* Profits up 71 percent to $2.6 billion
* Debt pile rises after Deepwater Horizon payments
* BP bought back $120 mln in shares(Adds detail, background)
By Ron Bousso
LONDON, May 1 (Reuters) - BP reported a 71 percentjump in first-quarter profit on Tuesday driven by higher oil andgas prices and increased production as it undergoes rapidgrowth.
At the same time, the London-based company saw its debt pilerise following $1.6 billion in payments to settle remaininglawsuits following the deadly 2010 Deepwater Horizon spill inthe Gulf of Mexico which has cost it more than $65 billion.
A nearly 25 percent rise in oil prices over the past yearhas lifted revenue for oil companies as investors shift theirfocus to how much cash the firms can generate following years ofdeep cost cuts.
BP's results follow a mixed picture from the sector withRoyal Dutch Shell and Exxon Mobil falling shortof forecasts while results from Chevron and France'sTotal were stronger than expected.
BP reported $2.6 billion in underlying replacement costprofit, its definition of net income, exceeding the $2.2 billionforecast by analysts in a company-provided survey.
That was up from $1.5 billion a year earlierand from $2.1 billion in the fourth quarter of 2017.
Operating cash flow excluding amounts relating to the Gulfof Mexico spill was $5.4 billion which was impacted by a $1.8billion increase in working capital. Including spill costs, cashflow was $3.6 billion, up from $2.1 billion a year earlier.
BP launched 7 oil and gas fields in 2017, a record year, andwas set to inaugurate 5 more projects this year including inEgypt, Azerbaijan and the UK North Sea which will help it boostproduction by 800,000 barrels per day (bpd) by 2020, most of itgas.
First-quarter production rose 6 percent to 3.7 millionbarrels per day.
"Moving through 2018, we're determined to keep deliveringour operational targets and maintaining capital discipline whilegrowing cash flow and returns," Chief Executive Officer BobDudley said in a statement.
BP last October announced plans to buy back $1.6 billion inshares per year, becoming the first European oil and gas majorto resume buybacks after a three-year downturn. The move wasaimed at offsetting the dilutive effect of scrip dividends,where shareholders can opt to receive dividends via cash orshares.
In the first quarter it bought back 18 million shares worth$120 million.
BP's gearing, the ratio between debt and BP's market value,stood at 28.1 percent at the end of the quarter, up from 27.4percent at the end of 2017.
Net debt at the end of March stood at $40 billion, upfrom$37.8 billion at the end of 2017.
The results were impacted by a $1.6 billion pre-tax paymentfor the settlement of the Deepwater Horizon spill. BP isexpected to pay $3 billion in 2018.
(Reporting by Ron Bousso; editing by Louise Heavens and JasonNeely)