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By Ernest Scheyder
May 1 (Reuters) - Oil and natural gas producer Chevron Corp reported a 43 percent drop in quarterly profit onFriday, though results beat analysts' expectations as cost cutsand robust refining margins helped offset the impact of tumblingoil prices.
The reliance on refining operations mirrored results atlarge, integrated rivals Exxon Mobil Corp and RoyalDutch Shell, as such companies tend to lean on theirrefining divisions for profit during times of cheap oil.
Oil prices have slumped more than 40 percentsince June amid a glut of global supply.
"The good thing about the quarter is that it's over," saidFadel Gheit, an oil analyst at Oppenheimer in New York. "Goingforward, costs will continue to go down and oil prices areslowly going up, so margins will improve."
Shares of San Ramon, California-based Chevron fell 1.4percent to $109.48 in morning trading.
The No. 2 U.S. oil company reported net income of $2.57billion, or $1.37 per share, down from $4.51 billion, or $2.36 ashare, a year earlier, but much better than analysts'expectations of 79 cents a share, according to Thomson ReutersI/B/E/S.
Chevron posted a loss in its United States oil productiondivision, a key indicator that the country is one of its highestcost areas.
Production grew 4 percent to 2.68 million barrels of oilequivalent per day, boosted largely by operations in the UnitedStates, Bangladesh and Argentina.
Earnings in the company's refining unit more than doubled to$1.42 billion, as a slump in oil prices of nearly 50 percentsince last June boosted margins.
Chevron continued slashing costs during the first quarter,reducing operating expenses by 9 percent.
"We're taking a number of deliberate actions to lower ourcost structure, and I expect these efforts to increasingly showthrough in our financial results as the year progresses," ChiefExecutive John Watson said in a statement.
The company is scheduled to hold a conference call withinvestors at 1500 GMT Friday. (Reporting by Ernest Scheyder; Editing by Bernadette Baum)
