By Nia Williams and Seher Dareen

(Reuters) -Canada's Imperial Oil reported a better-than-expected third-quarter profit on Friday, helped by higher production at its Kearl oil sands project in northern Alberta and reduced operating costs.

Earnings were down from the same quarter a year earlier, however, due to a drop in global oil prices on sluggish demand from top importer China and oversupply concerns. Integrated oil companies like Imperial have also been grappling with weakness in their refining businesses.

Imperial said 2024 capital spending was trending higher than its C$1.7 billion forecast, and was now expected to be C$1.8 billion-C$1.9 billion for the year.

The company's overall production averaged 447,000 barrels of oil equivalent per day (boepd) in the three months ending Sept. 30, up from 423,000 boepd a year earlier, with Kearl matching its record for third-quarter output.

"Our upstream once again saw record production and continued reduction in unit costs which more than offset the reduction in price realizations due to the softening of WTI prices," CEO Brad Corson told an earnings call.

Corson said the company had cut costs by more than $3 a barrel on a year-to-date basis versus 2023.

Imperial's shares were last down 3.9% on the Toronto Stock Exchange at C$99.80.

The company's refinery throughput volumes fell to 389,000 barrels per day (bpd) from 416,000 bpd, reflecting the impact of turnaround activities at the Nanticoke and Strathcona refineries. Refinery utilization in the third quarter fell to 90% from 96%.

Imperial earned C$2.33 ($1.68) per share, down from C$2.76 per share a year earlier but beating the average analyst estimate of C$2.04, according to data compiled by LSEG.

The company is part of the Pathways Alliance, a group of Canada's largest oil sands companies that are proposing a C$16-billion carbon capture and storage project to cut emissions.

Corson said Pathways put out a request for proposals for the 400-kilometre carbon pipeline in the third quarter, but discussions with government about final terms for fiscal support needed to be completed before any pipe is ordered.

($1 = 1.3909 Canadian dollars)

(Reporting by Seher Dareen in Bengaluru and Nia Williams in British Columbia; Editing by Shounak Dasgupta and Jane Merriman)