Global drilling demand will either slow down or speed up in 2014, according to energy industry pundits. The direction depends in large part on oil and gas producers’ capital spending, which in turn will depend on crude demand and oil prices.

2013 was a very good year for oilfield services companies, with all three of the largest firms posting share price gains of more than 33%. Demand in North America was high even though some services — like pressure pumping — were oversupplied and margins all but evaporated.

Last year’s growth came primarily from outside North America, but it is not so clear that we will see the same level of international demand again this year. International exposure may be the key to profits for the services company in 2014.

Since early October, Schlumberger Ltd. (NYSE: SLB) has seen its shares gain a paltry 0.2%, compared with a 12-month gain of about 11% and a 2013 gain of nearly 33%. Of the three major services companies, Schlumberger gets the smallest portion of its revenues from North America, about 30%. The firm’s market cap is round $114 billion, nearly three times larger than its nearest competitor. The stock closed at $86.16 on Wednesday, and the consensus analyst price target of around $110.10 indicates a potential upside of nearly 28%. Shares have traded in a range of $69.08 to $94.91 over the past year. With a fiscal year 2015 earnings per share estimate of $6.76, it is valued at nearly 13 times next year’s expected earnings.

Halliburton Co. (NYSE: HAL) shares are up about 2.6% since October. The company’s 12-month share price gain totals nearly 24%, and shares rose more than 49% in 2013. The second largest services firm, with a market cap of nearly $43 billion, Halliburton’s North American revenues declined by 1% in the fourth quarter and operating income in Latin America was flat. These two regions represent nearly two-thirds of the company’s business, so something has to go right if Halliburton expects to top last year’s performance. The stock closed at $50.43 on Wednesday, and the consensus analyst price target of around $63.80 indicates a potential upside of about 27%. Shares have traded in a range of $36.77 to $56.52 over the past year. With a fiscal year 2015 earnings per share estimate of $5.01, it is valued at about 10 times next year’s expected earnings.

Shares of Baker Hughes Inc. (NYSE: BHI) are up about 18% since early October. The stock gained more than 27% in the past 12 months, and the 2013 share price increase totaled more than 38%. The company’s market cap is around $25.5 billion. Its outlook for the first quarter includes sequential improvement in earnings, excluding the impact of one-time disruptions in Iraq. The stock closed at $57.01 Wednesday, and the consensus analyst price target of $64.00 indicates a potential upside of about 12%. Shares have traded in a range of $42.60 to $58.83 over the past year. With a fiscal year 2015 earnings per share estimate of $4.99, it is valued at about 11.5 times next year’s expected earnings.

Just for comparison, the Market Vectors Oil Services ETF (NYSEMKT: OIH) has gained just 3.7% in the past 12 months. The fund posted a 2013 gain of nearly 21%, still well below any of the company gains.

Halliburton, with a forward multiple of around 10 and a potential upside of 27% appears to be undervalued, compared with the others. Because the company depends so heavily on work in North and South America, any slowdown on either continent could hit the company harder than its competitors.

Schlumberger is not immune to a slowdown in North America, but its heavier load of international work could lessen the impact of a slowdown in the Americas.

Baker Hughes’s potential upside is the lowest of the three, and its exposure to North and South America markets is almost as heavy as Halliburton’s. The stock price could rise, but as a value play, either Halliburton or Schlumberger gets our nod.

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