Chevron never bought into North America's natural gas boom the way Big Oil peers like Exxon did.
That decision appears to be paying off.
The San Ramon, Calif. energy giant reported Friday that profits increased 4.2 percent from January to March as oil sold for higher prices. Meanwhile a plunge in U.S. natural gas prices contributed to an 11 percent profit decline at Exxon. ConocoPhillips, another major U.S. natural gas producer, saw profits fall 3 percent.
Chevron's reliance on oil "turned out to be a really good decision," Argus Research analyst Phil Weiss said. "And it could serve them well. They have a lot of cash on hand."
New technologies set off a rush to explore the continent's vast shale gas deposits that eventually drew in the major oil companies. Exxon Mobil Corp. made a big splash in 2010 with a $35 billion acquisition of XTO Energy that made it America's largest natural gas producer overnight. Exxon now produces more natural gas than oil.
Royal Dutch Shell spent about $11 billion to acquire large tracts of natural gas-producing assets in North America.
Chevron's only major move in North American natural gas was a $4.3 billion deal last year to acquire Atlas Energy of the U.S. Oil still makes up more than two-thirds of Chevron's total production.
Chevron, the second-largest U.S. energy company behind Exxon, reported net income of $6.47 billion, or $3.27 per share, for the first quarter. That compares with $6.21 billion, or $3.09 per share, for the same part of 2011. Revenue increased less than 1 percent to $60.7 billion.
The results met Wall Street expectations.
From January to March, Chevron sold crude and other liquid hydrocarbons for an average of $102 per barrel in the U.S. and $110 per barrel internationally, up 15 and 16 percent, respectively. That boosted revenue even as overall production dropped 4.7 percent.
The major oil companies, including Chevron, are struggling with a slowdown in production. New fields are tougher to find and expensive to develop. And many of the best reserves are owned by foreign governments that reduce the amount of oil that companies can sell as prices rise.
Chevron also suffered a reduction to production in Brazil. The Brazilian government ordered Chevron to shut down operations at its offshore Frade field after an oil leak at one of its wells. Prosecutors are now seeking $11 billion in environmental damages and have filed criminal charges against executives from Chevron and rig owner Transocean Ltd.
Pat Yarrington, Chevron's chief financial officer, said in a conference call that production in the area will stay offline while the company conducts a "technical study" of the field's underlying geology.
"We will resume production in the Frade field only when we are completely satisfied we can restart production safely, and when we have obtained the full support of our partners in the Brazilian regulators," Yarrington said.
Profits at Chevron's refining business rose 29 percent, but mostly because it sold its Pembroke Refinery in the United Kingdom and other assets for $200 million.
Other oil majors had mixed results. French oil giant Total SA said income fell 7 percent in the first quarter. Royal Dutch Shell's quarterly profit increased 16 percent. Even with the North American acquisitions, the bulk of Shell's natural gas production is overseas, where prices are higher. Occidental Petroleum Corp.'s earnings rose slightly.
BP will report next week.
Chevron shares fell 2 cents to close at $106.20 Friday.