brn-20221231

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

☒ Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the quarterly period ended December 31, 2022

☐ Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Commission 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, Hawaii						96813
(Address of principal executive offices)						(Zip code)

(808) 531-8400
(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:


Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, $0.50 par value	BRN	NYSE American

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. ☒ Yes ☐ No

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). ☒ Yes ☐ No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer

☐

Accelerated filer

☐

Non-accelerated filer

☒

Smaller reporting company

☒

Emerging growth company

☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). ☐ Yes ☒ No

As of February 3, 2022 there were 9,956,687 shares of common stock, par value $0.50, outstanding.

BARNWELL INDUSTRIES, INC.

AND SUBSIDIARIES

INDEX


PART I.	FINANCIAL INFORMATION:
Item 1.	Financial Statements (Unaudited)
	Condensed Consolidated Balance Sheets - December 31, 2022 and September 30, 2022	3
	Condensed Consolidated Statements of Operations - three months ended December 31, 2022 and 2021	4
	Condensed Consolidated Statements of Comprehensive Income - three months ended December 31, 2022 and 2021	5
	Condensed Consolidated Statements of Equity - three months ended December 31, 2022 and 2021	6
	Condensed Consolidated Statements of Cash Flows - three months ended December 31, 2022 and 2021	7
	Notes to Condensed Consolidated Financial Statements	8
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	26
Item 4.	Controls and Procedures	36
PART II.	OTHER INFORMATION:
Item 6.	Exhibits	38
	Signature	39
	Index to Exhibits	40

PART I - FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

BARNWELL INDUSTRIES, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited)


	December 31, 2022		September 30, 2022
ASSETS
Current assets:
Cash and cash equivalents	$	6,736,000	$	12,804,000

Accounts and other receivables, net of allowance for doubtful accounts of: $249,000 at December 31, 2022; $231,000 at September 30, 2022	4,316,000		4,361,000


Other current assets	3,246,000		2,932,000
Total current assets	14,298,000		20,097,000


Asset for retirement benefits	3,451,000		3,385,000

Operating lease right-of-use assets	114,000		132,000
Property and equipment:
Oil and natural gas properties, full cost method of accounting:
Proved properties	69,421,000		67,883,000
Advances to operators for capital expenditures	3,464,000		—
Unproved properties	1,890,000		—
Drilling rigs and other property and equipment	6,935,000		6,923,000
Total property and equipment	81,710,000		74,806,000
Accumulated depletion, depreciation, and amortization	(62,712,000)		(61,205,000)
Total property and equipment, net	18,998,000		13,601,000
Total assets	$	36,861,000	$	37,215,000

LIABILITIES AND EQUITY
Current liabilities:
Accounts payable	$	1,835,000	$	1,462,000
Accrued capital expenditures	266,000		1,655,000
Accrued compensation	1,063,000		999,000
Accrued operating and other expenses	1,420,000		1,576,000



Current portion of asset retirement obligation	1,665,000		1,327,000

Other current liabilities	1,302,000		1,908,000
Total current liabilities	7,551,000		8,927,000
Long-term debt	—		44,000
Operating lease liabilities	91,000		117,000
Liability for retirement benefits	1,670,000		1,649,000
Asset retirement obligation	7,163,000		7,129,000
Deferred income tax liabilities	176,000		188,000
Total liabilities	16,651,000		18,054,000
Commitments and contingencies
Equity:
Common stock, par value $0.50 per share; authorized, 40,000,000 shares: 10,124,587 issued at December 31, 2022 and September 30, 2022	5,062,000		5,062,000
Additional paid-in capital	7,466,000		7,351,000
Retained earnings	8,660,000		7,720,000
Accumulated other comprehensive income, net	1,276,000		1,294,000
Treasury stock, at cost: 167,900 shares at December 31, 2022 and September 30, 2022	(2,286,000)		(2,286,000)
Total stockholders' equity	20,178,000		19,141,000
Non-controlling interests	32,000		20,000
Total equity	20,210,000		19,161,000
Total liabilities and equity	$	36,861,000	$	37,215,000

See Notes to Condensed Consolidated Financial Statements

BARNWELL INDUSTRIES, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)


	Three months ended December 31,
	2022		2021
Revenues:
Oil and natural gas	$	5,226,000	$	3,920,000
Contract drilling	1,948,000		876,000
Sale of interest in leasehold land	265,000		600,000
Gas processing and other	72,000		58,000
	7,511,000		5,454,000
Costs and expenses:
Oil and natural gas operating	2,444,000		1,916,000
Contract drilling operating	1,857,000		980,000
General and administrative	2,249,000		1,830,000
Depletion, depreciation, and amortization	840,000		483,000

Foreign currency gain	(78,000)		—

Gain on sale of assets	(551,000)		—
	6,761,000		5,209,000
Earnings before equity in income of affiliates and income taxes	750,000		245,000
Equity in income of affiliates	538,000		1,207,000
Earnings before income taxes	1,288,000		1,452,000
Income tax provision	79,000		112,000
Net earnings	1,209,000		1,340,000
Less: Net earnings attributable to non-controlling interests	120,000		267,000
Net earnings attributable to Barnwell Industries, Inc.	$	1,089,000	$	1,073,000
Basic and diluted net earnings per common share attributable to Barnwell Industries, Inc. stockholders	$	0.11	$	0.11
Weighted-average number of common shares outstanding:
Basic and diluted	9,956,687		9,446,291

See Notes to Condensed Consolidated Financial Statements

BARNWELL INDUSTRIES, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(Unaudited)


	Three months ended December 31,
	2022		2021
Net earnings	$	1,209,000	$	1,340,000
Other comprehensive (loss) income:
Foreign currency translation adjustments, net of taxes of $0	2,000		(25,000)
Retirement plans:
Amortization of accumulated other comprehensive gain into net periodic benefit cost, net of taxes of $0	(20,000)		—


Total other comprehensive loss	(18,000)		(25,000)
Total comprehensive income	1,191,000		1,315,000
Less: Comprehensive income attributable to non-controlling interests	(120,000)		(267,000)
Comprehensive income attributable to Barnwell Industries, Inc.	$	1,071,000	$	1,048,000

See Notes to Condensed Consolidated Financial Statements

BARNWELL INDUSTRIES, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF EQUITY

Three months ended December 31, 2022 and 2021

(Unaudited)


	Shares Outstanding	Common Stock		Additional Paid-In Capital		Retained Earnings		Accumulated Other Comprehensive Income		Treasury Stock		Non-controlling Interests		Total Equity
Balance at September 30, 2021	9,445,625	$	4,807,000	$	4,590,000	$	2,356,000	$	32,000	$	(2,286,000)	$	8,000	$	9,507,000
Net earnings	—	—		—		1,073,000		—		—		267,000		1,340,000
Foreign currency translation adjustments, net of taxes of $0	—	—		—		—		(25,000)		—		—		(25,000)
Distributions to non-controlling interests	—	—		—		—		—		—		(251,000)		(251,000)
Share-based compensation	—	—		254,000		—		—		—		—		254,000
Issuance of common stock for services	1,158	—		2,000