* Q2 EPS C$0.71 vs C$0.50
* Sales volumes down 13 percent due to upgrader problems
* Full year output target remains at 110 mln bbls (Adds details on production problems)
CALGARY, Alberta, July 26 (Reuters) - Canadian Oil Sands Ltd COS.TO, which has the largest stake in the Syncrude Canada oil sands project, said on Tuesday its profit jumped 42 percent in the second quarter as higher oil prices offset a drop in output due to mechanical problems.
Canadian Oil Sands earned C$346 million ($368 million), or 71 Canadian cents a share, up from year-earlier C$244 million, or 50 Canadian cents a share.
That was slightly below analysts' average estimate of 73 Canadian cents a share, according to Thomson Reuters I/B/E/S.
Cash flow, a glimpse into the company's ability to find operations, rose 43 percent to C$544 million, or C$1.12 a share, from C$381 million, or 79 Canadian cents a share..
Canadian Oil Sands, which has a 37 percent interest in the sprawling Syncrude development north of Fort McMurray, Alberta, said its results were helped by higher overall oil prices, although production dropped and operating expenses rose.
Its share of Syncrude sales volumes in the quarter averaged 103,000 barrels a day, down 13 percent due to unplanned outages of Syncrude's vacuum distillation unit and LC Finer, part of the upgrading operations which turn the bitumen from the oil sands into refinery-ready light oil.
In total, Syncrude produced 281,000 barrels a day, well below its 350,000 bpd capacity.
The problems with the two pieces of equipment have been fixed and the company will provide production numbers for July next week, Canadian Oil Sands spokeswoman Alison Trollope said.
The unplanned upgrader outages have lifted cash prices in recent weeks for the synthetic crude that is processed from the Alberta oil sands, trade sources have said.
Canadian Oil Sands' averaged realize price during the second quarter was C$111 a barrel, up 42 percent from the same period a year earlier, the company said.
Full-year output for Syncrude is still expected to total 110 million barrels, the company said.
In the quarter, operating costs were C$37.07 a barrel, compared with C$30.93 a year earlier.
Canadian Oil Sands shares fell 69 Canadian cents, or 2.4 percent, to C$27.57 the Toronto Stock Exchange. They are up 4 percent this year.
$1=$0.94 Canadian Reporting by Jeffrey Jones; editing by Rob Wilson