UPDATE 3-Anadarko boosts output target, spending

(Adds CEO comments on budget)

NEW YORK, March 25 (Reuters) - Independent oil and gas company Anadarko Petroleum Corp (APC.N: Quote, Profile, Research) on Tuesday raised its full-year 2008 production guidance and boosted its capital budget 9 percent.

The Houston-based company said it is increasing its capital budget to $4.9 billion to $5.1 billion, citing higher commodity prices as well as recent asset sales. In February, the company forecast capital spending of $4.5 billion to $4.7 billion.

That compares with capital spending of just under $4 billion last year.

The higher spending will help the company boost the midpoint of its full-year production guidance by 2 million barrels of oil equivalent (BOE).

The recent rally in energy prices that briefly lifted oil above $110 a barrel and U.S. natural gas above $10 per million British thermal units has given producers renewed incentive to spend heavily to boost their output.

"We've always known we could spend more money profitably," Chief Executive and Chairman Jim Hackett told Reuters.

"We just tried to start out with a budget that was restrained in the event that energy prices didn't last" at current high levels, he said.

Hackett said the increased spending would allow the company to expand its midstream infrastructure so it can boost production from its assets in the Rocky Mountain region and spend more on high-margin onshore properties.