* Province posts Q1 operating surplus on revenue gain
* Borrows less than expected
* Raises oil price forecast by $6.30/bbl to $74.51/bbl
* Boost estimate for GDP rise to 3.1 pct from 2.9 pct
CALGARY, Alberta, Aug 29 (Reuters) - The Canadian province of Alberta, home to most of the country's oil and gas production, said on Thursday it had a C$715 million ($680 million) operating surplus in its fiscal first quarter as revenues rose above expectations.
The province said operating revenue was C$9.9 billion, C$211 million above what it forecast in its March budget, while spending was C$9.2 billion, down C$113 million.
The provincial government, which has posted six-straight deficits, said in its budget earlier this year it would borrow C$4 billion to fund badly needed schools, roads and hospitals. However, fiscal first-quarter borrowing was C$494 million, C$304 million lower than projected, as it spent a total C$1.4 billion on capital items.
The unexpected rise in revenue came as Canadian oil prices improved after falling to close to half of world levels earlier this year. The government, which gets nearly a third of its revenue from the energy sector, said it now expects Canadian oil prices to average $74.51 per barrel over the 2013/2014 fiscal year, $6.30 above it's budget forecast.
It also boosted its estimate of economic growth in the province of 4 million to 3.1 percent from 2.9 percent.
The government also said it has so far spent C$704 million on relief efforts following record floods that swept through the province in June.