* Q1 loss C$0.12/shr vs C$0.20/shr year ago
* Helped by Energy Incentive Program
* Sees '09 production of 13,800-14,200 boe/day
* Shares down 5 pct (Recasts, adds analyst comments, detail, share movement)
By Isheeta Sanghi
BANGALORE, May 11 (Reuters) - Celtic Exploration CLT.TO posted a narrower first-quarter loss on Monday, helped by increased daily production.
The company posted a net loss of C$5.0 million, or 12 Canadian cents a share, compared with a loss of C$7.4 million or 20 Canadian cents a share, a year earlier.
Celtic said it drilled 15 wells during the quarter, resulting in 12 natural gas wells and one oil well.
The company increased average daily production by 35 percent to 13,219 barrels of oil equivalent (boe) per day, up from 9,762 boe per day in the first quarter of 2008.
BMO Capital Markets analyst Mark Leggett said the company continues to report good drilling success at the main Kaybob core area located in west-central Alberta, and will be building infrastructure in the area as well.
"That's just going to improve their abilities to control their cost structure and timing of their growth structure," Leggett said.
Revenue fell 28 percent to C$41.4 million as lower commodity prices more than offset higher production levels.
Under a new Energy Incentive Program (EIP) announced by the Alberta government on March 3, new wells drilled starting on April 1 are eligible for a royalty credit. In addition, new wells that began commercial production starting on April 1 are eligible for a royalty reduction.
As a result, Celtic rescheduled its drilling operations by deferring new drills to start on or after April 1, to take advantage of the benefits.
"Going forward it will help them a lot," Leggett said, adding that Celtic was one of the few companies that were able to maintain drilling activities at the same levels as last year, largely helped by its balance sheet.
"If you're able to stay active you can gain the most benefit from the EIP program," the analyst said.
Celtic expects production in 2009 to average between 13,800 and 14,200 boe per day, 25 percent oil and 75 percent gas. This represents an increase of 25 percent to 28 percent from last year's average production.
The analyst currently has an "outperform" rating on the stock with a C$18.25 price target.
The company's shares fell 5 percent to C$16.22 in morning trade on the Toronto Stock Exchange. The shares had gained 35 percent so far this year through last week. (Editing by Mike Miller)