Barnwell Industries Inc. (BRN) 2018年年度報告「AMEX」.pdf

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1、 Barnwell Industries,Inc.2018 Annual Report FINANCIAL AND OPERATING HIGHLIGHTS Year ended September 30,2018 2017 2016 2015 2014 FINANCIAL:Revenues$9,368,000$13,030,000$13,627,000$17,533,000$31,445,000 Net(loss)earnings$(1,770,000)$1,171,000$(3,615,000)$1,263,000$672,000 Net(loss)earnings per share d

2、iluted$(0.21)$0.14$(0.44)$0.15$0.08 OPERATING:Production-Oil and natural gas liquids barrels 67,000 86,000 84,000 143,000 184,000 Natural gas MCF*328,000 378,000 476,000 1,688,000 1,927,000 Average price-Oil and natural gas liquids,per barrel$50.89$40.11$31.81$33.59$67.52 Natural gas,per MCF*$1.12$1

3、.98$1.27$2.23$3.84 At September 30,2018 2017 2016 2015 2014 FINANCIAL:Total assets$31,378,000$33,020,000$31,568,000$41,553,000$54,770,000 Long-term debt,excluding current portion -,-,-,-,$6,650,000 RESERVES:Oil and liquids barrels:Proved Developed Reserves 693,000 413,000 450,000 469,000 724,000 Pro

4、ved Undeveloped Reserves 897,000 -,-,-,-,Total 1,590,000 413,000 450,000 469,000 724,000 Natural gas MCF*:Proved Developed Reserves 2,399,000 3,005,000 1,441,000 3,124,000 9,465,000 Proved Undeveloped Reserves 2,656,000 -,-,-,-,Total 5,055,000 3,005,000 1,441,000 3,124,000 9,465,000 Total natural ga

5、s and natural gas equivalent of oil and liquids*MCF:Proved Developed Reserves 6,418,000 5,400,000 4,051,000 5,844,000 13,664,000 Proved Undeveloped Reserves 7,859,000 -,-,-,-,Total 14,277,000 5,400,000 4,051,000 5,844,000 13,664,000 *MCF means 1,000 cubic feet*Oil and liquids are converted to natura

6、l gas equivalents on the basis 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

7、 EXCHANGE ACT OF 1934For the fiscal year ended September 30,2018 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 ju

8、risdiction of incorporation or organization)(I.R.S.Employer Identification No.)1100 Alakea Street,Suite 2900,Honolulu,Hawaii96813-2840(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

9、 Act:Title of each class Name of each exchange on which registeredCommon Stock,par value$0.50 per share NYSE AmericanSecurities 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

10、 NoIndicate by check mark if the 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 prece

11、ding 12 months(or for such shorter 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

12、Interactive Data File required 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

13、filers pursuant to Item 405 of 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.Indica

14、te by check mark whether the registrant is a large accelerated filer,an accelerated filer,a non-accelerated filer,a smaller reporting company,or an emerging growth company.See the definitions of“large accelerated filer,”“accelerated filer,”“smaller reporting company”and emerging growth company in Ru

15、le 12b-2 of the Exchange Act.Large accelerated filer Accelerated filer Non-accelerated filer (Do not check if a smaller reporting company)Smaller reporting company Emerging growth company If an emerging growth company,indicate by check mark if the registrant has elected not to use the extended trans

16、ition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a)of the Exchange Act.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 he

17、ld by non-affiliates of the registrant,computed by reference to the closing price of a share of common stock on March 31,2018(the last business day of the registrants most recently completed second fiscal quarter)was$7,778,000.As of December 3,2018 there were 8,277,160 shares of common stock outstan

18、ding.Documents Incorporated by Reference1.Proxy statement to be forwarded to stockholders on or about January 17,2019 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

19、.Unresolved Staff Comments Item 2.Properties Item 3.Legal 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

20、Financial Condition and Results of Operations Item 7A.Quantitative 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.Othe

21、r Information PART III Item 10.Directors,Executive Officers 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

22、Item 14.Principal Accounting Fees and Services PART IV Item 15.Exhibits,Financial Statement Schedules Signatures Index to Exhibits351729292929303031484992929293939394949597993GLOSSARY OF TERMS Defined below are certain terms used in this Form 10-K:Terms DefinitionsASC-Accounting Standards Codificati

23、onASU-Accounting Standards UpdateBarnwell-Barnwell 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 NGLFASB-Financial Acco

24、unting 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%interest in a 320 acre lease represents 320 gros

25、s 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 Acquisition,LLLP,formerly known as WB KD Acquisit

26、ion,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 interest:KD Kukio Resorts,LLLP(“KD Kukio Reso

27、rts”)KD Maniniowali,LLLP(“KD Maniniowali”)KD Kaupulehu,LLLP,which consists of KD I and KD II(“KDK”)MBbls-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 1 Bbl=5.8 McfMMcf-millions of cu

28、bic 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 after deduction of the royalty shar

29、e dueothers.NGL(s)-natural gas liquid(s)Octavian Oil-Octavian Oil,Ltd.OPEC-Organization of the Petroleum Exporting Countries SEC-United States Securities and Exchange CommissionVIE-Variable interest entityWater Resources-Water Resources International,Inc.4PART I CAUTIONARY STATEMENT RELEVANT TO FORW

30、ARD-LOOKING INFORMATIONFOR THE PURPOSE OF“SAFE HARBOR”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(PSLR

31、A).A forward-looking statement is one which is based 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-o

32、wned subsidiaries as“Barnwell,”“we,”“our,”“us”or the“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

33、 the operations of a partnership or limited liability 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

34、current expectations are based on reasonable assumptions,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 contai

35、ned in such statements.Investors should not place undue reliance on these forward-looking statements,as they speak only as of the date of filing of this Form 10-K,and Barnwell expressly disclaims any obligation or undertaking to publicly release any updates or revisions to any forward-looking statem

36、ents contained herein.Among the important factors that 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,ec

37、onomic,regulatory and legal actions,including changes in the policies of the Organization of the 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 governme

38、nts of the United States and/or Canada in anticipation of 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 incr

39、eases,expropriation of property,cancellation of contract 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 n

40、ew 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,changes to zoning laws,the condition of Hawaiis tourism industry and the level of confidence in Hawaiis economy;levels of land developm

