Jan 21 (Reuters) - Oilfield service companies Halliburton Co and Baker Hughes Inc said they expect an improvement in North American margins, driven by a modest pickup in onshore activity and strong deepwater drilling in the Gulf of Mexico.
Halliburton and Baker Hughes, No. 2 and No. 3 in the industry, have been expanding outside the United States and Canada, where excess capacity and a drop in the number of rigs drilling for natural gas has eaten into margins.
Strong activity in international markets, particularly the Middle East and Africa, helped both companies report stronger-than-expected fourth-quarter earnings on Tuesday.
Baker Hughes shares rose about 2 percent in morning trade. Shares of Halliburton, which initially rose on the results, fell 3 percent after the company said in a conference call that conditions would remain tough in Latin America.
Halliburton said it was targeting an improvement of 200 basis points in North American margins in 2014, while Baker Hughes said it expected margins in the region to recover by at least 105 basis points in the first quarter.
Halliburton, which expects 2014 revenue in North America to increase by a mid-single-digit in percentage terms, said the average U.S. land rig count was likely to increase modestly this year.
Baker Hughes, which publishes a closely watched tally of active rigs, said it expected the U.S. onshore rig count to be essentially flat this year, but added that the well count would rise by 5 percent due to improved drilling efficiencies.
Oilfield service companies are able to secure more business despite no growth in rig count as greater efficiency allows clients to drill more wells with a single rig.
Baker Hughes said increased profitability in North America would offset a seasonal decline in its international and industrial businesses in the first quarter.
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