* Q1 EPS $0.36 vs est $0.34
* Q1 production up 38 percent
* Says number of rigs has fallen to 8 from 22
* Raises 2009 production view to 87 bcf from 85 bcf
* Shares up 11 percent (Recasts; adds details, conference call comments, share movement)
BANGALORE, April 23 (Reuters) - CNX Gas Corp's CXG.N first-quarter profit beat expectations, helped by a 38 percent jump in production despite a drop in the number of rigs in operation, sending its shares up as much as 11 percent.
"The most productive rigs are still operating. We have 8 rigs running right now on the gas side compared to 22 rigs running a year ago. We are only drilling in the most valuable places that we see," Chief Executive Brett Harvey said on a conference call with analysts.
The number of rigs drilling for natural gas in the United States have fallen to their lowest level in more than six years, according to a recent report by oil services firm Baker Hughes Inc in Houston. [ID:nN17466220]
Tighter credit and a 70 percent slide in gas prices over the last nine months has forced many producers to scale back drilling operations.
But, CNX reported first-quarter production of 22 billion cubic feet (bcf), up from 15.9 bcf in the year-ago quarter. Average daily production also rose 40 percent to $244.8 million cubic feet (mmcf).
The company, which operates primarily in the Appalachian Basin, said it had also begun production at its fourth and fifth Marcellus shale wells.
This helped CNX raise its 2009 production outlook to 87 bcf from 85 bcf, a 13.5 percent increase over 2008 production of 76.6 bcf, Harvey said during the call.
CNX's conference call was held jointly with Consol Energy Inc (CNX.N). Consol, which is the biggest coal miner in eastern United States, owns 83.3 percent of CNX shares and also reported first-quarter results earlier in the day. [ID:nN23170572]
CNX Gas reported positive first-quarter results despite the weak economy's effect on spot gas pricing because of the company's "robust hedging program and higher production," CEO Harvey said.
For the quarter, CNX's profit rose 10 percent to $54.9 million, or 36 cents a share, compared with $49.9 million, or 33 cents a share, a year earlier.
Revenue at the company, which operates primarily in the Appalachian and Illinois basins, rose 11 percent to $178.4 million.
It said it will re-evaluate its 100 bcf production target for 2010 based on how 2009 progresses.
Shares of the natural gas explorer touched a high of $25.73, but later shed some of their gains to trade up $1.75 at $24.96 Thursday afternoon on the New York Stock Exchange.
For the alerts, double-click. [ID:nWNAB6845] (Reporting by Shradhha Sharma in Bangalore; Editing by Jarshad Kakkrakandy, Himani Sarkar)