Metallgesellschaft’s U.S. subsidiary (MG Corp.) was reorganized in 1986 with equity capital of $50 million and net sales of $1.7 billion from trading in U.S. government bonds, foreign currency, emerging market instruments, and
various commodities. The U.S. subsidiary’s oil business, organized under MG Refining and Marketing (MGRM), grew significantly between 1989 and 1993. In 1989 the company obtained a 49% stake in Castle Energy, a U.S. oil exploration
company, whose transformation into a refiner MGRM helped finance. MGRM contracted with Castle Energy to purchase their output of refined products— approximately 46 million bbl. per year—at guaranteed margins for up to 10 years, and assembled a large network of infrastructure necessary for the storage and transport of oil products. During 1992 and 1993, MGRM succeeded in signing a large number of long-term contracts for delivery of gasoline, heating oil, and jet fuel oil to independent retailers. By late 1993 MGRM had become an important supplier. In addition MGRM ran large trades in energy-related derivatives. Its portfolio included a wide variety of over-the-counter forwards, swaps, and puts, and it did large amounts of trading in futures contracts on crude oil, heating oil, and gasoline on a number of exchanges and markets.