Baker Hughes Inc.'s (BHI) first-quarter profit nearly tripled as the oilfield services company reported improved international margins and strong demand for its hydraulic fracturing services in North America.

Baker Hughes plans to deploy additional pressure pumping fleets into the North American oil patch during the second half of this year, but the company doesn't expect to meet producers' needs for hydraulic fracturing services, essential to cracking open oil-and-gas bearing rock formations, called shales.

"Our conviction remains strong: the supply will not match demand this year," Chief Executive Chad Deaton told investors Wednesday during a conference call to discuss the company's earnings.

The North American drilling boom has quickly lifted oilfield service companies from recession. It's not only the increased activity in the U.S. and Canada, but the type of service-intensive unconventional drilling that is occurring, that has helped the sector's profits skyrocket.

Even in a quarter in which the energy industry saw major disruptions in turmoil-torn Middle Eastern and north African nations and work-halting weather in North America and Australia, oilfield services profits surged. The sectors' two largest companies Schlumberger Ltd. (SLB) and Halliburton Co. (HAL) last week reported profit increases of 40% and 148%, respectively.

Houston-based Baker Hughes, the third-largest oilfield service firm, reported a profit of $381 million, or 87 cents a share, up from $129 million, or 41 cents a share, a year earlier. Revenue rose 78% to $4.53 billion.

Analysts polled by Thomson Reuters most recently forecast earnings of 78 cents on revenue of $4.28 billion.

Investors rewarded Baker Hughes for the results, sending shares 2.6% higher to $75.98 in recent trading.

The company's "extreme outperformance" is due mainly to unforeseen improvement to its international margins, Wells Fargo Securities analyst Matt Conlan wrote in a research note. "While its three competitors reported international margin compression," Baker Hughes' jumped to 12.2% from 9.1%, Conlan said.

International profit margins have vexed the sector in recent quarters by failing to grow on par with demand for oilfield services.

Deaton said Wednesday that much of Baker Hughes' first-quarter margin improvement can be pegged to trimming costs and increasing efficiency. But, he said, the global scramble to find oil to replace spare capacity lost to production disruptions in war-torn Libya and the deep waters of the U.S. Gulf should spur further growth.

"High oil prices have spurred both international oil companies and national oil companies to accelerate their spending plans," Deaton said. "Assuming oil prices do not increase to levels high enough to destroy demand, we expect oil-driven spending growth to be sustained for multiple years."

-By Ryan Dezember and Tess Stynes, Dow Jones Newswires; 713-547-9208; ryan.dezember@dowjones.com
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