UPDATE 4-Halliburton profit slides, but tops Wall St view

* Q3 EPS ex-items 31 cts beats Wall St's view of 26 cts

* Revenue falls 26 pct to $3.6 bln

* Margin guidance raised for international markets

* Shares rise 3.3 pct (Adds analyst comment, details from conference call)

NEW YORK/SAN FRANCISCO, Oct 16 - Halliburton Co posted a 61 percent drop in quarterly profit on Friday, hurt by weak North American natural gas activity, but better-than-expected results elsewhere helped it top forecasts.

Shares of the world's second-largest oilfield services company rose 3.3 percent in morning trading on the New York Stock Exchange.

Company executives gave an improved outlook for international pricing over the next year, and said North American margins should bottom out after facing seasonal pressure in the fourth quarter.

"Halliburton's guarded commentary is cautiously optimistic, but still guarded," said Mark Brown, senior analyst at Pritchard Capital Partners.

Shares of larger rival Schlumberger Ltd were down as the overall U.S. stock market weakened, though Weatherford International Ltd, which has been aggressively shrinking its North American exposure, rose 0.5 percent.

Halliburton's third-quarter profit fell to $262 million, or 29 cents per share, from $672 million, or 76 cents per share, a year earlier. Revenue fell 26 percent to $3.6 billion.

Excluding $19 million in charges for cutting jobs, earnings per share of 31 cents topped the 26 cents that analysts on average had forecast, according to Thomson Reuters I/B/E/S.

Halliburton, which warned last month that its third-quarter margins in North America would decline from the previous quarter, saw North American operating profit tumble more than 90 percent and revenue shrink by 43 percent from a year ago.

Despite that, a third of its third-quarter revenue still came from North America, where the number of oil and gas rigs now operating is half the level of a year ago. This meant there were fewer opportunities to sell services to drillers, though Halliburton has been gaining market share.

Analysts said revenue and profit in the rest of the world held up better than expected. Revenue in the Middle East, Asia, Europe, Africa and the former Soviet region slipped about 10 percent, while Latin America posted a 16 percent decline.

International margins, excluding employee leaving costs, were 22 percent in the third quarter, and Chief Financial Officer Mark McCollum said they could fall to the "upper teens" next year, instead of the mid to high teens expected before.

WEAK U.S. NATGAS

U.S. natural gas prices hit their lowest level in nearly eight years in September, although they have started a recovery that many analysts expect to continue steadily into next year.

That rebound has helped stem declines in prices for oilfield services, but margins in the key North American market will probably remain under pressure in the fourth quarter.

Executives expect North American activity to pick up next year, but warned that profits would not bounce as quickly.

"Clearly, we see a kick up on the revenue side, but the margin side, I think, is going to lag," Chief Executive David Lesar told analysts and investors on a conference call.

BMO Capital Markets this week initiated coverage of Halliburton and Schlumberger with "outperform" ratings, in the belief that earnings would pick up in 2010. ID:nBNG444483

Schlumberger is due to report its earnings next Friday, while Weatherford reports on Monday.

Halliburton shares were up $1 at $30.85. The stock is up 69 percent in 2009, in line with the sector.