Chevron Corp's fourth-quarter profit easily topped Wall Street forecasts on Friday, but anemic growth of its oil reserves disappointed investors, and its shares slipped.

Chevron, like smaller rivals ConocoPhillips and Occidental Petroleum, saw its earnings bolstered by higher oil prices, as well as a rebound in profit margins for gasoline and diesel fuel.

But the company added only a modest 240 million oil-equivalent barrels to its reserves during the year, just about 24 percent of the oil and gas it produced in 2010.

It was an all-around good quarter, but the reserve replacement was weak, said Pavel Molchanov, analyst with Raymond James in Houston.

Analysts said the company's reserves did not likely include the Wheatstone or Gorgon natural gas projects that is developing in Australia, and the company said its reserves were reduced by 140 million BOE because rising oil prices had increased the share of reserves owed to state-run partners.

We took several major deepwater projects to final investment decision in 2010, and we expect to recognize reserves for these projects in future years, Chairman and Chief Executive John Watson said in a statement.

Chevron is planning annual oil and gas production increases of 1 percent annually through 2014. Growth is expected to pick up to between 4 percent and 5 percent in the three years after that, but driven largely by massive Australian gas projects.

Chevron also added to its U.S. natural gas position in the fourth quarter with the announced purchase of Atlas Energy.

PUMPED UP PROFIT

Profit rose to $5.3 billion, or $2.64 per share, from $3.1 billion, or $1.53 per share, a year before, lifted by higher oil prices and the gain from the sale of a pipeline stake.

That easily beat the $2.41 per share that analysts had on average forecast, according to Thomson Reuters I/B/E/S.

Revenue in the quarter rose 9 percent to $51.9 billion.

Profit from its upstream, or production arm, climbed 16 percent to $4.85 billion, while the downstream, or refining and transportation business, jumped to a $742 million profit from a year-ago loss.

Given the relative strength of oil compared with natural gas prices, the San Ramon, California-based company is in the fortunate position of getting more than two-thirds of its overall current production from liquids, compared with just over half for sector leader Exxon Mobil Corp.

The U.S. benchmark oil price averaged $85 per barrel in the fourth quarter, up $9 from a year earlier. Natural gas went in the opposite direction, with average cash prices at the key Henry Hub delivery point down 12 percent from a year ago to around $3.80 per million British thermal units. (Btus)

Chevron shares, which have rallied nearly 29 percent in the past 12 months, were down 0.9 percent to $93.89 on the New York Stock Exchange.

They have outperformed those of Exxon, which is set to report earnings on Monday. Exxon, which doubled its exposure to the depressed U.S. natural gas market through last year's purchase of XTO, has seen its shares rise about 22 percent in the past 12 months.

On Wednesday, ConocoPhillips and Occidental Petroleum posted higher profits and unveiled big capital spending increases.

BP Plc and Royal Dutch Shell Plc are expected to report quarterly results next week as well.

(Additional reporting by Braden Reddall in San Francisco, editing by Dave Zimmerman)

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