Adds shares in paragraph 2 and analyst comment in 3, 5

By Nikita Maria Jino and Sherin Sunny

May 18 (Reuters) - Santos STO.AX, Australia's no.2 oil and gas producer, said on Monday it had achieved first oil from the first phase of its Pikka development project in the U.S. state of Alaska.

Shares of the Adelaide-headquartered company rose as much as 3.1% to A$8.12, their highest since April 13, while the broader S&P/ASX 200 benchmark index .AXJO was down 1.4% by 0450 GMT. The stock was also among the top gainers on the energy sub-index .AXEJ, which was up 1.9%.

"This is a positive announcement by Santos with the backdrop of strong oil prices and an increasing production outlook," said Craig Sidney, a senior investment adviser at Shaw and Partners.

The Pikka project is expected to reach a gross production plateau of 80,000 barrels of oil per day in the third quarter of fiscal 2026, with first sales revenue seen two to three months following first oil, Santos said in a statement.

The increase in production is meaningful and significantly positive, Sidney said.

Santos is the operator of the Pikka project and holds a 51% stake, while its partner Repsol REP.MC owns the remaining 49%.

Last month, the company stuck to its annual production and sales forecasts despite a temporary outage at a gas facility and weather-linked disruptions impacting first-quarter output.