Barnwell Industries Inc. (BRN) 2016年年度報告「AMEX」.pdf

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1、 Barnwell Industries,Inc.2016 Annual Report FINANCIAL AND OPERATING HIGHLIGHTS Years ended September 30,2016 2015 2014 2013 2012 FINANCIAL:Revenues$13,287,000$17,533,000$31,445,000$24,608,000$34,062,000 Net(loss)earnings$(3,615,000)$1,263,000$672,000$(8,563,000)$(10,136,000)Net(loss)earnings per sha

2、re diluted$(0.44)$0.15$0.08$(1.03)$(1.22)OPERATING:Production-Oil and natural gas liquids barrels 84,000 143,000 184,000 229,000 259,000 Natural gas MCF*476,000 1,688,000 1,927,000 2,018,000 2,753,000 Average price-Oil and natural gas liquids,per barrel$31.81$33.59$67.52$67.35$70.71 Natural gas,per

3、MCF*$1.27$2.23$3.84$2.68$2.03 At September 30,2016 2015 2014 2013 2012 FINANCIAL:Total assets$31,568,000$41,553,000$54,770,000$62,714,000$69,890,000 Long-term debt,excluding current portion -,-,$6,650,000$11,400,000$11,400,000 RESERVES:Proved reserves:Oil and liquids barrels 450,000 469,000 724,000

4、923,000 1,078,000 Natural gas MCF*1,441,000 3,124,000 9,465,000 10,245,000 11,109,000 Total natural gas and natural gas equivalent of oil and liquids*MCF 4,051,000 5,844,000 13,664,000 15,598,000 17,361,000 *MCF means 1,000 cubic feet*Oil and liquids are converted to natural gas equivalents on the b

5、asis of one barrel equals 5.8 MCF.Reserves are calculated by an independent engineering firm based on SEC constant pricing.UNITED STATES SECURITIES AND EXCHANGE COMMISSIONWASHINGTON,D.C.20549FORM 10-K(Mark One)X ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)OF THE SECURITIES EXCHANGE ACT OF 1934For t

6、he fiscal year ended September 30,2016 or TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)OF THE SECURITIES EXCHANGE ACT OF 1934Commission File Number 1-5103 BARNWELL INDUSTRIES,INC.(Exact name of registrant as specified in its charter)Delaware 72-0496921(State or other jurisdiction of incorporatio

7、n or organization)(I.R.S.Employer Identification No.)1100 Alakea Street,Suite 2900,Honolulu,Hawaii96813-2833(Address of principal executive offices)(Zip code)Registrants telephone number,including area code:(808)531-8400 Securities registered pursuant to Section 12(b)of the Act:Title of each class N

8、ame of each exchange on which registeredCommon Stock,par value$0.50 per share NYSE MKTSecurities registered pursuant to Section 12(g)of the Act:NoneIndicate by check mark if the registrant is a well-known seasoned issuer,as defined in Rule 405 of the Securities Act.Yes NoIndicate by check mark if th

9、e registrant is not required to file reports pursuant to Section 13 or Section 15(d)of the Act.Yes NoIndicate by check mark whether the registrant(1)has filed all reports required to be filed by Section 13 or 15(d)of the Securities Exchange Act of 1934 during the preceding 12 months(or for such shor

10、ter period that the registrant was required to file such reports),and(2)has been subject to such filing requirements for the past 90 days.Yes NoIndicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site,if any,every Interactive Data File required

11、to be submitted and posted pursuant to Rule 405 of Regulation S-T(232.405 of this chapter)during the preceding 12 months(or for such shorter period that the registrant was required to submit and post such files).Yes NoIndicate by check mark if disclosure of delinquent filers pursuant to Item 405 of

12、Regulation S-K(229.405 of this chapter)is not contained herein,and will not be contained,to the best of registrants knowledge,in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K.Indicate by check mark whether the re

13、gistrant is a large accelerated filer,an accelerated filer,a non-accelerated filer,or a smaller reporting company.See the definitions of“large accelerated filer,”“accelerated filer”and“smaller reporting company”in Rule 12b-2 of the Exchange Act.Large accelerated filer Accelerated filer Non-accelerat

14、ed filer (Do not check if a smaller reporting company)Smaller reporting company Indicate by check mark whether the registrant is a shell company(as defined in Rule 12b-2 of the Act).Yes NoThe aggregate market value of the voting common stock held by non-affiliates of the registrant,computed by refer

15、ence to the closing price of a share of common stock on March 31,2016(the last business day of the registrants most recently completed second fiscal quarter)was$7,026,000.As of December 1,2016 there were 8,277,160 shares of common stock outstanding.Documents Incorporated by Reference1.Proxy statemen

16、t to be forwarded to stockholders on or about January 19,2017 is incorporated by reference in Part III hereof.2TABLE OF CONTENTS Page Glossary of TermsPART I Discussion of Forward-Looking Statements4 Item 1.Business Item 1A.Risk Factors Item 1B.Unresolved Staff Comments Item 2.Properties Item 3.Lega

17、l Proceedings Item 4.Mine Safety Disclosures PART II Item 5.Market For Registrants Common Equity,Related Stockholder Matters and Issuer Purchases of Equity Securities Item 6.Selected Financial Data Item 7.Managements Discussion and Analysis of Financial Condition and Results of Operations Item 7A.Qu

18、antitative and Qualitative Disclosures About Market Risk Item 8.Financial Statements and Supplementary Data Item 9.Changes in and Disagreements with Accountants on Accounting and Financial Disclosure Item 9A.Controls and Procedures Item 9B.Other Information PART III Item 10.Directors,Executive Offic

19、ers and Corporate Governance Item 11.Executive Compensation Item 12.Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters Item 13.Certain Relationships and Related Transactions,and Director Independence Item 14.Principal Accounting Fees and Services PART IV I

20、tem 15.Exhibits,Financial Statement Schedules Signatures Index to Exhibits35183030313132323354551001001001011011011021021031051073GLOSSARY OF TERMS Defined below are certain terms used in this Form 10-K:Terms DefinitionsASC-Accounting Standards CodificationASU-Accounting Standards UpdateBarnwell-Bar

21、nwell Industries,Inc.and all majority-owned subsidiariesBarnwell of Canada-Barnwell of Canada,LimitedBbl(s)-stock tank barrel(s)of oil equivalent to 42 U.S.gallonsBoe-barrel of oil equivalent at the rate of 5.8 Mcf per Bbl of oil or NGLDunvegan-Natural gas and oil properties in the Dunvegan and Bell

22、oy areas of Alberta,CanadaFASB-Financial Accounting Standards BoardGAAP-U.S.generally accepted accounting principlesGross-Total number of acres or wells in which Barnwell owns an interest;includes interests ownedof record by Barnwell and,in addition,the portion(s)owned by others;for example,a 50%int

23、erest in a 320 acre lease represents 320 gross acres and a 50%interest in a well represents 1gross well.In the context of production volumes,gross represents amounts before deductionof the royalty share due others.InSite-InSite Petroleum Consultants Ltd.Kaupulehu 2007-Kaupulehu 2007,LLLPKD I-KD Acqu

24、isition,LLLP,formerly known as WB KD Acquisition,LLC(“WB”)KD II-KD Acquisition II,LLLP,formerly known as WB KD Acquisition II,LLC(“WBKD”)KD Kona-KD Kona 2013 LLLPKKM Makai-KKM Makai,LLLPKukio Resort landdevelopmentpartnerships-The following partnerships in which Barnwell owns a 19.6%non-controlling

25、interest:KD Kukio Resorts,LLLPKD Maniniowali,LLLPKD Kaupulehu,LLLP,which consists of KD I and KD IILIBOR-London Interbank Offer RateMBbls-thousands of barrels of oilMcf-1,000 cubic feet of natural gas at 14.65 pounds per square inch absolute and 60 degreesFahrenheitMcfe-Mcf equivalent at the rate of

26、 1 Bbl=5.8 McfMMcf-millions of cubic feet of natural gasNet-Barnwells aggregate interest in the total acres or wells;for example,a 50%interest in a 320acre lease represents 160 net acres and a 50%interest in a well represents 0.5 net well.In thecontext of production volumes,net represents amounts af

27、ter deduction of the royalty share dueothers.NGL(s)-natural gas liquid(s)SEC-United States Securities and Exchange CommissionVIE-Variable interest entityWater Resources-Water Resources International,Inc.4PART I CAUTIONARY STATEMENT RELEVANT TO FORWARD-LOOKING INFORMATIONFOR THE PURPOSE OF“SAFE HARBO

28、R”PROVISIONS OF THEPRIVATE SECURITIES LITIGATION REFORM ACT OF 1995 This Form 10-K,and the documents incorporated herein by reference,contain“forward-looking statements”within the meaning of the Private Securities Litigation Reform Act of 1995(PSLRA).A forward-looking statement is one which is based

29、 on current expectations of future events or conditions and does not relate to historical or current facts.These statements include various estimates,forecasts,projections of Barnwell Industries,Inc.s(referred to herein together with its majority-owned subsidiaries as“Barnwell,”“we,”“our,”“us”or the

30、“Company”)future performance,statements of Barnwells plans and objectives and other similar statements.All such statements we make are forward-looking statements made under the safe harbor of the PSLRA,except to the extent such statements relate to the operations of a partnership or limited liabilit

31、y company.Forward-looking statements include phrases such as“expects,”“anticipates,”“intends,”“plans,”“believes,”“predicts,”“estimates,”“assumes,”“projects,”“may,”“will,”“will be,”“should,”or similar expressions.Although Barnwell believes that its current expectations are based on reasonable assumpt

32、ions,it cannot assure that the expectations contained in such forward-looking statements will be achieved.Forward-looking statements involve risks,uncertainties and assumptions which could cause actual results to differ materially from those contained in such statements.Investors should not place un

33、due reliance on these forward-looking statements,as they speak only as of the date of filing of this Form 10-K,and Barnwell expressly disclaims any obligation or undertaking to publicly release any updates or revisions to any forward-looking statements contained herein.Among the important factors th

34、at could cause actual results to differ materially from those in the forward-looking statements are domestic and international general economic conditions,such as recessionary trends and inflation;domestic and international political,legislative,economic,regulatory and legal actions,including change

