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ConocoPhillips (COP) said Wednesday it would shed $10 billion in assets over the next two years, cut expenditures and raise dividends in a bid to shore up its finances and restore confidence among investors.

The move represents a major turnabout for an oil and gas company that embarked on gigantic acquisitions and racked up debt during boom times, which came to an abrupt end as the global recession ensued. ConocoPhillips, the third-largest U.S. energy company by market value after ExxonMobil Corp. (XOM) and Chevron Corp. (CVX), has fared worse than its peers following last year's collapse of petroleum and natural gas prices.

ConocoPhillips upped its exposure to both natural gas and refining on the assumption that prices for raw hydrocarbons and useful products such as gasoline and diesel would remain relatively high. When it became apparent that its early estimates were overly optimistic, ConocoPhillips earlier this year cut thousands of jobs and slashed capital expenditures - the only major integrated U.S. oil company to do so.

The company said last week that its third-quarter earnings would be hit by lower natural gas prices and weak refining profits.

The changes come amid speculation among analysts that ConocoPhillips is seeking to quell discontent among investors.

ConocoPhillips said it would cut its capital budget by 12% to $11 billion, and proceeds from the sale of exploration, production and refining assets would go toward bringing its debt ratio to a targeted 20% to 25% from its current levels of about 34%. The company's debt burden rose after the acquisition of North American natural-gas provider Burlington Resources for about $35 billion in 2005, and last year, ConocoPhillips paid $8 billion for a 50% stake in the coal seam assets of Australia's Origin Energy Ltd. Both purchases, which took place when energy prices were high, are currently perceived as ill-timed.

The firm also said it would boost its quarterly dividend by 6.4% to 50 cents. ConocoPhillips shares recently were 2.4% higher at $49.57. Its stock peaked above $95 in June 2008; it has since then fallen further than the shares of both ExxonMobil and Chevron, which saw a 30% drop in the same period.

"We will replace reserves and grow production from a reduced, but more strategic, asset base," Chief Executive James Mulva said in a statement.

Some analysts were dismayed that ConocoPhillips was cutting capital investments such as drilling programs at a time when the company needs to boost output. It's also putting assets up for sale just as values are bottoming out. ExxonMobil is capitalizing on weak market conditions to scoop up potentially lucrative oil fields on the cheap: the Irving, Texas-based company said Tuesday it would buy a $4 billion stake in an oil field off the coast of Ghana as it seeks a foothold in a promising new oil-producing region.

Conoco's dividend increase also worried some analysts.

"If I was a shareholder, I'd prefer to see a higher capital budget rather than a dividend increase," said Phil Weiss, analyst at Argus Research. "I don't think it makes sense to raise the dividend at the same time a company is cutting spending and rationalizing its asset base."

ConocoPhillips didn't specify what assets it would sell, but analysts have previously said that shedding the company's 20% stake in Russia's OAO Lukoil (LKOH.RS) could be a good option; so would the sale of assets in which the company is not the operator.

Conoco, one of the world's largest crude refiners, has minority stakes in Germany's 310,000 barrel-a-day Karlshruhe refinery. The refinery's other owners include German units of Royal Dutch Shell PLC (RDSA), ExxonMobil and Ruhr Oel GmbH, a joint venture between BP PLC (BP) and Petroleos de Venezuela SA, or PdVSA (PVZ.YY). Last week PdVSA acquired ConocoPhillips' stake in a natural gas block offshore Venezuela.

Conoco also owns a 47% interest in small refinery in Melaka, Malaysia. Malaysia's national oil company Petronas is the other co-owner.

A spokesman for ConocoPhillips said more details about the announced changes would be discussed during a conference call following an Oct. 28 report on third-quarter earnings.

-By Isabel Ordonez, Dow Jones Newswires; 713-314-6090; isabel.ordonez@dowjones.com

(Susan Daker contributed to this article)