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Item 8. Financial Statements and Supplementary Data

2024-12-17 compared with 2023-12-18 · 304 added, 300 removed, 1193 unchanged (34% of the section changed)

5 unchanged sentences

We have audited the accompanying consolidated balance sheets of Barnwell Industries, Inc.

and subsidiaries (the Company) as of September 30, 2023 and 2022, and the related consolidated statements of operations, comprehensive (loss) income, equity, and cash flows for the years then ended, and the related notes (collectively referred to as the “financial statements”).

In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of September 30, 2023 and 2022, and the results of its operations and its cash flows for the years then ended, in conformity with accounting principles generally accepted in the United States of America.

and subsidiaries (the Company) as of September 30, 2024 and 2023, and the related consolidated statements of operations, comprehensive loss, equity, and cash flows for each of the two years in the period ended September 30, 2024, and the related notes (collectively referred to as the “financial statements”).

In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of September 30, 2024 and 2023, and the results of its operations and its cash flows for each of the two years in the period ended September 30, 2024, in conformity with accounting principles generally accepted in the United States of America.

Basis for Opinion

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Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements.

Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements.

Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements.

We believe that our audits provide a reasonable basis for our opinion.

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(1) relate to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments.

The communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by

communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate.

Estimation of proved reserves impacting the recognition and valuation of depletion expense and impairment of oil and gas properties

The communication of critical audit matters

does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate.

Estimation of proved reserves impacting the recognition and valuation of depletion expense and

impairment of oil and gas properties

Critical Accounting Matter Description

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We have served as the Company’s auditor since 2020.

Dallas, Texas

Little Falls, New Jersey

December 16, 2024

5 unchanged sentences

Cash and cash equivalents $ 4,505,000 $ 2,830,000

Accounts and other receivables, net of allowance for doubtful accounts of:

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

$ 375,000 at September 30, 2024;

1 unchanged sentence

2,770,000 3,246,000

Income taxes receivable 16,000 —

Assets held for sale 69,000 —

Other current assets 1,539,000 3,009,000

16 unchanged sentences

Total current liabilities 7,812,000 6,598,000

Long-term debt — 44,000

Operating lease liabilities 7,000 47,000

35 unchanged sentences

Impairment of assets 2,885,000 —

Foreign currency (gain) loss ( 76,000 ) 484,000

Foreign currency gain ( 10,000 ) ( 76,000 )

Interest expense 2,000 2,000

1 unchanged sentence

27,913,000 26,891,000

(Loss) earnings before equity in income of affiliates and income taxes ( 1,622,000 ) 3,119,000

Loss before equity in income of affiliates and income taxes ( 6,189,000 ) ( 1,622,000 )

Equity in income of affiliates 1,071,000 758,000

(Loss) earnings before income taxes ( 864,000 ) 6,519,000

Income tax (benefit) provision ( 53,000 ) 347,000

Net (loss) earnings ( 811,000 ) 6,172,000

Loss before income taxes ( 5,118,000 ) ( 864,000 )

Income tax provision (benefit) 213,000 ( 53,000 )

Net loss ( 5,331,000 ) ( 811,000 )

Net earnings attributable to non-controlling interests 234,000 150,000

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

Net loss attributable to Barnwell Industries, Inc.

stockholders $ ( 5,565,000 ) $ ( 961,000 )

Basic net (loss) earnings per common share

Basic net loss per common share

attributable to Barnwell Industries, Inc.

stockholders $ ( 0.56 ) $ ( 0.10 )

Diluted net (loss) earnings per common share

Diluted net loss per common share

attributable to Barnwell Industries, Inc.

6 unchanged sentences

AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE (LOSS) INCOME

CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS

Year ended September 30,

Net (loss) earnings $ ( 811,000 ) $ 6,172,000

Net loss $ ( 5,331,000 ) $ ( 811,000 )

Other comprehensive (loss) income:

Foreign currency translation adjustments, net of taxes of $ 0

( 2,000 ) ( 40,000 )

Retirement plans:

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

Net actuarial gain arising during the period, net of taxes of $ 0

( 85,000 ) ( 79,000 )

Total other comprehensive income 810,000 1,262,000

Total comprehensive (loss) income ( 1,000 ) 7,434,000

Net actuarial (loss) gain arising during the period, net of taxes of $ 0

( 76,000 ) 891,000

Total other comprehensive (loss) income ( 161,000 ) 810,000

Total comprehensive loss ( 5,492,000 ) ( 1,000 )

Comprehensive income attributable to non-controlling interests ( 234,000 ) ( 150,000 )

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

Comprehensive loss attributable to Barnwell Industries, Inc.

$ ( 5,726,000 ) $ ( 151,000 )

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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 — — — 5,513,000 — — 659,000 6,172,000

Net (loss) earnings — — — ( 961,000 ) — — 150,000 ( 811,000 )

Foreign currency translation adjustments, net of taxes of $ 0

2 unchanged sentences

Share-based compensation — — 263,000 — — — — 263,000

Issuance of common stock, net of costs 509,467 255,000 2,101,000 — — — — 2,356,000

Issuance of common stock for services 34,091 17,000 73,000 — — — — 90,000

2 unchanged sentences

Retirement plans:

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

— — — — ( 79,000 ) — — ( 79,000 )

Net actuarial gain arising during the period, net of taxes of $ 0

2 unchanged sentences

Net (loss) earnings — — — ( 5,565,000 ) — — 234,000 ( 5,331,000 )

Foreign currency translation adjustments, net of taxes of $ 0

— — — — ( 2,000 ) — — ( 2,000 )

Distributions to non-controlling interests — — — — — — ( 226,000 ) ( 226,000 )

Acquisition of non-controlling interest ( 186,000 ) 1,000 ( 185,000 )

Share-based compensation — — 208,000 — — — — 208,000

Issuance of common stock for services 34,091 17,000 73,000 — — — — 90,000

Dividends declared, $ 0.060 per share

— — — ( 599,000 ) — — — ( 599,000 )

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

Retirement plans:

1 unchanged sentence

— — — — ( 85,000 ) — — ( 85,000 )

Net actuarial gain arising during the period, net of taxes of $ 0

Net actuarial loss arising during the period, net of taxes of $ 0

— — — — ( 76,000 ) — — ( 76,000 )

6 unchanged sentences

Cash flows from operating activities:

Net (loss) earnings $ ( 811,000 ) $ 6,172,000

Adjustments to reconcile net (loss) earnings to net cash provided by operating activities:

Net loss $ ( 5,331,000 ) $ ( 811,000 )

Adjustments to reconcile net loss to net cash provided by operating activities:

Equity in income of affiliates ( 1,071,000 ) ( 758,000 )

6 unchanged sentences

Accretion of asset retirement obligation 900,000 808,000

Deferred income tax benefit ( 130,000 ) ( 171,000 )

Deferred income tax expense (benefit) 42,000 ( 130,000 )

Asset retirement obligation payments ( 1,139,000 ) ( 1,005,000 )

3 unchanged sentences

Retirement plan contributions and payments ( 4,000 ) ( 3,000 )

Bad debt expense 38,000 124,000

Foreign currency (gain) loss ( 76,000 ) 484,000

Credit loss expense 85,000 38,000

Foreign currency gain ( 10,000 ) ( 76,000 )

Gain on debt extinguishment — ( 15,000 )

Decrease from changes in current assets and liabilities ( 393,000 ) ( 1,027,000 )

Increase (decrease) from changes in current assets and liabilities 2,780,000 ( 393,000 )

Net cash provided by operating activities 4,710,000 1,943,000

Cash flows from investing activities:

Acquisition of non-controlling interest ( 185,000 ) —

Distributions from equity investees in excess of earnings — 219,000

Proceeds from sale of interest in leasehold land, net of fees paid 439,000 233,000

Proceeds from sale of oil and natural gas assets — 503,000

Proceeds from sale of contract drilling assets — 687,000

Deposit for sale of contract drilling asset — 551,000

Payments to acquire oil and natural gas properties — ( 1,563,000 )

Proceeds from the sale of oil and natural gas assets 441,000 —

Capital expenditures - oil and natural gas ( 3,514,000 ) ( 11,304,000 )

4 unchanged sentences

Distributions to non-controlling interests ( 226,000 ) ( 157,000 )

Proceeds from issuance of stock, net of costs — 2,356,000

Payment of dividends — ( 599,000 )

Net cash (used in) provided by financing activities ( 786,000 ) 1,560,000

Net cash used in financing activities ( 226,000 ) ( 786,000 )

Effect of exchange rate changes on cash and cash equivalents 23,000 49,000

Net (decrease) increase in cash and cash equivalents

( 9,974,000 ) 1,525,000

Net increase (decrease) in cash and cash equivalents 1,675,000 ( 9,974,000 )

Cash and cash equivalents at beginning of year 2,830,000 12,804,000

8 unchanged sentences

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., 2) investing in land interests in Hawaii, and 3) drilling wells and installing and repairing water pumping systems in Hawaii.

1) acquiring, developing, producing and selling oil and natural gas in Canada and the U.S., 2) leasehold land interests in Hawaii, and 3) drilling wells and installing and repairing water pumping systems in Hawaii.

