UPDATE 1-Devon Energy Q3 profit lower but tops Street

* Q3 oil and gas output rise 6 pct

* Q3 EPS $1.10/shr vs. analysts' 90 cts/shr

HOUSTON Nov 4 (Reuters) - Devon Energy Corp (DVN.N) reported a steep slide in third-quarter earnings on Wednesday as lower crude oil and natural gas prices offset higher production and lower costs, but results surpassed expectations.

Devon, the third-largest U.S. independent oil and gas company by market value, had a profit of $499 million, or $1.12 per share, compared with $2.6 billion, or $5.88 per share, a year earlier.

Excluding one-time items, Devon reported a profit of $491 million, or $1.10 per share.

Analysts on average had expected Devon to report a profit of 90 cents per share, according to Thomson Reuters I/B/E/S.

Devon's oil and gas output in the quarter rose 6 percent to 61.9 million oil-equivalent barrels. (Reporting by Anna Driver, editing by Gerald E. McCormick)