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 30,2024or 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 31,2024(the last business day of the registrants most recently completed second fiscal quarter)was$8,474,000.As of December 13,2024 there were 10,053,534 shares of common stock outstanding.Documents Incorporated by Reference1.Proxy statement,to b
14、e forwarded to stockholders on or about January 10,2025,is incorporated by reference in Part III hereof.2025/5/19 12:00brn-20240930https:/www.sec.gov/Archives/edgar/data/10048/000001004824000020/brn-20240930.htm1/1652025/5/19 12:00brn-20240930https:/www.sec.gov/Archives/edgar/data/10048/000001004824
15、000020/brn-20240930.htm2/165TABLE OF CONTENTS Page Glossary of Terms3 Discussion of Forward-Looking Statements4PART I Item 1.Business5 Item 1A.Risk Factors19 Item 1B.Unresolved Staff Comments31Item 1C.Cybersecurity31 Item 2.Properties32 Item 3.Legal Proceedings32 Item 4.Mine Safety Disclosures32 PAR
16、T II Item 5.Market For Registrants Common Equity,Related Stockholder Matters andIssuer Purchases of Equity Securities33 Item 6.Reserved34 Item 7.Managements Discussion and Analysis of Financial Condition and Resultsof Operations35 Item 7A.Quantitative and Qualitative Disclosures About Market Risk53
17、Item 8.Financial Statements and Supplementary Data54 Item 9.Changes in and Disagreements with Accountants on Accounting andFinancial Disclosure112 Item 9A.Controls and Procedures112 Item 9B.Other Information113Item 9C.Disclosure Regarding Foreign Jurisdictions That Prevent Inspections113 PART III It
18、em 10.Directors,Executive Officers and Corporate Governance114 Item 11.Executive Compensation114 Item 12.Security Ownership of Certain Beneficial Owners and Management andRelated Stockholder Matters114 Item 13.Certain Relationships and Related Transactions,and Director Independence115 Item 14.Princi
19、pal Accounting Fees and Services115 PART IV Item 15.Exhibits,Financial Statement Schedules116 Signatures119 Index to Exhibits12122025/5/19 12:00brn-20240930https:/www.sec.gov/Archives/edgar/data/10048/000001004824000020/brn-20240930.htm3/165GLOSSARY OF TERMSUnless otherwise indicated,all references
20、to“dollars”in this Form 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)-s
21、tock tank barrel(s)of 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
22、 accounting principlesGross-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 g
23、ross well.In the context 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 Deve
24、lopmentKD Development,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 consist
25、s of KD I and KD II(“KDK”)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 na
26、tural gasNet-Barnwells 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.N
27、GL(s)-natural gas liquid(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
28、/5/19 12:00brn-20240930https:/www.sec.gov/Archives/edgar/data/10048/000001004824000020/brn-20240930.htm4/165CAUTIONARY 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 in
29、corporated herein by reference,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
30、.These statements include various estimates,forecasts,projections of Barnwell Industries,Inc.s(referred to herein together with its majority-owned subsidiaries as“Barnwell,”“we,”“our,”“us”or the“Company”)future performance,statements of Barnwells plans andobjectives and other similar statements.All
31、such statements we make 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,”“believ
32、es,”“predicts,”“estimates,”“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.Forw
33、ard-looking statements 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,a
34、nd Barnwell expressly 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 i
35、nternational general economic 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 affecti
36、ng oil and natural gas 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 t
37、he U.S.and Canada,the 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 cond
38、ition of Hawaiis real 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 con
39、dition of Hawaiis tourism 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 disp
40、osition ofassets;the effects 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 Barnwe
41、ll with the SEC.Inaddition,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.42025/5/19 12:00brn-20240930https:/www.sec.gov/Archives/edgar/data/10048/00000100482400002
42、0/brn-20240930.htm5/165PART I ITEM 1.BUSINESS OverviewBarnwell was incorporated in Delaware in 1956 and fiscal 2024 represented Barnwells 68th year ofoperations.Barnwell operates in the following three principal business segments:Oil and Natural Gas Segment -Barnwell engages in oil and natural gas d
43、evelopment,production,acquisitions and sales in Canada and in the U.S.states of Oklahoma and Texas.Land Investment Segment -Barnwell owns land interests in Hawaii.Contract Drilling Segment -Barnwell provides well drilling services and water pumping systeminstallation and repairs in Hawaii.Oil and Na
44、tural Gas SegmentOverviewBarnwell 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
45、-operator participating 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
46、2021,and Barnwell Texas,LLC(“Barnwell Texas”),established in November 2022,Barnwell is involved in oil and natural gas investmentsin Oklahoma and Texas,respectively.StrategyTwining represents 70%of Barnwells fiscal 2024 production(Boe)and consists of assets in theTwining field,in Alberta,Canada.Thes
47、e assets were purchased in August 2018 and were augmented withsubsequent smaller acquisitions of partners.These assets are partially operated by the Company and partiallyoperated by Pine Cliff Energy Ltd.The oil wells operated by the Company largely have less than 15%peryear decline rates,and due to
48、 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 indefinitely,enablesdevelopment drilling to be done when commodity prices support it.Since Barnwells entry into the Twiningproperty,we have p
49、articipated in drilling 12 gross horizontal development wells that were completed withmulti-stage sand fracs,which have cumulatively been or are forecast to be profitable.Of these 12 wells,threeare 100%-owned operated wells in locations selected by Barnwell and nine gross(2.6 net)are non-operatedwel
50、ls.Barnwell plans to continue to develop the pool with more horizontal wells if commodity pricescontinue to support their profitability.Barnwell also has some minor legacy assets that represent 14%of Barnwells fiscal 2024 production(Boe)and consist of the largely non-operated oil and natural gas ass
51、ets located throughout Alberta,Canada,and produce shallow gas or conventional oil from a variety of pools.These assets have been accumulatedover decades of Barnwell activity.Barnwell has divested many of these properties in52025/5/19 12:00brn-20240930https:/www.sec.gov/Archives/edgar/data/10048/0000
52、01004824000020/brn-20240930.htm6/1652025/5/19 12:00brn-20240930https:/www.sec.gov/Archives/edgar/data/10048/000001004824000020/brn-20240930.htm7/165fiscal 2024 in order to reduce risk and increase focus in the Twining area.Barnwell will continue toopportunistically divest our remaining legacy Canadi
53、an assets and minimal capital is expected to be investedin these properties.Barnwell is continually reviewing the market and evaluating opportunities to add to ourproduction and development portfolio.The Company has non-operated working interests in seven wells varying from 1.2%to 4.2%and aminor ove
54、rriding royalty interest,0.07%,in one well in Oklahoma.Our interests in Oklahoma produced 7%of Barnwells fiscal 2024 production(Boe).The Company has a 15.4%non-operated working interest in two wells in the Permian Basin in Texas.Our interests in Texas produced 9%of Barnwells fiscal 2024 production(B
55、oe).OperationsOur oil and natural gas segment revenues,profitability,and future rate of growth are dependent uponoil and natural 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 recen
56、t past,the industryexperienced a period of low oil and natural gas prices that negatively impacted our past operating results,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 attrac
