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Freeport-McMoRan tumbles on plans to buy oil cos.

NEW YORK (AP) -- Shares of Freeport-McMoRan Copper & Gold tumbled more than 14 percent after the mining company said it was expanding into the energy sector through the $9 billion acquisition of a pair of oil and gas producers.

THE SPARK: Before Wednesday's opening bell, the Phoenix company said Plains Exploration Co. would be snapped up for $6.9 billion in cash and stock, and that it would spend $2.1 billion for McMoRan Exploration Co. The company will also assume $11 billion in debt.

THE BIG PICTURE: The addition of the two companies will create a natural resources conglomerate with assets ranging from oil rigs in the Gulf of Mexico to mines in Indonesia.

Plains Exploration, based in Houston, produces oil in California, Texas and the Gulf of Mexico, along with natural gas in Louisiana. McMoRan Exploration, based in New Orleans, is developing natural gas resources that lie deep below shallow water regions of the Gulf of Mexico.

THE ANALYSIS: Citi analyst Brian Yu backed his "Buy" rating for Freeport, but said the acquisitions come at too high a cost.

"We see little if any synergies between the copper mining and oil and gas drilling business to offset the premium valuation paid," Yu wrote. "Investors can get the same diversification in their portfolio at a much lower cost."

Yu said Freeport's net debt will rise from next to nothing to $16 billion, though he said that should be manageable with a smart capital spending plan.

THE SHARES: Freeport-McMoRan Copper & Gold Inc. fell $5.50 to $32.78 in extremely heavy afternoon trading after nearing its 52-week low of $31.08 earlier in the day.