By Archishma Iyer and Rajasik Mukherjee

(Reuters) - Woodside Energy, Australia's top independent gas producer, is on track to post a drop in interim earnings on Tuesday, with investors focusing on its deal-making strategy after the collapse of a $52 billion merger with Santos.

Perth-based Woodside is expected to report an underlying net profit after tax of $1.11 billion for the six months ended June, according to a Visible Alpha consensus cited by Jarden, compared with $1.90 billion reported a year ago.

"Woodside's portfolio is ex-growth and very highly concentrated in the yet-to-be-started Scarborough field. This is problematic and necessitates M&A, in our view," analysts from Citi said in a research note earlier this month.

The company is scheduled to report its first-half results before markets open on August 27.

Woodside recently received primary environmental approvals for its $12.5 billion Scarborough gas project in Western Australia, which is seen as a growth catalyst, with its first LNG cargo likely in 2026.

Despite some of Woodside's recent billion-dollar deals, including the acquisition of LNG developer Tellurian analysts are uncertain about the energy firm's future M&A plans to expand its LNG portfolio.

"The prevailing share price... along with our cautious stance on oil into 2025 and the uncertainty on the dividend and future M&A, we can't yet argue value," analysts at Citi added.

Woodside traded at a P/E of 20.2 on Monday based on the last 12 months of earnings, compared to the broader Australian market which was trading at a P/E of 17.9, according to LSEG data.

Lower demand from top consumer China, along with geopolitical tensions in the Middle East have sent Brent crude prices sharply lower from their 2022 highs.

Analysts at Jarden have lowered the estimate for Woodside's dividend payout ratio to 65% from 80% due to costs associated with its recent acquisitions.

Meanwhile, Santos reported a larger-than-expected drop in half-year profit to $654 million, citing lower realized prices and higher costs.

Santos, Australia's second-largest independent gas producer, has become a potential takeover target after failing to agree on a merger valuation with Woodside.

Santos' Chairman Kevin Gallagher has indicated a willingness to sell certain projects or the entire $16.3 billion company, as it has underperformed the broader energy index with a declining share price.