35、s in the policies of the Organization of Petroleum Exporting Countries or other developments involving or affecting oil and natural gas producing countries;military conflict,embargoes,internal instability or actions or reactions of the governments of the United States and/or Canada in anticipation o

36、f or in response to such developments;interest costs,restrictions on production,restrictions on imports and exports in both the United States and Canada,the maintenance of specified reserves,tax increases and retroactive tax claims,royalty increases,expropriation of property,cancellation of contract

37、 rights,environmental protection controls,environmental compliance requirements and laws pertaining to workers health and safety;the condition of Hawaiis real estate market,including the level of real estate activity and prices,the demand for new housing and second homes on the island of Hawaii,the

38、rate of increase in the cost of building materials and labor,the introduction of building code modifications,changes to zoning laws,the condition of Hawaiis tourism industry and the level of confidence in Hawaiis economy;levels of land development activity in Hawaii;levels of demand for water well d

39、rilling and pump installation in Hawaii;the potential liability resulting from pending or future litigation;the Companys acquisition or disposition of assets;the effects of changed accounting rules under GAAP promulgated by rule-setting bodies;and the factors set forth under the heading“Risk Factors

40、”in this Form 10-K,in other portions of this Form 10-K,in the Notes to Consolidated Financial Statements,and in other documents filed by Barnwell with the SEC.In addition,unpredictable or unknown factors not discussed in this report could also cause actual results to materially and adversely differ

41、from those discussed in the forward-looking statements.Unless otherwise indicated,all references to“dollars”in this Form 10-K are to United States dollars.5ITEM 1.BUSINESS OverviewBarnwell was incorporated in Delaware in 1956 and fiscal 2016 represented Barnwells 60th year of operations.Barnwell ope

42、rates in the following four principal business segments:Oil and Natural Gas Segment -Barnwell engages in oil and natural gas development,production,acquisitions and sales in Canada.Land Investment Segment -Barnwell invests in land interests in Hawaii.Contract Drilling Segment -Barnwell provides well

43、 drilling services and water pumping system installation and repairs in Hawaii.Residential Real Estate Segment -Barnwell develops homes for sale in Hawaii.Oil and Natural Gas SegmentOverviewThrough our wholly-owned subsidiary,Barnwell of Canada,we are involved in the acquisition and development of o

44、il and natural gas properties.Barnwell of Canada initiates and participates in acquisition and developmental operations for oil and natural gas on properties in which it has an interest and evaluates proposals by third parties with regard to participation in exploratory and developmental operations

45、elsewhere.OperationsBarnwells investments in oil and natural gas properties are located in Canada,principally in the province of Alberta,with minor,non-producing holdings in the provinces of Saskatchewan and British Columbia.These property interests are principally held under governmental leases or

46、licenses.Under the typical Canadian provincial governmental lease,Barnwell must perform exploratory operations,establish production and comply with certain other conditions.Lease terms vary with each province,but,in general,the terms grant Barnwell the right to remove oil,natural gas and related sub

47、stances subject to payment of royalties on production that vary based on production rates and commodity prices.All acquisition and developmental activities,as well as all field operations and regulatory compliance,are the direct responsibility of Barnwell of Canadas President and Chief Operating Off

48、icer,with strategic direction and approvals for major expenditures secured from Barnwells senior executive management.In fiscal 2016,Barnwell participated in acquisition and developmental operations in Alberta,although Barnwell does not limit its consideration of acquisition and developmental operat

49、ions to this area.Natural gas prices are typically higher in the winter than at other times due to increased heating demand.Oil prices are also subject to seasonal fluctuations,but to a lesser degree.Oil and natural gas unit sales are based on the quantity produced from the properties by the propert

50、ies operator.Our oil and natural gas segment revenues,profitability,and future rate of growth are dependent on oil and natural gas prices.The industry has experienced a prolonged period of low oil and natural gas prices that has negatively impacted our operating results,cash flows and liquidity.Cred

51、it and capital markets for 6oil and natural gas companies have been negatively affected as well,resulting in a decline in sources of financing as compared to previous years.In September 2015,Barnwell sold its interests in its principal oil and natural gas properties located in the Dunvegan and Bello

52、y areas of Alberta,Canada.Barnwells net proceeds from the sale,after brokers fees and other closing costs,were$14,162,000.The disposition was recorded in fiscal 2015 using preliminary purchase price adjustments.Barnwell and the purchaser updated and finalized the purchase price adjustments in accord

53、ance with the terms of the purchase and sale agreement during fiscal 2016 which resulted in additional proceeds of$493,000 and the recognition of an additional gain in the amount of$472,000 during the year ended September 30,2016,bringing the total gain on the sale of these properties to$6,689,000.T

54、he sale of Dunvegan resulted in a 60%decrease in our proved natural gas reserves and a 34%decrease in our proved oil and natural gas liquids reserves.In fiscal 2015,Dunvegan accounted for 74%of our net natural gas production and 44%of our net oil and natural gas liquids production,and contributed 46

55、%of our total oil and natural gas revenues.As a result of the disposition,Barnwells revolving credit facility at Royal Bank of Canada was amended in September 2015 to decrease the amount of the borrowing capacity from$6,500,000 Canadian dollars to$1,000,000 Canadian dollars.Barnwell repaid the$4,800

56、,000 then outstanding on the credit facility in full from a portion of the proceeds of the Dunvegan disposition.In April 2016,the revolving credit facility was terminated.In June 2016,Barnwell entered into a new agreement with Royal Bank of Canada for a revolving demand facility in the amount of$500

57、,000 Canadian dollars,or U.S.$381,000 at the September 30,2016 exchange rate,which is secured by a$500,000 Canadian dollar,or U.S.$381,000,guaranteed investment certificate pledged to the Royal Bank of Canada.We intend to continue to evaluate opportunities to acquire additional acreage and producing

58、 assets and to access new drilling and recompletion opportunities in order to deploy some or all of the cash proceeds from the sale of Dunvegan and other cash on hand.However,to date,we have not made any such significant investments in new oil and natural gas properties since the sale of Dunvegan.Wi

59、thout a significant reinvestment in our oil and natural gas business,it is likely that our future cash flow from operations from this segment will continue to decline and may become negative.If we do not redeploy this cash in new investments in our oil and natural gas business,or in our other busine

60、sses,or in new businesses,the funds from the sale of Dunvegan,including potentially the entire remaining balance,and other cash on hand are likely to be used to fund existing ongoing operations,general and administrative expenses,asset retirement obligations and retirement plan funding.Preparation o

61、f Reserve EstimatesBarnwells reserves are estimated by our independent petroleum reserve engineers,InSite,in accordance with generally accepted petroleum engineering and evaluation principles and techniques and rules and regulations of the SEC.All information with respect to the Companys reserves in

62、 this Form 10-K is derived from the report of InSite.A copy of the report issued by InSite is filed with this Form 10-K as Exhibit 99.1.InSite,and its predecessor company Paddock Lindstrom Associates Ltd.,has been the Companys independent petroleum reserve engineering firm for over 20 years.The prep

63、aration of data used by the independent petroleum reserve engineers to compile our oil and natural gas reserve estimates is completed in accordance with various internal control procedures which include verification of data input into reserves evaluation software,reconciliations and reviews of data

64、7provided to the independent petroleum reserve engineers to ensure completeness,and management review controls,including an independent internal review of the final reserve report for completeness and accuracy.Barnwell has a Reserves Committee consisting of four independent directors,the Companys Pr

65、esident and Chief Operating Officer,and the Companys Executive Vice President and Chief Financial Officer.The Reserves Committee was established to ensure the independence of the Companys petroleum reserve engineers.The Reserves Committee is responsible for reviewing the annual reserve evaluation re

66、port prepared by the independent petroleum reserve engineering firm and ensuring that the reserves are reported fairly in a manner consistent with applicable standards.The Reserves Committee meets annually to discuss reserve issues and policies and to meet with Company personnel and the independent

67、petroleum reserve engineers.Barnwell of Canadas President and Chief Operating Officer has primary responsibility for overseeing the preparation of the Companys reserve estimates by our independent petroleum reserve engineers.He is a professional engineer with over 30 years of relevant experience in

68、all facets of the oil and natural gas industry in Canada and is a member of the Association of Professional Engineers and Geoscientists of Alberta.ReservesThe amounts set forth in the following table,based on InSites evaluation of our reserves,summarize our estimated proved reserves of oil(including

69、 natural gas liquids)and natural gas as of September 30,2016 on all properties in which Barnwell has an interest.All of Barnwells proved reserves are developed;Barnwell has no proved undeveloped reserves as of September 30,2016.All of our oil and natural gas reserves are located in Canada and are ba

70、sed on constant dollars.No estimates of total proved net oil or natural gas reserves have been filed with,or included in reports to,any federal authority or agency,other than the SEC,since October 1,2015.September 30,2016Oil,including natural gas liquids(Bbls)450,000Natural gas(Mcf)1,441,000Total(Bo

71、e)698,000 During fiscal 2016,Barnwells total net proved developed reserves of oil and natural gas liquids decreased by 19,000 Bbls(4%)and total net proved developed reserves of natural gas decreased by 1,683,000 Mcf(54%),for a combined decrease of 310,000 Boe(31%).The decreases were primarily the re

72、sult of downward revisions in volumes resulting from lower rolling average historical first-day-of-the-month oil and natural gas prices used in the determination of reserve volumes at September 30,2016 as well as production during the year,partially offset by acquisitions of reserves and extensions,

73、discoveries and other additions.The following table sets forth Barnwells oil and natural gas net reserves at September 30,2016,by property name,based on information prepared by InSite,as well as net production and net revenues by property name for the year ended September 30,2016.This table is based

74、 on constant dollars where reserve estimates are based on sales prices,costs and statutory tax rates in existence at September 30,2016,the date of the projection.8As of September 30,2016For the year ended September 30,2016Net ProvedProducing ReservesTotal Net ProvedReservesNet ProductionNet Revenues

75、PropertyNameOil&NGL(MBbls)Gas(MMcf)Oil&NGL(MBbls)Gas(MMcf)Oil&NGL(Bbls)Gas(Mcf)Oil&NGLGasProgress4215611571712,00088,000$423,000$94,000Bonanza/Balsam6158615812,00026,000398,00037,000Wood River6420642011,00012,000351,00020,000Red Earth1262126227,000693,000Otherproperties535848464422,000350,000624,000

