What changed in this filing

/stocks — the workspaceLOADING

Item 2. Management’s Discussion and Analysis

2026-02-23 compared with 2025-08-13 · 109 added, 189 removed, 131 unchanged (69% of the section changed)

10 unchanged sentences

Forward-looking statements involve risks, uncertainties and assumptions which could cause actual results to differ materially from those contained in such statements.

The risks, uncertainties and other factors that might cause actual results to differ materially from Barnwell’s expectations are set forth in the “Forward-Looking Statements” and “Risk Factors” sections of Barnwell’s 2024 Annual Report and Barnwell’s Quarterly Reports on Form 10-Q for the quarters ending March 31, 2025, and December 31, 2024.

Investors should not place undue reliance on these forward-looking statements, as they speak only as of the date of filing of this Form 10-Q, and Barnwell expressly disclaims any obligation or undertaking to publicly release any updates or revisions to any forward-looking statements contained herein.

1 unchanged sentence

Management has determined that our most critical accounting policies and estimates are those related to the full-cost ceiling calculation and depletion of our oil and natural gas properties and the calculation of our income taxes, all of which are discussed in our 2025 Annual Report.

There have been no significant changes to these critical accounting policies and estimates during the three and nine months ended June 30, 2025.

There have been no significant changes to these critical accounting policies and estimates during the three months ended December 31, 2025.

We continue to monitor our accounting policies to ensure proper application of current rules and regulations.

2 unchanged sentences

The accompanying condensed consolidated financial statements have been prepared on a going concern basis, which contemplates the realization of assets and satisfaction of liabilities in the normal course of business for the twelve-month period following the date of issuance of these condensed consolidated financial statements.

Our ability to sustain our business in the future will depend on sufficient oil and natural gas operating cash flows which are dependent on oil and natural gas prices, which can and in the past have fluctuated significantly, and on oil and natural gas operating expenses which are both variable and fixed.

A sufficient level of oil and natural gas operating cash flows are necessary to fund discretionary oil and natural gas capital expenditures which must be economically successful to provide sufficient returns to grow reserves and production or at a minimum replace declining production from aging wells.

Such a level of oil and natural gas capital expenditures will require funding from external debt and/or equity sources that are not currently in place, but those sources may not be feasible or sufficient.

In addition, we will need sufficient cash flows to fund our non-discretionary outflows such as oil and natural gas asset retirement obligations, ongoing oil and natural gas operating expenses and general and administrative expenses, both those related to our oil and natural gas operations and those related to our being a public company such as costs incurred related to the shareholder consent solicitation and proxy contest.

Due to the recent shareholder consent solicitation and the proxy contest costs incurred and estimated to be incurred and the impacts of recently imposed tariffs which have caused a reduction in oil prices and have had an impact on the U.S.

economy as a whole, we now face a greater uncertainty about our oil and natural gas operating cash inflows as described above, which in turn limits our ability to make the required discretionary cash outflows for the capital expenditures necessary to convert our proved undeveloped reserves to proved developed reserves.

Furthermore, because of the greater uncertainty about our cash inflows described above, there is substantial doubt about our ability to fund our non-discretionary cash outflows and thus substantial doubt about our ability to continue as a going concern for one year from the date of the filing of this report.

The Company is investigating potential sources of funding, including debt financing, the issuance of stock, and the partial or complete sale of its remaining interests in the Kukio Resort Land Development Partnerships, however, no probable timing or amounts of such funding have yet been secured.

Because of this uncertainty as well as uncertainties regarding the potential duration and depth of the impacts of recently imposed tariffs on the economy as a whole, which in turn affects oil prices and our business as described above, substantial doubt about our ability to continue as a going concern for one year from the date of the filing of this report exists.

While the sale of our U.S.

oil and natural gas properties on August 8, 2025 will help to provide cash for the near term, the amount is not estimated to be sufficient to overcome the substantial doubt for one year from the date of this filing in the absence of other sources of funding, none of which are probable at the date of this filing.

These financial statements do not include any adjustments that might result from the outcome of these uncertainties.

Impact of Recently Issued Accounting Standards on Future Filings

In November 2023, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No.

2023-07 “Segment Reporting (Topic 280):

Improvements to Reportable Segment Disclosures,” which expands reportable segment disclosure requirements on an annual and interim basis, primarily through enhanced disclosures about significant segment expenses.

This ASU is effective for annual reporting periods beginning after December 15, 2023 (our fiscal 2025) and interim periods within fiscal years beginning after December 15, 2024 (our fiscal 2026), with early adoption permitted.

The Company is currently evaluating the impact of this standard on Barnwell’s consolidated financial statements but does not expect that the adoption of this update will have a material impact on Barnwell's consolidated financial statements.

In December 2023, the FASB issued ASU No.

2023-09 “Income Taxes (Topic 740):

Improvements to Income Tax Disclosures,” which requires disclosure of incremental income tax information within the tax rate reconciliation and expanded disclosures of income taxes paid both in the U.S.

and foreign jurisdiction, among other disclosure requirements.

This ASU is effective for annual

reporting periods beginning after December 15, 2024, with early adoption permitted.

The Company is currently evaluating the impact of this standard on Barnwell’s consolidated financial statements .

In November 2024, the FASB issued ASU No.

2024-03 “Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic 220-40):

Disaggregation of Income Statement Expenses,” which requires public companies to disclose specified information about certain costs and expenses in the notes to the financial statements at interim and annual reporting periods.

This ASU is effective for annual reporting periods beginning after December 15, 2026 and interim reporting periods within annual reporting periods beginning after December 15, 2027, with early adoption permitted.

