Chevron, the second-largest U.S. oil company, reported a slightly higher-than-expected quarterly profit as rising oil prices and refining margins made up for a decline in oil and gas production.

First-quarter profit rose to $6.47 billion, or $3.27 per share, from $6.21 billion, or $3.09 per share, a year earlier. That was just ahead of the $3.26 per share analysts had expected, according to the average on Thomson Reuters I/B/E/S. Revenue rose nearly 1%t to $60.7 billion.

Oil and gas production declined to 2.63 million barrels per day (bpd) on an oil-equivalent basis, from 2.76 million bpd a year before. Average benchmark oil prices rose about 12% over the same period.

Factors behind the decline in output included maintenance-related downtime and sales of assets, including some mostly natural gas producing interests in Alaska.

Chevron is spending heavily on production growth that will not kick in until 2014, with its 2012 capital budget of $32.7 billion up from $29.1 billion last year.

"New production is coming on as planned, and we continue to see strong customer interest in our Australia LNG projects that underpin our future growth," Chief Executive John Watson said in a statement.

Earnings from oil and gas production increased by 3% to $6.17 billion, while profits from Chevron's refining and chemicals division rose by 29% to $804 million.

Simmons & Co analysts said the Chevron earnings fell short of their expectations, mainly due to underperformance from the San Ramon, California-based company's international production, which was down 86,000 bpd at 1.98 million bpd in the quarter.

Chevron highlighted the February start-up at its Usan deepwater project off Nigeria, which ultimately could produce up to 180,000 bpd of crude oil.

Also off Nigeria, the company suffered an accident at the Funiwa well, where a natural gas explosion in January killed two contractors and caused a fire to burn for weeks.