Principles of Consolidation

The consolidated financial statements include the accounts of Barnwell Industries, Inc.

and all majority-owned subsidiaries (collectively referred to herein as “Barnwell,” “we,” “our,” “us,” or the “Company”), including a 77.6 %-owned land investment general partnership (Kaupulehu Developments), a 75 %-owned land investment partnership (KD Kona), and a variable interest entity (Teton Barnwell Fund I, LLC) for which the Company is deemed to be the primary beneficiary.

and all majority-owned subsidiaries (collectively referred to herein as “Barnwell,” “we,” “our,” “us,” or the “Company”), including a 77.6 %-owned land investment general partnership (Kaupulehu Developments) and a 75 %-owned land investment partnership (KD Kona).

All significant intercompany accounts and transactions have been eliminated.

6 unchanged sentences

Significant assumptions are required in the valuation of deferred tax assets, asset retirement obligations, contract drilling estimated costs to complete, and proved oil and natural gas reserves, and such assumptions may impact the amount at which such items are recorded.

Reclassifications

Certain reclassifications of prior period amounts have been made in Note 9 to conform to the current period presentations.

These reclassifications had no effect on previously reported net earnings, cash flows, total assets, or stockholders' equity.

Revenue Recognition

1 unchanged sentence

• Oil and Natural Gas Segment - Barnwell engages in oil and natural gas development, production, acquisitions and sales in Canada and the U.S.

• Land Investment Segment - Barnwell invests in land interests in Hawaii.

• Land Investment Segment - Barnwell owns land interests in Hawaii.

• Contract Drilling Segment - Barnwell provides well drilling services and water pumping system installation and repairs in Hawaii.

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The Company estimates variable consideration using either the most likely amount or expected value method, whichever is a more appropriate reflection of the amount to which it expects to be entitled based on the characteristics and circumstances of the contract.

Variable consideration is included

in the estimated transaction price to the extent it is probable that a significant reversal of cumulative recognized revenue will not occur.

Variable consideration is included in the estimated transaction price to the extent it is probable that a significant reversal of cumulative recognized revenue will not occur.

Contract price and cost estimates are reviewed periodically as work progresses and adjustments proportionate to the costs incurred to date to total estimated costs at completion are reflected in contract revenues in the reporting period when such estimates are revised.

1 unchanged sentence

Many factors and assumptions can and do change during a contract performance obligation period which can result in a change to contract profitability including unforeseen underground geological conditions (to the extent that contract remedies are unavailable), the availability and costs of skilled contract labor, the performance of major material suppliers, the performance of major subcontractors, unusual weather conditions and unexpected changes in material costs, changes in the scope and nature of the work to be performed, and unexpected construction execution errors, among others.

These factors may result in revisions to costs and income and are recognized in the period in which the revisions become known.

These factors may result in revisions to costs and income and

are recognized in the period in which the revisions become known.

Revenue and profit in future periods of contract performance are recognized using the adjusted estimate.

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Accounts receivable are recorded at the invoiced amount and do not bear interest.

The allowance for doubtful accounts is Barnwell’s best estimate of the amount of probable credit losses in Barnwell’s existing accounts receivable and is based on historical write-off experience and the application of the specific identification method.

The allowance for credit losses is Barnwell’s best estimate of the amount of current expected credit losses in Barnwell’s existing accounts receivable and is based on the aging of the receivable balances, analysis of historical credit loss rates, and current and future economic conditions affecting collectability.

Account balances are charged off against the allowance after all means of collection have been exhausted and the potential for recovery is considered remote.

12 unchanged sentences

This analysis includes a qualitative review based on an evaluation of the design of the entity, its organizational structure, including decision making ability and financial agreements, as well as a quantitative review.

Entities that have been determined to be VIEs and for which we have a controlling financial interest and are therefore the VIE’s primary beneficiary are consolidated (see Note 4).

Entities that have been determined to be VIEs and for which we do not have a controlling financial interest and are therefore not the VIE’s primary beneficiary are not consolidated.

These unconsolidated entities are accounted for under the equity method (see Note 3).

Our unconsolidated affiliates that have been determined to be VIEs are accounted under the equity method because we do not have a controlling financial interest and are therefore not the VIE’s primary beneficiary (see Note 4).

Equity Method Investments

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If the carrying amounts of the assets exceed their respective fair values, additional impairment tests are performed to measure the amounts of the impairment losses, if any.

When an impairment test demonstrates that the fair value of an investment is less than its carrying value, management will determine whether the impairment is either temporary or other-than-temporary.

When an impairment test demonstrates that the fair value of an investment is less than its carrying value, management will determine whether the impairment

is either temporary or other-than-temporary.

Examples of factors which may be indicative of an other-than-temporary impairment include (a) the length of time and extent to which fair value has been less than carrying value, (b) the financial condition and near-term prospects of the investee, and (c) the intent and ability to retain the investment in the investee for a period of time sufficient to allow for any anticipated recovery in fair value.

19 unchanged sentences

Under the full cost method of accounting, we review the carrying value of our oil and natural gas properties, on a country-by-country basis, each quarter in what is commonly referred to as the ceiling test.

Under the ceiling test, capitalized costs, net of accumulated depletion and oil and natural gas related deferred income taxes, may not exceed an amount equal to the sum of 1) the discounted present value (at 10 %), using average first-day-of-the-month prices during the 12-month period ending as of the balance sheet date held constant over the life of the reserves, of Barnwell’s estimated future net cash flows from estimated production of proved oil and natural gas reserves as determined by independent petroleum reserve engineers, less estimated future expenditures to be incurred in developing and producing the proved reserves but excluding future cash outflows associated with settling asset retirement obligations with the exception of those associated with proved undeveloped reserves from wells that are to be drilled in the future;

plus 2) the cost of major development projects and unproven properties not subject to depletion, if any;

Under the ceiling test, capitalized costs, net of accumulated depletion and oil and natural gas related deferred income taxes, may not exceed an amount equal to the sum of 1) the discounted present value (at 10 %), using average first-day-of-the-month prices during the 12-month period ending as of the balance sheet date held constant over the life of the reserves (except where prices are defined by contractual arrangements), of Barnwell’s estimated future net cash flows from estimated production of proved oil and natural gas reserves as determined by independent petroleum reserve engineers, less estimated future expenditures to be incurred in developing and producing the proved reserves but excluding future cash outflows associated with settling asset retirement obligations with the exception of those associated with proved undeveloped reserves from wells that are to be drilled in the future;

plus 2) the cost of major

development projects and unproven properties not subject to depletion, if any;

plus 3) the lower of cost or estimated fair value of unproven properties included in costs subject to depletion;

11 unchanged sentences

In accordance with the guidance for business combinations, Barnwell determines whether an acquisition is a business combination, which requires that the assets acquired and liabilities assumed constitute a business.

Each business combination is then accounted for by applying the acquisition method

of accounting.

Each business combination is then accounted for by applying the acquisition method of accounting.

If the assets acquired are not a business, the Company accounts for the transaction as an asset acquisition.

6 unchanged sentences

If it is determined that the asset may not be recoverable, impairment loss is measured as the amount by which the carrying amount of the asset exceeds the fair value of the asset.

Long-lived assets to be disposed of are reported at the lower of the asset carrying value or fair value, less cost to sell.

Long-lived assets to be disposed of by sale are classified as held for sale and are reported at the lower of the asset carrying value or fair value, less cost to sell.

Water well drilling rigs, office and other property and equipment are depreciated using the straight-line method based on estimated useful lives.

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The estimated rate of return on plan assets is based on an estimate of future experience for plan asset returns, the mix of plan assets, current market conditions, and expectations for future market conditions.

A decrease (increase) of 50 basis points in the expected return on assets assumption would increase (decrease) pension expense by approximately $ 59,000 based on the assets of the plan at September 30, 2023.

A decrease (increase) of 50 basis points in the expected return

on assets assumption would increase (decrease) pension expense by approximately $ 64,000 based on the assets of the plan at September 30, 2024.

The effects of changing assumptions are included in unamortized net gains and losses, which directly affect accumulated other comprehensive income.

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Any differential arising between insurance recoveries and insurance receivables is expensed or capitalized, consistent with the original treatment.

Derivative Instruments

Barnwell may utilize physical forward commodity contracts to mitigate market price risk on its oil and natural gas output when deemed appropriate.

Purchase and sale contracts with a fixed price determined at inception are recorded on the Consolidated Balance Sheets as derivative financial instruments if such contracts are readily convertible to cash - unless the contracts are eligible for and elected as the normal purchases and normal sales exception (“NPNS”);

in which case, the contracts are recorded on an accrual basis and the Company recognizes the amounts relating to such transactions during the period when the commodities are physically delivered.

The Company generally applies the NPNS exception to eligible oil and natural gas contracts to purchase or sell quantities it expects to use or sell in the normal course of business.

The Company has not traded in any derivative contracts other than where the NPNS exception is applied, and it does not apply hedge accounting.

Foreign Currency Translations and Transactions

9 unchanged sentences

Unobservable inputs for the financial asset or liability and have the lowest priority.

(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.

Recently Adopted Accounting Pronouncements

In June 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No.

2016-13, “Financial Instruments - Credit Losses (Topic 326):

Measurement of Credit Losses on Financial Instruments,” which replaces the incurred loss model with an expected loss model referred to as the current expected credit loss (“CECL”) model.

The CECL model is applicable to the measurement of credit losses on financial assets measured at amortized cost, including but not limited to trade receivables.

