On Friday, Chevron (NYSE:CVX) became the latest U.S. petro-giant to report lower exploration and production earnings -- but increased contributions from refining, marketing, and transportation.

Chevron, the second-largest domestic oil company, earned $4.72 billion in the quarter, up 18% from last year. Per-share earnings increased from $1.80 to $2.18 year over year. The 2007 results included a one-time gain of $700 million, or $0.32 a share, from the sale to BP (NYSE:BP) of Chevron's 31% interest in the Nerefco Refinery complex near Rotterdam.

Quarterly earnings from the company's upstream operations declined significantly year over year. In the U.S., upstream earnings fell 34.4%, while the international component of exploration and production was down 5.9%, including the effect of foreign currency translations. Net oil-equivalent production was about flat, both domestically and internationally, while Chevron's average sale price per barrel declined about $4.

The company's downstream operations were a mixed bag, particularly in the U.S. Domestic downstream operations generated $350 million, up 67% from the $210 million a year ago, all of which was tied to higher margins for refined products. Indeed, this impressive increase actually was offset by an extensive turnaround at the company's Richmond, Calif., refinery, and by the exacerbating effects of a fire that occurred during the turnaround.

Internationally, the earnings contribution from the downstream sector increased to $1.27 billion, from $370 million in 2006. Even excluding that $700 million gain on the European refinery sale, you're still looking at a 54.9% increase.

There appear to be more pluses than minuses in Chevron's ongoing operations, particularly if you believe -- as I do -- that crude prices will likely beat their year-ago levels by the third quarter, and that the downstream group will benefit in future quarters from the Richmond refinery's return to health.

Given declining production from many of the world's major wells, the need to satisfy steadily increasing worldwide energy demand, and shaky political circumstances within several OPEC nations, now including all-important Saudi Arabia, Fools would be wise to include shares of major producers in their portfolios. Consider firms that cast a wide international footprint, such as Chevron, ExxonMobil (NYSE:XOM), and ConocoPhillips (NYSE:COP).

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Fool contributor David Lee Smith does not own shares in any of the companies mentioned. He welcomes your questions or comments. The Fool has a disclosure policy.