41、ent activity in Hawaii;levels of demand for water well drilling 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;

42、and the factors set forth under the heading“Risk Factors”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

43、cause actual results to materially and adversely differ 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 2018 re

44、presented Barnwells 62nd year of operations.Barnwell operates in the following three 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

45、 Hawaii.Contract Drilling Segment -Barnwell provides well drilling services and water pumping system installation and repairs in Hawaii.Oil and Natural Gas SegmentOverview Barnwell acquires and develops crude oil and natural gas assets in the province of Alberta,Canada via two corporate entities,Bar

46、nwell of Canada and Octavian Oil.Barnwell of Canada is a U.S.incorporated company that has been active in Canada for over 50 years,primarily as a non-operator participating in exploration projects operated by others.Octavian Oil is a Canadian company,set up in 2016,to achieve long term growth throug

47、h the acquisition of crude oil reserves and development of these reserves through horizontal well drilling and completion techniques.Strategy Since 2013,Barnwell has transformed its Canadian oil and natural gas segment operation from a 90%non-operated production base,most of which was from its 40-ye

48、ar-old Dunvegan gas field,to a more operated production base.In 2013,only about 20%of Barnwells production was conventional oil,and capital investments were being directed towards heavy oil drilling projects in the province of Saskatchewan.In 2014 Barnwell sold all of its heavy oil properties,and in

49、 2015 Barnwell sold its Dunvegan gas property.These sales allowed Barnwell to minimize the effects of the subsequent commodity price collapse in 2015 and downstream transportation issues.Barnwell of Canada retained its core conventional oil assets and,since 2015,has acquired various conventional oil

50、 interests in Alberta from other companies to consolidate interests in these core properties.In February 2018,Barnwell sold its interest in its oil and natural gas property Red Earth.In August 2018,Barnwell closed a significant acquisition of conventional oil assets and infrastructure in the Twining

51、 area of Alberta.At September 30,2018,Barnwells reserves were approximately 80%operated and 65%conventional oil and natural gas liquids,as compared to 55%operated and 44%conventional oil and natural gas liquids at September 30,2017.OperationsAll acquisition and developmental activities,as well as al

52、l field operations and regulatory compliance,are the direct responsibility of Barnwell of Canadas President and Chief Operating Officer and Octavian Oils President.Strategic direction and approvals for major expenditures are secured from Barnwells senior executive management.6Our oil and natural gas

53、 segment revenues,profitability,and future rate of growth are dependent on oil and natural gas prices and obtaining external financing or sufficient land investment cash flows to fund the development of our proved undeveloped reserves.The industry has experienced a prolonged period of low oil and na

54、tural gas prices that has negatively impacted our operating results,cash flows and liquidity.Credit and capital markets for oil and natural gas companies have been negatively affected as well,resulting in a decline in sources of financing as compared to previous years.By divesting significant oil an

55、d natural gas assets prior to the 2015 decline in commodity prices,Barnwell was able to repay all of its debt,use funds for general corporate purposes,and fund its acquisition investments.Natural gas prices are typically higher in the winter than at other times due to increased heating demand.Oil pr

56、ices 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 properties operator.Prices received in Canada,especially natural gas and heavy oil have also been negatively impacted by the lack of expo

57、rt pipeline capacity.On August 28,2018,Barnwell completed the acquisition of interests in oil and natural gas properties located in the Twining area of Alberta,Canada,from an independent third party.The purchase price per the agreement was$10,362,000,which took into account customary purchase price

58、adjustments to reflect the economic activity from the effective date of July 1,2018 to the closing date.The final determination of the customary adjustments to the purchase price has not yet been made,however it is not expected to result in a material adjustment.Barnwell also assumed$3,076,000 in as

59、set retirement obligations associated with the Twining acquisition.This acquisition represents a significant step in Barnwells long-term strategy to transform its Canadian operations to having almost exclusively conventional light and medium oil assets.This was a strategic purchase by the Company of

60、 what is now its largest oil property.The Twining assets,which Barnwell operates,are expected to provide Barnwell with relatively low decline oil production,significant upside from a large volume of oil-in-place,operated infrastructure,and an advantageous geographic location in Central Alberta.Since

61、 closing,Barnwells net production from Twining for the two months of September and October 2018 has remained steady at an average of approximately 450 Boe per day.Our proved undeveloped reserves,which are primarily attributable to Twining,are estimated to be converted to proved developed reserves th

62、rough future capital expenditures by Barnwell of approximately$14,000,000 for the development of 12 gross(8.75 net)wells over the next five years.Preparation of Reserve EstimatesBarnwells reserves are estimated by our independent petroleum reserve engineers,InSite,in accordance with generally accept

63、ed petroleum engineering and evaluation principles and techniques and rules and regulations of the SEC.All information with respect to the Companys reserves in 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.The p

64、reparation 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 da

65、ta provided 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.7Barnwell has a Reserves Committee consisting of four independent directors,the Companys

66、 Chief Executive Officer and President,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

67、 report 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 independe

68、nt 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 35 years of relevant experience

69、in 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(includ

70、ing natural gas liquids)and natural gas as of September 30,2018 on all properties in which Barnwell has an interest.All of our oil and natural gas reserves are located in Canada and are based on constant dollars.The Company emphasizes that reserve estimates are inherently imprecise and that estimate

71、s of new discoveries and undeveloped locations are more imprecise than estimates of established proved producing oil and natural gas properties.Accordingly,these estimates are expected to change as future information becomes available.Proved oil and natural gas reserves are the estimated quantities

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

73、ves are proved reserves that can be expected to be recovered through existing wells and equipment in place and under operating methods being utilized at the time the estimates were made.No estimates of total proved net oil or natural gas reserves have been filed with,or included in reports to,any fe

74、deral authority or agency,other than the SEC,since October 1,2017.As of September 30,2018EstimatedProvedDevelopedReservesEstimatedProvedUndevelopedReservesEstimatedProvedReservesOil,including natural gas liquids(Bbls)693,000897,0001,590,000Natural gas(Mcf)2,399,0002,656,0005,055,000Total(Boe)1,107,0