The FASB has subsequently issued other related ASUs which amend ASU 2016-13 to provide clarification and additional guidance.

The Company adopted the provisions of this ASU effective October 1, 2023.

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

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 98,795 restricted stock units were excluded from the computation of diluted shares for the year ended September 30, 2024, as their inclusion would have been anti-dilutive.

Options to purchase 615,000 shares were excluded from the computation of diluted shares for the year ended September 30, 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:

Options to purchase 546,781 shares of common stock and 18,605 restricted stock units were excluded from the computation of diluted shares for the year ended September 30, 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:

Year ended September 30, 2024

1 unchanged sentence

(Numerator) (Denominator) Amount

Basic net loss

$ ( 961,000 ) 9,969,856 $ ( 0.10 )

Basic $ ( 5,565,000 ) 10,017,997 $ ( 0.56 )

Effect of dilutive securities - common stock options and restricted stock units — —

Diluted net loss

$ ( 961,000 ) 9,969,856 $ ( 0.10 )

Diluted $ ( 5,565,000 ) 10,017,997 $ ( 0.56 )

Year ended September 30, 2023

Net Earnings Shares Per-Share

Net Loss Shares Per-Share

(Numerator) (Denominator) Amount

Basic net earnings

$ 5,513,000 9,732,936 $ 0.57

Effect of dilutive securities - common stock options — —

Diluted net earnings

Basic $ ( 961,000 ) 9,969,856 $ ( 0.10 )

Effect of dilutive securities - common stock options and restricted stock units — —

Diluted $ ( 961,000 ) 9,969,856 $ ( 0.10 )

ALLOWANCE FOR CREDIT LOSSES

The following table summarizes the activity in the balance of allowance for credit losses related to accounts and other receivables:

Year ended September 30,

Allowance for credit losses as of beginning of year $ 284,000 $ 231,000

Provision for expected losses 85,000 38,000

Write-offs charged against the allowance ( 10,000 ) ( 20,000 )

Recoveries of amounts previously written off

16,000 34,000

Foreign currency translation adjustment — 1,000

Allowance for credit losses as of end of year $ 375,000 $ 284,000

Investment in Kukio Resort Land Development Partnerships

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Barnwell continues to have an indirect 19.6 % non-controlling ownership interest in KD Kukio Resorts, KD Maniniowali, 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 September 30, 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 resales by the real estate sales office and revenues resulting from the sale of a few remaining private club memberships.

In the quarter 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 in fact occur.

No definitive development plans have been made by the developer of Increment II as of the date of this report.

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.

During the year ended September 30, 2023, Barnwell received cash distributions of $ 758,000 from the Kukio Resort Land Development Partnership resulting in a net amount of $ 674,000 , after distributing $ 84,000 to non-controlling interests.

During the year ended September 30, 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.

During the year ended September 30, 2023, Barnwell received cash distributions of $ 758,000 from the Kukio Resort Land Development Partnerships resulting in a net amount of $ 674,000 , after distributing $ 84,000 to non-controlling interests.

5 unchanged sentences

Net earnings $ 6,437,000 $ 4,436,000

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, the amount of equity in income of affiliates recognized in the year ended September 30, 2023 was equivalent to the $ 758,000 of distributions received in that period.

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 year ended September 30, 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 $ 373,000 at September 30, 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 19).

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.

One single-family lot was sold during the year ended September 30, 2023 and two single-family lots, of the 80

lots developed within Increment I, remained to be sold as of September 30, 2023.

The developer had consolidated these two remaining lots into one large lot but has since split them back into the original two lots.

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 19).

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.

In the quarter ended March 31, 2024, the last two single-family lots of the 80 lots developed within Increment I were sold.

Under the terms of the Increment II agreement with KD II, Kaupulehu Developments is entitled to 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 as to the priority payout.

10 unchanged sentences

Sale of interest in leasehold land, net of fees paid $ 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 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.

Under the terms of the Teton Operating Agreement, the profits of Teton Barnwell are split between BOK and Gros Ventre at 98 % and 2 %, respectively, and as the manager of Teton Barnwell, Gros Ventre is paid an annual asset management fee equal to 1 % of the cumulative capital contributions made to Teton Barnwell as compensation for its management services.

BOK is responsible for 100 % of the capital contributions made to Teton Barnwell.

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.

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

The following table summarizes the carrying value of the assets and liabilities of Teton Barnwell that are consolidated by the Company.

Intercompany balances are eliminated in consolidation and thus, are not reflected in the table below.

September 30,

2023 September 30,

Cash and cash equivalents $ 83,000 $ 623,000

Accounts and other receivables 175,000 606,000

Oil and natural gas properties, full cost method of accounting:

Proved properties, net 544,000 655,000

Total assets $ 802,000 $ 1,884,000

Accounts payable $ 10,000 $ 15,000

Accrued operating and other expenses 15,000 26,000

Total liabilities $ 25,000 $ 41,000

ASSET HELD FOR SALE

In September 2022, the Company entered into a purchase and sale agreement with an independent third party for the sale of a contract drilling segment drilling rig and received a payment of $ 551,000 , net of related costs.

At September 30, 2022, the legal title for the drilling rig had not yet transferred to the buyer and therefore, the Company did not record a sale during the year ended September 30, 2022.

The proceeds received from the buyer was recognized as a deposit and recorded in “Other Current Liabilities” on the Company's Consolidated Balance Sheet at September 30, 2022.

No amount was recorded as assets held for sale at September 30, 2022 as the drilling rig was fully depreciated and therefore had a net book

value of zero.

In October 2022, the legal title for the drilling rig was transferred to the buyer and as a result, the Company recognized a $ 551,000 gain on the sale of the drilling rig during the year ended September 30, 2023.

Under the terms of the Teton Operating Agreement, the profits of Teton Barnwell were split between BOK and Gros Ventre at 98 % and 2 %, respectively, and as the manager of Teton Barnwell, Gros Ventre was paid an annual asset management fee equal to 1 % of the cumulative capital contributions made to Teton Barnwell as compensation for its management services.

BOK was responsible for 100 % of the capital contributions made to Teton Barnwell.

Teton Barnwell was a variable interest entity for which the Company was deemed the primary beneficiary and thus, was consolidated by the Company.

In the quarter ended June 30, 2024, BOK acquired Gros Ventre’s 2 % non-controlling interest in Teton Barnwell for $ 185,000 and following the acquisition, BOK now owns 100 % interest in Teton Barnwell.

As such, although Teton Barnwell is no longer a variable interest entity as of the acquisition date, it will continue to be consolidated by the Company.

This transaction was accounted for as an equity transaction with no gain or loss recognized and the difference between the carrying amount of Gros Ventre’s non-controlling interest and the consideration given for the acquisition of the additional equity interest was recorded as a reduction in additional paid-in capital in the accompanying Consolidated Balance Sheets and Consolidated Statements of Equity.

ASSETS HELD FOR SALE

Contract Drilling Segment Property and Equipment

In 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 continue to be classified as held and used as of September 30, 2024.

At September 30, 2024, a sale of the remainder of the contract drilling segment's property and equipment or the contract drilling segment as a whole was not estimated to be probable due to the lack of any definitive sale opportunities at that date.

OIL AND NATURAL GAS PROPERTIES

Fiscal 2023 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 .

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 has paid $ 4,293,000 for its share of the costs to drill, complete and equip the wells during the year ended September 30, 2023.

The two Texas wells began producing in late April 2023.

Additionally, in connection with the entry into this agreement, the Company was obligated to pay a broker’s fee of 5.0 % of the capital invested under this arrangement, which expired in November 2023, to Four Pines Exploration LLC - Exploration - Series 1 (“Four Pines”).

Four Pines is controlled by Mr.

Colin O’Farrell who is an affiliate of Teton Barnwell (see Note 19 for additional details).

As of September 30, 2023, the Company has paid $ 255,000 in broker fees to Four Pines related to this arrangement.

Fiscal 2022 Acquisitions and Dispositions

In the quarter ended December 31, 2021, Barnwell acquired working interests in oil and natural gas properties located in the Twining area of Alberta, Canada, for cash consideration of $ 317,000 .

In the quarter ended March 31, 2022, Barnwell acquired additional working interests in oil and natural gas properties located in the Twining area of Alberta, Canada for consideration of $ 1,246,000 .

The purchase price per the agreement was adjusted for customary purchase price adjustments to reflect the economic activity from the effective date to the closing date.

Barnwell also assumed $ 1,500,000 in asset retirement obligations associated with the acquisition.

There were no significant oil and natural gas property dispositions during the year ended September 30, 2022.

The $ 503,000 of proceeds from sale of oil and natural gas properties included in the Consolidated Statement of Cash Flows for the year ended September 30, 2022 primarily represents the refund of income taxes previously withheld from what otherwise would have been proceeds on fiscal 2021’s oil and natural gas property sales.

Oil and Natural Gas Property Dispositions

In the quarter ended June 30, 2024, Barnwell entered into and completed a purchase and sale agreement with an independent third party and sold its interests in certain oil and natural gas properties located in the Kaybob area of Alberta, Canada.

The sales price per the agreement was adjusted for customary purchase price adjustments to $ 441,000 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 proceeds were credited to the full cost pool, with no gain or loss recognized, as the sale did not result in a significant alteration of the relationship between capitalized costs and proved reserves.

