UPDATE 2-Oil Search sees potential boost to resource in Pikka project, shares rise

* Approves progress of Pikka project to preliminary work

* An independent review shows increase in contingent resource Looking to sell up to of 15% stake in Pikka, nearby leases (Rewrites throughout, adds rise in contingent resource, background on project plans)

Dec 18 (Reuters) - Australia-listed Oil Search said an assessment showed there were higher chances of drilling more oil from its Pikka project in Alaska than was initially expected, sending its shares up 3.8%.

An independent review by a resource specialist showed that the estimated amount of oil from the project was 728 million barrels, a 46% rise from the initial assumption of 500 million barrels at the time of purchasing a stake, Oil Search said on Wednesday.

The company had flagged an upside of up to 1 billion barrels while buying a 25.5% stake in 2017, which it raised to 51% in June. Spanish energy firm Repsol SA holds the remaining stake.

The bigger stake and a significant increase in the so called gross contingent oil resources has led to a jump in the company’s overall estimated amount of oil and condensates in the Alaska project to 371 million barrels from 127 million barrels.

Oil Search has said in the past that the Nanushuk field, situated within the Pikka unit, is one of the largest conventional onshore oil discoveries made in the United States in the past 30 years.

It said on Wednesday the engineering work at Pikka will start in early 2020 so as to start early production in 2022.

To fund the project, the company said it was looking to sell up to 15% of its 51% stake in the Pikka project and nearby exploration leases, which it expects to complete mid-2020.

A final investment decision for the Pikka field is now expected in the third quarter of fiscal 2020, the company said.

Shares of the company recorded their biggest intraday percentage gain in three months and were trading at A$7.590, while the broader index was up 0.2% at 0427 GMT. (Reporting by Sameer Manekar and Rashmi Ashok in Bengaluru; Editing by Chris Reese and Arun Koyyur)