UPDATE 1-Walter Energy Q3 profit beats estimates, shares rise

* Q3 EPS $0.44 vs est. of $0.28

* Q3 revenue falls 10 pct to $278.3 mln

* Sees met coal sales of 1.6-1.7 mln tons in Q4

* Sees Q4 met coal production of 1.4-1.5 mln tons

* Shares up 2 pct in after-market trade

Oct 20 (Reuters) - Walter Energy Inc (WLT.N) posted third-quarter earnings that handily topped analyst estimates, helped partly by a fall in production costs at one of its mines.

In the third-quarter, the company posted a net income of $23.8 million, or 44 cents a share, compared with $55 million, or 97 cents a share, a year ago.

The company said it earned 45 cents a share from continuing operations. It had spun off its homebuilding and finance arm earlier this year.

Total revenue for the quarter dropped 10 percent to $278.3 million.

Analysts, on average, were expecting earnings of 28 cents a share, before items, on revenue of $222.8 million, according to Thomson Reuters I/B/E/S.

The company said costs at its No. 7 mine fell to $62.48 a ton compared to $94.82 a ton in the prior-year period.

The coal miner said it expects to sell about 1.6 million to 1.7 million tons of metallurgical coal, or coking coal, in the fourth-quarter.

Fourth-quarter coking coal production is expected to range between 1.4 million and 1.5 million tons, with production costs expected to average $65 to $70 per ton.

Shares of the company rose 2 percent to $67 in trading after the bell. They closed at $65.87 Tuesday on the New York Stock Exchange. (Reporting by Antonita Madonna Devotta in Bangalore; Editing by Aradhana Aravindan)