In July 2024, Barnwell entered into and completed an agreement with an independent third party to convey interests in certain oil and natural gas properties located in the Bonanza and Balsam areas of Alberta, Canada.

In consideration for the sale of the working interests in these properties, Barnwell retained a 4 % overriding royalty on these properties and the buyer assumed the asset retirement obligations associated with these properties.

There were no cash proceeds from the sale and no gain or loss was recognized on this conveyance as this did not result in a significant alteration of the relationship between capitalized costs and proved reserves.

With the disposition of the working interest, Barnwell reduced the full cost pool and abandonment liabilities associated with the working interests conveyed by approximately $ 153,000 .

In September 2024, Barnwell entered into and completed a purchase and sale agreement with an independent third party and sold its interests in certain oil and natural gas properties located in the Wood River area of Alberta, Canada.

The sales price per the agreement was adjusted for customary purchase price adjustments to $ 292,000 in order to, among other things, reflect an economic effective closing date of September 30, 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.

From the sales proceeds, $ 38,000 was remitted directly to the Canada Revenue Agency by the buyers for potential amounts due for Barnwell’s Canadian income taxes related to the sale.

The proceeds from the sale was credited to our cash in October 2024 and will be reflected in the Statement of Cash Flows for the first quarter of fiscal 2025 ending December 31, 2024.

No gain or loss was recognized on this disposition as the sale proceeds were credited to the full cost pool and did not result in a significant alteration of the relationship between capitalized costs and proved reserves.

Investments and Acquisitions

In December 2022, Barnwell Texas, LLC (“Barnwell Texas”), a 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 paid $ 4,293,000 for its share of the costs to drill, complete and equip the wells during the year ended September 30, 2023.

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.

Changes in the 12-month rolling average first-day-of-the-month prices for oil, natural gas and natural gas liquids prices (except where prices are defined by contractual arrangements), 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.

During the year ended September 30, 2024, the Company incurred a non-cash ceiling test impairment of $ 2,885,000 , which included impairments for our U.S.

and Canadian oil and natural gas properties of $ 721,000 and $ 2,164,000 , respectively.

The impairment to our U.S.

and Canadian oil and natural gas properties were primarily due to a decline in the historical 12-month rolling average first-day-of-the-month prices.

There was no ceiling test impairment during the year ended September 30, 2023.

As discussed above, the ceiling test uses a 12-month historical rolling average first-day-of-the-month prices.

As such, declines in the 12-month historical rolling average first-day-of-the-month prices used in our ceiling test calculation in future periods could result in impairment write-downs in future periods in the absence of any offsetting factors that are not currently known or projected.

Based on the oil and gas prices for October 1, November 1 and December 1 of 2024, the oil prices and natural gas prices used in the 12-month historical rolling first-day-of-the-month average oil price for the ceiling test at December 31, 2024 will be lower than at September 30, 2024.

Whereas we believe our Canadian full cost pool is sufficiently below the ceiling limit, our U.S.

full cost pool had no ceiling excess at September 30, 2024, and thus a further impairment charge is more likely than not for our U.S full cost pool for the first quarter of fiscal 2025 ending December 31, 2024.

The Company is currently unable to estimate a range of the amount of any potential future impairment write-downs as variables that impact the ceiling limitation are dependent upon actual results of activity through the end of December 2024.

PROPERTY AND EQUIPMENT AND ASSET RETIREMENT OBLIGATION

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Asset retirement obligation, long-term $ 7,790,000 $ 8,297,000

Asset retirement obligations were reduced by nil and $ 483,000 in fiscal 2023 and 2022, respectively, for those obligations that were assumed by purchasers of Barnwell's oil and natural gas properties.

Asset retirement obligations increased by $ 1,462,000 and $ 1,021,000 in fiscal 2023 and 2022, respectively, primarily due to upward revisions from acceleration in the estimated timing of future abandonments as a result of changes in the estimated economic lives and costs of certain wells due to updated information received and changes in management's discretionary timing of abandonment projects due to an increase in estimated funds available.

Asset retirement obligations also increased by $ 21,000 and $ 1,682,000 in fiscal 2023 and 2022, respectively, due primarily to our wells drilled and acquisitions (see Note 6 for additional details on acquisitions).

Asset retirement obligations were reduced by $ 442,000 and nil in fiscal 2024 and 2023, respectively, for those obligations that were assumed by purchasers of Barnwell's oil and natural gas properties (see Note 7 for additional details on dispositions).

Asset retirement obligations were also reduced by $ 614,000 in fiscal 2024 as compared to an increase of $ 1,462,000 in fiscal 2023 primarily due to downward revisions related to deferrals in the estimated timing of future abandonments as a result of changes in the estimated economic lives of certain wells due to improved production performance of many wells in the Twining area as a result of focused attention and investment in optimization to improve well performance and reduce operating costs.

Asset retirement obligations also increased by $ 37,000 and $ 21,000 in fiscal 2024 and 2023, respectively, due primarily to our wells drilled and acquisitions.

The asset retirement obligation reflects the estimated present value of the amount of dismantlement, removal, site reclamation, and similar activities associated with Barnwell's oil and natural gas properties.

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Interest cost 411,000 406,000 95,000 88,000

Actuarial gain ( 394,000 ) ( 2,418,000 ) ( 66,000 ) ( 478,000 )

Actuarial loss (gain) 520,000 ( 394,000 ) 149,000 ( 66,000 )

Benefits paid ( 247,000 ) ( 432,000 ) ( 4,000 ) ( 3,000 )

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

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

Expected payments under the SERP for fiscal 2025 are expected to be $ 76,000 .

Fluctuations in actual 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 Pension Plan actuarial losses in fiscal 2024 were primarily due to a decrease in the discount rate, partially offset by an actuarial gain resulting from actual investment returns that were greater than the assumed rate of return.

The SERP actuarial losses in fiscal 2024 were primarily due to a decrease in the discount rate.

The Pension Plan actuarial gains in fiscal 2023 were primarily due to an increase in the discount rate and actual investment returns that were greater than the assumed rate of return.

The SERP actuarial gains in fiscal 2023 were primarily due to an increase in the discount rate.

The Pension Plan actuarial gains in fiscal 2022 were primarily due to an increase in the discount rate, partially offset by an actuarial loss resulting from actual investment returns that were less than the assumed rate of return.

The SERP actuarial gains in fiscal 2022 were primarily due to an increase in the discount rate.

The following table presents the weighted-average assumptions used to determine benefit obligations and net benefit (income) costs:

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Rate of compensation increase N/A N/A N/A N/A

We select a discount rate by reference to yields available on the ICE Bank of America Merrill Lynch AA-AAA 15+ Index at our consolidated balance sheet date.

We select a discount rate by reference to yields from the Willis Towers Watson RATE:Link 10-90 yield curve at our consolidated balance sheet date.

The expected return on plan assets is based on an actuarial model which takes into consideration our investment mix and market conditions.

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Fiscal years ending September 30, 2030 through 2034 $ 3,075,000 $ 764,000

Management communicates periodically with its professional investment advisors to establish investment policies, direct investments and select investment options.

The overall investment objective of the Pension Plan is to attain a diversified combination of investments that provides long-term growth in the assets of the plan to fund future benefit obligations while managing risk in order to meet current

benefit obligations.

The trustees of the Pension Plan communicate periodically with the Pension Plan’s professional investment advisors to establish investment policies, direct investments and select investment options.

in order to meet current benefit obligations.

Generally, interest and dividends received provide cash flows to fund current benefit obligations.

Longer-term obligations are generally estimated to be provided for by growth in equity securities.

The Company’s investment policy permits investments in a diversified mix of U.S.

and international equities, fixed income securities and cash equivalents.

Barnwell’s investments in fixed income securities include corporate bonds, U.S.

The Pension Plan’s investment policy permits investments in a diversified mix of U.S.

and international equities, fixed income securities, other investments, and cash equivalents.

The Pension Plan’s investments in fixed income securities include corporate bonds, U.S.

treasury and government securities, preferred securities, and fixed income exchange-traded funds.

The Company’s investments in equity securities primarily include domestic and international large-cap companies, as well as, domestic and international equity securities exchange-traded funds.

The Pension Plan’s investments in equity securities primarily include domestic companies and is comprised of companies with market capitalization categorized as follows:

47 % micro-cap;

20 % small-cap;

15 % mid-cap;

and 18 % large-cap.

The Pension Plan’s other investment is a short-term note receivable from an unrelated private company.

The Company’s year-end target allocation, by asset category, and the actual asset allocations were as follows:

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Asset Category Allocation 2024 2023

Cash and other 0 % - 25 %

Cash and cash equivalents 0 % - 25 %

Fixed income securities 15 % - 40 %

Equity securities 45 % - 75 %

Other investment 0 % - 10 %

Actual investment allocations may vary from our target allocations from time to time due to prevailing market conditions.

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Fixed income securities are valued based upon the closing price reported in the active market in which the security is traded.

All of our plan assets are categorized as Level 1 assets, and as such, the actual market value is used to determine the fair value of assets.

All of our plan assets, except for the note receivable from a private company, are categorized as Level 1 assets, and as such, the actual market value is used to determine the fair value of assets.

The fair value of the note receivable from an unrelated private company is valued based upon the terms of the note receivable’s agreement and unobservable inputs such as management’s consideration of the counterparty’s credit risk and as such, is categorized as a Level 3 asset.