The Company is currently evaluating the impact of this standard on Barnwell’s consolidated financial statements.

As disclosed in Note 3 “Discontinued Operations” to the Condensed Consolidated Financial Statements (unaudited) included in this report, on March 14, 2025, the Company entered into and completed the sale of its wholly-owned subsidiary, Water Resources.

2 unchanged sentences

Accordingly, Barnwell’s continuing operations is engaged in the following lines of business:

1) acquiring, developing, producing and selling oil and natural gas in Canada and the U.S.

(oil and natural gas segment) and 2) leasehold land interests in Hawaii (land investment segment).

1) acquiring, developing, producing and selling oil and natural gas in Canada (oil and natural gas segment) and 2) leasehold land interests in Hawaii (land investment segment).

Oil and Natural Gas Segment

10 unchanged sentences

Barnwell is committed to commence construction of improvements within 90 days of the transfer of the four lots in the phases subsequent to Phase 2A as a condition of the transfer of such lots.

Also, in addition to Barnwell's existing obligations to pay professional fees to certain parties based on percentages of its gross receipts, Kaupulehu Developments is also obligated to pay an amount equal to 0.72% and 0.20% of the cumulative net profits of KD II to KD Development, LLC and a pool of various individuals, respectively, all of whom are partners of KKM and are unrelated to Barnwell.

Also, in addition to Barnwell's existing obligations to pay professional fees to certain parties based on percentages of its gross receipts, Kaupulehu Developments is also obligated to pay an amount equal to 0.72% and 0.20%% of the cumulative net profits of KD II to KD Development, LLC and a pool of various individuals,

respectively, all of whom are partners of KKM and are unrelated to Barnwell.

The remaining acreage within Increment II is not yet under development, and there is no assurance that development of such acreage will in fact occur.

5 unchanged sentences

The Kukio Resort Land Development Partnerships have remaining Increment I obligations to complete project amenities, infrastructure, beautification, and restoration of certain areas and therefore has yet to fully recognize its deferred profit on the Increment I project as a whole.

The Increment I deferred profit at June 30, 2025 for the Kukio Resort Land Development Partnerships as a whole was approximately $4,000,000;

The Increment I deferred profit at December 31, 2025 for the Kukio Resort Land Development Partnerships as a whole was approximately $4,000,000;

the recognition of which is dependent upon the completion of the Increment I obligations.

5 unchanged sentences

• Approximately 1,000 acres of vacant leasehold land zoned conservation in the Kaupulehu Lot 4C area, which currently has no development potential without both a development agreement with the lessor and zoning reclassification.

The lease terminates in December 2025.

The lease expired by its terms in December 2025.

• Contracts to Sell Interests in Increment II

◦ In November 2025, Kaupulehu Developments entered into an agreement with Mr.

David Johnston, the son of Mr.

Terry Johnston, a partner in Kaupulehu Developments, to surrender any and all remaining rights of Kaupulehu Developments for Increment II for the total consideration of $2,000,000.

The purchaser paid an initial $70,000 which was recognized as revenue during the three months ended December 31, 2025.

Additionally, the purchaser has the right to extend the closing by up to two years by making a $70,000 payment in each of the next two years, with those payments applied against the $2,000,000 purchase price.

The transaction iremains subject to the purchaser's election to proceed and

other closing conditions.

Because the agreement is subject to substantive contingencies and closing conditions that has not been satisfied, the criteria for revenue recognition under ASC 606 have not been met.

Accordingly, no additional revenue has been recognized in the financial statements.

◦ Also in November 2025, pursuant to a unit purchase agreement, KDK agreed to sell KDK’s interests in Increment II to Mr.

David Johnston for $2,109,000.

The unit purchase agreement is subject to due diligence, and there is no certainty that the transaction will close.

Furthermore, there is also no assurance on the timing or amounts that the general partner of KDK would distribute upon a closing.

Again, there are substantive contingencies and closing conditions that have not been satisfied, and in turn no revenue has been recognized in the financial statements.

Results of Operations

Summary of Results From Continuing Operations

The net loss from continuing operations attributable to Barnwell for the three months ended June 30, 2025 totaled $1,550,000, a $532,000 increase from a net loss from continuing operations attributable to Barnwell of $1,018,000 for the three months ended June 30, 2024.

The following factors affected the results of operations for the three months ended June 30, 2025 as compared to the prior year period:

• General and administrative expenses increased $565,000 due to $657,000 in new fees and costs incurred, net of $348,000 of estimated accrued insurance recoveries receivable, related to a shareholder consent solicitation, various legal actions between Ned L.

Sherwood (“Sherwood”) and certain of his affiliates (collectively, the “Sherwood Group”) and the Company and certain of its directors, and a proxy contest in the current year period as compared to the same period in the prior year;

• A $299,000 decrease in oil and natural gas segment operating results, before income taxes, primarily attributable to a $1,299,000 decrease in oil and natural gas revenues in the current year period as compared to the same period in the prior year, partially offset by a $399,000 decrease in the ceiling test impairment which was $599,000 in the prior year period compared to a ceiling test impairment of $200,000 in the current year period, and a $449,000 decrease in oil and natural gas depletion in the current year period as compared to the same period in the prior year.

The decrease in depletion was due to a decrease in the depletion rate largely due to ceiling test impairments incurred in the prior year period;

The net loss from continuing operations attributable to Barnwell for the three months ended December 31, 2025 totaled $1,426,000, a $172,000 increase from a net loss from continuing operations attributable to Barnwell of $1,598,000 for the three months ended December 31, 2024.

