What changed in this filing

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Item 1. Financial Statements

2024-05-14 compared with 2024-02-12 · 243 added, 111 removed, 416 unchanged (46% of the section changed)

3 unchanged sentences

CONDENSED CONSOLIDATED BALANCE SHEETS

December 31, 2023 September 30, 2023

2024 September 30,

Current assets:

1 unchanged sentence

Accounts and other receivables, net of allowance for credit losses of:

$ 334,000 at December 31, 2023;

$ 339,000 at March 31, 2024;

$ 284,000 at September 30, 2023

3,385,000 3,246,000

Assets held for sale 69,000 —

Other current assets 2,507,000 3,009,000

26 unchanged sentences

authorized, 40,000,000 shares:

10,168,006 issued at December 31, 2023;

10,195,990 issued at March 31, 2024;

10,158,678 issued at September 30, 2023

4 unchanged sentences

Treasury stock, at cost:

167,900 shares at December 31, 2023 and September 30, 2023

167,900 shares at March 31, 2024 and September 30, 2023

( 2,286,000 ) ( 2,286,000 )

Total stockholders’ equity

16,384,000 18,744,000

Non-controlling interests 14,000 13,000

6 unchanged sentences

Three months ended

March 31, Six months ended

2024 2023 2024 2023

Oil and natural gas $ 4,144,000 $ 3,686,000 $ 9,274,000 $ 8,912,000

8 unchanged sentences

Depletion, depreciation, and amortization 1,392,000 761,000 2,903,000 1,601,000

Foreign currency gain ( 126,000 ) ( 78,000 )

Impairment of assets 1,677,000 — 1,677,000 —

Foreign currency loss (gain) 128,000 ( 2,000 ) 2,000 ( 80,000 )

Interest expense — — 2,000 —

1 unchanged sentence

8,295,000 6,477,000 15,046,000 13,238,000

(Loss) earnings before equity in income of affiliates and income taxes ( 596,000 ) 750,000

Loss before equity in income of affiliates and income taxes ( 2,521,000 ) ( 1,238,000 ) ( 3,117,000 ) ( 488,000 )

Equity in income of affiliates 1,071,000 — 1,071,000 538,000

(Loss) earnings before income taxes ( 1,450,000 ) ( 1,238,000 ) ( 2,046,000 ) 50,000

Income tax provision 66,000 79,000

Net (loss) earnings ( 662,000 ) 1,209,000

Income tax provision (benefit) 100,000 ( 3,000 ) 166,000 76,000

Net loss ( 1,550,000 ) ( 1,235,000 ) ( 2,212,000 ) ( 26,000 )

Net earnings attributable to non-controlling interests 222,000 2,000 224,000 122,000

Net (loss) earnings attributable to Barnwell Industries, Inc.

Net loss attributable to Barnwell Industries, Inc.

$ ( 1,772,000 ) $ ( 1,237,000 ) $ ( 2,436,000 ) $ ( 148,000 )

Basic and diluted net (loss) earnings per common share attributable to Barnwell Industries, Inc.

Basic and diluted net loss per common share attributable to Barnwell Industries, Inc.

stockholders $ ( 0.18 ) $ ( 0.12 ) $ ( 0.24 ) $ ( 0.01 )

4 unchanged sentences

AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE (LOSS) INCOME

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS

Three months ended

Net (loss) earnings $ ( 662,000 ) $ 1,209,000

Other comprehensive income (loss):

March 31, Six months ended

2024 2023 2024 2023

Net loss $ ( 1,550,000 ) $ ( 1,235,000 ) $ ( 2,212,000 ) $ ( 26,000 )

Other comprehensive (loss) income:

Foreign currency translation adjustments, net of taxes of $ 0

( 22,000 ) — 8,000 2,000

Retirement plans:

1 unchanged sentence

( 22,000 ) ( 20,000 ) ( 43,000 ) ( 40,000 )

Total other comprehensive income (loss) 9,000 ( 18,000 )

Total comprehensive (loss) income ( 653,000 ) 1,191,000

Total other comprehensive loss ( 44,000 ) ( 20,000 ) ( 35,000 ) ( 38,000 )

Total comprehensive loss ( 1,594,000 ) ( 1,255,000 ) ( 2,247,000 ) ( 64,000 )

Comprehensive income attributable to non-controlling interests ( 222,000 ) ( 2,000 ) ( 224,000 ) ( 122,000 )

Comprehensive (loss) income attributable to Barnwell Industries, Inc.

Comprehensive loss attributable to Barnwell Industries, Inc.

