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Earnings Preview: Chevron to report 1Q results

Jonathan Fahey, AP Energy Writer

NEW YORK (AP) -- Chevron expected to post weaker sales and profits Friday due to slowing production and lower energy prices.

Chevron has been the most profitable of the energy majors in recent years because a big part of its production mix is oil, which has been fetching high prices. Rivals, like Exxon Mobil, produce more natural gas in the U.S, and domestic gas prices are still cheap.

But crude prices fell across the globe in the first quarter of this year, compared with the same period last year. Chevron said this month that production had lagged slightly because of maintenance at U.S. production platforms and weather-related disruptions abroad.

The company earned $6 less per barrel of oil sold abroad, and $8 less per barrel sold in the U.S. through the first two months of this year, compared with the full first quarter of 2012. Production of oil and other liquid hydrocarbons was 2 percent below last year, the company said.

WHAT TO WATCH FOR: Investors will want to hear if Chevron has made any progress restoring oil production, especially in Brazil's offshore Frade field. Chevron was forced to halt production there in March 2012 after a pair of small spills. Brazil gave Chevron permission to restart production just this month.

WHY IT MATTERS: Chevron is the nation's second largest oil and gas company and among the 10 largest investor-owned companies of any kind in the world by market capitalization. As a member of the Dow Jones industrial average and a major component of the S&P 500 index, Chevron's stock is widely held by private investors through mutual funds and exchange-traded funds. Also, Chevron's fuel sales around the world may provide a glimpse into the state of the global economy. Economies typically consume more energy during periods of growth, or in this case, recovery.

WHAT'S EXPECTED: Analysts expect Chevron to report earnings of $3.10 per share on revenue of $56.5 billion for the first quarter, according to FactSet.

LAST YEAR'S QUARTER: Chevron Corp. earned $3.27 per share on revenue of $60.7 billion in the first quarter of 2012.