SLB Schlumberger Ltd

Halliburton Co.'s (HAL) second-quarter earnings surged 54% on rising demand for its services, especially from producers rushing to tap North America's new-found stores of oil and natural gas.

The Houston-based company's profit exceeded expectations, signaling yet another strong quarter for the oilfield-service sector. The industry has quickly rebounded from its recession-era nadir, propelled by the drilling boom in shale formations throughout the U.S. These reservoirs have only recently become economically feasible to exploit, and are more service-intensive.

The company also benefited from an uptick in margins world-wide and increased drilling activity in the Gulf of Mexico. However, executives struck a cautious note about future activity in the Gulf given the continued regulatory uncertainty in the wake of last year's Deepwater Horizon oil spill. Shares, which have nearly doubled in the past year, recently traded 0.58% lower at $52.77.

Halliburton notched a new quarterly revenue record. Revenues soared 35% on the year and 10% from the first quarter, to $5.94 billion.

Halliburton, the first oilfield-service company to report second-quarter results, recorded a profit of $739 million, or 80 cents a share, up from $480 million, or 53 cents a share, a year earlier. The latest period included a penny in restructuring-related costs. Operating margin jumped to 19.6% from 17.4%.

Analysts polled by Thomson Reuters most recently forecast earnings of 74 cents on revenue of $5.71 billion.

"Overall, we believe that what we are seeing in North America plus the continued international recovery will lead to even a more favorable earnings picture, which will go through 2011 and beyond," Chief Executive David Lesar said Monday on a conference call to discuss the results.

Halliburton's "sterling results should augur favorably" for other North America-focused service companies, while "expectations should be relatively muted" for companies that are more active in international markets, where Halliburton's results were mixed, Simmons & Co. analyst Bill Herbert said in a note to clients.

The second-largest oilfield service company after Schlumberger Ltd. (SLB), Halliburton is the top seller of hydraulic fracturing, or fracking, services in North America's resurgent oil patch. That service is essential in cracking open deeply buried oil-and-gas-bearing rocks, including shale.

Demand for fracking and other onshore drilling services has grown faster than Halliburton has been able to add equipment, "and we expect this imbalance to continue going forward," Lesar said.

As a result, North American revenue soared 63% and profit more than doubled during the quarter.

In the Gulf of Mexico, Halliburton has won service contracts for eight of the 18 new deep-water wells that have been permitted since February when U.S. regulators lifted the ban on such drilling that followed last year's deadly Deepwater Horizon disaster. Halliburton provided cementing services for BP PLC's (BP, BP.LN) doomed well, which the Deepwater Horizon rig was drilling when it exploded, killing 11 workers and touching off the worst offshore oil spill in U.S. history.

Lesar cautioned, however, that the pace of new drilling permits has slowed and once the current backlog of work is complete, the Gulf of Mexico recovery could stall in the second half of the year.

Lesar gave a more optimistic view of Halliburton's international business, where revenue rose 9.4% but earnings fell amid disruptions to oil production in war-torn Libya, delays in Iraq, U.K. tax changes and expensive mobilization costs in fledgling sub-Saharan Africa.

"In the second half of the year," Lesar said, "we expect a gradual progression of our international margins and as activity improves."

-By Ryan Dezember and Tess Stynes, Dow Jones Newswires;

713-547-9208; ryan.dezember@dowjones.com

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