The following tables set forth by level, within the fair value hierarchy, pension plan assets at their fair value:

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Equities 9,516,000 9,516,000 — —

Note receivable from an unrelated private company 571,000 — — 571,000

Total $ 13,094,000 $ 12,523,000 $ — $ 571,000

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Cash $ 263,000 $ 263,000 $ — $ —

Corporate bonds 1,000 1,000 — —

treasury and government securities 709,000 709,000 — —

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Preferred securities 47,000 47,000 — —

Equity securities exchange-traded funds 408,000 408,000 — —

Equities 7,861,000 7,861,000 — —

Total $ 11,982,000 $ 11,982,000 $ — $ —

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

The following sets forth a summary of changes in the fair value of the pension plan Level 3 asset:

Year ended September 30,

Balance at beginning of year

Issuance of note receivable from an unrelated private company

Balance at end of year

$ 571,000 $ —

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

Year ended September 30,

United States $ ( 2,820,000 ) $ ( 2,414,000 )

1 unchanged sentence

$ ( 5,352,000 ) $ ( 1,014,000 )

The components of the income tax (benefit) provision related to the above (loss) earnings are as follows:

The components of the income tax provision (benefit) related to the above losses are as follows:

Year ended September 30,

Current provision:

United States – Federal

Before operating loss carryforwards $ — $ 727,000

Benefit of operating loss carryforwards — ( 665,000 )

After operating loss carryforwards — 62,000

United States – State

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Total current 171,000 77,000

Deferred benefit:

Deferred provision (benefit):

United States – State 42,000 ( 130,000 )

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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.

In addition, Canadian jurisdiction net operating loss carryforwards, the benefit of which had not previously been recognized due to the Company's continuing full valuation allowance, were partially utilized in that jurisdiction in the current year.

The net operating loss carryforwards beyond the current year’s utilization continue to have a full valuation allowance as realization of their benefit is not more likely than not.

Included in the current income tax provision for the year ended September 30, 2022 is a $ 62,000 expense for income tax penalties and interest thereon for the non-filing of IRS Form 8858 in each of our U.S.

federal income tax returns for fiscal years 2019, 2020 and 2021.

The Company prepared amended U.S.

federal tax returns for each of these years to include Form 8858 and a statement of reasonable cause.

The amended returns were filed in September and October 2023 and the Company requested abatement of

any potential penalties and interest which could subsequently be assessed.

The Company is awaiting a response from the IRS and the probability of success of the abatement request remains uncertain.

No additional expenses related to the potential penalties and interest were included in the current income tax provision for the year ended September 30, 2023.

A reconciliation between the reported income tax (benefit) expense and the amount computed by multiplying the (loss) earnings attributable to Barnwell before income taxes by the U.S.

A reconciliation between the reported income tax expense (benefit) and the amount computed by multiplying the loss attributable to Barnwell before income taxes by the U.S.

federal tax rate of 21 % is as follows:

Year ended September 30,

Tax (benefit) provision computed by applying statutory rate $ ( 213,000 ) $ 1,231,000

Increase (decrease) in the valuation allowance 182,000 ( 1,450,000 )

Tax benefit computed by applying statutory rate $ ( 1,124,000 ) $ ( 213,000 )

Increase in the valuation allowance 1,383,000 182,000

Additional effect of the foreign tax provision on the total tax provision ( 129,000 ) ( 4,000 )

state income tax (benefit) provision, net of federal effect ( 9,000 ) 330,000

state income tax provision (benefit), net of federal effect 70,000 ( 9,000 )

state provision to tax return adjustments ( 12,000 ) ( 106,000 )

Uncertain tax positions — 62,000

Other 25,000 97,000

$ 213,000 $ ( 53,000 )

state provision to tax return adjustments in the table above was treated as a separate item in fiscal 2023 due to the significance of its impact on the fiscal 2023 reconciliation, and the corresponding fiscal 2022 amount was reclassified to conform to the current year presentation.

The reclassification had no impact on previously reported net earnings, cash flows, total assets, or stockholders' equity.

Additionally, the changes in the valuation allowance shown in the table above exclude the impact of changes in the valuation allowance of items that are incorporated within the respective reconciliation line items elsewhere in the table.

The change in the valuation allowance shown in the table above excludes the impact of changes in the valuation allowance of items that are incorporated within the respective reconciliation line items elsewhere in the table.

The tax effects of temporary differences that give rise to significant portions of the deferred tax assets and deferred tax liabilities are as follows:

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tax law impact of foreign branch deferred tax asset under Canadian tax law ( 2,215,000 ) ( 1,655,000 )

Retirement plan asset accrued for books but not for tax under U.S.

tax law ( 939,000 ) ( 711,000 )

Asset for retirement benefits

( 1,029,000 ) ( 939,000 )

Other ( 315,000 ) ( 259,000 )

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Net deferred income tax liability $ ( 100,000 ) $ ( 58,000 )

The asset retirement obligation accrued for books but not for tax under U.S.

tax law and the retirement plan asset accrued for books but not for tax under U.S.

tax law amounts in the table above were treated as separate items in fiscal 2023 to provide additional specificity as to the nature of the items, and the corresponding fiscal 2022 amounts were reclassified to conform to the current year presentation.

The reclassifications had no impact on the previously reported valuation allowance or previously reported net earnings, cash flows, total assets, or stockholders' equity.

The total valuation allowance decreased $ 169,000 for the year ended September 30, 2023.

The decrease was due to current fiscal year operational activity that resulted in changes in deferred tax asset and liability balances, and there were no changes in judgment about the realizability of related deferred tax assets in future years.

Of the total net decrease in the valuation allowance for fiscal 2023, $ 4,000 was recognized as an income tax benefit and $ 165,000 was credited to accumulated other comprehensive income.

Net deferred tax assets at September 30, 2023 of $ 4,819,000 consists of the portion of deferred tax assets that are estimated to be partially realized through corresponding concurrent reversals of deferred tax liabilities related to the Kukio Resort Land Development Partnerships' excess of book income over taxable income, the book basis of property and equipment in excess of tax basis, foreign branch deferred taxes, retirement plan assets accrued for books but not for tax under U.S.

The total valuation allowance increased $ 1,457,000 for the year ended September 30, 2024.

The increase was due to current fiscal year operational activity that resulted in changes in deferred tax asset and liability balances, and there were no changes in judgment about the realizability of related deferred tax assets in future years.

Of the total net increase in the valuation allowance for fiscal 2024, $ 1,392,000 was recognized as an income tax expense and $ 65,000 was charged to accumulated other comprehensive income.

Net deferred tax assets at September 30, 2024 of $ 4,658,000 consists of the portion of deferred tax assets that are estimated to be partially realized through corresponding concurrent reversals of deferred tax liabilities related to the Kukio Resort Land Development Partnerships' excess of book income over taxable income, the book basis of property and equipment in excess of tax basis, foreign branch deferred taxes, asset for retirement benefits accrued for books but not for tax under U.S.

tax law, and certain other minor deferred tax liabilities.

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state net operating loss carryovers and Canadian net operating loss carryovers totaling $ 916,000 , $ 49,439,000 , $ 20,848,000 and $ 4,958,000 , respectively.

All four items were fully offset by valuation allowances at September 30, 2023.

federal net operating loss carryovers generated through September 30, 2018 expire in fiscal years 2032-2038, the U.S.

state unitary net operating loss carryovers generated through September 30, 2017 expire in fiscal years 2033-2037, the Canadian net operating loss carryovers expire in fiscal years 2039-2043, and the foreign tax credit carryovers expire in fiscal years 2024-2025.

state unitary net operating loss carryovers generated through September 30, 2017 expire in fiscal years 2033-2037, the Canadian net operating loss carryovers expire in fiscal years 2039-2044, and the foreign tax credit carryover expires in fiscal year 2025.

federal net operating loss carryovers generated in fiscal years 2019-2024 and the U.S.

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Settlement of any particular position could require the use of cash.

Favorable resolution for an amount less than the amount estimated by Barnwell would be recognized as a decrease in the effective income tax rate in the period of resolution, and unfavorable resolution in excess of the amount estimated

by Barnwell would be recognized as an increase in the effective income tax rate in the period of resolution.

Below are the changes in unrecognized tax benefits.

Favorable or unfavorable resolution for an amount less than or greater than the amount estimated by Barnwell will result in a decrease or increase to income tax expense in the period of resolution.

There were no changes in unrecognized tax benefits during the years ended September 30, 2024 or 2023.

Year ended September 30,

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Contract liabilities — 377,000 1,087,000

Accounts receivables from contracts with customers are included in “Accounts and other receivables, net of allowance for doubtful accounts,” in the accompanying Consolidated Balance Sheets and contract assets, which includes costs and estimated earnings in excess of billings and retainage, are included in “Other current assets” in the accompanying Consolidated Balance Sheets.

Accounts receivables from contracts with customers are included in “Accounts and other receivables, net of allowance for credit losses,” in the accompanying Consolidated Balance Sheets and contract assets, which includes costs and estimated earnings in excess of billings and retainage, are included in “Other current assets” in the accompanying Consolidated Balance Sheets.

Contract liabilities, which includes billings in excess of costs and estimated earnings are included in “Other current liabilities” in the accompanying Consolidated Balance Sheets.