76、537,000Total3468204501,44184,000476,000$2,489,000$688,000Standardized Measure of Discounted Future Net Cash FlowsThe following table sets forth Barnwells“Estimated Future Net Revenues”from total proved oil,natural gas and natural gas liquids reserves and the present value of Barnwells“Estimated Futu

77、re Net Revenues”(discounted at 10%)as of September 30,2016.Estimated future net revenues for total proved reserves are net of estimated future expenditures of developing and producing the proved reserves,and assume the continuation of existing economic conditions.Net revenues have been calculated us

78、ing the average first-day-of-the-month price during the 12-month period ending as of the balance sheet date and current costs,after deducting all royalties,operating costs,future estimated capital expenditures(including abandonment costs),and income taxes.Year ending September 30,2017$805,0002018985

79、,0002019759,000Thereafter1,317,000Undiscounted future net cash flows,after income taxes$3,866,000 Standardized measure of discounted future net cash flows$2,910,000*_*This amount does not purport to represent,nor should it be interpreted as,the fair value of Barnwells natural gas and oil reserves.An

80、 estimate of fair value would also consider,among other items,the value of Barnwells undeveloped land position,the recovery of reserves not presently classified as proved,anticipated future changes in oil and natural gas prices(these amounts were based on a natural gas price of$1.35 per Mcf and an o

81、il price of$34.19 per Bbl)and costs,and a discount factor more representative of the time value of money and the risks inherent in reserve estimates.Oil and Natural Gas ProductionThe following table summarizes(a)Barnwells net production for the last three fiscal years,based on sales of natural gas,o

82、il and natural gas liquids,from all wells in which Barnwell has or had an interest,and(b)the average sales prices and average production costs for such production during the same periods.Production amounts reported are net of royalties.All of Barnwells net production in fiscal 2016,2015 and 2014 was

83、 derived in Canada,primarily in Alberta.For a discussion regarding our total annual production 9volumes,average sales prices,and related production costs,see Item 7,“Managements Discussion and Analysis of Financial Condition and Results of Operations.”Year ended September 30,201620152014Annual net p

84、roduction:Natural gas liquids(Bbls)6,00065,00069,000Oil(Bbls)78,00078,000115,000Natural gas(Mcf)476,0001,688,0001,927,000Total(Boe)166,000434,000516,000Total(Mcfe)965,0002,513,0002,996,000Annual average sales price per unit of production:Bbl of natural gas liquids*$23.82$18.16$46.04Bbl of oil*$32.42

85、$46.44$80.40Mcf of natural gas*$1.27$2.23$3.84Annual average production cost per Boe produced*$18.58$13.81$16.32Annual average production cost per Mcfe produced*$3.20$2.38$2.81_*Calculated on revenues before royalty expense divided by gross production.*Calculated on revenues net of pipeline charges

86、before royalty expense divided by gross production.*Calculated on production costs,excluding natural gas pipeline charges,divided by the combined total production of natural gas liquids,oil and natural gas.Capital ExpendituresBarnwell invested$1,773,000 in oil and natural gas properties during fisca

87、l 2016,including accrued capital expenditures and acquisitions of oil and natural gas properties and excluding additions and revisions to estimated asset retirement obligations,of which$769,000(43%)was for the acquisition of additional working interests in oil and natural gas properties and$1,004,00

88、0(57%)was for well improvements.10Well Drilling ActivitiesThe following table sets forth more detailed information with respect to the number of exploratory(“Exp.”)and development(“Dev.”)wells drilled for the fiscal years ended September 30,2016,2015 and 2014 in which Barnwell participated.There wer

89、e no wells drilled in the fiscal years ended September 30,2016 and 2015.All wells shown were drilled in Canada.ProductiveOil WellsProductiveGas WellsTotal ProductiveWellsDry HolesTotal Wells Exp.Dev.Exp.Dev.Exp.Dev.Exp.Dev.Exp.Dev.2016 GrossNet2015 GrossNet2014 Gross2.02.04.04.0Net1.20.41.61.6 At Se

90、ptember 30,2016,Barnwell was not in the process of drilling any oil or natural gas wells.Productive WellsAs of September 30,2016,Barnwell had interests in 156 gross(31.3 net)productive wells,of which 86 gross(17.0 net)were oil wells and 70 gross(14.3 net)were natural gas wells.Four natural gas wells

91、 and two oil wells have dual or multiple completions.All wells were in Canada.Developed Acreage and Undeveloped AcreageThe following table sets forth the gross and net acres of both developed and undeveloped oil and natural gas leases which we held as of September 30,2016.Developed Acreage*Undevelop

92、ed Acreage*TotalLocationGrossNetGrossNetGrossNetCanada187,99136,45096,86019,233284,85155,683_*“Developed Acreage”includes the acres covered by leases upon which there are one or more producing wells.“Undeveloped Acreage”includes acres covered by leases upon which there are no producing wells and whi

93、ch are maintained by the payment of delay rentals or the commencement of drilling thereon.Sixty-six percent of Barnwells undeveloped acreage is not subject to expiration at September 30,2016.Thirty-four percent of Barnwells leasehold interests in undeveloped acreage is subject to expiration and expi

94、re over the next five fiscal years,if not developed,as follows:22%expire during fiscal 2017;6%expire during fiscal 2018;0%expire during fiscal 2019;3%expire during fiscal 2020;and 3%expire in fiscal 2021.There can be no assurance that Barnwell will be successful in renewing its leasehold interests i

95、n the event of expiration.Much of the undeveloped acreage is at non-operated properties over which we do not have control,and the value of such acreage is not estimated to be significant at current commodity prices.Barnwells 11undeveloped acreage includes a significant concentration in the Thornbury

96、(5,919 net acres)area of Alberta,Canada.Marketing of Oil and Natural Gas Barnwell sells all of its oil and natural gas liquids production under short-term contracts between itself and marketers of oil.The price of oil and natural gas liquids is freely negotiated between buyers and sellers and is lar

97、gely determined by the world price for oil,which is principally denominated in U.S.dollars.Natural gas sold by Barnwell is generally sold under short-term contracts with prices indexed to market prices.The price of natural gas is freely negotiated between buyers and sellers and is principally determ

98、ined for Barnwell by western Canadian/Midwestern U.S.prices for natural gas.In fiscal 2016 and 2015,Barnwell took virtually all of its oil,natural gas liquids and natural gas“in kind”where Barnwell markets the products instead of having the operator of a producing property market the products on Bar

99、nwells behalf.We sell oil,natural gas and natural gas liquids to a variety of energy marketing companies.Because our products are commodities for which there are numerous marketers,we are not dependent upon one purchaser or a small group of purchasers.Accordingly,the loss of any single purchaser wou

100、ld not materially affect our revenue.In fiscal 2016,over 85%of Barnwells oil and natural gas revenues were from products sold at spot prices.Governmental RegulationThe jurisdictions in which the oil and natural gas properties of Barnwell are located have regulatory provisions relating to permits for

101、 the drilling of wells,the spacing of wells,the prevention of oil and natural gas waste,allowable rates of production and other matters.The amount of oil and natural gas produced is subject to control by regulatory agencies in each province that periodically assign allowable rates of production.The

102、province of Alberta and Government of Canada also monitor and regulate the volume of natural gas that may be removed from the province and the conditions of removal.There is no current government regulation of the price that may be charged on the sale of Canadian oil or natural gas production.Canadi

103、an natural gas production destined for export is priced by market forces subject to export contracts meeting certain criteria prescribed by Canadas National Energy Board and the Government of Canada.Different royalty rates are imposed by government agencies and private interests with respect to the

104、production and sale of oil,natural gas and natural gas liquids.In addition,provincial governments receive additional revenue through the imposition of taxes on oil and natural gas owned by private interests within the province.Essentially,provincial royalties are calculated as a percentage of revenu

105、e and vary depending on production volumes,selling prices and the date of discovery.All of Barnwells gross revenues were derived from properties located within Alberta.The province of Alberta charges oil and natural gas producers a royalty for production in Alberta.The province of Alberta determines

106、 its royalty share of natural gas and oil by using reference prices that average all natural gas sales and oil sales,respectively,in Alberta.Barnwell also pays gross overriding royalties and leasehold royalties on a portion of its natural gas and oil sales to parties other than the province of Alber

107、ta.12Under the current Alberta Royalty Framework(“ARF”),royalty rates operate on a sliding rate formula sensitive to the price and production volumes of conventional oil and natural gas.The maximum royalty rate for conventional oil is 40%and the maximum royalty rate for natural gas is 36%.The price-

108、sensitive maximum is reached for oil when oil is selling at or above$120.00 Canadian dollars per barrel and for natural gas when natural gas is selling at or above$17.50 Canadian dollars per Mcf.In January 2016,the Alberta Royalty Panel recommended a new modernized Alberta royalty framework(New Fram

109、ework)which will apply to wells drilled on or after January 1,2017.The current ARF will continue to apply to wells drilled prior to January 1,2017 for a period of ten years,starting January 1,2017,after which they will fall under the New Framework.Under the New Framework the same royalty calculation

110、 applies to both oil and natural gas wells,whereas the current ARF has different royalties applicable to each category,and royalties will be determined on a revenue minus cost basis where producers will pay a flat royalty rate of 5%of gross revenues until a well reaches payout after which an increas

111、ed post-payout royalty will apply.Post payout royalties vary with commodity prices and are adjusted down for cost increases as wells age.In fiscal 2016 and 2015,54%and 73%,respectively,of royalties related to Alberta government charges,and 46%and 27%,respectively,of royalties related to freehold,ove

112、rride and other charges which are not directly affected by the ARF.In fiscal 2016,the weighted-average royalty rate paid on all of Barnwells natural gas was 1%,and the weighted-average royalty rate paid on oil was 16%.Barnwells oil and natural gas segment is subject to the provisions of the Alberta

113、Energy Regulators(“AER”)Licensee Liability Rating(“LLR”)program.Under the LLR program the AER calculates a Liability Management Ratio(“LMR”)for a company based on the ratio of the companys deemed assets over its deemed liabilities relating to wells and facilities for which the company is the license

114、d operator.The LMR assessment is designed to assess a companys ability to address its suspension,abandonment,remediation,and reclamation liabilities.The value of the deemed assets is based on each wells most recent twelve months of production and a rolling three-year average industry netback as dete

