J. Pat Carter/AP About $387 million of the charges were for write-downs associated with unused oil and gas wells

California-based Unocal Corp. also blamed its quarterly loss on depressed oil prices.

Fairfax, Va.-based Mobil, the nation's second-largest oil company, has agreed to be acquired by Exxon Corp. That merger, now under review by regulators, would create the world's largest company in terms of revenue.

Wednesday, Mobil said writeoffs for unprofitable oil wells and inventories pushed it to a net loss of $152 million, or 21 cents a diluted share, in the fourth quarter.

In its last-ever earnings report, Mobil said a 40 percent drop in oil prices forced it to take fourth-quarter charges of $651 million. A year ago, Mobil reported net income of $704 million, or 86 cents a diluted share, in the fourth quarter.

The plunge in oil prices, when adjusted for inflation, brought the price of crude to the lowest level in 25 years. West Texas Intermediate crude oil blend prices fell below $13 a barrel in 1998 from an average of $17 to $21 per barrel in the previous 10 years.

About $387 million of the charges were for write-downs associated with oil and gas wells where production is uneconomic at today's oil prices below $13 per barrel, Mobil said. Oil inventory writedowns totaled $270 million, while the remainder covered restructuring and other items.

On an operating basis, Mobil's fourth-quarter earnings slid 38 percent to $499 million, or 62 cents a diluted share, from $809 million, or 99 cents a share in 1997's fourth quarter.

This was ahead of analysts' forecasts for operating earnings of 50 cents a share.

Mobil's revenues in the fourth quarter fell to $13.22 billion from $16.57 billion in the year-ago period.

"Business fundamentals, as evidenced by the uncertain outlook for prices and margins in the near term, continue to be unpredictable," Mobil's Chairman and Chief Executive Lucio Noto said. Weak oil and gas prices had an "unfavorable impact" of $1.4 billion on the company's 1998 results, he said.

Amid a general selloff in oil shares, led by Texaco Inc., Mobil's stock dropped 87.5 cents to $87.6875 a share Wednesday in composite New York Stock Exchange trading.

A Texaco executive told analysts in a conference call Wednesday that defending its dividend in the current abysmal industry conditions was "paramount." The official added that although Texaco expects some improvement in oil prices, the company is reluctant to set long-term production targets.

Texaco's quarterly dividend on its common stock is 45 cents a share.

Texaco's stock fell $1.875 to $46.625 Wednesday in composite NYSE activity. Since Monday, Texaco's stock has lost $4.25, which has wiped off more than $2.2 billion off the company's market capitalization.

Eugene Nowak, oil analyst at ABN AMRO Inc., said, "Investors recognize the fourth quarter was a disaster and now the market is looking hard at the valuation of oil equities."

The impact of the drop in oil and natural gas prices was shown by the fact that Mobil earned $252 million from its upstream, or exploration and production, operations, less than half of last year's $546 million.

Mobil's refining and marketing earnings rose in the fourth quarter to $300 million, up $7 million from a year ago, mainly due to a stellar performance overseas, where earnings climbed by $70 million to $193 million. Mobil's performance in Europe was aided by an improvement in refining margins and its alliance with BP Amoco Plc .

The chemicals business, as Mobil had expected, had a poor quarter, with earnings falling to $24 million in the fourth quarter, down $48 million from a year ago.

Despite record refining and marketing earnings of $1.42 billion for the year, Mobil said $662 million of special charges pushed its total 1998 net income down to $1.7 billion from $3.3 billion in 1997. On a per-share basis, Mobil's results were almost cut in half — to $2.10 per diluted share in 1998 from $4.01 per diluted share in 1997.

At Conoco, President and Chief Executive Archie Dunham said the Houston-based oil giant had suffered from the worst industry conditions in 25 years, but noted it was poised for growth.

Wednesday, Conoco reported a fourth-quarter net loss of $263 million, or 42 cents a share, in its first stand-alone earnings report since part of it was spun off last autumn by DuPont Co. in a record-breaking initial public offering. In the 1997 fourth quarter, Conoco earned a profit of $221 million, or 35 cents a share, in the 1997 quarter.

"Despite difficult economic conditions, the company moved aggressively toward its long-term growth objectives," Dunham said.

In addition to historically low crude prices, poor demand and warm weather also hurt Conoco's bottom line, Dunham said.

Thirty percent of Conoco was spun off from DuPont in the autumn of 1998 in the largest initial public offering in U.S. history, worth $4.4 billion. DuPont plans to spin off the rest of Conoco by the end of 1999.

On an operating basis, before charges of 47 cents a share in the quarter, after-tax income was cut by over 50 percent to $95 million, or five cents per share, from $200 million, or 32 cents a share, in the 1997 fourth quarter.

Conoco's revenues in the fourth quarter dropped 19 percent to $5.7 billion.

Operating earnings for Conoco were in line with analysts' forecasts.

For the full year, Conoco's net income fell to $450 million, or 71 cents a share, after $271 million in charges, from $1.097 billion, or $1.72 per share, in 1997.

Revenues in 1998 fell $23.2 billion, down 12 percent from 1997 levels, due to the fall in crude oil prices, Conoco said. Worldwide crude prices averaged $12.37 per barrel in 1998, down 33 percent from 1997, the company noted.

Conoco reduced its debt from $8.9 billion at Sept. 30, 1998, before the IPO, to $4.7 billion at year-end.

Wednesday, Conoco's shares fell 56.25 cents to $19.5625.

Unocal, based in El Segundo, Calif., lost $29 million in the fourth quarter, or 12 cents a diluted share, due to depressed oil prices, coupled with costs and asset writedowns.

In the year-earlier quarter, Unocal earned $142 million, or 57 cents a share.

Unocal's fourth-quarter revenue totaled $1.48 billion, off 5 percent from $1.56 billion in the 1997 quarter.

Wednesday, Unocal's stock slid 87.5 cents to $28.375 a share in composite NYSE trading.