By Ernest Scheyder and Swetha Gopinath
Jan 17 (Reuters) - Schlumberger Ltd, the world'slargest oilfield services company, posted a better-than-expectedfourth-quarter profit on Friday as robust international activityoffset stiff competition in North America.
Fracking, drilling seismic studies and other lucrativeservices for oil producers across most of the Middle East, Asiaand Latin America helped the company's profit top analysts'estimates for the ninth straight quarter.
Intense competition with Halliburton Co and BakerHughes Inc for work in North America's vast shalefields, though, combined with weak natural gas prices, erodedregional results.
Without strong sales from the U.S. Gulf of Mexico, NorthAmerican revenue would have dipped.
"The main challenge in the North America land market isstill pricing," Chief Executive Paal Kibsgaard said on aconference call with investors.
Negotiations for new contracts with several key NorthAmerican customers should further dent results, with pricingfalling, he said. Statoil and other internationalenergy firms are Schlumberger's largest North American customersand have used the oversupply of oilfield services to theiradvantage.
Despite tepid North American growth, Schlumberger expectsthe global economy to improve in 2014 and oil demand to rise,with double-digit earnings growth across the company for theyear, Kibsgaard said.
Schlumberger has the lowest exposure to North America amongthe big four oilfield service providers. International marketsbrought in about two-thirds of Schlumberger's 2013 revenue of$45.27 billion.
Middle Eastern revenue jumped 5 percent in the quarter,helped by activity in Saudi Arabia and the United Arab Emirates,but a temporary shutdown of operations in southern Iraq inNovember, following a protest, slightly dented fourth-quarterresults, the company said.
Schlumberger suspended activity in Iraq in November afterdozens of Shi'ite Muslim workers and tribesmen, accusing aforeign security adviser of insulting their religion, stormedthe Schlumberger camp in North Rumaila and wrecked offices.
Seasonal slowdowns in North America, the North Sea, Russiaand China also weighed on results.
The company expects oil producers' exploration andproduction spending, the lion's share of its business, toincrease this year for international markets and the U.S. Gulfof Mexico.
Barclays expects oil and gas companies to spendabout $723 billion on exploration and production this year, anincrease of 6.1 percent from 2013, according to report releasedlast month.
Schlumberger's net income rose to $1.66 billion, or $1.26per share, in the fourth quarter ended Dec.31, from $1.36billion, or $1.02 per share, a year earlier.
Excluding items, profit from continuing operations was $1.35per share.
Revenue rose about 7 percent to $11.91 billion.
Analysts on average had expected earnings of $1.32 per shareon revenue of $12.01 billion, according to Thomson ReutersI/B/E/S.
The results come the day after Schlumberger boosted itsquarterly dividend by 28 percent to 40 cents.
The company, which reviews its dividend every January, hasno set level for future dividend payouts, Kibsgaard said.
"There is no target number," he said.
Baker Hughes and Halliburton are scheduled to report theirfourth-quarter results on Jan. 21.
Baker Hughes, considered the smallest of the "big three" oilservice providers, earlier this month estimated asmaller-than-expected quarterly profit, citing the suspension ofits operations in Iraq.
Schlumberger shares rose 1.1 percent to $89.61 in morningtrading on Friday.
Schlumberger shares have risen 21 percent in the past year,compared with a 17 percent rise in the Philadelphia oil serviceindex.
Barclays (BARC)