$ ( 1,816,000 ) $ ( 1,257,000 ) $ ( 2,471,000 ) $ ( 186,000 )

3 unchanged sentences

CONDENSED CONSOLIDATED STATEMENTS OF EQUITY

Three months ended December 31, 2023 and 2022

Three months ended March 31, 2024 and 2023

Outstanding Common

Stock Additional

Capital Retained

Earnings Accumulated

Comprehensive

Income Treasury

Capital Retained Earnings Accumulated

Comprehensive Income Treasury

Stock Non-controlling

Interests Total

Balance at December 31, 2022 9,956,687 $ 5,062,000 $ 7,466,000 $ 8,660,000 $ 1,276,000 $ ( 2,286,000 ) $ 32,000 $ 20,210,000

Net (loss) earnings — — — ( 1,237,000 ) — — 2,000 ( 1,235,000 )

Distributions to non-controlling interests — — — — — — ( 16,000 ) ( 16,000 )

Share-based compensation — — 75,000 — — — — 75,000

Dividends declared, $ 0.015 per share

— — — ( 150,000 ) — — — ( 150,000 )

Retirement plans:

Amortization of accumulated other comprehensive gain into net periodic benefit cost, net of taxes of $ 0

— — — — ( 20,000 ) — — ( 20,000 )

Balance at March 31, 2023 9,956,687 $ 5,062,000 $ 7,541,000 $ 7,273,000 $ 1,256,000 $ ( 2,286,000 ) $ 18,000 $ 18,864,000

Balance at December 31, 2023 10,000,106 $ 5,084,000 $ 7,747,000 $ 5,496,000 $ 2,113,000 $ ( 2,286,000 ) $ 11,000 $ 18,165,000

Net (loss) earnings — — — ( 1,772,000 ) — — 222,000 ( 1,550,000 )

Foreign currency translation adjustments, net of taxes of $ 0

— — — — ( 22,000 ) — — ( 22,000 )

Distributions to non-controlling interests — — — — — — ( 219,000 ) ( 219,000 )

Share-based compensation — — 46,000 — — — — 46,000

Issuance of common stock for restricted stock unites vested 27,984 14,000 ( 14,000 ) — — — — —

Retirement plans:

Amortization of accumulated other comprehensive gain into net periodic benefit cost, net of taxes of $ 0

— — — — ( 22,000 ) — — ( 22,000 )

Balance at March 31, 2024 10,028,090 $ 5,098,000 $ 7,779,000 $ 3,724,000 $ 2,069,000 $ ( 2,286,000 ) $ 14,000 $ 16,398,000

See Notes to Condensed Consolidated Financial Statements

BARNWELL INDUSTRIES, INC.

AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF EQUITY

Six months ended March 31, 2024 and 2023

Outstanding Common

Stock Additional

Capital Retained Earnings Accumulated

Comprehensive Income Treasury

Stock Non-controlling

Interests Total

Balance at September 30, 2022 9,956,687 $ 5,062,000 $ 7,351,000 $ 7,720,000 $ 1,294,000 $ ( 2,286,000 ) $ 20,000 $ 19,161,000

Net earnings — — — 1,089,000 — — 120,000 1,209,000

Net (loss) earnings — — — ( 148,000 ) — — 122,000 ( 26,000 )

Foreign currency translation adjustments, net of taxes of $ 0

7 unchanged sentences

— — — — ( 40,000 ) — — ( 40,000 )

Balance at December 31, 2022 9,956,687 $ 5,062,000 $ 7,466,000 $ 8,660,000 $ 1,276,000 $ ( 2,286,000 ) $ 32,000 $ 20,210,000

Balance at March 31, 2023 9,956,687 $ 5,062,000 $ 7,541,000 $ 7,273,000 $ 1,256,000 $ ( 2,286,000 ) $ 18,000 $ 18,864,000

Balance at September 30, 2023 9,990,778 $ 5,079,000 $ 7,687,000 $ 6,160,000 $ 2,104,000 $ ( 2,286,000 ) $ 13,000 $ 18,757,000

4 unchanged sentences

Share-based compensation — — 111,000 — — — — 111,000

Issuance of common stock for restricted stock units vested 9,328 5,000 ( 5,000 ) — — — — —

Issuance of common stock for restricted stock unites vested 37,312 19,000 ( 19,000 ) — — — — —

Retirement plans:

1 unchanged sentence

— — — — ( 43,000 ) — — ( 43,000 )

Balance at December 31, 2023 10,000,106 $ 5,084,000 $ 7,747,000 $ 5,496,000 $ 2,113,000 $ ( 2,286,000 ) $ 11,000 $ 18,165,000

Balance at March 31, 2024 10,028,090 $ 5,098,000 $ 7,779,000 $ 3,724,000 $ 2,069,000 $ ( 2,286,000 ) $ 14,000 $ 16,398,000

See Notes to Condensed Consolidated Financial Statements

2 unchanged sentences

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

Three months ended

Six months ended

Cash flows from operating activities:

Net (loss) earnings $ ( 662,000 ) $ 1,209,000

Adjustments to reconcile net (loss) earnings to net cash

Net loss $ ( 2,212,000 ) $ ( 26,000 )

Adjustments to reconcile net loss to net cash

provided by operating activities:

Depletion, depreciation, and amortization 1,511,000 840,000

Equity in income of affiliates ( 1,071,000 ) ( 538,000 )

Depletion, depreciation, and amortization 2,903,000 1,601,000

Impairment of assets 1,677,000 —

Gain on sale of assets — ( 551,000 )

2 unchanged sentences

Retirement benefits income ( 173,000 ) ( 126,000 )

Accretion of asset retirement obligation 200,000 194,000

Non-cash rent income ( 13,000 ) ( 12,000 )

