UPDATE 1-Oil Search buys 23 pct stake in PNG gas fields for $900 mln

* Oil Search well positioned for LNG growth in PNG

* Oil Search wins key influence over LNG expansion plans

* PNG government to acquire 10 pct stake

* Abu Dhabi to end up as top shareholder in Oil Search

(Adds CEO, analyst comments)

By Sonali Paul

MELBOURNE, Feb 27 (Reuters) - Oil Search Ltd OSH.AX agreed on Thursday to acquire a 23 percent stake for $900 million in two Papua New Guinea gas fields that could feed a new liquefied natural gas (LNG) project in the country or supply gas to ExxonMobil's PNG LNG project.

The deal gives Oil Search a stake in the Elk and Antelope gas fields alongside a rival PNG firm, InterOil IOC.N , which brought in French giant Total SA TOTF.PA as a partner last December in a deal worth up to $3.6 billion. News Search ID:nL4N0JL0I5

Oil Search Managing Director Peter Botten highlighted that the company would now have a strong say in how Elk and Antelope, PNG's largest undeveloped gas fields, are brought on-stream and tied into Oil Search's other gas resources in PNG.

"We're extremely well positioned as a significant resources owner and significant infrastructure owner for the next phase of LNG growth," Botten told analysts on a conference call.

Analysts said it was paying a premium compared to what Total agreed to pay.

"You've obviously paid a premium to ensure you get access to this resource," Scott Ashton, an analyst at broker BBY, told Botten on the conference call.

Botten said that was based on the company's desire to get a seat at the table to decide how the resource would be developed and based on its bullish view on the potential resources yet to be discovered in the area around the fields.

The company will fund the acquisition by issuing 149 million new shares at A$8.20 a share to the Papua New Guinea government, allowing the government giving the government a strategic stake of about 10 percent in the company.

The government had been in the midst of trying to retrieve a 15 percent stake in the company for A$1.68 billion ($1.51 billion) from Abu Dhabi's International Petroleum Investment Co ahead of the Oil Search deal, but will now give up that stake.

"The PNG government is supportive of the development of all PNG hydrocarbon resources, including Elk/Antelope, in the earliest practical timeframe and we look forward to working with them and our joint venture partners to ensure the optimal outcome," Oil Search said.

The deal was announced as Papua New Guinea's top oil and gas producer reported a 17 percent rise in full year profit to A$205.7 million for 2013 from a year earlier. That compared with analysts' forecasts around A$201 million, according to Thomson Reuters I/B/E/S.

Oil Search is set for strong growth starting in the third quarter of 2014 when the $19 billion PNG liquefied natural gas project, 29 percent owned by Oil Search and operated by ExxonMobil , is set to start exporting.

Oil Search has forecast its production will double to between 12 and 15 million barrels of oil equivalent (mmboe) this year from 2013 as PNG LNG production begins.

Analysts are expecting its annual profit to quadruple over the next two years.

The company had been seen as a potential takeover target for bigger oil companies looking to get a foot in LNG expansion opportunities in Papua New Guinea, but any company eyeing Oil Search will now have to win support from the PNG government and would need to buy out Abu Dhabi's IPIC, which will be its top shareholder with a stake of around 13 percent.

PNG has lined up funds through UBS to fund its acquisition of Oil Search shares.

($1 = 1.1159 Australian dollars)

(Reporting by Sonali Paul; Editing by Matt Driskill)

((Sonali.Paul@thomsonreuters.com)(+61 3 9286 1419)(Reuters Messaging: sonali.paul.thomsonreuters.com@reuters.net))

Keywords: PAPUA OILSEARCH/ACQUISITION