BARNWELL INDUSTRIES INC 10-Q

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Cautionary Statement Relevant to Forward-Looking Information For the Purpose Of “Safe Harbor” Provisions Of The Private Securities Litigation Reform Act of 1995 This Form 10-Q, and the documents incorporated herein by reference, contain “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995 ("PSLRA"). A forward-looking statement is one which is based on current expectations of future events or conditions and does not relate to historical or current facts. These statements include various estimates, forecasts, projections of Barnwell’s future performance, statements of Barnwell’s plans and objectives, and other similar statements. All such statements we make are forward-looking statements made under the safe harbor of the PSLRA, except to the extent such statements relate to the operations of a partnership or limited liability company. Forward-looking statements include phrases such as “expects,” “anticipates,” “intends,” “plans,” “believes,” “predicts,” “estimates,” “assumes,” “projects,” “may,” “will,” “will be,” “should,” or similar expressions. Although Barnwell believes that its current expectations are based on reasonable assumptions, it cannot assure that the expectations contained in such forward-looking statements will be achieved. Forward-looking statements involve risks, uncertainties and assumptions which could cause actual results to differ materially from those contained in such statements. The risks, uncertainties and other factors that might cause actual results to differ materially from Barnwell’s expectations are set forth in the “Forward-Looking Statements” and “Risk Factors” sections of Barnwell’s 2023 Annual Report. Investors should not place undue reliance on these forward-looking statements, as they speak only as of the date of filing of this Form 10-Q, and Barnwell expressly disclaims any obligation or undertaking to publicly release any updates or revisions to any forward-looking statements contained herein. Critical Accounting Policies and Estimates Management has determined that our most critical accounting policies and estimates are those related to the full-cost ceiling calculation and depletion of our oil and natural gas properties, the estimation of our contract drilling segment's revenues and expenses, and the calculation of our income taxes, all of which are discussed in our 2023 Annual Report. There have been no significant changes to these critical accounting policies and estimates during the three months ended December 31, 2023. We continue to monitor our accounting policies to ensure proper application of current rules and regulations. Impact of COVID-19 We face various risks and uncertainties related to public health crises, including the global COVID-19 pandemic, which has disrupted financial markets and significantly impacted worldwide economic activity. The future impact of the COVID-19 pandemic as well as mandatory and voluntary actions taken to mitigate the public health impact of the pandemic may have a material adverse effect on our financial condition. The COVID-19 pandemic and social and governmental responses to the pandemic have caused, and may continue to cause, severe economic, market and other disruptions worldwide. Although the COVID-19 pandemic and related societal and government responses have not, to date, had a material impact on our business or financial results, the extent to which COVID-19 and related actions may, in the future, impact our operations cannot be predicted with any degree of confidence. As a result, we cannot at this time predict the direct or indirect impact on us of the COVID-19 pandemic, but it could 23 have a material adverse effect on our business, financial condition, liquidity, results of operations and prospects . Impact of Recently Issued Accounting Standards on Future Filings In November 2023, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2023-07 “Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures”, which expands reportable segment disclosure requirements on an annual and interim basis, primarily through enhanced disclosures about significant segment expenses. This ASU is effective for annual reporting periods beginning after December 15, 2023 and interim periods within fiscal years beginning after December 15, 2024, with early adoption permitted. The Company is currently evaluating the impact of this standard on Barnwell’s consolidated financial statements. In December 2023, the FASB issued ASU No. 2023-09 “Income Taxes (Topic 740): Improvements to Income Tax Disclosures”, which requires disclosure of incremental income tax information within the tax rate reconciliation and expanded disclosures of income taxes paid both in the U.S. and foreign jurisdiction, among other disclosure requirements. This ASU is effective for annual reporting periods beginning after December 15, 2024, with early adoption permitted. The Company is currently evaluating the impact of this standard on Barnwell’s consolidated financial statements. Overview Barnwell is engaged in the following lines of business: 1) acquiring, developing, producing and selling oil and natural gas in Canada and the U.S. (oil and natural gas segment), 2) investing in land interests in Hawaii (land investment segment), and 3) drilling wells and installing and repairing water pumping systems in Hawaii (contract drilling segment). Oil and Natural Gas Segment