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Freeport taps Goldman, Barclays to help find partners, say sources-Reuters

(Reuters) – Natural resources conglomerate Freeport-McMoRan Inc has hired Goldman Sachs Group Inc and Barclays Plc to help find private equity firms that will finance some of its projects, according to people familiar with the matter.

The move comes two years after Freeport acquired Plains Exploration & Production Co and McMoRan Exploration Co for $19 billion, including debt, in a bid to diversify into the U.S. energy industry as the copper sector’s prospects waned.

With crude oil prices down from $100 per barrel to a six-year low of $44 per barrel, that strategy has backfired. Not only is less cash generated from the oil and gas assets to fund Freeport’s mining projects, but the company now has to find ways to finance the development of assets it acquired.

Faced with a 20 percent drop in copper prices in addition to the 50 percent decline in oil prices, Freeport said in January it was looking for partners to help provide funding for its capital expenditure in the Gulf of Mexico.

Freeport is now speaking to the world’s largest private equity firms, including Blackstone Group LP, Apollo Global Management LLC and Warburg Pincus LLC, about such partnerships, the people said this week.

The exact amount of capital Freeport is seeking could not be learned, but the sources said it would be several billion dollars.

The discussions are in a very early stage, said the people, who asked not to be named because discussions are private.

Freeport did not return calls seeking comment. Goldman Sachs and Barclays declined to comment. Representatives for Warburg Pincus and Blackstone declined comment. An Apollo representative had no immediate comment.

As part of the 2013 deals, Phoenix, Arizona-based Freeport took on mountains of debt. It now has $18.4 billion in long-term debt and a market capitalization of around $19 billion.

To cut its debt pile, Freeport has also considered asset sales. It explored shedding some $5 billion worth of assets in California last year, but the sale stalled as oil prices dropped, people familiar with that deal have said.

Private equity firms view the capital expenditures of energy companies as an attractive investment opportunity. In January, for example, GSO Capital Partners LP, Blackstone’s credit investment arm, committed up to $500 million for five years to fund the drilling program of oil and natural gas exploration company LINN Energy LLC.