The following factors affected the results of operations for the three months ended December 31, 2025 as compared to the prior year period:

• General and administrative expenses increased $453,000 due to $257,000 higher personnel costs for new staff hired in Canada during the transition period in advance of closing of the Hawaii office on January 31, 2026, $101,000 higher non-cash cost shares issued to the new Chief Financial Officer and $116,000 higher professional service fees mainly due to the previously discussed proxy contest, consent solicitation and various legal actions;

Partially offset by:

• A $84,000 increase in oil and natural gas segment operating results primarily attributable to decreases of $613,000 in the ceiling test impairment, $425,000 in the expenses, and $313,000 in oil and natural gas depletion, partially offset by a $1,267,000 decrease in oil and natural gas revenues.

The decrease in oil and natural gas revenues, expenses and depletion was primarily due to a decrease in net production resulting from the August 8, 2025 sale of U.S.

oil and natural gas assets, and the August 28, 2025 sale of Barnwell's interest in certain oil and natural gas properties in Canada.

Lower realized oil price also reduced revenue;

• A $70,000 increase in land investment segment operating results as a result of partial proceeds received from the sale of the Increment II;

• A $398,000 increase in positive impacts due to a $47,000 foreign currency gain recorded in the current period as compared to a $351,000 loss recorded in the prior year period due to the effects of foreign currency exchange rate changes on intercompany loans and advances as a result of changes in the U.S.

dollar against the Canadian dollar.

The net loss from continuing operations attributable to Barnwell for the nine months ended June 30, 2025 totaled $4,686,000, a $2,012,000 increase from a net loss from continuing operations attributable to Barnwell of $2,674,000 for the nine months ended June 30, 2024.

The following factors affected the results of operations for the nine months ended June 30, 2025 as compared to the prior year period:

• General and administrative expenses increased $1,314,000 due to $1,599,000 in new fees and costs incurred, net of $348,000 of estimated accrued insurance recoveries, related to a shareholder consent solicitation, various legal actions between the Sherwood Group and the Company and certain of its directors, and a proxy contest in the current year period as compared to the same period in the prior year;

• Equity in income from affiliates decreased $1,071,000 and land investment segment operating results, before non-controlling interests’ share of such profits, decreased $500,000 due to the

Kukio Resort Land Development Partnerships' sale of two lots in the prior year period, whereas there was no lots sold in the current year period;

• A $1,411,000 decrease in the ceiling test impairment which was $2,276,000 in the prior year period compared to a ceiling test impairment of $865,000 in the current year period, and a $1,592,000 decrease in oil and natural gas depletion in the current year period as compared to the same period in the prior year partially offset by a decrease in oil and natural gas segment revenues due primarily to decreases in oil and natural gas prices and production.

Barnwell conducts operations in the U.S.

2 unchanged sentences

To date, we have not entered into foreign currency hedging transactions.

Foreign currency gains or losses on intercompany loans and advances that are not considered long-term investments in nature because management intends to settle these intercompany balances in the future are included in our statements of operations.

The average exchange rate of the Canadian dollar to the U.S.

dollar decreased 1% and 3% in the three and nine months ended June 30, 2025, respectively, as compared to the same periods in the prior year.

dollar was flat in the three months ended December 31, 2025, as compared to the same period in the prior year.

The exchange rate of the Canadian dollar to the U.S.

dollar decreased 1% at June 30, 2025, as compared to September 30, 2024.

Accordingly, the assets, liabilities, stockholders’ equity and revenues and expenses of Barnwell’s subsidiaries operating in Canada have been adjusted to reflect the change in the exchange rates.

dollar increased 1% at December 31, 2025, as compared to September 30, 2025.

Accordingly, the assets, liabilities, stockholders’ equity, revenues and expenses of Barnwell’s subsidiaries operating in Canada have been adjusted to reflect the change in the exchange rates.

Other comprehensive income and losses are not included in net earnings and net loss.

Other comprehensive loss due to foreign currency translation adjustments, net of taxes, for the three months ended June 30, 2025 was $37,000, a $49,000 change from other comprehensive income due to foreign currency translation adjustments, net of taxes, of $12,000 for the same period in the prior year.

Other comprehensive income due to foreign currency translation adjustments, net of taxes, for the nine months ended June 30, 2025 was $53,000, a $33,000 change from other comprehensive income due to foreign currency translation adjustments, net of taxes, of $20,000 for the same period in the prior year.

There were no taxes on other comprehensive income (loss) due to foreign currency translation adjustments in the three and nine months ended June 30, 2025 and 2024 due to a full valuation allowance on the related deferred tax asset.

Other comprehensive loss due to foreign currency translation adjustments, net of taxes, for the three months ended December 31, 2025 was $27,000, a $120,000 change from other comprehensive income due to foreign currency translation adjustments, net of taxes, of $93,000 for the same period in the prior year.

There were no taxes on other comprehensive income (loss) due to foreign currency translation adjustments in the three months ended December 31, 2025 and 2024 due to a full valuation allowance on the related deferred tax asset.

