What changed in this filing

/stocks — the workspaceLOADING

Item 2. Management’s Discussion and Analysis

2026-05-21 compared with 2026-02-23 · 141 added, 75 removed, 165 unchanged (57% of the section changed)

14 unchanged sentences

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 months ended December 31, 2025.

There have been no significant changes to these critical accounting policies and estimates during the three and six months ended March 31, 2026.

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

28 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 December 31, 2025 for the Kukio Resort Land Development Partnerships as a whole was approximately $4,000,000;

The Increment I deferred profit at March 31, 2026 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.

10 unchanged sentences

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.

The purchaser paid an initial $70,000 which was recognized as revenue during the six months ended March 31, 2026.

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

The transaction remains 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.

Because the agreement is subject to substantive contingencies and closing conditions that have 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.

6 unchanged sentences

Summary of Results From Continuing Operations

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;

The net loss from continuing operations attributable to Barnwell for the three months ended March 31, 2026 totaled $1,150,000, a $388,000 decrease from a net loss from continuing operations attributable to Barnwell of $1,538,000 for the three months ended March 31, 2025.

The following factors affected the results of operations for the three months ended March 31, 2026 as compared to the prior year period:

• General and administrative expenses decreased $641,000 due to $755,000 less professional service fees due to the fees for legal services, proxy solicitation, proxy advisory and public relations costs related to a shareholder consent solicitation and proxy contest in the prior year period compared to the same period in the current year, $96,000 lower personnel costs from the closing of the Hawaii office on January 31, 2026, and a $26,000 insurance recovery.

These decreases were partially offset by increases in share based compensation expense and other costs in the current year period as compared to the same period in the prior year;

• A $338,000 increase in equity in income from affiliates and a $34,000 increase in net income attributable to non-controlling interest.

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.

• A $665,000 decrease in oil and natural gas segment operating results primarily attributable to a $1,060,000 decrease in oil and natural gas revenues, partially offset by a $200,000 decrease in oil and natural gas depletion, a $143,000 decrease in the oil and natural gas operating expenses, and decreases of $52,000 in the ceiling test impairment.

The decrease in oil and natural gas revenues, expenses and depletion was due in part 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.

For the three months ended March 31, 2025, the U.S.

oil and natural gas assets contributed oil and natural gas revenues of $376,000, oil and natural gas operating expenses of $139,000, depletion of $86,000 and impairments of $52,000.

For the three months ended March 31, 2025, the interest of certain oil and natural gas properties in Canada that were sold contributed oil and natural gas revenues of $84,000, oil and natural gas operating expenses of $46,000, and depletion of $25,000.

Also contributing to the decrease in oil and natural gas segment operating results was the impact of natural declines in production from wells in the Company's Twining area.

The decline was 18% overall in the three months ended March 31, 2026 as compared to the same period in the prior year.

This includes the impact of the Company's newest horizontal well being in flush production mode in the three months ended March 31, 2025.

Excluding the effect of this well, the decline rate was 12% in the three months ended March 31, 2026 as compared to the same period in the prior year.

Lower realized oil prices also contributed to the decrease in oil and natural gas segment operating results.

• A $68,000 decrease in foreign currency impacts due to a $58,000 foreign currency loss recorded in the current period as compared to a $10,000 gain 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 six months ended March 31, 2026 totaled $2,576,000, a $560,000 decrease from a net loss from continuing operations attributable to Barnwell of $3,136,000 for the six months ended March 31, 2025.

The following factors affected the results of operations for the six months ended March 31, 2026 as compared to the prior year period:

• General and administrative expenses decreased $188,000 due to $642,000 less professional service fees due to the fees for legal services, proxy solicitation, proxy advisory and public relations costs related to a shareholder consent solicitation and proxy contest in the prior year period compared to the same period in the current year, and a $78,000 insurance recovery.

This was partially offset by higher salaries and wages due to bonuses and retirement payments related to the Hawaii office closure on January 31, 2026 and higher share based compensation expense in the current year period as compared to the same period in the prior year;

• Equity in income from affiliates increased $338,000, net income attributable to non-controlling interests increased $50,000, and land investment segment operating results, before non-controlling interests’ share of such profits, increased $70,000 due to the Kukio Resort Land Development Partnerships' sale of two lots in the current year period, whereas there were no lots sold in the prior year period;

• A $581,000 decrease in oil and natural gas segment operating results primarily attributable to a $2,327,000 decrease in oil and natural gas revenues, partially offset by a $513,000 decrease in oil and natural gas depletion, a $568,000 decrease in the oil and natural gas operating expenses, and decreases of $665,000 in the ceiling test impairment.

The decrease in oil and natural gas revenues, expenses and depletion was due in part 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.

