The Spanish rider’s best time was 2m 00.275s as he finished tenth fastest on the combined leaderboard, 1.160s down on Repsol Honda's Marc Marquez.
Espargaro shaved one second off his previous best lap on the Suzuki at the Malaysian circuit.
He feels that he could have gone even quicker had a few technical issues been sorted out.
"We are satisfied with today's results, we ran a lot in hot conditions because yesterday we had some issues with those conditions with more than 50 laps," he said.
"I'm very, very happy with the improvements on the pace. I'm missing the fast lap because with the two soft tyres I made a couple of mistakes.
"The bike is very improved, we worked a lot on electronic set-up and to find a better configuration of the traction control, which gave good results and let us cut one second off our time," Espargaro added.
"We also worked on traction out of corners and it was important to verify the bike's behaviour in hot conditions because they are similar to race conditions.
"We still have a lot of work to do but I'm confident and aware that I'm in a factory team with a lot of people working hard to do the best job," he said.