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Chevron Profit Surges Past $5 Billion

Earnings beat estimates, though revenue declines.
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Updated from 9:12 a.m. EDT

Chevron's

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third-quarter earnings increased 40%, surpassing $5 billion, as a big jump in profits at its downstream operations helped offset a decline in revenue.

The oil and gas giant earned $5.02 billion, or $2.29 a share, up from $3.59 billion, or $1.64 a share, a year earlier. Analysts polled by Thomson First Call projected earnings of $2.03 a share.

Revenue dropped to $54.21 billion for the quarter from $54.46 billion last year. The top line was below one analyst's forecast of $60.77 billion.

Chevron's profits were boosted by improved margins at its downstream operations, where earnings more than doubled to $1.44 billion from $573 million last year. The downstream business -- which relates to oil refining and converting it into gasoline -- was helped by higher utilization of Chevron's U.S. refineries and improved refined-product margins, the company said.

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"Utilization rates for the company's refineries were much improved in this year's third quarter, with the U.S. fuels refinery network operating at close to its crude oil design capacity during the period," said Chairman and CEO Dave O'Reilly in a press release.

Earnings in the upstream business, which relates to oil exploration and production, climbed to $3.50 billion from $3.23 billion. The company had oil-equivalent production of 2.7 million barrels per day, up 152,000 barrels from a year earlier.

The company attributed the higher upstream income to the increase in production, a reduction of the expenses associated with the hurricanes in 2005, and higher oil prices. The average price for crude oil was $62 a barrel, up $9 a barrel in the U.S. from a year ago and up nearly $8 outside the U.S.

Chevron's earnings came a day after the world's largest publicly traded oil company,

Exxon Mobil

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, reported that its third-quarter income jumped to $10.49 billion, the second-largest quarterly profit in corporate history.