* Q3 profit ahead of estimates, production flat
* CEO see clarity on Middle East stake sale by year-end
* Shares largely unchanged, investors await asset sales
Oct 29 (Reuters) - Occidental Petroleum Corp's earnings jumped 15 percent in the third quarter, beating expectations due to cost cuts and higher prices for its products, the fourth-largest U.S. oil company said on Tuesday.
Analysts said the part of Occidental's business that transports and stores oil and gas accounted for much of the upside surprise, even as international output declined.
Occidental shares were down 10 cents at $97.44 in late morning trading on the New York Stock Exchange. The stock has risen by more than a quarter in value so far in 2013, lifted by Oxy's plans to sell off non-core assets.
"The big focus for Oxy shareholders remains the expected restructuring and shareholder returns and this quarterly result does not affect that outlook," Wells Fargo analysts said in a note to clients.
Chief Executive Steve Chazen said a decision on what to do with the California unit, which is deemed a drag on the rest of the company, would come after its current round of asset sales. He expected a sale of a minority stake in Oxy's Middle East business to be completed by the first quarter of next year.
"You've got to sign a lot of documents and the documents will probably fill a room," Chazen told analysts on a conference call. "I expect we'll have clarity as to the proceeds by the end of the year."
Third-quarter net profit was $1.58 billion, or $1.96 per share, up from $1.38 billion, or $1.69 per share, a year earlier. Net sales rose 8 percent to $6.45 billion. Adjusted profit was $1.97 per share, beating the average estimate of $1.90, according to Thomson Reuters I/B/E/S.
The Los Angeles-based company said its realized price for worldwide crude in the quarter increased 8 percent over a year ago to $103.95 per barrel, while domestic crude gained 13 percent to $104.30 and domestic gas prices jumped 32 percent.
Overall oil and gas production in the quarter grew only 1,000 barrels per day of oil equivalent (boe) versus last year to 767,000 boe, but domestic production grew by 7,000 boe.
Excluding the impact of insurgent activity in Colombia, Oxy expected overall fourth-quarter output to be about flat.
But Oxy flagged a 22 percent fall in U.S. drilling costs relative to 2012. As a result of the greater efficiency and easier permitting in California, Chazen said its home-state capital spending would rise by $500 million to $2.1 billion in 2014.