NEW YORK (Reuters) - Chevron Corp , the second-largest U.S. oil company, posted a 37 percent drop in quarterly profit, missing Wall Street forecasts, as steep losses at its refineries offset gains from higher oil prices and production.
Global refining margins have suffered in recent months as rising crude oil prices have driven up costs even as the weak economy has shrunk demand for gasoline and diesel fuel.
That refinery weakness overshadowed CHEVRON (CVX.NY)s steep 9 percent rise in oil and gas output during the quarter from new and expanded projects, which lifted its proved reserves by 1.10 billion barrels.
"It's like trying to go 40 miles per hour in a boat while dragging an anchor," said James Halloran, energy adviser at Financial America Securities in Cleveland.
Chevron's fourth-quarter net profit fell to $3.07 billion, or $1.53 per share, from $4.9 billion, or $2.44 per share, in the same quarter a year before.
That fell far short of analysts' average forecast of $1.70 per share, according to Thomson Reuters I/B/E/S, largely because of the steeper-than-expected $613 million loss from refining, marketing and transportation.
"Our operated refineries continued to run reliably during the fourth quarter. However, this operational success did not offset the effects of low margins on the sale of gasoline and other refined products due to weak demand and excess supply worldwide," Chairman and Chief Executive John Watson said in a statement.
Overall revenue rose nearly 12 percent to $48 billion.
Chevron said earlier in January that fourth-quarter profit would be hit by the slump in its refining business, which saw margins fall to the lowest levels of the year.
The company's business lost in the quarter versus a year-ago profit of $2.1 billion.
Earlier this week, ConocoPhillips
Exxon Mobil Corp
Production at Chevron was 2.78 million barrels of oil equivalent per day in the quarter, including about 135,000 barrels per day associated with the ramp-up at Agbami in Nigeria, which commenced operations in the third quarter of 2008, and expansion at Tengiz in Kazakhstan.
At Thursday's close, Chevron shares had shed 4.5 percent since the start of 2010, against a 3.6 percent decline in the Chicago Board Options Exchange index of oil companies <.OIX>.
Shares of Chevron rose 0.7 percent to $73.73 in early trade on Friday, slightly lagging the gain in Standard & Poor's Energy index <.GSPE>.
(Reporting by Matt Daily, editing by Dave Zimmerman)
