By Chris Kahn, The Associated Press --

NEW YORK — Conoco Phillips said Friday it will reward investors with a 20 percent dividend increase and a plan to buy back $10 billion of shares.

The company also announced a $12 billion exploration and production capital budget for this year that includes some projects on Alaska's North Slope, where Conoco has major holdings.

The Houston oil producer will pay a 66-cents-per-share dividend on March 1 to shareholders of record on Feb. 22. The share repurchase plan, if completed, would more than double the amount spent on buybacks last year. Repurchasing shares takes them off the open market and pushes remaining shares higher.

Conoco has been aggressive in rewarding shareholders while transforming its business with the sale of some oil-producing assets during the past few years. The sales helped Conoco boost earnings last year nearly threefold to $11.4 billion.

Morningstar Inc. analyst Allen Good said Conoco wants to make up for poorly timed acquisitions, including a $35 billion deal for Burlington Resources, that haven't been worth as much as the company paid.

The company is focusing on its North American properties and using proceeds from the asset sales to pay back shareholders. The stock repurchase program is the industry's largest behind Exxon Mobil Corp., Good said.

"They're just trying to be more shareholder friendly," he said.

Shares rose 2.1 percent to $71.58.

Separately, Conoco announced it will boost capital spending to $13.5 billion this year. Most of that money will go toward finding and producing new sources of petroleum.

About $6 billion will be used to develop liquids-rich shale fields in the continental United States. Other spending will be directed to oil sands projects in Canada and development of oil wells in Alaska.

Spending in Alaska is expected to be directed toward development of the existing Prudhoe Bay and Kuparuk oil fields, as well as the Western North Slope. The company did not specify how much of the $6 billion is aimed at Alaska.

Another $6 billion will be spent on operations in Europe, Asia and Africa. Conoco will continue to develop a coalbed methane-to-liquid natural gas joint venture in Australia and new fields offshore in Malaysia, Indonesia and Vietnam. Projects also will be funded in the North Sea, Africa and the Caspian Sea.

Conoco will spend $1.2 billion on its refining and marketing business, with $1 billion to be spent in the United States.

The Anchorage Daily News/adn.com contributed to this story.