ConocoPhillips, the third-largest US oil company, said Thursday it would split into two separate firms, one focusing on production and exploration and one specializing in the refinery business.
Chief executive Jim Mulva will retire after the separation is completed in the first half of 2012, ConocoPhillips said in a statement.
"We have concluded that two independent companies focused on their respective industries will be better positioned to pursue their individually focused business strategies," Mulva said in the statement.
The move will create one company in the high-risk, high-return business of exploration and production and a second company in the lower-margin field of refining and marketing petroleum products.
Shares of ConocoPhillips closed 1.6 percent higher on Thursday, having come down from early gains of nearly eight percent.
ConocoPhillips was created when two US oil companies, Conoco and Phillips Petroleum Company, merged in August 2002.
It has operations in more than 30 countries including Algeria, Canada, China, Indonesia, Kazakhstan, Nigeria, Norway and Russia.
The company had 2.4 million barrels per day of refining capacity as of March 2011, with 12 refineries in the United States, three in Europe and one in Asia, according to its website.