-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, QsuAg+Nt3eh+wOjAN1RLU2d0UkuUNEECdraEGgniawFVlLmLyExl4ccrAoIrpqiS nZSF554PYotHos4SZtEeiw== 0000010048-00-000005.txt : 20000516 0000010048-00-000005.hdr.sgml : 20000516 ACCESSION NUMBER: 0000010048-00-000005 CONFORMED SUBMISSION TYPE: 10QSB PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20000331 FILED AS OF DATE: 20000515 FILER: COMPANY DATA: COMPANY CONFORMED NAME: BARNWELL INDUSTRIES INC CENTRAL INDEX KEY: 0000010048 STANDARD INDUSTRIAL CLASSIFICATION: CRUDE PETROLEUM & NATURAL GAS [1311] IRS NUMBER: 720496921 STATE OF INCORPORATION: DE FISCAL YEAR END: 0930 FILING VALUES: FORM TYPE: 10QSB SEC ACT: SEC FILE NUMBER: 001-05103 FILM NUMBER: 632790 BUSINESS ADDRESS: STREET 1: 1100 ALAKEA ST. STREET 2: SUITE 2900 CITY: HONOLULU STATE: HI ZIP: 96813 BUSINESS PHONE: 808-531-8400 MAIL ADDRESS: STREET 1: 1100 ALAKEA ST. STREET 2: SUITE 2900 CITY: HONOLULU STATE: HI ZIP: 96813 FORMER COMPANY: FORMER CONFORMED NAME: BMA CORP/TN DATE OF NAME CHANGE: 19770324 FORMER COMPANY: FORMER CONFORMED NAME: BARNWELL OFFSHORE INC DATE OF NAME CHANGE: 19671101 10QSB 1 UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-QSB X QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES --- EXCHANGE ACT OF 1934 For the quarterly period ended March 31, 2000 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 small business issuer as specified in its charter) DELAWARE 72-0496921 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 1100 ALAKEA STREET, SUITE 2900, HONOLULU, HAWAII 96813 (Address of principal executive offices) (Zip code) (808) 531-8400 (Issuer's telephone number, including area code) Check whether the issuer (1) filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the past 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 X No ----- ----- As of May 12, 2000 there were 1,316,952 shares of common stock, par value $0.50, outstanding. Transitional Small Business Disclosure Format Yes No X ----- ----- 2 BARNWELL INDUSTRIES, INC. ------------------------- AND SUBSIDIARIES ---------------- INDEX ----- PART I. FINANCIAL INFORMATION: Item 1. Financial Statements Condensed Consolidated Balance Sheets - March 31, 2000 and September 30, 1999 (Unaudited) Consolidated Statements of Operations - three and six months ended March 31, 2000 and 1999 (Unaudited) Condensed Consolidated Statements of Cash Flows - six months ended March 31, 2000 and 1999 (Unaudited) Consolidated Statements of Stockholders' Equity and Comprehensive Income (Loss) - three months ended March 31, 2000 and 1999 (Unaudited) Consolidated Statements of Stockholders' Equity and Comprehensive Income (Loss) - six months ended March 31, 2000 and 1999 (Unaudited) Notes to Condensed Consolidated Financial Statements (Unaudited) Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations PART II. OTHER INFORMATION: Item 6. Exhibits and reports on Form 8-K 3 BARNWELL INDUSTRIES, INC. ------------------------- AND SUBSIDIARIES ---------------- CONDENSED CONSOLIDATED BALANCE SHEETS ------------------------------------- (Unaudited, see Note A below) ASSETS March 31, September 30, - ------ 2000 1999 ------------ ------------ CURRENT ASSETS: Cash and cash equivalents $ 6,231,000 $ 2,577,000 Accounts receivable, net 1,453,000 1,873,000 Other current assets 774,000 1,147,000 ------------ ------------ TOTAL CURRENT ASSETS 8,458,000 5,597,000 INVESTMENT IN LAND 3,694,000 3,519,000 OTHER ASSETS 204,000 207,000 NET PROPERTY AND EQUIPMENT 24,957,000 23,972,000 ------------ ------------ TOTAL ASSETS $ 37,313,000 $ 33,295,000 ============ ============ LIABILITIES AND STOCKHOLDERS' EQUITY - ------------------------------------ CURRENT LIABILITIES: Accounts payable $ 1,408,000 $ 1,894,000 Accrued expenses 2,355,000 1,975,000 Current portion of long-term debt 400,000 1,650,000 Income taxes payable 912,000 251,000 Other