57、tive and would support potential growth.Natural gas prices are typically higher in the winter than at other times due to increased 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 prope
58、rties by the respective property operators.Oil pricesreceived in Canada are impacted by differentials in price to West Texas Intermediate(“WTI”).In recenthistory this meant that Barnwell at times received prices at a significant discount to WTI.In 2024,additionaloil export pipeline capacity was made
59、 available in Canada which greatly reduced this differential.Gas pricesreceived in Canada are based on published AECO hub prices and are also impacted by local marketconditions that result in a discount to U.S.Henry Hub pricing.Oil prices received from the Texas andOklahoma properties are generally
60、in line with WTI pricing.Realized gas prices from our Texas natural gassold at the Waha Hub are at a significant discount to Henry Hub due to limited gas egress from the PermianBasin and excess supply in the area.Preparation of Reserve EstimatesBarnwells reserves are estimated by our independent pet
61、roleum 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 evaluation principles and techniques andrules and regulations of the SEC.All information with respect to
62、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 in this Form 10-K is derived from the report ofRyder Scott,which is filed with this Form 10-K as Exhibit 99
63、.2.The preparation of data used by the independent petroleum reserve 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 review
64、s of dataprovided to the independent petroleum reserve engineers to ensure completeness,and management62025/5/19 12:00brn-20240930https:/www.sec.gov/Archives/edgar/data/10048/000001004824000020/brn-20240930.htm8/165review controls,including an independent internal review of the final reserve report
65、for completeness andaccuracy.Barnwell has a Reserves Committee consisting of two independent directors and BarnwellsCorporate Secretary.The Reserves Committee was established to ensure the independence of the Companyspetroleum reserve engineers.The Reserves Committee is responsible for reviewing the
66、 annual reserveevaluation reports prepared by the independent petroleum reserve engineering firms and ensuring that thereserves are reported fairly in a manner consistent with applicable standards.The Reserves Committee meetsannually to discuss reserve issues and policies and to meet with Company pe
67、rsonnel and the independentpetroleum reserve engineers.The President and Chief Operating Officer of Barnwell of Canada and Octavian Oil,who also servesas the President and Chief Executive Officer of Barnwell effective April 1,2024,is a professional engineerwith over 25 years of relevant experience i
68、n the oil and natural gas industry in Canada and is a member of theAssociation of Professional Engineers and Geoscientists of Alberta.ReservesAt September 30,2024,Barnwells reserves were approximately 52%operated and consisted of 41%conventional oil,15%conventional natural gas liquids,and 44%natural
69、 gas.At September 30,2023,Barnwells reserves were approximately 43%operated and consisted of 38%conventional oil,14%conventional natural gas liquids,and 48%natural gas.The amounts set forth in the following table,based on our independent reserve engineers evaluationof our reserves,summarize our esti
70、mated proved reserves of oil,natural gas liquids,and natural gas as ofSeptember 30,2024 for all properties located in Canada and the U.S.in which Barnwell has an interest.Allof our oil and natural gas reserves are based on constant dollar price and cost assumptions.The Companyemphasizes that reserve
71、 estimates are inherently imprecise and that estimates of new discoveries andundeveloped locations are more imprecise than estimates of established proved producing oil and natural gasproperties.Accordingly,these estimates are expected to change as future information becomes available.Proved oil and
72、 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 economic and operating conditions(i.e.,prices and costs)existing at the time the estimate i
73、smade.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 theestimates were made.No estimates of total proved net oil or natural gas reserves have be
74、en filed with,orincluded in reports to,any federal authority or agency,other than the SEC,since October 1,2023.As of September 30,2024Estimated NetProvedDevelopedReservesEstimated NetProvedUndevelopedReservesEstimated NetProved ReservesOil(Bbls)873,000 109,000 982,000 Natural gas liquids(Bbls)340,00
75、0 23,000 363,000 Natural gas(Mcf)5,815,000 640,000 6,455,000 Total(Boe)2,184,000 239,000 2,423,000 72025/5/19 12:00brn-20240930https:/www.sec.gov/Archives/edgar/data/10048/000001004824000020/brn-20240930.htm9/165During fiscal 2024,Barnwells total net proved reserves of oil and natural gas liquids in
76、creased by83,000 Bbls(9%)and 36,000 Bbls(11%),respectively,and total net proved reserves of natural gas decreasedby 246,000 Mcf(4%),for a combined increase of 80,000 Boe(3%).The increase in proved reserves for oiland natural gas liquids were primarily the result of revisions due to the improved prod
77、uction performance ofmany wells in Twining as a result of focused attention and investment in optimization.The Company hasidentified a number of additional optimization projects for fiscal 2025 that should further improve wellperformance and reduce operating costs.Projects are generally workovers,fi
78、eld automation,and facilitydebottlenecking.Barnwell has an ownership is all processing facilities that handle our net productionvolumes.The following tables set forth Barnwells oil and natural gas net reserves at September 30,2024,bylocation and property name,based on information prepared by our ind
79、ependent reserve engineers,as well asnet production and net revenues by location and property name for the year ended September 30,2024.Thereserve data in these tables are based on constant dollars where reserve estimates are based on sales prices,costs and statutory tax rates using a historical ave
80、rage price of the first day pricing of the last 12-monthsending with September 2024.As of September 30,2024Net Proved Producing ReservesNet Proved ReservesProperty NameOil(MBbls)NGL(MBbls)Gas(MMcf)Oil(MBbls)NGL(MBbls)Gas(MMcf)Canada:Twining710 126 3,637 867 156 4,549 Medicine River23 43 366 23 43 36
81、6 Thornbury 2 26 Other properties2 2 United States:Oklahoma33 86 699 33 86 699 Texas57 78 815 57 78 815 Total825 333 5,519 982 363 6,455 For the year ended September 30,2024Net ProductionNet RevenuesProperty NameOil(MBbls)NGL(MBbls)Gas(MMcf)OilNGLGasCanada:Twining160 23 944$11,241,000$1,190,000$1,61
82、9,000 Medicine River2 4 18 171,000 107,000 26,000 Thornbury 52 39,000 Other properties22 9 71 633,000 9,000 58,000 United States:Oklahoma5 12 99 406,000 252,000 190,000 Texas14 16 160 1,058,000 322,000 75,000 Total203 64 1,344$13,509,000$1,880,000$2,007,000 82025/5/19 12:00brn-20240930https:/www.sec
83、.gov/Archives/edgar/data/10048/000001004824000020/brn-20240930.htm10/165Net proved reserves that are attributable to existing producing wells are primarily determined usingdecline curve analysis.Net proved reserves attributable to producing wells with limited production historyand for undeveloped lo
84、cations are estimated using performance from analogous wells in the surrounding areaand geologic data to assess the reservoir continuity.Standardized Measure of Discounted Future Net Cash FlowsThe following table sets forth Barnwells“Estimated Future Net Revenues”from total proved oil,natural gas an
85、d 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 30,2024.Estimatedfuture net revenues for total proved reserves are net of estimated future expenditures of developing andproducing the prove
86、d reserves,and assume the continuation of existing economic conditions.Net revenueshave been calculated using the average first-day-of-the-month price during the 12-month period ending as ofthe balance sheet date and current costs,after deducting all royalties,operating costs,future estimated capita
87、lexpenditures(including abandonment costs),and income taxes.The amounts below include future cash flowsfrom reserves that are currently proved undeveloped reserves and do not deduct general and administrative orinterest expenses.Year ending September 30,2025$5,208,000 20264,802,000 20273,301,000 The
