Laredo Oil Faces Financial Pressures

Exploration efforts continue despite losses, legal disputes, and liquidity concerns.

January 21, 2025

Overview of Financial Performance

Laredo Oil, Inc. (OTC: LRDC), an oil exploration and production company, reported continued financial struggles in its latest quarterly results for the period ending November 30, 2024. Despite making progress on several drilling projects in Montana, the company remains in a precarious financial position, facing substantial debt, ongoing legal disputes, and liquidity challenges.

For the quarter, Laredo posted a net loss of $815,720, widening its accumulated deficit to $24 million. While revenue saw a small increase, reaching $1,640 for the quarter and $7,688 for the six-month period, operating expenses still vastly outpaced income. The company cited general, selling, and administrative costs —which totaled over $1.3 million for the six months —as one of the primary reasons for the ongoing losses.

Debt, Lawsuits, and Financial Uncertainty

Laredo's total liabilities surged to $16.4 million, significantly outpacing its total assets of $4.9 million. Among the biggest financial burdens is a $750,000 secured promissory note that carries an 18% annual interest rate. Additionally, the company is facing legal challenges from multiple service providers over unpaid bills related to drilling operations.

Three separate lawsuits have been filed against Laredo’s subsidiary, Lustre Oil Company LLC, by Capex Oilfield Services, Capstar Drilling, and Warren Well Service, collectively demanding over $900,000 in unpaid fees. The company has started making partial payments but remains significantly behind on its obligations.

Looking Ahead: Can Laredo Stay Afloat?

Laredo's ability to remain a going concern remains in serious doubt. The company has been consistently losing money, and management acknowledges that there are no guarantees it will be able to raise the necessary funds to sustain operations.

To offset its losses, Laredo continues to issue promissory notes and convertible debt, though these financings come with high-interest rates and dilution risks for shareholders. The company has also been relying on deferred payroll agreements with executives, a sign that cash flow remains tight.

For now, Laredo’s future largely hinges on whether its Montana drilling operations can start generating meaningful revenue. The completion of the Cranston saltwater disposal well —expected soon—could help increase production volumes from its existing wells.

Investors will be closely watching the company’s next moves as it navigates funding challenges, legal disputes, and production delays while attempting to capitalize on its Montana oil assets.