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Chevron Profit Slips

Earnings decline 9%, hurt by lower gas prices.


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reported a 9% decline in fourth-quarter earnings as lower gas prices in the U.S. cut into profits.

The oil and gas giant said its net income declined to $3.77 billion, or $1.74 a share, from $4.14 billion, or $1.86 a share, a year earlier. Analysts polled by Thomson Financial projected earnings of $1.73 a share.

Revenue declined to $47.75 billion from $53.79 billion.

"Fourth-quarter earnings benefited from an improvement in the operating performance of our oil and gas fields and refineries, especially in the United States," said Chairman and CEO Dave O'Reilly. "However, this benefit to earnings was more than offset by the effect of a sharp decline in U.S. natural gas prices from a year earlier."

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Earnings at Chevron's upstream business, which relates to oil exploration and production, totaled $2.91 billion, down $340 million from a year earlier.

Worldwide oil-equivalent production was 2.66 million barrels per day in the quarter, about the same as the corresponding 2005 period. The average price per barrel for crude oil and natural gas fell $1 in the U.S. to $51.

Downstream profits, tied to oil refining, climbed $150 million to $950 million, boosted by higher earnings from international operations.

Chevron's report comes a day after the world's largest oil company,

Exxon Mobil

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, posted a 4.3% decline in fourth-quarter earnings, though the giant's profit for 2006 reached $39.5 billion -- the largest annual profit ever in U.S. corporate history.