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Company News

UPDATE 3-Halliburton third-quarter profit rises 19 pct

(Adds analyst comment)

HOUSTON, Oct 21 (Reuters) - Oil services company Halliburton Co HAL.N on Sunday said third-quarter net profit rose 19 percent, helped by a tax benefit, new international contracts and higher activity from its customers.

Halliburton, which earlier this year opened a headquarters in Dubai to capture contracts in faster-growing, more profitable Eastern Hemisphere markets, has been hit by pricing pressure in its largest North American market.

The company reported a net profit of $727 million, or 79 cents a share, compared with $611 million, or 58 cents a share, in the same quarter a year earlier.

Results for the 2007 third quarter include a favorable income tax impact of $133 million, or 15 cents per share, and a charge of $21 million, or 2 cents per share, for reserves related to environmental matters.

Consolidated revenue in the quarter climbed 16 percent from a year ago to $3.9 billion.

Bill Herbert, analyst with Simmons & Co., said in an e-mail that results were “commendable,” especially considering two weeks of work were lost in the Gulf of Mexico because of storm-related evacuations.

Excluding the tax benefit and one-time charge, Halliburton earned 66 cents per share. Analysts on average had expected a profit of 64 cents, according to Reuters Estimates.

“I am pleased with the continuing very strong performance of our Eastern Hemisphere operations this quarter,” Dave Lesar, Halliburton’s chief executive, said in a statement.

As a result of the company’s efforts to increase its business in the Eastern Hemisphere, revenue grew 29 percent, operating income gained 40 percent and margins increased to 24 percent, Lesar said.

Looking ahead, Halliburton said that is still experiencing strong demand for its services in U.S. land-based markets.

“I thought you had fairly bullish comment on the outlook,” said Dan Pickering, analyst with Tudor, Pickering & Co. Securities. “Halliburton was coming off a tough second quarter, and they saw improving North American profitability.”

Pickering added that is was likely Halliburton has gained share in the pressure pumping market.

This year, Halliburton and others with big exposure to North American markets have been hurt by overcapacity in the pressure pumping market, a technique used to extract gas from hard-to-reach pockets in substances like shale, and a slowdown in drilling in Canada.

The chief executive of rival Schlumberger Ltd SLB.N, which has less exposure to North America, said on Friday he did not know when those pricing declines would stop.

Shares of Schlumberger tumbled 11 percent on Friday.

Halliburton’s revenue rose 6 percent to $1.847 billion in North America, while operating income fell 13 percent to $497 million, hit by the evacuations in the Gulf of Mexico and pricing declines in U.S. land markets.

In the Middle East and Asia, Halliburton’s revenue rose to 28 percent to $693 million and operating income was $182 million, up 31 percent from a year ago.

Halliburton also said it repurchased 11 million of its shares in the third quarter for a total cost of about $374 million.

Shares of Halliburton closed down 5 percent, or $2.16, at $38.85 on the New York Stock Exchange on Friday. Since the start of the year, its shares are up about 25 percent, compared with a 44 percent gain in the Philadelphia Stock Exchange Index of Oil Service companies .OSX.

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