May 23 (Bloomberg) -- Halliburton Co., the world's second- biggest oilfield contractor, topped a rival takeover bid for Expro International Group Plc, stoking speculation the competing suitors will ratchet up the price.

Expro rose 0.4 percent to 1,547 pence as of 3:07 p.m. in London, exceeding Halliburton's all-cash offer of 1.71 billion pounds ($3.4 billion), or 1,525 pence a share. That's more than the 1,435 pence a share offered by Candover Partners Ltd. and Goldman Sachs Group Inc. on April 17. Candover, a U.K. private- equity firm, said it's reviewing the bid.

``This is not over as I think Candover will come back with another bid,'' said Jane Coffey, head of equities at Royal London Asset Management, which manages $63 billion. ``I expect then Halliburton to top Candover's bid and become the winner, unless there's another industrial player.''

Expro, based in Reading, England, is in demand because its equipment tests oil wells drilled in waters deeper than 1,000 meters (3,281 feet), enabling oil companies to exploit deposits that were made more profitable by crude prices above $130 a barrel. The company also has a production-testing technology that Houston-based Halliburton lacks and could further the U.S. contractor's effort to increase sales outside North America.

``We are looking at the situation,'' Susanna Voyle, a spokeswoman for Candover, said today. The joint bid with Goldman and AlpInvest Partners NV, a Dutch investor in Candover's private-equity funds, valued Expro at 1.61 billion pounds.

Flow Management

Joanna Carss, a London-based spokeswoman for Goldman, declined to comment. Halliburton spokesman Neil Bennett didn't immediately respond to a telephone message seeking comment.

``Expro is very well established in the flow-management arena, which is an area which, really, Halliburton does not participate in significantly,'' Tim Probert, executive vice president of Halliburton's strategy and corporate development, told investors on an April 21 conference call. ``That's clearly one of the attractions.''

Production testing allows oil companies to evaluate a reservoir and fluids in a well before deciding whether to spend more money developing the prospect.

Expro has surged about 50 percent this year. Halliburton rose 21 cents to $48.49 in New York, leaving the shares 28 percent higher than where they began the year.

Services Demand Increases

Surging energy prices have driven companies to explore for oil and gas in harder-to-reach fields, boosting demand for technology that allows drilling offshore and in the Arctic. Buyout firms including First Reserve Corp. are also acquiring oil-services companies, betting on rising competition for commodities.

First Reserve and Schlumberger Ltd., the world's biggest oilfield-services provider, agreed to buy Canada's Saxon Energy Services Inc. on May 5 for C$592.1 million ($601.7 million) to expand in South America. First Reserve also agreed to buy Scottish oil driller Abbot Group Plc in December for 906 million pounds.

Expro said May 20 that net income in the 12 months ended March 31 jumped 45 percent to 49.3 million pounds as orders from oil companies increased. The company's revenue has more than doubled in the past five years

Exxon Mobil Corp., Royal Dutch Shell Plc, BP Plc, Chevron Corp., Total SA and ConocoPhillips will spend a record $98.7 billion this year on exploration and production, according to Lehman Brothers Holdings Inc. estimates. Costs more than quadrupled since 2000 as explorers targeted more challenging reservoirs, boosting demand for field services.

Record Prices

Rising energy demand by countries including China and India has pushed oil prices to all-time highs. Brent crude oil for July settlement traded at a record $135.14 a barrel on London's ICE Futures Europe exchange yesterday, almost double the price a year earlier.

Oil-producing countries, seeking to keep a larger share of revenue, are hiring Halliburton, Schlumberger and other contractors to do work previously handled by companies such as Exxon, which typically seek stakes in projects.

Halliburton said April 21 that first-quarter profit rose 5.8 percent to $584 million after producers increased spending on Middle East and Latin American projects.

Halliburton is adding research and training centers from Russia to Singapore as it diversifies away from North America, which accounted for 47 percent of revenue last year. U.S. and Canadian business is dominated by regional natural-gas markets, where weather can cause prices to surge or plummet.

Dubai Headquarters

Chief Executive Officer David Lesar splits his time between the U.S. and Halliburton's regional headquarters in Dubai. The Eastern Hemisphere accounted for 41 percent of Halliburton's first-quarter revenue. Lesar has said he'd like the region to account for half of sales.

Expro derived 75 percent of its revenue from the Eastern Hemisphere last year, according to Wachovia Securities Inc.

Halliburton's proposal isn't a ``firm offer'' and is subject to pre-conditions, Expro said today in a statement. The U.K. company said it was announcing the proposal without the approval of Halliburton.

To contact the reporters on this story: Paul Dobson in London at pdobson2@bloomberg.net; Jim Kennett in Houston at jkennett@bloomberg.net.

Last Updated: May 23, 2008 10:13 EDT