A private-equity consortium headed up by Candover Partners Ltd., a wholly owned subsidiary of Candover Investments PLC, and Goldman Sachs Group Inc. (GS) has boosted its initial bid for U.K.-based Expro International Group PLC (PINK: EXPRF) by 8%, just narrowly beating out Halliburton Company’s (HAL) $3.4 billion (1.71 billion pounds) cash offer.

The counter bid - announced mid-afternoon today (Friday) - was made necessary after Halliburton trumped Candover’s bid earlier today. The Candover-led consortium’s original $3.2 billion bid had been launched on April 17.

The Halliburton bid represented a 6.2% premium over that original offer. Analysts said they expected Candover would respond with a higher bid - a correct assumption, as it turns out - but noted that they ultimately expected Halliburton to be the winner.

“I expect then Halliburton to top Candover’s bid and become the winner, unless there’s another industrial player,” Jane Coffey, head of equities at Royal London Asset Management, said earlier today in a telephone interview with Bloomberg News.

What analysts such as Coffey hadn’t counted upon, however, was the speed with which Candover came back with a new bid. That quick response is now leading some analysts to predict that Expro will take the slightly higher offer without waiting for a possible counteroffer from Halliburton.

“If I’m Expro, I’m like, ‘No, you had four weeks doing due diligence,’” James Wicklund, of Carlson Capital LLC in Dallas, told Bloomberg. “‘If you want to raise your bid, raise your bid. How many times do you need to go through the underwear drawer to know what you have?’”

Surging demand for oil from developing economies such as China and India have pushed oil to record levels over the past year. Just this week, West Texas intermediate crude crossed the $135-a-barrel threshold.

With oil commanding such a high price, Halliburton and its larger rival Schlumberger Ltd. (ADR: SLB), have profited as oil-rich nations have turned to the oil-services firms for help with excavation and exploration, forgoing the assistance of international oil majors, in hopes of keeping a larger chunk of revenue for state coffers.

At the same time oil demand is skyrocketing, some of the easy-to-reach oil deposits are starting to dry up, forcing the oil majors to experiment with more-challenging and - and much-more costly - deep-sea drilling expeditions. Oil at $135 a barrel can cover the cost of hard-to-reach sites that were previously considered financially unfeasible, making a company with Expro’s technology and experience a valuable asset.

Such heavy-hitters as Exxon Mobil Corp. (XOM), BP PLC (BP), Total SA (TOT), Chevron Corp. (CVX), ConocoPhillips (COP), and Royal Dutch Shell PLC (RDS.A, RDS.B), will spend a record $98.7 billion this year on exploration and production, according to Lehman Bros. Holdings Inc. (LEH).

And some of that almost $100 billion in exploration and production fees is bound to end up in the pockets of Expro, given that it’s among the leaders in deep-sea oil exploration. The firm’s experience with underwater wells at levels deeper than 1,000 meters (3,281 feet) would be a nice complement to Halliburton’s existing services.

Many analysts feel the deal makes too much sense for Halliburton to pass up.

“The consortium is private equity, with returns that need to be made - the higher their bid, the lower their returns,” Phillip Lindsay, an analyst with ABN Amro Holding NV (OTC: ABNYY), told Forbes. “I would say Halliburton is in a stronger financial position. I certainly think Halliburton could bid higher.”

Source: Halliburton Offer Sets Off Bidding War for Deep Sea Oil Expert