Oilfield service company Halliburton Co posted higher-than-expected profits, boosted by oil projects in North America, and forecast steady growth elsewhere, but said pricing competition could be tough.

Shares of the world's second-largest oilfield services company, which have long traded at a discount to those of larger rival Schlumberger Ltd , outperformed the sector on Monday in response to the more than doubling of fourth-quarter profit.

The rise in oil prices to near $90 a barrel during the period spurred a bout of spending on new wells, overshadowing a decline in natural gas projects, as prices for that fuel remained weak.

An 80 percent jump in Halliburton's North American revenue in the fourth quarter was driven by robust onshore activity, though offshore activity in the Gulf of Mexico remained slack.

Graphic on earnings/rig count: http://r.reuters.com/kym67r

On Friday, Schlumberger posted higher-than-expected profits and said it expected client spending to grow.

Shares of Halliburton were up 0.5 percent at $39.37 on the New York Stock Exchange in early afternoon trading, off an earlier high of $40.31. The Philadelphia Stock Exchange's Oil Service index <.OSX> was down 0.2 percent.

Halliburton shares are up 25 percent in the last 12 months, but remain a bargain compared with those of peers, analysts said.

It's still the cheapest of the large-cap diversified (oilfield service) companies, said RBC Capital Markets analyst Kurt Hallead.

Halliburton was trading at a 20 percent discount to rivals based on 2012 earnings forecasts, according to UBS analyst Angie Sedita, who has a price target of $48 on the shares.

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Halliburton's fourth-quarter net profit rose to $605 million, or 66 cents per share, from $243 million or 27 cents per share, a year earlier.

Excluding a 2 cent-per-share charge related to former subsidiary KBR Inc's settlement with Nigeria, earnings per share were 68 cents, topping the 63 cents that analysts had forecast on average, according to Thomson Reuters I/B/E/S.

Revenue jumped 40 percent to $5.16 billion, while analysts had expected $4.88 billion.

Houston-based Halliburton is looking abroad for growth in the year ahead, but margins are likely to remain under pressure as its rivals are chasing growth in the very same markets.

We do see activity increases happening throughout 2011, Chief Executive Dave Lesar told analysts on a conference call. The big wild card is just how tough the pricing environment continues to be.

The company said it recently won a 15-well package in Iraq, on top of three deals announced there last year, and it will double its employee headcount in the country to 1,200 in 2011.

Lesar sees steady demand in North America this year, helped by the 3,200 uncompleted wells in the region -- a number higher than he had expected, and that he sees rising this quarter.

Gulf of Mexico activity is moribund as companies struggle to obtain drilling permits in the wake of BP Plc's oil spill last April after a blowout that killed 11 workers -- for which Halliburton, a BP contractor, could face legal liability.

Halliburton is maintaining its staffing in the Gulf even though activity looks likely to stay subdued in the first half of 2011, and possibly for the rest of the year, Lesar said.

Halliburton will expand deepwater operations in the Eastern Hemisphere, but did not specify how much it would spend.

Competitors Baker Hughes Inc and Weatherford International Ltd report results on Tuesday.

(Reporting by Matt Daily in New York and Braden Reddall in San Francisco; Editing by Gerald E. McCormick and Matthew Lewis)