While executives promoted their $15.6 billion deal to unite Phillips Petroleum Co. and Conoco Inc. as a merger of equals, analysts described the combination as a deal done to survive. 

If Phillips and Conoco hadn't decided to join forces, analysts said Monday, they risked losing market share to competitors in an unhealthy business climate for all but the largest petroleum companies. 

"This is absolutely a matter of survival - 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 have already plunged to their lowest level in more than two years despite efforts by OPEC (to trim production and stop the free fall. Gas is now selling for less than $1 a gallon in some parts of the country and is averaging $1.23 a gallon at stations nationwide, according to the Lundberg Survey. 

In a conference call with analysts Monday, top Phillips and Conoco officials said the merger will allow them to save at least $750 million annually, in part through the elimination of an unspecified number 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, but Gheit predicted about 10 percent of the work force would be eliminated. 

"You cannot say you are cutting costs if you cut less than 5 percent,'' Gheit said "And if you want to be aggressive with a sharp knife you can cut 15 to 20 percent, which I see as unlikely.'' 

The combined company will be the country's top refiner and a gas retailing giant, with about 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. 

ConocoPhillips will have reserves of 8.7 billion barrels of oil equivalent and daily production of 1.7 million barrels. 

Officials took pains Monday to describe the deal as a merger of equals, though under its terms, Phillips shareholders will end up with a 56.6 percent stake in the new company and Conoco shareholders will own 43.4 percent. 

But even though 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. And the Conoco name goes first in the new name of the combined company. 

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. 

"For accounting purposes Phillips is acquiring Conoco,'' said analyst Michael Mayer of Prudential Securities. But in a cultural sense, "it's a merger of equals.'' 

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. 

A familiar face to U.S. motorists with its Phillips 66 logo, Phillips has engaged in a flurry of growth acquisitions after being among the smaller integrated companies for decades. 

Last year, it merged its gas gathering and processing operations with Duke Energy and acquired production assets in Alaska jettisoned by BP Amoco to secure approval of its acquisition of Atlantic Richfield. Phillips also combined its chemicals division with ChevronTexaco. 

In February, Phillips acquired Tosco Corp., of Greenwich, Conn. for $7 billion in stock. 

Meanwhile, in May, Conoco acquired Gulf Canada Resources, greatly increasing its international oil reserves. Conoco operates nearly 6,000 miles of pipelines in the United States and has stakes in nine refineries in the United States, Europe and Asia. 

Regulatory approval is expected, though ConocoPhillips may be forced to divest some filling stations in states in the Rocky Mountains, the Midwest and along the Gulf Coast because of heavy overlap in those areas, said Dan Gilligan, president of the Petroleum Marketers Association, in Arlington, Va. 

Mayer said the Phillips-Conoco combination makes good business sense. 

"The companies have very complementary assets, they have the opportunity to increase their market presence substantially, and generate cost savings,'' Mayer said. 

Conoco shareholders won't get a premium, but Gheit predicted they'll support the deal because the combined company will be a stronger player than Conoco would be by going it alone. 

"They are exchanging your currency for a stronger currency,'' he said.