115、rmined by the AER annually.The AER has not recalculated the three-year average industry netback since March 2015 making the current value a premium to what most producers have been realizing.A recalculation of the value using current industry netback values would likely have a significant negative i

116、mpact on our LMR.Companies with an LMR less than 1.0 are required to deposit funds with the AER to cover future deemed liabilities.At September 30,2016,the Company had sufficient deemed asset value that no security deposit was due.In June 2016,the AER implemented changes in the Liability Management

117、Program(LMP)which now requires purchasers of AER licensed oil and natural gas assets to have an LMR of 2.0 or higher immediately following the transfer of a license,up from the previous requirement of 1.0 or higher.This change in the LMR requirement for well transfers will result in significantly le

118、ss qualified buyers and may hinder our ability to generate capital by selling oil and natural gas assets.Additionally,it may inhibit our ability to grow through acquisitions without depositing collateral with the AER,as we do not currently have an LMR of 2.0 or higher.Additionally,in July 2014,the A

119、ER introduced an Inactive Well Compliance Program which resulted in the acceleration of expenditures to suspend and/or abandon long-term inactive wells.Under the program all inactive wells that were non-compliant as of April 1,2015 need to be brought into compliance by the operator within five years

120、,in increments of not less than 20 percent per year.At April 1,2015,Barnwell had 25 inactive wells identified as non-compliant by the AER.At September 30,2016,22 of these 25 wells had been brought into compliance through a combination of re-activation,abandonment,or suspension.13The estimated impact

121、 of the LLR program and Inactive Well Compliance Program has been incorporated into Barnwells estimate of its asset retirement obligation liability.CompetitionBarnwell competes in the sale of oil and natural gas on the basis of price and on the ability to deliver products.The oil and natural gas ind

122、ustry is intensely competitive in all phases,including the exploration for new production and reserves and the acquisition of equipment and labor necessary to conduct drilling activities.The competition comes from numerous major oil companies as well as numerous other independent operators.There is

123、also competition between the oil and natural gas industry and other industries in supplying the energy and fuel requirements of industrial,commercial and individual consumers.Barnwell is a minor participant in the industry and competes in its oil and natural gas activities with many other companies

124、having far greater financial,technical and other resources.Land Investment SegmentOverviewBarnwell owns a 77.6%interest in Kaupulehu Developments,a Hawaii general partnership that has the right to receive percentage of sales payments from KD I and KD II resulting from the sale of lots and/or residen

125、tial units by KD I and KD II within the approximately 870 acres of the Kaupulehu Lot 4A area in two increments(“Increment I”and“Increment II”),located approximately six miles north of the Kona International Airport in the North Kona District of the island of Hawaii.Kaupulehu Developments also holds

126、an interest in approximately 1,000 acres of vacant leasehold land zoned conservation located adjacent to Lot 4A under a lease that terminates in December 2025,which currently has no development potential without both a development agreement with the lessor and zoning reclassification.Barnwell,throug

127、h two limited liability limited partnerships,KD Kona 2013 LLLP and KKM Makai,LLLP,holds a 19.6%non-controlling ownership interest in the Kukio Resort land development partnerships which is comprised of KD Kukio Resorts,LLLP,KD Maniniowali,LLLP and KD Kaupulehu,LLLP.These land development partnership

128、s own certain real estate and development rights interests in the Kukio,Maniniowali and Kaupulehu portions of Kukio Resort,a private residential community on the Kona coast of the island of Hawaii,as well as Kukio Resorts real estate sales office operations.KD Kaupulehu,LLLP,which is comprised of KD

129、 I and KD II,is the developer of Kaupulehu Lot 4A Increments I and II,the area in which Barnwell has interests in percentage of sales payments.Barnwells investment in these entities is accounted for using the equity method of accounting.The partnerships derive income from the sale of residential par

130、cels,of which 25 lots remain to be sold within Kaupulehu Increment I and one ocean front parcel over two acres in size remains to be sold in Kaupulehu Increment II,as well as from commissions on real estate sales by the real estate sales office.Kaupulehu 2007,a Hawaii limited liability limited partn

131、ership 80%-owned by Barnwell,owns one residential parcel in Kaupulehu Lot 4A Increment I that is available for sale.OperationsIn the 1980s,Kaupulehu Developments obtained the state and county zoning changes necessary to permit development of the Four Seasons Resort Hualalai at Historic Kaupulehu and

132、 Hualalai Golf Club,14which opened in 1996,a second golf course,and single-family and multi-family residential units.These projects were developed by an unaffiliated entity on leasehold land acquired from Kaupulehu Developments.In the 1990s and 2000s,Kaupulehu Developments obtained the state and cou

133、nty zoning changes necessary to permit development of single-family and multi-family residential units,a golf course and a limited commercial area on approximately 870 leasehold acres,known as Lot 4A,zoned for resort/residential development,located adjacent to and north of the Four Seasons Resort Hu

134、alalai at Historic Kaupulehu.In 2004 and 2006,Kaupulehu Developments sold its leasehold interest in Kaupulehu Lot 4A to KD Is and KD IIs predecessors in interest,which was prior to Barnwells affiliation with KD I and KD II which commenced on November 27,2013,the acquisition date of our ownership int

135、erest in the Kukio Resort land development partnerships.Increment I is an area planned for approximately 80 single-family lots,of which 25 lots remain to be sold,and a beach club on the portion of the property bordering the Pacific Ocean.The purchasers of the 80 single-family lots will have the righ

136、t to apply for membership in the Kukio Golf and Beach Club,which is located adjacent to and south of the Four Seasons Resort Hualalai at Historic Kaupulehu.Increment II is the remaining portion of the approximately 870-acre property and is zoned for single-family and multi-family residential units a

137、nd a golf course and clubhouse.Two residential lots of significant value approximately two to three acres in size fronting the ocean were developed within Increment II by KD II,of which one lot was sold in fiscal 2016,and the remaining acreage within Increment II is not yet under development.It is u

138、ncertain when or if KD II will develop the other areas of Increment II,and there is no assurance with regards to the amounts of future sales from Increments I and II.Kaupulehu Developments is entitled to receive payments from KD I based on the following percentages of the gross receipts from KD Is s

139、ales of single-family residential lots in Increment I:9%of the gross proceeds from single-family lot sales up to aggregate gross proceeds of$100,000,000;10%of such aggregate gross proceeds greater than$100,000,000 up to$300,000,000;and 14%of such aggregate gross proceeds in excess of$300,000,000.In

140、fiscal 2016,three single-family lots in Increment I were sold bringing the total amount of gross proceeds from single-family lot sales through September 30,2016 to$205,000,000.Kaupulehu Developments is entitled to receive payments from KD II based on a percentage of the sales price of KD IIs sales o

141、f residential lots or units in Increment II ranging from 8%to 10%of the price of improved or unimproved lots or 2.60%to 3.25%of the price of units constructed on a lot,to be determined in the future depending upon a number of variables,including whether the lots are sold prior to improvement.Kaupule

142、hu Developments is also entitled to receive up to$8,000,000 in additional payments after the members of KD II have received distributions equal to the capital they invested in the project.One of the two ocean front lots developed by KD II was sold in fiscal 2016 for$20,000,000,of which we received a

143、 percentage of sales payment in the amount of$1,600,000 from KD II representing 8%of the gross sales price of the parcel.In April 2016,the Kukio Resort land development partnerships made a cash distribution to its partners of which Barnwell received$5,320,000,after distributing$40,000 to minority in

144、terests.15CompetitionBarnwells land investment segment is subject to intense competition in all phases of its operations including the acquisition of new properties,the securing of approvals necessary for land rezoning,and the search for potential buyers of property interests presently owned.The com

145、petition comes from numerous independent land development companies and other industries involved in land investment activities.The principal factors affecting competition are the location of the project and pricing.Barnwell is a minor participant in the land development industry and competes in its

146、 land investment activities with many other entities having far greater financial and other resources.Contract Drilling SegmentOverviewBarnwells wholly-owned subsidiary,Water Resources,drills water and water monitoring wells of varying depths in Hawaii,installs and repairs water pumping systems,and

147、is the distributor for Floway pumps and equipment in the state of Hawaii.OperationsWater Resources owns and operates four water well drilling rigs,two pump rigs and other ancillary drilling and pump equipment.Additionally,Water Resources leases a three-quarter of an acre maintenance facility in Hono

148、lulu,Hawaii,a one acre maintenance and storage facility with 2,800 square feet of interior space in Kawaihae,Hawaii,and a one-half acre equipment storage yard in Waimea,Hawaii,and maintains an inventory of drilling materials and pump supplies.Water Resources currently operates in Hawaii and is not s

149、ubject to seasonal fluctuations.The demand for Water Resources services is primarily dependent upon land development activities in Hawaii.Water Resources markets its services to land developers and government agencies,and identifies potential contracts through public notices,its officers involvement

150、 in the community and referrals.Contracts are usually fixed price per lineal foot drilled or day rate contracts and are negotiated with private entities or obtained through competitive bidding with private entities or local,state and federal agencies.Contract revenues are not dependent upon the disc

151、overy of water or other similar targets,and contracts are not subject to renegotiation of profits or termination at the election of the governmental entities involved.Contracts provide for arbitration in the event of disputes.In fiscal 2016,Water Resources started one well drilling and two pump inst

152、allation and repair contracts and completed three well drilling and one pump installation and repair contracts.All three of the well drilling and the one pump installation and repair contracts completed were started in the prior year.Fifty percent of well drilling and pump installation and repair jo

153、bs,representing 36%of total contract drilling revenues in fiscal 2016,have been pursuant to government contracts.At September 30,2016,there was a backlog of two well drilling and five pump installation and repair contracts,of which one well drilling and four pump installation and repair contracts we

154、re in progress as of September 30,2016.16The approximate dollar amount of Water Resources backlog of firm well drilling and pump installation and repair contracts at December 1,2016 and 2015 was as follows:December 1,20162015Well drilling$2,900,000$1,900,000Pump installation and repair900,000800,000

155、$3,800,000$2,700,000 Of the contracts in backlog at December 1,2016,$3,400,000 is expected to be recognized in fiscal 2017 with the remainder to be recognized in the following fiscal year.CompetitionWater Resources competes with other drilling contractors in Hawaii,some of which use drill rigs simil

