Shares in Spain's Repsol rise after solid start of the year

* Repsol (Amsterdam: RP6.AS - news) posts small profit in upstream, downstream up 4 pct

* Gas Natural (AMEX: EGAS - news) contribution drops 19 pct

* Shares (Berlin: DI6.BE - news) up 5 pct (Adds details, background)

By Julien Toyer and Jose Elías Rodríguez

MADRID, May 5 (Reuters) - Spanish oil company Repsol reported better than expected first-quarter net profit on Thursday helped by lower exploration and production costs and a solid performance at its refining business despite lower oil prices.

Shares in Europe's fifth biggest oil company by market value were up 5.46 percent at 11.39 euros at 0830 GMT, leading Spain's blue-chip index Ibex and outperforming European peers.

First (Other OTC: FSTC - news) -quarter average recurring net profit adjusted for one-off gains and inventory effects (CCS net profit) fell 38 percent to 572 million euros ($655 million) from the same period in 2015 when its results were boosted by a one-off financial gain.

But this was much higher than analyst forecasts for a net adjusted profit of 14 million to 445 million euros.

The main reason for the beat was a resilient exploration and production upstream division, which turned a net profit of 17 million euros compared with a 190 million-euro loss last year, thanks to lower investment costs and a big tax credit.

At its downstream refining division Repsol said net profit climbed 4.1 percent to 556 million euros, helped mainly by a higher gasoline demand and lower taxes in Spain.

The contribution from Repsol's 30 percent stake in Gas Natural was down 19 percent from last year to 99 million euros.

The company, which last year posted its first annual loss, has slashed its dividend and announced a 40 percent cut in exploration and production investment as well as assets sales in a bid to protect its investment grade credit rating.

Repsol said net debt, which jumped after the acquisition of Talisman Energy (EUREX: 23554.EX - news) , was 11.978 billion euros at the end of the quarter, stable from 11.934 billion euros at the end of last year.

Repsol said refining margins dropped to $6.3 per barrel in the first quarter from $7.3 in the fourth quarter of 2015.

Production was worth 714,000 barrels per day in the first three months of the year, up from 697,000 barrels per day in the October-December period and 355,000 a year earlier.

($1 = 0.8732 euros) (Editing by David Clarke)