Oil and Natural Gas

3 unchanged sentences

Three months ended Increase

June 30, (Decrease)

2025 2024 $ %

Natural Gas (Mcf)* $ 1.39 $ 1.00 $ 0.39 39 %

Oil (Bbls)** $ 55.78 $ 70.64 $ (14.86) (21 %)

Natural gas liquids (Bbls)** $ 25.93 $ 29.81 $ (3.88) (13 %)

Average Price Per Unit

Nine months ended Increase

June 30, (Decrease)

December 31, (Decrease)

2025 2024 $ %

4 unchanged sentences

Three months ended Increase

June 30, (Decrease)

2025 2024 Units %

Natural Gas (Mcf)* 290,000 348,000 (58,000) (17 %)

Oil (Bbls)** 42,000 50,000 (8,000) (16 %)

Natural gas liquids (Bbls)** 14,000 16,000 (2,000) (13 %)

Net Production

Nine months ended Increase

June 30, (Decrease)

December 31, (Decrease)

2025 2024 Units %

6 unchanged sentences

** Bbl = stock tank barrel equivalent to 42 U.S.

The oil and natural gas segment generated a $27,000 operating profit before general and administrative expenses in the three months ended June 30, 2025, a decrease in operating results of $299,000 as compared to the $326,000 operating profit before general and administrative expenses generated during the same period of the prior year due to a decrease in operating results primarily from decreased revenues, partially offset by a decrease of $399,000 in the ceiling test impairment and a $449,000 decrease in oil and natural gas depletion in the current year period.

The oil and natural gas segment generated a $663,000 operating profit before general and administrative expenses in the nine months ended June 30, 2025, an increase in operating results of $661,000 as compared to the $2,000 operating profit before general and administrative expenses generated during the same period of the prior year primarily due to a decrease of $1,411,000 in the ceiling test impairment and a $1,592,000 decrease in oil and natural gas depletion in the current year period, partially offset by a decrease in operating results primarily from decreased revenues.

The oil and natural gas segment generated a $32,000 operating loss before general and administrative expenses in the three months ended December 31, 2025, an increase in operating results of $84,000 as compared to the $116,000 operating loss before general and administrative expenses generated during the same period of the prior year due to a decrease in operating results primarily from decreased revenues, partially offset by a decrease of $613,000 in the ceiling test impairment and a $313,000 decrease in oil and natural gas depletion in the current year period.

The following table sets forth Barnwell’s oil and natural gas segment operating profit before general and administrative expenses by geographic location:

Three months ended

June 30, Nine months ended

2025 2024 2025 2024

Operating profit (loss)

2 unchanged sentences

United States (1)

(81,000) 34,000 (500,000) 685,000

Total operating profit $ (32,000) $ (116,000)

________________________

(1) The operating profit (loss) for Canada for the three and nine months ended June 30, 2024 includes non-cash ceiling test impairments of $487,000 and $2,164,000, respectively.

(2) The operating loss for the United States for the three and nine months ended June 30, 2025 includes non-cash ceiling test impairments of $200,000 and $865,000, respectively.

The operating profit for the United States for the three and nine months ended June 30, 2024 includes a non-cash ceiling test impairment of $112,000.

Oil and natural gas revenues decreased $1,299,000 (29%) and $3,133,000 (23%) for the three and nine months ended June 30, 2025, respectively, as compared to the same periods in the prior year, primarily due to decreases in natural gas, oil, and natural gas liquids production in the current year periods as compared to the same periods in the prior year.

The decreases in production are primarily the result of natural declines in production from wells in the Company's Twining area as the wells age, and to a lesser extent due to properties sold in the prior year.

(1) The operating loss for the United States for the three months ended December 31, 2024 includes non-cash ceiling test impairments of $613,000.

Oil and natural gas revenues decreased $1,267,000 (33%) for the three months ended December 31, 2025, as compared to the same period in the prior year, primarily due to decreases in natural gas, oil, and natural gas liquids production in the current year periods as compared to the same periods in the prior year.

The decreases in production are primarily the result of the sale of the U.S.

oil and natural gas assets, the sale of Barnwell's interest in certain oil and natural gas properties in Canada, and natural declines in production from wells in the Company's Twining area as the wells age.

Revenues also decreased due to a decrease in oil prices.

In February 2025, the Company amended the sales price on 1,055 gross Mcf per day of the Canadian natural gas it will sell during the period from April 1, 2025 to October 31, 2025 to a fixed index price before differentials of $1.95 Canadian dollars per Mcf, with remaining volumes continuing to be sold at spot prices.

This per day volume of natural gas under this fixed index price contract was equivalent to approximately 39% of Canadian natural gas gross production per day for the nine months ended June 30, 2025.

In February 2025, the Company amended certain of its Canadian purchase and sales contracts to change the sales price on 1,055 gross Mcf per day of the Canadian natural gas it sold during the period from April 1, 2025 to October 31, 2025 to a fixed index price before differentials of $1.95 Canadian dollars per Mcf, with remaining volumes continuing to be sold at spot prices.

This per day volume of natural gas under this fixed index price contract was equivalent to approximately 39% of Canadian natural gas gross production per day for the three months ended December 31, 2025.

Additionally, in September 2025, the Company amended the sales price on 1,583 gross Mcf per day of the Canadian natural gas it will sell during the period from November 1, 2025 to March 31, 2026 to a fixed index price before differentials of $3.03 Canadian dollars per Mcf, with remaining volumes continuing to be sold at spot prices.

This per day volume of natural gas under this fixed index price contract that will affect the period from November 1, 2025 to March 31, 2026, is equivalent to approximately 58% of Canadian natural gas gross production per day for the three months ended December 31, 2025.

These natural gas contracts were eligible for and elected as normal purchase and normal sales exception contracts and were thus excluded from derivative accounting.

In June 2025, the Company amended certain of its Canadian purchase and sales contracts to change the sales price on 100 gross barrels per day of the Canadian oil that it will sell during the period from July 1, 2025 to September 30, 2025 to a fixed index price before differentials of $70.71 per net barrel, with remaining volumes continuing to be sold at spot prices.

