UPDATE 6-Strong US helps Halliburton overcome Libya impact

Mon Apr 18, 2011 1:23pm EDT

* Q1 EPS ex-items 61 cents vs Wall Street view 58 cents

* Q1 revenue $5.3 bln vs Street view $4.9 bln

* Takes $46 million charge for Libya

* Shares up 1.6 pct, have doubled since June 2010 low

* Larger rival Schlumberger down 2.5 pct (Adds further analyst comment in paragraph 15, updates shares)

By Braden Reddall and Matt Daily

SAN FRANCISCO/NEW YORK, April 18 (Reuters) - Halliburton Co's (HAL.N) quarterly profit topped Wall Street forecasts as a surge in the oilfield services company's North American operations overshadowed the impact of a shutdown in Libya.

Halliburton's oil-producing customers are spending more on new projects to take advantage of high oil prices, which surged above $100 per barrel in late February and have remained strong due to turmoil in the Middle East and North Africa.

Yet the unrest in Libya prompted the United Nations to impose economic sanctions on the country, forcing energy companies to pull out and leading to a $46 million charge for Halliburton.

That was anticipated by analysts, but a more than threefold increase in profit from its North American business was not.

"North America was even better than we thought," said Roger Read, an analyst with Morgan Keegan & Co. "International was probably as bad or worse than they thought it would be."

Most energy watchers have said they expect oilfield service markets to grow tighter in the second half of this year as work on planned projects absorbs available capacity.

That view was confirmed by Halliburton, the second-largest oilfield services company, which is more heavily exposed to North America than sector leader Schlumberger Ltd (SLB.N).

"Going forward, I feel even more confident about the prospects of our North America business in 2011 and beyond," Chief Executive Dave Lesar told a conference call. "We believe there is upside for both revenue and margins as we respond to the continued increases in service intensity."

A move toward increased U.S. oil extraction from shale, which requires more equipment and expertise, favors Halliburton due to its track record in U.S. natural gas shale production.

(For a graphic comparing Halliburton and Schlumberger, see r.reuters.com/res98r )

PROFIT BEAT

Halliburton said net profit rose to $511 million, or 56 cents per share, from $206 million, or 23 cents per share, a year earlier.

Excluding the Libya charge, it made 61 cents per share, topping analysts' average forecast of 58 cents, according to Thomson Reuters I/B/E/S. Revenue rose to $5.3 billion, also better than analysts' average forecast of $4.9 billion.

North American operating profit jumped to $732 million from $230 million a year ago, and profit in Latin America rose 65 percent to $76 million. Profits fell in the rest of the world.

Lesar, the CEO since 2000, highlighted stiff competition for contracts to explain weak profit margins in the Eastern Hemisphere. But he sees this diminishing once rivals abandon aggressive bidding for initial contracts in emerging fields.

In the past week, contracts for work off the coast of Norway with Statoil (STL.OL) and for 15 wells in Iraq for Exxon Mobil Corp (XOM.N) both went to Halliburton. [ID:nN11289441]

"Its price leadership in certain segments make it a strong player regardless of disparate local market conditions," said Phil Adams at Gimme Credit, who was encouraged by Halliburton's talk of winning about a third of the new Gulf of Mexico work.

U.S. drilling permits have started being issued in the Gulf of Mexico recently after an extended pause in response to the Macondo well, on which Halliburton performed some work and which suffered a disastrous blow-out a year ago on Wednesday.

Halliburton shares rose 1.6 percent to $47.59 in Monday afternoon trading, double the level they plumbed last June due to Macondo liability concerns. The Philadelphia Stock Exchange Oil Service index .OSX was down 1.3 percent, and Schlumberger, which has far more exposure to the Eastern Hemisphere, fell 2.5 percent.

Schlumberger is set to post results on Thursday, along with No.4 player Weatherford International WFT.VX. Industry No.3, Baker Hughes Inc (BHI.N) ,is due to report on April 27. (Editing by Maureen Bavdek, John Wallace and Tim Dobbyn)

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