* Santos reports A$2.7 bln loss as impairments bite
* Confident net debt won't increase in 2016
* Seeks to collaborate with rivals to cut costs
* Shares fall as much as 8.8 pct (Adds comments from CEO, reserves cut)
By Sonali Paul
MELBOURNE, Feb 19 (Reuters) - Australian oil and gas producer Santos Ltd STO.AX , which rejected a A$7.1 billion takeover last year, slid to a loss in 2015, hit by hefty writedowns, and its new boss said he was working on a strategy to shore it up against weak oil prices.
Chief Executive Kevin Gallagher, who took the helm on Feb. 1, days after Santos's shares hit a 23-year low, said his top priority was to cut costs to survive the downturn.
"There's no question current oil prices present a significant challenge for the oil industry, for Santos and for its shareholders," Gallagher told analysts on a conference call in his first public comments since joining the company.
Santos has been slammed by collapsing oil prices that forced it to raise A$3 billion in a share sale in November to help cut debt taken on for its Gladstone liquefied natural gas (LNG) project, which started exporting in October.
While its credit rating is teetering one notch above junk status, executives said the share sale ensured it had a solid buffer and had no need to sell assets. The company expects net debt of A$6.5 billion will not increase in 2016.
To preserve cash, the company abandoned a policy of paying ever higher dividends and instead said it would pay out a minimum 40 percent of its underlying earnings from now on.
Gallagher said he wanted to find ways to save money by working with rivals, including competing LNG producers in Gladstone that have previously resisted opportunities to collaborate.
"What I suspect is there'll be a greater appetite in this current environment from all parties to pursue those and make things work," he said.
Santos reported a net loss of A$2.7 billion ($1.93 billion) for 2015, after booking A$2.8 billion in impairment charges.
Core profit before the charges fell 91 percent to A$50 million, well below analysts' forecasts of about A$94 million, according to Thomson Reuters I/B/E/S.
Santos cut its estimate of its commercial oil and gas reserves by a fourth, reflecting weaker oil prices, which sparked concern among investors and led to its shares falling as much as 8.8 percent on Friday to A$3.23.
The stock remains below the A$3.85 a share that investors, including Chinese private equity firm Hony Capital, paid in its share sale last November.
Hony, whose backers include Singapore's Temasek and Abu Dhabi Investment Authority, recently increased its stake to 11.6 percent but has not revealed its intentions. = 1.3980 Australian dollars)