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

As of September 30, 2023 and 2022, the Company had $ 377,000 and $ 1,087,000 , respectively, included in “Other current liabilities” on the Consolidated Balance Sheets for those performance obligations expected to be completed in the next twelve months.

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

During the years ended September 30, 2024 and 2023, the amount of revenue recognized that was previously included in contract liabilities as of the beginning of the respective period was $ 377,000 and $ 1,015,000 , respectively.

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

At September 30, 2023, the Company had five contract drilling jobs with original expected durations of greater than one year.

For these contracts, 100 % of the remaining performance obligation of $ 3,587,000 is expected to be recognized in the next twelve months.

At September 30, 2024, the remaining performance obligation for contract drilling jobs with original expected durations greater than one year was not material.

Contract Fulfillment Costs

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(oil and natural gas);

2) investing in land interests in Hawaii (land investment);

2) leasehold land interests in Hawaii (land investment);

and 3) drilling wells and installing and repairing water pumping systems in Hawaii (contract drilling).

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Total depletion, depreciation, and amortization $ 5,106,000 $ 4,457,000

Land investment $ — $ 89,000

Oil and natural gas $ 2,885,000 $ —

Total impairment $ 2,885,000 $ —

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

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

Oil and natural gas $ ( 285,000 ) $ 4,673,000

3 unchanged sentences

Gain on sale of assets — 551,000

Total operating profit 5,173,000 11,630,000

Total operating (loss) profit ( 687,000 ) 5,173,000

Equity in income of affiliates:

1 unchanged sentence

General and administrative expenses ( 5,598,000 ) ( 6,956,000 )

Foreign currency gain (loss) 76,000 ( 484,000 )

Foreign currency gain 10,000 76,000

Interest expense ( 2,000 ) ( 2,000 )

Interest income 88,000 87,000

(Loss) earnings before income taxes $ ( 864,000 ) $ 6,519,000

Loss before income taxes $ ( 5,118,000 ) $ ( 864,000 )

Capital Expenditures:

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Canada 15,184,000 16,734,000

Total (excluding interest income) $ 25,182,000 $ 28,527,000

Total (before interest income) $ 21,636,000 $ 25,182,000

ACCUMULATED OTHER COMPREHENSIVE INCOME

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Retirement plans:

Beginning accumulated retirement plans benefit cost 1,072,000 ( 230,000 )

Beginning accumulated retirement plans benefit income

1,884,000 1,072,000

Amortization of net actuarial gain ( 85,000 ) ( 79,000 )

Net actuarial gain arising during the period 891,000 1,302,000

Net actuarial (loss) gain arising during the period ( 76,000 ) 891,000

Income taxes — —

Net current period other comprehensive income 812,000 1,302,000

Net current period other comprehensive (loss) income ( 161,000 ) 812,000

Ending accumulated retirement plans benefit income 1,723,000 1,884,000

6 unchanged sentences

The estimated fair values of oil and natural gas properties and the asset retirement obligation incurred in the drilling of oil and natural gas wells or assumed in the acquisitions of additional oil and natural gas working interests are based on an estimated discounted cash flow model and market assumptions.

The significant Level 3 assumptions used in the calculation of estimated discounted cash flows included future commodity prices, projections of estimated quantities of oil and natural gas reserves, expectations for timing and amount of future development, operating and asset retirement costs, projections of future rates of production, expected recovery rates and risk adjusted discount rates.

The assumptions used in the calculation of estimated discounted cash flows were primarily Level 3 assumptions;

assumptions included future commodity prices, projections of estimated quantities of oil and natural gas reserves, expectations for timing and amount of future development, operating and asset retirement costs, projections of future rates of production, expected recovery rates and risk adjusted discount rates.

See Note 7 for additional information regarding oil and natural gas property acquisitions.

6 unchanged sentences

Asset retirement obligations are not measured at fair value subsequent to initial recognition.

Canada Emergency Business Account Loan

In the quarter ended December 31, 2020, the Company’s Canadian subsidiary, Barnwell of Canada, received an interest-free loan of CAD$ 40,000 (in Canadian dollars) under the Canada Emergency Business Account (“CEBA”) loan program for small businesses.

In the quarter ended March 31, 2021, the Company applied for an increase to our CEBA loan and received an additional CAD$ 20,000 for a total loan amount received of CAD$ 60,000 ($ 45,000 ) under the program.

The CEBA loan was interest-free with no principal payments required until December 31, 2023 and if the Company repaid 66.7 % of the principal amount prior to December 31, 2023, 33.3 % of the loan would be forgiven.

In September 2023, the Company repaid the loan balance of CAD$ 40,000 and the remaining loan balance of CAD$ 20,000 was forgiven per the terms of the CEBA loan agreement.

Accordingly, as a result of the loan forgiveness, the Company recognized a gain on debt extinguishment of $ 15,000 during the year ended September 30, 2023, which was included in the “Gas processing and other” line item in the accompanying Consolidated Statements of Operations.

The Company’s right-of-use (“ROU”) assets and lease liabilities at September 30, 2024, primarily relate to non-cancelable operating leases for our Hawaii corporate and Canadian office spaces and our leasehold land interest for Lot 4C held by Kaupulehu Developments.

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A ROU asset and corresponding lease liability is not recorded for leases with an initial term of 12 months or less (short-term leases) as the Company recognizes lease expense for these leases as incurred over the lease term.

In fiscal 2022, the Company determined that the right-of-use asset related to the operating lease for the Lot 4C leasehold land zoned conservation held by Kaupulehu Developments was fully impaired as of September 30, 2022.

As a result, the Company recognized an $ 89,000 right-of-use asset impairment expense in the year ended September 30, 2022.

Leases recorded on the balance sheet consist of the following:

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2018 Equity Incentive Plan

The stockholder-approved 2018 Equity Incentive Plan is administered by the Compensation Committee of the Board of Directors and provides for the issuance of incentive stock options, nonstatutory stock options, stock options with stock appreciation rights, restricted stock, restricted stock units and performance units, qualified performance-based awards, and stock grants to employees, consultants and non-employee members of the Board of Directors.

non-employee members of the Board of Directors.

1,600,000 shares of Barnwell common stock have been reserved for issuance and as of September 30, 2024, a total of 925,188 share options remain available for grant.

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60,000 shares of the stock options granted have an exercise price of $ 3.66 (110% of the closing market price on the date of grant for options granted to affiliates), vest annually over three years , and expire in five years from the date of grant.

Of the 665,000 shares of common stock granted, 100,000 vested stock options expired and 100,000 shares were forfeited, both of which were as a result of director departures since the date of grant.

The following assumptions were used in estimating the fair value for equity-classified stock options granted in the year ended September 30, 2021:

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There was no impact on income taxes for the years ended September 30, 2024 and 2023 due to a full valuation allowance on the related deferred tax asset.

As of September 30, 2023, the total remaining unrecognized compensation cost related to nonvested stock options was $ 50,000 , which is expected to be recognized over the weighted-average remaining requisite service period of 0.4 years.

There is no remaining unrecognized compensation cost related to stock options as of September 30, 2024.

Restricted Stock Units

On June 9, 2023, the Board of Directors of the Company granted a total of 37,312 restricted stock units to the independent directors of the Board as partial payment of fiscal 2023 director fees for their service as members of the Board from the period of April 1, 2023 to September 30, 2023.

The restricted stock units vested and became nonforfeitable on September 30, 2023.

On November 2, 2023, the Board of Directors of the Company granted a total of 76,336 restricted stock units to the independent directors of the Board as partial payment of director fees for their service as members of the Board.

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

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.

On May 16, 2024, the Board of Directors of the Company granted 60,000 restricted stock units to the Company’s President and Chief Executive Officer.

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

The following table summarizes Barnwell’s restricted stock units activity from October 1, 2023 through September 30, 2024:

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(1) The underlying common stock for these vested restricted stock units were not yet issued as of September 30, 2024;

in November 2023, the Company issued 9,328 shares of common stock for a portion of these vested restricted stock units.

in October 2024, the Company issued 25,444 shares of common stock for these vested restricted stock units.

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 year ended September 30, 2023, the Company recognized share-based compensation expense related to vested restricted stock units of $ 99,000 .

There was no share-based compensation expense related to restricted stock units recognized during the year ended September 30, 2022.

There was no impact on income taxes for the year ended September 30, 2023 due to a net operating loss and net operating loss carryforwards with a full valuation allowance in the relevant taxing jurisdiction.

During the years ended September 30, 2024 and 2023, the Company recognized share-based compensation expense related to vested restricted stock units of $ 158,000 and $ 99,000 , respectively.

There was no impact on income taxes for the years ended September 30, 2024 and 2023 due to a net operating loss and net operating loss carryforwards with a full valuation allowance in the relevant taxing jurisdiction.

As of September 30, 2024, the total remaining unrecognized compensation cost related to nonvested restricted stock units was $ 200,000 , which is expected to be recognized over the weighted-average remaining requisite service period of 1.7 years.

Common Stock Issued for Services

3 unchanged sentences

Cash Dividends

The following table sets forth the cash dividends paid per share of common stock during fiscal 2023 and 2022.

No dividends were declared or paid during the year ended September 30, 2024.

The following table sets forth the cash dividends paid per share of common stock during the year ended September 30, 2023.

