* Earnings of $0.63 a share versus Wall Street view of $0.60 * Sees 2013 E. Hemisphere margins averaging "upper teens" * Shares up nearly 5 percent, at highest for more than a year By Braden Reddall Jan 25 (Reuters) - Haliburton Co's overseas business lifted fourth-quarter earnings above expectations, belying how tough the market is for North American oilfield services due to the glut of natural gas. Shares of Halliburton, the world's second-largest oilfield services company and the North American leader, rose nearly 5 percent on Friday to their highest levels for more than a year. Strong margins in the Middle East, Asia, Europe and Africa helped make up for a 58 percent drop in operating income in North America, where the "unconventional" boom, driven by hydraulic fracturing, has produced all the natural gas that put the market for services so badly out of joint. In a reversal of past quarters, 53 percent of Houston-based Halliburton's profits came from outside its home market, helped in part by the growth of "fracking" abroad. "Globally, 2012 was a watershed year for the expansion of unconventionals," Chief Executive David Lesar said, noting its work on the first unconventional wells in China and Australia and moves toward them in Saudi Arabia, Mexico and Argentina. In the fourth quarter of 2011, Halliburton made only 22 percent of its operating earnings in international markets. Industry leader Schlumberger Ltd, which has long set itself apart by earning more money outside North America, posted better-than-expected results last week. Profits for competitor Baker Hughes Inc, on the other hand, were hit hard by the U.S. slump. Oilfield companies' pricing power, especially for the pressure pumping fleets used in fracking, has evaporated as the number of U.S. rigs targeting gas hit 13-year lows. North American land drilling is likely to remain subdued this year as oil and gas companies forecast spending around 2012 levels. "We believe that without a significant uptick in natural gas drilling, it is difficult to see a path for pressure pumping equipment to reach equilibrium this year," Lesar said. Halliburton expects the North America rig count to improve from fourth-quarter levels in 2013, though it will be down slightly compared to 2012. The company, however, does view the fourth quarter as a low water mark for profit margins, which at 12 percent were half of what they were at the start of 2012 and what the company considers to be "normalized" levels. After last year's stockpiling of guar -- a key ingredient for fracking fluid -- at record-high prices, Halliburton now believes its guar inventory will be at market prices by the second quarter, which will drive down costs. Halliburton expects 2013 margins in the Eastern Hemisphere to average in the "upper teens," which is better than some analysts' expectations. Fourth-quarter net income fell 35 percent to $589 million, or 63 cents per share, which beat the consensus expectation of 60 cents, according to Thomson Reuters I/B/E/S. Revenue rose 3 percent to $7.3 billion, above the average estimate of $7.06 billion. Simmons & Co analysts called the performance "commendable" relative to negative expecations, with both Schlumberger and Baker Hughes issuing profit warnings last month. Shares of Halliburton were up 4.9 percent at $39.64 in morning trading on the New York Stock Exchange.