88、reafter2,646,000 Undiscounted future net cash flows,after income taxes$15,957,000 Standardized measure of discounted future net cash flows$15,850,000*_*This amount does not purport to represent,nor should it be interpreted as,the fair value of Barnwells oil and natural gas reserves.An estimateof fai
89、r value would also consider,among other items,the recovery of reserves not presently classified as proved,anticipated future changes in oiland natural gas prices(these amounts were based on a natural gas price of$1.16 per Mcf and an oil price of$70.78 per Bbl)and costs,and adiscount factor more repr
90、esentative of the time value of money and the risks inherent in reserve estimates.Barnwell has included all abandonment,decommissioning and reclamation costs and inactive wellcosts into the Companys reserve reports in accordance with best practice recommendations.Oil and Natural Gas ProductionThe fo
91、llowing table summarizes(a)Barnwells net production for the last three fiscal years,based onsales of natural gas,oil 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
92、.Production amounts reported are net of royalties.All of Barnwells net production in fiscal 2024 and 2023was derived in Alberta,Canada and in the U.S.states of Oklahoma and Texas.Barnwells net production infiscal 2022 was derived in Alberta,Canada and in Oklahoma.For a discussion regarding our total
93、 annualproduction volumes,average sales prices,and related production costs,see Item 7,“ManagementsDiscussion and Analysis of Financial Condition and Results of Operations.”92025/5/19 12:00brn-20240930https:/www.sec.gov/Archives/edgar/data/10048/000001004824000020/brn-20240930.htm11/165 Year ended S
94、eptember 30,202420232022Annual net production:Natural gas(Mcf)1,344,000 1,263,000 964,000 Oil(Bbls)203,000 204,000 182,000 Natural gas liquids(Bbls)64,000 52,000 48,000 Total(Boe)491,000 467,000 396,000 Total(Mcfe)2,946,000 2,799,000 2,296,000 Annual average sales price per unit of production:Mcf of
95、 natural gas*$1.41$2.64$4.63Bbl of oil*$66.49$69.77$86.73Bbl of natural gas liquids*$29.38$32.24$48.06Annual average production cost per Boe produced*$19.82$22.10$23.66Annual average production cost per Mcfe produced*$3.30$3.68$4.08_*Calculated on revenues net of pipeline charges before royalty expe
96、nse divided by gross production.*Calculated on revenues before royalty expense divided by gross production.*Calculated on production costs,excluding natural gas pipeline charges,divided by the combined total production of natural gas liquids,oiland natural gas.Capital Expenditures and AcquisitionsBa
97、rnwell invested$4,805,000 in oil and natural gas properties during fiscal 2024,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
98、 drilling of anew well and for equipment and upgrades to facilities,all of which were in the Twining area.Barnwell invested$10,729,000 in oil and natural gas properties during fiscal 2023,including accruedcapital expenditures and acquisitions of oil and natural gas properties and excluding additions
99、 and revisionsto estimated asset retirement obligations.Barnwells capital expenditures were primarily for the drilling ofnew wells in Texas and the Twining area.Well Drilling ActivitiesDuring the year ended September 30,2024,the Company drilled one gross(1.0 net)operateddevelopment oil well in the T
100、wining area which started producing in mid-September 2024.The well hasproduced on average approximately 107 Boe per day in its first two months of production.Capitalexpenditures incurred by the Company for this well totaled approximately$3,183,000.The Company did notdrill or participate in the drill
101、ing of wells in Texas or in Oklahoma during the year ended September 30,2024.In fiscal 2023,the Company participated in the drilling of three gross(0.9 net)non-operateddevelopment wells in the Twining area of Alberta,Canada.Total capital expenditures for the year endedSeptember 30,2023 totaled appro
102、ximately$4,770,000 and included the drilling,completion and equipping ofthe three gross(0.9 net)wells along with various upgrades to the Twining facilities.Additionally,theCompany participated in the drilling of two gross(0.3 net)non-operated development oil wells in Texas.Capital expenditures incur
103、red for the drilling of these two wells totaled approximately102025/5/19 12:00brn-20240930https:/www.sec.gov/Archives/edgar/data/10048/000001004824000020/brn-20240930.htm12/165$4,293,00 during the year ended September 30,2023.The Company did not drill or participate in the drillingof wells in Oklaho
104、ma 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 for the year ended Septembe
105、r 30,2022.Five gross(1.4 net)wells wereproducing at September 30,2022 and the remaining one gross(0.3 net)well was awaiting tie-in and startedproducing in fiscal 2023.The Company drilled one gross(1.0 net)operated development well in the Twiningarea which was producing at September 30,2022.Capital e
106、xpenditures incurred by the Company for thisoperated well was$2,852,000.The Company did not drill or participate in the drilling of wells in Oklahomaduring the year ended September 30,2022.Producing WellsAs of September 30,2024,Barnwell has interests in 141 gross(69.3 net)producing wells in Alberta,
107、Canada,of which 93 gross(63.3 net)were oil wells and 48 gross(6.0 net)were natural gas wells.Additionally,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 30,2024.Developed Acreage and Undeveloped AcreageThe fol
108、lowing table sets forth the gross and net acres of both developed and undeveloped oil andnatural gas leases in the province of Alberta,Canada which Barnwell held as of September 30,2024.Theacreage of developed and undeveloped oil and natural gas leases in the U.S.are not significant and aretherefore
109、 not included in the table below.Developed Acreage*Undeveloped Acreage*TotalLocationGrossNetGrossNetGrossNetAlberta,Canada131,59030,73026,2107,410157,80038,140_*“Developed Acreage”includes the acres covered by leases upon which there are one or more producing wells.“Undeveloped Acreage”includes acre
110、s covered by leases upon which there are no producing wells and which are maintained by the payment of delay rentals or thecommencement of drilling thereon.Seventy-seven percent of Barnwells undeveloped acreage is not subject to expiration atSeptember 30,2024.Twenty-three percent of Barnwells leaseh
111、old interests in undeveloped acreage issubject to expiration and may expire over the next five fiscal years,if not developed,as follows:4%expireduring fiscal 2025;9%expire during fiscal 2026;6%expire during fiscal 2027;4%expire during fiscal2028;and no expirations during fiscal 2029.There can be no
112、assurance that Barnwell will be successful inrenewing its leasehold interests in the event of expiration.Barnwells undeveloped acreage includes a significant concentration in the Twining area(2,810 netacres).The remaining undeveloped acreage is at non-operated properties over which we do not have co
113、ntrol,and the value of such acreage is not estimated to be significant at current commodity prices.Marketing of Oil and Natural Gas Barnwell sells its Canadian oil,natural gas,and natural gas liquids production under short-termcontracts between itself and two main oil purchasers,one natural gas purc
114、haser,and one natural gas112025/5/19 12:00brn-20240930https:/www.sec.gov/Archives/edgar/data/10048/000001004824000020/brn-20240930.htm13/1652025/5/19 12:00brn-20240930https:/www.sec.gov/Archives/edgar/data/10048/000001004824000020/brn-20240930.htm14/165liquids purchaser.The prices received are freel
115、y negotiated between buyers and sellers and are determinedfrom transparent posted prices adjusted for quality and transportation differentials.In the quarter ended December 31,2023,the Company amended certain of its Canadian purchase andsales contracts to change the sales price on 1,055 gross Mcf pe
116、r day of the Canadian natural gas that it sellsduring the period from April 1,2024 to October 31,2024 to a fixed index price before differentials of$2.55Canadian dollars per Mcf,with remaining volumes continuing to be sold at spot prices.This per day volumeof natural gas under fixed index price cont
