NEW YORK — A five-month slump in oil prices hasn't spooked the petroleum industry so far.
Halliburton Co., a major provider of oil industry services, said its profit increased 26 percent in the third quarter as drilling activity rose in in the U.S.
The Houston-based company is the first big player in the industry to report third-quarter results.
The number of drilling projects grew 6 percent in the U.S. from the second to third quarter, Halliburton said. The company expects producers to continue to drill aggressively for oil in the U.S., particularly the rich underground shale deposits such as the Eagle Ford region of Texas and the Bakken region in North Dakota and Montana. New technologies have allowed companies to cheaply produce oil and natural gas from those fields, sparking a rush to drill despite a 24-percent drop in the price of benchmark crude since May.
Oil companies may eventually cut back, but Halliburton CEO Dave Lesar said he doesn't see "any meaningful changes" in the industry for now.
"I continue to believe in the long-term prospects for our business," he said.
A plunge in oil and natural gas prices three years ago forced many companies to scale back on drilling. The number of active rigs dropped by more than half as gas lost two-thirds of its value from July 2008 to July 2009. Oil dropped from $147 to $61 per barrel in that period.
This time will be different, Lesar said. Oil giants like Exxon, Chevron and Royal Dutch Shell have become increasingly involved in America's oil and gas fields in the past three years, and they usually don't change course because of a short-term fluctuation in prices. Drillers are also increasingly focusing on shale fields that are rich in oil, and oil has held its value better than natural gas, even though its price has fallen from near $114 a barrel in early May to more than $86 Monday.
With benchmark crude above $86, "oil is still high enough to sustain activity" in the U.S., Argus Research analyst Phil Weiss said. Weiss estimates oil producers wouldn't start losing money until crude prices slumped below $60.
Three big acquisitions over the past day show high expectations for the energy industry.
Norwegian oil company Statoil ASA announced Monday that it would buy Brigham Exploration Co. of Austin, Texas for $4.4 billion in cash, giving it control of fields in North Dakota. Less than three hours later AmeriGas said it would pay $2.9 billion for the propane operations of Energy Transfer Partners.
Kinder Morgan plans to buy El Paso Corp. for $20.7 billion in a deal that would create America's largest natural gas pipeline operator.
One area of concern is natural gas drilling, which has stalled in the U.S. as prices for the fuel dropped to less than a third of their value in 2008. Lesar said drilling activity has been flat and could stay that way.
Halliburton's prospects also were clouded by troubling legal news.
The company may be forced to pay millions or billions of dollars as part of its role in last year's Gulf of Mexico oil spill. Halliburton, which was hired to do cement work on the well, has shared the blame for the disaster with well owner BP and rig owner Transocean. Halliburton has denied that it is at fault, but analysts say it may pay BP anyway to clear itself from any future legal claims.
A stake holder in the well, Anadarko Petroleum Corp., on Monday agreed to pay BP $4 billion.
BP already has accepted a $75 million settlement from contractor Weatherford International Inc. and a $1 billion settlement with MOEX Offshore 2007 LLC, which owned 10 percent of the well.
Shares fell $2.95, or 7.9 percent, to close at $34.48 Monday.
Canaccord Genuity analyst Scott Burk said the stock price decline follows a sharp rise last week. Some investors were anticipating profit increases similar to the first half of the year, when Halliburton nearly doubled its net income. Halliburton may have exceeded analyst expectations in the third quarter, but "it wasn't a blowout quarter," Burk said.
The Houston oil services company reported earnings of $683 million, or 74 cents per share, for the three months ended Sept. 30. That compared with $544 million, or 60 cents per share, for the same period in 2010. Revenue rose 40 percent to $6.55 billion.
Income from continuing operations was 94 cents per share. Analysts, who tend to base estimates on continuing operations, were expecting earnings of 91 cents per share on revenue of $6.35 billion, according to FactSet.
The company said costs rose for materials, logistics and labor in North America, and project delays in Iraq and Libya slowed down its international business.
Profit at Halliburton's completion and production business increased 75 percent to $1.07 billion. The company's drilling and evaluation business saw profit increase 36 percent to $369 million.
Schlumberger Ltd. is expected to release its financial results on Friday while Baker Hughes Inc. will post its results on Nov. 1.
___Chris Kahn can be reached at http://twitter.com/ChrisKahnAP