This per day volume of oil under this fixed index price contract that will affect the period from July 1, 2025 to September 30, 2025, is equivalent to approximately 18% of Canadian oil gross production per day for the nine months ended June 30, 2025.

Additionally, the Company also amended the sales price on 100 gross barrels per day of the Canadian oil that it will sell during the period from July 1, 2025 to December 31, 2025 to a fixed index price before differentials of $70.35 per net barrel, with remaining volumes continuing to be sold at spot prices.

This per day volume of oil under this fixed index price contract that will affect the period from July 1, 2025 to December 31, 2025, is equivalent to approximately 18% of Canadian oil gross production per day for the nine months ended June 30, 2025.

In November 2025, the Company amended certain of its Canadian purchase and sales contracts to change the sales price on 1,055 gross Mcf per day of the Canadian natural gas that it sold during the period from April 1, 2026 to October 31, 2026 to a fixed index price before differentials of $2.94 Canadian dollars per Mcf, with remaining volumes continuing to be sold at spot prices.

This per day volume of natural gas under this fixed index price contract that will affect the period from April 1, 2026 to October 31, 2026, is equivalent to approximately 39% of Canadian natural gas gross production per day

for the quarter ended December 31, 2025.

These natural gas contracts were eligible for and elected as normal purchase and normal sales exception contracts and were thus excluded from derivative accounting.

In June 2025, the Company amended the sales price on 100 gross barrels per day of the Canadian oil to be sold during the period from July 1, 2025 to December 31, 2025 to a fixed index price before differentials of $70.35 per net barrel, with remaining volumes continuing to be sold at spot prices.

This per day volume of oil under this fixed index price contract affected the period from July 1, 2025 to December 31, 2025, is equivalent to approximately 26% of Canadian oil gross production per day for the three months ended December 31, 2025.

In January 2026, the Company amended the sales price on 100 gross barrels per day of the Canadian oil to be sold during the period from February 1, 2026 to July 31, 2026 to a fixed index price before differentials of $58.20 per net barrel, with remaining volumes continuing to be sold at spot prices.

This per day volume of oil under this fixed index price contract that will affect the period from February 1, 2026 to July 31, 2026, is equivalent to approximately 26% of Canadian oil gross production per day for the quarter ended December 31, 2025.

These natural gas contracts were eligible for and elected as normal purchase and normal sales exception contracts and were thus excluded from derivative accounting.

These oil contracts were eligible for and elected as normal purchase and normal sales exception contracts and were thus excluded from derivative accounting.

Oil and natural gas operating expenses decreased $152,000 (7%) and $791,000 (11%) for the three and nine months ended June 30, 2025, respectively, as compared to the same periods in the prior year, primarily due to decreases in production in the current year periods, partially offset by an increase in workovers in the current year periods, as compared to the same periods in the prior year.

Oil and natural gas segment depletion decreased $449,000 (35%) and $1,592,000 (39%) for the three and nine months ended June 30, 2025, respectively, as compared to the same periods in the prior year.

The decreases were due to decreases in the depletion rate and due to decreases in production in the current year periods as compared to the same periods in the prior year.

The depletion rate decreased as a result of a decrease in the depletable base from significant ceiling test impairments between the prior year periods and the current year periods.

Oil and natural gas operating expenses decreased $425,000 (17%) for the three months ended December 31, 2025, as compared to the same period in the prior year, primarily due to decreases in production in the current year period due to the sale of the U.S.

oil and natural gas properties and the sale of Barnwell's interest in certain oil and natural gas properties in Canada.

Oil and natural gas segment depletion decreased $313,000 (35%) for the three months ended December 31, 2025, as compared to the same period in the prior year.

The decrease was primarily due to decreases in production in the current year period as compared to the same period in the prior year.

On August 8, 2025, Barnwell entered into an agreement with an independent third party to sell all of its working interest in U.S.

5 unchanged sentences

Operating revenues from these U.S.

oil and natural gas properties represented 10% of the total oil and natural gas segment operating revenues for the nine months ended June 30, 2025.

Sale of Interest in Leasehold Land

Kaupulehu Developments was entitled to receive a percentage of the gross receipts from the sales of lots and/or residential units in Increment I by KD I.

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

Three months ended

June 30, Nine months ended

2025 2024 2025 2024

Sale of interest in leasehold land:

Revenues - sale of interest in leasehold land $ — $ — $ — $ 500,000

Fees - included in general and administrative expenses — — — (61,000)

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

No lots were sold during the three months ended June 30, 2025 and 2024.

No lots were sold during the nine months ended June 30, 2025.

During the nine months ended June 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.

There is an Increment II owned by KD II in which the Company has a 10.8% indirect non-controlling ownership interest.

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

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

oil and natural gas properties represented 9% of the total oil and natural gas segment operating revenues for the three months ended December 31, 2024.

Contracts to Sell Interests in Increment II

In November 2025, Kaupulehu Developments entered into an agreement with Mr.

David Johnston, the son of Mr.

Terry Johnston, a partner in Kaupulehu Developments, to surrender any and all remaining rights of Kaupulehu Developments for Increment II for the total consideration of $ 2,000,000 , of which $ 70,000 was received in the three months ended December 31, 2025.

Additionally, the purchaser has the right to extend the closing by up to two years by making a $ 70,000 payment in each of the next two years , with those payments applied against the $ 2,000,000 purchase price.

The closing of this transaction is entirely dependent on the purchaser and therefore may not happen.

Also in November 2025, pursuant to a unit purchase agreement, KDK agreed to sell KDK’s interests in Increment II to Mr.

David Johnston for $ 2,109,000 .

The unit purchase agreement is subject to due diligence, and there is no certainty that the transaction will close.