117、ract is equivalent to approximately 33%of Canadian natural gasgross production per day for the year ended September 30,2024.In July 2024,the Company amended thesales price on 1,055 gross Mcf per day of the Canadian natural gas it will sell during the period fromNovember 1,2024 to March 31,2025 to a
118、fixed index price before differentials of$2.64 Canadian dollars perMcf,with remaining volumes continuing to be sold at spot prices.This per day volume of natural gas underthis fixed index price contract is equivalent to approximately 33%of Canadian natural gas gross productionper day for the year en
119、ded September 30,2024.These natural gas contracts were eligible for and elected asnormal purchase and normal sales exception contracts and were thus excluded from derivative accounting.In the quarter ended December 31,2023,the Company amended certain of its Canadian purchase andsales contracts to ch
120、ange the sales price on 225 gross barrels per day of the Canadian oil for sale for theperiod from January 1,2024 to June 30,2024 to a fixed index price before differentials of$69.46 per netbarrel,with remaining volumes continuing to be sold at spot prices.This per day volume of oil under thisfixed i
121、ndex price contract was equivalent to approximately 35%of Canadian oil gross production per day forthe year ended September 30,2024.In July 2024,the Company amended the sales price on 100 gross barrelsper day of the Canadian oil that it sells during the period from August 1,2024 to December 31,2024
122、to afixed index price before differentials of$79.00 per net barrel,with remaining volumes continuing to be soldat spot prices.This per day volume of oil under this fixed index price contract is equivalent to approximately16%of Canadian oil gross production per day for the year ended September 30,202
123、4.These oil contractswere eligible for and elected as normal purchase and normal sales exception contracts and were thusexcluded from derivative accounting.In fiscal 2024 and 2023,Barnwell took most of its Canadian oil,natural gas liquids and natural gas“in kind”where Barnwell markets the products i
124、nstead 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 our products are commodities for which there are numerous marketers,we arenot dependent upon one purchaser or
125、 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 properties of Barnwell are located have regulatoryprovisions relating to permits for the drilling of wells,the s
126、pacing 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 control by regulatory agencies in each province.The province of Albertaand the Government of Canada also monitor
127、 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 revenues were derived from properties located within Alberta,which charges oil and natural gas producers a royal
128、ty for production within the province.Provincial122025/5/19 12:00brn-20240930https:/www.sec.gov/Archives/edgar/data/10048/000001004824000020/brn-20240930.htm15/165royalties are calculated as a percentage of revenue and vary depending on production volumes,selling pricesand the date of discovery.Barn
129、well also pays gross overriding royalties and leasehold royalties on a portionof its oil and 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
130、 are determined 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 2024,75%of Canadian royalt
131、ies were related to Alberta government charges and 25%ofroyalties were related to freehold,overriding royalties and other charges.In fiscal 2024,the weighted-average royalty rate paid on all of Barnwells Canadian natural gas was6%,and the weighted-average royalty rate paid on oil was 21%.In fiscal 2
132、024,the weighted-average royaltyrate paid on all of Oklahomas and Texass production was 23%and 26%,respectively.Under Canadian oil and gas law and regulations,in order for the Company to retain the right toacquire,transfer,or drill well licenses,Barnwell must maintain a favorable Licensee Capability
133、 Assessment(“LCA”)with the Alberta Energy Regulators(“AER”).The LCA is intended to be a comprehensiveassessment of corporate health and considers a wide variety of factors and establishes guidelines for theindustry with regards to the management of liabilities throughout the entire lifecycle of oil
134、and gas projects.Factors considered by the AER are combined into six groups,these being current financial distress,liabilitymagnitude,resources lifespan,operations compliance,closure efficiency,and administrative compliance.These factors are compared to peer operators and ranked into three“Tiers.”Ba
135、rnwells assessment under theLCA Program is currently favorable with Tier 1 or Tier 2 overall rankings in the six factor groups.Barnwellbelieves it can continue to manage its operations to maintain a favorable ranking.A program has also been implemented by the AER which requires mandatory annual mini
136、mumexpenditures towards outstanding decommissioning and reclamation obligations in accordance with AERtargets which are adjusted by the AER on an annual basis.The target for calendar 2025 is 6.2%of anindividual companys inactive liability.This amount for Barnwell is approximately$244,000.Barnwellbel
137、ieves the targets assessed by the AER are within estimated forecasts for Barnwells future ARO spendingand therefore the Company expects to be in compliance with AER spending targets under their mandatoryspend requirements.In instances where Barnwell is a non-operating partner of a company which has
138、become insolvent,Barnwell and any remaining partners are responsible for administering site closure.This is achieved in one oftwo ways.First,either Barnwell or the other partners proceed with closure,and then make a claim for thecosts attributed to the insolvent entity from the Orphan Well Associati
139、on(“OWA”)after the abandonmentwork has been certified complete by the AER.Alternatively,Barnwell may pay a deposit to the OWA for itsnet share of the estimated closure costs,plus contingency as determined by the OWA.This allows the OWAto proceed with closure work on behalf of all partners.As of Sept
140、ember 2024,Barnwell had provided$923,000 in cash deposits to the OWA,and$353,000 of the deposit has been spent on closure activities as atSeptember 30,2024.If the amount of deposit proves larger than that required by the OWA to complete theestimated work,Barnwell will receive a refund on the excess
141、after sites are certified by the AER.Thesedeposits do not earn interest.Asset retirement obligations of Barnwells net132025/5/19 12:00brn-20240930https:/www.sec.gov/Archives/edgar/data/10048/000001004824000020/brn-20240930.htm16/165share of sites operated by all partners are included in“Asset retire
142、ment obligation”,current and long-term,inthe Consolidated Balance Sheets.Over the past eight years,the Company has worked to reduce its abandonment and reclamationobligations associated with its oil and natural gas segment,both by divesting low-productivity assets andactively closing wells and sites
143、.Twenty-four Barnwell-operated sites have been certified as fully reclaimed orexempt since 2016.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 competitive in all phases,includin
144、g 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 competition between the oil and natu
145、ral 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 financial,technical and o
146、ther 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 KD I and KD II within the
147、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 approximately 1,000 acres of
148、 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 liability limited partnerships,
149、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 interests in the Kukio,Maniniowali
150、 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 of Increment II.Barnwells
151、ownership interests in the Kukio ResortLand Development Partnerships are accounted for using the equity method of accounting.OperationsIncrement I is an area of 80 single-family lots,all of which were sold from 2006 to 2024,and a beachclub on the portion of the property bordering the Pacific Ocean.I