156、ar to Water Resources.These competitors are also capable of installing and repairing vertical turbine and submersible water pumping systems in Hawaii.These contractors compete actively with Water Resources for government and private contracts.Pricing is Water Resources major method of competition;re

157、liability of service is also a significant factor.Competitive pressures are expected to remain high,thus there is no assurance that the quantity or values of available or awarded jobs which occurred in fiscal 2016 will continue.Residential Real Estate SegmentOverviewKaupulehu 2007 develops luxury re

158、sidences for sale.OperationsWe began our homebuilding business in fiscal 2007 when Kaupulehu 2007 purchased two parcels in the Lot 4A Increment I area of Kaupulehu.Construction of the two homes commenced in fiscal 2007 and was completed in fiscal 2009.One of the homes was sold in fiscal 2012 and the

159、 other was sold in fiscal 2016,and the Company has no current homebuilding plans.CompetitionBarnwells residential real estate segment is subject to intense competition in all phases of its operations including the acquisition of land,the building of residential homes,including the need for raw mater

160、ials and skilled labor and the search for potential purchasers of completed homes.The competition comes from numerous independent real estate developers.The principal factors affecting competition are the location of the project,reputation,design,quality and pricing.Kaupulehu 2007 is a minor partici

161、pant in the residential real estate industry and competes with many other entities having far greater financial and other resources.17Financial Information About Industry Segments and Geographic AreasNote 15 in the“Notes to Consolidated Financial Statements”in Item 8 contains information on our segm

162、ents and geographic areas.EmployeesAt December 1,2016,Barnwell employed 34 individuals;33 on a full time basis and 1 on a part time basis.Environmental CostsBarnwell is subject to extensive environmental laws and regulations.U.S.Federal and state and Canadian Federal and provincial governmental agen

163、cies issue rules and regulations and enforce laws to protect the environment which are often difficult and costly to comply with and which carry substantial penalties for failure to comply,particularly in regard to the discharge of materials into the environment.These laws,which are constantly chang

164、ing,regulate the discharge of materials into the environment and maintenance of surface conditions and may require Barnwell to remove or mitigate the environmental effects of the disposal or release of petroleum or chemical substances at various sites.In January 2015,there was an oil and saltwater r

165、elease from one of our operated oil pipelines in Alberta,Canada.The gross environmental remediation costs were approximately$2,200,000.Barnwells working interest in the well is 58%,and we have recovered all of the monies from the other working interest owners for their share of the costs.We have col

166、lected insurance proceeds,less an$80,000 deductible,for our share of the costs.There was no remaining liability at September 30,2016.In February 2016,a gas migration was detected at one of our previously abandoned non-operated wells in Alberta,Canada.We have estimated that probable environmental rem

167、ediation costs will be within the range of$400,000 to$800,000.Barnwells working interest in the well is 50%,and accordingly we accrued approximately$200,000 at September 30,2016,however as non-operator we have no control over the actual cost or timing of the eventual remediation.For further informat

168、ion on environmental remediation,see the Contingencies section included in Item 7,“Managements Discussion and Analysis of Financial Condition and Results of Operations”and the notes to our consolidated financial statements included in Item 8,“Financial Statements and Supplementary Data.”Available In

169、formationWe are required to file annual,quarterly and current reports and other information with the SEC.These filings are not deemed to be incorporated by reference in this report.You may read and copy any document filed by us at the Public Reference Room of the SEC,100 F Street,N.E.,Washington,D.C

170、.20549,on official business days during the hours of 10 a.m.to 3 p.m.You may obtain information on the operation of the Public Reference Room by calling the SEC at 1-800-SEC-0330.Our filings with the SEC are also available to the public through the SECs website at www.sec.gov.Furthermore,we maintain

171、 an internet site at .We make available on our internet website free of charge our annual reports on Form 10-K,quarterly reports on Form 10-Q,current reports on Form 8-K,and any amendments to those reports as soon as practicable after we electronically file such reports with,or furnish them to,the S

172、EC.The contents of these websites are not incorporated into this filing.Furthermore,the Companys references to URLs for these websites are intended to be textual references only.18ITEM 1A.RISK FACTORS The business of Barnwell and its subsidiaries face numerous risks,including those set forth below o

173、r those described elsewhere in this Form 10-K or in Barnwells other filings with the SEC.The risks described below are not the only risks that Barnwell faces.If any of the following risk factors should occur,our profitability,financial condition or liquidity could be materially negatively impacted.E

174、ntity-Wide RisksThe Company faces issues that could impair our ability to continue as a going concern in the future.Due to the negative impacts of 1)declines in oil and natural gas prices;2)declines in oil and natural gas production due to both oil and natural gas property sales and the natural decl

175、ine oil and natural gas wells experience as they age;3)increasing costs due to both inflation and the age of Barnwells properties and other factors,Barnwells existing oil and natural gas assets are projected to have minimal cash flow from operations.As a result,the Companys current cash on hand will

176、 likely not be sufficient to fund both the significant reinvestments that are necessary to sustain our oil and natural gas business in the future and our asset retirement obligations,retirement plan funding,and ongoing operating and general and administrative expenses.Therefore,it is likely that Bar

177、nwell will be increasingly reliant upon future land investment segment proceeds from percentage of sales payments,if any,and future cash distributions,if any,from the Kukio Resort land development partnerships,the timing of which are both highly uncertain and not within Barnwells control,to fund ope

178、rations and provide capital for reinvestment.If the Company is unable to make sufficient and successful reinvestments,or if unforeseen circumstances arise that impair our ability to sustain or grow the Company,we may be forced to wind down our operations,either through liquidation,bankruptcy or furt

179、her sales of our assets,and/or we may not be able to continue as a going concern in the longer term beyond one year.Our revenues decreased significantly in the fiscal year ended September 30,2016 as compared to the fiscal year ended September 30,2015,and there can be no assurances that our revenues

180、will not continue to decline.Our consolidated revenues have been declining rapidly for years.In the fiscal year ended September 30,2016,our consolidated revenues declined by 24%from fiscal 2015.Backing out the$5,700,000 of revenues attributable to the one-time sale of a residential property in fisca

181、l 2016,our consolidated revenues declined by 57%from fiscal 2015.The declines in revenues were significant across all of our business segments in fiscal 2016,other than the residential real estate segment which includes the sale of the home.We need to generate new revenues quickly and there can be n

182、o assurances that we will be successful in doing so.Our failure to increase our revenues and grow our profitability may force us to wind down our operations,either through liquidation,bankruptcy or further sales of our assets.We may not be able to continue as a going concern in the longer term beyon

183、d one year.We incurred a loss before equity in income of affiliates and income taxes of$6.2 million and a net loss attributable to Barnwell stockholders of$3.6 million in the fiscal year ended September 30,2016,and we may incur additional losses in fiscal 2017.We cannot give assurances of our future

184、 profitability.We incurred these significant losses because our operating expenses,including our general and administrative expenses,substantially exceeded our revenues.While we have recently undertaken steps to reduce our overhead expenses,there can be no assurance that we will be able to achieve c

185、ost savings at levels that would return us to profitability,particularly in light of the pressure on our revenues.19A small number of stockholders,including our CEO and President,own a significant amount of our common stock and have influence over our business regardless of the opposition of other s

186、tockholders.As of September 30,2016,four of our stockholders,including our CEO and President,held approximately 44%of our outstanding common stock.The interests of one or more of these stockholders may not always coincide with the interests of other stockholders.These stockholders have significant i

187、nfluence over all matters submitted to our stockholders,including the election of our directors,and could accelerate,delay,deter or prevent a change of control of the Company.The significant stockholders who also are executive officers could significantly affect our business,policies and affairs.Our

188、 operations are subject to currency rate fluctuations.Our operations are subject to fluctuations in foreign currency exchange rates between the U.S.dollar and the Canadian dollar.Our financial statements,presented in U.S.dollars,may be affected by foreign currency fluctuations through both translati

189、on risk and transaction risk.Volatility in exchange rates may adversely affect our results of operations,particularly through the weakening of the U.S.dollar relative to the Canadian dollar which may affect the relative prices at which we sell our oil and natural gas and may affect the cost of certa

190、in items required in our operations.To date,we have not entered into foreign currency hedging transactions to control or minimize these risks.Adverse changes in actuarial assumptions used to calculate retirement plan costs due to economic or other factors,or lower returns on plan assets could advers

191、ely affect Barnwells results and financial condition.Retirement plan cash funding obligations and plan expenses and obligations are subject to a high degree of uncertainty and could increase in future years depending on numerous factors,including the performance of the financial markets,specifically

192、 the equity markets,levels of interest rates,and the cost of health care insurance premiums.The price of our common stock has been volatile and could continue to fluctuate substantially.The market price of our common stock has been volatile and could fluctuate based on a variety of factors,including

193、:fluctuations in commodity prices;variations in results of operations;announcements by us and our competitors;legislative or regulatory changes;general trends in the industry;general market conditions;litigation;and analysts estimates and other events applicable to our industries.Failure to retain k

194、ey personnel could hurt our operations.We require highly skilled and experienced personnel to operate our business.In addition to competing in highly competitive industries,we compete in a highly competitive labor market.Our business could be adversely affected by an inability to retain personnel or

195、 upward pressure on wages as a result of the highly competitive labor market.Further,there are significant personal liability risks to Barnwell of Canadas 20individual officers and directors related to well clean-up costs that may affect our ability to attract or retain the necessary people.We are a

196、 smaller reporting company and are taking advantage of certain reduced governance and disclosure requirements,including that our independent registered public accounting firm is not required to attest to the effectiveness of our internal control over financial reporting.We cannot be certain if the o

197、mission of reduced disclosure requirements applicable to smaller reporting companies will make our common stock less attractive to investors.Currently,we are a“smaller reporting company,”meaning that our outstanding common stock held by nonaffiliates had a value of less than$75 million at the end of

198、 our most recently completed second fiscal quarter.As a smaller reporting company,we are not required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act,meaning our auditors are not required to attest to the effectiveness of the Companys internal control ove

199、r financial reporting.As a result,investors and others may be less comfortable with the effectiveness of the Companys internal controls and the risk that materialweaknesses or other deficiencies in internal controls go undetected may increase.In addition,as a smaller reporting company,we take advant

