NEW YORK ( TheStreet) -- ConocoPhillips ( COP) reported a production decline in the first quarter from the year ago period, and said that both its exploration and production (E&P) and refining and marketing (R&M) businesses fell short of expectations, even as rising oil prices buoyed profits. The commentary from ConocoPhillips CEO James Mulva which accompanied the earnings expressed disappointment in the results. The company said higher commodity prices and global refining margins were the primary factors for the increase in earnings. ConocoPhillips shares were down 2% in early trading on Wednesday. ConocoPhillips earned $2.6 billion in the first quarter on an adjusted basis, a rise from $2.1 billion in the year ago period. Earnings per share of $1.82 were short of the Wall Street estimate of $1.97. On a non-adjusted basis, earnings were $3 billion, or $2.09 per share. ConocoPhillips has benefitted, like all oil companies, from rising oil prices and a recent surge in refinery margins as the spread between WTI crude and Brent crude widened. "While our financial results were much improved from a year ago, E&P production and R&M capacity utilization did not meet our targets," said ConocoPhillips CEO Jim Mulva in the earnings release. "The quarter was negatively impacted by approximately $200 million from unplanned downtime and from variable compensation expense related to prior-year performance." ConocoPhillips exploration and production adjusted earnings were higher than the year ago period, but primarily due to higher prices. The issue of replacing lost production has been highlighted as a key issue. All major oil companies have as a No. 1 priority replacing production over the long-term. On Wednesday, BP ( BP) reported replacement cost profit that slipped 2% year over year after having sold off more than $24 billion in assets in response to oil spill liabilities. ConocoPhillips production for the first quarter of 2011 was 1.7 million barrels of oil equivalent (BOE) per day, a decrease of about 125,000 BOE per day versus the same period in 2010.