(Recasts to correct development spending was adjusted up, not down)
By Karolin Schaps
LONDON, May 13 (Reuters) - Premier Oil produced less oil and gas in the first quarter of the year, but its output of 60,200 barrels of oil equivalent per day (boepd) was above guidance, sending its shares higher on Wednesday.
The London-listed firm, whose operations stretch from the Falkland Islands to Indonesia, saw first-quarter production fall 8.5 percent year on year. That drop reflected an oilfield sale in the North Sea and some natural decline in output across its producing fields.
The result was above levels expected on a full-year production target of 55,000 boepd, analysts said, lifting its shares 3.3 percent by 0746 GMT.
"Production ... is around 9 percent above 2015 guidance ... as operational uptime continues to support stronger than anticipated volumes, particularly in Vietnam," said analysts at Deutsche Bank.
The oil firm revised its development spending up by $50 million to $750 million, bringing its total capital expenditure for 2015 up to $970 million.
Its exploration budget remains $220 million.
Premier Oil's main frontier exploration work is focused on the Falkland Islands, where oil drilling remains controversial due to a sovereignty dispute between Britain and Argentina.
The South American country has filed a domestic lawsuit against the oil drillers active around the islands, saying their work was illegal.
Undeterred, Premier Oil and its partners have drilled the first of a series of oil wells as part of their 2015 campaign in the Falklands, with results due by the end of the month.
Much of Premier Oil's valuation depends on successful oil production at its Sea Lion field in the Falkland Islands which it said could produce as much as 160 million barrels of oil.
Last year, Premier Oil scaled back the initial phase of the project to below $2 billion amid tighter spending on the back of weak crude prices. The company said on Wednesday it planned to make a final investment decision on the project in 2016.
"Our focus remains on delivering our committed projects and managing our balance sheet while maintaining optionality in the portfolio for future growth as the oil price recovers," Chief Executive Tony Durrant said.
Weak crude prices have driven oil companies across the globe to sell forward a larger amount of future oil production to shield themselves against a further decline.
Premier Oil said it had sold 5.6 million barrels of 2015 production at an average price of $97.8 per barrel and 3.5 million barrels at $68.7 per barrel of its 2016 forward output. (Editing by Jason Neely and Mark Potter)