Over the past year, ConocoPhillips (COP 0.10%) has taken investors through a transformation. Because of booming production in the United States and increasingly risky conditions overseas, ConocoPhillips is really getting domesticated. It's sold off major assets abroad and doubled-down on premier U.S. plays such as the Eagle Ford, Bakken, and Permian Basin.

This makes perfect sense, since oil production here is soaring. The U.S. Energy Information Administration reported that American oil production climbed 15% last year. The U.S. produced a grand total of 7.5 million barrels per day, a level not seen since 1989.

Because of this, ConocoPhillips management looks brilliant for its strategy to sell off risky international assets and reinvest the proceeds in promising domestic fields.

Here's ConocoPhillips' strategy, and why it's working out so well.

ConocoPhillips reshuffles its portfolio
ConocoPhillips is depending heavily on domestic fields for future production and development. To do this, it's unloaded several overseas assets that it deemed non-critical to future growth, primarily because those assets are located in areas of the world with heightened instability. Plus, focusing on the United States makes perfect sense because domestic production is soaring.

Proceeds from ConocoPhillips' divestments last year totaled $7 billion from locations such as Kazakhstan, Algeria, and Nigeria, which were reinvested primarily in U.S. oil fields. Continuing political tensions and unrest prompted the move. In addition, ConocoPhillips' results last year were once again adversely affected by poor performance in the company's Libyan operations.

Other companies are feeling the effects of supply disruptions out of Libya. For example, Hess Corporation (HES 0.67%) production was significantly affected by worsening conditions in Libya last year. Extended shutdowns caused from civil uprisings in Libya resulted in a 23,000 barrel-per-day drop in first-quarter production.

However, excluding Libya and asset disposals, Hess grew production by 11% last quarter. The bulk of this growth was due to strength from domestic fields such as the Bakken shale, where Hess brought 30 more wells on-line. Production there now clocks in at 80,000 barrels per day for Hess.

Gearing up for the future
With billions in cash on hand as a result of its significant divestments, ConocoPhillips is plowing tremendous resources back into the United States. The strategy is clearly working. ConocoPhillips produced 28% growth in adjusted earnings in the first quarter, despite losing $21 million from its "other international" segment, which includes Libyan operations.

ConocoPhillips' production grew 3% last quarter, or 41,000 barrels-per-day more. Most of the growth came from the U.S. fields. For example, the company's Lower 48 segment grew production by 50,000 barrels per day. This more than made up for declining production elsewhere.

In fact, its domestic oil production jumped 16% year over year. It reached a new peak daily production level in the Eagle Ford. And, it's making progress in drilling and testing at additional locations in the Permian Basin.

ConocoPhillips is also benefiting from margin improvements per barrel, which management specifically attributes to its portfolio shift. ConocoPhillips realized a price-normalized cash margin of $30.24 per barrel in the first quarter, up 13% year over year. Management credited a full five percentage-points of this growth to its reshuffled portfolio.

Paving the way for shareholder rewards
In response to disappointing production overseas, ConocoPhillips decided to sell off assets in risky international geographies. Afterwards, the company reinvested the proceeds in exploration and production activities in great domestic fields such as the Permian Basin and Eagle Ford shale. This has worked out exactly as management had intended.

As a result of its success, ConocoPhillips is committed to returning value to shareholders with a compelling dividend. The stock yields 3.25%, and as production and earnings steadily increase, so do the dividends.

ConocoPhillips gave investors a 4.5% dividend increase last year, and it's now been a full year since the last dividend raise. That means investors should fully expect another solid dividend increase in time for the company's next declared dividend.

If you're looking for a company taking full advantage of booming oil production in the United States and a compelling, growing dividend, look no further than ConocoPhillips.