For the six months ended March 31, 2025, the U.S.

oil and natural gas assets contributed oil and natural gas revenues of $731,000, oil and natural gas operating expenses of $260,000, depletion of $225,000 and impairments of $665,000.

For the six months ended March 31, 2025, the interest of certain oil and natural gas properties in Canada that were sold contributed oil and natural gas revenues of $165,000, oil and natural gas operating expenses of $135,000, and depletion of $49,000.

Lower realized oil price and natural decline in the retained Canadian properties also contributed to the decrease in oil and natural gas segment operating results.

Barnwell conducts operations in the U.S.

4 unchanged sentences

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

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

dollar was flat and increased 2% in the three and six months ended March 31, 2026, respectively, as compared to the same periods in the prior year.

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

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

dollar was flat at March 31, 2026, 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 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.

Other comprehensive income due to foreign currency translation adjustments, net of taxes, for the three months ended March 31, 2026 was income of $39,000, a $42,000 increase from a loss of $3,000 for the same period in the prior year.

Other comprehensive income due to foreign currency translation adjustments, net of taxes, for the six months ended March 31, 2026 was income of $12,000, a $78,000 decrease from income of $90,000 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 six months ended March 31, 2026 and 2025 due to a full valuation allowance on the related deferred tax asset.

Oil and Natural Gas

3 unchanged sentences

Three months ended Increase

December 31, (Decrease)

March 31, (Decrease)

2026 2025 $ %

2 unchanged sentences

Natural gas liquids (Bbls)** $ 28.88 $ 32.43 $ (3.55) (11 %)

Average Price Per Unit

Six months ended Increase

March 31, (Decrease)

2026 2025 $ %

Natural Gas (Mcf)* $ 1.94 $ 1.43 $ 0.51 36 %

Oil (Bbls)** $ 54.00 $ 63.39 $ (9.39) (15 %)

Natural gas liquids (Bbls)** $ 27.08 $ 29.61 $ (2.53) (9 %)

Net Production

Three months ended Increase

December 31, (Decrease)

March 31, (Decrease)

2026 2025 Units %

2 unchanged sentences

Natural gas liquids (Bbls)** 8,000 14,000 (6,000) (43 %)

Net Production

Six months ended Increase

March 31, (Decrease)

2026 2025 Units %

Natural Gas (Mcf)* 461,000 551,000 (90,000) (16 %)

Oil (Bbls)** 67,000 91,000 (24,000) (26 %)

Natural gas liquids (Bbls)** 18,000 29,000 (11,000) (38 %)

_______________________________________

2 unchanged sentences

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

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 oil and natural gas segment generated a $87,000 operating profit before general and administrative expenses in the three months ended March 31, 2026, a decrease in operating results of $665,000 as compared to the $752,000 operating profit before general and administrative expenses generated during the same period of the prior year.

This decrease is primarily attributable to a $1,060,000 decrease in oil and natural gas revenues, partially offset by a $200,000 decrease in oil and natural gas depletion, a $143,000 decrease in the oil and natural gas operating expenses, and decreases of $52,000 in the ceiling test impairment.

The decrease in oil and natural gas revenues, expenses and depletion was due in part 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.

For the three months ended March 31, 2025, the U.S.

oil and natural gas assets contributed oil and natural gas revenues of $376,000, oil and natural gas operating expenses of $139,000, depletion of $86,000 and impairments of $52,000.

Also contributing to the decrease in oil and natural gas segment operating results was the impact of natural declines in production from wells in the Company's Twining area.

The decline was 18% overall in the three months ended March 31, 2026 as compared to the same period in the prior year.

This includes the impact of the Company's newest horizontal well being in flush production mode in the three months ended March 31, 2025.

Excluding the effect of this well, the decline rate was 12% in the three months ended March 31, 2026 as compared to the same period in the prior year.

Lower realized oil prices also contributed to the decrease in oil and natural gas segment operating results.

The oil and natural gas segment generated a $55,000 operating profit before general and administrative expenses in the six months ended March 31, 2026, a decrease in operating results of $581,000 as compared to the $636,000 operating profit before general and administrative expenses generated during the same period of the prior year.

This decrease is primarily attributable to a $2,327,000 decrease in oil and natural gas revenues, partially offset by a $513,000 decrease in oil and natural gas depletion, a $568,000 decrease in the oil and natural gas operating expenses, and decreases of $665,000 in the ceiling test impairment.

The decrease in oil and natural gas revenues, expenses and depletion was due in part 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.

For the six months ended March 31, 2025, the U.S.

oil and natural gas assets contributed oil and natural gas revenues of $731,000, oil and natural gas operating expenses of $260,000, depletion of $225,000 and impairments of $665,000.

Lower realized oil price and natural decline in the retained Canadian properties also contributed to the decrease in oil and natural gas segment operating results.