Deferred income tax benefit ( 2,000 ) ( 12,000 )

Accretion of asset retirement obligation 434,000 395,000

Deferred income tax expense (benefit) 51,000 ( 57,000 )

Asset retirement obligation payments ( 396,000 ) ( 529,000 )

2 unchanged sentences

Credit loss expense 46,000 18,000

Foreign currency gain ( 126,000 ) ( 78,000 )

Increase (decrease) from changes in current assets and liabilities 606,000 ( 241,000 )

Foreign currency loss (gain) 2,000 ( 80,000 )

Increase from changes in current assets and liabilities 273,000 365,000

Net cash provided by operating activities 2,262,000 734,000

8 unchanged sentences

Distributions to non-controlling interests ( 223,000 ) ( 124,000 )

Payment of dividends — ( 299,000 )

Net cash used in financing activities ( 223,000 ) ( 423,000 )

22 unchanged sentences

The Condensed Consolidated Balance Sheet as of September 30, 2023 has been derived from audited consolidated financial statements.

In the opinion of management, all adjustments (which include only normal recurring adjustments) necessary to present fairly the financial position at December 31, 2023, results of operations, comprehensive (loss) income, equity and cash flows for the three months ended December 31, 2023 and 2022, have been made.

The results of operations for the period ended December 31, 2023 are not necessarily indicative of the operating results for the full year.

In the opinion of management, all adjustments (which include only normal recurring adjustments) necessary to present fairly the financial position at March 31, 2024, results of operations, comprehensive loss, and equity for the three and six months ended March 31, 2024 and 2023, and cash flows for the six months ended March 31, 2024 and 2023, have been made.

The results of operations for the period ended March 31, 2024 are not necessarily indicative of the operating results for the full year.

Use of Estimates in the Preparation of Condensed Consolidated Financial Statements

25 unchanged sentences

The adoption of this update did not have an impact on Barnwell’s consolidated financial statements.

(LOSS) EARNINGS PER COMMON SHARE

Basic (loss) earnings per share is computed using the weighted-average number of common shares outstanding for the period.

Diluted (loss) earnings per share is calculated using the treasury stock method to reflect the assumed issuance of common shares for all potentially dilutive securities, which consist of outstanding stock options and nonvested restricted stock units.

Potentially dilutive shares are excluded from the computation of diluted (loss) earnings per share if their effect is anti-dilutive.

Options to purchase 465,000 shares of common stock and 76,336 restricted stock units were excluded from the computation of diluted shares for the three months ended December 31, 2023, as their inclusion would have been anti-dilutive.

Options to purchase 615,000 shares of common stock were excluded from the computation of diluted shares for the three months ended December 31, 2022, as their inclusion would have been anti-dilutive.

Reconciliations between net (loss) earnings attributable to Barnwell stockholders and common shares outstanding of the basic and diluted net (loss) earnings per share computations are detailed in the following tables:

Three months ended December 31, 2023

LOSS PER COMMON SHARE

Basic loss per share is computed using the weighted-average number of common shares outstanding for the period.

Diluted loss per share is calculated using the treasury stock method to reflect the assumed issuance of common shares for all potentially dilutive securities, which consist of outstanding stock options and nonvested restricted stock units.

Potentially dilutive shares are excluded from the computation of diluted loss per share if their effect is anti-dilutive.

Options to purchase 465,000 shares of common stock and 76,336 restricted stock units were excluded from the computation of diluted shares for the three and six months ended March 31, 2024, as their inclusion would have been anti-dilutive.

Options to purchase 615,000 shares of common stock were excluded from the computation of diluted shares for the three and six months ended March 31, 2023, as their inclusion would have been anti-dilutive.

Reconciliations between net loss attributable to Barnwell stockholders and common shares outstanding of the basic and diluted net loss per share computations are detailed in the following tables:

Three months ended March 31, 2024

(Numerator) Shares

(Denominator) Per-Share

Basic net loss $ ( 664,000 ) 9,996,760 $ ( 0.07 )

$ ( 1,772,000 ) 10,019,172 $ ( 0.18 )

Effect of dilutive securities -

common stock options and restricted stock units — —

Diluted net loss $ ( 664,000 ) 9,996,760 $ ( 0.07 )

Three months ended December 31, 2022

Net Earnings (Numerator) Shares

$ ( 1,772,000 ) 10,019,172 $ ( 0.18 )

Six months ended March 31, 2024

(Numerator) Shares

(Denominator) Per-Share

Basic net earnings $ 1,089,000 9,956,687 $ 0.11

$ ( 2,436,000 ) 10,007,905 $ ( 0.24 )

Effect of dilutive securities -

common stock options and restricted stock units — —

$ ( 2,436,000 ) 10,007,905 $ ( 0.24 )

Three months ended March 31, 2023

(Numerator) Shares

(Denominator) Per-Share

$ ( 1,237,000 ) 9,956,687 $ ( 0.12 )

Effect of dilutive securities -

common stock options — —

Diluted net earnings $ 1,089,000 9,956,687 $ 0.11

$ ( 1,237,000 ) 9,956,687 $ ( 0.12 )

Six months ended March 31, 2023

(Numerator) Shares

(Denominator) Per-Share

$ ( 148,000 ) 9,956,687 $ ( 0.01 )

Effect of dilutive securities -

common stock options — —

$ ( 148,000 ) 9,956,687 $ ( 0.01 )

Investment in Kukio Resort Land Development Partnerships

1 unchanged sentence

These entities, collectively referred to hereinafter as the “Kukio Resort Land Development Partnerships,” 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 holds interests in KD Acquisition, LLLP (“KD I”) and KD Acquisition II,

LP, formerly KD Acquisition II, LLLP (“KD II”).

