By Ernest Scheyder

(Reuters) - The U.S. energy industry on Wednesday reveled in Republican Donald Trump's presidential victory, expecting him to advocate for more oil and gas output and to cut red tape holding back billions of dollars of investment in new projects.

Shares of most oil and gas producers, energy construction firms and pipeline operators rose after the election results, while crude oil prices also settled higher.

Exxon Mobil Corp, the world's largest publicly traded oil producer, said it hoped Trump's administration would use "sound science" on future regulations.

Exxon has drawn fire from environmentalists who say the company misled investors and the public about the risks of climate change. Trump has previously called climate change a hoax.

"We intend to work constructively with the president-elect and his administration," said Exxon spokesman Alan Jeffers.

Exxon's shares were up about 1.0 percent, and shares of Chevron Corp rose about 0.3 percent.

The world's largest energy market saw an energy revolution under Democratic President Barack Obama's administration, as improved technology led to the rapid development of shale oil and gas reserves.

Even as shale expanded, the energy industry bemoaned environmental regulations that slowed development. Now, the industry expects Trump to roll back those restrictions. For one thing, Trump has promised to rescind the Environmental Protection Agency's Clean Water Rule, which the industry called an attempt to regulate fracking.

ConocoPhillips, the largest U.S. independent oil producer, said it would work with Trump to protect the environment but also to produce needed oil and gas.

"The American people have spoken and elected Mr. Trump as president and ConocoPhillips respects that choice," spokesman Daren Beaudo said.

While Trump has given few details on energy policy, he has surrounded himself with shale industry supporters and he backs development of infrastructure, including pipelines.

"We are looking forward to President Trump doing what he promised, which is to undo many of the onerous regulations that have plagued our industry throughout an Obama presidency," Harold Hamm, chief executive officer of oil producer Continental Resources Inc, said in a statement.

Trump has considered making Hamm the first energy secretary from the oil and gas industry since the position was created in 1977.

Trump's promise to create jobs and boost manufacturing could bode well for delayed energy projects across the United States, including the Dakota Access Pipeline, analysts said.

SHARE MOVEMENT

Shale oil-focused shares outpaced the wider oil and gas sector gains on Wednesday. Oasis Petroleum and Whiting Petroleum, spiked about 5 percent, a sign of optimism that the federal government would not impose more restrictions on fracking, and leave such regulation to individual states.

Shares of oil construction companies also jumped, including KBR Inc , Chicago Bridge & Iron and Jacobs Engineering Group .

Pipeline companies rallied, as the Trump victory gave a fillip to an industry whose growth prospects have been hit by environmental and native group activism as well as the steep two-year oil price slump.

TransCanada Corp, which wants to build the Keystone XL pipeline, rose more than 1 percent. During the election campaign, Trump said he would approve the pipeline if elected.

The Trump administration will not be able to change bearish oil fundamentals of oversupply and lagging demand. A rise in U.S. oil output could further pressure crude prices that remain around half of levels just over two years ago.

The energy stock rally on Wednesday "has little to do with fundamentals and leaves us more incrementally concerned than bullish," said Tim Rezvan, an oil industry analyst with Mizuho Securities USA.

The Organization of the Petroleum Exporting Countries meets to negotiate output cuts, and the election result could influence OPEC's meeting.

A Trump administration was not expected to oppose drilling on public lands and may be interested in advancing coal leases on public lands, with advice coming from the industry, said Scott Segal, co-head of the federal government relations practice at Bracewell LLP.

"I believe this administration will rely heavily on corporate America to understand the issues," Segal said.

In North Dakota, the No. 2 oil producing state, Trump's victory was seen as a boon for energy companies.

"Trump is bullish on the economy. He's bullish on energy. He's got the wherewithal to make it all happen," said Ron Ness, head of the North Dakota Petroleum Council trade group.

"This is a day of tremendous optimism for the energy industry."

(Reporting by Ernest Scheyder; Additional reporting by Jessica Resnick-Ault and Swetha Gopinath; Editing by Simon Webb, Grant McCool and David Gregorio)