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

March 31, Six months ended

2026 2025 2026 2025

Operating profit (loss)

2 unchanged sentences

United States (1)

— 99,000 — (419,000)

Total operating profit $ 87,000 $ 752,000 $ 55,000 $ 636,000

________________________

(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.

(1) The operating loss for the United States for the three and six months ended March 31, 2025 includes non-cash ceiling test impairments of $52,000 and $665,000, respectively.

Oil and natural gas revenues decreased $1,060,000 (30%) and $2,327,000 ( 31% ) for the three and six months ended March 31, 2026, 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 in part the result of the sale of the U.S.

oil and natural gas assets.

These assets contributed revenues of $376,000 and $731,000 for the three and six months ended March 31, 2025, respectively.

Also contributing to the decrease was the sale of Barnwell's interest in certain oil and natural gas properties in Canada, which contributed sales of $84,000 and $165,000 for the three and six months ended March 31, 2025, respectively.

Revenues also decreased due to natural declines in the Company's Twining assets and a decrease in oil and natural gas liquids prices.

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.

This per day volume of natural gas under this fixed index price contract was equivalent to approximately 45% and 42% of Canadian natural gas gross production per day for the three and six months ended March 31, 2026.

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.

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 68% and 62% of Canadian natural gas gross production per day for the three and six months ended March 31, 2026.

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 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.

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 45% and 42% of Canadian natural gas gross production per day for the three and six months ended March 31, 2026.

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.

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 28% and 27% of Canadian oil gross production per day for the three and six months ended March 31, 2026.

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.

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 28% and 27% of Canadian oil gross production per

day for the three and six months ended March 31, 2026.

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 $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.

In March 2026, the Company amended the sales price on 50 gross barrels per day of the Canadian oil to be sold during the period from April 1, 2026 to June 30, 2026 to a fixed index price before differentials of $89.10 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 April 1, 2026 to June 30, 2026, is equivalent to approximately 14% and 14% of Canadian oil gross production per day for the three and six months ended March 31, 2026.

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 $143,000 (7%) and 568,000 (13%) for the three and six months ended March 31, 2026, as compared to the same periods 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.

Oil and natural gas segment depletion decreased $200,000 (27%) and $513,000 (31%) for the three and six months ended March 31, 2026, as compared to the same periods in the prior year.

The decrease was primarily due to decreases in production in the current year period as compared to the same periods 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 9% of the total oil and natural gas segment operating revenues for the three months ended December 31, 2024.

oil and natural gas properties represented 11% and 10% of the total oil and natural gas segment operating revenues for the three and six months ended March 31, 2025.

Contracts to Sell Interests in Increment II

1 unchanged sentence

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.

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 six months ended March 31, 2026.

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

The transaction remains subject to the purchaser's election to proceed and other closing conditions.

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

3 unchanged sentences

General and Administrative Expenses

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.

General and administrative expenses decreased $641,000 (30%) for the three months ended March 31, 2026 as compared to the same periods in the prior year due to $755,000 less professional service fees due to the fees for legal services, proxy solicitation, proxy advisory and public relations costs related to a shareholder consent solicitation and proxy contest in the prior year period compared to the same period in the current year, $96,000 lower personnel costs from the closing of the Hawaii office on January 31, 2026, and a $26,000 insurance recovery.

These decreases were partially offset by increases in share based compensation expense and other costs in the current year period as compared to the same period in the prior year.

General and administrative expenses decreased $188,000 (6% ) for the six months ended March 31, 2026 as compared to the same periods in the prior year due to $642,000 less professional service fees due to the fees for legal services, proxy solicitation, proxy advisory and public relations costs related to a shareholder consent solicitation and proxy contest in the prior year period compared to the same period in the current year, and a $78,000 insurance recovery.

Depletion, Depreciation, and Amortization

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.

Depletion, depreciation, and amortization decreased $193,000 (26%) and $505,000 (30% ) for the three and six months ended March 31, 2026, as compared to the same periods in the prior year, primarily due to decreases in production, as discussed in the “Oil and natural gas” section above.

Impairment of Assets

1 unchanged sentence

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 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.

During the three and six months ended March 31, 2026, the Company had no impairments to oil and natural gas properties.

During the three and six months ended March 31, 2025, the Company incurred a non-cash ceiling test impairment on our U.S.

oil and natural gas properties of $52,000 and $665,000.

Foreign Currency (Gain) Loss

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.

During the three and six months ended March 31, 2026, the Company recorded $58,000 and $11,000 in foreign currency losses, 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.

dollar against the Canadian dollar (three and six months ended March 31, 2025 - $10,000 foreign currency gain and $341,000 foreign currency loss, respectively).

The foreign currency losses or gains from intercompany balances are included in our Condensed Consolidated Statements of Operations as the intercompany balances were not considered long-term in nature because management estimates that these intercompany balances will be settled in the future.

Equity in Income of Affiliates

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.

