UDPATE 1-Baker Hughes Q2 profit rises, beat forecasts

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NEW YORK, July 22 (Reuters) - Oilfield services company Baker Hughes Inc (BHI.N) said on Tuesday its second-quarter profit rose more than 8 percent, beating Wall Street forecasts, but costs to ramp up operations for new Latin American projects would weigh on earnings over the rest of the year.

The Houston-based company said it had won more than $1.6 billion in work in Brazil and Mexico in the second quarter, requiring large investments to support its growth.

Baker Hughes also said it expects to benefit from a likely increase in natural gas activity during the second half of 2008.

Profit in the quarter was $379.3 million, or $1.23 a share, compared with $349.6 million, or $1.09 a share, in the same period a year earlier.

Second-quarter net income includes a charge of $40.3 million, or 13 cents a share, related to a litigation settlement.

Excluding that charge, Baker Hughes' adjusted earnings of $1.36 per share topped the analysts' consensus forecast of $1.24 per share, according to Reuters Estimates.

Revenue rose 18 percent to $3 billion.

The oilfield services sector has benefited from the rally in oil and gas prices, which has prompted energy producers to hike their spending in an effort to increase output.

Baker Hughes' larger rival Halliburton Co (HAL.N) reported that earnings from continuing operations rose nearly 5 percent to $623 million, or 68 cents per share. Schlumberger Ltd (SLB.N), the sector leader posted a profit of $1.42 billion, or $1.16 per share.

Shares in Baker Hughes rose 1.9 percent in pre-market trade to $86.00. (Reporting by Dhanya Skariachan in Bangalore; editing by Mark Porter and Sue Thomas)