* Targets 89-94 mmboe output in 2014
* Q2 production rose to 23.5 mmboe
* Sticks to 80 pct payout ratio for interim dividend
* Expects to book small loss on asset sales (Adds dividend, asset sales outlook)
SYDNEY, July 17 (Reuters) - Woodside Petroleum Ltd, Australia's largest independent oil and gas producer, reported an 18 percent rise in second-quarter production on Thursday and raised its output target slightly for 2014.
Woodside said it aims to produce between 89 and 94 million barrels of oil equivalent (mmboe) this year, up from an earlier target of 86-93 mmboe.
June quarter production rose to 23.5 mmboe, from 20.0 mmboe a year ago and 23 mmboe in the first quarter.
Revenue was $1.679 billion, up 25 percent on a year ago.
Some analysts and investors have raised questions about where the next phase of Woodside's growth will come from after it walked away from a deal to buy into Israel's massive Leviathan field and opted to spend $2.9 billion buying back its own shares from Royal Dutch Shell.
The buyback needs shareholder approval at a meeting on August 1. Assuming it is cleared, the company said it would pay out 80 percent of underlying profit for its first-half dividend, in line with the payout ratio if flagged a year ago.
Woodside, which recently announced two deals to buy U.S. LNG to help it supply Asian customers, says it has a strong enough balance sheet to pursue growth even after the buyback.
In its effort to build reserves and expand into frontier areas, it recently picked up exploration stakes in Tanzania and in deep water off Morocco.
Woodside warned on Thursday it would book a loss of $20 million to $40 million on the sale of oil and gas properties and exploration assets in the half year. (Reporting by Lincoln Feast and Sonali Paul; Editing by Paul Tait and Richard Pullin)