Schlumberger & Baker Hughes results point to improving North America

* Schlumberger (Frankfurt: SCL.F - news) first-quarter profit $1.21/share vs est. $1.20

* Baker Hughes (Stuttgart: BHU.SG - news) first-quarter adjusted profit $0.84/shr est. $0.78

* Both upbeat on Gulf of Mexico deepwater drilling (Recasts to adds details on outlook risks, new share prices)

By Sayantani Ghosh and Ashutosh Pandey

April 17 (Reuters) - Oilfield services providers Schlumberger Ltd and Baker Hughes Inc each posted better-than-expected quarterly profit on Thursday, though they said pockets of weakness loom in Brazil, Canada, Russia and other drilling regions.

The results highlight a rapidly changing landscape for the oilfield service industry, where companies are competing for a smaller number of new contracts in North American shale fields. At the same time, they are moving into newer, more-lucrative Eastern Hemisphere regions that have higher logistical risks.

Schlumberger and Baker Hughes, which provide drilling technology and equipment, well construction services and seismic surveys for oil and natural gas companies, have for months been complaining of market weakness in North America.

Additionally, Royal Dutch Shell (Xetra: R6C1.DE - news) and other large, international oil companies, after a decade of double-digit growth in capital budgets, have begun cutting spending as oil prices stagnate and project costs rise, a bad sign for oilfield service companies.

Executives from Schlumberger, the world's No. 1 oilfield services company by revenue, and Baker Hughes told analysts on conference calls they expect results to slightly improve this year in parts of North America but they warned of potential problems in other regions.

Schlumberger said deepwater drilling off Brazil should decline 20 percent this year compared with last year and that revenue could drop in Russia due to weakness in the rouble. Both countries are important markets for Schlumberger.

"Brazil revenue for us this year is going to be significantly down versus 2013," Schlumberger Chief Executive Officer Paal Kibsgaard said on a call with analysts, citing slipping demand and less-lucrative contracts signed last year.

Baker Hughes said its revenue this quarter would decline slightly in North America, where it gets half its annual revenue, partly due to a slowdown in Canada.

GULF OF MEXICO HOLDS PROMISE

Three years after the worst offshore oil spill in U.S. history, large oil and gas companies are ramping up operations in the Gulf of Mexico, which they expect to yield more than 700,000 barrels per day of crude.

"The Gulf of Mexico will play a big role in our North American margin growth," Baker Hughes Chief Executive Officer Martin Craighead said.

While Schlumberger's revenue from deepwater drilling in the region fell in the first quarter due to operational delays, it expects the situation to normalize this quarter.

"The outlook for deepwater drilling activity in the Gulf of Mexico remains strong for the full year," Kibsgaard said.

Baker Hughes, which said it had a good first quarter in the Gulf, expects business in the region to continue to improve and boost margins particularly in the second half of the year.

The company's North American revenue rose 12 percent to $3.68 billion in the first quarter. Baker Hughes posted a 7 percent rise in revenue to $2.78 billion from the region.

Baker Hughes' shares rose 4.1 percent to $69.05 in afternoon trading.

Schlumberger's shares, which hit their highest point in nearly six years on Thursday morning, fell 0.4 percent to $100.53. The stock has risen about 12 percent in the past month, outperforming shares of Halliburton Co and Baker Hughes.

In the past few quarters, unusually cold weather in North America and Russia disrupted drilling, hurting oil and gas companies while pushing up natural gas prices in North America and depleted stockpiles to their lowest level since 2003.

Kibsgaard said the fundamentals of the global economic recovery were intact despite the harsh winter, slowing growth in China, and problems in Ukraine.

Schlumberger, which cut its 2014 capital spending budget by about 3 percent to $3.8 billion, said it expected spending on well-related activity to rise by more than 6 percent this year.

WEAK LATAM

Schlumberger's first-quarter revenue fell short of analysts' average estimate due to reduced drilling activity and pricing pressure in Latin America.

Revenue from the region declined 8 percent to $1.76 billion, the lowest in eight quarters. Latin America accounted for nearly 16 percent of Schlumberger's total sales in the first quarter ended March 31.

Schlumberger's profit from continuing operations rose 32.5 percent to $1.59 billion, or $1.21 per share, in the first quarter. Analysts had expected a profit of $1.20 per share.

The company's total revenue rose about 6 percent to $11.24 billion, but missed an average estimate of $11.49 billion, according to Thomson Reuters I/B/E/S.

Baker Hughes also posted a 10 percent drop in quarterly revenue from Latin America.

The company's adjusted profit rose 27 percent to 84 cents per share, while revenue rose nearly 10 percent to $5.73 billion. Analysts on average had expected earnings of 78 cents on revenue of $5.71 billion. (Writing by Sayantani Ghosh in Bangalore and Ernest Scheyder in New York (Frankfurt: HX6.F - news) ; Editing by Saumyadeb Chakrabarty, Terry Wade and Tom Brown)