(Adds earnings comparison, stock, capital spending)
By Ernest Scheyder
WILLISTON, N.D., Jan 30 (Reuters) - Chevron Corp,the second-largest U.S. oil producer, reported ahigher-than-expected quarterly profit on Friday as sales ofchemicals, lubricants and other refined products helped offsetplunging crude prices.
That drop in crude prices, about 60 percent since June, haseroded margins across the oil industry and forced scores ofcompanies to slash spending budgets. Royal Dutch Shell,a so-called international oil company like Chevron, said onThursday it would cut its spending over the next three years by$15 billion.
Taking similar steps, Chevron executives slashed thecompany's 2015 capital budget by 13 percent to $35 billion.
"We enter 2015 with the financial strength to meet thechallenges of a volatile crude price environment and withsignificant efforts under way to manage to a lower coststructure," Chief Executive Officer John Watson said in astatement.
Indeed, the strength of the company's downstream operation,which sells those refined products, proved to be the main brightspot for Chevron this quarter, with profit in the divisionspiking nearly fourfold.
Earnings in Chevron's upstream unit, which finds andproduces oil and gas, dropped 45 percent.
In total, Chevron posted fourth-quarter net income of $3.47billion, or $1.85 per share, compared with $4.93 billion, or$2.57 per share, a year earlier.
Analysts on average had expected earnings of $1.63 pershare, according to Thomson Reuters I/B/E/S.
Foreign currency conversion charges dented earnings by $432million, Chevron said.
Production between the quarters held steady at 2.58 millionbarrels of oil equivalent per day.
Shares of the San Ramon, California-based company fell about1 percent to $102 in premarket trading on Friday. (Reporting by Ernest Scheyder; Editing by Franklin Paul andLisa Von Ahn)