KDK holds interests in KD Acquisition, LLLP (“KD I”) and KD Acquisition II, LP, formerly KD Acquisition II, LLLP (“KD II”).

KD I is the developer of Kaupulehu Lot 4A Increment I (“Increment I”), and KD II is the developer of Kaupulehu Lot 4A Increment II (“Increment II”).

3 unchanged sentences

Barnwell continues to have an indirect 19.6 % non-controlling ownership interest in KD Kukio Resorts, LLLP, KD Maniniowali, LLLP, and KD I.

The partnerships derive income from the sale of residential parcels in Increment I, of which only two lots remain to be sold as of December 31, 2023, as well as from commissions on real estate sales by the real estate sales office and revenues resulting from the sale of private club memberships.

The partnerships derive income from the sale of residential parcels in Increment I, which is now completely sold, as well as from commissions on real estate sales by the real estate sales office and revenues resulting from the sale of private club memberships.

During the three months ended March 31, 2024, the last two remaining single-family lots of the 80 lots developed within Increment I were sold.

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 KD II, the developer of Increment II, as of the date of this report.

Barnwell has the right to receive distributions from the Kukio Resort Land Development Partnerships via its non-controlling interests in KD Kona and KKM, based on its respective partnership sharing ratios of 75 % and 34.45 %, respectively.

No cash distributions were received during the three months ended December 31, 2023.

During the three months ended December 31, 2022, Barnwell received cash distributions $ 538,000 from the Kukio Resort Land Development Partnerships resulting in a net amount of $ 478,000 , after distributing $ 60,000 to non-controlling interests.

Equity in income of affiliates was nil for the three months ended December 31, 2023, as compared to equity in income of affiliates of $ 538,000 for the three months ended December 31, 2022.

Barnwell has the right to receive distributions from the Kukio Resort Land Development Partnerships via its non-controlling interest in KD Kona and KKM, based on its respective partnership sharing ratios of 75 % and 34.45 %, respectively.

During the three and six months ended March 31, 2024, Barnwell received cash distributions of $ 1,071,000 (resulting in a net amount of $ 953,000 , after distributing $ 118,000 to non-controlling interests) from the Kukio Resort Land Development Partnerships.

No cash distributions were received during the three months ended March 31, 2023.

During the six months ended March 31, 2023, Barnwell received cash distributions of $ 538,000 from the Kukio Resort Land Development Partnerships resulting in a net amount of $ 478,000 after distributing $ 60,000 to non-controlling interests.

Equity in income of affiliates was $ 1,071,000 for the three and six months ended March 31, 2024, as compared to equity in income of affiliates of nil and $ 538,000 for the three and six months ended March 31, 2023, respectively.

Summarized financial information for the Kukio Resort Land Development Partnerships is as follows:

Three months ended

Three months ended March 31,

Revenue $ 10,153,000 $ 1,284,000

Gross profit $ 7,329,000 $ 738,000

Net earnings (loss) $ 6,658,000 $ ( 82,000 )

Six months ended March 31,

Revenue $ 12,039,000 $ 4,996,000

Gross profit $ 8,146,000 $ 3,160,000

Net earnings $ 7,012,000 $ 1,225,000

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 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.

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 Partnerships 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 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 Partnerships’ cumulative earnings in excess of distributions during the suspended period exceeds our share of the Kukio Resort Land Development Partnerships’ income recognized for the excess distributions, and during this suspended period any distributions received will be recorded as equity in income of affiliates.

Accordingly, the amount of equity in income of affiliates recognized in the six months ended March 31, 2024 was equivalent to the $ 1,071,000 of distributions received in that period.

Cumulative distributions received from the Kukio Resort Land Development Partnerships in excess of our investment balance was $ 225,000 at March 31, 2024 and $ 708,000 at September 30, 2023.

Sale of Interest in Leasehold Land

Kaupulehu Developments has the right to receive payments from KD I and KD II resulting from the sale of lots and/or residential units within Increment I and Increment II by KD I and KD II (see Note 15).

With respect to Increment I, Kaupulehu Developments is entitled to receive payments from KD I based on 10 % of the gross receipts from KD I’s sales of single-family residential lots in Increment I.

No lots were sold during the three months ended December 31, 2023 and two single-family lots, of the 80 lots developed within Increment I, remained to be sold as of December 31, 2023.

Kaupulehu Developments holds rights to receive payments from KD I and KD II resulting from the sale of lots and/or residential units within Increment I, which is now fully sold, and within Increment II, which is not yet developed (see Note 16).

