Zero-coupon Delaware Statutory Trusts (DSTs) sit near the high end of the leverage scale for real estate sold to exchange investors. Most of the purchase price comes from a mortgage. The investor's cash often buys only a thin slice of equity.
Laredo Oil's 2026 annual report says production from wells tied to the Lustre 2-36 & 1-10 Montana Oil Drilling Investment could not sustain operations. The report, a Form 10-K filed with the SEC, gives that status as of May 31, 2026.
This post covers what the filing and the project's 2023 agreement say. It then explains the risks of this kind of investment and how an investor can bring a FINRA claim.
The Form 10-K counts three wells drilled under the Texakoma development arrangement behind the Lustre 2-36 & 1-10 Montana Oil Drilling Investment. Production from those wells was insufficient to maintain operations, the filing states. At that point the wells sat shut in, pending further evaluation and possible additional perforations.
The same report says development of eight additional wells has paused. Drilling a well and profiting from one are different things, though. A completed well does not, by itself, return an investor's principal.
The project traces to an exploration and development agreement dated July 18, 2023. Texakoma Exploration & Production, LLC entered into it with Lustre Oil Company, LLC and Erehwon Oil & Gas, LLC.
Under that agreement, the parties contemplated drilling two initial oil wells in Valley County, Montana. They identified the wells as Lustre 2-36 and Lustre 1-10, the names carried by the Lustre 2-36 & 1-10 Montana Oil Drilling Investment. Texakoma agreed to fund the drilling and completion costs. In exchange, it would hold an 85% working interest in the initial wells.
A working interest is a share of a well's costs as well as its output. The holder pays toward drilling and operating expenses, often before any oil is sold. Exploration wells can come up dry, or they can produce far less than projected.
Even a good well declines over time. Oil prices also swing, and the investor cannot control them. Interests in a private drilling venture rarely trade, so an investor who wants out usually has nowhere to sell. Sponsors and operators also earn fees whether or not a well pays, which can create conflicts.
An interest such as the Lustre 2-36 & 1-10 Montana Oil Drilling Investment carries these general risks of the type. For investors who need income or cannot afford to lose principal, that profile is hard to justify.
An investor who bought into the Lustre 2-36 & 1-10 Montana Oil Drilling Investment through a broker can file a FINRA arbitration claim. The claim can name the broker and the brokerage firm.
Due diligence often sits at the center. A firm cannot simply rely on a sponsor's projections before recommending a private drilling deal. It must look at the geology, the costs, the operator's track record and the assumptions behind any projected payments.
Claims can also allege unsuitability, overconcentration, misstatements about risk, or a failure to supervise. The SEC's best interest standard adds duties on disclosure, care and conflicts. When we review a claim like this, we ask what the broker said about dry holes, decline and liquidity before the sale.
FINRA arbitrators hear these cases. An investor does not have to show the operator did anything wrong. The focus is the recommendation.
Overconcentration is putting too large a share of an account into a single stock, sector or kind of product. If that position drops, the whole account drops with it. A broker's recommendations have to fit the customer's investment profile. That profile includes age, other holdings, risk tolerance, liquidity needs and time horizon. As a result, a large position that suits one investor can be wrong for a retiree who needs steady income. When we review a claim like this, the account statements usually tell the story. They show how large the position grew, and for how long.
FINRA Rule 2111 requires a broker to have a reasonable basis to believe a recommendation suits the customer. The broker must also consider the customer's investment profile. The profile includes the customer's age, financial situation, risk tolerance and investment objectives.
Brokerage firms must supervise the brokers who recommend investments like Lustre 2-36 & 1-10 Montana Oil Drilling Investment. If a broker or financial advisor sold it to you and you have questions, call Soreide Law Group at (888) 760-6552 or reach us online. These claims go to FINRA arbitration, so we represent investors nationwide. We handle them on a contingency fee basis. Learn how FINRA arbitration works.
This post summarizes public documents about Lustre 2-36 & 1-10 Montana Oil Drilling Investment listed under Sources, as of October 31, 2026. Allegations in a regulatory complaint or a customer claim are claims, not findings, and a settlement is not an admission of wrongdoing. Nothing here states that any particular investor was harmed. Investors with questions about how a product was sold to them can have their account reviewed at no cost.
Zero-coupon Delaware Statutory Trusts (DSTs) sit near the high end of the leverage scale for real estate sold to exchange investors. Most of the purchase price comes from a mortgage. The investor's cash often buys only a thin slice of equity.
A variable annuity dispute naming Mario Rudolph (CRD 6169121) settled on August 20, 2026, for $82,504, BrokerCheck shows. The disclosure lists $61,411 in alleged damages. A settlement is not an admission of wrongdoing.
In 2010, the SEC instituted public administrative and cease-and-desist proceedings against Brett Messing (CRD 2077288), BrokerCheck shows. Without admitting or denying the findings, the respondents consented to a finding that they willfully violated Rule 105 of Regulation M.
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