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HOUSTON - ConocoPhillips, the No. 3 U.S. oil company, announced a quarterly loss on Thursday and said it is cutting its shareholder dividend by two thirds, finally running out of tricks to protect the payout as it braces for a long downturn.

The Houston oil producer said it lost $3.5 billion, or $2.78 a share, in the fourth quarter, down from its net loss of $39 million, or 3 cents a share, in the same period the year before. Its revenues sank 42 percent to $6.8 billion.

While we don't know how far commodity prices will fall, or the duration of the downturn, we believe it's prudent to plan for lower prices for a longer period of time, ConocoPhillips CEO Ryan Lance said in a written statement.

It lowered its 2016 capital spending guidance 16 percent to $6.4 billion as it reduces activity in U.S. shale plays, even as its crude production remains flat for the year. It also said it will cut its expectations for operating costs 9 percent to $7 billion.

The dividend will be reduced from 74 cents a share to 25 cents a share, its first reduction in years. Even after ConocoPhillips spun off its refining business into Phillips 66 three years ago, it kept its dividend at the same level, giving shareholders a higher dividend yield than even its biggest oil-company rivals.

Houston investment bank Tudor, Pickering, Holt & Co. said ConocoPhillips' dividend yield dropped from 7.7 percent to 2.6 percent on Thursday, trailing the 5-year average of 4.5 percent.

But it is now in line with large independent producers that Tudor Pickering covers, the investment bank said.

In the fourth quarter, the firm wrote down the value of its oil properties and exploration assets by $2.2 billion. It also took a restructuring charge  typically related to severance costs of $55 million.