152、ncrement II is the remaining portion of theapproximately 870-acre property and is zoned for single-family and multi-family residential units and a golfcourse and clubhouse.Two residential lots of approximately two to three acres in size142025/5/19 12:00brn-20240930https:/www.sec.gov/Archives/edgar/d
153、ata/10048/000001004824000020/brn-20240930.htm17/165fronting the ocean were developed within Increment II and sold by KD II,and the remaining acreage withinIncrement II is not yet under development.It is uncertain when or if KD II will develop the other areas ofIncrement II,and there is no assurance
154、with regards to the amounts of future sales from Increment II.Theremaining 420 developable acres at Increment II are entitled for up to 350 homesites.No definitivedevelopment plans have been made by KD II,the developer of Increment II,as of the date of this report.Kaupulehu Developments was entitled
155、 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 fiscal 2024,the last tworemaining single-family lots of the 80 lots developed within Increment I were sold.In March 2019,KD II admitted a new development partner,Repla
156、y 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 10.8%indirect non-controlling ownership interes
157、t 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 with KD II,Kaupulehu Developments is entitled to
158、15%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$3,000,000 as to the priority payout.Such inter
159、ests 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 arrangement also gives Barnwell rights to threesingle-family residential lots in Phase 2A of Increment II,and four single-f
160、amily residential lots in phasessubsequent to Phase 2A when such lots are developed by KD II,all at no cost to Barnwell.Barnwell iscommitted to commence construction of improvements within 90 days of the transfer of the four lots in thephases subsequent to Phase 2A as a condition of the transfer of
161、such lots.Also,in addition to Barnwellsexisting obligations to pay professional fees to certain parties based on percentages of its gross receipts,Kaupulehu Developments also is obligated to pay an amount equal to 0.72%and 0.2%of the cumulative netprofits of KD II to KD Development and a pool of var
162、ious individuals,respectively,all of whom are partnersof KKM and are unrelated to Barnwell,in compensation for the agreement of these parties to admit the newdevelopment partner,Replay,for Increment II.Such compensation will be reflected as the obligationbecomes probable and the amount of the obliga
163、tion can be reasonably estimated.As stated above,IncrementII is not yet under development and it is uncertain when or if KD II will develop the other areas of IncrementII,and there is no assurance with regards to the amounts of future sales from Increment II.In fiscal 2024,the Kukio Resort Land Deve
164、lopment Partnerships sold the last two remaining lots inIncrement I and as a result of the lot sales,made cash distributions to its partners of which Barnwell received$1,071,000 resulting in a net amount of$953,000,after distributing$118,000 to non-controlling interests.CompetitionBarnwells land inv
165、estment segment is subject to intense competition in all phases of its operationsincluding 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 l
166、and development companies and other industries involved in land investment activities.Theprincipal factors affecting competition are the location of the project and pricing.Barnwell is a minor152025/5/19 12:00brn-20240930https:/www.sec.gov/Archives/edgar/data/10048/000001004824000020/brn-20240930.ht
167、m18/165participant in the land development industry and competes in its land investment activities with many otherentities having far greater financial and other resources.Contract Drilling SegmentOverviewBarnwells wholly-owned subsidiary,Water Resources,drills water and water monitoring wells ofvar
168、ying 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 Resources owns and operates three water well drilling rigs,two pump rigs and other ancillarydril
169、ling and pump equipment.Additionally,Water Resources leases short-term a storage facility in Waipahu,Hawaii,and a one-acre maintenance and storage facility with 2,800 square feet of interior space in Kawaihae,Hawaii.Water Resources also maintains an inventory of uninstalled materials for jobs in pro
170、gress and aninventory 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 primarily dependent upon land development activities in Hawaii.WaterResources markets its services to land
171、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 entities or obtained through competitive bidding with private entities or local,stateand federal agencies
172、.Contract revenues are not dependent upon the discovery of water or other similartargets,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 Resou
173、rces sold a drilling rig to an independent third party for proceeds of$551,000,net of 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 2024,Water Resources started three pump installation and
174、 repair contracts and completedtwo well drilling and five pump installation and repair contracts.The two completed well drilling contractswere both started in fiscal 2023.Of the five completed pump installation and repair contracts,two werestarted in fiscal 2017,one was started in fiscal 2019,and tw
175、o were started in the current year.Fifty-fourpercent of well drilling and pump installation and repair jobs,representing 18%of total contract drillingrevenues in fiscal 2024,have been pursuant to government contracts.At September 30,2024,there was a backlog of one well drilling and two pump installa
176、tion and repaircontracts and all of the contracts were in progress as of September 30,2024.162025/5/19 12:00brn-20240930https:/www.sec.gov/Archives/edgar/data/10048/000001004824000020/brn-20240930.htm19/165The approximate dollar amount of Water Resources backlog of firm well drilling and pumpinstall
177、ation and repair contracts at December 1,2024 and 2023 was as follows:December 1,20242023Well drilling$800,000$5,900,000 Pump installation and repair300,000 900,000$1,100,000$6,800,000 All of the contract drilling revenues in backlog at December 1,2024 is expected to be recognized infiscal 2025.Pote
178、ntial Sale or Wind Down of the Contract Drilling SegmentOn December 13,2023,the Company entered into a stock purchase agreement with a constructioncompany for the sale of Water Resources.On December 27,2023,the stock purchase agreement wasterminated by the buyer prior to closing.The Company continue
179、s to investigate strategies regarding WaterResources future including,but not limited to,other potential opportunities for a sale of its stock or assets.Ifno sale of its stock or assets along with contract backlog can be secured,Water Resources will likely bewound down after all contracts in backlog
180、 are completed and any remaining drilling rigs and equipment willbe liquidated.CompetitionWater Resources competes 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 subme
181、rsible water pumping systems in Hawaii.These contractors compete actively with WaterResources for government and private contracts.Pricing is Water Resources major method of competition;reliability of service also is a significant factor.Financial Information About Industry Segments and Geographic A
182、reasNote 12 in the“Notes to Consolidated Financial Statements”in Item 8 contains information on oursegments and geographic areas.EmployeesAt December 1,2024,Barnwell employed 28 individuals;27 on a full time basis and 1 on a part-timebasis.Environmental CostsBarnwell is subject to extensive environm
183、ental 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
184、 in 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 environmental172025/5/19 12:00brn-20240930https:/www
185、.sec.gov/Archives/edgar/data/10048/000001004824000020/brn-20240930.htm20/1652025/5/19 12:00brn-20240930https:/www.sec.gov/Archives/edgar/data/10048/000001004824000020/brn-20240930.htm21/165effects of the disposal or release of petroleum or chemical substances at various sites where it has a workingi
186、nterest.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 financial statements included in Item 8,“Financial Statements and Supple