75、001,355,0002,462,000During fiscal 2018,Barnwells total net proved developed reserves of oil and natural gas liquids increased by 280,000 Bbls(68%)and total net proved developed reserves of natural gas decreased by 606,000 Mcf(20%),for a combined increase of 176,000 Boe(19%).The increase in oil and n

76、atural gas liquids reserves was primarily the result of the Twining asset acquisition.The decrease in gas reserves was due to lower rolling average historical first-day-of-the-month natural gas prices used in the determination of reserve volumes at September 30,2018,partially offset by the Twining a

77、sset acquisition.Proved undeveloped reserves,which primarily relate to our acquisition of Twining in August 2018,totaled 897,000 Bbls of oil and natural gas liquids and 2,656,000 Mcf of gas as of September 30,2018.Our 8proved undeveloped reserves are planned for development within five years and are

78、 based on approximately$14,000,000 of future estimated capital expenditures to develop 12 gross(8.75 net)wells.The ability of Barnwell to convert the undeveloped reserves to developed reserves will be heavily influenced by the cash flows generated by the oil and natural gas segment,the results of su

79、ch drilling,and the ability of the Company to raise sufficient funds that may be needed for any potential future capital financing.There were no proved undeveloped reserves at September 30,2017.The following table sets forth Barnwells oil and natural gas net reserves at September 30,2018,by property

80、 name,based on information prepared by InSite,as well as net production and net revenues by property name for the year ended September 30,2018.The reserve data in this table is based on constant dollars where reserve estimates are based on sales prices,costs and statutory tax rates in existence at S

81、eptember 30,2018,the date of the projection.As of September 30,2018For the year ended September 30,2018Net ProvedProducing ReservesTotal Net ProvedReservesNet ProductionNet RevenuesPropertyNameOil&NGL(MBbls)Gas(MMcf)Oil&NGL(MBbls)Gas(MMcf)Oil&NGL(Bbls)Gas(Mcf)Oil&NGLGasBonanza/Balsam8965896513,00014

82、,000$675,000$14,000Hillsdown116511653,00040,000176,00056,000Progress28450456693,00088,000179,000128,000Spirit River4536911794,0006,000211,0008,000Twining4381,4711,2944,0528,00030,000432,00031,000Wood River5520552019,0006,000950,0008,000Otherproperties545517,000144,000739,00099,000Total6712,1111,5905

83、,05567,000328,000$3,362,000$344,000 Proved reserves that are attributable to existing producing wells are primarily determined using decline curve analysis and rate transient analysis,which incorporates the principles of hydrocarbon flow.Proved reserves attributable to producing wells with limited p

84、roduction history and for undeveloped locations are estimated using performance from analogous wells in the surrounding area and geologic data to assess the reservoir continuity.Technologies relied on to establish reasonable certainty of economic producibility include electrical logs,radioactivity l

85、ogs,core analyses,geologic maps and available production data,seismic data and well test data.Standardized 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 pres

86、ent value of Barnwells“Estimated Future Net Revenues”(discounted at 10%)as of September 30,2018.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

87、.Net revenues have been calculated using 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 9costs),and income taxes.The am

88、ounts below include future cash flows from reserves that are currently proved undeveloped reserves and do not deduct general and administrative or interest expenses.Year ending September 30,2019$2,567,00020202,482,00020212,152,000Thereafter15,627,000Undiscounted future net cash flows,after income ta

89、xes$22,828,000 Standardized measure of discounted future net cash flows$13,836,000*_*This amount does not purport to represent,nor should it be interpreted as,the fair value of Barnwells oil and natural gas reserves.An estimate of fair value would also consider,among other items,the value of Barnwel

90、ls 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$1.24 per Mcf and an oil price of$51.43 per Bbl)and costs,and a discount factor more representative of t

91、he 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,oil and natural gas liquids,from all wells in which Barnwell has or had an interest

92、,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 2018,2017 and 2016 was derived in Alberta,Canada.For a discussion regarding our total annual production

93、volumes,average sales prices,and related production costs,see Item 7,“Managements Discussion and Analysis of Financial Condition and Results of Operations.”The 2018 volumes reflect volumes from the Twining acquisition only from the closing date of August 28,2018.Year ended September 30,201820172016A

94、nnual net production:Natural gas(Mcf)328,000378,000476,000Oil(Bbls)62,00081,00078,000Natural gas liquids(Bbls)5,0005,0006,000Total(Boe)123,000151,000166,000Total(Mcfe)717,000877,000965,000Annual average sales price per unit of production:Mcf of natural gas*$1.12$1.98$1.27Bbl of oil*$51.53$40.72$32.4

95、2Bbl of natural gas liquids*$43.02$30.19$23.82Annual average production cost per Boe produced*$21.08$19.03$18.58Annual average production cost per Mcfe produced*$3.63$3.28$3.20_*Calculated on revenues net of pipeline charges before royalty expense divided by gross production.*Calculated on revenues

96、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.10 Capital Expenditures and AcquisitionsBarnwell invested$10,890,000 in oil and natural gas pr

97、operties during fiscal 2018,including accrued capital expenditures and acquisitions of oil and natural gas properties and excluding additions and revisions to estimated asset retirement obligations,of which$10,362,000 was for the acquisition of oil and natural gas working interests in an oil and nat

98、ural gas property in the Twining area.Barnwell also assumed$3,076,000 in asset retirement obligations associated with the Twining acquisition.Well Drilling ActivitiesIn fiscal 2018,we participated in a horizontal development well that was drilled in the Balsam area,in which we have a 22%working inte

99、rest.This well was successful and started producing in July 2018.During the first 90 days of production the well has averaged about 180 barrels of oil per day,of which about 40 barrels of oil per day are net to Barnwell.This is estimated to result in a less than one-year payout and it is expected th

100、at an additional offset well will be drilled in 2019.One gross(0.1 net)development well was drilled in fiscal 2017 and no wells were drilled in fiscal year 2016.Producing WellsAs of September 30,2018,Barnwell had interests in 73 gross(42.1 net)producing wells,of which 65 gross(39.4 net)were oil well

101、s and 8 gross(2.7 net)were natural gas wells.All wells were in Alberta,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 Barnwell held as of September 30,2018.Developed Acreage*Und

102、eveloped Acreage*TotalLocationGrossNetGrossNetGrossNetCanada182,43940,72888,22917,322270,66858,050_*“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 a

103、nd which are maintained by the payment of delay rentals or the commencement of drilling thereon.Seventy-five percent of Barnwells undeveloped acreage is not subject to expiration at September 30,2018.Twenty-five percent of Barnwells leasehold interests in undeveloped acreage is subject to expiration

104、 and expire over the next five fiscal years,if not developed,as follows:12%expire during fiscal 2019;4%expire during fiscal 2020;3%expire during fiscal 2021;2%expire during fiscal 2022;and 4%expire in fiscal 2023.There can be no assurance that Barnwell will be successful in renewing its leasehold in

105、terests in 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 undeveloped acreage includes a significant concentration in the Th

106、ornbury(5,919 net acres)and Twining(2,904 net acres)areas of Alberta,Canada.11Marketing of Oil and Natural Gas Barnwell sells its oil,natural gas,and natural gas liquids production,including under short-term contracts between itself and two main oil marketers,one natural gas purchaser,and one natura

107、l gas liquids marketer.The prices received are freely negotiated between buyers and sellers and are determined from transparent posted prices adjusted for quality and transportation differentials.In fiscal 2018,over 80%of Barnwells oil and natural gas revenues were from products sold at spot prices.

108、Barnwell does not use derivative instruments to manage price risk.In fiscal 2018 and 2017,Barnwell took most 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 Barnwells behalf.We se

109、ll 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 would not materially a

110、ffect our revenues.Governmental RegulationThe jurisdictions in which the oil and natural gas properties of Barnwell are located have regulatory provisions relating to permits for the drilling of wells,the spacing of wells,the prevention of oil and natural gas waste,allowable rates of production,envi

111、ronmental protection,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 province of Alberta and Government of Canada also monitor and regulate the volume of natural gas

112、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.Canadian natural gas production destined for export is priced by market forces subject to export contra

113、cts meeting certain criteria prescribed by Canadas National Energy Board and the Government of Canada.All of Barnwells gross revenues were derived from properties located within Alberta,which charges oil and natural gas producers a royalty for production within the province.Provincial royalties are

114、calculated as a percentage of revenue and vary depending on production volumes,selling prices and the date of discovery.Barnwell also pays gross overriding royalties and leasehold royalties on a portion of its oil and natural gas sales to parties other than the province of Alberta.In January 2016,th

115、e Alberta Royalty Panel recommended a new modernized Alberta royalty framework which applies to wells drilled on or after January 1,2017.The previous royalty framework will continue to apply to wells drilled prior to January 1,2017 for a period of ten years,after which they will fall under the curre

116、nt royalty framework.Under the current royalty framework the same royalty calculation applies to both oil and natural gas wells,whereas the previous royalty framework had different royalties applicable to each category,and royalties are determined on a revenue minus cost basis where producers pay a

117、flat royalty rate of 5%of gross revenues until a well reaches payout after which an increased post-payout royalty applies.Post payout royalties vary with commodity prices and are adjusted down for cost increases as wells age.12In fiscal 2018 and 2017,66%and 63%,respectively,of royalties related to A

118、lberta government charges,and 34%and 37%,respectively,of royalties related to freehold,override and other charges which are not directly affected by the Alberta royalty framework.In fiscal 2018,the weighted-average royalty rate paid on all of Barnwells natural gas was 6%,and the weighted-average roy

119、alty rate paid on oil was 20%.Barnwells oil and natural gas segment is currently subject to the provisions of the Alberta 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 th

120、e companys deemed assets over its deemed liabilities relating to wells and facilities for which the company is the licensed 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 asset

121、s is based on each wells most recent twelve months of production and a rolling three-year average industry netback as determined 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 be

122、en realizing.A recalculation of the value using current industry netback values would likely have a negative impact 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 30,2018,the Company had sufficient deemed asse

123、t value that no security deposit was due.The AER reviews and approves the transfers of all well,facility and pipeline license from one operator to another,and 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 licens

124、e.This review process typically takes 30 to 60 days from the date of application.Application was made on August 28,2018 for Barnwell of Canada to accept the transfer of the various licenses relating to the Twining acquisition.On October 2,2018,the AER approved the transfer of all of the related lice

125、nses.As of the November 3,2018 LMR report,we had an LMR of 2.09.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 industry is intensely competitive in all phases,including the acquisition and developme

126、nt of 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 also competition between the oil and natural gas industry and other i

127、ndustries 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 having far greater financial,technical and other resources.Land Inves

128、tment SegmentOverviewBarnwell owns a 77.6%interest in Kaupulehu Developments,a Hawaii general partnership that has the right to receive payments from KD I and KD II resulting from the sale of lots and/or residential units by KD I and KD II within the approximately 870 acres of the Kaupulehu Lot 4A a

129、rea 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 an interest in approximately 1,000 acres of vacant leasehold land zoned conservation loca

130、ted adjacent to Lot 4A under a 13lease that terminates in December 2025,which currently has no development potential without both a development agreement with the lessor and zoning reclassification.Barnwell,through two limited liability limited partnerships,KD Kona and KKM Makai,holds a non-controll

131、ing ownership interest in the Kukio Resort land development partnerships which is comprised of KD Kukio Resorts,KD Maniniowali,and KDK.These entities,collectively referred to hereinafter as the“Kukio Resort Land Development Partnerships,”own certain real estate and development rights interests in th

132、e 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.KDK holds interests in KD I and KD II.KD I is the developer of Kaupulehu Lot 4A Increment I,and KD II is t

133、he developer of Kaupulehu Lot 4A increment II.Barnwells ownership interests in the Kukio Resort Land Development Partnerships is accounted for using the equity method of accounting.OperationsIn the 1980s,Kaupulehu Developments obtained the state and county zoning changes necessary to permit developm

134、ent of the Four Seasons Resort Hualalai at Historic Kaupulehu and Hualalai Golf Club,which 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 19

135、90s and 2000s,Kaupulehu Developments obtained the state and county 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 developm

136、ent,located adjacent to and north of the Four Seasons Resort Hualalai 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 commence

137、d on November 27,2013,the acquisition date of our ownership interest in the Kukio Resort Land Development Partnerships.Increment I is an area of 80 single-family lots,of which 20 lots remain to be sold,and a beach club on the portion of the property bordering the Pacific Ocean.The purchasers of the

138、80 single-family lots will have the right 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-fam

139、ily and multi-family residential units and a golf course and clubhouse.Two residential lots of approximately two to three acres in size fronting the ocean were developed within Increment II and sold by KD II,and the remaining acreage within Increment II is not yet under development.It is uncertain w

140、hen 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 sales of si

141、ngle-family residential lots in Increment I: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 fiscal 2018,three single-family lots in Increment I were sold bringing the total amount of gross proceeds fro

142、m single-family lot sales through September 30,2018 to$215,000,000.Kaupulehu Developments is entitled to receive payments from KD II based on a percentage of the gross receipts from KD IIs sales of residential lots or units in Increment II ranging from 8%to 10%of the price of improved or unimproved

143、lots or 2.60%to 3.25%of the price of units constructed on a lot,to be 14determined in the future depending upon a number of variables,including whether the lots are sold prior to improvement.Kaupulehu Developments is also entitled to receive 50%of distributions otherwise payable from KD II to its me

144、mbers up to$8,000,000,of which$3,500,000 has been received to date,after the members of KD II have received distributions equal to the original basis of capital invested in the project.In fiscal 2018,the Kukio Resort Land Development Partnerships made cash distributions to its partners of which Barn

145、well received$735,000,after distributing$89,000 to minority interests.CompetitionBarnwells 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 po

146、tential buyers of property interests presently owned.The competition 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 part

147、icipant in the land development industry and competes in its 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 dept

148、hs in Hawaii,installs and repairs water pumping systems,and 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 le

149、ases a three-quarter of an acre maintenance facility in Honolulu,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 suppli

150、es.Water Resources currently operates in Hawaii and is not subject 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 potenti

151、al contracts through public notices,its officers involvement in the community and referrals.Contracts are usually fixed price per lineal foot drilled and are negotiated with private entities or obtained through competitive bidding with private entities or local,state and federal agencies.Contract re

152、venues are not dependent upon the discovery 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 2018,Water Resources start

153、ed two well drilling and four pump installation and repair contracts and completed one well drilling and six pump installation and repair contracts.The drilling contract and two of the pump installation and repair contracts completed were started in the prior year,and the other completed contracts w

154、ere started in the current year.Sixty-nine percent of well drilling and pump installation and repair 15jobs,representing 58%of total contract drilling revenues in fiscal 2018,have been pursuant to government contracts.At September 30,2018,there was a backlog of four well drilling and seven pump inst

155、allation and repair contracts,of which three well drilling and five pump installation and repair contracts were in progress as of September 30,2018.The approximate dollar amount of Water Resources backlog of firm well drilling and pump installation and repair contracts at December 1,2018 and 2017 wa

156、s as follows:December 1,20182017Well drilling$4,600,000$4,600,000Pump installation and repair1,200,0001,600,000$5,800,000$6,200,000 Of the contracts in backlog at December 1,2018,$2,900,000 is expected to be recognized in fiscal 2019 with the remainder to be recognized in the following fiscal year.C

157、ompetitionWater Resources competes with other drilling contractors in Hawaii,some of which use drill rigs similar 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

158、 Water Resources for government and private contracts.Pricing is Water Resources major method of competition;reliability 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

159、 occurred in fiscal 2018 will continue.Financial Information About Industry Segments and Geographic AreasNote 11 in the“Notes to Consolidated Financial Statements”in Item 8 contains information on our segments and geographic areas.EmployeesAt December 1,2018,Barnwell employed 31 individuals;30 on a

160、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 agencies issue rules and regulations and enforce laws to protect the environment which are often di

161、fficult 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 changing,regulate the discharge of materials into the environment and maintenance of surface conditi

162、ons and may require Barnwell to remove or mitigate the environmental effects of the disposal or release of petroleum or chemical substances at various sites where it has a working interest.16 For further information on environmental remediation,see the Contingencies section included in Item 7,“Manag

163、ements 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 InformationWe are required to file annual,quarterly and current reports and other informat

164、ion 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.20549,on official business days during the hours of 10 a.m.to 3 p.m.You may obtain info

165、rmation 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 an internet site at .We make available on our internet website free of charge our annua

166、l 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 SEC.The contents of these websites are not incorporated into this filing.Furthermore,the

167、Companys references to URLs for these websites are intended to be textual references only.17ITEM 1A.RISK FACTORS The business of Barnwell and its subsidiaries face numerous risks,including those set forth below or those described elsewhere in this Form 10-K or in Barnwells other filings with the SEC

168、.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.Entity-Wide RisksThe Company faces issues that could impair our ability to continue as a

169、going concern in the future.The Twining reserves acquired consist of proved producing reserves as well as a significant amount of proved reserves that are undeveloped.Our proved undeveloped reserves are estimated to require roughly$14,000,000 in future oil and natural gas capital expenditures to dev

170、elop within the next five years.Cash flows generated by developed Twining reserves are estimated by our independent reserve engineering firm to be sufficient to fund such capital expenditures.However,as the independent reserve engineering firms estimates do not consider items such as our ongoing gen

171、eral and administrative expenses,it is possible that we will need to obtain a significant amount of new financing in the form of debt or equity in order to develop the reserves to the level estimated by our independent reserve engineers.Our ability to sustain our business in the future will depend o

172、n sufficient oil and natural gas operating cash flows,which are highly sensitive to potentially volatile oil and natural gas prices,sufficient future land investment segment proceeds and distributions from the Kukio Resort Land Development Partnerships,the timing of which are both highly uncertain a

173、nd not within Barnwells control,and our ability to fund our needed oil and natural gas capital expenditures and the level of success of such capital expenditures,as well as our ability to fund oil and natural gas asset retirement obligations and ongoing operating and general and administrative expen

174、ses.Management believes our current cash balances,working capital and future cash inflows from operations will be sufficient to fund its estimated cash outflows for the next 12 months.However,if oil and natural gas and land investment cash inflows and any needed new financing sources are not suffici

175、ent to sustain our longer term business plans,which are currently based upon assumptions and estimates that may not materialize,or if unforeseen circumstances arise that impair our ability to sustain or grow our business,the Company may need to consider further sales of our assets or alternative str

176、ategies,or we may be forced to wind down our operations,either through liquidation or bankruptcy,and we may not be able to continue as a going concern in 2020 and beyond.A small number of stockholders,including our CEO,own a significant amount of our common stock and have influence over our business

177、 regardless of the opposition of other stockholders.As of September 30,2018,the CEO,who is a member of the Board of Directors,and two others hold approximately 36%of our outstanding common stock.The interests of one or more of these stockholders may not always coincide with the interests of other st

178、ockholders.These stockholders have significant influence 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 are also members of the Board of Directors c

179、ould significantly affect our business,policies and affairs.18Our 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

180、 affected by foreign currency fluctuations through both translation 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

181、 we sell our oil and natural gas and may affect the cost of certain 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 econo

182、mic or other factors,or lower returns on plan assets could adversely 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 factor

183、s,including the performance of the financial markets,specifically 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 vol

184、atile and could fluctuate based on a variety of factors,including: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

185、and other events applicable to our industries.Failure to retain key 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 c

186、ould be adversely affected by an inability to retain personnel or upward pressure on wages as a result of the highly competitive labor market.Further,there are significant personal liability risks to Barnwell of Canadas individual officers and directors related to well clean-up costs that may affect

187、 our ability to attract or retain the necessary people.19We are a smaller reporting company and benefit from 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

188、over financial reporting.We cannot be certain if the omission 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 nonaffili

189、ates had a value of less than$250 million at the end of 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

190、 the effectiveness of the Companys internal control over 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

191、 addition,as a smaller reporting company,we take advantage 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 disclosur

192、es.Consequently,it may be morechallenging for investors 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 n

193、ot required to provide this information.Risks Related to 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.Since fiscal 2014,Barnwell has been selectively divesting oil and natural ass

194、ets to improve operational focus,reduce abandonment liabilities,and decrease the Companys debt burden,however,as a result of these sales,our oil and natural gas segment revenues and operating cash flow have significantly declined.Most notably,in September 2015,we sold our interest in our principal o

195、il and natural gas property Dunvegan,which 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 contributed 46%of our total oil and natural gas revenues.In February 2018,we sold our interest in our o

196、il and natural gas property Red Earth.Red Earth represented 0.07%of our proved natural gas reserves and 25%of our proved oil and natural gas liquids reserves as of September 30,2017,and 22%of our total oil and natural gas revenues in the year ended September 30,2017.In August 2018,Barnwell made a si

197、gnificant reinvestment into its oil and natural gas segment with the acquisition of the Twining property in Alberta,Canada which resulted in a significant increase in our proved reserves.However,a significant portion of those proved reserves include proved undeveloped reserves for which it is estima

198、ted that$14,000,000 in future capital expenditures will need to be made to convert those undeveloped reserves into developed reserves.The ability to convert the undeveloped reserves to developed reserves will be heavily influenced by the cash flows generated by the oil and natural gas segment,the re

199、sults of such drilling,and the need for and sufficiency of any potential future capital financing.If future circumstances are such that we are not able to make the capital expenditures necessary to convert the undeveloped reserves to developed reserves,our future reserves and resulting operating res

200、ults and cash flows from our reserves will be less than our expectations and less than the estimations included in this report.Also,continued reinvestment in oil and natural gas segment assets are needed to replace the significant amount of reserves produced and sold.20Future oil and natural gas ope

201、rating results and cash flow are 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 financial resources may be insufficient to make s

202、uch 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.Conversion of our proved undeveloped reserves into

203、 proved developed reserves will require substantial capital expenditures which we intend to fund using cash on hand and operational cash generated,if any.However,the Companys current cash on hand is likely to be needed to fund upcoming cash needs including asset retirement obligations,retirement pla

204、n funding,and ongoing operating and general and administrative expenses,such that some or potentially all 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 existing wells,oi

205、l and natural gas prices,and our success in acquiring and developing new reserves.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.Decreases in c

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

207、 obtain financing on terms favorable to us,or at all.If cash on hand and cash generated by operations,if any,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 need to curtail the development o

208、f our proved undeveloped reserves 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 ret

209、urn on oil and natural gas investments.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

210、our investment in those wells.If 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.Oil and natural gas prices are highly volatile and further declines,or extended lo

211、w 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 a per unit basis,but also reduce the amount

212、of oil and natural gas we can produce economically,if any.Prices that do not produce sufficient operating margins 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 allocate for the a

213、cquisition and development of oil and natural gas reserves.21Various 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,the level of

214、 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 Organization of

215、 the 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.The inability of one or more of our working interest partners to meet their ob

216、ligations may adversely affect our 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.Nonpe

217、rformance by a non-operating partner 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 thir

218、d party operators may be unwilling or unable to pay their share of the costs of projects as they become due.In the event a third party operator of a non-operated property becomes insolvent,it may result in increased operating expenses and cash required for abandonment liabilities if the Company is r

219、equired to take over operatorship.Barnwell holds a 10%working interest,the largest working interest other than that held by the operator,in a property with approximately 80 wells where the operator is in receivership.We may incur material costs to comply with or as a result of health,safety,and envi

220、ronmental laws and regulations.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 oi

221、l and natural gas industry may 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

222、that we will be able to satisfy 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 Managemen

223、t 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 licensed operator and imposes a security deposit on operators whose estimated liabilities exceed their deemed asset value.At Septembe

224、r 30,2018,the Company had sufficient 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.The AER

225、 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.This LMR requirement for well transfers hinders our ability to generate capital by selling oil and natural gas assets as there are less qualified buyers.22A

226、 requirement to provide security deposit funds to the AER in the future would result in the diversion of cash on hand and 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,finan

227、cial condition 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

228、in the 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

229、 the AER.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

230、on economically 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

231、 to suspend 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 l

232、easeholds 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 pote

233、ntial environmental 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 bec

234、ome sufficiently familiar with the properties to fully assess their deficiencies and potential 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,

235、the seller 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 o

236、n an“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.If oil and natural gas prices dec

237、line,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 test write-downs will result in reductions

238、of the carrying value of our oil and natural gas properties and an equivalent charge to earnings.23 The oil and natural gas industry is highly competitive.We compete for capital,acquisitions of reserves,undeveloped lands,skilled personnel,access to drilling rigs,service rigs and other equipment,acce

239、ss to processing facilities,pipeline capacity and in many other respects with a substantial number of other organizations,most of which have greater technical and financial resources than we do.Some of these organizations explore for,develop and produce oil and natural gas,carry on refining operatio

240、ns 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 competitive advantage when responding to factors t

241、hat 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 resources,it could adversely affect our reven

242、ues.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.Electricity,supplies,and labor costs are a few

243、 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 negatively impact operating results and cash flow.Our operating results are affec

244、ted 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 provincial,as well as United States federal and state,regul

245、ation 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 factors change and inhibit the marketing of our production

246、,overall production or realized prices may decline.We are not the operator and have limited influence over the operations of certain of our oil and natural gas properties.We hold minority interests in certain of our oil and natural gas properties.As a result,we cannot control the pace of exploration

247、 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 provisions give Barnwell certain consent rights in some matters.The

248、 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 provide us with reliable accounting information.We also depend on

249、operators and joint operators to maintain the financial resources to fund their share of all abandonment and reclamation costs.24Actual reserves will vary from reserve estimates.Estimating reserves is inherently uncertain and the reserves estimation process involves significant decisions and assumpt

250、ions in the evaluation of available geological,geophysical,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 estimati

251、on of reserves involves a number of factors and assumptions,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 developme

252、nt costs,royalties and capital expenditures;initial 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

253、 reserves.If these factors,assumptions and prices prove 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 natura

254、l gas to the operators of our properties,and the delays 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 gathe

255、ring system;blowouts or other accidents;adjustments 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 o

256、il and natural gas market in which we operate exposes 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,an

257、d the production and transportation of oil and natural 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

258、weather conditions,pollution,other 25environmental 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 carry various levels of insurance,we could be affected by civil,criminal

259、,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

260、listed 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

261、 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

262、 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

263、 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,environm

264、ental 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

265、in 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;41%in fiscal 2018.Additionally,our ability to compete in the Canadian oil and natural gas ind

266、ustry 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

267、funds 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 t

268、o 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 ta

269、x 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 fut

270、ure 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 cou

271、ld have a material adverse effect on our financial performance.26Unforeseen 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 gua

272、rantee 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 payments from

273、 KD I and KD II and cash distributions from the Kukio Resort Land Development Partnerships is dependent upon the developers continued efforts and ability to develop and market the property.We are entitled to receive future payments based on a percentage of the sales prices of residential lots sold w

274、ithin the Kaupulehu area by KD I and KD II as well as a percentage of future distributions KD II makes to its members.However,in order to collect such payments we are reliant upon the developer,KD I and KD II,in which we own a non-controlling ownership interest,to continue to market the remaining lo

275、ts within Increment I and to proceed with the development or sale of the remaining portion of Increment II.Additionally,future cash distributions from the Kukio Resort Land Development Partnerships,which includes KD I and KD II,are also dependent on future lot sales in Increment I by KD I and the de

276、velopment or sale of Increment II by KD II.It is uncertain when or if KD II will develop or sell the remaining portion of Increment II,and there is no assurance with regards to the amounts of future sales from Increments I and II.KD II is required to submit an overall status report of the project,in

277、cluding the percentage of completed development,by April 20,2019.There is a possibility that regulatory authorities could impose adverse conditions of approval that impede the developers goals,or outright refuse to extend the allowed zoning beyond April 20,2019,which would have an adverse impact on

278、the value of the property.Currently,a formal request for a 20-year time extension of the original development period was submitted by the general partner and reviewed by the regulatory authorities.Although the initial response has been favorable,a 20-year extension has not been granted to date.We do

279、 not have a controlling interest in the partnerships,and therefore are dependent on the general partner for development decisions.The receipt of future payments and cash distributions could be jeopardized if the developer fails to proceed with development and marketing of the property.We hold invest

280、ment 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 investments involve risks and are highly illiquid.These investments involve risks which include:the lack of a controlling

281、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 vote of partners;potential for future additional capital contributions to fund operations and development activities;the

282、 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/or an increase in indebtedness to pay potential future additional capital contributions,which could in turn restrict 27o

283、ur ability to access additional capital when needed or to pursue other important elements of our business strategy;undisclosed,contingent or other liabilities or problems,unanticipated costs,and an inability to recover or manage such liabilities and costs;and certain underlying partnership data is n

284、ot accessible to us,therefore we depend on the general partner to provide us with reliable accounting information.We may be required to write-down the carrying value of our investment in the Kukio Resort Land Development Partnerships if our assumptions about future lot sales and profitability prove

285、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 assumptions about the level of future lot sales,operating and development costs,cash generation and market conditions.The

286、se 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 the value of the assets recorded,which could lead to an impairment of certain of these assets in the future.Such a write

287、-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 and health of Hawaii,particularly the island of Hawaii.Barnwells land investment segment is impac

288、ted 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 Barnwells land development activities are subject to,among other factors,the level of real estat

289、e 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,changes to zoning laws,and the level of confidence in Hawaiis economy.The occurrence of natural d

290、isasters in Hawaii could adversely affect our business.The occurrence of a natural disaster in Hawaii such as,but not limited to,earthquakes,landslides,hurricanes,tornadoes,tsunamis,volcanic activity,droughts and floods,could have a material adverse effect on our land investments.The occurrence of a

291、 natural disaster could also cause property and flood insurance rates and deductibles to increase,which could reduce demand for real estate in Hawaii.Risks Related to Contract Drilling Segment Demand for water well drilling and/or pump installation is volatile.A decrease in demand for our services c

292、ould 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 real estate development industry is cyclical in nature and is particularly vulnerable to shifts in local,regional,and n

293、ational 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 drilling and/or pump installation contracts will result in decreased revenues and operating results.28If we are unab

294、le to accurately estimate the overall risks,requirements or costs when bidding on or negotiating a contract that is ultimately awarded,we may achieve a lower than anticipated profit or incur a loss on the contract.Contracts are usually fixed price per lineal foot drilled and require the provision of

295、 line-item materials at a fixed unit price based on approved quantities irrespective of actual per unit costs.Under such contracts,prices are established in part on cost and scheduling estimates,which are based on a number of assumptions,many of which are beyond our control.Expected profits on contr

296、acts are realized only if costs are accurately estimated and successfully controlled.We may not be able to obtain compensation for additional work performed or expenses incurred as a result of changes or inaccuracies in these estimates and underlying assumptions,such as unanticipated sub-surface sit

297、e conditions,unanticipated technical problems,equipment failures,inefficiencies,cost of raw materials,schedule delays due to constraints on drilling hours,weather delays,or accidents.If cost estimates for a contract are inaccurate,or if the contract is not performed within cost estimates,then cost o

298、verruns may result in losses or cause the contract not to be as profitable as expected.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 drilling divisio

299、n revenues is derived from water and infrastructure contracts with governmental entities or agencies;58%in fiscal 2018.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 spending by a sign

300、ificant 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 of our compe

301、titors 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.The loss of

302、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 affect our busi

303、ness.Awarding 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 impact on our

304、ability to win competitive bids,which could have a corresponding material impact on contract drilling operating results.29The contracts in our backlog are subject to change orders and cancellation.Our backlog consists of the uncompleted portion of services to be performed under contracts that have b

305、een 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 Hawaii such as,b

306、ut 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 and Land Investment Properties The l

307、ocation and character of Barnwells oil and natural gas properties and its land investment properties,are described above under Item 1,“Business.”Corporate Offices Barnwell,through a wholly-owned subsidiary,owns the 29th floor of a commercial office building in downtown Honolulu that it uses as its c

308、orporate office.ITEM 3.LEGAL PROCEEDINGS Barnwell is routinely involved in disputes 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 mana

309、gement is not aware of any claims or litigation involving Barnwell that are likely to have a material adverse effect on its results of operations,financial position or liquidity.ITEM 4.MINE SAFETY DISCLOSURES Disclosure is not applicable to Barnwell.30PART II ITEM 5.MARKET FOR REGISTRANTS COMMON EQU

310、ITY,RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES Market Information The principal market on which Barnwells common stock is being traded is the NYSE American under the ticker symbol“BRN.”The following tables present the quarterly high and low sales prices,on the NYSE America

311、n,for Barnwells common stock during the periods indicated:Quarter EndedHighLowQuarter EndedHighLowDecember 31,2016$2.04$1.55December 31,2017$2.70$1.80March 31,2017$2.70$1.58March 31,2018$2.95$1.80June 30,2017$2.21$1.70June 30,2018$2.47$1.63September 30,2017$1.93$1.62September 30,2018$2.95$1.69 Holde

312、rs As of December 1,2018,there were 8,277,160 shares of common stock,par value$0.50,outstanding.As of December 1,2018,there were approximately 90 shareholders of record and approximately 1,000 beneficial owners.Dividends No dividends were declared or paid during fiscal years 2018 or 2017.The payment

313、 of future cash dividends will depend on,among other things,our financial condition,operating 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

314、 information included in Part III,Item 12,under the caption“Equity Compensation Plan Information.”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

315、qualifies as a smaller reporting company.31ITEM 7.MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL 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 refer

316、red to herein as“Barnwell,”“we,”“our,”“us”or the“Company”)as of September 30,2018 and 2017,and the related Consolidated Statements of Operations,Comprehensive(Loss)Income,Equity,and Cash Flows for the years ended September 30,2018and 2017.This discussion should be read in conjunction with the consol

317、idated financial statements and related Notes to Consolidated Financial Statements included in this report.Current Outlook The Twining reserves acquired consist of proved producing reserves as well as a significant amount of proved reserves that are undeveloped.Our proved undeveloped reserves are es

318、timated to require roughly$14,000,000 in future oil and natural gas capital expenditures to develop within the next five years.Cash flows generated by developed Twining reserves are estimated by our independent reserve engineering firm to be sufficient to fund such capital expenditures.However,as th

319、e independent reserve engineering firms estimates do not consider items such as our ongoing general and administrative expenses,it is possible that we will need to obtain a significant amount of new financing in the form of debt or equity in order to develop the reserves to the level estimated by ou

320、r independent reserve engineers if the cash inflows estimated by the Companys executive management are not sufficient.Our ability to sustain our business in the future will depend on sufficient oil and natural gas operating cash flows,which are highly sensitive to potentially volatile oil and natura

321、l gas prices,sufficient future land investment segment proceeds and distributions from the Kukio Resort Land Development Partnerships,the timing of which are both highly uncertain and not within Barnwells control,and our ability to fund our needed oil and natural gas capital expenditures and the lev

322、el of success of such capital expenditures,as well as our ability to fund oil and natural gas asset retirement obligations and ongoing operating and general and administrative expenses.Management believes our current cash balances,working capital and future cash inflows from operations will be suffi

323、cient to fund its estimated cash outflows for the next 12 months.However,if oil and natural gas and land investment cash inflows and any needed new financing sources are not sufficient to sustain our longer term business plans,which are currently based upon assumptions and estimates that may not mat

324、erialize,or if unforeseen circumstances arise that impair our ability to sustain or grow our business,the Company may need to consider further sales of our assets or alternative strategies,or we may be forced to wind down our operations,either through liquidation or bankruptcy,and we may not be able

325、 to continue as a going concern in 2020 and beyond.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 subjective about matters that were highly uncertain at t

326、he 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 current period,would have a material impact on the Co

327、mpanys financial condition or results of operations.The most critical accounting policies inherent in the preparation of the 32Companys consolidated financial statements are described below.We continue to monitor our accounting policies to ensure proper application of current rules and regulations.O

328、il 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,on the carrying value of oil and nat

329、ural 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 estimated future net cash flows from est

330、imated 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 with the exception of those associated with proved undev

331、eloped reserves from wells that are to be drilled in the future;plus 2)the cost of major development projects and unproven properties not subject to depletion,if any;plus 3)the lower of cost or estimated fair value of unproven properties included in costs subject to depletion;less 4)related income t

332、ax effects.If net capitalized costs exceed this limit,the excess is expensed.Judgments and Assumptions The estimate of our oil and natural gas reserves is a major component of the ceiling calculation and represents the component that requires the most subjective judgments.Estimates of reserves are f

333、orecasts based on engineering data,historical data,projected future rates of production and the timing of future expenditures.The process of estimating oil and natural gas reserves requires substantial judgment,resulting in imprecise determinations,particularly for new discoveries.Our reserve estimates are prepared at least annually by independent petroleum reserve engineers.The passage of time pr