ChevronTexaco Corp. (CVX), the No. 2 U.S. oil company, on Friday reported a 5 percent rise in quarterly profit driven by surging oil prices, but the results fell short of Wall Street forecasts.

The company's results were marred by a 36 percent decline in profit at its refining and marketing operations, which were hit by work stoppages at several refineries and weak marketing margins overseas.

Oil and gas production — the bread and butter of the company's operations — fell 7 percent from a year earlier.

"The earnings miss is annoying but not disastrous for ChevronTexaco," Credit Suisse First Boston analyst Mark Flannery said in a research note. "We assume that the weak operating result in U.S. refining can be turned around quickly."

Shares of ChevronTexaco, were down about 0.1 percent, or 7 cents, at $51.08 on the New York Stock Exchange (search), while the rest of the energy sector posted modest gains.

Net income in the first quarter rose to $2.68 billion, or $1.28 a share, from $2.56 billion, or $1.20 a share a year earlier. That was below analysts' average forecast of $1.38 a share, according to Reuters Estimates.

ChevronTexaco's results come a day after industry stalwart Exxon Mobil Corp. (XOM), the world's largest publicly traded oil company, also posted disappointing profit that fell short of Wall Street estimates.

The shortfall in Exxon's results were also largely tied to its refining and marketing operations, which suffered from weak marketing margins.

Despite the decline in output, ChevronTexaco's production division reported a 20 percent rise in profit thanks to the relentless surge in crude oil prices, which have been kept aloft by booming demand in Asia and tight global supplies.

Production volumes were hurt by asset sales, the effect of production agreements, and halts in production because of damage from Hurricane Ivan in September.

Sales and other operating revenues jumped 22 percent to $40.44 billion.

Earlier this month, ChevronTexaco agreed to buy smaller California rival Unocal Corp. (search) , for about $16.4 billion, in the one of the largest acquisitions in the energy sector in years.