* Q3 EPS C$0.35 vs C$0.51
* Production averaged 96,000 bpd, down 17 pct
* Operating costs jump 44 pct to $39.99/bbl
CALGARY, Alberta, Oct 28 (Reuters) - Third-quarter profit at Canadian Oil Sands Trust COS_u.TO, which has the largest stake in Syncrude Canada Ltd, retreated 31 percent as oil production fell and costs climbed, it said on Thursday.
Canadian Oil Sands earned C$171 million ($168 million), or 35 Canadian cents a unit, down from a year-earlier C$247 million, or 51 Canadian cents, in the third-quarter of 2009.
The company had been expected to earn 21 Canadian cents a share, the average estimate among analysts polled by Thomson Reuters I/B/E/S.
Cash from operations, from which the trust pays distributions to unitholders, rose 55 percent to C$330 million, or 68 Canadian cents per unit, from C$213 million, or 44 Canadian cents a unit, as lower revenues and higher operating costs were more than offset by a reduction in non-cash working capital, the trust said.
Canadian Oil Sands has a 37 percent stake in Syncrude, one of Canada's largest oil sands miners and processors.
It said its results were hindered by lower production at the Syncrude Canada oil sands project, as planned and unplanned maintenance work cut output from the project's upgraders, which convert tarry bitumen stripped from the sands into refinery-ready synthetic crude.
In September, the trust cut its target for annual Syncrude production by 4.6 percent to 105 million barrels due to a longer than planned shutdown of one of the coker units at its upgrading plant.
Canadian Oil Sands said it expects the operation to run about 19 percent below capacity for the rest of the year as other equipment is down for maintenance.
During the third quarter, production averaged 96,000 barrels per day, down 17 percent from the same period in 2009.
Operating costs were C$39.99 a barrel, up 44 percent.
Canadian Oil Sands units rose 21 Canadian cents to C$26.69 on the Toronto Stock Exchange on Thursday.
Syncrude has struggled with negative publicity in the past week after paying a C$3 million fine for the 2008 deaths of 1,600 ducks on a toxic tailings pond. This week, at least 350 more waterfowl died in a similar incident.
$1=$1.02 Canadian Reporting by Scott Haggett; Editing by Rob Wilson