Legal Battle Unmasks Shell's Under-The-Radar Oil Trading Earnings: Report

A former employee’s lawsuit against oil giant Shell PLC SHEL has reportedly peeled back the curtain on the financial intricacies of its expansive oil and gas trading enterprise.

The lawsuit documents unveiled in a Texas state court shed light on the company’s closely-guarded secrets, particularly regarding its U.S. crude trading operations.

Testimony by John Dimech, a former head of Shell’s U.S. crude trading division, offered a rare glimpse into the substantial profits reaped by the trading arm, along with the lavish bonuses bestowed upon traders, reported Reuters.

Dimech, who served as a manager in Shell’s crude oil trading group in Houston for over a decade, disclosed in his deposition that the crude trading unit consistently rakes in annual profits ranging from $950 million to $1 billion.

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As per the report, these figures account for a significant portion between 13% and 15% of Shell’s overall U.S. pre-tax profits in recent years.

Despite the substantial financial contributions from its trading activities, Shell has historically kept a tight lid on the performance metrics of its oil and gas trading desk, which is touted as the world’s largest.

The lack of transparency surrounding this segment has raised concerns among some investors, given its potential to yield substantial profits but also to incur volatility and losses.

Traders within Shell’s operations capitalize on market fluctuations in oil and gas prices worldwide to secure profits through strategic buying and selling.

Their compensation packages often include hefty bonuses tied to performance metrics, which can surpass even the annual bonuses awarded to top executives.

For instance, CEO Wael Sawan’s annual bonus amounted to £2.7 million ($3.4 million) last year, as per the company’s latest annual report.

In a recent legal dispute, former trading manager Eva-Maria Frohn sought $15 million in damages, alleging breach of contract by Shell, including a $6 million claim for her 2021 bonus, the report further added.

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Price Action: SHEL shares closed Friday’s session flat at $73.27.

Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.

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