Furthermore, there is also no assurance on the timing or amounts that the general partner of KDK would distribute upon a closing.

General and Administrative Expenses

General and administrative expenses increased $565,000 (43%) for the three months ended June 30, 2025 as compared to the same period in the prior year.

The increase was due to $657,000 in new fees and costs incurred, net of $348,000 of estimated accrued insurance recoveries receivable, for legal services, proxy solicitation, proxy advisory, and public relations costs related to a shareholder consent solicitation, various legal actions between the Sherwood Group and the Company and certain of its directors, and a proxy contest in the current year period as compared to the same period in the prior year.

The increase was partially offset by decreases in compensation and other costs in the current year period as compared to the same period in the prior year.

General and administrative expenses increased $1,314,000 (34%) for the nine months ended June 30, 2025 as compared to the same period in the prior year.

The increase was due to $1,599,000 in new fees and costs incurred, net of $348,000 of estimated accrued insurance recoveries receivable, for legal services, proxy solicitation, proxy advisory, and public relations costs related to a shareholder consent solicitation, various legal actions between the Sherwood Group and the Company and certain of its directors, and a proxy contest in the current year period as compared to the same period in the prior year.

The increase was partially offset by decreases in compensation and other costs in the current year period as compared to the same period in the prior year.

While the aforementioned shareholder proxy contest is not continuing as of the date of this report, the Company's annual stockholders meeting has been rescheduled to September 10, 2025 as a result of the Sherwood Group’s repeated refusals to attend the annual meeting despite having solicited proxies in connection with the 2025 Annual Meeting, thus causing the annual meeting to be adjourned numerous times and ultimately rescheduled due to a lack of a quorum.

Therefore, related costs will continue to be incurred until the matter is resolved.

Accordingly, general and administrative expenses will continue to be affected by this matter beyond June 30, 2025.

The Company is unable to estimate the amount of such future costs as the matter is ongoing and such costs will depend upon the future actions to be taken, which are yet to be determined.

In addition, the amount of estimated accrued insurance recoveries receivable is management's best estimate of the probable recoverable amount under the insurance policies.

While the insurer has confirmed that certain costs incurred by the Company are eligible for claim under the Company's insurance policies, the amount ultimately recoverable through insurance is dependent upon the insurer's completion of their review of eligible legal costs incurred and the recoverable amount may differ from management's estimate.

General and administrative expenses increased $453,000 (39%) for the three months ended December 31, 2025 as compared to the same period in the prior year.

The increase was due to $257,000 higher personnel costs for the new staff hired in Canada during the transition period in advance of closing of the Hawaii office on January 31, 2026, $101,000 higher non-cash cost shares issued to the new Chief Financial Officer and $116,000 higher professional service fees primarily due to in new fees and costs incurred, for legal services, proxy solicitation, proxy advisory, and public relations costs related to a shareholder consent solicitation, various legal actions between the Sherwood Group and the Company and certain of its directors, and a proxy contest in the current year period as compared to the same period in the prior year.

The aforementioned shareholder proxy contest, consent solicitation and various legal actions is not continuing, though the Company incurred $169,000 of costs related thereto during the quarter.

Since inception of these matters, the Company has received $ 250,000 in insurance proceeds towards these and other costs incurred thereto.

In addition, the Company is expecting to receive another $ 150,000 in insurance proceeds and has accrued a receivable for this amount.

In this regard, the insurer has confirmed that certain costs incurred by the Company are eligible for claim under the Company's insurance policies.

However, the amount ultimately recoverable through insurance will depend upon their review of eligible legal costs incurred and the recoverable amount may differ from management's estimate.

Depletion, Depreciation, and Amortization

Depletion, depreciation, and amortization decreased $450,000 (35%) and $1,593,000 (39%) for the three and nine months ended June 30, 2025, respectively, as compared to the same periods in the prior year, primarily due to decreases in the depletion rate and decreases in production, as discussed in the “Oil and natural gas” section above.

Depletion, depreciation, and amortization decreased $312,000 (35%) for the three months ended December 31, 2025, as compared to the same period in the prior year, primarily due to decreases in production, as discussed in the “Oil and natural gas” section above.

Impairment of Assets

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 three and nine months ended June 30, 2025, the Company incurred a non-cash ceiling test impairment for our U.S.

oil and natural gas properties of $200,000 and $865,000, respectively.

During the three months ended June 30, 2024, the Company incurred a non-cash ceiling test impairment of $599,000, which included impairments for our U.S.

and Canadian oil and natural gas properties of $112,000 and $487,000, respectively.

During the nine months ended June 30, 2024, the Company incurred a non-cash ceiling test impairment of $2,276,000, which included impairments for our U.S.

and Canadian oil and natural gas properties of $112,000 and $2,164,000, respectively.

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 July 1 and August 1 of 2025, the oil prices used in the 12-month historical rolling first-day-of-the-month average for the ceiling test at September 30, 2025 are likely to be lower than at June 30, 2025.

As such, we may incur a further impairment charge in the quarter ending September 30, 2025.

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 September 2025.

During the three months ended December 31, 2025, the Company had no impairments to oil and natural gas properties.

During the three months ended December 31, 2024, the Company incurred a non-cash ceiling test impairment on our U.S.

oil and natural gas properties of $613,000.

Foreign Currency (Gain) Loss

During the three and nine months ended June 30, 2025, there was a $219,000 foreign currency gain and a $122,000 foreign currency loss, respectively, as compared to foreign currency losses of $61,000 and $63,000 during the three and nine months ended June 30, 2024, respectively, due to the effects of foreign exchange rate changes on intercompany loans and advances as a result of changes in the exchange rate between the U.S.

