3rd UPDATE: Halliburton 4Q Profit Surges, Signals Energy Rebound

Halliburton Co.'s (HAL) fourth-quarter earnings more than doubled as the oil-field services giant saw improved international results, as well as record U.S. revenue due to the oil industry's rush to exploit shale formations in North America using the complex techniques the company markets.

Chief Executive David Lesar said Monday that he is optimistic that the company will continue to see performance measures surge in 2011 as high oil prices drive "unrelenting" demand for intense drilling around the world. As such, the company plans to invest heavily in new technology and ramp up equipment manufacturing in the coming months, particularly in the Eastern Hemisphere, Lesar said.

"These key investments reflect our strong belief that we are on the verge of a major upcycle in spending by our customers and will be a necessary step to meet our growth, return and margin goals," he said.

Halliburton's results and the optimism expressed by the head of the world's second largest oil-field services company underscore the energy sector's swift rebound from recession, which was signaled last week when Halliburton's larger rival Schlumberger Ltd. (SLB) reported earnings growth of 31%.

Strong quarters from Schlumberger and Halliburton confirmed runs in both companies' stock prices in recent months, said Simmons & Co. analyst Bill Herbert. Shares of Halliburton traded at $39.55 on Monday, 40% above their Aug. 31 close. Schlumberger's stock has risen 58% in that span, trading at $84.37 on Monday. "The outlooks look pretty compelling for both companies if not the industry," Herbert said.

Halliburton has seen its stock climb despite being partially blamed by a U.S. government panel for last April's deadly explosion aboard the Deepwater Horizon drilling rig, which killed 11 and set off the largest offshore oil spill in U.S. history.

Federal investigators allege that Halliburton's cement job on the doomed deepwater well drilled by BP PLC (BP, BP.LN) was faulty and that Halliburton failed to alert the U.K.-based oil giant, findings that Halliburton disputes. Several analysts have said that it is unlikely the accusations could result in significant liabilities for the company.

Houston-based Halliburton reported profits of $605 million, or 66 cents a share, from $243 million, or 27 cents a share, a year earlier. Excluding payments on behalf of its former KBR Inc. (KBR) unit related to settle bribery charges in Nigeria, earnings from continuing operations rose to 68 cents.

Revenue climbed 40% to $5.16 billion, after slumping 25% a year earlier. Operating margin rose to 19% from 11.6%.

Analysts polled by Thomson Reuters most recently forecast earnings of 63 cents on revenue of $4.88 billion.

North American revenue soared 83% from a year earlier despite losses from Gulf of Mexico operations. Longer-term contracts and elaborate onshore drilling operations are propelling growth. Unlike some in the sector, Lesar said he does not fear that increased competition for the services and technology needed to crack open deeply buried energy-bearing rock formations will weigh down margins.

"We continue to expect that we can improve prices in select basins where the demand for our integrated services is robust," he said.

The chief executive was less optimistic about the Gulf of Mexico, where business declined "dramatically" from the third quarter when Halliburton recorded gains from its work to help BP plug its runaway well.

"We don't see much going on in the first half of 2011 in the Gulf of Mexico," Lesar said. Nonetheless, Halliburton will maintain its infrastructure and work force in the U.S. Gulf because its large customers have indicated a commitment to drilling there, Lesar said.

Internationally, the company reported increased activity in Norway, Algeria, West Africa and Iraq, where profits came several quarters ahead of schedule and Halliburton plans to double the number of its employees to 1,200 in 2011.

Strong growth in Brazil and Colombia was once again offset by weak results in Mexico. Though Halliburton participated in drilling the country's first shale well, Lesar said "Mexico is a market that is still in the process of repair and the environment continues to be uncertain."

Though the company is in the midst of exporting its unconventional drilling technology to international markets, including France, Argentina and Poland, Lesar said that he expects earnings from abroad to slip in the first quarter as they traditionally have.

-By Ryan Dezember, Dow Jones Newswires; 713-560-6670; Ryan.Dezember@dowjones.com

--Tess Stynes contributed to this article.

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