(Adds background, share performance)
June 28 (Reuters) - Australia's Santos Ltd STO.AX said on Thursday it will resume its dividend payment policy earlier than expected, citing a favourable oil price cycle, and sending its shares to a more than one-month high.
The board of the country's No. 2 independent gas producer, which is set to report half-year results in August, approved a new dividend policy targeting a payout range of 10-30 percent of annual free cash flow.
Santos flagged in February that it may soon be able to revive dividend payments, which were scrapped in 2016 after the oil price crash cut its ability to service debts from the construction of the Gladstone liquefied natural gas (LNG) plant.
"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 in a statement.
Santos also said it was on track to achieve its net debt reduction target in the second half of 2018.
Two years of deep cost cuts and a rebound in oil and gas prices have helped Santos escape from its massive debt overhang, helping it to meet its debt cutting target about a year ahead of plan.
It has also helped the company fend off predators. Santos last month snubbed a $10.8 billion takeover offer from private equity-backed Harbour Energy.
Santos shares rose 2 percent in early trade in a slightly lower overall market to their highest since May 22.