updated 11/2/2007 9:26:30 AM ET 2007-11-02T13:26:30

Chevron Corp., the U.S.'s second-largest oil company, said Friday its third-quarter profit fell more than Wall Street expected, as tighter U.S. refining margins took a big bite out of earnings.

Net income for the three months ended Sept. 30 fell to $3.72 billion, or $1.75 per share, compared with $5.02 billion, or $2.29 per share, during the same period a year earlier.

Analysts polled by Thomson Financial had been expecting earnings of $2.07 per share, on average.

Chief Executive Dave O'Reilly said weak refining margins were the culprit behind the big drop.

"Margins were squeezed as escalating costs for crude-oil feedstocks could not be fully recovered in a U.S. marketplace that was well-supplied with gasoline and other refined products," he said in a statement.

Revenue also fell short of forecasts, increasing to $55.17 billion from $54.21 billion a year ago. Analysts expected revenue of $58.29 billion, according to Thomson.

Copyright 2007 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

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