ChevronTexaco Corp. (CVX), the No. 2 U.S. oil company, on Friday said quarterly profit nearly doubled, driven higher by record crude oil prices and soaring refining margins.

The results were well above Wall Street forecasts, propelled by a strong performance at its refining and marketing operations. But like its peers, the company struggled with declining production, and its shares fell as crude prices dropped ahead of Sunday's OPEC (search) meeting and the Iraq elections.

Oil and gas production fell about 9 percent in the quarter because of properties sold off and from disruptions due to the damage inflicted by Hurricane Ivan (search) in the Gulf of Mexico (search).

"These guys are running hard, not making really any major progress in terms of production growth," said Gene Gillespie, analyst with Howard, Weil, Labouisse, Friedrichs Inc., adding that he had expected the company's overseas production segment to perform better. Nevertheless, lofty crude prices ensured a mammoth gain on the bottom line.

Net income in the fourth quarter rose to $3.44 billion, or $1.63 a share, compared with $1.74 billion, or 82 cents a share, a year earlier.

Excluding special items like foreign currency, the company's profit was roughly $1.58 a share, estimated Gillespie. That was still well above consensus forecasts of $1.38 a share, according to Reuters Estimates.

Revenues jumped 39 percent to $42.69 billion.

Crude oil prices touched a peak in late October, as soaring demand from Asian giants like India and China as well as fears of disruptions in supply from countries like Russia, Nigeria and Iraq kept energy prices aloft for much of the past year.

Average prices in the fourth quarter for crude oil and natural gas both in the United States and abroad were up 40 percent, ChevronTexaco said.

The cash windfall from the record prices allowed ChevronTexaco to cut debt by $1.3 billion over the year, buy back shares and pump money into its pension plans.

Damage from the hurricane is expected to restrict production in the first quarter by about 35,000 barrels per day. Most of the remaining shut production is expected to be restored in the second quarter.

The company's shares fell 64 cents, or more than 1 percent, to $53.42 on the New York Stock Exchange.