Freeport-McMoRan’s deals boost energy sector

SAN FRANCISCO (MarketWatch) � Freeport-McMoRan Gold and Copper Inc.�s plans to acquire two energy companies boosted the sector on Wednesday, with energy stocks among the top gainers in the S&P 500 index.

Mining giant Freeport-McMoRan FCX , the world�s largest publicly traded copper producer and a major gold miner, said it will acquire Plains Exploration & Production Co. PXP �for about $6.9 billion in cash and stock, and Freeport Exploration Co. MMR �for roughly $3.4 billion in cash.

Freeport-McMoRan had spun off Freeport Exploration in the 1990s. Shares of Freeport Exploration soared 87% to $15.82. Shares of Plains Exploration & Production Co. jumped 23% to settle at $44.50.

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�The addition of a high quality, U.S.-focused oil and gas resource base is expected to provide exposure to energy markets with positive fundamentals, strong margins and cash flows, exploration leverage and financially attractive long-term investment opportunities,� Freeport- McMoRan said in a statement.

Freeport-McMoRan�s shares, however, declined 16% to $32.16 as investors worried about share dilution and added debt to the company�s balance sheet. Mining giant wades in energy play.

Meanwhile, shares of coal miners and natural-gas producers led among energy companies in the S&P 500. Coal miner Consol Energy Inc. CNX �shares rose 4.9%, while natural-gas major Peabody Energy Corp. BTU �shares rose 4.5%.

Oil majors posted more muted gains, with Exxon Mobil Corp. XOM �shares up 0.6%. Smaller competitors ConocoPhillips COP �and Chevron Corp. CVX �rose 0.6% and 1.2%, respectively.

Spanish oil company Repsol SA REPYY �filed a suit in New York federal court Tuesday to block Chevron from joining with Argentina�s YPF SA YPF �to develop oil and gas from shale formations in Argentina.

Argentina nationalized Repsol�s YPF subsidiary in April. Repsol said in the lawsuit it has a �rightful interest� in the Argentine energy assets, including the Vaca Muerta shale formation, in the Neuquen basin, which holds an estimated 23 billion barrels of oil equivalent.

The company alleges state-owned YPF needed Chevron�s expertise to tap the unconventional resources, and Chevron entered into a deal with YPF knowing it went against Repsol�s rights.

�Chevron was well aware that the manner in which Argentina seized control of [YPF] was a deliberate and blatant breach of bylaws, Argentina law and international law,� Repsol�s lawyers said in the suit.

Refiners were Wednesday�s laggards, with shares of Tesoro Corp. TSO �the worst hit, down 4.6%. Rival Valero Energy Corp. VLO �shares declined 2.7%, while Phillips 66 PSX , also a refiner, declined 1.7%.

The SPDR Energy Select Sector XLE , an exchange-traded fund focusing on energy names, rose 0.7%. Crude-oil futures traded lower, with front-month January contract CLF3 �off 62 cents to settle at $87.88 a barrel on the New York Mercantile Exchange. Oil back below $88 a barrel.