FILE PHOTO: A Chevron gas station sign is shown in Cardiff, California, in this January 25, 2016 photo. REUTERS/Mike Blake/File Photo

HOUSTON (Reuters) - Chevron Corp CVX.N reported a lower-than-expected quarterly profit on Friday as U.S. production slipped, offsetting a rise in oil and natural gas prices.

Shares of the San Ramon, California-based company fell 1.2 percent to $117 in premarket trading. The stock has gained less than 1 percent this year.

Net income in the third quarter was $1.95 billion, or $1.03 per share, compared with $1.28 billion, or 68 cents per share, a year earlier.

Excluding one-time items, Chevron earned 85 cents per share. By that measure, analysts expected earnings of 98 cents per share, according to Thomson Reuters I/B/E/S.

Despite the miss, Chevron said its results were moving in the right direction, with spending on large projects being scaled back.

“We continue to see improvement in the underlying pattern of earnings and cash flow,” said Chief Executive John Watson, who will retire early next year.

Chevron’s operations were largely not affected by Hurricane Harvey, which tore through the western U.S. Gulf Coast region in August.

Production grew 8 percent to 2.7 million barrels of oil equivalent per day.

In the United States, Chevron said its rising Gulf of Mexico and Permian Shale output was offset by natural declines in wells elsewhere. Production increased outside the United States.