Oil services stocks up on crude oil, 2012 outlook

Mon Oct 24, 2011 12:42pm EDT

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(Reuters) - Oilfield services stocks rose on Monday along with climbing crude oil prices, after executives at the sector leaders shrugged off the economic uncertainty and kept their outlook for next year broadly intact.

No. 2 company Halliburton Co, which took a beating last week on worries about services pricing in some of its core U.S. markets, rose 5 percent to $35.15 -- which is still more than $2 below the price going into third-quarter earnings last Monday.

Sector leader Schlumberger rose 3 percent, having expressed confidence about 2012 despite weaker-than-expected profits out on Friday.

Canaccord Genuity analyst Scott Burk raised his target for Schlumberger to $78 from $73 on Monday as he felt growing revenues outside North America shielded it from concerns about a slowdown in U.S. activity. But he saw more value elsewhere.

"In a rising oil price environment or growing economic environment, we would want to own the smaller names that have a chance to take market share from Schlumberger," said Burk, who maintained a "hold" rating on the stock.

Schlumberger generates about a third of its revenue in North America, compared with closer to half for its peers.

Yet a 3.5 percent rise in U.S. benchmark oil prices on Monday seemed to allay some concerns about North American drilling prospects, and shares of industry No. 3 Baker Hughes Inc rose 3 percent.

Weatherford International Ltd, which is shifting focus outside North America in expectation of stronger growth in other markets in the years ahead, rose 1.4 percent. The Switzerland-based company is due to report earnings on Tuesday.

Oil prices were buoyed on Monday by Chinese manufacturing numbers that outweighed weak European data in influencing traders view of the outlook for fuel demand.

(Reporting by Braden Reddall in San Francisco; Editing by Derek Caney)

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