NEW YORK (AP) -- While executives promoted their $15.6 billion deal to unite Phillips Petroleum Co. and Conoco Inc. as a merger of equals, analysts described it Monday as a simple matter of survival.
Phillips is a major force on the North Slope of Alaska, and also has a presence on the Kenai Peninsula. But Conoco hasn't been active in Alaska in recent years, so a merger isn't likely to result in significant job cuts here.
If Phillips and Conoco hadn't decided to join forces, they risked losing market share to competitors in a business climate that's increasingly unhealthy for all but the largest petroleum companies, the analysts said.
''This is absolutely a matter of survival -- not necessarily to thrive, but to guarantee they will survive,'' said Fadel Gheit, an analyst at Fahnestock & Co. ''If oil and gas prices collapse, smaller companies will be swept away.''
Oil prices recently have plunged to their lowest level in more than two years, with gasoline averaging $1.23 a gallon at stations nationwide, according to the Lundberg Survey. Prices at the pump could drop further if OPEC fails in its efforts to stop the free-fall.
In a conference call Monday, top Phillips and Conoco officials said the merger will allow them to save at least $750 million annually, in part through elimination of jobs from the combined company's roster of 58,000 employees.
Phillips chairman James Mulva said it's too soon to say how many positions will be cut. Gheit predicted about 10 percent of the work force would be eliminated.
The combined company will be the country's top refiner and a gas retailing giant, with 17,000 filling stations nationwide. Conoco sells gasoline, diesel fuel, and other petroleum products at 5,000 outlets in the United States, while Phillips sells fuel at more than 12,000 stations under brands such as Phillips 66, Circle K, and 76.
The all-stock deal, announced Sunday, gives the new company -- named ConocoPhillips -- a $35 billion market value. It puts it in the No. 3 position behind Exxon Mobil Corp. and ChevronTexaco Corp. in the United States, and ranks it sixth-largest in the world.
Officials took pains Monday to describe the deal as a merger of equals, though Phillips shareholders will end up with a 56.6 percent stake in the new company and Conoco shareholders will own 43.4 percent.
Although Phillips has a larger stake, the new headquarters will be in Houston -- where Conoco is based -- instead of Bartlesville, Okla., where Phillips employs 2,400 at its headquarters and research facility.
In a power-sharing arrangement, Conoco chairman Archie W. Dunham is delaying his retirement to serve as chairman while Mulva becomes chief executive. When Dunham retires in 2004, Mulva will become chairman.
Both will hold seats on the combined company's board -- which will have 16 directors, eight from each company -- and both will receive the same compensation package.
Wall Street reacted positively to the deal, with investors sending each company's shares higher Monday. Conoco shares soared $1.68, or almost 7 percent to close at $25.98 on the New York Stock Exchange, while Phillips shares rose $1.53, or almost 3 percent, to $53.35.
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