current liabilities 1,163,000 787,000 ------------ ------------ TOTAL CURRENT LIABILITIES 6,238,000 6,557,000 ------------ ------------ LONG-TERM DEBT 10,380,000 12,631,000 ------------ ------------ DEFERRED INCOME TAXES 7,063,000 6,301,000 ------------ ------------ MINORITY INTEREST 2,249,000 - ------------ ------------ STOCKHOLDERS' EQUITY: Common stock, par value $.50 per share: Authorized, 4,000,000 shares Issued, 1,642,797 shares 821,000 821,000 Additional paid-in capital 3,103,000 3,103,000 Retained earnings 15,011,000 11,801,000 Accumulated other comprehensive loss - foreign currency translation adjustments (2,763,000) (3,130,000) Treasury stock, at cost, 325,845 shares (4,789,000) (4,789,000) ------------ ------------ TOTAL STOCKHOLDERS' EQUITY 11,383,000 7,806,000 ------------ ------------ TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 37,313,000 $ 33,295,000 ============ ============ Note A: The condensed consolidated balance sheet at September 30, 1999 has been derived from the audited consolidated financial statements at that date. See Notes to Condensed Consolidated Financial Statements 4
BARNWELL INDUSTRIES, INC. ------------------------- AND SUBSIDIARIES ---------------- CONSOLIDATED STATEMENTS OF OPERATIONS ------------------------------------- (Unaudited) Three months ended Six months ended March 31, March 31, -------------------------- ------------------------- 2000 1999 2000 1999 ------------ ----------- ----------- ----------- Revenues: Oil and natural gas $ 3,530,000 $ 2,070,000 $ 6,660,000 $ 4,420,000 Contract drilling 870,000 580,000 1,850,000 1,330,000 Gas processing and other 470,000 190,000 670,000 390,000 Property sold 6,540,000 - 6,540,000 - ------------ ----------- ----------- ----------- 11,410,000 2,840,000 15,720,000 6,140,000 ------------ ----------- ----------- ----------- Costs and expenses: Oil and natural gas operating 830,000 688,000 1,580,000 1,505,000 Contract drilling operating 682,000 479,000 1,443,000 1,055,000 General and administrative 922,000 662,000 1,642,000 1,426,000 Depreciation, depletion and amortization 867,000 623,000 1,571,000 1,317,000 Interest 202,000 193,000 406,000 399,000 Foreign exchange losses 206,000 - 206,000 - Minority interest in earnings 3,297,000 - 3,297,000 - ------------ ----------- ----------- ----------- 7,006,000 2,645,000 10,145,000 5,702,000 ------------ ----------- ----------- ----------- Earnings before income taxes 4,404,000 195,000 5,575,000 438,000 Income tax provision 1,734,000 165,000 2,365,000 358,000 ------------ ----------- ----------- ----------- NET EARNINGS $ 2,670,000 $ 30,000 $ 3,210,000 $ 80,000 ============ =========== =========== =========== BASIC EARNINGS PER COMMON SHARE $ 2.03 $ 0.02 $ 2.44 $ 0.06 ============ =========== =========== =========== DILUTED EARNINGS PER COMMON SHARE $ 1.93 $ 0.02 $ 2.34 $ 0.06 ============ =========== =========== =========== See Notes to Condensed Consolidated Financial Statements
5
BARNWELL INDUSTRIES, INC. ------------------------- AND SUBSIDIARIES ---------------- CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS ----------------------------------------------- (Unaudited) Six months ended March 31, ---------------------------- 2000 1999 ----------- ----------- Cash Flows from Operating Activities: Net earnings $ 3,210,000 $ 80,000 Adjustments to reconcile net earnings to net cash provided by operating activities: Minority interest in earnings 3,297,000 - Depreciation, depletion, and amortization 1,571,000 1,317,000 Deferred income taxes 673,000 30,000 Foreign exchange losses 206,000 - Pre-tax gain on sale of equity securities (238,000) - Pre-tax earnings on property sold (6,540,000) - ----------- ----------- 2,179,000 1,427,000 Increase (decrease) from changes in current assets and liabilities 1,553,000 (1,153,000) ----------- ----------- Net cash provided by