Record Date Date of Payment Dividend Paid

3 unchanged sentences

December 27, 2022 January 11, 2023 $ 0.015

August 23, 2022 September 6, 2022 $ 0.015

The Tax Benefits Preservation Plan

On October 17, 2022, the Board of Directors of the Company adopted a Tax Benefits Preservation Plan (the “Tax Plan”) designed to protect the availability of the Company’s existing net operating loss carryforwards and certain other tax attributes.

To implement the Tax Plan, the Board of Directors declared a dividend of one right (a “Right”) for each outstanding share of the Company's common stock.

On January 25, 2023, the Tax Plan was terminated by the Board of Directors and as a result, all Rights distributed to holders of the Company's common stock expired at the time of termination.

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.

During the year ended September 30, 2022, the Company sold 509,467 shares of common stock resulting in net proceeds of $ 2,356,000 after commissions and fees of $ 75,000 and ATM-related professional services of $ 22,000 .

In August 2022, the Company’s Board of Directors suspended the sales of our common stock under the ATM until further notice.

COMMITMENTS AND CONTINGENCIES

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Barnwell’s management is not aware of any claims or litigation involving Barnwell that are likely to have a material adverse effect on its results of operations, financial position or liquidity.

In the quarter ended December 31, 2021, it was determined that a contract drilling segment well completed in the period did not meet the contract specifications for plumbness under a gyroscopic plumbness test which the contract required.

While the well did pass the cage plumbness test, the contract uses the gyroscopic test as the measure of plumbness.

Barnwell and the customer currently have an arrangement where Barnwell will provide for centralizers, armored cabling and a pump installation and removal test to confirm that plumbness is satisfactory.

The pump installation and removal test was successfully completed.

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 September 30, 2023 for any further costs related to this contract as there is no related probable or estimable contingent liability.

In fiscal 2020, the Staff of the State of Hawaii’s Commission on Water Resource Management (“Commission”) circulated a draft of a proposed recommendation to the Commission under which the Company, the water utility, the water utility's independent hydrologist firm and the owner of the land on which two water wells were drilled would be assessed penalty fines because each of the wells were calculated to have been drilled beyond the depth permitted by the permit.

2 unchanged sentences

Additionally, the fines applicable to the depth of the second well were dropped in lieu of the parties entering into an agreement to perform a water quality study and repurpose a current well into a monitoring well.

Accordingly, the Company recorded a liability of $ 300,000 to accrue for the costs to drill the monitoring well in the year ended September 30, 2020, and no subsequent revision to the accrual has been recorded as of September 30, 2023.

During the year ended September 30, 2023, one of our water well drilling jobs encountered an unusually hard geological formation, and the drilling has taken longer than previously anticipated which required an increase in estimated costs and resulted in the job becoming a loss job for which the Company recorded a $ 180,000 liability as of September 30, 2023.

Accordingly, the Company recorded a liability of $ 300,000 to accrue for the costs to drill the monitoring well in the year ended September 30, 2020.

During the year ended September 30, 2024, the liability was reduced to $ 200,000 due to a decrease in the estimated cost of the monitoring well due to reductions in the scope of work from what had been previously estimated.

Other Matters

During the year ended September 30, 2024, one of our water well drilling jobs encountered numerous unforeseen difficulties causing an increase in costs which led to the water well drilling contract becoming a loss job for which the Company had a $ 141,000 remaining loss accrual liability as of September 30, 2024.

Barnwell is obligated to pay Nearco Enterprises Ltd.

10.4 %, net of non-controlling interests' share, of Kaupulehu Developments’ gross receipts from real estate transactions.

The fees represent compensation for promotion and marketing of Kaupulehu Developments’ property and were determined based on the estimated fair value of such services.

This fee represents compensation for promotion and marketing of Kaupulehu Developments’ property and were determined based on the estimated fair value of such services.

These fees are included in general and administrative expenses.

Barnwell is obligated to pay its external real estate legal counsel 1.2 %, net of non-controlling interests' share, of all Increment II payments received by Kaupulehu Developments for services provided

by its external real estate legal counsel in the negotiation and closing of the Increment II transaction.

Barnwell is obligated to pay its external real estate legal counsel’s estate 1.2 %, net of non-controlling interests' share, of all Increment II payments received by Kaupulehu Developments for services provided by its external real estate legal counsel in the negotiation and closing of the Increment II transaction.

These fees are included in general and administrative expenses.

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Other current liabilities ( 191,000 ) ( 556,000 )

Decrease from changes in current assets and liabilities $ ( 393,000 ) $ ( 1,027,000 )

Increase (decrease) from changes in current assets and liabilities $ 2,780,000 $ ( 393,000 )

Supplemental disclosure of cash flow information:

Cash paid (received) during the year for:

Income taxes paid (refunded), net $ 100,000 $ ( 98,000 )

Capital expenditure accruals related to oil and natural gas acquisition and development decreased $ 575,000 during the year ended September 30, 2023 and increased $ 882,000 during the year ended September 30, 2022.

Additionally, capital expenditure accruals related to oil and natural gas asset retirement obligations increased $ 1,483,000 and $ 2,703,000 during the years ended September 30, 2023 and 2022, respectively.

Cash paid during the year for:

Income taxes paid $ 71,000 $ 100,000

Capital expenditure accruals related to oil and natural gas acquisition and development increased $ 1,291,000 during the year ended September 30, 2024 and decreased $ 575,000 during the year ended September 30, 2023.

Additionally, capital expenditure accruals related to oil and natural gas asset retirement obligations decreased $ 577,000 during the year ended September 30, 2024 and increased $ 1,483,000 during the year ended September 30, 2023.

RELATED PARTY TRANSACTIONS

3 unchanged sentences

Changes to the arrangement above, effective March 7, 2019, are discussed in Note 4.

During the year ended September 30, 2023, Barnwell received $ 265,000 in percentage of sales payments from KD I from the sale of one lot within Increment I.

During the year ended September 30, 2022, Barnwell received $ 1,295,000 in percentage of sales payments from KD I from the sale of six lots within Increment I.

O'Farrell, formerly a member of the Board of Directors of the Company from July 7, 2021 to March 7, 2022, is the sole member of Four Pines Operating LLC which owns a 25 % interest in Gros Ventre.

In February 2021, Gros Ventre and BOK, a wholly-owned subsidiary of Barnwell, entered into the Teton Operating Agreement of Teton Barnwell, an entity formed for the purpose of directly investing in oil and natural gas exploration and development in Oklahoma.

Under the terms of the Teton Operating Agreement, Gros Ventre makes no capital contributions and receives 2 % of the profits of Teton Barnwell.

Additionally, as the manager of Teton Barnwell, Gros Venture is paid an annual asset management fee equal to 1 % of the cumulative capital contributions made to Teton Barnwell as compensation for its management services.

Furthermore, as discussed above, Mr.

O'Farrell controls Four Pines, which, as of September 30, 2023, was paid $ 255,000 in broker fees in connection with the oil and natural gas investment discussed in Note 6.

Cooperation and Support Agreement

In January 2023, the Company entered into a cooperation and support agreement (the “Cooperation Agreement”) with Alexander C.

Kinzler , the Company’s CEO and President in his capacity as a stockholder , MRMP-Managers LLC, the Ned L.

Sherwood Revocable Trust, NLS Advisory Group, Inc.

Sherwood (collectively, the “MRMP Stockholders”), with respect to a potential proxy contest pertaining to the election of directors to our Board of Directors (the “Board”).

The Cooperation Agreement extended for two years the standstill terms of the previous agreement entered into with the MRMP Stockholders in 2021, which ended the potential of a proxy contest at the 2023 annual meeting of stockholders (the “2023 Annual Meeting”), which was held on April 17, 2023.

Pursuant to the terms of the Cooperation Agreement, among other things, the Company agreed to promptly appoint Joshua S.

Horowitz and Laurance Narbut, effective February 9, 2023, to serve on the Board.

In addition, the Company agreed to nominate a five-person board comprised of Mr.

Kinzler, Kenneth Grossman, Douglas Woodrum, and Messrs.

Horowitz and Narbut as candidates for election to the Board at the 2023 Annual Meeting and the 2024 annual meeting of stockholders (the “2024 Annual Meeting”) and Mr.

Kinzler and the MRMP Stockholders agreed to vote their respective shares of common stock of the Company in favor of the election of the Company’s slate at the 2023 Annual Meeting and the 2024 Annual Meeting.

Additionally, pursuant to the terms of the Cooperation Agreement, the Company terminated the previously adopted Tax Benefits Preservation Plan, although the MRMP Stockholders have agreed to limit their beneficial and economic ownership of the Company to 28 % of the outstanding common stock of the Company for the next 12 months and 30 % for the subsequent 12-month period.

In exchange for this arrangement, the Company agreed to reimburse the MRMP Stockholders and Mr.

Kinzler for their reasonable, documented out-of-pocket fees and expenses (including legal expenses) in connection with the negotiation and execution of the Cooperation Agreement and the transactions contemplated hereby and the proposed nomination of directors at the 2023 Annual Meeting.

During the year ended September 30, 2023 , $ 202,000 and $ 149,000 in expenses were recorded for reimbursements to MRMP Stockholders and Mr.

Kinzler, respectively, under the Cooperation Agreement.

In May 2023, the Company’s Board of Directors approved and ratified the payment of one-time special director fees to directors Messrs.