200、age of our ability to provide certain other less comprehensive disclosures in our SEC filings,including,among other things,providing only two years of audited financial statements in annual reports and simplified executive compensation disclosures.Consequently,it may be morechallenging for investors

201、 to analyze our results of operations and financial prospects,as the information we provide to stockholders may be different from what one might receive from other public companies in which one hold shares.As a smaller reporting company,we are not required to provide this information.Risks Related t

202、o Oil and Natural Gas Segment Acquisitions or discoveries of additional reserves are needed to increase our oil and natural gas segment operating results and cash flow.In September 2015,we sold our interests in our principal oil and natural gas properties located in the Dunvegan and Belloy areas of

203、Alberta,Canada.The sale of Dunvegan resulted in a 60%decrease in our proved natural gas reserves and a 34%decrease in our proved oil and natural gas liquids reserves.In fiscal 2015,Dunvegan accounted for 74%of our net natural gas production and 44%of our net oil and natural gas liquids production,an

204、d contributed 46%of our total oil and natural gas revenues.As a result of this sale,our oil and natural gas revenues and cash flow have significantly declined.Reinvestment in oil and natural gas segment assets are needed to replace the significant amount of reserves sold in fiscal 2015 and reserves

205、produced.Future oil and natural gas operating results and cash flow are,therefore,highly dependent upon our level of success in acquiring or finding additional reserves on an economic basis.We cannot guarantee that we will be successful in developing or acquiring additional reserves and our current

206、financial resources may be insufficient to make such investments.Furthermore,if oil or natural gas prices increase,our cost for additional reserves could also increase.We may have difficulty funding oil and natural gas segment capital expenditures which could have an adverse effect on our business.O

207、ur oil and natural gas acquisition and development activities require substantial capital expenditures which we intend to fund using cash on hand and cash flows from operations.However,the Companys current cash on hand may be needed to fund upcoming cash needs including asset retirement obligations,

208、retirement plan funding,and ongoing operating and general and administrative expenses,such that some or potentially 21all of the cash will not be available for reinvestment.Future cash flows from operations are uncertain and are based on a number of variables including the level of production from e

209、xisting wells,oil and natural gas prices,and our success in acquiring and developing new reserves.Barnwells existing oil and natural gas assets are projected to have minimal cash flow from operations at current prices and production levels.In April 2016,Barnwells$1,000,000 Canadian-dollar revolving

210、credit facility at Royal Bank of Canada was terminated.The termination was due to Barnwells significant reduction in reserves as a result of the sale of its interests in oil and natural gas properties located in the Dunvegan and Belloy areas in September 2015 as well as a tightening credit market fo

211、r oil and natural gas companies due to current low oil and natural gas prices and reductions in Royal Bank of Canadas forecast of oil and natural gas prices which decreased its valuation of the Companys remaining oil and natural gas assets pledged as security.In June 2016,Barnwell entered into a new

212、 agreement with Royal Bank of Canada for a revolving demand facility in the amount of$500,000 Canadian dollars,or U.S.$381,000 at the September 30,2016 exchange rate,which is secured by a$500,000 Canadian dollar,or U.S.$381,000,guaranteed investment certificate pledged to the Royal Bank of Canada.Th

213、is leaves Barnwell with minimal available credit under the new revolving demand facility.Disruptions in the capital and credit markets,in particular with respect to companies in the energy sector,could limit our ability to access these markets or may significantly increase our cost to borrow.Recent

214、decreases in commodity prices,among other factors,are causing and may continue to cause lenders to increase interest rates,enact tighter lending standards which we may not satisfy,and reduce or cease to provide funding to borrowers.If additional capital is required,we may not be able to obtain finan

215、cing on terms favorable to us,or at all.If cash on hand and cash generated by operations is not sufficient to meet our capital requirements,the failure to obtain additional financing could limit our ability to fund capital expenditures,and we may be forced to curtail our oil and natural gas activiti

216、es or be forced to sell some of our oil and natural gas segment assets under untimely or unfavorable terms.Any such curtailment or sale could have a material adverse effect on our business,financial condition and results of operations.We may not realize an adequate return on oil and natural gas inve

217、stments.Drilling for oil and natural gas involves numerous risks,including the risk that we will not encounter commercially productive oil or natural gas reservoirs.The wells we drill or participate in may not be productive,and we may not recover all or any portion of our investment in those wells.I

218、f future oil and natural gas segment acquisition and development activities are not successful it could have an adverse effect on our future results of operations and financial condition.We may incur material costs to comply with or as a result of health,safety,and environmental laws and regulations

219、.The oil and natural gas industry is subject to extensive environmental regulation pursuant to local,provincial and federal legislation.A violation of that legislation may result in the imposition of fines or the issuance of“clean up”orders.Legislation regulating the oil and natural gas industry may

220、 be changed to impose higher standards and potentially more costly obligations.Although we have recorded a provision in our financial statements relating to our estimated future environmental and reclamation obligations that we believe is reasonable,we cannot guarantee that we will be able to satisf

221、y our actual future environmental and reclamation obligations.Barnwells oil and natural gas segment is subject to the provisions of the Alberta Energy Regulators(“AER”)Licensee Liability Rating(“LLR”)program.Under the LLR program the AER calculates a Liability 22Management Ratio(“LMR”)for a company

222、based on the ratio of the companys deemed assets over its deemed liabilities relating to wells and facilities for which the company is the licensed operator and imposes a security deposit on operators whose estimated liabilities exceed their deemed asset value.At September 30,2016,the Company had su

223、fficient deemed asset value that no security deposit was due.However,decreases in prices and production and related netbacks from relevant properties could result in a decline in the Companys deemed asset value to a point where a deposit could be due in the future.It is also possible that we may hav

224、e to transfer well licenses with favorable LMRs resulting in an overall reduction in our remaining LMR.In June 2016,the AER implemented changes in the Liability Management Program(LMP)which now requires purchasers of AER licensed oil and natural gas assets to have an LMR of 2.0 or higher immediately

225、 following a transfer,up from the previous requirement of 1.0 or higher.This change in the LMR requirement for well transfers will result in significantly less qualified buyers and may hinder our ability to generate capital by selling oil and natural gas assets.Additionally,it may inhibit our abilit

226、y to grow through acquisitions without depositing collateral with the AER,as we do not currently have an LMR of 2.0 or higher.Additionally,in July 2014,the AER introduced an Inactive Well Compliance Program which resulted in the acceleration of expenditures to suspend and/or abandon long-term inacti

227、ve wells.A requirement to provide security deposit funds to the AER in the future would result in the diversion of operating cash flows that could otherwise be used to fund oil and natural gas reserve replacement efforts,which could in turn have a material adverse effect on our business,financial co

228、ndition and results of operations.If Barnwell fails to comply with the requirements of the LLR program,Barnwells oil and natural gas subsidiary would be subject to the AERs enforcement provisions which could include suspension of operations and non-compliance fees and could ultimately result in the

229、AER serving the Company with a closure order to shut-in all operated wells.Additionally,if Barnwell is non-compliant,the Company would be prohibited from transferring well licenses which would prohibit us from selling any oil and natural gas assets until the required cash deposit is made with the AE

230、R.We are not fully insured against certain environmental risks,either because such insurance is not available or because of high premium costs.In particular,insurance against risks from environmental pollution occurring over time,as opposed to sudden and catastrophic damages,is not available on econ

231、omically reasonable terms.Accordingly,any site reclamation or abandonment costs actually incurred in the ordinary course of business in a specific period could negatively impact our cash flow.Should we be unable to fully fund the cost of remedying an environmental problem,we might be required to sus

232、pend operations or enter into interim compliance measures pending completion of the required remedy.We may fail to fully identify potential problems related to acquired reserves or to properly estimate those reserves.We periodically evaluate acquisitions of reserves,properties,prospects and leasehol

233、ds and other strategic transactions that appear to fit within our overall business strategy.Our evaluation includes an assessment of reserves,future oil and natural gas prices,operating costs,potential for future drilling and production,validity of the sellers title to the properties and potential e

234、nvironmental issues,litigation and other liabilities.In connection with these assessments,we perform a review of the subject properties that we believe to be generally consistent with industry practices.Our review will not reveal all existing or potential problems nor will it permit us to become suf

235、ficiently familiar with the properties to fully assess their deficiencies and 23potential recoverable reserves.Inspections may not always be performed on every well,and environmental problems are not necessarily observable even when an inspection is undertaken.Even when problems are identified,the s

236、eller may be unwilling or unable to provide effective contractual protection against all or part of the problems.We often are not entitled to contractual indemnification for environmental liabilities or title defects in excess of the amounts claimed by us before closing and acquire properties on an“

237、as is”basis.There are numerous uncertainties inherent in estimating quantities of proved oil and gas reserves and future production rates and costs with respect to acquired properties,and actual results may vary substantially from those assumed in the estimates.Oil and natural gas prices are highly

238、volatile and further declines,or extended low prices will significantly affect our financial condition and results of operations.Much of our revenues and cash flow are greatly dependent upon prevailing prices for oil and natural gas.Lower oil and natural gas prices not only decrease our revenues on

239、a per unit basis,but also reduce the amount of oil and natural gas we can produce economically,if any.Continued depressed prices will have a material adverse effect on our operations,financial condition,operating cash flows,borrowing ability,reserves,and the amount of capital that we are able to all

240、ocate for the acquisition and development of oil and natural gas reserves.Various factors beyond our control affect prices of oil and natural gas including,but not limited to,changes in supply and demand,market uncertainty,weather,worldwide political instability,foreign supply of oil and natural gas

241、,the level of consumer product demand,government regulations and taxes,the price and availability of alternative fuels and the overall economic environment.Energy prices are also subject to other political and regulatory actions outside our control,which may include changes in the policies of the Or

242、ganization of Petroleum Exporting Countries or other developments involving or affecting oil-producing countries,or actions or reactions of the government of the United States in anticipation of or in response to such developments.If oil and natural gas prices remain at their current level for an ex

243、tended period of time or continue to decline,we may be required to take write-downs of the carrying values of our oil and natural gas properties.Oil and natural gas prices affect the value of our oil and natural gas properties as determined in our full cost ceiling calculation.Any future ceiling tes

