Vitol to acquire Noble’s US oil trading business for $580 million

Vitol US Holding Co has agreed to acquire Noble Americas Corporation, the US oil trading business of loss-making commodities trader Noble Group, for about $580 million, subject to certain conditions.

Noble Group is selling its Americas-focused oil trading business as part of a debt-cutting strategy, and warned of a big loss for its third quarter.

Noble said gross proceeds from the sale of its oil liquids business would be $1.4 billion, and after deducting debt of about $836 million, cash proceeds would be about $580 million.

Noble, whose founder Richard Elman built the company into one of the world's biggest traders after starting it in 1986, is shrinking to an Asian-centric company focused on its core coal trading, LNG and freight businesses.

It is slashing jobs and selling assets to reduce debt and win support from lenders after a crisis-wracked two years. In July it agreed to sell its smaller gas and power business to Mercuria.

Vitol is an energy and commodities company, primarily focused on trading and distribution of energy products globally – it trades over seven million barrels per day of crude oil and products and, at any time, has 250 ships transporting its cargoes.

Vitol's clients include national oil companies, multinationals, leading industrial and chemical companies and the world's largest airlines. Founded in Rotterdam in 1966, today Vitol serves clients from some 40 offices worldwide and is invested in energy assets globally, including 18mm3 of storage across six continents, 480 kbpd of refining capacity and 5,000 service stations across Africa, Australia, Eurasia and in Northwest Europe. Revenues in 2016 were $152 billion.

Andrews Kurth Kenyon LLP acted as legal advisor to Vitol. Vitol also received legal advice from Skadden, Arps, Slate, Meagher & Flom LLP and Vinson & Elkins LLP.

Hong Kong-based Noble was hit by the commodities downturn and a scrutiny of its accounts by Iceberg Research in 2015, although the company stood by its figures.

The company was hammered further by a share price collapse, credit downgrades, a series of writedowns, as well as fund raising and management changes. Noble's market value has plummeted to less than $400 million from $6 billion in February 2015.