UPDATE 2-Surging oil prices boost Canadian Natural profit

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CALGARY, Alberta, May 8 (Reuters) - First-quarter profit at Canadian Natural Resources Ltd (CNQ.TO: Quote, Profile, Research) jumped 170 percent as surging oil prices more than made up for lower production, the country's No. 2 independent oil explorer said on Thursday.

Canadian Natural, which is expected to open the 110,000 barrel per day Horizon oil sands project in August, earned C$727 million ($715 million), or $1.35 a share, up from year-earlier C$269 million, or 50 Canadian cents a share.

Adjusted earnings from operations, excluding hedging costs and foreign exchange losses, jumped 40 percent to C$872 million, or C$1.61 a share, from C$621 million, or C$1.15 a share.

The operating result handily beat the C$1.18 per share average profit forecast by analysts polled by Reuters Estimates.

Canadian Natural's cash flow, an indicator of its ability to fund new projects, rose 6 percent to C$1.7 billion, or C$3.19 a share, from C$1.6 billion, or C$3.01 a share, in the first quarter of 2007.

Revenue was C$4 billion, up 27 percent.

Canadian Natural and its rivals have benefited from oil prices that averaged a record $97.82 in the quarter, up more than two-thirds from the year before. Crude has climbed even higher since, recently topping $124 a barrel.

The company has further benefited from a smaller discount for heavy-grade crude, which accounts for much of its Canadian output, as well as strong natural gas prices, it said.