Initial estimates put the well's reserves at 227 million barrels of oil equivalent (boe) and tests in three different reservoirs yielded a maximum output rate of 8,200 barrels per day (bpd), Petroliam Nasional Bhd (Petronas) said on Tuesday.
Petronas' exploration and production arm, Petronas Carigali Sdn Bhd, is the sole equity holder of the production-sharing contract (PSC) for the block. Wakid-1 is the second well drilled in the block. The first, Tambuku-1, yielded only minor gas discovery, Petronas said in a statement.
"Petronas Carigali plans to further appraise the discovery in the near future," it said, adding that the estimated reserves have upside potential.
The oil find comes four months after Petronas said it has discovered significant gas in the shallow waters off the coast of Borneo island.
Sabah has about 11 trillion cubic feet (tcf) of gas and 1.5 billion barrels of oil in its reserves, representing about 12 percent and 25 percent of Malaysia's gas and oil reserves respectively, said FACTS Global Energy analyst H.S. Yen.
Subramanya Bettadapura, director of energy & power systems at consultancy Frost & Sullivan Asia Pacific, said the East Malaysian state has potential gas reserves of 10 tcf and oil reserves of 2 billion barrels on a conservative estimate.
"The new discoveries indicate that there's a lot more oil out there," said Yen. "Since Petronas has a stake in all fields either through total equity (in the case of Wakid-1) or through its cemented position in all Malaysian PSCs, any oil/gas discovery is good for Petronas."
Crude oil output in Southeast Asia's second-biggest oil and gas producer is seen rising 3.3 percent next year, reversing a decline in 2011, and liquefied natural gas production may rise, the government said last month.
Oil production is expected to recover to 620,000 bpd, after an estimated 6 percent drop this year to 600,000 bpd, extending a 3.1 percent fall in 2010, it said.
Shamsul Azhar Abbas, who became Petronas chief executive last year, has led the producer to rejuvenate domestic fields and drill in deeper waters at home, while seeking to "high grade" its global operations by acquiring more valuable assets in Asia, West Africa and South America and exiting from less profitable ventures such as Algeria.
"Petronas is putting capital where they can get better returns for the risk involved," said Andrew Wong, associate director at Standard & Poor's in Singapore. "It recognizes that certain areas such as the Middle East and North Africa are a bit more volatile and present higher risks."
Last week, Royal Dutch Shell and Petronas agreed to bolster output at fields off Sarawak and Sabah, as Malaysia works on coaxing more oil out of matured wells to stem a natural decline via projects that may lead to an additional 90,000 to 100,000 bpd of crude.
The development of the existing fields of Baram Delta off Sarawak and North Sabah using enhanced oil recovery technology will increase the nation's reserves just as drilling costs taper off amid a global economic slowdown while oil prices stay high.
US crude is up 7.1 percent this year, poised for a third year of gains after climbing 15 percent in 2010 and 78 percent in 2009.
"Petronas is developing Labuan and Sabah region as the deepwater regional hub," said Bettadapura of Frost & Sullivan.
"As many as seven deepwater fields are being developed around this region. The Sabah-Sarawak Pipeline and the Sabah Oil & Gas Terminal are major investments in the region to exploit the hydrocarbon reserves in Sabah."
