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

Shares of the world's second-largest oilfield services company, which have long traded at a big discount to larger rival Schlumberger Ltd , climbed nearly 3 percent on Monday, while the sector index was only slightly higher.

The rise in oil prices to near $90 a barrel has spurred a bout of fresh spending by energy companies 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 sales in the fourth quarter was driven by robust onshore activity, even as offshore activity in the Gulf of Mexico remained slack.

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

Halliburton's shares are up about 25 percent in the last 12 months, but remain a bargain compared with 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 on 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.

Shares of Halliburton were up 1.8 percent at $39.89 on the New York Stock Exchange on Monday morning, off an earlier high at $40.31. The Philadelphia Stock Exchange's Oil Service index <.OSX> was up 0.5 percent.


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'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 demand in North America as steady this year, helped by the 3,200 uncompleted wells in the region -- a number higher than what he had forecast in October, and that he expects to continue rising this quarter.

Gulf of Mexico activity remains 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, may 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 are due to report quarterly results on Tuesday.

(Reporting by Matt Daily in New York and Braden Reddall in San Francisco; Editing by Derek Caney and Matthew Lewis)