244、t write-downs will result in reductions of the carrying value of our oil and natural gas properties and an equivalent charge to earnings.The oil and natural gas industry is highly competitive.We compete for capital,acquisitions of reserves,undeveloped lands,skilled personnel,access to drilling rigs,

245、service rigs and other equipment,access to processing facilities,pipeline capacity and in many other respects with a substantial number of other organizations,many of which may have greater technical and financial resources than we do.Some of these organizations explore for,develop and produce oil a

246、nd natural gas,carry on refining operations and market oil and other products on a worldwide basis.As a result of these complementary activities,some of our competitors may have competitive resources that are greater and more diverse than ours.Furthermore,many of our competitors may have a competiti

247、ve advantage when responding to factors that affect demand for oil and natural gas production,such as changing prices and production levels,the cost and availability of alternative fuels and the application of government regulations.If our competitors are able to capitalize on these competitive reso

248、urces,it could adversely affect our revenues.24 An increase in operating costs greater than anticipated could have a material adverse effect on our results of operations and financial condition.Higher operating costs for our properties will directly decrease the amount of cash flow received by us.El

249、ectricity,supplies,and labor costs are a few of the operating costs that are susceptible to material fluctuation.The need for significant repairs and maintenance of infrastructure may increase as our properties age.A significant increase in operating costs could result in materially lower operating

250、results and cash flow.Our operating results are affected by our ability to market the oil and natural gas that we produce.Our business depends in part upon the availability,proximity and capacity of oil and natural gas gathering systems,pipelines and processing facilities.Canadian federal and provin

251、cial,as well as United States federal and state,regulation of oil and natural gas production,processing and transportation,tax and energy policies,general economic conditions,and changes in supply and demand could adversely affect our ability to produce and market oil and natural gas.If market facto

252、rs change and inhibit the marketing of our production,overall production or realized prices may decline.We are not the operator and have limited influence over the operations of the majority of our oil and natural gas properties.We hold minority interests in the majority of our oil and natural gas p

253、roperties.As a result,we cannot control the pace of exploration or development,major decisions affecting the drilling of wells,the plan for development and production at non-operated properties,or the timing and amount of costs related to abandonment and reclamation activities although contract prov

254、isions give Barnwell certain consent rights in some matters.The operators influence over these matters can affect the pace at which we incur capital expenditures.Additionally,as certain underlying joint venture data is not accessible to us,we depend on the operators at non-operated properties to pro

255、vide us with reliable accounting information.We also depend on operators and joint operators to maintain the financial resources to fund their share of all abandonment and reclamation costs.The inability of one or more of our working interest partners to meet their obligations may adversely affect o

256、ur financial results.For our operated properties,we pay expenses and bill our non-operating partners for their respective shares of costs.Some of our non-operating partners may experience liquidity problems and may not be able to meet their financial obligations.Nonperformance by a non-operating par

257、tner could result in significant financial losses.Liquidity problems encountered by our working interest partners or the third party operators of our non-operated properties may also result in significant financial losses as the other working interest partners or third party operators may be unwilli

258、ng or unable to pay their share of the costs of projects as they become due.25Actual reserves will vary from reserve estimates.Estimating reserves is inherently uncertain and the reserves estimation process involves significant decisions and assumptions in the evaluation of available geological,geop

259、hysical,engineering and economic data.The reserve data and standardized measures set forth herein are only estimates.Ultimately,actual reserves attributable to our properties will vary from estimates,and those variations may be material.The estimation of reserves involves a number of factors and ass

260、umptions,including,among others:oil and natural gas prices as prescribed by SEC regulations;historical production from our wells compared with production rates from similar producing wells in the area;future commodity prices,production and development costs,royalties and capital expenditures;initial

261、 production rates;production decline rates;ultimate recovery of reserves;success of future development activities;marketability of production;effects of government regulation;and other government levies that may be imposed over the producing life of reserves.If these factors,assumptions and prices p

262、rove to be inaccurate,actual results may vary materially from reserve estimates.Delays in business operations could adversely affect the amount and timing of our cash inflows.In addition to the usual delays in payment by purchasers of oil and natural gas to the operators of our properties,and the de

263、lays of those operators in remitting payment to us,payments between any of these parties may also be delayed by:restrictions imposed by lenders;accounting delays;delays in the sale or delivery of products;delays in the connection of wells to a gathering system;blowouts or other accidents;adjustments

264、 for prior periods;recovery by the operator of expenses incurred in the operation of the properties;and the establishment by the operator of reserves for these expenses.Any of these delays could expose us to additional third party credit risks.The oil and natural gas market in which we operate expos

265、es us to potential liabilities that may not be covered by insurance.Our operations are subject to all of the risks associated with the operation and development of oil and natural gas properties,including the drilling of oil and natural gas wells,and the production and transportation of oil and natu

266、ral gas.These risks include encountering unexpected formations or pressures,premature declines of reservoirs,blow-outs,equipment failures and other accidents,cratering,sour gas releases,uncontrollable flows of oil,natural gas or well fluids,adverse weather conditions,pollution,other 26environmental

267、risks,fires and spills.A number of these risks could result in personal injury,loss of life,or environmental and other damage to our property or the property of others.While we maintain reserves for anticipated liabilities and carry various levels of insurance,we could be affected by civil,criminal,

268、regulatory or administrative actions,claims or proceedings.We cannot fully protect against all of the risks listed above,nor are all of these risks insurable.There is no assurance that any applicable insurance or indemnification agreements will adequately protect us against liability for the risks l

269、isted above.We could face substantial losses if an event occurs for which we are not fully insured or are not indemnified against or a customer or insurer fails to meet its indemnification or insurance obligations.In addition,there can be no assurance that insurance will continue to be available to

270、cover any or all of these risks,or,even if available,that insurance premiums or other costs will not rise significantly in the future,so as to make the cost of such insurance prohibitive.Deficiencies in operating practices and record keeping,if any,may increase our risks and liabilities relating to

271、incidents such as spills and releases and may increase the level of regulatory enforcement actions.Our operations are subject to domestic and foreign government regulation and other risks,particularly in Canada and the United States.Barnwells oil and natural gas operations are affected by political

272、developments and laws and regulations,particularly in Canada and the United States,such as restrictions on production,restrictions on imports and exports,the maintenance of specified reserves,tax increases and retroactive tax claims,expropriation of property,cancellation of contract rights,environme

273、ntal protection controls,environmental compliance requirements and laws pertaining to workers health and safety.Further,the right to explore for and develop oil and natural gas on lands in Alberta,Saskatchewan and British Columbia is controlled by the governments of each of those provinces.Changes i

274、n royalties and other terms of provincial leases,permits and reservations may have a substantial effect on Barnwells operations.We derive a significant portion of our revenues from our operations in Canada;26%in fiscal 2016.Additionally,our ability to compete in the Canadian oil and natural gas indu

275、stry may be adversely affected by governmental regulations or other policies that favor the awarding of contracts to contractors in which Canadian nationals have substantial ownership interests.Furthermore,we may face governmentally imposed restrictions or fees from time to time on the transfer of f

276、unds to the U.S.Government regulations control and often limit access to potential markets and impose extensive requirements concerning employee safety,environmental protection,pollution control and remediation of environmental contamination.Environmental regulations,in particular,prohibit access to

277、 some markets and make others less economical,increase equipment and personnel costs and often impose liability without regard to negligence or fault.In addition,governmental regulations may discourage our customers activities,reducing demand for our products and services.Compliance with foreign tax

278、 and other laws may adversely affect our operations.Tax and other laws and regulations are not always interpreted consistently among local,regional and national authorities.Income tax laws,other legislation or government incentive programs relating to the oil and natural gas industry may in the futu

279、re be changed or interpreted in a manner that adversely affects us and our stockholders.It is also possible that in the future we will be subject to disputes concerning taxation and other matters in Canada,including the manner in which we calculate our income for tax purposes,and these disputes coul

280、d have a material adverse effect on our financial performance.27Unforeseen title defects may result in a loss of entitlement to production and reserves.Although we conduct title reviews in accordance with industry practice prior to any purchase of resource assets or property,such reviews do not guar

281、antee that an unforeseen defect in the chain of title will not arise and defeat our title to the purchased assets.If such a defect were to occur,our entitlement to the production from such purchased assets could be jeopardized.Risks Related to Land Investment Segment Receipt of future percentage of

282、sales payments from KD I and KD II and cash distributions from the Kukio Resort land development partnerships is dependent upon the developers continued efforts to develop and market the property.We have become increasingly dependent on the percentage of sales payments and cash distributions from ou

283、r land investment segment as our revenues,cash flows and profits from our oil and natural gas business have continued to decline.We are entitled to receive future payments based on a percentage of the sales prices of residential lots sold within the Kaupulehu area.However,in order to collect such pe

284、rcentage of sales payments we are reliant upon the developer,KD I and KD II,in which we own a 19.6%ownership interest,to continue to develop and market the lots.Additionally,future cash distributions from the Kukio Resort land development partnerships,which includes KD I and KD II,are dependent on f

285、uture lot sales,specifically the remaining two acre ocean front parcel in Increment II by KD II.We do not have a controlling interest in the partnerships,and therefore are dependent on the general partner for development decisions.The receipt of future percentage of sales payments and cash distribut

286、ions could be jeopardized if the developer fails to proceed with development and marketing of the property.We hold investment interests in unconsolidated land development partnerships,which are accounted for using the equity method of accounting,in which we do not have a controlling interest.These i

287、nvestments involve risks and are highly illiquid.These investments involve risks which include:the lack of a controlling interest in these partnerships and,therefore,the inability to require that the entities sell assets,return invested capital or take any other action without obtaining the majority

288、 vote of partners;potential for future additional capital contributions to fund operations and development activities;the adverse impact on overall profitability if the entities do not achieve the financial results projected;the reallocation of amounts of capital from other operating initiatives and

289、/or an increase in indebtedness to pay potential future additional capital contributions,which could in turn restrict our ability to access additional capital when needed or to pursue other important elements of our business strategy;undisclosed,contingent or other liabilities or problems,unanticipa

290、ted costs,and an inability to recover or manage such liabilities and costs;and certain underlying partnership data is not accessible to us,therefore we depend on the general partner to provide us with reliable accounting information.28We may be required to write-down the carrying value of our invest

291、ment in the Kukio Resort land development partnerships if our assumptions about future lot sales and profitability prove incorrect.Any write-down would negatively impact our results of operations.In analyzing the value of our investment in the Kukio Resort land development partnerships,we have made