operating activities 3,732,000 274,000 ----------- ----------- Cash Flows from Investing Activities: Cash received on sale of property 6,540,000 - Proceeds from sale of equity securities 381,000 - Proceeds from sale of oil and natural gas properties 52,000 70,000 Decrease in other assets 3,000 3,000 Capital expenditures - contract drilling and other (168,000) (162,000) Additions to investment in land (350,000) (416,000) Capital expenditures - oil and natural gas (2,152,000) (503,000) ----------- ----------- Net cash provided by (used in) investing activities 4,306,000 (1,008,000) ----------- ----------- Cash Flows from Financing Activities: Long-term debt borrowings 50,000 546,000 Distribution to minority interest partner (873,000) - Repayments of long-term debt (3,566,000) (200,000) ----------- ----------- Net cash (used in) provided by financing activities (4,389,000) 346,000 ----------- ----------- Effect of exchange rate changes on cash and cash equivalents 5,000 5,000 ----------- ----------- Net increase (decrease) in cash and cash equivalents 3,654,000 (383,000) Cash and cash equivalents at beginning of period 2,577,000 2,178,000 ----------- ----------- Cash and cash equivalents at end of period $ 6,231,000 $ 1,795,000 =========== =========== Supplemental disclosures of cash flow information: Cash paid during the period for: Interest (net of amounts capitalized) $ 438,000 $ 440,000 =========== =========== Income taxes $ 1,150,000 $ 52,000 =========== =========== See Notes to Condensed Consolidated Financial Statements
6
BARNWELL INDUSTRIES, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY AND COMPREHENSIVE INCOME (LOSS) Three months ended March 31, 2000 and 1999 (Unaudited) Accumulated Additional Comprehensive Other Total Common Paid-In Income Retained Comprehensive Treasury Stockholders' Stock Capital (Loss) Earnings Loss Stock Equity -------- ---------- ------------- ----------- ------------- ------------- ------------- Balances at December 31, 1998 $821,000 $3,103,000 $11,331,000 $ (3,688,000) $ (4,789,000) $ 6,778,000 Comprehensive income: Net earnings $ 30,000 30,000 30,000 Other comprehensive income, net of income taxes - foreign currency translation adjustments 201,000 201,000 201,000 ------------- Total comprehensive income $ 231,000 -------- ---------- ============= ----------- ------------- ------------- ------------- Balances at March 31, 1999 $821,000 $3,103,000 $11,361,000 $ (3,487,000) $ (4,789,000) $ 7,009,000 ======== ========== =========== ============= ============= ============= Balances at December 31, 1999 $821,000 $3,103,000 $12,341,000 $ (2,917,000) $ (4,789,000) $ 8,559,000 Comprehensive income: Net earnings $ 2,670,000 2,670,000 2,670,000 Other comprehensive loss, net of income taxes - foreign currency translation adjustments (52,000) (52,000) (52,000) ------------- Total comprehensive income $ 2,618,000 ============= Foreign exchange losses recognized 206,000 206,000 -------- ---------- ----------- ------------- ------------- ------------- Balances at March 31, 2000 $821,000 $3,103,000 $15,011,000 $ (2,763,000) $ (4,789,000) $ 11,383,000 ======== ========== =========== ============= ============= ============= See Notes to Condensed Consolidated Financial Statements
7
BARNWELL INDUSTRIES, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY AND COMPREHENSIVE INCOME (LOSS) Six months ended March 31, 2000 and 1999 (Unaudited) Accumulated Additional Comprehensive Other Total Common Paid-In Income Retained Comprehensive Treasury Stockholders' Stock Capital (Loss) Earnings Loss Stock Equity -------- ---------- ------------- ----------- ------------- ------------- ------------- Balances at September 30, 1998 $821,000 $3,103,000 $11,281,000 $ (3,672,000) $ (4,789,000) $ 6,744,000 Comprehensive income: Net earnings $ 80,000 80,000 80,000 Other comprehensive income, net