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Abu Dhabi, UAEFriday 22 June 2018

Once-mighty Noble sells oil-liquids unit to Vitol and warns of $1.25bn loss

Struggling major commodities trader fights for survival and offloads assets to cover debt

Noble is struggling amid huge losses and debts. Edgar Su/Reuters
Noble is struggling amid huge losses and debts. Edgar Su/Reuters

The embattled commodities trader Noble Group announced on Monday the sale of its American oil-liquids business to Vitol Group and warned of a third-quarter loss of up to US$1.25 billion.

Singapore-listed Noble said the sale to Vitol, the world's largest independent oil trader, should generate proceeds of $582 million, and is the latest move to pay off debts as the firm fights to survive.

The company has been hammered since 2015 as plunging commodity prices hit its bottom line while it has also suffered a ratings downgrade and allegations of irregular accounting practices.

Noble said it expects a total net loss in the quarter ending September 30 of between $1.1bn and $1.25bn, after reporting a heavy loss of $1.75bn in the second quarter.

"The operating environment continues to be challenging for the group and this impacted performance in [the third quarter of] 2017," Noble said.

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Noble's shares resumed trading after being halted Friday pending the announcement of the sale, and slipped more than 10 per cent to 34 Singapore cents.

The firm's stock has been hammered since the start of the crisis and has sunk about 78 per cent this year.

The disposal of Noble's oil liquids unit, which trades large amounts of crude and refined oil products, came after the sale in July of its US gas and power unit to rival Mercuria Energy America.

"The core of their business has changed to some degree, but they're still fighting to survive," said Nicholas Teo, a trading strategist at KGI Securities (Singapore).

"Management has been selling assets to lighten the debt load, and this oil deal is quite significant in size."

Noble wants to refocus its business on "hard" commodities - those that are mined such as coal and metals - as well as on freight and liquefied natural gas, with an eye on Asia.

It is also reducing its staff to about 400, having had 900 employees at the end of June.