During the three months ended December 31, 2025 and 2024, there was a $47,000 foreign currency gain and a $351,000 foreign currency loss, respectively, due to the effects of foreign exchange rate changes on intercompany loans and advances as a result of changes in the exchange rate between the

dollar against the Canadian dollar.

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Equity in Income of Affiliates

Equity in income of affiliates was nil for the three and nine months ended June 30, 2025, as compared to equity in income of affiliates of nil and $1,071,000 for the three and nine months ended June 30, 2024, respectively.

The decrease in partnership income is primarily due to the Kukio Resort Land Development Partnerships' sale of the last two lots in Increment I in the prior year period, whereas there were no lots sold in the current year period.

No cash distributions were received during the three months ended June 30, 2025 and 2024.

No cash distributions were received during the nine months ended June 30, 2025.

During the nine months ended June 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.

Equity in income of affiliates was nil for the three months ended December 31, 2025 and 2024 as there were no lots sold in the current year or prior year periods.

No cash distributions were received during the three months ended December 31, 2025 and 2024.

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, no equity in income of affiliates was recognized in the nine months ended June 30, 2025.

Cumulative distributions received from the Kukio Resort Land Development Partnerships in excess of our investment balance was $149,000 at June 30, 2025 and $373,000 at September 30, 2024.

Barnwell’s effective consolidated income tax rate from continuing operations, after adjusting loss from continuing operations before income taxes for non-controlling interests, was 2% and (3)% for the three and nine months ended June 30, 2025, respectively, as compared to (2)% and (8)% for the three and nine months ended June 30, 2024, respectively.

Accordingly, no equity in income of affiliates was recognized in the three months ended December 31, 2025.

Cumulative distributions received from the Kukio Resort Land Development Partnerships in excess of our investment balance was $ 116,000 at December 31, 2025 and $ 106,000 at September 30, 2025.

Barnwell’s effective consolidated income tax rate from continuing operations, after adjusting loss from continuing operations before income taxes for non-controlling interests, was 5% for the three months ended December 31, 2025 as compared to nil for the three months ended December 31, 2024.

Consolidated taxes do not bear a customary relationship to pretax results due primarily to the fact that the Company is taxed separately in Canada based on Canadian source operations and in the U.S.

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Income from our non-controlling interest in the Kukio Resort Land Development Partnerships is treated as non-unitary for state of Hawaii unitary filing purposes, thus unitary Hawaii losses provide limited sheltering of such non-unitary income.

Income from our investment in the Oklahoma oil venture is 100% allocable to Oklahoma.

As such, Barnwell receives no benefit from consolidated or unitary losses and, therefore, is subject to Oklahoma state taxes.

Our operations in Texas are subject to a franchise tax assessed by the state of Texas, however no significant amounts have been incurred to date.

On July 4, 2025, the President of the United States signed into law the One Big Beautiful Bill Act.

The legislation, among other things, makes permanent, extends or modifies certain provisions under the 2017 Tax Cuts and Jobs Act, including a permanent extension of 100% bonus depreciation for certain capital expenditures.

Pursuant to ASC Topic 740, Income Taxes, the effects of changes in tax law are recognized in the period of enactment.

As such, this legislation is not reflected in the Company’s unaudited condensed consolidated financial statements for the periods ended June 30, 2025.

The Company is currently evaluating the full impact of this new legislation on its consolidated financial statements.

Net (Loss) Earnings Attributable to Non-controlling Interests

Earnings and losses attributable to non-controlling interests represent the non-controlling interests’ share of revenues and expenses related to the various partnerships and joint ventures in which Barnwell has controlling interests and consolidates.

Net loss attributable to non-controlling interests totaled $3,000 and $5,000 for the three and nine months ended June 30, 2025, respectively, as compared to net earnings attributable to non-controlling interests of $12,000 and $236,000 for the same periods in the prior year.

The changes of $15,000 (125%) and $241,000 ( 102%) for the three and nine months, respectively, are primarily due to decreases in the amount of equity in income of affiliates and percentage of sales revenues received in the current year periods as compared to the same periods in the prior year.

Net earnings attributable to non-controlling interests totaled $14,000 for the three months ended December 31, 2025 as compared to net loss attributable to non-controlling interests of $2,000 for the same period in the prior year.

The change of $16,000 ( 800%) for the three months was primarily due to the increase in the amount of equity in income of affiliates and percentage of sales revenues received in the current year periods as compared to the same period in the prior year.

Net (Loss) Earnings From Discontinued Operations

Net earnings from discontinued operations was nil and $12,000 during the three and nine months ended June 30, 2025, respectively, as compared to net loss from discontinued operations of $228,000 and $1,008,000 during the three and nine months ended June 30, 2024, respectively.

Net earnings from discontinued operations was nil during three months ended December 31, 2025 as compared to net loss from discontinued operations of $ 319,000 during the three months ended December 31, 2024.

On March 14, 2025, the Company completed the sale of Water Resources, which represented the Company’s contract drilling segment.

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The focus of this section, “Liquidity and Capital Resources,” is on the cash flows from continuing operations, which affects future liquidity and capital resources as the Company no longer has any significant continuing involvement with the discontinued operations after the sale.

At June 30, 2025, Barnwell had a working capital deficit of $1,321,000.

At December 31, 2025, Barnwell had a working capital surplus of $1,826,000.

Barnwell’s primary sources of liquidity are cash on hand and cash flow generated by our oil and natural gas operations, as cash flow from our land investment segment, if any, are expected to be intermittent and not significant to our liquidity.

