UPDATE 2-Canadian Natural profit falls, but beats Street

* First-quarter EPS C$0.56 vs C$1.35

* Adjusted EPS C$1.34 vs C$1.61

* Revenue falls 45 pct to C$2.2 billion (Adds comments, details; in U.S. dollars unless noted)

CALGARY, Alberta, May 7 (Reuters) - Canadian Natural Resources Ltd (CNQ.TO) said on Thursday its first-quarter profit fell 58 percent as oil and gas prices sank, but the results beat expectations on strong heavy crude margins and price hedging.

Canadian Natural, which has started up its C$9.7 billion ($8.3 billion) Horizon oil sands project, earned C$305 million, or 56 Canadian cents a share, down from year-earlier C$727 million, or C$1.35 a share.

The results included unrealized impacts from risk management, stock-based compensation and foreign exchange movements.

Excluding such items, adjusted profit fell 17 percent to C$727 million, or C$1.34 a share, from C$872 million, or C$1.61 a share.

Canadian Natural had been expected to earn 86 Canadian cents a share, the average forecast of analysts surveyed by Reuters Estimates.

Cash flow, a glimpse into an oil company's ability to fund development, was C$1.5 billion, or C$2.80 a share, down 12 percent from C$1.7 billion, or C$3.19 a share, in the first quarter of 2008.