Revised proposal up 4.6 pct from previous offer Is conditional...

• Revised proposal up 4.6 pct from previous offer
• Is conditional on additional hedging of oil-linked output
• A successful bid would be biggest takeover of Aus oil gas firm

(Adds details on offer, recent oil prices)

May 21 (Reuters) - Australia's Santos Ltd (STO) on Monday said it had received an improved $10.84 billion offer from U.S.-based suitor Harbour Energy, a proposal that comes at a time when oil prices are at their highest since late 2014.

The new offer is equivalent to A$6.95 a share at an exchange rate of 75 U.S. cents to 1 Australian dollar, and is at an 11.2-percent premium to the last close of Santos shares on Friday.

A successful bid would mark the biggest takeover of an Australian oil and gas producer.

The revised proposal, up 4.6 percent from an earlier offer, is conditional on Santos undertaking additional hedging of oil-linked production in 2018 of about 30 percent and changes to hedging in 2019, Santos said in a statement.

Harbour said the offer price would be increased to a U.S. dollar amount equivalent to A$7.00 per share if Santos agreed to hedge 30 percent of oil-linked production in 2020.

The requirement for Adelaide-based Santos to step up its hedging is tied to securing funding for the deal, as Harbour will be taking on a lot of debt for the acquisition on top of Santos' existing net debt of around $2.5 billion. Hedging would ensure cash flows needed to pay down debt, protecting the company from oil price volatility.

Oil prices LCOc1 have risen about 17 percent since Santos received Harbour's $4.98 per share offer in April.

Independent directors of Santos will consider the revised Harbour proposal, the company said.