UPDATE 1-Warren Resources Q3 beats estimates

* Q3 shr $0.04 vs est. $0.00 * Rev more than halves

* Shares up 3 pct

Nov 4 (Reuters) - Independent oil and gas company Warren Resources Inc (WRES.O: Quote, Profile, Research) reported an 86 percent drop in quarterly profit but beat analysts' expectations, helped by lower expenses. For the third quarter, the company earned $2.2 million, or 4 cents a share, down from $15.8 million, or 27 cents a share, last year.

Oil and gas sales more than halved to $16.4 million, hurt by lower realized prices.

Analysts, on average, expected the company to break-even on a per share basis, excluding items, on revenue of $15.7 million, according to Thomson Reuters I/B/E/S.

For the quarter, operating expenses fell about 21 percent to $13.5 million, helped by decreased well service and equipment costs, decreased severance taxes and other lower production costs.

The company also said it is in full compliance with all covenants under its senior credit facility.

Shares of the company were up 3 percent at $2.31 Wednesday morning on the Nasdaq. (Reporting by Thyagaraju Adinarayan in Bangalore; Editing by Aradhana Aravindan)