.2% higher to $7.43.

Contact the author, Lauren Barrett, at lbarrett@hartenergy.com.