* Merger ratio undervalues Oil Search, expert says

* Expert backs deal despite valuation concerns

* Acting CEO says most shareholders see deal's benefits

MELBOURNE, Nov 11 (Reuters) - Oil Search shareholders are set to vote on Dec. 7 on a merger with Santos Ltd after gaining approval from a Papua New Guinea court and a mixed endorsement from an independent expert.

If it goes ahead, the A$8.8 billion ($6.5 billion) takeover of Oil Search would create a global top 20 oil and gas company and make Santos the largest shareholder in Papua New Guinea's biggest resource project, the PNG LNG project, run by Exxon Mobil Corp.

Oil Search's appointed independent expert firm, Grant Samuel, said the merger was in the best interest of Oil Search shareholders as it would boost funding for its $3 billion Pikka oil project in Alaska and improve gas development prospects in Papua New Guinea.

It said Santos' offer, which will give Oil Search shareholders a 38.5% stake in the merged group, did not fully reflect Oil Search's underlying value, which it said was worth 43%-44% of the total estimated value of the merged group.

"There is clearly a risk that the funding and other strategic benefits do not fully compensate shareholders for this dilution," Grant Samuel said in a report attached to the merger document going to shareholders.

It concluded nevertheless that Oil Search shareholders were likely to be better off if the deal went ahead, given growing funding constraints facing the industry in the drive away from fossil fuels.

Oil Search acting chief executive Peter Fredericson defended the merger ratio, saying it took into account relative contributions from earnings, reserves and production along with the strategic benefits, such as much better access to capital markets for the enlarged group.

"At the end of the day there are going to be one or two out there who are going to say it's not enough in the deal that we've got, but the majority of shareholders we've spoken to see the strategic benefit of putting these two businesses together," Fredericson told Reuters.

Based on Santos' closing share price of A$6.78 on Thursday, its offer valued Oil Search at A$4.25 a share, slightly above Oil Search's close, indicating investors expect the deal to go ahead.

($1 = 1.3563 Australian dollars) (Reporting by Sonali Paul; Additional reporting by Anushka Trivedi in Bengaluru; Editing by Ramakrishnan M, Sherry Jacob-Phillips and Gerry Doyle)