Included in the working capital deficit at June 30, 2025 mentioned above are incurred but unpaid legal and other professional service costs related to the shareholder contest amounting to $918,000, or $570,000 net of $348,000 of estimated accrued insurance recoveries receivable.

Included in the working capital surplus at December 31, 2025 mentioned above are incurred but unpaid legal and other professional service costs related to the shareholder contest amounting to $596,000, or $446,000 net of $150,000 of estimated accrued insurance recoveries receivable.

Future cash inflows will need to be utilized to pay down these incurred but unpaid costs.

Cash Flows From Continuing Operations

Cash flows used in continuing operations totaled $1,163,000 for the nine months ended June 30, 2025, as compared to cash flows provided by continuing operations of $4,349,000 for the same period in the prior year.

This $5,512,000 decrease in operating cash flows was primarily due to lower operating results for the oil and natural gas segment in the current year period as compared to the same period in the prior year, higher general and administrative expenses in the current year period due to the shareholder contests, and a distribution of income from the Kukio Resort Land Development Partnerships in the prior year period as compared to none in the current year period.

The change was also due to the effect of changes in current assets and liabilities, which was a decrease in operating cash flows of $50,000 in the current year period as compared to an increase of $710,000 in the prior year period.

Cash flows used in investing activities from continuing operations totaled $2,235,000 during the nine months ended June 30, 2025, as compared to cash flows used in investing activities from continuing operations of $1,729,000 during the same period of the prior year.

This $506,000 change in investing cash flows was due to $520,000 more in cash paid for investments in oil and natural gas properties and $163,000 in cash divested from the sale of discontinued operations, net of proceeds, in the current year as compared to the same period in the prior year, partially offset by a $250,000 dividend received from discontinued operations and $350,000 of payments received on the note receivable related to the sale of discontinued operations in the current year period;

there were no such amounts in the same period of the prior year.

In addition, there was $439,000 of proceeds received by the land investment segment in the prior year period, as compared to none in the current year period.

Cash flows used in financing activities from continuing operations totaled $60,000 for the nine months ended June 30, 2025, as compared to cash flows used in financing activities from continuing operations of $226,000 for the nine months ended June 30, 2024.

The $166,000 change in financing cash flows was due to a decrease of $226,000 in distributions to non-controlling interests, partially offset by $60,000 in repayments for insurance premium financing in the current year period as compared to none the same period in the prior year.

Going Concern

While the sale of our U.S.

These financial statements do not include any adjustments that might result from the outcome of these uncertainties.

Cash flows used in continuing operations totaled $1,767,000 for the three months ended December 31, 2025, as compared to cash flows used in continuing operations of $552,000 for the same period in the prior year.

This $1,215,000 decrease in operating cash flows was primarily due to lower operating results for the oil and natural gas segment in the current year period as compared to the same period in the prior year as a result of the sale of the U.S.

oil and gas operations and higher general and administrative expenses in the current year period.

The change was also due to the effect of changes in current assets and liabilities, which was a decrease in operating cash flows of $615,000 in the current year period as compared to a decrease of $881,000 in the prior year period.

Cash flows provided by financing activities from continuing operations totaled $2,426,000 and nil for the three months ended December 31, 2025, and 2024, respectively.

The $2,426,000 change in financing cash flows was due to the private placement of 2,221,141 common shares at $1.10 per share in the three months ended December 31, 2025.

Oil and Natural Gas Capital Expenditures

Barnwell’s oil and natural gas capital expenditures, including accrued capital expenditures and excluding acquisitions and additions and revisions to estimated asset retirement obligations, totaled $385,000 and $767,000 for the three and nine months ended June 30, 2025, respectively, as compared to $751,000 and $1,806,000 for the same periods in the prior year.

Barnwell estimates that investments in oil and natural gas properties for fiscal 2025 will range from $800,000 to $1,000,000.

This estimated amount may increase or decrease as dictated by cash flows and management's assessment of the oil and natural gas environment and prospects.

Barnwell’s oil and natural gas capital expenditures, including accrued capital expenditures and excluding acquisitions and additions and revisions to estimated asset retirement obligations, totaled $28,000 for the three months ended December 31, 2025, as compared to $2,529,000 for the same period in the prior year.

Oil and Natural Gas Property Dispositions

There were no significant oil and natural gas property dispositions during the nine months ended June 30, 2025.

The $282,000 of proceeds from sale of oil and natural gas properties included in the Condensed Consolidated Statement of Cash Flows for the nine months ended June 30, 2025 represents proceeds that were credited to our cash in October 2024 from a sale of properties that closed in late September 2024.

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 natural gas and oil properties located in the Kaybob area of Alberta, Canada.

The sales price per the agreement was adjusted for customary purchase price adjustments to $441,000 in order to, among other things, reflect an economic effective date of May 1, 2024.

There were no significant oil and natural gas property dispositions during the three months ended December 31, 2025.

On August 8, 2025, Barnwell entered into an agreement with an independent third party to sell all of its working interest in U.S.

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oil and natural gas assets were located in the states of Texas and Oklahoma and were owned by wholly-owned subsidiaries of Barnwell.

Barnwell will no longer own any oil and natural gas assets in the U.S.

Barnwell no longer owns any oil and natural gas assets in the U.S.

as a result of this sale.

On August 28, 2025, 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 Medicine River area of Alberta, Canada.

The sales price per the agreement was adjusted for customary purchase price adjustments to $288,000 in order to, among other things, reflect an economic closing date of September 30, 2025.

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.

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

What changed 10-Q

Item 2. Management’s Discussion and Analysis