Barnwell is involved in the acquisition and development of oil and natural gas properties in Canada where we initiate and participate in acquisition and developmental operations for oil and natural gas on properties in which we have an interest, and evaluate proposals by third parties with regard to participation in exploratory and developmental operations elsewhere. Additionally, through its wholly-owned subsidiaries, Barnwell is involved in several non-operated oil and natural gas investments in Oklahoma and Texas. Land Investment Segment Through Barnwell’s 77.6% interest in Kaupulehu Developments, 75% interest in KD Kona, and 34.45% non-controlling interest in KKM Makai, the Company’s land investment interests include the following: • The right to receive percentage of sales payments from KD I resulting from the sale of single-family residential lots by KD I, within Increment I of the Kaupulehu Lot 4A area located in the North Kona District of the island of Hawaii. Kaupulehu Developments is entitled to receive payments from KD I based on 10% of the gross receipts from KD I’s sales at Increment I. Increment I is an area zoned for approximately 80 single-family lots, of which two remained to be sold at December 31, 2023. 24 • The right to receive 15% of the distributions of KD II, the cost of which is to be solely borne by KDK out of its 55% ownership interest in KD II, plus a priority payout of 10% of KDK's cumulative net profits derived from Increment II sales subsequent to Phase 2A, up to a maximum of $3,000,000. Such interests are limited to distributions or net profits interests and Barnwell does not have any partnership interest in KD II or KDK through its interest in Kaupulehu Developments. Barnwell also has rights to three single-family residential lots in Phase 2A of Increment II, and four single-family residential lots in phases subsequent to Phase 2A when such lots are developed by KD II, all at no cost to Barnwell. Barnwell is committed to commence construction of improvements within 90 days of the transfer of the four lots in the phases subsequent to Phase 2A as a condition of the transfer of such lots. Also, in addition to Barnwell's existing obligations to pay professional fees to certain parties based on percentages of its gross receipts, Kaupulehu Developments is also obligated to pay an amount equal to 0.72% and 0.20% of the cumulative net profits of KD II to KD Development, LLC and a pool of various individuals, respectively, all of whom are partners of KKM and are unrelated to Barnwell. The remaining acreage within Increment II is not yet under development, and there is no assurance that development of such acreage will occur. No definitive development plans have been made by KDII, the developer of Increment II, as of the date of this report. • An indirect 19.6% non-controlling ownership interest in KD Kukio Resorts, LLLP, KD Maniniowali, LLLP and KD I and an indirect 10.8% non-controlling ownership interest in KD II through KDK. These entities own certain real estate and development rights interests in the Kukio, Maniniowali and Kaupulehu portions of Kukio Resort, a private residential community on the Kona coast of the island of Hawaii, as well as Kukio Resort’s real estate sales office operations. KDK was the developer of Kaupulehu Lot 4A Increments I and II. The partnerships derive income from the sale of residential parcels as well as from commission on real estate sales by the real estate sales office and revenues resulting from the sale of private club memberships. • Approximately 1,000 acres of vacant leasehold land zoned conservation in the Kaupulehu Lot 4C area, which currently has no development potential without both a development agreement with the lessor and zoning reclassification. The lease terminates in December 2025. Contract Drilling Segment Barnwell’s wholly-owned subsidiary, Water Resources International, Inc. (“Water Resources”), drills water and water monitoring wells and installs and repairs water pumping systems in Hawaii. Contract drilling results are highly dependent upon the quantity, dollar value and timing of contracts awarded by governmental and private entities and can fluctuate significantly. Results of Operations Summary The net loss attributable to Barnwell for the three months ended December 31, 2023 totaled $664,000, a $1,753,000 decrease in operating results from net earnings of $1,089,000 for the three months ended December 31, 2022. The following factors affected the results of operations for the three months ended December 31, 2023 as compared to the same period in the prior year: • A $1,105,000 decrease in oil and natural gas segment operating results, before income taxes, due primarily to significant decreases in natural gas, oil, and natural gas liquid prices, partially offset 25 by an increase in new production from wells in Texas and from wells in the Twining area in the current period as compared to the same period in the prior year; • Equity in income from affiliates decreased $538,000 and land investment segment operating results, before non-controlling interests’ share of such profits, decreased $265,000 due to the Kukio Resort Development Partnerships' sale of one lot in the prior year period, whereas there were no lot sales in the current year period; • A $551,000 gain recognized in the prior year period from the sale of a contract drilling segment drilling rig, whereas there was no such gain in the current period; and • General and administrative expenses decreased $845,000 primarily due to decreases in professional fees, accrued bonus expense, and share-based compensation in the current period as compared to the same period in the prior year. General Barnwell conducts operations in the U.S. and Canada. Consequently, Barnwell is subject to foreign currency translation and transaction gains and losses due to fluctuations of the exchange rates between the Canadian dollar and the U.S. dollar. Barnwell cannot accurately predict future fluctuations of the exchange rates and the impact of such fluctuations may be material from period to period. To date, we have not entered into foreign currency hedging transactions. Foreign currency gains or losses on intercompany loans and advances that are not considered long-term investments in nature because management intends to settle these intercompany balances in the future are included in our statements of operations. The average exchange rate of the Canadian dollar to the U.S. dollar remained unchanged in the three months ended December 31, 2023 as compared to the same period in the prior year, and the exchange rate of the Canadian dollar to the U.S. dollar increased 3% at December 31, 2023 as compared to September 30, 2023. Accordingly, the assets, liabilities, stockholders’ equity and revenues and expenses of Barnwell’s subsidiaries operating in Canada have been adjusted to reflect the change in the exchange rates. Other comprehensive income and losses are not included in net earnings and net loss. Other comprehensive income due to foreign currency translation adjustments, net of taxes, for the three months ended December 31, 2023 was $30,000, a $28,000 change from other comprehensive income due to foreign currency translation adjustments, net of taxes, of $2,000 for the same period in the prior year. There were no taxes on other comprehensive (loss) income due to foreign currency translation adjustments in the three months ended December 31, 2023 and 2022 due to a full valuation allowance on the related deferred tax assets. 26 Oil and natural gas The following tables set forth Barnwell’s average prices per unit of production and net production volumes. Production amounts reported are net of royalties. Average Price Per Unit Three months ended Increase December 31, (Decrease) 2023 2022 $ % Natural Gas (Mcf)* $ 1.82 $ 4.25 $ (2.43) (57 %) Oil (Bbls)** $ 67.08 $ 72.32 $ (5.24) (7 %) Natural gas liquids (Bbls)** $ 29.23 $ 44.01 $ (14.78) (34 %) Net Production Three months ended Increase December 31, (Decrease) 2023 2022 Units % Natural Gas (Mcf)* 379,000 300,000 79,000 26 % Oil (Bbls)** 58,000 48,000 10,000 21 % Natural gas liquids (Bbls)** 18,000 10,000 8,000 80 % _______________________________________ * Mcf = 1,000 cubic feet. Natural gas price per unit is net of pipeline charges. ** Bbl = stock tank barrel equivalent to 42 U.S. gallons The oil and natural gas segment generated an $881,000 operating profit before general and administrative expenses in the three months ended December 31, 2023, a decrease in operating results of $1,105,000 as compared to a $1,986,000 operating profit before general and administrative expenses generated during the same period of the prior year. The following table sets forth Barnwell’s oil and natural gas segment operating profit before general and administrative expenses by geographic location: Three months ended December 31, 2023 2022 Operating profit (before general and administrative expenses) Canada $ 536,000 $ 1,599,000 Oklahoma 177,000 387,000 Texas 168,000 — Total operating profit $ 881,000 $ 1,986,000 Oil and natural gas segment revenues decreased $96,000 (2%) for the three months ended December 31, 2023, as compared to the same period in the prior year, primarily due to significant decreases in natural gas, oil, and natural gas liquid prices, which decreased 57%, 7%, and 34%, respectively, as compared to the same period in the prior year. The decrease was partially offset by increases of 26%, 21%, and 80% in natural gas, oil, and natural gas liquid production, respectively, as compared to the same period in the prior year. In the quarter ended December 31, 2023, the Company amended certain of its Canadian purchase and sales contracts to change the sales price on 1,055 gross Mcf per day of the Canadian natural gas that it 27 will sell during the period from April 1, 2024 to October 31, 2024 to a fixed price of $2.55 Canadian dollars per Mcf, with remaining volumes continuing to be sold at spot prices. This per day volume of natural gas under fixed price contract is equivalent to approximately 30% of what Canadian natural gas gross production per day was for the three months ended December 31, 2023. Additionally, the Company also amended the sales price on 225 gross barrels per day of the Canadian oil that it will sell during the period from January 1, 2024 to June 30, 2024 to a fixed price of $69.46 per net barrel, with remaining volumes continuing to be sold at spot prices. This per day volume of oil under fixed price contract is equivalent to approximately 30% of what Canadian oil gross production per day was for the three months ended December 31, 2023. These natural gas and oil contracts were eligible for and elected as normal purchase and normal sales exception contracts and were thus excluded from derivative accounting. Oil and natural gas segment operating expenses increased $347,000 (14%) for the three months ended