Chevron said Friday that net income fell 6% in the third quarter as weak refining results and higher operating costs offset higher oil and gas production and prices. The nation's second-biggest oil company said net income fell to $4.95 billion, or $2.57 a share, compared with $5.25 billion, or $2.69, a year earlier. Sales rose 1.7% to $56.6 billion. Chevron's worldwide oil and gas production rose 3%, or about 70,000 barrels per day, compared with last year. Higher oil prices in the U.S. and abroad and higher natural gas prices in the U.S. also helped boost revenue. But higher operating expenses and exploration costs offset those gains. The company's oil and gas exploration and production earnings fell 1% in the quarter. Pat Yarrington, Chevron's chief financial officer, said exploration costs are rising for all oil and gas companies. "We're seeing higher industry costs," she said. That's a general trend. Refining profit fell 45% in the quarter because input costs such as crude oil stayed high while prices for fuel products such as gasoline fell. Chevron is in the midst of an enormous capital spending plan as it builds liquefied natural gas export facilities in Australia and deep-water production platforms in the Gulf of Mexico. The company expects to spend a record $36.7 billion this year on these and other projects. Yarrington told investors to expect Chevron to sell some of its smaller or less promising oil and gas exploration and production assets to help raise cash. Capital spending nearly used up all of the company's cash flow in the quarter, and the company spent $1.25 billion in the quarter to buy back shares. Chevron shares fell $1.95, or 1.63%, to $118.01.