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Chevron Quarterly Profits Fall On Lower Natural Gas Prices

Chevron said fourth-quarter profit dropped by 9% amid lower natural gas prices, but the nation's second largest oil company still ended up with its third consecutive year of record earnings.

The San Ramon-based company said net income in the quarter dropped to $3.77 billion, or $1.74 a share, from $4.14 billion, or $1.86 a share, in 2005.

On average, analysts polled by Thomson Financial were expecting Chevron to earn $1.73 a share.

Revenue for the period totaled $47.7 billion, down 11% from $53.8 billion in the previous year.

While the oil company made enough to post its third consecutive year of record earnings, fourth-quarter results marked Chevron's first quarterly profit decline in more than a year.

Like its industry peers, Chevron has been recently stung by a steady decline in crude oil prices, which have plunged more than $20 per barrel from their peak reached last summer.

But lower natural gas prices hurt Chevron even more. The company said its average price for natural gas sold in the U.S. plunged 42% during the fourth quarter to $5.90 per thousand cubic square feet. Natural gas prices in 2005 had soared after damage in the Gulf of Mexico caused by Hurricanes Katrina and Rita created supply shortages.

Chevron's fourth-quarter profit would have been squeezed more if it hadn't benefited from the weak dollar, which boosted its earnings internationally.

The company's division that refines oil and sells gasoline earned $611 million outside the U.S. during the fourth quarter, a 44% increase from $423 million in 2005.

The same refining and marketing division didn't fare as well in the U.S., where Chevron's profit declined 11% to $343 million.

Earlier this month, Chevron warned that a decline in realized crude oil prices, lower production and weaker profit from its refining business would hurt its fourth-quarter results.

For the full year, Chevron earned $17.1 billion to easily exceed its previous record income of $14.1 billion set in 2005. Chevron has earned more than $44 billion during the past three years, a stretch of unprecedented prosperity for the industry, much to the dismay of many motorists and lawmakers.

Chevron's earnings success during the past three years has helped boost its market value by about $70 billion, or 75%.

While the oil company made enough to post its third consecutive year of record earnings, fourth-quarter results marked Chevron's first quarterly profit decline in more than a year.

Chevron will hold a conference call and webcast to discuss the results at 11 am New York time.

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