News: OSH UPDATE 1-Oil Search posts sharp HY profit decline, after PNG quake hits output

(Adds production guidance, costs)

Aug 21 (Reuters) - Australia's Oil Search Ltd (OSH) reported a near 40 percent fall in half-year profit on Tuesday, hurt by lower output and higher costs after an earthquake in Papua New Guinea halted production at a liquefied natural gas (LNG) project for six weeks.

Net profit fell to $79.2 million for the six months to June from $129.1 million last year. That still topped an estimate of $67 million by Royal Bank of Canada.

Oil Search is a partner in the PNG LNG project, run by ExxonMobil Corp XOM.N , where production was halted after a 7.5 magnitude earthquake hit the country's rugged highlands on Feb. 26, triggering landslides and flattening buildings. More than 145 people died.

Oil Search cut its full-year production guidance in April to 23-26 million barrels of oil equivalent (mmboe) and in July said production was heading towards the upper end of that guidance.

On Tuesday, it upgraded its 2018 output guidance to 24-26 mmboe, helped by a recovery in the performance of the PNG LNG plant, which resumed production in mid-April.

Total unit production costs for the half year to June 30 came in at $14.04 per barrel of oil equivalent (boe), up from $8.52/boe last year, due to weaker output, the company said.

Oil Search declared an interim dividend of $0.02 a share, down from $0.04 a year ago.