ConocoPhillips (COP) said Wednesday it will sell assets in Canada, the U.S. and the North Sea as part of its bid to restructure itself - a transformation that executives say heralds a major shift in the way the oil business is run.

The Houston-based company also reported a 71% drop in earnings due to lower commodity prices and a weak environment for refining operations.

Speaking to analysts on an earnings conference call, ConocoPhillips Chief Executive Jim Mulva said that international oil companies in the years ahead will have to look at different business models, including being "smaller" or developing different relationships with national oil companies that will allow access to new oil reserves.

"The business environment has quite dramatically changed in the last 12 to 18 months," Mulva said. The impact of the global economic recession on credit markets and increasingly difficult access to oil reserves amid raising nationalism "will be an issue for companies like ConocoPhillips and international oil companies" in the years to come, Mulva said.

"Some will say what we're doing essentially is that we're shrinking to grow," Mulva said. "That would be a fair assessment."

ConocoPhillips's restructuring plans represent a major about-face for an oil and gas company that embarked on gigantic acquisitions and racked up debt during boom times. That came to an abrupt halt as the global recession ensued. The company earlier this year cut thousands of jobs and slashed capital expenditures - the only major integrated U.S. oil company to do so.

"Conoco is making clear that getting bigger is not helping international oil companies," said Fadel Gheit, analyst at Oppenhemier & Co. Inc. "Basically it's accepting that national oil companies are now in the driver's seat and that international oil companies will have to accept their terms."

Although major oil companies are larger than ever, all have trouble increasing production and reserves in the dwindling oil provinces they control. As a result, major oil companies are finding they need to strengthen ties with national oil companies, which own the vast majority of the world's untapped resources.

ConocoPhillips, the third-largest U.S. oil company by market capitalization after Exxon Mobil Corp. (XOM) and Chevron Corp. (CVX), has been the hardest hit of the so-called majors by the recession, due to its comparatively large refining and North American natural gas segments. To quell investor discontent and reduce debt, the company announced a two-year reorganization plan that includes the sale of $10 billion in assets.

Speculation was rife among analysts that the company may sell its 20% share in Russia's OAO Lukoil Holdings (LUKOY, LKOH.RS), but Mulva said the reorganization plan doesn't include the sale of that stake. He also said the company doesn't plan to sell any major refinery.

But ConocoPhillips confirmed it will sell its 9% stake in the Syncrude oil sands project in Canada early next year. The company also plans to sell 10% of its assets in Canada and the lower 48 states, some of its North Sea natural gas properties, and some small refineries, pipelines and terminals in the U.S.

But ConocoPhillips will remain an integrated oil company, a model in which the losses in the exploration and production segment are offset by gains in the refining and marketing businesses, Mulva said.

The chief executive added that ConocoPhillips, one of the world's largest refiners, doesn't expect to shut refineries permanently despite the sharp decline in profits and falling demand for fuel. The company doesn't plan to sell any major refinery at this time because such a sale would fetch little value, but it could look at disposing some these assets in 2012 and 2013, when the company expects the outlook for the refining business to improve.

ConocoPhillips, however, will try to dispose right away "less sophisticated" and "less competitive" refineries, Mulva said.

ConocoPhillips reported a third-quarter profit of $1.5 billion, or $1 a share, down from $5.19 billion, or $3.39 per share, a year earlier. Revenue dropped 42% to $41.3 billion. The results, however, beat analysts' estimates for earnings of 94 cents a share.

ExxonMobil and Chevron are expected to also report significantly lower earnings on Thursday and Friday, respectively.

ConocoPhillips said quarterly production excluding its share in Lukoil was 1.8 million barrels of oil equivalent a day, or 2.5% higher than the same period in 2008. The company's year-to-date production increased 4% mainly due to new production from major project developments in the U.K., China, Canada, Vietnam and Norway. ConocoPhillips said its worldwide utilization rate for the quarter was 90%.

The company expects fourth-quarter cash from operations to improve due to higher oil and natural gas prices and rising refining margins. In addition, ConocoPhillips expects its fourth-quarter revenue and earnings to benefit by approximately $1.5 billion and $150 million, respectively, from the liquidation of positions built during the year in response to contango market conditions, where near-term prices are lower than prices for later deliveries.

ConocoPhillips' shares were recently trading at $49.54, down 2.7%.

-By Isabel Ordonez, Dow Jones Newswires; 713.547.9207; isabel.ordonez@dowjones.com