REUTERS

NEW YORK

CHEVRON, the secondlargest US oil company, reported a slightly higherthan- expected quarterly profit as rising oil prices and refining margins made up for a decline in oil and gas production.

The company’s shares were flat in early trading.

First-quarter profit rose to $6.47 billion, or $3.27 per share, from $6.21 billion, or $3.09 per share, a year earlier. That was just ahead of the $3.26 per share analysts had expected.

Revenue rose nearly 1 percent to $60.7 billion.

Revenue rose nearly 1 percent to $60.7 billion. The company is grappling with weighty legal and political challenges due to an offshore leak in Brazil and a deadly accident at a natural gas well off Nigeria, and Morningstar analyst Allen Good hoped to hear more about them on the conference call on Friday morning.

“Updates on Brazil and Nigeria should be useful, as well as any additional guidance on further downstream sales,” he said.

Chevron’s downstream, or refining and marketing, division has pulled out of more than two dozen countries in the past few years, and it said last month it was reviewing options for Egypt, Pakistan and its Caltex refining unit in Australia.

Oil and gas production declined to 2.63 million barrels per day (bpd) on an oil-equivalent basis, from 2.76 million bpd a year before. Average benchmark oil prices rose about 12 percent over the same period.

Factors behind the decline in output included maintenance-related downtime and sales of assets, including some mostly natural gas producing interests in Alaska.

Chevron is spending heavily on production growth that will not kick in until 2014, with its 2012 capital budget of $32.7 billion up from $29.1 billion last year.

“New production is coming on as planned, and we continue to see strong customer interest in our Australia LNG projects that underpin our future growth,” Chief Executive John Watson said in a statement.

Last week, Chevron signed a preliminary deal with Japan’s Chubu Electric Power Co to supply it with liquefied natural gas from its Wheatstone plant in Australia, a $29 billion project due to start up in 2016.

Earnings from oil and gas production increased by 3 percent to $6.17 billion, while profits from Chevron’s refining and chemicals division rose by 29 percent to $804 million.

Simmons analysts said the Chevron earnings fell short of their expectations, mainly due to underperformance from the San Ramon, California-based company’s international production, which was down 86,000 bpd at 1.98 million bpd in the quarter.

Chevron highlighted the February start-up at its Usan deepwater project off Nigeria, which ultimately could produce up to 180,000 bpd of crude oil.

Also off Nigeria, the company suffered an accident at the Funiwa well, where a natural gas explosion in January killed two contractors and caused a fire to burn for weeks.

In Brazil, Chevron and rig contractor Transocean are facing a huge lawsuit that followed an offshore oil leak at Chevron’s Frade field in November.