With respect to Increment I, Kaupulehu Developments was entitled to receive payments from KD I based on 10 % of the gross receipts from KD I’s sales of single-family residential lots in Increment I.

During the three months ended March 31, 2024, the last two remaining single-family lots of the 80 lots developed within Increment I were sold.

The following table summarizes the Increment I revenues from KD I and the amount of fees directly related to such revenues:

Three months ended

March 31, Six months ended

2024 2023 2024 2023

Sale of interest in leasehold land:

2 unchanged sentences

Sale of interest in leasehold land, net of fees paid $ 439,000 $ — $ 439,000 $ 233,000

There is no assurance with regards to the amounts of future payments from Increment I or Increment II to be received, or that the remaining acreage within Increment II will be developed.

There is no assurance with regards to the amounts of future payments from Increment II to be received 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.

4 unchanged sentences

In February 2021, Barnwell Industries, Inc.

established a new wholly-owned subsidiary named BOK Drilling, LLC (“BOK”) for the purpose of indirectly investing in oil and natural gas exploration and

development in Oklahoma.

established a new wholly-owned subsidiary named BOK Drilling, LLC (“BOK”) for the purpose of indirectly investing in oil and natural gas exploration and development in Oklahoma.

BOK and Gros Ventre Partners, LLC (“Gros Ventre”) entered into the Limited Liability Agreement (the “Teton Operating Agreement”) of Teton Barnwell Fund I, LLC (“Teton Barnwell”), an entity formed for the purpose of directly entering into such oil and natural gas investments.

2 unchanged sentences

The Company has determined that Teton Barnwell is a variable interest entity (“VIE”) as the entity is structured with non-substantive voting rights and that the Company is the primary beneficiary.

This is due to the fact that even though Teton Barnwell has a unanimous consent voting structure, BOK is responsible for 100 % of the capital contributions required to fund Teton Barnwell’s future oil exploration and development investments pursuant to the Teton Operating Agreement and thus, BOK has the power to steer the decisions that most significantly impact Teton Barnwell’s economic performance and has the obligation to absorb any potential losses that could be significant to Teton Barnwell.

obligation to absorb any potential losses that could be significant to Teton Barnwell.

As BOK is the primary beneficiary of the VIE, Teton Barnwell’s operating results, assets and liabilities are consolidated by the Company.

10 unchanged sentences

Total liabilities $ 29,000 $ 25,000

ASSETS HELD FOR SALE

Contract Drilling Segment Property and Equipment

During the quarter ended March 31, 2024, the Company commenced the marketing of a portion of the contract drilling segment's property and equipment, the majority of which was already fully depreciated.

There was no impairment related to the classification change from held and used to held for sale as the fair value, less estimated selling costs, of the disposal group exceeded its carrying value.

The property and equipment deemed necessary to complete the contract drilling segment's contracts in backlog will continue to be classified as held and used.

OIL AND NATURAL GAS PROPERTIES

Fiscal 2023 Investments and Acquisitions

Investments and Acquisitions

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.

Impairment of Oil and Natural Gas Properties

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.

During the three and six months ended March 31, 2024, the Company incurred a

non-cash ceiling test impairment for our Canadian oil and natural gas properties of $ 1,677,000 .

There was no ceiling test impairment during the three and six months ended March 31, 2023.

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.

If oil and natural gas prices decline sufficiently from the 12-month historical rolling average first-day-of-the-month prices used in the ceiling test at March 31, 2024, it is more likely than not that the Company will incur further impairment write-downs in future periods in the absence of any offsetting factors that are not currently known or projected.

RETIREMENT PLANS

2 unchanged sentences

Effective December 31, 2019, the accrual of benefits for all participants in the Pension Plan and SERP was frozen and the plans were closed to new participants from that point forward.

The following table details the components of net periodic benefit (income) cost for Barnwell’s retirement plans:

The following tables detail the components of net periodic benefit (income) cost for Barnwell’s retirement plans:

Pension Plan SERP

Three months ended December 31,

Three months ended March 31,

2024 2023 2024 2023

3 unchanged sentences

Net periodic benefit (income) cost $ ( 89,000 ) $ ( 65,000 ) $ 2,000 $ 2,000

Pension Plan SERP

Six months ended March 31,

2024 2023 2024 2023

Interest cost $ 205,000 $ 203,000 $ 48,000 $ 44,000

Expected return on plan assets ( 383,000 ) ( 333,000 ) — —

Amortization of net actuarial gain — — ( 43,000 ) ( 40,000 )

Net periodic benefit (income) cost $ ( 178,000 ) $ ( 130,000 ) $ 5,000 $ 4,000

The net periodic benefit (income) cost is included in “General and administrative” expenses in the Company's Condensed Consolidated Statements of Operations.

Currently, no contributions are planned to be made to the Pension Plan during fiscal 2024.

Currently, no contributions are expected to be made to the Pension Plan during fiscal 2024.

The SERP plan is unfunded and Barnwell funds benefits when payments are made.

Expected payments under the SERP for fiscal 2024 are not material.

