Chevron Corp, the second-largest U.S. oil company, posted three-fold profit growth that beat estimates as refinery margins improved, and raised its 2010 oil and gas production growth target to 3 percent.

Energy giants such as Chevron and its peers Exxon Mobil Corp and Royal Dutch Shell Plc , which reported on Thursday, have benefited from renewed demand for oil and fuel products as the global economy crawls out of recession.

Refining and marketing essentially doubled the best expectation that we had, Oppenheimer & Co analyst Fadel Gheit said of Chevron. When things go well, they go really well.

Second-quarter net income jumped to $5.4 billion, or $2.70 per share, from $1.75 billion, or 87 cents per share, a year before. Analysts had expected a profit of $2.44 per share, according to the average on Thomson Reuters I/B/E/S.

Revenue rose 32 percent to $53 billion.

Chevron has so far felt only a modest impact from the drilling moratorium put in place after the BP Plc spill in the Gulf of Mexico. George Kirkland, Chevron's vice chairman and head of upstream, told analysts on a call he sees the 2010 impact from the halt at less than 10,000 barrels per day.

Although the longer-term impact of the moratorium remains unknown, we are focused on progressing our projects in the deepwater Gulf of Mexico, Kirkland said, with final investment decisions on its Jack/St Malo and Big Foot projects still on track for later this year assuming the moratorium is lifted.

If this keeps sliding out in the unknowns, it will impact the projects, he added.

Chevron owns half of Jack/St Malo, set to produce 120,000 to 150,000 barrels of oil equivalent per day once it starts up in 2014, and 60 percent of Big Foot, which would produce 63,000 boepd once it starts up in the next five years.

Chevron shares slipped 0.8 percent to $75.41 in midday trading, compared with a 0.2 percent drop in the Chicago Board Options Exchange's oil company index <.OIX>. Chevron's stock was already down 1 percent in 2010, compared with a 10 percent drop in the oil index -- which includes BP's battered shares.

SHARE BUYBACK ENDS

Chevron said it terminated its three-year $15 billion share repurchase plan that started in September 2007 and put in place an ongoing buyback plan with no set limits.

Its oil and gas production business reported profit of $4.5 billion, up from $1.66 billion a year ago on both higher volumes and prices. Global production rose to 2.75 million barrels of oil equivalent per day (boepd) from 2.67 million, driven by increases in both natural gas and oil output gains.

The San Ramon, California-based company increased its 2010 production outlook to 2.78 million boepd from its previous guidance of 2.73 million, with its base business decline now expected at 4 percent to 5 percent, down from 6 percent.

Chevron's average sales price for oil and other liquids jumped 34 percent from a year ago to $71 per barrel, while its sales price for natural gas rose 18 percent to $4.40 per thousand cubic feet.

Like others in the industry, profit margins at Chevron refineries rose sharply as demand for products such as gasoline and diesel fuel recovered after a two-year slump. For that side of the business, which also now includes chemicals, the company earned $975 million, compared with $131 million a year ago.

(Reporting by Matt Daily in New York and Braden Reddall in San Francisco; editing by Dave Zimmerman and Andre Grenon)

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