Santos said on Thursday it has cut net debt by four per cent since the start of the second quarter, helped by higher oil prices and may revive dividends in August.
Second quarter production fell 3.4 per cent from a year ago to 14.2 million barrels of oil equivalent (mmboe), said Santos, which which in May rejected a $10.8 billion takeover by US-based investor Harbour Energy.
Santos said its board would consider a dividend declaration in August, which would be the first declaration since early 2016, reflecting a policy adopted late last month to target a payout of between 10 per cent and 30 per cent of annual free cash flow as ordinary dividends.
"Given the cyclical nature of the industry, the board will also consider additional returns to shareholders above the ordinary dividend when business conditions permit," the company said on Thursday.
Santos said its average realised oil price in the second quarter rose 48 per cent to $US78.60 per barrel over the same period a year earlier, helping quarterly revenue rise 15.2 per cent despite lower production.
The company in April narrowed its 2018 production forecast range to 55-58 mmboe from 55-60 mmboe after an earthquake in Papua New Guinea in February caused an outage at the Exxon Mobil-run PNG LNG operation in which it holds a minority stake.
Santos said in May that the offer from Harbour Energy, which would have been the world's biggest private equity oil and gas buyout deal, was "simply not compelling enough" compared to its own growth plans.
Santos shares have risen more than nine per cent this year, supported by a rise of about 9 per cent in Brent crude prices, and on Thursday closed 10 cents, or 1.7 per cent, higher at $6.06.