As the company released its fourth-quarter results on Wednesday, last year's $11 billion takeover bid by Harbour Energy appears to be losing steam.

Santos's total revenues rose by about 20 per cent year on year, reaching $US3.1 billion for 2017, due to a 25 per cent increase in average oil prices year on year.

While production reached the top end of its guidance, at 59.5 million barrels of oil equivalent, it was a 3 per cent dip from 2016's production rate of 61.6 million barrels of oil equivalent.

The fall was due to lower crude oil output levels.

Debt reduction has been a major focus for Santos.

"In 2017, we reduced net debt by 23 per cent to $2.7 billion, lowered our free cash flow breakeven price to $US32 per barrel and delivered Australia's lowest-cost onshore operations," Santos chief executive Kevin Gallagher said.

He told Fairfax Media this was a 32 per cent reduction from its previous breakeven price of $US47 a barrel last year.

"This reduction has allowed us to do a lot more and to drill more wells, and as the oil price increases we'll have a greater margin," he said.

"We're well on track to hit our net debt target of $US2 billion by the end of 2019, and if prices remain the way there are now we will hit this target early."

Mr Gallagher said this growth is due to its ???new operating model' which created a more disciplined operational framework, allowing it to reduce upstream unit costs by 5 per cent, to $US8.07 a barrel.

Capital expenditure was $US682 million, below guidance levels, but up 9 per cent year on year.

Santos also reported a 30 per cent increase in capital expenditure in the fourth quarter compared to the third quarter, rising from $US157 million to $US204 million.

Mr Gallagher said the company was now focusing on drilling in the Cooper Basin and growth opportunities in Papua New Guinea.

Wood Mackenzie's Saul Kavonic said while the results had been mostly supported by high commodity prices, Santos's chief executive had played a major role in turning the business around operationally.

"Santos is heavily leveraged to price movements, and at the end of the day hoping for price rises is not a strategy," he told Fairfax Media.

"Still, Kevin Gallagher deserves credit for turning around the company and beleaguered projects."

RBC Capital Markets analyst Ben Wilson said operations were largely in line with expectations, saying it was "a solid quarterly result".

Mr Wilson said Santos achieving free cash flow (FCF) of $US32 a barrel was an achievement, however, this will likely increase next year.

"We see FCF breakeven to be more in the range of $US35 to $US40 a barrel in CY18 due to increased capex and higher expected production costs in CY18," he said.

While the company has seen strong results, it may not be enough to reignite potential buyer interest.

Late last year Santos was the target of an $11 takeover bid by American investment house Harbour Energy.

In line with previous takeover proposals, Santos rejected the bid, forcing Harbour to come back with a higher offer, and the deal has remained in stasis since then time.

However strong performance coupled with higher than expected commodity prices may have put the company out of reach for Harbour.

A source familiar with the Harbour Energy approach said talks had slowed since last year.

"There's little activity at the moment," he said

While Harbour Energy chief executive Linda Cook was reportedly in Australia late last year, it is not known whether she has returned since that time.

The two groups already have a link, with Hock Goh serving as a director on the boards of both Santos and Harbour Energy.

A Santos spokeswoman confirmed a potential conflict of interest for Mr Goh at the time.

"Mr Goh did not participate in any deliberations relating to Harbour Energy's confidential, non-binding, conditional and indicative proposal in August (2017)," she told Fairfax Media.

"Hock Goh will take a leave of absence from the Santos board until Harbour Energy's position is definitively established."

Mr Goh is still on leave.

Yet, this has not taken it off the table for other prospective buyers.

"We still see Santos as a takeover target for any player looking to make their way into LNG or diversify in the space," Mr Kavonic told Fairfax Media.

He said it could be a target of interest for large national oil companies globally or emerging players who have an interest in LNG in Australia.

"There aren't many sub-$10 billion companies with assets like these in the world," he said.

Mr Gallagher told Fairfax Media there was nothing to say on a potential takeover.

"We said repeatedly if there were any further developments we would keep the market updated; as there have been no updates it means there have been no developments on that front," he said.

"If you've got good, strong core assets and deliver at competitive costs then it's not surprising you would see interest, and we take it as a compliment. Our focus remains on running the business well."

Santos opened trading at $5.30, up 2.3 per cent from the previous day's close, however, it quickly fell to a midday trading point of $5.26.