Baker Hughes Inc.'s quarterly profit beat estimates because of an international turnaround and a rush of U.S. drilling in what remains the most important market for the world's third-largest oilfield services company.
Baker Hughes shares rose as much as 6.9 percent to their highest level since August 2008, even as other energy stocks declined.
Larger rivals Schlumberger Ltd. and Halliburton Co. posted results last week. Halliburton beat expectations due to its greater U.S. exposure, while Schlumberger fell short of estimates.
Spending levels have increased as oil companies look to tap into more oil and liquids-rich natural gas fields in onshore North America, Baker Hughes Chief Executive Officer Chad Deaton said.
With the company's pressure pumping capacity sold out, he expects to accelerate its new equipment deployment later this year to feed the expanding unconventional drilling operations in North American shale regions.
Houston-based Baker Hughes has been focusing on getting its international arm back to the profitability level of rivals, with a 15 percent margin target by the end of 2011 and an ultimate goal of getting well above the 20 percent mark.
The margin outside North America improved by more than 3 percentage points to 12.2 percent from the first quarter. Deaton said it had completed almost all of the cost cutting, with margin gains in the second half coming from increased activity.
"We're going to be competitive in 2012," Deaton told analysts on a conference call. "So I think we will have room to improve on that midteens in 2012."
The turnaround is paying off for Baker Hughes, with its shares up 32 percent so far in 2011, compared with gains of 21 percent for Halliburton and 5 percent for Schlumberger.
Baker Hughes' first-quarter net profit rose to $381 million, or 87 cents a share, from $129 million, or 41 cents a share, a year earlier, reflecting gains from the acquisition of BJ Services.
Revenue jumped 78 percent to $4.53 billion.
Analysts on average had expected 78 cents a share on revenue of $4.28 billion, according to Thomson Reuters I/B/E/S.
Baker warned last month that disruptions from the upheaval in North Africa and a North American cold snap would shave off 4 cents to 7 cents a share from first-quarter earnings.
Looking at opportunities around the world for growth, Deaton said he expected development of shale gas in Eastern Europe to take years to develop, but he was more bullish on the potential for shale growth in energy-hungry China.
"You know that they will not have a problem running pipelines across the country and wherever else in order to transport this gas," Deaton said.
Shares of Baker Hughes were up 2.7 percent at $76.10 in morning trading after rising as high as $79.16 earlier in the session.
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