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In this May 23, 2013, file photo, a United States flag flies in view of a Chevron gas station in Blaine, Wash.

Elaine Thompson/AP

Falling oil prices hardly seem to be bothering the two biggest U.S. oil companies, but things could get tougher in the coming months.

Exxon and Chevron leaned on strong performances from their refining operations to increase profits in the third quarter despite plummeting global oil prices.

"These companies can hold up in weaker markets," said Brian Youngberg, an analyst at Edward Jones, about Exxon and Chevron. "Refining and chemicals can benefit from lower oil prices."

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The global price of oil fell 18 per cent from the beginning of the quarter to the end, and it cost both companies. Revenue slipped at Exxon by 4 per cent and at Chevron by 8 per cent.

But low oil and natural gas prices make for low raw material costs – and higher profit – for refining and chemical operations, which turn oil and gas into fuels and chemicals. Profit at Exxon's refining and chemicals operations rose 38 per cent compared with a year earlier, and Chevron's profit from its so-called downstream operations more than tripled.

Those results helped Exxon's overall earning rise 3 per cent in the quarter to $8.07-billion (U.S.). Chevron's earnings rose 13 per cent to $5.59-billion.

The trend lately has been for integrated oil and gas companies, which own production, refining and distribution assets, to spin off their refining operations into different companies in an effort to better appeal to investors. ConocoPhillips, Marathon and Hess have all exited refining in recent years.

Exxon CEO Rex Tillerson defended his strategy of remaining integrated Friday. He said in a statement that the company's strong results "demonstrated the strength of our integrated business model." Integration, he said, "gives us competitive advantages in scale, efficiency, technical and commercial capabilities, regardless of market fluctuations."

Exxon and Chevron joined rival Royal Dutch Shell in posting rising earnings for the quarter. But other major oil international oil companies, such as BP, ConocoPhillips and Total, saw earnings fall in the third quarter on lower oil prices.

All may suffer in the fourth quarter, however. The slide in oil prices accelerated in early October, at the beginning of the quarter, and reached lows not seen in four years. If prices remain low or continue to fall it could create declines too large for better refining results to cover.

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That "will be a little more of a challenge," Youngberg said.

Also, a reason oil prices have fallen so far is that demand for fuels is weakening around the world, which could limit output and profit gains at refining operations.

But Exxon, unlike nearly every other major oil company, says lower global oil prices will not change its plans to invest in new projects. And it suggested on a call with investors that the drop in oil prices might be a good time to use its cash to buy undervalued assets.

"We continue to invest through the cyclical nature of our business," said Jeff Woodbury, Exxon's vice-president of investor relations. "We're a long-term business."

Exxon said it was on track to increase oil and gas production to the equivalent of 4 million barrels of oil per day by the end of the year as it works to reverse years of sliding output. Exxon's oil and gas production fell 4.7 per cent in the third quarter from the same period a year ago. Its production of the equivalent of 3.83 million barrels of oil per day in the quarter was the company's lowest since the third quarter of 2009.

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