Chevron profit fell 7% in the second quarter as oil prices weakened, the No. 2 U.S. oil company said on Friday, and oil and gas output will fall short this year, but margins are strong for the smaller refining business.

Like larger rival ExxonMobil, Chevron did face weak prices for U.S. natural gas prices. But Chevron is far less reliant on it, with just 5% of its reserves in North American gas, compared with 18% for Exxon.

Chevron's second-quarter oil and gas production fell to 2.62 million barrels of oil equivalent per day from 2.69 million bpd a year earlier, and it surprised few investors by saying it would fall short of its 2012 target of 2.68 million bpd.

George Kirkland, the vice chairman who also runs Chevron's production arm, blamed that on a shutdown of its Frade field in Brazil after a spill there, third-quarter maintenance work at the 300,000-bpd Tengizchevroil plant in Kazakhstan, and a delay to the startup of its $10 billion Angola LNG project.

Kirkland now expects the first shipment of liquefied natural gas in September from Angola LNG, in which Chevron holds a 36.4% stake. The first exports had been previously expected in June.

"I thought it was an outstanding quarter," said Edward Jones analyst Brian Youngberg. "The downstream (refining) was the main reason for the beat."

Cheaper oil has helped refining by lowering the input costs. Gulf Coast margins have also been lifted by rising U.S. gasoline exports, which have run at a rate of 56,000 barrels per day this year -- double the average of the same period for the past five years, according to the Energy Information Administration.

Overall, Chevron said its second-quarter net income fell to $7.2 billion, or $3.66 per share, from $7.7 billion, or $3.85 per share, in the year-ago quarter. Analysts, on average, had forecast $3.24 per share, according to Thomson Reuters I/B/E/S.

The oil and gas production business had an 18% profit drop to $5.6 billion, while its downstream business saw profit jump 80% to $1.88 billion.

U.S. downstream operations saw profits rise 42%, and profits from the rest of the world more than doubled to $1.1 billion, helped by an asset sale in South Korea.

Chevron said earlier this month that industry benchmark margins on the Gulf Coast rose more than $4 per barrel to $24.89, while West Coast margins improved to $21.32 per barrel, their highest three-month average in four years.

Its largest refinery is in Mississippi, with 330,000 bpd of capacity, while its two California plants can together refine 518,000 bpd.

Profits at Exxon fell short of expectations on Thursday as oil and gas output sagged and its chemical unit faced weak margins.