UPDATE 3-Key Venture s'holders oppose $2 bln Centrica bid

* Larry Kinch, Arclight oppose hostile Centrica bid

* Investors control 12.8 pct of Venture

* Kinch says shares worth over 10 pounds

* Venture shares up 5 pct

(Recasts lead, adds analysts, updates shares)

By Tom Bergin

LONDON, July 13 (Reuters) - Britain's largest gas retailer, Centrica (CNA.L), faced a setback in its battle to take over Venture Production (VPC.L) on Monday, when the North Sea gas producer's two largest investors backed management's rejection of the $2 billion bid.

U.S. investment firm ArcLight Capital Partners and one of Venture's founders, Larry Kinch, which between them control 12.8 percent of Venture's shares both agreed that Centrica's 845 pence a share offer undervalued Venture.

"I believe that Venture's shares have a value of at least 10 pounds per share," Kinch, who owns about 7.4 percent of the company, said in a statement.

Centrica, which said on Monday it had boosted its stake in Venture to 29.9 percent, is eager to boost its gas production so that it does not have to buy so much on the wholesale market, where prices are volatile.

Analysts agreed with the investors, saying that in valuing Venture's reserves at around $10/barrel, Centrica's offer was low compared with other North Sea deals done over the past year.

"Centrica's offer of 845p for the remainder of Venture is cheeky in our view," Richard Griffith, oil analyst at Evolution Securities, said in a research note.

Gordon Gray at Collins Stewart said he estimated a net asset value of 938 pence a share for Venture but that the value of the business to Centrica was much higher because it has lower financing costs than Venture.

Venture shares were up 5.1 percent at 825 pence at 0906 GMT while Centrica shares edged up 0.9 percent at 220-1/4, against a flat UK market and oil and gas sector.

SHOWDOWN