Fluctuations in actual equity market returns as well as changes in general interest rates will result in changes in the market value of plan assets and may result in increased or decreased retirement benefits costs and contributions in future periods.

The components of (loss) earnings before income taxes, after adjusting the (loss) earnings for non-controlling interests, are as follows:

Fluctuations in actual equity market returns as well as changes

in general interest rates will result in changes in the market value of plan assets and may result in increased or decreased retirement benefits costs and contributions in future periods.

The components of loss before income taxes, after adjusting the loss for non-controlling interests, are as follows:

Three months ended

March 31, Six months ended

2024 2023 2024 2023

United States $ 538,000 $ ( 1,275,000 ) $ ( 151,000 ) $ ( 1,257,000 )

1 unchanged sentence

$ ( 1,672,000 ) $ ( 1,240,000 ) $ ( 2,270,000 ) $ ( 72,000 )

The components of the income tax provision are as follows:

The components of the income tax provision (benefit) are as follows:

Three months ended

March 31, Six months ended

2024 2023 2024 2023

Current $ 47,000 $ 42,000 $ 115,000 $ 133,000

11 unchanged sentences

Disaggregation of Revenue

The following tables provides information about disaggregated revenue by revenue streams, reportable segments, geographical region, and timing of revenue recognition for the three months ended December 31, 2023 and 2022.

Three months ended December 31, 2023

The following tables provide information about disaggregated revenue by revenue streams, reportable segments, geographical region, and timing of revenue recognition for the three and six months ended March 31, 2024 and 2023.

Three months ended March 31, 2024

Oil and natural gas Contract drilling Land investment Other Total

4 unchanged sentences

Drilling and pump — 1,070,000 — — 1,070,000

Contingent residual payments — — 500,000 — 500,000

Other — — — 42,000 42,000

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Total revenues before interest income $ 4,144,000 $ 1,070,000 $ 500,000 $ 42,000 $ 5,756,000

Three months ended December 31, 2022

Three months ended March 31, 2023

Oil and natural gas Contract drilling Land investment Other Total

4 unchanged sentences

Drilling and pump — 1,501,000 — — 1,501,000

Other — — — 29,000 29,000

Total revenues before interest income $ 3,686,000 $ 1,501,000 $ — $ 29,000 $ 5,216,000

Geographical regions:

United States $ 309,000 $ 1,501,000 $ — $ 6,000 $ 1,816,000

Canada 3,377,000 — — 23,000 3,400,000

Total revenues before interest income $ 3,686,000 $ 1,501,000 $ — $ 29,000 $ 5,216,000

Timing of revenue recognition:

Goods transferred at a point in time $ 3,686,000 $ — $ — $ 29,000 $ 3,715,000

Services transferred over time — 1,501,000 — — 1,501,000

Total revenues before interest income $ 3,686,000 $ 1,501,000 $ — $ 29,000 $ 5,216,000

Six months ended March 31, 2024

Oil and natural gas Contract drilling Land investment Other Total

Revenue streams:

Oil $ 6,877,000 $ — $ — $ — $ 6,877,000

Natural gas 1,390,000 — — — 1,390,000

Natural gas liquids 1,007,000 — — — 1,007,000

Drilling and pump — 2,063,000 — — 2,063,000

Contingent residual payments — — 500,000 — 500,000

9 unchanged sentences

Total revenues before interest income $ 9,274,000 $ 2,063,000 $ 500,000 $ 59,000 $ 11,896,000

Six months ended March 31, 2023

Oil and natural gas Contract drilling Land investment Other Total

Revenue streams:

Oil $ 6,273,000 $ — $ — $ — $ 6,273,000

Natural gas 1,918,000 — — — 1,918,000

Natural gas liquids 721,000 — — — 721,000

Drilling and pump — 3,449,000 — — 3,449,000

Contingent residual payments — — 265,000 — 265,000

Other — — — 72,000 72,000

Total revenues before interest income $ 8,912,000 $ 3,449,000 $ 265,000 $ 72,000 $ 12,698,000

Geographical regions:

United States $ 826,000 $ 3,449,000 $ 265,000 $ 8,000 $ 4,548,000

Canada 8,086,000 — — 64,000 8,150,000

Total revenues before interest income $ 8,912,000 $ 3,449,000 $ 265,000 $ 72,000 $ 12,698,000

Timing of revenue recognition:

Goods transferred at a point in time $ 8,912,000 $ — $ 265,000 $ 72,000 $ 9,249,000

Services transferred over time — 3,449,000 — — 3,449,000

Total revenues before interest income $ 8,912,000 $ 3,449,000 $ 265,000 $ 72,000 $ 12,698,000

Contract Balances

The following table provides information about accounts receivables, contract assets and contract liabilities from contracts with customers:

December 31, 2023 September 30, 2023 September 30, 2022

March 31, 2024 September 30, 2023 September 30, 2022

Accounts receivables from contracts with customers $ 3,046,000 $ 2,931,000 $ 4,038,000

10 unchanged sentences

Such deferred revenue typically results from billings in excess of costs and estimated earnings on uncompleted contracts.

