Laredo Oil, Inc.

What they do

Laredo Oil, Inc., incorporated in 2008 as Laredo Mining, Inc. and renamed in 2009, is an oil exploration and production company focused on acquiring mature oil fields and recovering stranded oil using proprietary underground gravity drainage (UGD) methods. The UGD method uses conventional mining to establish a drilling chamber beneath an existing oil field, from which closely spaced wellbores are drilled directionally into the reservoir, using residual pressure and gravity to drain oil. The company also drills conventional oil wells in Montana and holds mineral acreage north of the Fort Peck Reservation. It wholly owns subsidiary Stranded Oil Resources Corporation (SORC), which is not conducting ongoing operations.

Revenue drivers

• Oil and gas production — Revenue is generated from oil production at conventional wells in Montana, primarily through interests in the Lustre Field Prospect and other acreage. Annual revenue has declined sharply, from $4.6M in 2021 to $9,423 in 2025, and recent quarterly revenue is minimal.
• Management fees and reimbursements from SORC — Prior to the acquisition of SORC on December 31, 2020, the company earned quarterly management fees and employee-related expense reimbursements from SORC, which effectively constituted all revenues before that acquisition. SORC is now a wholly owned subsidiary and not conducting ongoing operations.
• Royalty obligation to Alleghany — As part of the SORC acquisition, Laredo agreed to pay Alleghany a seven-year royalty of 5.0% of future revenues and net profits from oil, gas, gas liquids, and other hydrocarbon operations, subject to adjustments, which reduces net revenue from production.

Recent performance

Annual revenue fell from $4.6M in 2021 to $667,608 in 2022, then to $0 in 2023, $36,482 in 2024, and $9,423 in 2025. Net losses have been persistent, including $895,847 in 2022, $7.9M in 2023, $2.9M in 2024, and $3.2M in 2025. Quarterly revenue in fiscal 2026 has been negligible: $1,735 for the quarter ended February 28, 2025; $0 for May 31, 2025; $1,543 for August 31, 2025; and $1,598 for November 30, 2025. As of February 28, 2026, the company reported total assets of $1.4M, total liabilities of $15.7M, and shareholder equity of -$14.2M, with cash and equivalents of $264,166. Operating cash flow has been negative each year, including -$1.6M in 2025.

Strategy

The company's primary focus is to pursue and recover stranded oil from selected mature fields using its UGD method as funds become available. It intends to implement UGD in oil fields with a minimum of 25 million barrels of estimated recoverable oil. Secondary to UGD is drilling conventional oil wells in Montana, where it has acquired 45,246 gross acres (37,932 net acres) of mineral property. The company is evaluating alternatives to its original plan to raise $7.5 million to drill three exploratory wells by selling units of West Fork Resources, LLC; $750,000 of the initially raised $2.25 million was used to commence drilling operations in fiscal 2025, and the remaining $1.5 million was returned to investors upon request. Development of additional wells in the Lustre Field Prospect with Texakoma is paused pending evaluation of oil prices and field information.

Risks

• Going concern and liquidity risk — The company has negative shareholder equity of $14.2M, total liabilities of $15.7M, and minimal cash and revenue, raising substantial doubt about its ability to continue as a going concern.
• Unsuccessful well results — Recent wells have been uneconomical: the development well drilled in Spring 2025 produced limited oil with high water levels and was shut in, and the Olfert #11-4 well encountered excessive salt water and has been shut in for three years.
• Dependence on external funding — The company's UGD projects require significant capital, and its plan to raise $7.5 million for exploratory drilling is uncertain after only $750,000 of an initial $2.25 million raise was used and the remaining $1.5 million was returned to investors.
• Debt obligations and royalty burden — Total debt outstanding was $4,783,585 as of February 28, 2026, including notes payable to Alleghany, the CFO, and others, plus a 5.0% royalty on future revenues and net profits owed to Alleghany.

Outlook

Management states that its primary business is to pursue and recover stranded oil from selected mature fields as necessary funds become available. The company continues to evaluate alternatives for its West Fork Resources project and to seek other funding sources to develop its Montana acreage. Development of additional wells in the Lustre Field Prospect is paused pending evaluation of oil prices and additional field information. The company also continues to evaluate the Olfert #11-4 well with the plan to bring it into production if economical.