187、mentary 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 reports as soon as practicable after we electronically file such reports w
188、ith,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 theSECs website at www.sec.gov.The Companys references to URLs for these webs
189、ites are intended to betextual references only.182025/5/19 12:00brn-20240930https:/www.sec.gov/Archives/edgar/data/10048/000001004824000020/brn-20240930.htm22/165ITEM 1A.RISK FACTORS The business of Barnwell and its subsidiaries face numerous risks,including those set forth below orthose described e
190、lsewhere 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 liquidity could be materially negatively impacted.Entity-Wide RisksStock
191、holders 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,without action or vote of the stockholders,subject to therequirements of t
192、he 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,possibly at a discount to market in the future.These actions would resultin di
193、lution 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 Company,including that of Alexander Kinzler,our General Counsel andSec
194、retary.A small number of stockholders,including our General Counsel and Secretary,own a significantamount of our common stock and may have influence over the Company.As of September 30,2024,our General Counsel and Secretary,who is the Executive Chairman of theBoard of Directors,and two other stockho
195、lders hold approximately 48%of our outstanding common stock.The interests of one or more of these stockholders may not always coincide with the interests of otherstockholders.These stockholders have significant influence over all matters submitted to our stockholders,including the election of our di
196、rectors,and could accelerate,delay,deter or prevent a change of control of theCompany.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
197、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
198、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
199、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
200、numerous factors,including theperformance of the financial markets,specifically the equity markets and levels of interest rates.192025/5/19 12:00brn-20240930https:/www.sec.gov/Archives/edgar/data/10048/000001004824000020/brn-20240930.htm23/1652025/5/19 12:00brn-20240930https:/www.sec.gov/Archives/ed
201、gar/data/10048/000001004824000020/brn-20240930.htm24/165Declines in the price of our common stock could adversely affect the value of an asset on our balancesheet and our stockholders equity.Currently,Barnwells pension plan is overfunded,meaning that the current fair value of the assetsheld by the p
202、ension plan exceeds the estimated current accumulated benefit obligation of the pension plan.The overfunded amount is included on our balance sheet as an asset titled“Asset for retirement benefits.”Asof September 30,2024,the value of that asset was$4,899,000,which represented 16%of the Companystotal
203、 assets of$30,669,000 and 38%of our stockholders equity.A decline in the value of our pension plansinvestments overall,or of any one investment,could reduce the value of“Asset for retirement benefits.”A portion of the pension plans investments is in publicly traded stocks,one of which is Barnwellsco
204、mmon stock.As of September 30,2024,the value of the Barnwell common stock held by the pension planwas$934,000,representing approximately 7%of the fair market value of the pension plans assets.A declinein the price of our common stock would also have the effect of reducing the value of our“Asset forr
205、etirement benefits,”total assets and our stockholders equity.The price of our common stock has been volatile and could continue to fluctuate substantially.The market price of our common stock has been volatile and could fluctuate based on a variety offactors,including:fluctuations in commodity price
206、s;variations in results of operations;announcements by us and our competitors;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
207、 skilled and experienced personnel to operate our business.In addition to competingin 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 highlycompeti
208、tive labor market.Further,there are significant personal liability risks to Barnwell of Canadasindividual officers and directors related to well clean-up costs that may affect our ability to attract or retainthe necessary people.202025/5/19 12:00brn-20240930https:/www.sec.gov/Archives/edgar/data/100
209、48/000001004824000020/brn-20240930.htm25/165We are a smaller reporting company and benefit from certain reduced governance and disclosurerequirements,including that our independent registered public accounting firm is not required toattest to the effectiveness of our internal control over financial
210、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 are a“smaller reporting company,”meaning that our outstanding common stock heldby nonaffiliates had a value o
211、f 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 Section 404 of the Sarbanes-Oxley Act,meaning our auditors are not required to attest to theeffectiveness of
212、 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 materialweaknesses or other deficiencies in internal controls go undetected may increase.In addition,as a smaller
213、reporting 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 financial statements inannual reports and simplified executive compensation disclosures.Consequently,it may be
214、 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 other public companies in which one holdshares.As a smaller reporting company,we are not required to provide this
215、 information.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 acqu
216、isition 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 able
217、to 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 to se
218、ll 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 upon our
219、 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 incr
220、ease,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 we d
221、rill or participate in may not beproductive,and we may not recover all or any portion of our investment in those wells.If future oil212025/5/19 12:00brn-20240930https:/www.sec.gov/Archives/edgar/data/10048/000001004824000020/brn-20240930.htm26/165and natural gas segment acquisition and development a
222、ctivities are not successful it could have an adverseeffect on our future results of operations and financial condition.Oil 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 our re
223、venues 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 sufficientoperat
224、ing 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 affect pri
225、ces 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 fuels an
226、d 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,or act
227、ions 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-operatin
228、g 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 worki
229、ng 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 third
230、 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 environmental law
231、sand 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 natural g
232、as 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 be ab
233、le to satisfy our actual future environmental andreclamation obligations.222025/5/19 12:00brn-20240930https:/www.sec.gov/Archives/edgar/data/10048/000001004824000020/brn-20240930.htm27/1652025/5/19 12:00brn-20240930https:/www.sec.gov/Archives/edgar/data/10048/000001004824000020/brn-20240930.htm28/16
234、5Barnwells oil and natural gas segment is subject to the provisions of the Alberta Energy Regulators(“AER”)Licensee Life-Cycle Management Program via a Licensee Capability Assessment(“LCA”).Underthis program the AER assesses the corporate health of the Company and considers a wider variety of factor
235、sthan those considered under the previous program.The LCA establishes clear expectations for 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,liabi
236、lity magnitude,resources lifespan,operations compliance,closure efficiency and administrative compliance.These factorsare compared to peer operators and ranked into three“Tiers”.Under the LCA Program,an inventoryreduction program has also been implemented which requires mandatory annual minimum expe