December 31, 2023, as compared to the same period in the prior year, primarily due to costs associated with new production from wells in Texas and from wells in the Twining area. Oil and natural gas segment depletion increased $662,000 (83%) for the three months ended December 31, 2023, as compared to the prior year period. The increase was due to depletion attributable to production in Texas, whereas there was no such depletion in the prior year period, and was due to an increase in the depletion rate for Canadian properties and also new production from those properties, both of which were the result of the drilling of new wells and facilities expansion and upgrade costs, all in the Twining area. Under the full cost method of accounting, the Company performs quarterly oil and natural gas ceiling test calculations. There were no reductions to the carrying value of our oil and natural gas properties during the three months ended December 31, 2023 and 2022. Changes in the 12-month rolling average first-day-of-the-month prices for oil, natural gas and natural gas liquids prices, the value of reserve additions as compared to the amount of capital expenditures to obtain them, and changes in production rates and estimated levels of reserves, future development costs and the market value of unproved properties, impact the determination of the maximum carrying value of oil and natural gas properties. Based on the 12-month rolling average first-day-of-the-month prices for January and February 2024, it is reasonably possible that we will incur a ceiling test impairment in the Company's second quarter ending March 31, 2024. The Company is currently unable to estimate a range of the amount of any potential future reduction in carrying value as variables that impact the ceiling limitation are dependent upon actual results through the end of March 2024. Sale of interest in leasehold land Kaupulehu Developments is entitled to receive a percentage of the gross receipts from the sales of lots and/or residential units in Increment I by KD I. 28 The following table summarizes the revenues received from KD I and the amount of fees directly related to such revenues: Three months ended December 31, 2023 2022 Sale of interest in leasehold land: Revenues – sale of interest in leasehold land $ — $ 265,000 Fees - included in general and administrative expenses — (32,000) Sale of interest in leasehold land, net of fees paid $ — $ 233,000 No lots were sold during the three months ended December 31, 2023. During the three months ended December 31, 2022, Barnwell received $265,000 in percentage of sales payments from KD I from the sale of one single-family lot within Increment I. As of December 31, 2023, only two single-family lots of the 80 lots developed within Increment I remain to be sold. The Company does not have a controlling interest in Increments I and II, and there is no assurance with regards to the amounts of future sales from Increments I and II, or that the remaining acreage within Increment II will be developed. No definitive development plans have been made by KD II, the developer of Increment II, as of the date of this report. Contract drilling The contract drilling segment generated a $228,000 operating loss before general and administrative expenses in the three months ended December 31, 2023, a decrease in operating results of $276,000 as compared to a $48,000 operating profit during the same period of the prior year. Contract drilling revenues and contract drilling costs decreased $955,000 (49%) and $688,000 (37%), respectively, for the three months ended December 31, 2023, as compared to the same period in the prior year. These decreases were primarily due to less water well drilling activity in the current year period as compared to the same period in the prior year; additionally, contract drilling costs did not decrease as much as contract drilling revenues as additional costs were incurred on one of the well drilling jobs due to operational issues during drilling. On December 13, 2023, the Company entered into a stock purchase agreement with a construction company for the sale of Water Resources for gross proceeds of $2,000,000, subject to customary post-closing price adjustments and the purchaser’s completion of due diligence. On December 27, 2023, the stock purchase agreement was terminated by the buyer prior to closing. The Company continues to investigate strategies regarding Water Resources' future including, but not limited to, other potential opportunities for a sale of its stock or assets to any other interested parties, or the potential for eventual wind-down after all contracts in backlog are completed along with liquidation of its drilling rigs and equipment. No definitive plans have been made as of the date of this Quarterly Report as to the future direction of Water Resources. Management estimates that contracts in backlog will be completed in December 2024 or soon thereafter. In January 2024, a significant well drilling contract, which previously had an estimated contract drilling revenue backlog of $2,400,000 and which had not yet started, was cancelled by mutual agreement of Water Resources and the counterparty. 