(Adds stock movement, comments by CEO and president, details on effects of drop in prices)
Oct 29 (Reuters) - Oil and gas producer Hess Corp posted a better-than-expected quarterly profit on Wednesday as production jumped and costs fell in North Dakota's booming Bakken shale formation.
The company, which also produces oil in Norway, Ohio and the U.S. Gulf of Mexico, said it was watching oil prices closely and may change its operations if prices fall further, though no decision has been made.
The price of Brent crude has fallen about 21 percent in recent months, prompting concern that drilling could slow. Hess bases its budget on Brent prices around $100 per barrel, though the commodity traded at about $87 on Wednesday.
If prices fall too low, oil companies tend to stop drilling new wells and slow existing production in an effort to cut costs. Hess didn't announce any steps like that on Wednesday, but said it is watching the situation closely.
"We are reviewing our plans and actions we might take in a lower-price environment," Chief Executive Officer John Hess said on a conference call with investors.
Every $1 dip in the price per barrel of crude cuts corporate profit by $8 million, Hess said.
Net income surged to $1 billion, or $3.31 per share, in the third quarter from $420 million, or $1.23 per share, in the year-ago period.
Excluding recent asset sales and other one-time items, the company posted profit of $1.24 per share.
By that measure, analysts expected $1.07, according to Thomson Reuters I/B/E/S.
Oil production jumped to an average of 380,000 barrels of oil equivalent per day (boe/d) from 310,000 boe/d in the year-ago quarter.
Production in North Dakota, the second-largest oil producing state in the United States, jumped 21 percent to 86,000 boe/d.
Hess opened 59 Bakken wells in the third quarter, but still managed to slash production costs by 8 percent to $7.2 million per well, bucking an industry trend to increase spending per North Dakota well in an attempt to boost output.
Last month Continental Resources Inc, North Dakota's largest oil producer, said it would boost spending per well to $10 million as it uses much more sand, or proppant, to hydraulically fracture rock and extract oil, and combines several new fracking techniques.
Hess said it is comfortable with its current spending and believes its techniques are the best way to produce the most oil.
"We've tried some of these more expensive completion designs, but thus far none have proven to be economically superior to our methodology," Greg Hill, the Hess president, told investors.
Production in Libya, which has been marred by violence in recent years, is slowly returning, and Hess said production averaged 4,000 boe/d during the quarter.
Shares of Hess rose 1.7 percent to $83.31 in Wednesday trading.
(Reporting by Ernest Scheyder Editing by W Simon and JS Benkoe)