237、nditurestowards outstanding decommissioning and reclamation obligations in accordance with AER targets which areadjusted by the AER on an annual basis.The target for 2025 is 6.2%of an individual companys inactiveliability.These targets became effective January 1,2022.The AER may require purchasers o
238、f AER licensed oil and 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
239、a security deposit if assessed 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 busines
240、s,financial condition and 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 res
241、ult in the AER serving the Company with a closure order to shut-in all operated wells.Additionally,if Barnwell is non-compliant,the Company would be prohibited from transferring well licenseswhich would prohibit us from selling any oil and natural gas assets until the required cash deposit is madewi
242、th the AER.We are not fully 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
243、oneconomically reasonable 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
244、 suspendoperations or enter into interim compliance measures pending completion of the required remedy.We may fail to fully identify potential problems related to acquired reserves or to properly estimatethose reserves.We periodically evaluate acquisitions of reserves,properties,prospects and leaseh
245、olds and otherstrategic 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 en
246、vironmental issues,litigation 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 suffici
247、ently familiar with the properties to fully assess232025/5/19 12:00brn-20240930https:/www.sec.gov/Archives/edgar/data/10048/000001004824000020/brn-20240930.htm29/1652025/5/19 12:00brn-20240930https:/www.sec.gov/Archives/edgar/data/10048/000001004824000020/brn-20240930.htm30/165their deficiencies and
248、 potential recoverable reserves.Inspections may not always be performed on every well,and environmental problems are not necessarily observable even when an inspection is undertaken.Evenwhen problems are identified,the seller of the properties may be unwilling or unable to provide effectivecontractu
249、al protection against all or part of the problems.We often are not entitled to contractualindemnification 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 estimati
250、ng quantities of proved 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 thecarryin
251、g values of our oil and natural gas properties.Oil and natural gas prices affect the value of our oil and natural gas properties as determined in ourfull cost ceiling calculation.Any future ceiling test write-downs will result in reductions of the carrying valueof our oil and natural gas properties
252、and an equivalent charge to earnings.The oil and natural gas industry is highly competitive.We compete for capital,acquisitions of reserves,undeveloped lands,skilled personnel,access todrilling rigs,service rigs and other equipment,access to processing facilities,pipeline capacity and in manyother r
253、espects with a substantial 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 resu
254、lt of thesecomplementary 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
255、prices and productionlevels,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 anticip
256、ated could have a material 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 materialf
257、luctuation.The need for 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 w
258、e produce.Our business depends 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,
259、tax and energypolicies,general 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.242025/5/19 12:00brn-2
260、0240930https:/www.sec.gov/Archives/edgar/data/10048/000001004824000020/brn-20240930.htm31/165 We 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
261、,we cannotcontrol the pace 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 cer
262、tain consent rights insome 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 accou
263、nting information.We also 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 s
264、ignificantdecisions and assumptions 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
265、 may be material.Theestimation 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 pric
266、es,production and development 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
267、over the producing life of 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 su
268、bject to drilling and completion 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 ultima
269、te recoveries and thereforegenerate 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
270、,the inability to recover 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 be252025/5/19 12:00brn-20240930https:/www.sec.gov/Archives/e
271、dgar/data/10048/000001004824000020/brn-20240930.htm32/1652025/5/19 12:00brn-20240930https:/www.sec.gov/Archives/edgar/data/10048/000001004824000020/brn-20240930.htm33/165evaluated over time as more wells are drilled and production profiles are established over a sufficiently longtime period.If our d
272、rilling results are less than anticipated or we are unable to execute our drilling programbecause of capital constraints,lease expirations,limited access to gathering systems and takeaway capacity,and/or prices for crude oil,natural gas,and natural gas liquids decline,then the return on our investme
273、nt for aparticular project may not be as attractive as we anticipated and we could incur material write-downs of oiland 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 inherent
274、lydifficult to predict.If 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 adver
275、sely affect the amount and timing of our cash inflows.In addition to the usual delays in payment by purchasers of oil and natural gas to the operators of ourproperties,and the delays of those operators in remitting payment to us,payments between any of theseparties may also be delayed by:restriction
276、s imposed by lenders;accounting delays;delays in the sale or delivery of products;delays in the connection of wells to a gathering system;blowouts or other accidents;adjustments for prior periods;recovery by the operator of expenses incurred in the operation of the properties;andthe establishment by
277、 the operator of reserves for these expenses.Any of these delays could expose us to additional third party credit risks.The oil and natural gas market in which we operate exposes us to potential liabilities that may not becovered by insurance.Our operations are subject to all of the risks associated
278、 with the operation and development 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,equipmen
279、t failures and other accidents,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
280、 property or the property 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
281、 any applicable insurance 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 indemnificatio
282、n or insurance obligations.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,that262025/5/19 12:00brn-20240930https:/www.sec.gov/Archives/edgar/data/10048/000001004824000020/brn-20240930.htm34/165insurance premiu
283、ms or other costs will not rise significantly in the future,so as to make the cost of suchinsurance prohibitive.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 regulato
284、ry enforcement actions.Our 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 restr
285、ictions on production,restrictions 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 healt
286、h and safety.Further,the 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 signifi
287、cant portion of our revenues from our operations in Canada;70%in fiscal2024.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 nat
288、ionals have substantial ownership 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,
289、environmental protection,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 ad
290、dition,governmental regulations may discourage our customers activities,reducing demand for our products and services.Changes in U.S.trade policy,including the imposition of tariffs and the resulting consequences,couldadversely affect our business,prospects,financial condition,and operating results.