29 General and administrative expenses General and administrative expenses decreased $845,000 (38%) for the three months ended December 31, 2023, as compared to the same period in the prior year. The decrease was due to decreases of $694,000 in professional fees primarily related to legal and consulting services, $75,000 in accrued bonus expense, and $50,000 in share-based compensation in the current year period as compared to the same period in the prior year. Depletion, depreciation, and amortization Depletion, depreciation, and amortization increased $671,000 (80%) for the three months ended December 31, 2023, as compared to the same period in the prior year, primarily due to depletion attributable to production in Texas and increases in the depletion rate for Canadian properties and also new production from those properties as discussed in the “Oil and natural gas” section above. Foreign currency gain Foreign currency gain was $126,000 and $78,000 during the three months ended December 31, 2023 and 2022, respectively, due to the effects of foreign exchange rate changes on intercompany loans and advances as a result of the weakening of the U.S. dollar against the Canadian dollar. The foreign currency gain from intercompany balances was included in our condensed consolidated net earnings as the intercompany balances were not considered long-term in nature because management estimates that these intercompany balances will be settled in the future. Gain on sale of assets In October 2022, the Company completed the sale of a contract drilling segment drilling rig to an independent third part for proceeds of $551,000, net of related costs. The drilling rig was fully depreciated and had a net book value of zero and as a result of the sale, the Company recognized a $551,000 gain during the three months ended December 31, 2022. Equity in income of affiliates Equity in income of affiliates was nil for the three months ended December 31, 2023, as compared to $538,000 for the three months ended December 31, 2022. The decrease in partnership income was primarily due to the Kukio Resort Land Development Partnerships' sale of one lot during the prior year period, whereas there were no lot sales in the current year period. No cash distributions were received from the Kukio Resort Land Development Partnerships during the three months ended December 31, 2023. During the three months ended December 31, 2022, Barnwell received cash distributions $538,000 from from the Kukio Resort Land Development Partnerships resulting in a net amount of $478,000, after distributing $60,000 to non-controlling interests. In the quarter ended June 30, 2021, the Company received cumulative distributions from the Kukio Resort Land Development Partnerships in excess of our investment balance and in accordance with applicable accounting guidance, the Company suspended its equity method earnings recognition and the Kukio Resort Land Development Partnership investment balance was reduced to zero with the distributions received in excess of our investment balance recorded as equity in income of affiliates because the distributions are not refundable by agreement or by law and the Company is not liable for the 30 obligations of or otherwise committed to provide financial support to the Kukio Resort Land Development Partnerships. The Company will record future equity method earnings only after our share of the Kukio Resort Land Development Partnership’s cumulative earnings in excess of distributions during the suspended period exceeds our share of the Kukio Resort Land Development Partnership’s income recognized for the excess distributions, and during this suspended period any distributions received will be recorded as equity in income of affiliates. Accordingly, no equity in income of affiliates was recognized during the three months ended December 31, 2023. Cumulative distributions received from the Kukio Resort Land Development Partnerships in excess of our investment balance was $630,000 at December 31, 2023 and $708,000 at September 30, 2023. Income taxes Barnwell’s effective consolidated income tax rate for the three months ended December 31, 2023, after adjusting earnings before income taxes for non-controlling interests, was (11)%, as compared to an effective income tax rate of 7% for the three months ended December 31, 2022. Consolidated taxes do not bear a customary relationship to pretax results due primarily to the fact that the Company is taxed separately in Canada based on Canadian source operations and in the U.S. based on consolidated operations, and essentially all deferred tax assets, net of relevant offsetting deferred tax liabilities, are not estimated to have a future benefit as tax credits or deductions. The Company operates two subsidiaries in Canada, one of which is a U.S. corporation operating as a branch in Canada that is treated as a non-resident for Canadian tax purposes and thus has operating results that cannot be offset against or combined with the other Canadian subsidiary that files as a resident for Canadian tax purposes. Income from our non-controlling interest in the Kukio Resort Land Development Partnerships is treated as non-unitary for state of Hawaii unitary filing purposes, thus unitary Hawaii losses provide limited sheltering of such non-unitary income. Income from our investment in the Oklahoma oil venture is 100% allocable to Oklahoma. As such, Barnwell receives no benefit from consolidated or unitary losses and, therefore, is subject to Oklahoma state taxes. Our operations in Texas are subject to a franchise tax assessed by the state of Texas, however no significant amounts have been incurred to date. Net earnings attributable to non-controlling