Chevron Corp. said Friday that its profit slipped by 3.2 percent in the fourth quarter as its refineries struggled to pass on the higher cost of crude oil.
The San Ramon, Calif., oil giant on Friday reported net income of $5.12 billion, or $2.58 per share, in the final three months of 2011. That compares with $5.3 billion, or $2.64 per share, in the same part of 2010. Revenue increased 11.9 percent to $60 billion.
The net income fell short of Wall Street forecasts of $2.86 per share, according to FactSet. Shares dropped $3.26, or 3.1 percent, to $103.33 in morning trading.
Chevron, the second-largest U.S. oil company behind Exxon Mobil Corp., said that oil and natural gas production declined in the quarter due to a rash of slowdowns in its global operation. Production fell for the entire year as well, though the company says it should rebound slightly in 2012.
Production from Chevron wells dropped, from the U.S. to Kazakhstan. One of the biggest concerns for the company going forward is its operation in Brazil, where an offshore oil leak put Chevron in the crosshairs of the Brazilian government.
Regulators in Brazil forced Chevron to shut down one of its offshore production wells in December, and prosecutors are seeking $10.6 billion in damages. Chevron also has voluntarily suspended plans to further explore the country's oil-rich offshore region.
Profits from Chevron's exploration and production business increased, despite weaker production, as the company sold oil at higher prices. International natural gas prices also rose in the quarter.
Chevron's refining business struggled, however, as falling prices for retail gasoline and other fuels made it harder to pass along higher oil costs to customers. Chevron's U.S. refining operations lost $204 million from October to December, compared with a profit in the 2010 quarter. International refining profits fell by 46.4 percent.
For the full year Chevron earned $26.9 billion, or $13.44 per share, compared with $19 billion, or $9.48 per share in 2010. Annual revenue increased 23.3 percent to $253.7 billion.
Earlier in the week, ConocoPhillips reported a 66 percent increase in quarterly earnings, though much of that came from the sale of a pipeline and other assets. Occidental Petroleum Corp. reported a 35 percent jump in quarterly profits as it increased production and sold crude oil for higher prices.
ExxonMobil releases its fourth-quarter and annual financial results on Tuesday.