As of December 31, 2023 and September 30, 2023, the Company had $ 232,000 and $ 377,000 , respectively, included in “Other current liabilities” in the accompanying Condensed Consolidated Balance Sheets for those performance obligations expected to be completed in the next twelve months.

During the three months ended December 31, 2023 and 2022, the amount of revenue recognized that was previously included in contract liabilities as of the beginning of the respective period was $ 229,000 and $ 523,000 , respectively.

As of March 31, 2024 and September 30, 2023, the Company had $ 320,000 and $ 377,000 , respectively, included in “Other current liabilities” in the accompanying Condensed Consolidated Balance Sheets for those performance obligations expected to be completed in the next twelve months.

During the six months ended March 31, 2024 and 2023, the amount of revenue recognized that was previously included in contract liabilities as of the beginning of the respective period was $ 347,000 and $ 969,000 , respectively.

Contracts are sometimes modified for a change in scope or other requirements.

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Nearly all of the Company's contract drilling segment contracts have original expected durations of one year or less.

At December 31, 2023, the Company had three contract drilling jobs with original expected durations of greater than one year.

For these contracts, approximately 100 % of the remaining performance obligation of $ 371,000 is expected to be recognized as revenue in the next twelve months.

At March 31, 2024, the Company had three contract drilling jobs with original expected durations of greater than one year.

For these contracts, 100 % of the remaining performance obligation of $ 56,000 is expected to be recognized as revenue in the next twelve months.

Contract Fulfillment Costs

Preconstruction costs, which include costs such as set-up and mobilization, are capitalized and allocated across all performance obligations and deferred and amortized over the contract term on a progress towards completion basis.

As of December 31, 2023 and September 30, 2023, the Company had $ 423,000 and $ 504,000 , respectively, in unamortized preconstruction costs related to contracts that were not completed.

During the three months ended December 31, 2023 and 2022, the amortization of preconstruction costs related to contracts were not material and were included in the accompanying Condensed Consolidated Statements of Operations.

Additionally, no impairment charges in connection with the Company’s preconstruction costs were recorded during the three months ended December 31, 2023 and 2022.

As of March 31, 2024 and September 30, 2023, the Company had $ 324,000 and $ 504,000 , respectively, in unamortized preconstruction costs related to contracts that were not completed.

During the three months ended March 31, 2024 and 2023, the amortization of preconstruction costs related to contracts were not material.

During the six months ended March 31, 2024 and 2023, the amortization of preconstruction costs related to contracts was $ 155,000 and $ 178,000 , respectively.

These amounts have been included in “Contract drilling operating” costs and expenses in the accompanying Condensed Consolidated Statements of Operations.

Additionally, no impairment charges in connection with the Company’s preconstruction costs were recorded during the three and six months ended March 31, 2024 and 2023.

SEGMENT INFORMATION

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Three months ended

March 31, Six months ended

2024 2023 2024 2023

Oil and natural gas $ 4,144,000 $ 3,686,000 $ 9,274,000 $ 8,912,000

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Total depletion, depreciation, and amortization $ 1,392,000 $ 761,000 $ 2,903,000 $ 1,601,000

Oil and natural gas $ 1,677,000 $ — $ 1,677,000 $ —

Total impairment $ 1,677,000 $ — $ 1,677,000 $ —

Operating profit (loss) (before general and administrative expenses):

4 unchanged sentences

Gain on sale of assets — — — 551,000

Total operating profit 669,000 2,892,000

Total operating (loss) profit ( 1,030,000 ) 787,000 ( 361,000 ) 3,679,000

Equity in income of affiliates:

1 unchanged sentence

General and administrative expenses ( 1,381,000 ) ( 2,050,000 ) ( 2,785,000 ) ( 4,299,000 )

Foreign currency gain 126,000 78,000

Foreign currency (loss) gain ( 128,000 ) 2,000 ( 2,000 ) 80,000

Interest expense — — ( 2,000 ) —

4 unchanged sentences

Three months ended

March 31, Six months ended

2024 2023 2024 2023

Foreign currency translation:

2 unchanged sentences

Income taxes — — — —

Net current period other comprehensive income 30,000 2,000

Net current period other comprehensive (loss) income ( 22,000 ) — 8,000 2,000

Ending accumulated foreign currency translation 228,000 224,000 228,000 224,000

14 unchanged sentences

Barnwell estimates the fair value of asset retirement obligations based on the projected discounted future cash outflows required to settle abandonment and restoration liabilities.

Such an estimate requires assumptions and judgments regarding the existence of liabilities, the amount and timing of cash outflows required to settle the liability, what constitutes adequate restoration, inflation factors, credit adjusted discount rates, and consideration of changes in legal, regulatory, environmental and political environments.

Abandonment and restoration cost estimates are determined in conjunction with Barnwell’s reserve engineers based on historical information regarding costs incurred to abandon and restore similar

well sites, information regarding current market conditions and costs, and knowledge of subject well sites and properties.

Such an estimate requires assumptions and judgments regarding the existence of liabilities, the amount and timing of cash outflows

required to settle the liability, what constitutes adequate restoration, inflation factors, credit adjusted discount rates, and consideration of changes in legal, regulatory, environmental and political environments.

