ChevronTexaco

(CVX) - Get Report

has struck it rich again.

The California-based supermajor posted a 22% surge in first-quarter operating profits as the soaring demand for gasoline strengthened refining margins. High prices for oil and natural gas continued to help results as well.

Overall, the oil giant saw its revenue grow by 8% to $33 billion and its net income, including special items, jump 37% to $2.6 billion, or $2.40 a share. The company's big exploration and production division continued to rake in most of the profits, even though it reported almost no growth from last year's robust levels.

The company's refining unit -- which ranks as the second-largest division -- posted phenomenal improvements, however. There, profits more than doubled to $640 million in the latest period.

"All of our major businesses contributed to an excellent first quarter," declared CEO Dave O'Reilly. "We've had a sustained period of very strong earnings and cash flows, and our outlook for the future remains positive."

ChevronTexaco's stock jumped 1.9% to $92.09 on the quarterly update.

The company easily toppled one analyst's expectations for the group in general. In an earnings preview issued earlier this month, Lehman Brothers analyst Paul Cheng predicted the sector would actually weather a slight earnings decline from last year's lofty levels. For the E&P business, he did expect "another gangbuster quarter driven by a continued red-hot oil market." But he forecast a "whopping 26%" drop in the sector's downstream, or refining, profits.

To be sure, ChevronTexaco weathered no such decline. Instead, the company significantly improved upon last year's weak results. Domestically, the company's downstream earnings nearly quadrupled to $276 million as the division benefited from increased margins, higher sales volumes, lower operating expenses and the absence of last year's refinery shutdowns. International downstream profits jumped 48% to $364 million on higher margins as well.

The company's smaller chemical division continued to be hurt by charges but still managed to narrow its losses. The division slashed its first-quarter losses by nearly two-thirds to end the period $63 million in the red.

On an operational basis, however, the chemicals division posted a huge jump in profits. Earnings rocketed from $3 million to $74 million as margins showed improvement.

Meanwhile, ChevronTexaco's biggest unit posted relatively flat first-quarter profits of $1.95 billion -- up less than 1% from a year ago -- and an actual decline in its domestic E&P business. In the U.S., E&P profits slid 15% to $860 million on a 10% drop in production, caused by "normal field declines and asset sales." But international E&P profits jumped 19% to $1.09 billion despite reduced production in troubled areas like Nigeria.

ChevronTexaco spent more than half of its $1.7 billion first-quarter budget on its international operations. The company has pledged to pursue lucrative opportunities outside the U.S.

In the meantime, ChevronTexaco continues to celebrate its progress as a supermajor so far.

"Besides benefiting from strong marketplace fundamentals in recent periods, we've also maintained our focus on operational excellence in daily operations and a disciplined approach toward investing for the long term," O'Reilly stated. "These are key enablers of increased profitability and improved returns on invested capital, which create value for our shareholders and further enhance our company's competitiveness."