Equity in income of affiliates was $338,000 for the three and six months ended March 31, 2026.

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

$323,000 of cash distributions were received during the three and six months ended March 31, 2026.

Comparatively, there were no cash distributions received during the three and six months ended March 31, 2025 .

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 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.

The Company determined that it would 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 would be recorded as equity in income of affiliates.

During the three months ended March 31, 2026, the Company's share of earnings from the Kukio Resort Land Development Partnerships exceeded distributions received and previously recognized excess distributions.

Accordingly, the Company resumed equity-method earnings recognition during the period.

For the three and six months ended March 31, 2026, the Company recognized equity in income of affiliates only to the extent its share of net earnings exceeded cumulative excess distributions recognized during the suspended period.

As a result, $338,000 was recognized as equity in income from affiliates during the three and six months ended March 31, 2026 (three and six months ended March 31, 2025 - nil and nil), which resulted in an investment balance of $14,000 as at March 31, 2026.

Barnwell’s effective consolidated income tax rate from continuing operations, after adjusting loss from continuing operations before income taxes for non-controlling interests, was 1% and 3% for the three and six months ended March 31, 2026 as compared to 12% and 6% for the three and six months ended March 31, 2025.

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

based on consolidated operations, and essentially all deferred tax assets, net of relevant offsetting deferred tax liabilities, are not estimated to have a future benefit as tax credits or deductions.

based on consolidated operations, and essentially all deferred tax assets, net of relevant offsetting deferred

tax liabilities, are not estimated to have a future benefit as tax credits or deductions.

The Company operates two subsidiaries in Canada, one of which is a U.S.

3 unchanged sentences

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

Net earnings attributable to non-controlling interests 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 earnings attributable to non-controlling interests totaled $34,000 and $48,000 for the three and six months ended March 31, 2026 as compared to net loss attributable to non-controlling interests of nil and $2,000 for the same periods in the prior year.

The changes of $34,000 and $50,000 for the three and six months were 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 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.

Net earnings from discontinued operations was nil during the three and six months ended March 31, 2026 as compared to net loss from discontinued operations of $331,000 and $12,000 during the three and six months ended March 31, 2025.

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

5 unchanged sentences

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 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 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.

At March 31, 2026, Barnwell had a working capital surplus of $2,152,000.

Barnwell’s primary sources of liquidity are cash on hand of $4,016,000 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.

Cash Flows From Continuing Operations

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.

Cash flows used in continuing operations totaled $2,422,000 for the six months ended March 31, 2026, as compared to cash flows used in continuing operations of $854,000 for the same period in the prior year.

This $1,568,000 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 gas operations and the August 28, 2025 sale of Barnwell's interests in certain oil and natural gas properties in Canada, and lower realized oil prices.

The change was also due to increased spending on asset retirement obligations as part of the Company's abandonment and reclamation initiatives, equity income from affiliates, and retirement plan payments relating to the SERP for retirements in the periods presented.

Cash flows provided by investing activities from continuing operations totaled $223,000 during the six months ended March 31, 2026, as compared to cash flows used in investing activities from continuing operations of $2,272,000 during the same period of the prior year.

This $2,495,000 increase in investing cash flows was due to $2,391,000 lower investments in oil and natural gas properties in the current period compared to the prior period, $150,000 of payments received on the note receivable related to the sale of discontinued operations and $323,000 distribution from equity investees received in the current period, and $163,000 in cash divested from the sale of discontinued operations, net of proceeds in the prior year period.

These increases were partially offset by a $250,000 dividend received from discontinued operations and $282,000 from the sale of oil and natural gas assets in the prior year period.

Cash flows provided by financing activities from continuing operations totaled $3,330,000 for the six months ended March 31, 2026, as compared to cash flows used in financing activities from continuing operations of $15,000 for the same period in the prior year.

The $3,345,000 increase in financing cash flows was due to the November 24, 2025 private placement of 2,221,141 common shares at $1.10 per share and the At-the-Market Equity Offering Program ("ATM Program") sale of 926,403 common shares at an average price of $1.22 per share, which ATM Program began with the sales agreement dated February 25, 2026.

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 $28,000 for the three months ended December 31, 2025, as compared to $2,529,000 for the same period in the prior year.

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 $113,000 and $223,000 for the three and six months ended March 31, 2026, as compared to $68,000 and $382,000 for the same periods in the prior year.

Oil and Natural Gas Property Dispositions

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

There were no significant oil and natural gas property dispositions during the three and six months ended March 31, 2026.

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

6 unchanged sentences

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.

The final determination of the customary adjustments to the purchase price was completed in the three months ended March 31, 2026 and resulted in a reduction in sales price of $16,000.

The proceeds and adjustment 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.

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

As a smaller reporting company, we are not required to provide the information required by this Item 3.

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