* Underlying profit doubles to $217 mln, beats RBC forecast
* On track to cut net debt to below $2 bln this year
* Santos shares jump 12 pct to 4-1/2 year high
* Analysts say Quadrant acquisition price looks good (Adds comment from CEO, investor, analyst)
MELBOURNE, Aug 23 (Reuters) - Santos Ltd, Australia's No.2 independent gas producer, on Thursday reported a near doubling in half-year profit and revived its dividend, just a day after locking in near-term growth with an over $2 billion acquisition.
Investors said the results and deal to buy Quadrant Energy in the state of Western Australia vindicated the firm's decision earlier this year to reject a $10.8 billion takeover bid from private equity-backed Harbour Energy.
Santos shares jumped as much as 12 percent to a 4-1/2 year high of A$7.00 on Thursday, the same price Harbour had offered for the firm and a level investors had not expected to be reached again so soon after that bid fell through.
"After rejecting Harbour Energy's bid earlier this year, Santos's management has had a point to prove to its shareholders that the company had emerged from survival mode and is ready to grow again. This deal certainly does that," said Wood Mackenzie analyst Daniel Toleman.
JPMorgan likened the acquisition to pulling a "rabbit out of a hat", while several analysts pointed to strong growth prospects with Quadrant's Dorado oil find off Western Australia.
"The synergies they can get out of full ownership of Quadrant, debt funding the whole thing, it's a pretty accretive deal for them. I didn't expect it to happen," said Andy Forster, a portfolio manager at Argo Investments, Santos's ninth-largest shareholder.
The company reported that underlying profit for the half-year ended June 30 rose to $217 million from $109 million a year earlier, beating a Royal Bank of Canada forecast of $189 million. That came even as first-half output was hit by an outage at the Papua New Guinea LNG (liquefied natural gas) plant after an earthquake.
Santos declared an interim dividend of $0.035 a share.
It suspended dividends in 2016, diverting cash to pay down debt which had peaked for the construction of its Gladstone LNG project just as oil prices collapsed.
It has since cut net debt to $2.4 billion and said it was on course to get it below $2 billion before the end of this year, a year ahead of plan, thanks to sharp cost-cutting and a rebound in oil and gas prices.
"We're fully funded to execute our growth programme and to be able to pay a sustainable dividend going forward," Santos Chief Executive Kevin Gallagher told Reuters in an interview.
The Quadrant acquisition, which Gallagher said the company had been looking at for around a year, is expected to boost the company's free cash flow by around 17 percent in 2019, assuming oil prices of $65 a barrel.
Santos said the cash generated from Quadrant, the biggest gas supplier to the domestic market in Western Australia, will help fund expansions in northern Australia and Papua New Guinea, as well as servicing the $1.2 billion in debt it is taking on for the deal.
"What it does do is it gives us more choice. Now we have really good growth opportunities in all of our core assets," Gallagher said.
The company's weak spot, the Gladstone LNG project, aims to reach output of 6 million tonnes a year by the end of 2019, four years after opening. Gallagher gave no estimate on when the project would hit its capacity of 7.8 million tonnes.
Santos still expects 2018 production of 55-58 million barrels of oil equivalent (mmboe) on growing output from its Cooper Basin assets, and maintained its sales volume guidance of 72-76 mmboe.
(Reporting by Sonali Paul Additional reporting by Susan Mathew in Bengaluru Editing by Darren Schuettler and Joseph Radford)