292、assumptions about the level of future lot sales,operating and development costs,cash generation and market conditions.These assumptions are based on managements and the general partners best estimates and if the actual results differ significantly from these assumptions,we may not be able to realize

293、 the value of the assets recorded,which could lead to an impairment of certain of these assets in the future.Such a write-down would have a negative impact on our results of operations.The market value of our real estate interests could decline,which may require a write-down of the carrying value of

294、 our residential lot held for sale to its estimated fair value.Any write-down would negatively impact our results of operations.The market value of our residential lot held for sale can fluctuate significantly as a result of changing economic market conditions.If the market conditions deteriorate,we

295、 may be required to write-down the carrying value of our residential lot held for sale.Such write-down would have a negative impact on our results of operations.Our land investment business is concentrated in the state of Hawaii.As a result,our financial results are dependent on the economic growth

296、and health of Hawaii,particularly the island of Hawaii.Barnwells land investment segment is impacted by the condition of Hawaiis real estate market,which is affected by Hawaiis economy and Hawaiis tourism industry,as well as the United States and world economies in general.Any future cash flows from

297、 Barnwells land development activities are subject to,among other factors,the level of real estate activity and prices,the demand for new housing and second homes on the island of Hawaii,the rate of increase in the cost of building materials and labor,the introduction of building code modifications,

298、changes to zoning laws,and the level of confidence in Hawaiis economy.We may be adversely impacted by the failure of the land development partnerships to fulfill their commitments.Barnwell,as well as KD I,KD II and certain other owners of the partnerships,have jointly and severally executed a surety

299、 indemnification agreement.Bonds issued by the surety relate to certain construction contracts of KD I.If any such performance bonds are called,we may be obligated to reimburse the issuer of the performance bond as Barnwell,KD I and certain other owners are jointly and severally liable.If the partne

300、rships do not fulfill their commitments,we may be required to expend additional resources or suffer losses,which could be significant.The occurrence of natural disasters in Hawaii could adversely affect our business.The occurrence of a natural disaster in Hawaii such as,but not limited to,earthquake

301、s,landslides,hurricanes,tornadoes,tsunamis,volcanic activity,droughts and floods,could have a material adverse effect on our ability to develop and sell properties or realize income from our projects.The occurrence of a natural disaster could also cause property and flood insurance rates and deducti

302、bles to increase,which could reduce demand for our properties.29Our business is subject to extensive regulation which makes it difficult and expensive for us to conduct our operations.We are subject to a wide variety of federal,state and local laws and regulations relating to land use and developmen

303、t and to environmental compliance and permitting obligations,including those related to the use,storage,discharge,emission,and disposal of hazardous materials.In most cases,approval to develop requires multiple permits which involve a long,uncertain and costly regulatory process.Any failure to compl

304、y with these laws could result in capital or operating expenditures or the imposition of severe penalties or restrictions on operations that could adversely affect present and future operations,or jeopardize our ability to sell the leasehold interest currently held.Risks Related to Contract Drilling

305、 Segment Demand for water well drilling and/or pump installation is volatile.A decrease in demand for our services could adversely affect our revenues and results of operations.Demand for services is highly dependent upon land development activities in the state of Hawaii.As also noted above,the rea

306、l estate development industry is cyclical in nature and is particularly vulnerable to shifts in local,regional,and national economic conditions outside of our control such as interest rates,housing demand,population growth,employment levels and job growth and property taxes.A decrease in water well

307、drilling and/or pump installation contracts will result in decreased revenues and operating results.A significant portion of our contract drilling business is dependent on municipalities and a decline in municipal spending could adversely impact our business.A significant portion of our contract dri

308、lling division revenues is derived from water and infrastructure contracts with governmental entities or agencies;36%in fiscal 2016.Reduced tax revenues and governmental budgets may limit spending by local governments which in turn will affect the demand for our services.Material reductions in spend

309、ing by a significant number of local governmental agencies could have a material adverse effect on our business,results of operations,liquidity and financial position.Our contract drilling operations face significant competition.We face competition for our services from a variety of competitors.Many

310、 of our competitors utilize drilling rigs that drill as quickly as our equipment but require less labor.Our strategy is to compete based on pricing and to a lesser degree,quality of service.If we are unable to compete effectively with our competitors,our financial results could be adversely affected

311、.The loss of or damage to key vendor,customer or sub-contractor relationships would adversely affect our operations.Our contract drilling business is dependent on our relationships with key vendors,customers and subcontractors.The loss of or damage to any of our key relationships could negatively af

312、fect our business.30Awarding of contracts is dependent upon our ability to obtain contract bid and performance bonds from insurers.There can be no assurance that our ability to obtain such bonds will continue on the same basis as the past.Additionally,bonding insurance rates may increase and have an

313、 impact on our ability to win competitive bids,which could have a corresponding material impact on contract drilling operating results.The contracts in our backlog are subject to change orders and cancellation.Our backlog consists of the uncompleted portion of services to be performed under contract

314、s that have been started and new contracts not yet started.Our contracts are subject to change orders and cancellations,and such changes could adversely affect our operations.The occurrence of natural disasters in Hawaii could adversely affect our business.The occurrence of a natural disaster in Haw

315、aii such as,but not limited to,earthquakes,landslides,hurricanes,tornadoes,tsunamis,volcanic activity,droughts and floods,could have a material adverse effect on our ability to complete our contracts.ITEM 1B.UNRESOLVED STAFF COMMENTS None.ITEM 2.PROPERTIES Oil and Natural Gas,Land Investment and Res

316、idential Real Estate Properties The location and character of Barnwells oil and natural gas properties,and its land investment and residential real estate properties,are described above under Item 1,“Business.”Corporate Offices Barnwell,through wholly-owned subsidiaries,owns the 29th floor of a comm

317、ercial office building in downtown Honolulu that it uses as its corporate office and a unit in a high rise cooperative apartment in New York City that was previously used as its New York office and is currently available for sale.31ITEM 3.LEGAL PROCEEDINGS Barnwell is routinely involved in disputes

318、with third parties that occasionally require litigation.In addition,Barnwell is required to maintain compliance with all current governmental controls and regulations in the ordinary course of business.Barnwells management is not aware of any claims or litigation involving Barnwell that are likely t

319、o have a material adverse effect on its results of operations,financial position or liquidity.ITEM 4.MINE SAFETY DISCLOSURES Disclosure is not applicable to Barnwell.32PART II ITEM 5.MARKET FOR REGISTRANTS COMMON EQUITY,RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES Market Inf

320、ormation The principal market on which Barnwells common stock is being traded is the NYSE MKT under the ticker symbol“BRN.”The following tables present the quarterly high and low sales prices,on the NYSE MKT,for Barnwells common stock during the periods indicated:Quarter EndedHighLowQuarter EndedHig

321、hLowDecember 31,2014$2.99$2.18December 31,2015$2.25$1.85March 31,2015$3.06$2.31March 31,2016$1.95$1.30June 30,2015$3.44$2.40June 30,2016$1.79$1.31September 30,2015$2.70$1.60September 30,2016$2.01$1.40 Holders As of December 1,2016,there were 8,277,160 shares of common stock,par value$0.50,outstandin

322、g.As of December 1,2016,there were approximately 100 shareholders of record and approximately 1,000 beneficial owners.Dividends No dividends were declared or paid during fiscal years 2016 or 2015.The payment of future cash dividends will depend on,among other things,our financial condition,operating

323、 cash flows,the amount of cash inflows from land investment activities,and the level of our oil and natural gas capital expenditures.Securities Authorized for Issuance Under Equity Compensation Plans See the information included in Part III,Item 12,under the caption“Equity Compensation Plan Informat

324、ion.”Stock Performance Graph and Cumulative Total Return Disclosure is not required as Barnwell qualifies as a smaller reporting company.ITEM 6.SELECTED FINANCIAL DATA Disclosure is not required as Barnwell qualifies as a smaller reporting company.33ITEM 7.MANAGEMENTS DISCUSSION AND ANALYSIS OF FINA

325、NCIAL CONDITION AND RESULTS OF OPERATIONS The following discussion is intended to assist in the understanding of the Consolidated Balance Sheets of Barnwell Industries,Inc.and subsidiaries(collectively referred to herein as“Barnwell,”“we,”“our,”“us”or the“Company”)as of September 30,2016 and 2015,an

326、d the related Consolidated Statements of Operations,Comprehensive Loss,Cash Flows,and Equity for the years ended September 30,2016 and 2015.This discussion should be read in conjunction with the consolidated financial statements and related Notes to Consolidated Financial Statements included in this

327、 report.Use of Estimates in the Preparation of Financial Statements The preparation of the financial statements in conformity with U.S.GAAP requires management of Barnwell to make estimates and assumptions that affect the reported amounts of assets,liabilities,revenues and expenses and the disclosur

328、e of contingent assets and liabilities.Actual results could differ significantly from those estimates.Critical Accounting Policies and Estimates The Company considers an accounting estimate to be critical if the accounting estimate requires the Company to make assumptions that are difficult or subje

329、ctive about matters that were highly uncertain at the time that the accounting estimate was made,and changes in the estimate that are reasonably likely to occur in periods subsequent to the period in which the estimate was made,or use of different estimates that the Company could have used in the cu

330、rrent period,would have a material impact on the Companys financial condition or results of operations.The most critical accounting policies inherent in the preparation of the Companys financial statements are described below.We continue to monitor our accounting policies to ensure proper applicatio

331、n of current rules and regulations.Oil and Natural Gas Properties-full cost ceiling calculation and depletion Policy Description We use the full cost method of accounting for our oil and natural gas properties under which we are required to conduct quarterly calculations of a“ceiling,”or limitation,

332、on the carrying value of oil and natural gas properties.The ceiling limitation is the sum of 1)the discounted present value(at 10%),using average first-day-of-the-month prices during the 12-month period ending as of the balance sheet date held constant over the life of the reserves,of Barnwells esti

333、mated future net cash flows from estimated production of proved oil and natural gas reserves,less estimated future expenditures to be incurred in developing and producing the proved reserves but excluding future cash outflows associated with settling asset retirement obligations;plus 2)the cost of major development projects and unproven properties not subject to depletion,if any;plus 3)the lower o