291、There is currently significant uncertainty about the future relationship between the United States andCanada,including potential changes with respect to trade policies,treaties,tariffs,taxes,and other limitationson cross-border operations.Because most of our oil and natural gas production is in Cana
292、da,changes intariffs,trade barriers,and other regulatory requirements could have an adverse effect on our business,prospects,financial condition and operating results,the extent of which cannot be predicted with certainty atthis time.Legislation,regulation,and other government actions and shifting c
293、ustomer preferences and otherprivate efforts related to greenhouse gas(“GHG”)emissions and climate change could increase ouroperational costs 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
294、 experience challenges from the impacts of international and domestic legislation,regulation,or other government actions relating to GHG emissions(e.g.,carbon dioxide and methane)and272025/5/19 12:00brn-20240930https:/www.sec.gov/Archives/edgar/data/10048/000001004824000020/brn-20240930.htm35/165202
295、5/5/19 12:00brn-20240930https:/www.sec.gov/Archives/edgar/data/10048/000001004824000020/brn-20240930.htm36/165climate 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 sta
296、ges of implementation.Many of these actions,as well as customers preferences 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
297、government actions may curtailprofitability in the oil and gas sector,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 effo
298、rts aimed at reducing GHG emissions mayresult in increased and substantial 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 our business
299、 plans;and adversely affect the Companys salesvolumes,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 uncertain because theCompany is unable to pre
300、dict 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 and other laws may adversely affect our operati
301、ons.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 be changed or interpreted in a manner that adve
302、rsely 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 a material adverse effect on our financial per
303、formance.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 an unforeseen defect in the chain of title wi
304、llnot 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 II and cash distributions from the Kukio Resort LandDev
305、elopment Partnerships is dependent upon the developers continued efforts and ability to developthe property.We are entitled to receive future payments based on a percentage of the sales prices of residential lotssold within the Kaupulehu area by KD II as well as a percentage of future distributions
306、KD II makes to itsmembers.However,in order to collect such payments we are reliant upon the developer,KD II,in which weown a non-controlling ownership interest,to proceed with the development or sale of the remaining portionof Increment II.Additionally,future cash distributions from the Kukio Resort
307、 Land DevelopmentPartnerships,which includes KD II,are also dependent on the development or sale of Increment II by KD II.It is uncertain when or if KD II will develop or sell the remaining portion of Increment II,and there is noassurance with regards to the amounts of future sales from Increment II
308、.We282025/5/19 12:00brn-20240930https:/www.sec.gov/Archives/edgar/data/10048/000001004824000020/brn-20240930.htm37/1652025/5/19 12:00brn-20240930https:/www.sec.gov/Archives/edgar/data/10048/000001004824000020/brn-20240930.htm38/165do not have a controlling interest in the partnerships,and therefore
309、are dependent on the general partner fordevelopment decisions.The receipt of future payments and cash distributions could be jeopardized if thedeveloper fails to proceed with development of the property.We hold investment interests in unconsolidated land development partnerships,which are accountedf
310、or 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:the lack of a controlling interest in these partnerships and,therefore,the inability to require thatthe entitie
311、s 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 development activities;the adverse impact on overall profitability if the entities do not achieve the financial r
312、esultsprojected;the reallocation of amounts of capital from other operating initiatives and/or an increase inindebtedness to pay potential future additional capital contributions,which could in turn restrictour ability to access additional capital when needed or to pursue other important elements of
313、 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 prevent development of thereal estate held by the land development partnerships;andcertain underlying partnership
314、 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.As a result,our financial resultsare dependent on the economic growth and health of Hawaii,particularly the i
315、sland 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.S.and worldeconomies in general.Any future cash flows from Barnwells land development activities are subject
316、 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 and labor,theintroduction of building code modifications,changes to zoning laws,and the level of confidence i
317、n 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,landslides,hurricanes,tornadoes,tsunamis,volcanic activity,droughts and floods,could have a material adverse effect
318、on 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.292025/5/19 12:00brn-20240930https:/www.sec.gov/Archives/edgar/data/10048/000001004824000020/brn-20240930.ht
319、m39/165Risks 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 sta
320、te of 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,populationgrowth,employment levels and job growth and property taxes.A decre
321、ase in water well drilling and/or pumpinstallation contracts will result in decreased revenues and operating results.If we are unable to accurately estimate the overall risks,requirements or costs when bidding on ornegotiating a contract that is ultimately awarded,we may achieve a lower than anticip
322、ated 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 quantities irrespective of actual per unit costs.Under such contracts,prices are established in part on cost an
323、d 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 successfully controlled.We may not be able to obtain compensation for additional workperformed or expenses incur
324、red as a result of changes or inaccuracies in these estimates and underlyingassumptions,such as unanticipated sub-surface site conditions,unanticipated technical problems,equipmentfailures,inefficiencies,cost of raw materials,schedule delays due to constraints on drilling hours,weatherdelays,or acci
325、dents.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 profitable asexpected.A significant portion of our contract drilling business is dependent on municipalities and a
326、 decline inmunicipal spending could adversely impact our business.A significant portion of our contract drilling division revenues is derived from water andinfrastructure contracts with governmental entities or agencies;18%in fiscal 2024.Reduced tax revenuesand governmental budgets may limit spendin
327、g by local governments which in turn will affect the demand forour services.Material reductions in spending by a significant number of local governmental agencies couldhave a material adverse effect on our business,results of operations,liquidity and financial position.Our contract drilling operatio
328、ns 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 require less labor.Our strategy is to compete based onpricing and to a lesser degree,quality of service.If we are
329、 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 couldadversely affect our operating results.We are dependent on various well drilling and pump installation equi
330、pment to conduct our contractdrilling segment operations.The shortage of and/or delay in delivery of such equipment,such as pumps,302025/5/19 12:00brn-20240930https:/www.sec.gov/Archives/edgar/data/10048/000001004824000020/brn-20240930.htm40/1652025/5/19 12:00brn-20240930https:/www.sec.gov/Archives/
331、edgar/data/10048/000001004824000020/brn-20240930.htm41/165interruptions in supply,and price increases of such equipment and materials due to supply chain issues andmanufacturing disruptions could adversely impact our gross margin and results of operations.Awarding of contracts is dependent upon our
332、ability to obtain contract bid and performance bondsfrom insurers.There can be no assurance that our ability to obtain such bonds will continue on the same basis as thepast.Additionally,bonding insurance rates may increase and have an impact on our ability to win competitivebids,which could have a c
333、orresponding material impact on contract drilling operating results.The contracts in our backlog are subject to change orders and cancellation.Our backlog consists of the uncompleted portion of services to be performed under contracts thathave been started and new contracts not yet started.Our contracts are subject to change orders andcancellations,and such changes could adversely affect our opera
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