Singapore: Noble Group seen picking buyer for oil & LNG units in Sept

A Noble Group sign is pictured at a meet-the-investors event in Singapore August 17, 2015. REUTERS/Edgar Su

Trader Noble Group is expected to pick a buyer for its oil and liquefied natural gas (LNG) units by mid-September to cover debts and reduce credit exposure after a first half loss of $1.9 billion, sources familiar with the matter said.

Once Asia’s largest commodities trader, Singapore-listed Noble has slimmed down drastically to its core Asian coal business after a crisis-wracked two years.

Hong Kong-based Noble said in July it was selling its North American gas and power business to Mercuria and also said it would sell its capital-intensive oil liquids business, leaving it focused on hard commodities.

Suitors for the oil business have already signed non-disclosure agreements, one of the sources told Reuters.

“We have the last two weeks of August to view and then compile the bids … Noble will then take the first two weeks of September to review them,” the source said.

Noble‘s $2 billion credit facility expires in October, a date set by creditors after a four-month extension.

Noble‘s LNG business would be included in the sale, the sources said. The firm delivered 2 million tonnes of LNG in 2015 after securing a deal to supply Egypt and contracts in the Asia-Pacific region.

Noble declined comment.

The sources, who did not put a value on the oil and LNG units, said interested parties included rival trading firms Mercuria Group, Vitol Group, U.S.-based Castleton Commodities International and Freepoint Commodities, as well as Litasco, the trading arm of Russia’s Lukoil.

A spokesman for Mercuria said the company was “looking broadly at opportunities in the marketplace.”

Spokesmen for Vitol and Litasco declined to comment. Freepoint and Castleton did not immediately respond to requests for comment.

Noble is a major player in the global physical oil market, trading crude and refined products. But its operations shrank this year due to higher prices and liquidity constraints.

Noble said its traded oil liquids volume fell nearly 20 percent year-on-year for the first half of 2017. In 2016, it traded 115 million tonnes of oil, helped by low prices.

The firm has blending and wholesale capabilities in North America and the Caribbean, alongside long-term storage leases globally.

Noble‘s oil business attracted interest even before it was officially put up for sale, particularly for its U.S. presence where Noble focuses on fuel trade via several major pipelines.

The trader’s dominant position on the key U.S. Colonial pipeline is a major draw. The pipeline runs from Texas to New Jersey, providing fuel to distributors along the Eastern Seaboard where gasoline commands higher prices.

“There’s been a fair bit of interest. At the right price, it’ll attract bidders,” said another of the sources.

Revenues for its energy operations that includes oil and coal were $39.7 billion in 2016, generating a profit of $90.6 million.

Noble‘s market value has plunged by 90 percent from $6 billion in February 2015 to just over $400 million. Its shares are down about 70 percent so far this year.

Noble was put in the spotlight in February 2015 when Iceberg Research accused it of overstating its assets by billions of dollars. Noble rejected the allegation but was then hit by the downturn in commodities prices.

The firm has scaled back its risk positions. Ratings agencies S&P and Moody’s cut their credit ratings on Noble in August, citing high default risks, making it more challenging for Noble to secure trade finance.

Also Read:

What’s left of Noble Group as trader retreats to its Asian roots

Reuters

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Singapore Reporter/s

In Singapore, we are looking to double our reporting team by this year-end to comprehensively cover the fast-moving world of funded startups and VC, PE & M&A deals. We want reporters who can tell our readers what is really happening in these sectors and why it matters to markets, companies and consumers. The ability to write precisely and urgently is crucial for these roles. Ideal candidates must have to ability to work in a collaborative, dynamic, and fast-changing environment. We want our new hires to be digitally savvy and ready to experiment with new forms of storytelling. Most importantly, we are looking for hard-hitting reporters who work well in a team. Collaboration and collegiality are a must.

Following vacancies can be applied for (only in Singapore).

Following vacancies can be applied for (only in Singapore).   

  • A reporter to track companies/startups that have raised private capital, and have the potential to become unicorns. SEA currently has over 40 companies with a valuation of over $100 million and under $1 billion.
  • A reporter who can get behind the scenes and reveal how funding rounds are put together, or why they’ve failed to materialise. She/he in this role will largely focus on long-format stories. 
  • A journalist to track special situations funds, distressed debt and private credit (from the PE angle) across Asia.