interests Earnings and losses attributable to non-controlling interests represent the non-controlling interests’ share of revenues and expenses related to the various partnerships and joint ventures in which Barnwell has controlling interests and consolidates. Net earnings attributable to non-controlling interests for the three months ended December 31, 2023 totaled $2,000, as compared to net earnings attributable to non-controlling interests of $120,000 for the same period in the prior year. The decrease of $118,000 is primarily due to decreases in the amount of equity in income of affiliates and percentage of sales revenue received in the current year period as compared to the same period in the prior year. Liquidity and Capital Resources Barnwell’s primary sources of liquidity are cash on hand, cash flow generated by operations and land investment segment proceeds. At December 31, 2023, Barnwell had $2,478,000 in working capital. 31 Cash Flows Cash flows provided by operating activities increased $478,000 to $1,375,000 for the three months ended December 31, 2023, as compared to cash flows provided by operating activities of $897,000 for the three months ended December 31, 2022. This increase was primarily due to the timing of the collection of current assets, partially offset by lower operating results for the oil and natural gas segment in the current year period as compared to the same period in the prior year. Cash flows used in investing activities totaled $1,019,000 during the three months ended December 31, 2023, as compared to cash flows used in investing activities of $6,891,000 during the same period of the prior year. This $5,872,000 change in investing cash flows was due to a decrease of $6,316,000 in cash paid for investments in oil and natural gas properties, partially offset by a decrease of $219,000 in distributions from equity investees in excess of earnings and a decrease of $233,000 in proceeds from sale of interest in leasehold land in the current year period as compared to same period in the prior year. Cash flows used in financing activities totaled $4,000 during the three months ended December 31, 2023, as compared to cash flows used in financing activities of $108,000 for the same period in the prior year. The $104,000 change in financing cash flows was primarily due to a decrease in distributions to non-controlling interests in the current year period as compared to the same period in the prior year. Cash Dividend No dividends were declared or paid during the three months ended December 31, 2023. During the three months ended December 31, 2022, the Company's Board of Directors declared a cash dividend of $0.015 per share that was paid on January 11, 2023 to stockholders of record on December 27, 2022. At The Market Offering On March 16, 2021, the Company entered into a Sales Agreement (the “Sales Agreement”) with A.G.P./Alliance Global Partners (“A.G.P,”), with respect to an at-the-market offering program (“ATM”) pursuant to which the Company may offer and sell, from time to time, shares of its common stock, par value $0.50 per share, having an aggregate sales price of up to $25 million (subject to certain limitations set forth in the Sales Agreement and applicable securities laws, rules and regulations), through or to A.G.P as the Company’s sales agent or as principal. Sales of our common stock under the ATM, if any, will be made by any methods deemed to be “at the market offerings” as defined in Rule 415(a)(4) under the Securities Act, including sales made directly on the NYSE American, on any other existing trading market for our Common Stock, or to or through a market maker. Shares of common stock sold under the ATM are offered pursuant to the Company’s Registration Statement on Form S-3 (File No. 333-254365), filed with the Securities and Exchange Commission on March 16, 2021, and declared effective on March 26, 2021 (the "Registration Statement”), and the prospectus dated March 26, 2021, included in the Registration Statement. In August 2022, the Company’s Board of Directors suspended the sales of our common stock under the ATM until further notice. Oil and Natural Gas Capital Expenditures Barnwell’s oil and natural gas capital expenditures, including accrued capital expenditures and excluding additions and revisions to estimated asset retirement obligations, totaled $495,000 for the three months ended December 31, 2023, as compared to $5,928,000 for the same period in the prior year. 32 In December 2022, Barnwell Texas, LLC (“Barnwell Texas”), a new wholly-owned subsidiary of the Company, entered into a purchase and sale agreement with an independent third party whereby Barnwell Texas acquired a 22.3% non-operated working interest in oil and natural gas leasehold acreage in the Permian Basin in Texas for cash consideration of $806,000. Additionally, in connection with the purchase of such leasehold interests, Barnwell Texas acquired a 15.4% non-operated working interest in two oil wells in the Wolfcamp Formation in Loving and Ward Counties, Texas and had paid $4,293,000 for its share of the costs to drill, complete, and equip the wells in the three months ended December 31, 2022. Barnwell estimates that investments in oil and natural gas properties for fiscal 2024 will range from $4,000,000 to $6,000,000. This estimated amount may increase or decrease as dictated by cash flows and management's assessment of the oil and natural gas environment and prospects.