UPDATE 2-KBR profit slips but tops Wall St view

* Q3 EPS 45 cents per share vs Wall St view of 41 cents

* Revenue down 6 pct to $2.84 bln vs $2.92 bln estimate

* Shares down 3.6 pct (Adds comments from conference call, share price)

By Braden Reddall

SAN FRANCISCO, Oct 29 (Reuters) - U.S. engineering and construction company KBR Inc (KBR.N) posted a 14 percent drop in quarterly profit on Thursday, as energy producers reined in spending on projects.

The profit topped Wall Street forecasts, but KBR's third-quarter revenue fell short of what analysts had expected, and its shares fell 3.6 percent.

The company took a $25 million charge related to problems at three liquefied natural gas (LNG) projects that included equipment failures and schedule delays, though Chief Executive Bill Utt did not anticipate any further impact on its earnings.

"Despite the charges taken this quarter, all of KBR's current LNG projects remain profitable," Utt told analysts on a conference call.

Third-quarter net profit fell to $73 million, or 45 cents per share, from $85 million, or 51 cents per share, in the same quarter a year ago. Revenue fell 6 percent to $2.84 billion.

Analysts had expected 41 cents per share of earnings on revenue of $2.92 billion, according to Thomson Reuters I/B/E/S.

The company generated nearly half its operating income and revenue from its government and infrastructure unit, which includes military services.

Volumes for U.S. military services fell about 15 percent in the third-quarter from the quarter before, and Utt said he expects a 5 percent quarter-to-quarter decline in the fourth.

In the next month or so, Utt anticipates a U.S. government decision on an award for one new Iraq contract as well as a formal proposal for another, and said the transition to new Iraq contracts would be done by the third quarter of 2010.

He said KBR's expiring Afghanistan contract will end next March, though the transition will push into the summer. KBR will release more details on 2010 plans in December, he said.

KBR's overall backlog of work grew to $13.5 billion at the end of the quarter from $12.3 billion three months before.

Last month, a KBR joint venture won an estimated A$2.7 billion ($2.5 billion) engineering and procurement contract for Chevron Corp's (CVX.N) huge Gorgon LNG project in Australia, after handling front-end design work for it. [ID:nSYD478497]

KBR will perform about half the work related to Gorgon. Utt said he expects the rest of the company's backlog to remain fairly steady over the next few quarters and said he feels it could command higher margins as volumes grow.

Shares of the Houston-based company fell 3.6 percent to $20.45 in afternoon trading on the New York Stock Exchange. (Reporting by Braden Reddall in San Francisco and Matt Daily in New York; Editing by Derek Caney and Gerald E. McCormick)