Abandonment and restoration cost estimates are determined in conjunction with Barnwell’s reserve engineers based on historical information regarding costs incurred to abandon and restore similar well sites, information regarding current market conditions and costs, and knowledge of subject well sites and properties.

Asset retirement obligation fair value measurements in the current period were Level 3 fair value measurements.

3 unchanged sentences

The restricted stock units vest ratably over a three-year period, subject to the director’s continued service through the applicable vesting dates;

The following table summarizes Barnwell’s restricted stock unit activity from October 1, 2023 through December 31, 2023:

provided that, any unvested restricted stock would vest upon a director’s death, disability, a change in control of the Company resulting in the director not continuing as a director or the director not being renominated for election even though he was willing to stand for re-election.

The following table summarizes Barnwell’s restricted stock unit activity from October 1, 2023 through March 31, 2024:

Restricted Stock Units Shares Weighted-Average

2 unchanged sentences

Forfeited — —

Nonvested at December 31, 2023 76,336 $ 2.62

Nonvested at March 31, 2024

76,336 $ 2.62

Compensation cost for restricted stock unit awards is measured at fair value and is recognized as an expense over the requisite service period.

During the three months ended December 31, 2023, the Company recognized share-based compensation expense related to restricted stock units of $ 30,000 .

There was no share-based compensation expense related to restricted stock units recognized during the three months ended December 31, 2022.

As of December 31, 2023, the total remaining unrecognized compensation cost related to nonvested restricted stock units was $ 170,000 , which is expected to be recognized over the weighted-average remaining requisite service period of 1.8 years.

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.

During the three and six months ended March 31, 2024, 2024, the Company recognized share-based compensation expense related to restricted stock units of $ 31,000 and $ 61,000 , respectively.

There was no share-based compensation expense related to restricted stock units recognized during the three and six months ended March 31, 2023.

As of March 31, 2024, the total remaining unrecognized compensation cost related to nonvested restricted stock units was $ 139,000 , which is expected to be recognized over the weighted-average remaining requisite service period of 1.7 years.

Cash Dividends

No dividends were declared or paid during the six months ended March 31, 2024.

In December 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.

In February 2023, the Company's Board of Directors declared a cash dividend of $ 0.015 per share that was paid on March 13, 2023 to stockholders of record on February 23, 2023.

CONTINGENCIES

8 unchanged sentences

Barnwell’s management believes the plumbness deviation is not impactful to the performance of the submersible pumps that will be installed in the well.

Accordingly, while costs for the centralizers, armored cabling and the pump installation and removal test have been accrued, no accrual has been recorded as of December 31, 2023 for any further costs related to this contract as there is no related probable or estimable contingent liability.

Accordingly, while costs for the centralizers, armored cabling and the pump installation and removal test have been accrued, no accrual has been recorded as of March 31, 2024 for any further costs related to this contract as there is no related probable or estimable contingent liability.

INFORMATION RELATING TO THE CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

Three months ended

Six months ended

Supplemental disclosure of cash flow information:

1 unchanged sentence

Income taxes paid

Capital expenditure accruals related to oil and natural gas exploration and development decreased $ 523,000 and $ 1,405,000 during the three months ended December 31, 2023 and 2022, respectively.

Additionally, capital expenditure accruals related to oil and natural gas asset retirement obligations increased $ 115,000 and $ 150,000 during the three months ended December 31, 2023 and 2022, respectively.

$ 71,000 $ 100,000

Capital expenditure accruals related to oil and natural gas exploration and development decreased $ 569,000 and $ 105,000 during the six months ended March 31, 2024 and 2023, respectively.

Additionally, capital expenditure accruals related to oil and natural gas asset retirement obligations increased $ 179,000 and $ 220,000 during the six months ended March 31, 2024 and 2023, respectively.

RELATED PARTY TRANSACTIONS

3 unchanged sentences

Changes to the arrangement above, effective March 7, 2019, are discussed in Note 3.

No lots were sold during the three months ended December 31, 2023.

During the three months ended December 31, 2022, Kaupulehu Developments received $ 265,000 in percentage of sales payments from KD I from the sale of one single-family lot within Phase II of Increment I.

During the six months ended March 31, 2024, Barnwell received $ 500,000 in percentage of sales payments from KD I from the sale of the last two single-family lots within Increment I.

During the six months ended March 31, 2023, Barnwell received $ 265,000 in percentage of sales payments from KD I from the sale of one single-family lot within Increment I.

SUBSEQUENT EVENTS

Oil and Natural Gas Property Dispositions

Subsequent to March 31, 2024, Barnwell entered into and completed a purchase and sale agreement with an independent third party and sold its interests in certain natural gas and oil properties located in the Kaybob area of Alberta, Canada.

The sales price per the agreement was adjusted for customary purchase price adjustments to $ 448,000 in order to, among other things, reflect an economic effective date of May 1, 2024.

The final determination of the customary adjustments to the purchase price has not yet been made, however, it is not expected to result in a material adjustment.

The financial results of this transaction will be reflected in Barnwell’s quarter ending June 30, 2024.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements