Barnwell Industries Inc. (BRN) 2023年10-K年度報告「AMEX」.pdf

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1、UNITED STATES SECURITIES AND EXCHANGE COMMISSIONWASHINGTON,D.C.20549FORM 10-K(Mark One)ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)OF THE SECURITIES EXCHANGE ACT OF 1934For the fiscal year ended September 30,2023or TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)OF THE SECURITIES EXCHANGE ACT OF 1

2、934Commission File Number 1-5103 BARNWELL INDUSTRIES,INC.(Exact name of registrant as specified in its charter)Delaware 72-0496921(State or other jurisdiction of incorporation or organization)(I.R.S.Employer Identification No.)1100 Alakea Street,Suite 500,Honolulu,Hawaii96813-2840(Address of princip

3、al executive offices)(Zip code)Registrants telephone number,including area code:(808)531-8400 Securities registered pursuant to Section 12(b)of the Act:Title of each classTrading Symbol(s)Name of each exchange on which registeredCommon Stock,$0.50 par valueBRNNYSE AmericanSecurities registered pursu

4、ant 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.o Yes x NoIndicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d)of the Act.o Yes x NoIndi

5、cate 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 of1934 during the preceding 12 months(or for such shorter period that the registrant was required to file such reports),and(2)has been subject tosuch filing req

6、uirements for the past 90 days.x Yes o NoIndicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant toRule 405 of Regulation S-T(232.405 of this chapter)during the preceding 12 months(or for such shorter period that the re

7、gistrant was requiredto submit such files).x Yes o NoIndicate 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,”“

8、smaller reporting company”and emerginggrowth company in Rule 12b-2 of the Exchange Act.Large accelerated filer Accelerated filerNon-accelerated filer Smaller reporting companyEmerging growth companyIf an emerging growth company,indicate by check mark if the registrant has elected not to use the exte

9、nded transition period for complying withany new or revised financial accounting standards provided pursuant to Section 13(a)of the Exchange Act.oIndicate by check mark whether the Registrant has filed a report on and attestation to its managements assessment of the effectiveness of itsinternal cont

10、rol over financial reporting under Section 404(b)of the Sarbanes-Oxley Act(15 U.S.C.7262(b)by the registered public accountingfirm that prepared or issued its audit report.If securities are registered pursuant to Section 12(b)of the Act,indicate by check mark whether the financial statements of the

11、registrant includedin the filing reflect the correction of an error to previously issued financial statements.oIndicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensationreceived by any of the registrants executive

12、officers during the relevant recovery period pursuant to 240.10D-1(b).oIndicate by check mark whether the registrant is a shell company(as defined in Rule 12b-2 of the Act).Yes x NoThe aggregate market value of the voting common stock held by non-affiliates of the registrant,computed by reference to

13、 the closing price of ashare of common stock on March 31,2023(the last business day of the registrants most recently completed second fiscal quarter)was$10,251,000.As of December 12,2023 there were 10,000,106 shares of common stock outstanding.Documents Incorporated by Reference1.Proxy statement,to

14、be forwarded to stockholders on or about January 12,2024,is incorporated by reference in Part III hereof.2025/2/12 02:25brn-20230930https:/www.sec.gov/Archives/edgar/data/10048/000001004823000022/brn-20230930.htm1/1672025/2/12 02:25brn-20230930https:/www.sec.gov/Archives/edgar/data/10048/00000100482

15、3000022/brn-20230930.htm2/167TABLE OF CONTENTS Page Glossary of Terms3 Discussion of Forward-Looking Statements4PART I Item 1.Business5 Item 1A.Risk Factors19 Item 1B.Unresolved Staff Comments31 Item 2.Properties31 Item 3.Legal Proceedings31 Item 4.Mine Safety Disclosures31 PART II Item 5.Market For

16、 Registrants Common Equity,Related Stockholder Matters andIssuer Purchases of Equity Securities32 Item 6.Reserved33 Item 7.Managements Discussion and Analysis of Financial Condition and Resultsof Operations34 Item 7A.Quantitative and Qualitative Disclosures About Market Risk53 Item 8.Financial State

17、ments and Supplementary Data54 Item 9.Changes in and Disagreements with Accountants on Accounting andFinancial Disclosure111 Item 9A.Controls and Procedures111 Item 9B.Other Information111Item 9C.Disclosure Regarding Foreign Jurisdictions That Prevent Inspections112 PART III Item 10.Directors,Execut

18、ive Officers and Corporate Governance113 Item 11.Executive Compensation113 Item 12.Security Ownership of Certain Beneficial Owners and Management andRelated Stockholder Matters113 Item 13.Certain Relationships and Related Transactions,and Director Independence114 Item 14.Principal Accounting Fees an

19、d Services114 PART IV Item 15.Exhibits,Financial Statement Schedules115 Signatures118 Index to Exhibits12022025/2/12 02:25brn-20230930https:/www.sec.gov/Archives/edgar/data/10048/000001004823000022/brn-20230930.htm3/167GLOSSARY OF TERMSUnless otherwise indicated,all references to“dollars”in this For

20、m 10-K are to U.S.dollars.Defined below are certain terms used in this Form 10-K:Terms DefinitionsAER-Alberta Energy RegulatorARO-Asset retirement obligationASC-Accounting Standards CodificationASU-Accounting Standards UpdateBarnwell of Canada-Barnwell of Canada,LimitedBbl(s)-stock tank barrel(s)of

21、oil equivalent to 42 U.S.gallonsBoe-barrel of oil equivalent at the rate of 6 Mcf per Bbl of oil or NGLConsolidated BalanceSheets-The consolidated balance sheets of Barnwell Industries,Inc.and its subsidiaries.FASB-Financial Accounting Standards BoardGAAP-U.S.generally accepted accounting principles

22、Gross-Total number of acres or wells in which Barnwell owns an interest;includes interests owned ofrecord by Barnwell and,in addition,the portion(s)owned by others;for example,a 50%interestin a 320 acre lease represents 320 gross acres and a 50%interest in a well represents 1 gross well.In the conte

23、xt of production volumes,gross represents amounts before deduction of the royaltyshare due others.InSite-InSite Petroleum Consultants Ltd.KD I-KD Acquisition,LLLP,formerly known as WB KD Acquisition,LLCKD II-KD Acquisition II,LP,formerly known as WB KD Acquisition,II,LLCKD DevelopmentKD Development,

24、LLCKD Kona-KD Kona 2013 LLLPKKM Makai-KKM Makai,LLLPKukio Resort LandDevelopment Partnerships-The following partnerships in which Barnwell owns non-controlling interest:KD Kukio Resorts,LLLP(“KD Kukio Resorts”)KD Maniniowali,LLLP(“KD Maniniowali”)KD Kaupulehu,LLLP,which consists of KD I and KD II(“K

25、DK”)LCA-Licensee Capability AssessmentLGX-LGX Oil&Gas Ltd.MBbls-thousands of barrels of oilMcf-one thousand cubic feet of natural gas at 14.65 pounds per square inch absolute and 60 degreesFahrenheitMcfe-Mcf equivalent at the rate of 1 Bbl=6 McfMMcf-one million cubic feet of natural gasNet-Barnwells

26、 aggregate interest in the total acres or wells;for example,a 50%interest in a 320 acrelease represents 160 net acres and a 50%interest in a well represents 0.5 net well.In the contextof production volumes,net represents amounts after deduction of the royalty share due others.NGL(s)-natural gas liqu

27、id(s)Octavian Oil-Octavian Oil,Ltd.OWAOrphan Well AssociationRyder Scott-Ryder Scott Company,L.P.SEC-United States Securities and Exchange CommissionU.S.-United StatesVIE-Variable interest entityWater Resources-Water Resources International,Inc.WIPWorking Interest Partners32025/2/12 02:25brn-2023093

28、0https:/www.sec.gov/Archives/edgar/data/10048/000001004823000022/brn-20230930.htm4/167CAUTIONARY STATEMENT RELEVANT TO FORWARD-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 r

29、eference,contain“forward-lookingstatements”within the meaning of the Private Securities Litigation Reform Act of 1995(PSLRA).Aforward-looking statement is one which is based on current expectations of future events or conditions anddoes not relate to historical or current facts.These statements incl

30、ude various estimates,forecasts,projections of Barnwell Industries,Inc.s(referred to herein together with its majority-owned subsidiaries as“Barnwell,”“we,”“our,”“us”or the“Company”)future performance,statements of Barnwells plans andobjectives and other similar statements.All such statements we mak

31、e are forward-looking statements madeunder the safe harbor of the PSLRA,except to the extent such statements relate to the operations of apartnership or limited liability company.Forward-looking statements include phrases such as“expects,”“anticipates,”“intends,”“plans,”“believes,”“predicts,”“estima

32、tes,”“assumes,”“projects,”“may,”“will,”“will be,”“should,”or similar expressions.Although Barnwell believes that its current expectationsare based on reasonable assumptions,it cannot assure that the expectations contained in such forward-looking statements will be achieved.Forward-looking statements

33、 involve risks,uncertainties andassumptions which could cause actual results to differ materially from those contained in such statements.Investors should not place undue reliance on these forward-looking statements,as they speak only as of thedate of filing of this Form 10-K,and Barnwell expressly

34、disclaims any obligation or undertaking to publiclyrelease any updates or revisions to any forward-looking statements contained herein.Among the important factors that could cause actual results to differ materially from those in theforward-looking statements are domestic and international general e

35、conomic conditions,such asrecessionary trends and inflation;domestic and international political,legislative,economic,regulatory andlegal actions,including changes in the policies of the Organization of the Petroleum Exporting Countries orother developments involving or affecting oil and natural gas

36、 producing countries;military conflict,embargoes,internal instability or actions or reactions of the governments of the U.S.and/or Canada inanticipation of or in response to such developments;interest costs,restrictions on production,restrictions onimports and exports in both the U.S.and Canada,the

37、maintenance of specified reserves,tax increases andretroactive tax claims,royalty increases,expropriation of property,cancellation of contract rights,environmental protection controls,environmental compliance requirements and laws pertaining to workershealth and safety;the condition of Hawaiis real

38、estate market,including the level of real estate activity andprices,the demand for new housing and second homes on the island of Hawaii,the rate of increase in thecost of building materials and labor,the introduction of building code modifications,changes to zoning laws,the condition of Hawaiis tour

39、ism industry and the level of confidence in Hawaiis economy;levels of landdevelopment 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 ofassets;the e

40、ffects of changed accounting rules under GAAP promulgated by rule-setting bodies;and thefactors set forth under the heading“Risk Factors”in this Form 10-K,in other portions of this Form 10-K,inthe Notes to Consolidated Financial Statements,and in other documents filed by Barnwell with the SEC.Inaddi

41、tion,unpredictable or unknown factors not discussed in this report could also cause actual results tomaterially and adversely differ from those discussed in the forward-looking statements.42025/2/12 02:25brn-20230930https:/www.sec.gov/Archives/edgar/data/10048/000001004823000022/brn-20230930.htm5/16

42、7PART I ITEM 1.BUSINESS OverviewBarnwell was incorporated in Delaware in 1956 and fiscal 2023 represented Barnwells 67th year ofoperations.Barnwell operates in the following three principal business segments:Oil and Natural Gas Segment -Barnwell engages in oil and natural gas development,production,

43、acquisitions and sales in Canada and in the U.S.states of Oklahoma and Texas.Land Investment Segment -Barnwell invests in land interests in Hawaii.Contract Drilling Segment -Barnwell provides well drilling services and water pumping systeminstallation and repairs in Hawaii.Oil and Natural Gas Segmen

44、tOverviewBarnwell acquires and develops crude oil and natural gas assets in the province of Alberta,Canada viatwo corporate entities,Barnwell of Canada and Octavian Oil.Barnwell of Canada is a U.S.incorporatedcompany that has been active in Canada for over 50 years,primarily as a non-operator partic

45、ipating inexploration projects operated by others.Octavian Oil is a Canadian company incorporated in 2016 to achievegrowth through the acquisition and development of crude oil reserves.Additionally,through its wholly-owned subsidiaries BOK Drilling,LLC(“BOK”),established in February 2021,and Barnwel

46、l Texas,LLC(“Barnwell Texas”),established in November 2022,Barnwell is involved in oil and natural gas investmentsin Oklahoma and Texas,respectively.StrategyBarnwells Canadian oil and natural gas assets are currently managed as two categories based on theirdiffering attributes and strategies:Twining

47、 and Legacy.Twining represents 73%of Barnwells fiscal 2023 Boe production and consists of assets in theTwining field,in Alberta,Canada.These assets were purchased in August 2018 and were augmented withsubsequent smaller acquisitions of partners.These assets are partially operated by the Company and

48、partiallyoperated by Pine Cliff Energy Ltd.The oil wells operated by the Company have largely less than 15%peryear decline rates,and due to these lower decline rates,require less capital investment to replace decline.This lower capital requirement along with the fact that the land is largely held in

49、definitely,enablesdevelopment drilling to be done when commodity prices support it.Since Barnwells entry into the Twiningproperty,we have participated in drilling 11 gross horizontal development wells that were completed withmulti-stage sand fracs,all of which have been or are forecast to be profita

50、ble.Of these 11 wells,two are100%-owned operated wells in locations selected by Barnwell and nine gross(2.6 net)are non-operatedwells.Barnwell plans to continue to develop the pool with more horizontal wells if commodity pricescontinue to support their profitability.52025/2/12 02:25brn-20230930https

51、:/www.sec.gov/Archives/edgar/data/10048/000001004823000022/brn-20230930.htm6/1672025/2/12 02:25brn-20230930https:/www.sec.gov/Archives/edgar/data/10048/000001004823000022/brn-20230930.htm7/167The Legacy assets represent 8%of Barnwells fiscal 2023 Boe production and consist of the largelynon-operated

52、 Canadian oil and natural gas assets not in the Twining area.The Legacy assets are locatedthroughout Alberta,Canada,and produce shallow gas and conventional oil from a variety of pools.Theseassets have been accumulated over decades of Barnwell activity.Barnwell continues to evaluate opportunitiesto

53、either divest the legacy Canadian assets or add to them through acquiring working interests depending ontechnical and economic evaluations.Minimal capital is expected to be invested in these properties.In Oklahoma,which produced 9%of Barnwells fiscal 2023 Boe production,the Company has non-operated

54、working interests in seven wells varying from 1.2%to 4.2%and a minor overriding royalty interest,0.07%,in one well.In December 2022,the Company entered into a purchase and sale agreement with an independentthird party to acquire a 22.3%non-operated working interest in oil and natural gas leasehold a

55、creage in thePermian Basin in Texas.In connection with the purchase of such leasehold interests,Barnwell acquired a15.4%non-operated working interest in two oil wells in the Wolfcamp Formation in Loving and WardCounties,Texas.Two gross(0.3 net)wells were drilled and began producing in late April 202

56、3.Additionaldrilling opportunities in the U.S.are being investigated.These wells produced 10%of Barnwells fiscal 2023Boe production,but were only producing for five months.OperationsAll acquisitions,operational and developmental activities in the Twining area are the responsibility ofthe President a

57、nd Chief Operating Officer of Barnwell of Canada and Octavian Oil with approvals for majorexpenditures secured from Barnwells executive management and,when applicable,the Board of Directors.Our oil and natural gas segment revenues,profitability,and future rate of growth are dependent uponoil and nat

58、ural gas prices and the Companys ability to use its current cash,obtain external financing orgenerate sufficient cash flows to fund the development of our reserves.In the recent past,the industryexperienced a period of low oil and natural gas prices that negatively impacted our past operating result

59、s,cash flows and liquidity.Credit and capital markets for oil and natural gas markets are volatile.We may seekto raise additional capital if such proceeds are considered attractive and would support potential growth.Natural gas prices are typically higher in the winter than at other times due to inc

60、reased heatingdemand.Oil prices also are subject to seasonal fluctuations,but to a lesser degree.Oil and natural gas unitsales are based on the quantity produced from the properties by the respective property operators.Pricesreceived in Canada also have been negatively impacted by the lack of export

61、 pipeline capacity.Preparation of Reserve EstimatesBarnwells reserves are estimated by our independent petroleum reserve engineers,InSite PetroleumConsultants Ltd.(“InSite”)in Canada and Ryder Scott Company,L.P.(“Ryder Scott”)in the U.S.,inaccordance with generally accepted petroleum engineering and

62、 evaluation principles and techniques andrules and regulations of the SEC.All information with respect to the Companys Canadian reserves in thisForm 10-K is derived from the report of InSite,which is filed with this Form 10-K as Exhibit 99.1.Allinformation with respect to the Companys U.S.reserves i

63、n this Form 10-K is derived from the reports ofRyder Scott,which are filed with this Form 10-K as Exhibits 99.2 and 99.3.62025/2/12 02:25brn-20230930https:/www.sec.gov/Archives/edgar/data/10048/000001004823000022/brn-20230930.htm8/167 The preparation of data used by the independent petroleum reserve

64、 engineers to compile our oil andnatural gas reserve estimates was completed in accordance with various internal control procedures whichinclude verification of data input into reserves evaluation software,reconciliations and reviews of dataprovided to the independent petroleum reserve engineers to

65、ensure completeness,and management reviewcontrols,including an independent internal review of the final reserve report for completeness and accuracy.Barnwell has a Reserves Committee consisting of two independent directors and Barnwells CEO.The Reserves Committee was established to ensure the indepe

66、ndence of the Companys petroleum reserveengineers.The Reserves Committee is responsible for reviewing the annual reserve evaluation reportsprepared by the independent petroleum reserve engineering firms and ensuring that the reserves are reportedfairly in a manner consistent with applicable standard

67、s.The Reserves Committee meets annually to discussreserve issues and policies and to meet with Company personnel and the independent petroleum reserveengineers.The President and Chief Operating Officer of Barnwell of Canada and Octavian Oil is a professionalengineer with over 25 years of relevant ex

68、perience in the oil and natural gas industry in Canada and is amember of the Association of Professional Engineers and Geoscientists of Alberta.ReservesAt September 30,2023,Barnwells reserves were approximately 43%operated and consisted of 52%conventional oil and natural gas liquids and 48%natural g

69、as.At September 30,2022,Barnwells reserveswere approximately 54%operated and consisted of 56%conventional oil and natural gas liquids and 44%natural gas.This change in reserves was largely due to our Texas investment in two non-operated wells.The amounts set forth in the following table,based on our

70、 independent reserve engineers evaluationof our reserves,summarize our estimated proved reserves of oil(including natural gas liquids)and naturalgas as of September 30,2023 for all properties located in Canada and the U.S.in which Barnwell has aninterest.All of our oil and natural gas reserves are b

71、ased on constant dollar price and cost assumptions.TheCompany emphasizes that reserve estimates are inherently imprecise and that estimates of new discoveriesand undeveloped locations are more imprecise than estimates of established proved producing oil and naturalgas properties.Accordingly,these es

72、timates are expected to change as future information becomes available.Proved oil and natural gas reserves are the estimated quantities of oil and natural gas that geological andengineering data demonstrate,with reasonable certainty,to be recoverable in future years from knownreservoirs under econom

73、ic and operating conditions(i.e.,prices and costs)existing at the time the estimate ismade.Proved developed oil and natural gas reserves are proved reserves that can be expected to be recoveredthrough existing wells and equipment in place and under operating methods being utilized at the time theest

74、imates were made.No estimates of total proved net oil or natural gas reserves have been filed with,orincluded in reports to,any federal authority or agency,other than the SEC,since October 1,2022.72025/2/12 02:25brn-20230930https:/www.sec.gov/Archives/edgar/data/10048/000001004823000022/brn-20230930

75、.htm9/167As of September 30,2023Estimated NetProvedDevelopedReservesEstimated NetProvedUndevelopedReservesEstimated NetProved ReservesOil,including natural gas liquids(Bbls)1,116,000 110,000 1,226,000 Natural gas(Mcf)6,093,000 608,000 6,701,000 Total(Boe)2,132,000 211,000 2,343,000 During fiscal 202

76、3,Barnwells total net proved developed reserves of oil and natural gas liquidsincreased by 70,000 Bbls(7%)and total net proved developed reserves of natural gas increased by 1,236,000Mcf(25%),for a combined increase of 249,000 Boe(13%).The increase in natural gas reserves wereprimarily the result of

77、 the wells drilled in Texas and Canada in the current year.The following table sets forth Barnwells oil and natural gas net reserves at September 30,2023,bylocation and property name,based on information prepared by our independent reserve engineers,as well asnet production and net revenues by locat

78、ion and property name for the year ended September 30,2023.Thereserve data in this table is based on constant dollars where reserve estimates are based on sales prices,costsand statutory tax rates using a historical average price of the first day pricing of the last 12-months endingwith September 20

79、23.As of September 30,2023For the year ended September 30,2023Net ProvedProducing ReservesNet Proved ReservesNet ProductionNet RevenuesProperty NameOil&NGL(MBbls)Gas(MMcf)Oil&NGL(MBbls)Gas(MMcf)Oil&NGL(MBbls)Gas(MMcf)Oil&NGLGasCanada:Twining656 3,024 813 3,882 192 902$12,605,000$2,581,000 Bonanza/Ba

80、lsam27 24 27 24 4 15 265,000 30,000 Kaybob22 101 22 101 3 14 211,000 42,000 Medicine River58 623 58 623 5 20 216,000 50,000 Thornbury 287 344 52 136,000 Wood River17 33 17 33 6 9 436,000 32,000 Other properties 4 3 11 2,000 24,000 United States:Oklahoma116 734 116 734 22 119 1,037,000 355,000 Texas1

81、73 957 173 957 24 121 1,163,000 191,000 Total1,069 5,787 1,226 6,701 256 1,263$15,935,000$3,441,000 Net proved reserves that are attributable to existing producing wells are primarily determined usingdecline curve analysis and rate transient analysis,which incorporates the principles of hydrocarbon

82、flow.Netproved reserves attributable to producing wells with limited production history and for undeveloped locationsare estimated using performance from analogous wells in the surrounding area and geologic data to assess thereservoir continuity.Technologies relied on to establish reasonable certain

83、ty of economic producibilityinclude electrical logs,radioactivity logs,core analyses,geologic maps and available production data,seismic data and well test data.82025/2/12 02:25brn-20230930https:/www.sec.gov/Archives/edgar/data/10048/000001004823000022/brn-20230930.htm10/167Standardized Measure of D

84、iscounted Future Net Cash FlowsThe following table sets forth Barnwells“Estimated Future Net Revenues”from total proved oil,natural gas and natural gas liquids reserves located in Canada and the U.S.and the present value ofBarnwells“Estimated Future Net Revenues”(discounted at 10%)as of September 30

85、,2023.Estimatedfuture net revenues for total proved reserves are net of estimated future expenditures of developing andproducing the proved reserves,and assume the continuation of existing economic conditions.Net revenueshave been calculated using the average first-day-of-the-month price during the

86、12-month period ending as ofthe balance sheet date and current costs,after deducting all royalties,operating costs,future estimated capitalexpenditures(including abandonment costs),and income taxes.The amounts below include future cash flowsfrom reserves that are currently proved undeveloped reserve

87、s and do not deduct general and administrative orinterest expenses.Year ending September 30,2024$7,993,000 20255,654,000 20263,900,000 Thereafter2,413,000 Undiscounted future net cash flows,after income taxes$19,960,000 Standardized measure of discounted future net cash flows$19,913,000*_*This amoun

88、t does not purport to represent,nor should it be interpreted as,the fair value of Barnwells oil and natural gas reserves.An estimateof fair value would also consider,among other items,the value of Barnwells undeveloped land position,the recovery of reserves not presentlyclassified as proved,anticipa

89、ted future changes in oil and natural gas prices(these amounts were based on a natural gas price of$2.54 per Mcfand an oil price of$69.66 per Bbl)and costs,and a discount factor more representative of the time value of money and the risks inherent inreserve estimates.Barnwell has included all abando

90、nment,decommissioning and reclamation costs and inactive wellcosts into the Companys reserve reports in accordance with best practice recommendations.Oil and Natural Gas ProductionThe following table summarizes(a)Barnwells net production for the last three fiscal years,based onsales of natural gas,o

91、il and natural gas liquids,from all wells in which Barnwell has or had an interest,and(b)the average sales prices and average production costs for such production during the same periods.Production amounts reported are net of royalties.All of Barnwells net production in fiscal 2023 was derivedin Alb

92、erta,Canada and in the U.S.states of Oklahoma and Texas.Barnwells net production in fiscal 2022and 2021 was derived in Alberta,Canada and in Oklahoma.For a discussion regarding our total annualproduction volumes,average sales prices,and related production costs,see Item 7,“ManagementsDiscussion and

93、Analysis of Financial Condition and Results of Operations.”92025/2/12 02:25brn-20230930https:/www.sec.gov/Archives/edgar/data/10048/000001004823000022/brn-20230930.htm11/167 Year ended September 30,202320222021Annual net production:Natural gas(Mcf)1,263,000 964,000 694,000 Oil(Bbls)204,000 182,000 1

94、47,000 Natural gas liquids(Bbls)52,000 48,000 24,000 Total(Boe)467,000 396,000 291,000 Total(Mcfe)2,799,000 2,296,000 1,685,000 Annual average sales price per unit of production:Mcf of natural gas*$2.64$4.63$2.62Bbl of oil*$69.77$86.73$51.74Bbl of natural gas liquids*$32.24$48.06$31.92Annual average

95、 production cost per Boe produced*$22.10$23.66$22.40Annual average production cost per Mcfe produced*$3.68$4.08$3.86_*Calculated on revenues net of pipeline charges before royalty expense divided by gross production.*Calculated on revenues before royalty expense divided by gross production.*Calculat

96、ed on production costs,excluding natural gas pipeline charges,divided by the combined total production of natural gas liquids,oiland natural gas.Capital Expenditures and AcquisitionsBarnwell invested$10,729,000 in oil and natural gas properties during fiscal 2023,including accruedcapital expenditure

97、s and acquisitions of oil and natural gas properties and excluding additions and revisionsto estimated asset retirement obligations.Barnwells capital expenditures were primarily for the drilling ofnew wells in Texas and the Twining area.Barnwell invested$11,052,000 in oil and natural gas properties

98、during fiscal 2022,including accruedcapital expenditures and acquisitions of oil and natural gas properties and excluding additions and revisionsto estimated asset retirement obligations.Barnwells capital expenditures were primarily for the drilling ofwells in the Twining area,for facilities expansi

99、on and upgrade costs in the Twining area and the acquisitionof additional working interests in several wells in the Twining area.Well Drilling ActivitiesThe Company participated in the drilling of three gross(0.9 net)non-operated development wells inthe Twining area of Alberta,Canada during the year

100、 ended September 30,2023.Total capital expenditures forthe year ended September 30,2023 totaled approximately$4,770,000 and included the drilling,completionand equipping of the three gross(0.9 net)wells along with various upgrades to the Twining facilities.Additionally,the Company participated in th

101、e drilling of two gross(0.3 net)non-operated development oilwells in Texas which began producing in late April 2023.Capital expenditures incurred for the drilling ofthese two wells totaled approximately$4,293,00 during the year ended September 30,2023.The Companydid not drill or participate in the d

102、rilling of wells in Oklahoma during the year ended September 30,2023.In fiscal 2022,the Company participated in the drilling of six gross(1.7 net)non-operateddevelopment wells in the Twining area.Capital expenditures incurred by the Company for these non-operateddevelopment wells totaled$4,366,000 f

103、or the year ended September 30,2022.Five gross(1.4102025/2/12 02:25brn-20230930https:/www.sec.gov/Archives/edgar/data/10048/000001004823000022/brn-20230930.htm12/167net)wells were producing at September 30,2022 and the remaining one gross(0.3 net)well was awaiting tie-in and started producing in fis

104、cal 2023.The Company drilled one gross(1.0 net)operated development wellin the Twining area which was producing at September 30,2022.Capital expenditures incurred by theCompany for this operated well was$2,852,000.The Company did not drill or participate in the drilling ofwells in Oklahoma during th

105、e year ended September 30,2022.In fiscal 2021,the Company participated in the drilling of seven gross(0.2 net)non-operateddevelopment wells in Oklahoma.Capital expenditures incurred by the Company for these Oklahoma wellstotaled$1,178,000 for the year ended September 30,2021.The Company did not dril

106、l or participate in thedrilling of wells in Canada during the year ended September 30,2021.Producing WellsAs of September 30,2023,Barnwell has interests in 145 gross(65.7 net)producing wells in Alberta,Canada,of which 95 gross(59.3 net)were oil wells and 50 gross(6.4 net)were natural gas wells.Addit

107、ionally,Barnwell has interests in seven gross(0.2 net)and two gross(0.3 net)producing oil wells inOklahoma and Texas,respectively,as of September 30,2023.Developed Acreage and Undeveloped AcreageThe following table sets forth the gross and net acres of both developed and undeveloped oil andnatural g

108、as leases in Canada which Barnwell held as of September 30,2023.The acreage of developed andundeveloped oil and natural gas leases in the U.S.are not significant and are therefore not included in thetable below.Developed Acreage*Undeveloped Acreage*TotalLocationGrossNetGrossNetGrossNetCanada136,2203

109、3,98027,1108,710163,33042,690_*“Developed Acreage”includes the acres covered by leases upon which there are one or more producing wells.“Undeveloped Acreage”includes acres covered by leases upon which there are no producing wells and which are maintained by the payment of delay rentals or thecommenc

110、ement of drilling thereon.Eighty-three percent of Barnwells undeveloped acreage is not subject to expiration at September 30,2023.Seventeen percent of Barnwells leasehold interests in undeveloped acreage is subject to expiration andmay expire over the next five fiscal years,if not developed,as follo

111、ws:6%expire during fiscal 2024;noexpirations during fiscal 2025;2%expire during fiscal 2026;5%expire during fiscal 2027;and 4%expireduring fiscal 2028.There can be no assurance that Barnwell will be successful in renewing its leaseholdinterests in the event of expiration.Barnwells undeveloped acreag

112、e includes a significant concentration in the Twining area(4,040 netacres).The remaining 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.Marketing of Oil and Natural Gas B

113、arnwell sells its Canadian oil,natural gas,and natural gas liquids production,including under short-term contracts between itself and two main oil purchasers,one natural gas purchaser,and one natural gasliquids purchaser.The prices received are freely negotiated between buyers and sellers and are112

114、025/2/12 02:25brn-20230930https:/www.sec.gov/Archives/edgar/data/10048/000001004823000022/brn-20230930.htm13/1672025/2/12 02:25brn-20230930https:/www.sec.gov/Archives/edgar/data/10048/000001004823000022/brn-20230930.htm14/167determined from transparent posted prices adjusted for quality and transpor

115、tation differentials.In fiscal 2023,95%of Barnwells Canadian oil and natural gas revenues were from products sold at spot prices.In November 2023,to provide partial protection against the risk of declining natural gas prices duringthe second half of our fiscal 2024,the Company amended certain of its

116、 Canadian purchase and sales contractsto change the sales price on a portion of the natural gas it sells to a fixed price during the period from April 1,2024 to October 31,2024.With these changes,the Company anticipates that during that periodapproximately 25%of its Canadian natural gas production w

117、ill be sold at fixed prices while the remaining75%of such production will continue to be sold at spot prices.Additionally,in December 2023,the Company amended certain of its Canadian purchase and salescontract to change the sales price on a portion of the oil it sells to a fixed price during the per

118、iod fromJanuary 1,2024 to June 30,2024.With these changes,the Company anticipates that during that periodapproximately 40%of its Canadian oil production will be sold at fixed prices while the remaining 60%ofsuch production will continue to be sold at spot prices.In fiscal 2023 and 2022,Barnwell took

119、 most of its Canadian oil,natural gas liquids and natural gas“in kind”where Barnwell markets the products instead of having the operator of a producing property marketthe products on Barnwells behalf.We sell oil,natural gas and natural gas liquids to a variety of energymarketing companies.Because ou

120、r products are commodities for which there are numerous marketers,we arenot dependent upon one purchaser or a small group of purchasers.Accordingly,the loss of any singlepurchaser would not materially affect our revenues.Governmental RegulationThe jurisdictions in which the oil and natural gas prope

121、rties of Barnwell are located have regulatoryprovisions relating to permits for the drilling of wells,the spacing of wells,the prevention of oil and naturalgas waste,allowable rates of production,environmental protection,and other matters.The amount of oil andnatural gas produced is subject to contr

122、ol by regulatory agencies in each province.The province of Albertaand the Government of Canada also monitor the volume of natural gas that may be removed from theprovince and the conditions of removal;currently all our Canadian natural gas is sold within Alberta.All of Barnwells Canadian gross reven

123、ues were derived from properties located within Alberta,which charges oil and natural gas producers a royalty for production within the province.Provincial royaltiesare calculated as a percentage of revenue and vary depending on production volumes,selling prices and thedate of discovery.Barnwell als

124、o pays gross overriding royalties and leasehold royalties on a portion of its oiland natural gas sales to parties other than the province of Alberta.Under the current royalty framework for newly drilled wells,the same royalty calculation applies toboth oil and natural gas wells and royalties are det

125、ermined on a revenue minus cost basis where producerspay a 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 well production rates.In fiscal 2023,76%of Canadian royalties were

126、 related to Alberta government charges and 24%ofroyalties were related to freehold,overriding royalties and other charges.122025/2/12 02:25brn-20230930https:/www.sec.gov/Archives/edgar/data/10048/000001004823000022/brn-20230930.htm15/167In fiscal 2023,the weighted-average royalty rate paid on all of

127、 Barnwells Canadian natural gas was10%,and the weighted-average royalty rate paid on oil was 17%.In fiscal 2023,the weighted-averageroyalty rate paid on all of Oklahomas and Texass production was 23%and 26%,respectively.In June 2021,the AER announced that the previous Licensee Liability Program(“LLP

128、”)would bereplaced by a Licensee Life-Cycle Management Program via a Licensee Capability Assessment(“LCA”).The LCA is intended to be a more comprehensive assessment of corporate health and considers a widervariety of factors than those considered under the LLP and establishes clear expectations for

129、industry withregards to the management of liabilities throughout the entire lifecycle of oil and gas projects.Factorsconsidered are grouped into six factor groups,these being current financial distress,liability magnitude,resources lifespan,operations compliance,closure efficiency,and administrative

130、 compliance.These factorsare compared to peer operators and ranked into three“Tiers.”Barnwells assessment under the LCA Programis currently favorable with Tier 1 or 2 overall rankings in the six factor groups.Barnwell believes it cancontinue to manage its operations to maintain a favorable ranking.I

131、mportantly,an inventory reductionprogram also has been implemented which requires mandatory annual minimum expenditures towardsoutstanding decommissioning and reclamation obligations in accordance with AER targets which areadjusted by the AER on an annual basis.The target for 2024 is 6.6%of an indiv

132、idual companys inactiveliability.These targets became effective January 1,2022.Barnwell believes the targets assessed by the AERare within estimated forecasts for Barnwells future ARO spending and therefore the Company will be incompliance with spend targets under the Inventory Reduction Program.In

133、September 2019,the AER issued an abandonment/closure order for all wells and facilities in theManyberries area which had been largely operated by LGX,an operating company that went intoreceivership in 2016.The estimated asset retirement obligation for the Companys interest in the wells andfacilities

134、 in the Manyberries area is included in“Asset retirement obligation”in the Consolidated BalanceSheets.After the abandonment/closure order was issued for Manyberries,the OWA created a WorkingInterest Partners(“WIP”)program for specific areas where there are a significant number of orphaned wellsto ab

135、andon.The OWA has the ability and expertise to abandon wells using its internal resources and networkof service providers resulting in efficiencies that companies such as Barnwell would not be able to obtain onits own.Under the WIP program,the Company would be required to provide payment for only Ba

136、rnwellsworking interest share,however,all WIPs would have to participate in the program for the OWA to begin itswork.In March 2021,the Company was notified by the OWA that Barnwells Manyberries wells wereconfirmed to be in the WIP program.Under the agreement with the OWA,the Company is required to p

137、ay the abandonment andreclamation costs in advance through a cash deposit.The total cash deposit amount was calculated to beapproximately$1,525,000 and the Company paid$888,000 of the total deposit in July and August 2021 andmay need to pay the remaining balance of$637,000 by August 2024.The Company

138、 revised its ManyberriesARO liability based on the OWAs revised abandonment and reclamation estimates.Based on a review of thedetails of the cash deposit calculation provided by the OWA,which includes amounts added for possiblecontingencies,the Company believes the required cash deposit amount by th

139、e OWA is higher than the actualcosts of the asset retirement obligation for the Manyberries wells and that any excess of the deposit overactual asset retirement costs for the first phase of the work would be credited toward the second phase of thework.A remaining excess deposit,if any,would ultimate

140、ly be refunded to the Company upon completion ofall of the work.As at September 30,2023,the Company recognized a cumulative reduction in the depositbalance of$300,000 for work performed under this program.132025/2/12 02:25brn-20230930https:/www.sec.gov/Archives/edgar/data/10048/000001004823000022/br

141、n-20230930.htm16/1672025/2/12 02:25brn-20230930https:/www.sec.gov/Archives/edgar/data/10048/000001004823000022/brn-20230930.htm17/167Over the past seven years,the Company has worked to reduce its abandonment and reclamationobligations associated with its oil and natural gas segment,both by divesting

142、 low-productivity assets andactively closing wells and sites.Twenty-three Barnwell-operated sites have been certified as fully reclaimedor exempt since 2016.To aid in this regard,and as a stimulus response to the COVID-19 pandemic,theCanadian Federal Government created and funded the Alberta-adminis

143、tered Site Rehabilitation Program(“SRP”)in spring 2020.The SRP has been designed to reduce oil and gas industry liabilities by fundingvendors who perform closure work.In partnership with its vendors,Barnwell-operated sites have received$388,000 in net funding to date,to be directed to ARO reduction

144、activities.Barnwell has further benefitedfrom grants allocated to its non-operated property partners amounting to$120,000.CompetitionBarnwell competes in the sale of oil and natural gas on the basis of price and on the ability to deliverproducts.The oil and natural gas industry is intensely competit

145、ive in all phases,including the acquisition anddevelopment of new production and reserves and the acquisition of equipment and labor necessary to conductdrilling activities.The competition comes from numerous major oil companies as well as numerous otherindependent operators.There also is competitio

146、n between the oil and natural gas industry and other industriesin supplying the energy and fuel requirements of industrial,commercial and individual consumers.Barnwellis a minor participant in the industry and competes in its oil and natural gas activities with many othercompanies having far greater

147、 financial,technical and other resources.Land Investment SegmentOverviewBarnwell owns a 77.6%interest in Kaupulehu Developments,a Hawaii general partnership(“Kaupulehu Developments”)that has the right to receive payments from KD I and KD II resulting from thesale of lots and/or residential units by

148、KD I and KD II within the approximately 870 acres of the KaupulehuLot 4A area in two increments(“Increment I”and“Increment II”),located approximately six miles north ofthe Kona International Airport in the North Kona District of the island of Hawaii.Kaupulehu Developmentsalso holds an interest in ap

149、proximately 1,000 acres of vacant leasehold land zoned conservation locatedadjacent to Lot 4A under a lease that terminates in December 2025,which currently has no developmentpotential without both a development agreement with the lessor and zoning reclassification.Barnwell,through two limited liabi

150、lity limited partnerships,KD Kona and KKM Makai(“KKM”),holds anon-controlling ownership interest in the Kukio Resort Land Development Partnerships comprised of KDKukio Resorts,KD Maniniowali,and KDK.The Kukio Resort Land Development Partnerships own certainreal estate and development rights interest

151、s in the Kukio,Maniniowali and Kaupulehu portions of KukioResort,a private residential community on the Kona coast of the island of Hawaii,as well as Kukio Resortsreal estate sales office operations.KDK holds interests in KD I and KD II.KD I is the developer ofIncrement I,and KD II is the developer

152、of Increment II.Barnwells ownership interests in the Kukio ResortLand Development Partnerships are accounted for using the equity method of accounting.142025/2/12 02:25brn-20230930https:/www.sec.gov/Archives/edgar/data/10048/000001004823000022/brn-20230930.htm18/167OperationsIn the 1980s,Kaupulehu D

153、evelopments obtained the state and county zoning changes necessary topermit development 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.Theseprojects were developed by an u

154、naffiliated entity on leasehold land acquired from Kaupulehu Developments.In the 1990s and 2000s,Kaupulehu Developments obtained the state and county zoning changesnecessary to permit development of single-family and multi-family residential units,a golf course and alimited commercial area on approx

155、imately 870 leasehold acres,known as Lot 4A,zoned for resort/residentialdevelopment,located adjacent to and north of the Four Seasons Resort Hualalai at Historic Kaupulehu.In2004 and 2006,Kaupulehu Developments sold its leasehold interest in Kaupulehu Lot 4A to KD Is and KDIIs predecessors in intere

156、st,which was prior to Barnwells affiliation with KD I and KD II which commencedon November 27,2013,the acquisition date of our ownership interest in the Kukio Resort Land DevelopmentPartnerships.Increment I is an area of 80 single-family lots,78 of which were sold from 2006 to 2023,and a beachclub o

157、n the portion of the property bordering the Pacific Ocean.The purchasers of the 80 single-family lotsalso have the right to apply for membership in the Kukio Golf and Beach Club,which is located adjacent toand south of the Four Seasons Resort Hualalai at Historic Kaupulehu.Increment II is the remain

158、ing portionof the approximately 870-acre property and is zoned for single-family and multi-family residential units anda golf course and clubhouse.Two residential lots of approximately two to three acres in size fronting theocean were developed within Increment II and sold by KD II,and the remaining

159、 acreage within Increment IIis not yet under development.It is uncertain when or if KD II will develop the other areas of Increment II,and there is no assurance with regards to the amounts of future sales from Increments I and II.The remaining420 developable acres at Increment II are entitled for up

160、 to 350 homesites.No definitive development planshave been made by KDII,the developer of Increment II,as of the date of this report.Kaupulehu Developments is entitled to receive payments from KD I based on 10%of the grossreceipts from KD Is sales of single-family residential lots in Increment I.In f

161、iscal 2023,one single-family lotwas sold and two single-family lots,of the 80 lots developed within Increment I,remained to be sold as ofSeptember 30,2023.The developer had consolidated these two remaining lots into one large lot but has sincesplit them back into the original two lots.In March 2019,

162、KD II admitted a new development partner,Replay Kaupulehu Development,LLC(“Replay”),a party unrelated to Barnwell,in an effort to move forward with development of the remainder ofIncrement II at Kaupulehu.KDK and Replay hold ownership interests of 55%and 45%,respectively,of KDII and Barnwell has a 1

163、0.8%indirect non-controlling ownership interest in KD II through KDK,which isaccounted for using the equity method of accounting.Barnwell continues to have an indirect 19.6%non-controlling ownership interest in KD Kukio Resorts,KD Maniniowali,and KD I.Under the terms of the Increment II agreement wi

164、th KD II,Kaupulehu Developments is entitled to15%of the distributions of KD II,the cost of which is to be solely borne by KDK out of its 55%ownershipinterest in KD II,plus a priority payout of 10%of KDKs cumulative net profits derived from Increment IIsales subsequent to Phase 2A,up to a maximum of$

165、3,000,000 as to the priority payout.Such interests arelimited to distributions or net profits interests and Barnwell does not have any partnership interests in KD IIor KDK through its interest in Kaupulehu Developments.The arrangement152025/2/12 02:25brn-20230930https:/www.sec.gov/Archives/edgar/dat

166、a/10048/000001004823000022/brn-20230930.htm19/167also gives Barnwell rights to three single-family residential lots in Phase 2A of Increment II,and four single-family residential lots in phases subsequent to Phase 2A when such lots are developed by KD II,all at no costto Barnwell.Barnwell is committ

167、ed to commence construction of improvements within 90 days of thetransfer of the four lots in the phases subsequent to Phase 2A as a condition of the transfer of such lots.Also,in addition to Barnwells existing obligations to pay professional fees to certain parties based on percentagesof its gross

168、receipts,Kaupulehu Developments also is obligated to pay an amount equal to 0.72%and 0.2%of the cumulative net profits of KD II to KD Development and a pool of various individuals,respectively,allof whom are partners of KKM and are unrelated to Barnwell,in compensation for the agreement of thesepart

169、ies to admit the new development partner,Replay,for Increment II.Such compensation will be reflectedas the obligation becomes probable and the amount of the obligation can be reasonably estimated.In fiscal 2023,the Kukio Resort Land Development Partnerships sold one lot in Increment I and as aresult

170、 of the lot sale,made cash distributions to its partners of which Barnwell received$758,000 resulting ina net amount of$674,000,after distributing$84,000 to non-controlling interests.CompetitionBarnwells land investment segment is subject to intense competition in all phases of its operationsincludi

171、ng the acquisition of new properties,the securing of approvals necessary for land rezoning,and thesearch for potential buyers of property interests presently owned.The competition comes from numerousindependent land development companies and other industries involved in land investment activities.Th

172、eprincipal factors affecting competition are the location of the project and pricing.Barnwell is a minorparticipant in the land development industry and competes in its land investment activities with many otherentities having far greater financial and other resources.Contract Drilling SegmentOvervi

173、ewBarnwells wholly-owned subsidiary,Water Resources,drills water and water monitoring wells ofvarying depths in Hawaii,installs and repairs water pumping systems,and is the distributor for Trillium FlowTechnologies,previously known as Floway,pumps and equipment in the state of Hawaii.OperationsWater

174、 Resources owns and operates three water well drilling rigs,two pump rigs and other ancillarydrilling and pump equipment.Additionally,Water Resources leases month-to-month a storage facility inHonolulu,Hawaii,and a one-acre maintenance and storage facility with 2,800 square feet of interior space in

175、Kawaihae,Hawaii.Water Resources also maintains an inventory of uninstalled materials for jobs in progressand an inventory of drilling materials and pump supplies.Water Resources currently operates in Hawaii and is not subject to seasonal fluctuations.The demandfor Water Resources services is primari

176、ly dependent upon land development activities in Hawaii.WaterResources markets its services to land developers and government agencies,and identifies potential contractsthrough public notices,and referrals.Contracts are usually fixed price per lineal foot drilled and arenegotiated with private entit

177、ies or obtained through competitive bidding with private entities or local,stateand federal agencies.Contract revenues are not dependent upon the discovery of water or other162025/2/12 02:25brn-20230930https:/www.sec.gov/Archives/edgar/data/10048/000001004823000022/brn-20230930.htm20/167similar targ

178、ets,and contracts are not subject to renegotiation of profits or termination at the election of thegovernmental entities involved.Contracts provide for arbitration in the event of disputes.In fiscal 2023,Water Resources sold a drilling rig to an independent third party for proceeds of$551,000,net of

179、 related costs,and recognized a$551,000 gain on the sale of the drilling rig during the yearended September 30,2023,as the rig was fully depreciated.In fiscal 2022,Water Resources sold a drillingrig and related ancillary equipment to an independent third party for proceeds of$687,000,net of relatedc

180、osts,which was equivalent to its net carrying value.In fiscal 2023,Water Resources started two well drilling and three pump installation and repaircontracts and completed three well drilling and nine pump installation and repair contracts.Of the threecompleted well drilling contracts,two were starte

181、d in fiscal 2021 and one was started in fiscal 2022.Of thenine completed pump installation and repair contracts,one was started in fiscal 2015,one was started infiscal 2017,two were started in fiscal 2021,two were started in fiscal 2022,and three were started in thecurrent year.Fifty-two percent of

182、well drilling and pump installation and repair jobs,representing 8%of totalcontract drilling revenues in fiscal 2023,have been pursuant to government contracts.At September 30,2023,there was a backlog of four well drilling and seven pump installation andrepair contracts,of which three well drilling

183、and four pump installation and repair contracts were in progressas of September 30,2023.The approximate dollar amount of Water Resources backlog of firm well drilling and pumpinstallation and repair contracts at December 1,2023 and 2022 was as follows:December 1,20232022Well drilling$5,900,000$10,00

184、0,000 Pump installation and repair900,000 1,200,000$6,800,000$11,200,000 Of the contracts in backlog at December 1,2023,$6,300,000 is expected to be recognized in fiscal2024 with the remainder to be recognized in the following fiscal year.Sale of Water ResourcesIn December 2023,the Company entered i

185、nto an agreement with a construction company for the saleof Water Resources for gross proceeds of$2,000,000,subject to customary post-closing price adjustmentsand the purchasers completion of due diligence.The sale is expected to close in the first half of our fiscal2024.CompetitionWater Resources c

186、ompetes with other drilling contractors in Hawaii,some of which use drill rigssimilar to Water Resources.These competitors also are capable of installing and repairing vertical turbineand submersible water pumping systems in Hawaii.These contractors compete actively with WaterResources for governmen

187、t and private contracts.Pricing is Water Resources major method of competition;reliability of service also is a significant factor.172025/2/12 02:25brn-20230930https:/www.sec.gov/Archives/edgar/data/10048/000001004823000022/brn-20230930.htm21/1672025/2/12 02:25brn-20230930https:/www.sec.gov/Archives

188、/edgar/data/10048/000001004823000022/brn-20230930.htm22/167Competitive pressures are expected to remain high,thus there is no assurance that the quantity orvalues of available or awarded jobs which occurred in fiscal 2023 will continue.Financial Information About Industry Segments and Geographic Are

189、asNote 11 in the“Notes to Consolidated Financial Statements”in Item 8 contains information on oursegments and geographic areas.EmployeesAt December 1,2023,Barnwell employed 37 individuals;36 on a full time basis and 1 on a part-timebasis.Environmental CostsBarnwell is subject to extensive environmen

190、tal laws and regulations.U.S.Federal and state andCanadian Federal and provincial governmental agencies issue rules and regulations and enforce laws toprotect the environment which are often difficult and costly to comply with and which carry substantialpenalties for failure to comply,particularly i

191、n regard to the discharge of materials into the environment.These laws,which are constantly changing,regulate the discharge of materials into the environment andmaintenance of surface conditions and may require Barnwell to remove or mitigate the environmental effectsof the disposal or release of pet

192、roleum or chemical substances at various sites where it has a working interest.For further information on environmental remediation,see the Contingencies section included in Item7,“Managements Discussion and Analysis of Financial Condition and Results of Operations”and the notesto our consolidated f

193、inancial statements included in Item 8,“Financial Statements and Supplementary Data.”Available InformationWe maintain a website at .We make available on our website free of charge ourannual reports on Form 10-K,quarterly reports on Form 10-Q,current reports on Form 8-K,and anyamendments to those rep

194、orts as soon as practicable after we electronically file such reports with,or furnishthem to,the SEC.The contents of our website are not part of this Annual Report on Form 10-K and are notincorporated by reference into this document.Our filings with the SEC are available to the public through theSEC

195、s website at www.sec.gov.The Companys references to URLs for these websites are intended to betextual references only.182025/2/12 02:25brn-20230930https:/www.sec.gov/Archives/edgar/data/10048/000001004823000022/brn-20230930.htm23/167ITEM 1A.RISK FACTORS The business of Barnwell and its subsidiaries

196、face numerous risks,including those set forth below orthose described elsewhere in this Form 10-K or in Barnwells other filings with the SEC.The risks describedbelow are not the only risks that Barnwell faces.If any of the following risk factors should occur,ourprofitability,financial condition or l

197、iquidity could be materially negatively impacted.Entity-Wide RisksStockholders may be diluted significantly through our efforts to obtain financing,satisfy obligationsthrough the issuance of securities or use our stock as consideration in certain transactions.Our Board of Directors has authority,wit

198、hout action or vote of the stockholders,subject to therequirements of the NYSE American and applicable law,to issue all shares of our common stock or warrantsor other instruments to purchase such shares of our common stock.In addition,we may raise capital byselling shares of our common stock,possibl

199、y at a discount to market in the future.These actions would resultin dilution of the ownership interests of existing stockholders and may further dilute common stock bookvalue,and that dilution may be material.A related effect of such issuances may enhance existing largestockholders influence on the

200、 Company,including that of Alexander Kinzler,our Chief Executive Officer.A small number of stockholders,including our CEO,own a significant amount of our common stockand may have influence over the Company.As of September 30,2023,the CEO,who is a member of the Board of Directors,and two otherstockho

201、lders hold approximately 44%of our outstanding common stock.The interests of one or more ofthese stockholders may not always coincide with the interests of other stockholders.These stockholders havesignificant influence over all matters submitted to our stockholders,including the election of our dir

202、ectors,and could accelerate,delay,deter or prevent a change of control of the Company.Our operations are subject to currency rate fluctuations.Our operations are subject to fluctuations in foreign currency exchange rates between the U.S.dollarand the Canadian dollar.Our financial statements,presente

203、d in U.S.dollars,may be affected by foreigncurrency fluctuations through both translation risk and transaction risk.Volatility in exchange rates mayadversely affect our results of operations,particularly through the weakening of the U.S.dollar relative to theCanadian dollar which may affect the rela

204、tive prices at which we sell our oil and natural gas and may affectthe cost of certain items required in our operations.To date,we have not entered into foreign currencyhedging transactions to control or minimize these risks.Adverse changes in actuarial assumptions used to calculate retirement plan

205、costs due to economic orother factors,or lower returns on plan assets could adversely affect Barnwells results and financialcondition.Retirement plan cash funding obligations and plan expenses and obligations are subject to a highdegree of uncertainty and could increase in future years depending on

206、numerous factors,including theperformance of the financial markets,specifically the equity markets,levels of interest rates,and the cost ofhealth care insurance premiums.192025/2/12 02:25brn-20230930https:/www.sec.gov/Archives/edgar/data/10048/000001004823000022/brn-20230930.htm24/167The price of ou

207、r common stock has been volatile and could continue to fluctuate substantially.The market price of our common stock has been volatile and could fluctuate based on a variety offactors,including:fluctuations in commodity prices;variations in results of operations;announcements by us and our competitor

208、s;legislative or regulatory changes;general trends in the industry;general market conditions;litigation;andother 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 co

209、mpetingin highly competitive industries,we compete in a highly competitive labor market.Our business could beadversely affected by an inability to retain personnel or upward pressure on wages as a result of the highlycompetitive labor market.Further,there are significant personal liability risks to

210、Barnwell of Canadasindividual officers and directors related to well clean-up costs that may affect our ability to attract or retainthe necessary people.We are a smaller reporting company and benefit from certain reduced governance and disclosurerequirements,including that our independent registered

211、 public accounting firm is not required toattest to the effectiveness of our internal control over financial reporting.We cannot be certain if theomission of reduced disclosure requirements applicable to smaller reporting companies will make ourcommon stock less attractive to investors.Currently,we

212、are a“smaller reporting company,”meaning that our outstanding common stock heldby nonaffiliates had a value of less than$250 million at the end of our most recently completed second fiscalquarter.As a smaller reporting company,we are not required to comply with the auditor attestationrequirements of

213、 Section 404 of the Sarbanes-Oxley Act,meaning our auditors are not required to attest to theeffectiveness of the Companys internal control over financial reporting.As a result,investors and others maybe less comfortable with the effectiveness of the Companys internal controls and the risk that mate

214、rialweaknesses or other deficiencies in internal controls go undetected may increase.In addition,as a smallerreporting company,we take advantage of our ability to provide certain other less comprehensive disclosuresin our SEC filings,including,among other things,providing only two years of audited f

215、inancial statements inannual reports and simplified executive compensation disclosures.Consequently,it may be more challengingfor investors to analyze our results of operations and financial prospects,as the information we provide tostockholders may be different from what one might receive from othe

216、r public companies in which one holdshares.As a smaller reporting company,we are not required to provide this information.202025/2/12 02:25brn-20230930https:/www.sec.gov/Archives/edgar/data/10048/000001004823000022/brn-20230930.htm25/167We face various risks and uncertainties related to public healt

217、h crises,including the COVID-19pandemic.The COVID-19 pandemic and its consequences may have a material adverse effect on us.We face various risks and uncertainties related to public health crises,including the global COVID-19pandemic,which has disrupted financial markets and significantly impacted w

218、orldwide economic activity.The future impact of the COVID-19 pandemic as well as mandatory and voluntary actions taken to mitigatethe public health impact of the pandemic may have a material adverse effect on our financial condition.TheCOVID-19 pandemic and social and governmental responses to the p

219、andemic have caused,and may continueto cause,severe economic,market and other disruptions worldwide.Although the COVID-19 pandemic andrelated societal and government responses have not,to date,had a material impact on our business orfinancial results,the extent to which COVID-19 and related actions

220、may,in the future,impact our operationscannot be predicted with any degree of confidence.As a result,we cannot at this time predict the direct orindirect impact on us of the COVID-19 pandemic,but it could have a material adverse effect on our business,financial condition,liquidity,results of operati

221、ons and prospects.Risks Related to Oil and Natural Gas Segment Acquisitions or discoveries of additional reserves are needed to increase our oil and natural gassegment operating results and cash flow.In August 2018,Barnwell made a significant reinvestment into its oil and natural gas segment withthe

222、 acquisition of the Twining property in Alberta,Canada.The Company believes there are potentialundeveloped reserves for which significant future capital expenditures will be needed to convert thosepotential undeveloped reserves into developed reserves.If future circumstances are such that we are not

223、 ableto make the capital expenditures necessary to convert potential undeveloped reserves to developed reserves,we will not replace the amount of reserves produced and sold and our reserves and oil and natural gassegment operating results and cash flows will decline accordingly,and we may be forced

224、to sell some of ouroil and natural gas segment assets under untimely or unfavorable terms.Any such curtailment or sale couldhave a material adverse effect on our business,financial condition and results of operations.Future oil and natural gas operating results and cash flow are highly dependent upo

225、n our level ofsuccess in acquiring or finding additional reserves on an economic basis.We cannot guarantee that we will besuccessful in developing or acquiring additional reserves and our current financial resources may beinsufficient to make such investments.Furthermore,if oil or natural gas prices

226、 increase,our cost foradditional reserves also could increase.We may not realize an adequate return on oil and natural gas investments.Drilling for oil and natural gas involves numerous risks,including the risk that we will not encountercommercially productive oil or natural gas reservoirs.The wells

227、 we drill or participate in may not beproductive,and we may not recover all or any portion of our investment in those wells.If future oil andnatural gas segment acquisition and development activities are not successful it could have an adverse effecton our future results of operations and financial

228、condition.212025/2/12 02:25brn-20230930https:/www.sec.gov/Archives/edgar/data/10048/000001004823000022/brn-20230930.htm26/167Oil and natural gas prices are highly volatile and further declines,or extended low prices willsignificantly affect our financial condition and results of operations.Much of o

229、ur revenues and cash flow are greatly dependent upon prevailing prices for oil and naturalgas.Lower oil and natural gas prices not only decrease our revenues on a per unit basis,but also reduce theamount of oil and natural gas we can produce economically,if any.Prices that do not produce sufficiento

230、perating margins will have a material adverse effect on our operations,financial condition,operating cashflows,borrowing ability,reserves,and the amount of capital that we are able to allocate for the acquisitionand development of oil and natural gas reserves.Various factors beyond our control affec

231、t prices of oil and natural gas including,but not limited to,changes in supply and demand,market uncertainty,weather,worldwide political instability,foreign supply ofoil and natural gas,the level of consumer product demand,government regulations and taxes,the price andavailability of alternative fue

232、ls and the overall economic environment.Energy prices also are subject to otherpolitical and regulatory actions outside our control,which may include changes in the policies of theOrganization of the Petroleum Exporting Countries or other developments involving or affecting oil-producing countries,o

233、r actions or reactions of the government of the U.S.in anticipation of or in response tosuch developments.The inability of one or more of our working interest partners to meet their obligations may adverselyaffect our financial results.For our operated properties,we pay expenses and bill our non-ope

234、rating partners for their respectiveshares of costs.Some of our non-operating partners may experience liquidity problems and may not be ableto meet their financial obligations.Nonperformance by a non-operating partner could result in significantfinancial losses.Liquidity problems encountered by our

235、working interest partners or the third party operators of ournon-operated properties also may result in significant financial losses as the other working interest partners orthird party operators may be unwilling or unable to pay their share of the costs of projects as they becomedue.In the event a

236、third party operator of a non-operated property becomes insolvent,it may result inincreased operating expenses and cash required for abandonment liabilities if the Company is required to takeover operatorship.We may incur material costs to comply with or as a result of health,safety,and environmenta

237、l lawsand 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 theissuance of“clean up”orders.Legislation regulating the oil and natu

238、ral gas industry may be changed toimpose higher standards and potentially more costly obligations.Although we have recorded a provision inour financial statements relating to our estimated future environmental and reclamation obligations that webelieve is reasonable,we cannot guarantee that we will

239、be able to satisfy our actual future environmental andreclamation obligations.Barnwells oil and natural gas segment is subject to the provisions of the AERs Licensee Life-CycleManagement Program via a Licensee Capability Assessment(“LCA”).Under this program the AER assessesthe corporate health of th

240、e Company and considers a wider variety of factors than those considered under theprevious program.The LCA establishes clear expectations for industry with regards222025/2/12 02:25brn-20230930https:/www.sec.gov/Archives/edgar/data/10048/000001004823000022/brn-20230930.htm27/1672025/2/12 02:25brn-202

241、30930https:/www.sec.gov/Archives/edgar/data/10048/000001004823000022/brn-20230930.htm28/167to the management of liabilities throughout the entire lifecycle of oil and gas projects.Factors considered aregrouped into six factor groups,these being current financial distress,liability magnitude,resource

242、s lifespan,operations compliance,closure efficiency and administrative compliance.These factors are compared to peeroperators and ranked into three“Tiers”.Under the LCA Program,an inventory reduction program has alsobeen implemented which requires mandatory annual minimum expenditures towards outsta

243、ndingdecommissioning and reclamation obligations in accordance with AER targets which are adjusted by theAER on an annual basis.The target for 2024 is 6.6%of an individual companys inactive liability.Thesetargets became effective January 1,2022.The AER may require purchasers of AER licensed oil and

244、natural gas assets to be within Tiers 1 or 2overall rankings in the six factors group.This requirement for well transfers hinders our ability to generatecapital by selling oil and natural gas assets as there are less qualified buyers.The AER may require the Company to provide a security deposit if a

245、ssessed at Tier 3.Diverting fundsto the AER in the future would result in the diversion of cash on hand and operating cash flows that couldotherwise be used to fund oil and natural gas reserve replacement efforts,which could in turn have a materialadverse effect on our business,financial condition a

246、nd results of operations.If Barnwell fails to comply withthe requirements of the LCA program,Barnwells oil and natural gas subsidiary would be subject to theAERs enforcement provisions which could include suspension of operations and non-compliance fees andcould ultimately result in the AER serving

247、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 licenseswhich would prohibit us from selling any oil and natural gas assets until the required cash deposit is madewith the AER.We are not f

248、ully insured against certain environmental risks,either because such insurance is notavailable or because of high premium costs.In particular,insurance against risks from environmentalpollution occurring over time,as opposed to sudden and catastrophic damages,is not available oneconomically reasonab

249、le terms.Accordingly,any site reclamation or abandonment costs actually incurred inthe ordinary course of business in a specific period could negatively impact our cash flow.Should we beunable to fully fund the cost of remedying an environmental problem,we might be required to suspendoperations or e

250、nter 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 estimatethose reserves.We periodically evaluate acquisitions of reserves,properties,prospects and leaseholds and otherstrategic

251、 transactions that appear to fit within our overall business strategy.Our evaluation includes anassessment of reserves,future oil and natural gas prices,operating costs,potential for future drilling andproduction,validity of the sellers title to the properties and potential environmental issues,liti

252、gation andother liabilities.In connection with these assessments,we perform a review of the subject properties that we believe tobe generally consistent with industry practices.Our review will not reveal all existing or potential problemsnor will it permit us to become sufficiently familiar with the

253、 properties to fully assess their deficiencies andpotential recoverable reserves.Inspections may not always be performed on every well,and environmentalproblems are not necessarily observable even when an inspection is undertaken.Even when problems areidentified,the seller of the properties may be u

254、nwilling or unable to provide effective contractual protectionagainst all or part of the problems.We often are not entitled to contractual232025/2/12 02:25brn-20230930https:/www.sec.gov/Archives/edgar/data/10048/000001004823000022/brn-20230930.htm29/1672025/2/12 02:25brn-20230930https:/www.sec.gov/A

255、rchives/edgar/data/10048/000001004823000022/brn-20230930.htm30/167indemnification for environmental liabilities or title defects in excess of the amounts claimed by us beforeclosing and acquire properties on an“as is”basis.There are numerous uncertainties inherent in estimating quantities of proved

256、oil and gas reserves andfuture production rates and costs with respect to acquired properties,and actual results may vary substantiallyfrom those assumed in the estimates.If oil and natural gas prices decline and remain low,we may be required to take write-downs of thecarrying values of our oil and

257、natural gas properties.Oil and natural gas prices affect the value of our oil and natural gas properties as determined in ourfull cost ceiling calculation.Any future ceiling test write-downs will result in reductions of the carrying valueof our oil and natural gas properties and an equivalent charge

258、 to earnings.The oil and natural gas industry is highly competitive.We compete for capital,acquisitions of reserves,undeveloped lands,skilled personnel,access todrilling rigs,service rigs and other equipment,access to processing facilities,pipeline capacity and in manyother respects with a substanti

259、al number of other organizations,most of which have greater technical andfinancial resources than we do.Some of these organizations explore for,develop and produce oil and naturalgas,carry on refining operations and market oil and other products on a worldwide basis.As a result of thesecomplementary

260、 activities,some of our competitors may have competitive resources that are greater and morediverse than ours.Furthermore,many of our competitors may have a competitive advantage when respondingto factors that affect demand for oil and natural gas production,such as changing prices and productionlev

261、els,the cost and availability of alternative fuels and the application of government regulations.If ourcompetitors are able to capitalize on these competitive resources,it could adversely affect our revenues andprofitability.An increase in operating costs greater than anticipated could have a materi

262、al adverse effect on ourresults of operations and financial condition.Higher operating costs for our properties will directly decrease the amount of cash flow received byus.Electricity,supplies,and labor costs are a few of the operating costs that are susceptible to materialfluctuation.The need for

263、significant repairs and maintenance of infrastructure may increase as our propertiesage.A significant increase in operating costs could negatively impact operating results and cash flow.Our operating results are affected by our ability to market the oil and natural gas that we produce.Our business d

264、epends in part upon the availability,proximity and capacity of oil and natural gasgathering systems,pipelines and processing facilities.Canadian federal and provincial,as well as U.S.federal and state,regulation of oil and natural gas production,processing and transportation,tax and energypolicies,g

265、eneral economic conditions,and changes in supply and demand could adversely affect our abilityto produce and market oil and natural gas.If market factors change and inhibit the marketing of ourproduction,overall production or realized prices may decline.242025/2/12 02:25brn-20230930https:/www.sec.go

266、v/Archives/edgar/data/10048/000001004823000022/brn-20230930.htm31/167We are not the operator and have limited influence over the operations of certain of our oil and naturalgas properties.We hold minority interests in certain of our oil and natural gas properties.As a result,we cannotcontrol the pac

267、e of exploration or development,major decisions affecting the drilling of wells,the plan fordevelopment and production at non-operated properties,or the timing and amount of costs related toabandonment and reclamation activities although contract provisions give Barnwell certain consent rights insom

268、e matters.The operators influence over these matters can affect the pace at which we incur capitalexpenditures.Additionally,as certain underlying joint venture data is not accessible to us,we depend on theoperators at non-operated properties to provide us with reliable accounting information.We also

269、 depend onoperators and joint operators to maintain the financial resources to fund their share of all abandonment andreclamation costs.Actual reserves will vary from reserve estimates.Estimating reserves is inherently uncertain and the reserves estimation process involves significantdecisions and a

270、ssumptions in the evaluation of available geological,geophysical,engineering and economicdata.The reserve data and standardized measures set forth herein are only estimates.Ultimately,actualreserves attributable to our properties will vary from estimates,and those variations may be material.Theestim

271、ation 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 wellsin the area;future commodity prices,production and develop

272、ment 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;andother government levies that may be imposed over the producing life o

273、f reserves.If these factors,assumptions and prices prove to be inaccurate,actual results may vary materiallyfrom reserve estimates.Part of our strategy involves using some of the latest available horizontal drilling and completiontechniques.The results of our drilling are subject to drilling and com

274、pletion technique risks,andresults may not meet our expectations for reserves or production.Many of our operations involve,and are planned to utilize,the latest drilling and completion techniques asdeveloped by our service providers in order to maximize production and ultimate recoveries and therefo

275、regenerate the highest possible returns.Risks we face while completing our wells include,but are not limitedto,the inability to fracture the planned number of stages,the inability to run tools and other equipment theentire length of the well bore during completion operations,the inability to recover

276、 such tools and otherequipment,and the inability to successfully clean out the well bore after completion of the final fracturestimulation.Ultimately,the success of these drilling and completion techniques can only be evaluated overtime as more wells are drilled and production profiles are establish

277、ed over a sufficiently252025/2/12 02:25brn-20230930https:/www.sec.gov/Archives/edgar/data/10048/000001004823000022/brn-20230930.htm32/1672025/2/12 02:25brn-20230930https:/www.sec.gov/Archives/edgar/data/10048/000001004823000022/brn-20230930.htm33/167long time period.If our drilling results are less

278、than anticipated or we are unable to execute our drillingprogram because of capital constraints,lease expirations,limited access to gathering systems and takeawaycapacity,and/or prices for crude oil,natural gas,and natural gas liquids decline,then the return on ourinvestment for a particular project

279、 may not be as attractive as we anticipated and we could incur materialwrite-downs of oil and gas properties and the value of our undeveloped acreage could decline in the future.Production and reserves,if any,attributable to the use of enhanced recovery methods are inherentlydifficult to predict.If

280、our enhanced recovery methods do not allow for the extraction of crude oil,natural gas,and associated liquids in a manner or to the extent that we anticipate,we may not realize an acceptable returnon our investments in such projects.Delays in business operations could adversely affect the amount and

281、 timing of our cash inflows.In addition to the usual delays in payment by purchasers of oil and natural gas to the operators of ourproperties,and the delays of those operators in remitting payment to us,payments between any of theseparties may also be delayed by:restrictions imposed by lenders;accou

282、nting delays;delays in the sale or delivery of products;delays in the connection of wells to a gathering system;blowouts or other accidents;adjustments for prior periods;recovery by the operator of expenses incurred in the operation of the properties;andthe establishment by the operator of reserves

283、for these expenses.Any of these delays could expose us to additional third party credit risks.The oil and natural gas market in which we operate exposes us to potential liabilities that may not becovered by insurance.Our operations are subject to all of the risks associated with the operation and de

284、velopment of oil andnatural gas properties,including the drilling of oil and natural gas wells,and the production andtransportation of oil and natural gas.These risks include encountering unexpected formations or pressures,premature declines of reservoirs,blow-outs,equipment failures and other accid

285、ents,cratering,sour gasreleases,uncontrollable flows of oil,natural gas or well fluids,adverse weather conditions,pollution,otherenvironmental risks,fires and spills.A number of these risks could result in personal injury,loss of life,orenvironmental and other damage to our property or the property

286、of others.While we carry various levels of insurance,we could be affected by civil,criminal,regulatory oradministrative actions,claims or proceedings.We cannot fully protect against all of the risks listed above,norare all of these risks insurable.There is no assurance that any applicable insurance

287、or indemnificationagreements will adequately protect us against liability for the risks listed above.We could face substantiallosses if an event occurs for which we are not fully insured or are not indemnified against or a customer orinsurer fails to meet its indemnification or insurance obligations

288、.In addition,there can be no assurance thatinsurance will continue to be available to cover any or all of these risks,or,even if available,that insurancepremiums or other costs will not rise significantly in the future,so as to make the cost of such insuranceprohibitive.262025/2/12 02:25brn-20230930

289、https:/www.sec.gov/Archives/edgar/data/10048/000001004823000022/brn-20230930.htm34/167 Deficiencies in operating practices and record keeping,if any,may increase our risks and liabilitiesrelating to incidents such as spills and releases and may increase the level of regulatory enforcement actions.Ou

290、r operations are subject to domestic and foreign government regulation and other risks,particularly in Canada and the U.S.Barnwells oil and natural gas operations are affected by political developments and laws andregulations,particularly in Canada and the U.S.,such as restrictions on production,res

291、trictions on importsand exports,the maintenance of specified reserves,tax increases and retroactive tax claims,expropriation ofproperty,cancellation of contract rights,environmental protection controls,environmental compliancerequirements and laws pertaining to workers health and safety.Further,the

292、right to explore for and developoil and natural gas on lands in Alberta is controlled by the government of that province.Changes in royaltiesand other terms of provincial leases,permits and reservations may have a substantial effect on Barnwellsoperations.We derive a significant portion of our reven

293、ues from our operations in Canada;67%in fiscal2023.Additionally,our ability to compete in the Canadian oil and natural gas industry may be adverselyaffected by governmental regulations or other policies that favor the awarding of contracts to contractors inwhich Canadian nationals have substantial o

294、wnership interests.Furthermore,we may face governmentallyimposed restrictions or fees from time to time on the transfer of funds to the U.S.Government regulations control and often limit access to potential markets and impose extensiverequirements concerning employee safety,environmental protection,

295、pollution control and remediation ofenvironmental contamination.Environmental regulations,in particular,prohibit access to some markets andmake others less economical,increase equipment and personnel costs and often impose liability withoutregard to negligence or fault.In addition,governmental regul

296、ations may discourage our customers activities,reducing demand for our products and services.Legislation,regulation,and other government actions and shifting customer preferences and otherprivate efforts related to greenhouse gas(“GHG”)emissions and climate change could increase ouroperational costs

297、 and reduce demand for our oil and natural gas,resulting in a material adverse effecton the Companys results of operations and financial condition.Barnwell may experience challenges from the impacts of international and domestic legislation,regulation,or other government actions relating to GHG emis

298、sions(e.g.,carbon dioxide and methane)andclimate change.International agreements and national,regional,and state legislation and regulatory measuresthat aim to directly or indirectly limit or reduce GHG emissions are in various stages of implementation.Many of these actions,as well as customers pref

299、erences and use of oil and natural gas or substitute products,are beyond the Companys control.Similar to any significant changes in the regulatory environment,GHGemissions and climate change-related legislation,regulation,or other government actions may curtailprofitability in the oil and gas sector

300、,or render the extraction of the Companys hydrocarbon resourceseconomically infeasible.In particular,GHG emissions-related legislation,regulations,and other governmentactions and shifting consumer preferences and other private efforts aimed at reducing GHG emissions mayresult in increased and substa

301、ntial capital,compliance,operating,and maintenance costs and could,amongother things,reduce demand for the Companys oil and natural gas;adversely affect the economic feasibilityof the Companys resources;impact or limit our272025/2/12 02:25brn-20230930https:/www.sec.gov/Archives/edgar/data/10048/0000

302、01004823000022/brn-20230930.htm35/167business plans;and adversely affect the Companys sales volumes,revenues,margins and reputation.The ultimate impact of GHG emissions and climate change-related agreements,legislation,regulation,and government actions on the Companys financial performance is highly

303、 uncertain because theCompany is unable to predict with certainty,the outcome of political decision-making processes,includingthe actual laws and regulations enacted,the variables and tradeoffs that inevitably occur in connection withsuch processes,and market conditions.Compliance with foreign tax a

304、nd other laws may adversely affect our operations.Tax and other laws and regulations are not always interpreted consistently among local,regional andnational authorities.Income tax laws,other legislation or government incentive programs relating to the oiland natural gas industry may in the future b

305、e changed or interpreted in a manner that adversely affects us andour stockholders.It also is possible that in the future we will be subject to disputes concerning taxation andother matters in Canada,including the manner in which we calculate our income for tax purposes,and thesedisputes could have

306、a material adverse effect on our financial performance.Unforeseen 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 ofresource assets or property,such reviews do not guarantee that

307、 an unforeseen defect in the chain of title willnot arise and defeat our title to the purchased assets.If such a defect were to occur,our entitlement to theproduction from such purchased assets could be jeopardized.Risks Related to Land Investment Segment Receipt of future payments from KD I and KD

308、II and cash distributions from the Kukio Resort LandDevelopment Partnerships is dependent upon the developers continued efforts and ability to developand market the property.We are entitled to receive future payments based on a percentage of the sales prices of residential lotssold within the Kaupul

309、ehu area by KD I and KD II as well as a percentage of future distributions KD IImakes to its members.However,in order to collect such payments we are reliant upon the developer,KD Iand KD II,in which we own a non-controlling ownership interest,to continue to market the remaining lotswithin Increment

310、 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,whichincludes KD I and KD II,are also dependent on future lot sales in Increment I by KD I and the developmentor sale of

311、Increment II by KD II.It is uncertain when or if KD II will develop or sell the remaining portion ofIncrement II,and there is no assurance with regards to the amounts of future sales from Increments I and II.We do not have a controlling interest in the partnerships,and therefore are dependent on the

312、 general partnerfor development decisions.The receipt of future payments and cash distributions could be jeopardized if thedeveloper fails to proceed with development and marketing of the property.282025/2/12 02:25brn-20230930https:/www.sec.gov/Archives/edgar/data/10048/000001004823000022/brn-202309

313、30.htm36/167We hold investment interests in unconsolidated land development partnerships,which are accountedfor using the equity method of accounting,in which we do not have a controlling interest.Theseinvestments involve risks and are highly illiquid.These investments involve risks which include:th

314、e lack of a controlling interest in these partnerships and,therefore,the inability to require thatthe entities sell assets,return invested capital or take any other action without obtaining themajority vote of partners;potential for future additional capital contributions to fund operations and deve

315、lopment activities;the adverse impact on overall profitability if the entities do not achieve the financial resultsprojected;the reallocation of amounts of capital from other operating initiatives and/or an increase inindebtedness to pay potential future additional capital contributions,which could

316、in turn restrictour ability to access additional capital when needed or to pursue other important elements of ourbusiness strategy;undisclosed,contingent or other liabilities or problems,unanticipated costs,and an inability torecover or manage such liabilities and costs and which could delay or prev

317、ent development of thereal estate held by the land development partnerships;andcertain underlying partnership data is not accessible to us,therefore we depend on the generalpartner to provide us with reliable accounting information.Our land investment business is concentrated in the state of Hawaii.

318、As a result,our financial resultsare dependent on the economic growth and health of Hawaii,particularly the island of Hawaii.Barnwells land investment segment is impacted by the condition of Hawaiis real estate market,which is affected by Hawaiis economy and Hawaiis tourism industry,as well as the U

319、.S.and worldeconomies in general.Any future cash flows from Barnwells land development activities are subject to,among other factors,the level of real estate activity and prices,the demand for new housing and secondhomes on the island of Hawaii,the rate of increase in the cost of building materials

320、and labor,theintroduction of building code modifications,changes to zoning laws,and the level of confidence in Hawaiiseconomy.The occurrence of natural disasters in Hawaii could adversely affect our business.The occurrence of a natural disaster in Hawaii such as,but not limited to,earthquakes,landsl

321、ides,hurricanes,tornadoes,tsunamis,volcanic activity,droughts and floods,could have a material adverse effecton our land investments.The occurrence of a natural disaster could also cause property and flood insurancerates and deductibles to increase,which could reduce demand for real estate in Hawaii

322、.Risks Related to Contract Drilling Segment Demand for water well drilling and/or pump installation is volatile.A decrease in demand for ourservices could adversely affect our revenues and results of operations.Demand for services is highly dependent upon land development activities in the state of

323、Hawaii.Thereal estate development industry is cyclical in nature and is particularly vulnerable to shifts in local,regional,and national economic conditions outside of our control such as interest rates,housing demand,292025/2/12 02:25brn-20230930https:/www.sec.gov/Archives/edgar/data/10048/00000100

324、4823000022/brn-20230930.htm37/167population growth,employment levels and job growth and property taxes.A decrease in water well drillingand/or pump installation contracts will result in decreased revenues and operating results.If we are unable to accurately estimate the overall risks,requirements or

325、 costs when bidding on ornegotiating a contract that is ultimately awarded,we may achieve a lower than anticipated profit orincur a loss on the contract.Contracts are usually fixed price per lineal foot drilled and require the provision of line-item materialsat a fixed unit price based on approved q

326、uantities 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 contracts are realized only if costs are accuratelyestimated and su

327、ccessfully controlled.We may not be able to obtain compensation for additional workperformed or expenses incurred as a result of changes or inaccuracies in these estimates and underlyingassumptions,such as unanticipated sub-surface site conditions,unanticipated technical problems,equipmentfailures,i

328、nefficiencies,cost of raw materials,schedule delays due to constraints on drilling hours,weatherdelays,or accidents.If cost estimates for a contract are inaccurate,or if the contract is not performed withincost estimates,then cost overruns may result in losses or cause the contract not to be as prof

329、itable asexpected.A significant portion of our contract drilling business is dependent on municipalities and a decline inmunicipal spending could adversely impact our business.A significant portion of our contract drilling division revenues is derived from water andinfrastructure contracts with gove

330、rnmental entities or agencies;8%in fiscal 2023.Reduced tax revenues andgovernmental budgets may limit spending by local governments which in turn will affect the demand for ourservices.Material reductions in spending by a significant number of local governmental agencies could havea material adverse

331、 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 competitors utilizedrilling rigs that drill as quickly as our equipment but requ

332、ire less labor.Our strategy is to compete based onpricing and to a lesser degree,quality of service.If we are unable to compete effectively with ourcompetitors,our financial results could be adversely affected.Supply chain and manufacturing issues of well drilling and pump installation equipment cou

333、ldadversely affect our operating results.We are dependent on various well drilling and pump installation equipment to conduct our contractdrilling segment operations.The shortage of and/or delay in delivery of such equipment,such as pumps,interruptions in supply,and price increases of such equipment and materials due to supply chain issues andmanufacturing disruptions could adversely impact our gr