Grossman and Woodrum for their services on behalf of the Company and the Board pertaining to the negotiations of the Cooperation Agreement and the settlement of

the potential proxy contest.

During the year ended September 30, 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 year ended September 30, 2023, Barnwell received $ 265,000 in percentage of sales payments from KD I from the sale of one single-family lot within Increment I.

In May 2023, the Company’s Board of Directors approved and ratified the payment of one-time special director fees to directors Kenneth Grossman and Doug Woodrum for their services on behalf of the Company and the Board of Directors pertaining to the negotiations of the cooperation and support agreement and the settlement of the potential proxy contest at the 2023 annual meeting of stockholders.

Grossman received a one-time special director fee of $ 100,000 , which was paid in $ 40,000 cash and a stock grant of 22,728 shares of Barnwell common stock (valued at $ 60,000 using the closing price of Barnwell's common stock on May 11, 2023, the date of grant).

2 unchanged sentences

Restricted Stock Units

In November 2023, the Board of Directors of the Company granted a total of 76,366 restricted stock units to the independent directors of the Board as partial payment of director fees for their service as members of the Board.

In October 2024, the Board of Directors of the Company granted a total of 105,820 restricted stock units to the independent directors of the Board as partial payment of director fees for their service as members of the Board.

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

Natural Gas and Oil Contracts

In November 2023, the Company amended certain of its Canadian purchase and sales contracts to change the sales price on a portion of the natural gas it sells to a fixed price during the period from April 1, 2024 to October 31, 2024.

With these changes, the Company anticipates that during that period approximately 25 % of its Canadian natural gas production will be sold at fixed prices while the remaining 75 % of such production will continue to be sold at spot prices.

In December 2023, the Company amended certain of its Canadian purchase and sales contract to change the sales price on a portion of the oil it sells to a fixed price during the period from January 1, 2024 to June 30, 2024.

With these changes, the Company anticipates that during that period approximately 40 % of its Canadian oil production will be sold at fixed prices while the remaining 60 % of such production will continue to be sold at spot prices.

Sale of Water Resources

In December 2023, the Company entered into an 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.

The sale is expected to close in the first half of our fiscal 2024.

Contract Drilling Segment Drilling Rig

In December 2024, the Company entered into a purchase agreement with an independent third party for the sale of a contract drilling segment drilling rig and related ancillary equipment.

The sale of these assets will close upon the buyer’s acceptance of the drilling rig and transfer of the legal title at delivery which is expected to occur in our second quarter of fiscal 2025.

SUMMARY OF SELECTED QUARTERLY FINANCIAL DATA (UNAUDITED)

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All of the information regarding U.S.

reserves in this Form 10-K is derived from the reports of our independent petroleum reserve engineers, Ryder Scott, and are included as Exhibits to this Form 10-K.

reserves in this Form 10-K is derived from the report of our independent petroleum reserve engineers, Ryder Scott, and is included as an Exhibit to this Form 10-K.

The Company emphasizes that reserve estimates are inherently imprecise and that estimates of new discoveries and undeveloped locations are more imprecise than estimates of established proved producing oil and natural gas properties.

1 unchanged sentence

Proved oil and natural gas reserves are the estimated quantities of oil and natural gas that geological and engineering data demonstrate, with reasonable certainty, to be recoverable in future years from known reservoirs under economic and operating conditions (i.e., prices and costs) existing at the time the estimate is made.

Proved developed oil and natural gas reserves are proved reserves that can be expected to be recovered through existing wells and equipment in place and under operating methods being utilized at the time the estimates were made.

Canada United States Total

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Extensions, discoveries and other additions 167,000 85,000 252,000

Acquisitions of reserves 99,000 — 99,000

Less production ( 183,000 ) ( 21,000 ) ( 204,000 )

2 unchanged sentences

Extensions, discoveries and other additions 117,000 — 117,000

Acquisitions of reserves 4,000 — 4,000

Less sales of reserves ( 54,000 ) — ( 54,000 )

Less production ( 184,000 ) ( 19,000 ) ( 203,000 )

Proved Reserves, September 30, 2024 892,000 90,000 982,000

Proved Developed Reserves, September 30, 2023 827,000 289,000 1,116,000

Proved Undeveloped Reserves, September 30, 2023 110,000 — 110,000

Canada United States Total

3 unchanged sentences

Extensions, discoveries and other additions 32,000 112,000 144,000

Less production ( 27,000 ) ( 25,000 ) ( 52,000 )

Balance at September 30, 2023 150,000 177,000 327,000

Revisions of previous estimates 70,000 15,000 85,000

Extensions, discoveries and other additions 15,000 — 15,000

Acquisitions of reserves 2,000 — 2,000

1 unchanged sentence

Less production ( 36,000 ) ( 28,000 ) ( 64,000 )

Proved Reserves, September 30, 2024 199,000 164,000 363,000

Canada United States Total

Proved reserves:

Balance at September 30, 2022 4,519,000 466,000 4,985,000

2 unchanged sentences

Less production ( 1,023,000 ) ( 240,000 ) ( 1,263,000 )

Balance at September 30, 2023 5,010,000 1,691,000 6,701,000

Revisions of previous estimates 826,000 82,000 908,000

Extensions, discoveries and other additions 313,000 — 313,000

Acquisitions of reserves 16,000 — 16,000

Less sales of reserves ( 139,000 ) — ( 139,000 )

Less production ( 1,085,000 ) ( 259,000 ) ( 1,344,000 )

Proved Reserves, September 30, 2024 4,941,000 1,514,000 6,455,000

Proved Developed Reserves, September 30, 2023 4,402,000 1,691,000 6,093,000

Proved Undeveloped Reserves, September 30, 2023 608,000 — 608,000

Total Equivalent Reserves

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Extensions, discoveries and other additions 379,000 377,000 756,000

Acquisitions of reserves 137,000 — 137,000

Less sales of reserves ( 2,000 ) — ( 2,000 )

Less production ( 381,000 ) ( 86,000 ) ( 467,000 )

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Extensions, discoveries and other additions 184,000 — 184,000

Acquisitions of reserves 9,000 — 9,000

Less sales of reserves ( 79,000 ) — ( 79,000 )

Less production ( 401,000 ) ( 90,000 ) ( 491,000 )

Proved Reserves, September 30, 2024 1,915,000 508,000 2,423,000

The following tables summarize changes in the estimates of Barnwell’s net interests in total proved undeveloped reserves and presents the balances of total proved developed reserves of oil and natural gas liquids and natural gas, which are located in Canada and the U.S.

states of Oklahoma and Texas.

Canada United States Total

Proved undeveloped reserves:

Balance at September 30, 2023 92,000 — 92,000

Conversion to proved developed reserves ( 98,000 ) — ( 98,000 )

Revisions of previous estimates 6,000 — 6,000

Additions due to a new well 109,000 — 109,000

Proved Undeveloped Reserves, September 30, 2024 109,000 — 109,000

Proved Developed Reserves, September 30, 2023 695,000 112,000 807,000

Proved Developed Reserves, September 30, 2024 783,000 90,000 873,000

Canada United States Total

Proved undeveloped reserves:

Balance at September 30, 2023 18,000 — 18,000

Conversion to proved developed reserves ( 10,000 ) — ( 10,000 )

Revisions of previous estimates ( 8,000 ) — ( 8,000 )

Additions due to a new well 23,000 — 23,000

Proved Undeveloped Reserves, September 30, 2024 23,000 — 23,000

Proved Developed Reserves, September 30, 2023 132,000 177,000 309,000

Proved Developed Reserves, September 30, 2024 176,000 164,000 340,000

Canada United States Total

Proved undeveloped reserves:

Balance at September 30, 2023 608,000 — 608,000

Conversion to proved developed reserves ( 279,000 ) — ( 279,000 )

Revisions of previous estimates ( 330,000 ) — ( 330,000 )

Additions due to a new well 641,000 — 641,000

Proved Undeveloped Reserves, September 30, 2024 640,000 — 640,000

Proved Developed Reserves, September 30, 2023 4,402,000 1,691,000 6,093,000

Proved Developed Reserves, September 30, 2024 4,301,000 1,514,000 5,815,000

Total Equivalent Reserves

Canada United States Total

Proved undeveloped reserves:

Balance at September 30, 2023 211,000 — 211,000

Conversion to proved developed reserves ( 155,000 ) — ( 155,000 )

Revisions of previous estimates ( 56,000 ) — ( 56,000 )

Additions due to a new well 239,000 — 239,000

Proved Undeveloped Reserves, September 30, 2024 239,000 — 239,000

Proved Developed Reserves, September 30, 2023 1,561,000 571,000 2,132,000

Proved Developed Reserves, September 30, 2024 1,676,000 508,000 2,184,000

(B) Capitalized Costs Relating to Oil and Natural Gas Producing Activities

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Total $ 6,858,000 $ 5,354,000 $ 12,212,000

Costs incurred in the tables above include additions and revisions to Barnwell’s asset retirement obligation of $ 1,483,000 and $ 2,703,000 for the years ended September 30, 2023 and 2022, respectively.

(D) Results of Operations for Oil and Natural Gas Producing Activities

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Depletion ( 4,139,000 ) ( 808,000 ) ( 4,947,000 )

Impairment of assets ( 2,164,000 ) ( 721,000 ) ( 2,885,000 )

Pre-tax results of operations (1)

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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-K

Item 8. Financial Statements and Supplementary Data