SYDNEY, Feb 8 (Reuters) - A hedge fund pushing Santos to split off its liquefied natural gas (LNG) assets is resuming its campaign, as management and investors look for ways to revive a share price back in the doldrums after failed talks to merge with bigger rival Woodside.

Melbourne-based L1 Capital in October went public with a proposal to Santos management to demerge its LNG assets in Australia and Papua New Guinea to help improve the company's stock performance relative to energy peers.

Santos CEO Kevin Gallagher acknowledged the plan at an investor day the following month and said the company was assessing options to revive a "frustrating" share price.

With a Woodside deal now off the table, L1 plans to meet management later this month to push for a detailed study of the demerger plan, James Hawkins, head of the L1 Capital Catalyst fund told Reuters in an interview on Thursday.

"The jewels in the crown are the LNG assets," he said. "Today's share price tells you the market is not fairly valuing the current mix of Santos assets. Something structural needs to be done."

L1 Capital, which manages roughly A$6 billion ($3.9 billion), owns about A$400 million worth of Santos shares across two funds.

Other shareholders are wary about L1's core contention that the LNG assets are so undervalued today that a spin-off would attract a hefty premium. L1 said the combined value of the two separate companies could be roughly 40% higher than Thursday's close of A$7.34, which valued Santos at A$23.8 billion.

SPIN-OFF DOWNSIDES

There's no guarantee the market would reprice the LNG business so favourably, said Jason Beddow, managing director at Argo Investments, the ninth largest Santos shareholder, according to LSEG data.

And a demerger of the cash-generating LNG assets would make it harder for Santos' rump business to fund its Pikka oil project in Alaska and Dorado oil and gas project in Australia, he said.

"You could demerge and not get the re-rating," Beddow said. "With all these issues in Australia, the green tape, the red tape, the active super funds, I'm not sure you get it," he said, referring to hurdles Santos has faced on its Barossa gas project off northern Australia, now expected to cost up to $4.6 billion.

However, Hawkins argued "LNG CO" would be an attractive target for global majors like TotalEnergies or Exxon Mobil, which already partner with Santos in PNG, or others like BP.

"We feel confident about that assumption," he said. There's a large number of oil and gas majors with big LNG ambitions and there are a limited number of quality LNG assets globally like Santos'."

Casey McLean, a portfolio manager at Fidelity, the tenth largest shareholder, said a spin-off could result in a de-rating of Santos' remaining business which would partly offset any gain in a spun-off LNG arm.

The simpler and more likely option would be for Santos to sell some domestic assets like Dorado or the long-delayed Narrabri coal seam gas project to fund a buyback, McLean said.

Santos said on Wednesday it would continue its months-long review into ways to unlock value for shareholders.

It remains to be seen how CEO Gallagher's A$6 million bonus agreed in 2021, tied to him staying on until the end of 2025 and delivering on "major growth projects", colours the decision on what Santos does next. ($1 = 1.5342 Australian dollars) (Reporting by Lewis Jackson; Editing by Sonali Paul)