UPDATE 1-Australia Origin underlying year profit up 20 pct

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PERTH Aug 28 (Reuters) - Origin Energy Ltd (ORG.AX), Australia's second-largest power retailer and a takeover target, posted a 19.7 percent rise in full-year underlying profit on Thursday, due to higher earnings from energy retailing and its oil and gas unit.

Origin, which is fending off a A$13.8 billion ($12 billion) takeover bid from Britain's BG Group Plc (BG.L), declared a final dividend of 13 Australian cents a share and reaffirmed a target of underlying earnings per share growth of between 10-15 percent a year.

Net profit before one-off items of A$443 million, above expectations of A$432.2 million in a poll of seven analysts polled by Reuters Estimates.

Reported net profit, which includes one-off items, rose 13 percent to A$516.7 million, Origin said in a statement.

Origin said record production, sales and revenues boosted earnings from its oil and gas exploration and production unit, while profit at its energy retail segment was largely lifted by a full year contribution from the Sun Retail business that was acquired last year.

"We expect this growth to continue in the current financial year, with a number of projects expected to make initial or significantly increased contributions to Origin's financial performance," Origin Chairman Kevin McCann said in the statement.

Increased coal-seam gas production, a full-year contribution from the Otway Gas project off Victoria state and initial contributions from its power stations would more than offset production declines in mature upstream assets, Origin said.

Origin, which holds the country's largest reserves of coal-seam gas, has rebuffed BG's A$15.50 per share offer as undervaluing its assets.

Origin has invited proposals as to how best exploit its coal-seam gas reserves in Queensland State, with options ranging from the sale of its gas tenements to partnership in a liquefied natural gas (LNG) export project.

Shares in Origin have doubled since the start of the year to Wednesday's close of A$16.01, largely lifted by BG's bid, while the broader S&P/ASX 200 Energy Index .AXEJ has risen about 15 percent in the same period. ($1=A$1.16) (Reporting by Fayen Wong)