of income taxes - foreign currency translation adjustments 185,000 185,000 185,000 ------------- Total comprehensive income $ 265,000 -------- ---------- ============= ----------- ------------- ------------- ------------- Balances at March 31, 1999 $821,000 $3,103,000 $11,361,000 $ (3,487,000) $ (4,789,000) $ 7,009,000 ======== ========== =========== ============= ============= ============= Balances at September 30, 1999 $821,000 $3,103,000 $11,801,000 $ (3,130,000) $ (4,789,000) $ 7,806,000 Comprehensive income: Net earnings $ 3,210,000 3,210,000 3,210,000 Other comprehensive income, net of income taxes - foreign currency translation adjustments 161,000 161,000 161,000 ------------- Total comprehensive income $ 3,371,000 ============= Foreign exchange losses recognized 206,000 206,000 -------- ---------- ----------- ------------- ------------- ------------- Balances at March 31, 2000 $821,000 $3,103,000 $15,011,000 $ (2,763,000) $ (4,789,000) $ 11,383,000 ======== ========== =========== ============= ============= ============= See Notes to Condensed Consolidated Financial Statements
8 BARNWELL INDUSTRIES, INC. ------------------------- AND SUBSIDIARIES ---------------- NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS ---------------------------------------------------- (Unaudited) 1. CONDENSED CONSOLIDATED FINANCIAL STATEMENTS ------------------------------------------- The Condensed Consolidated Balance Sheet as of March 31, 2000, the Consolidated Statements of Operations for the three and six months ended March 31, 2000 and 1999, the Condensed Consolidated Statements of Cash Flows for the six months ended March 31, 2000 and 1999, and the Consolidated Statements of Stockholders' Equity and Comprehensive Income (Loss) for the three and six months ended March 31, 2000 and 1999 have been prepared by Barnwell Industries, Inc. (referred to herein together with its subsidiaries as "Barnwell" or the "Company") and are unaudited. In the opinion of management, all adjustments (which include only normal recurring adjustments) necessary to present fairly the financial position, results of operations and cash flows at March 31, 2000 and for all periods presented have been made. The Condensed Consolidated Balance Sheet as of September 30, 1999 has been derived from audited financial statements. Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted. These condensed consolidated financial statements should be read in conjunction with the financial statements and notes thereto included in the Company's September 30, 1999 annual report to stockholders. The results of operations for the period ended March 31, 2000 are not necessarily indicative of the operating results for the full year. The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses and the disclosure of contingent assets and liabilities. Actual results could differ significantly from those estimates. 2. EARNINGS PER COMMON SHARE ------------------------- Basic earnings per share ("EPS") excludes dilution and is computed by dividing net earnings by the weighted-average number of common shares outstanding for the period. The weighted-average number of common shares outstanding was 1,316,952 for the three and six months ended March 31, 2000 and 1999. Diluted EPS includes the potentially dilutive effect of outstanding common stock options and securities which are convertible to common shares. The weighted-average number of common and potentially dilutive common shares outstanding was 1,398,365 and 1,393,162 for the three and six months ended March 31, 2000, respectively, and 1,316,952 for the three and six months ended March 31, 1999. Reconciliations between the numerator and denominator of the basic and diluted earnings per share computations for the three and six months ended March 31, 2000 is as follows: Three months ended March 31, 2000 --------------------------------------- Net Earnings Shares Per-Share (Numerator) (Denominator) Amount --------------------------------------- Basic earnings per share $2,670,000 1,316,952 $ 2.03 ====== Effect of dilutive securities - common stock options - 11,413 Convertible debentures 23,000 70,000 ---------- ---------- Diluted earnings per share $2,693,000 1,398,365 $ 1.93 ========== ========== ====== 9 Six months ended March 31, 2000 --------------------------------------- Net Earnings Shares Per-Share (Numerator) (Denominator) Amount --------------------------------------- Basic earnings per share $3,210,000 1,316,952 $ 2.44 ====== Effect of dilutive securities - common stock options - 6,210 Convertible debentures 48,000 70,000 ---------- ---------- Diluted earnings per share $3,258,000 1,393,162 $ 2.34 ========== ========== ====== Assumed conversion of certain common stock options was excluded from the computation of diluted EPS for the three and six months ended March 31, 2000 and 1999 because their inclusion would be antidilutive. For the three and six months ended March 31, 2000, antidilutive options to acquire 50,000 and 74,000 shares, respectively, of the Company's common stock were outstanding. For the three and six months ended March 31, 1999, antidilutive options to acquire 55,000 shares of the Company's common stock were outstanding. Assumed conversion of the convertible debentures to 90,000 shares of common stock at March 31, 1999 was excluded from the computation of diluted EPS for the three and six months ended March 31, 1999 because their inclusion would be antidilutive. 3. INCOME TAXES ------------ The components of the provision for income taxes for the three and six months ended March 31, 2000 and 1999 are as follows: Three months ended Six months ended March 31, March 31, -------------------------- ------------------------- 2000 1999 2000 1999 ---------- --------- ---------- --------- Current - U.S. $ 267,000 $ - $ 267,000 $ - Current - Foreign 936,000 150,000 1,425,000 328,000 ---------- --------- ---------- --------- Total - Current 1,203,000 150,000 1,692,000 328,000 ---------- --------- ---------- --------- Deferred - U.S. 600,000 15,000 660,000 30,000 Deferred - Foreign (69,000) - 13,000 - ---------- --------- ---------- --------- Total - Deferred 531,000 15,000 673,000 30,000 ---------- --------- ---------- --------- $1,734,000 $ 165,000 $2,365,000 $ 358,000 ========== ========= ========== ========= 4. SEGMENT INFORMATION ------------------- The Company operates three segments: exploring for, developing, producing and selling oil and natural gas in Canada; investing in leasehold land in Hawaii; and drilling wells and installing and repairing water pumping systems in Hawaii. The Company's reportable segments are strategic business units that offer different products and services. They are managed separately as each segment requires different operational methods, operational assets and marketing strategies, and operate in different geographical locations. The Company does not allocate general and administrative expenses, interest expense, interest income or income taxes to segments, and there are no transactions between segments that affect segment profit or loss. 10
Three months ended March 31, Six months ended March 31, -------------------------- -------------------------- 2000 1999 2000 1999 ----------- ----------- ----------- ----------- Revenues: Oil and natural gas $ 3,530,000 $ 2,070,000 $ 6,660,000 $ 4,420,000 Contract drilling 870,000 580,000 1,850,000 1,330,000 Land development 6,540,000 - 6,540,000 - Other 377,000 172,000 517,000 355,000 ----------- ----------- ----------- ----------- Total $11,317,000 $ 2,822,000 $15,567,000 $ 6,105,000 =========== =========== =========== =========== Depreciation, depletion and amortization: Oil and natural gas $ 681,000 $ 551,000 $ 1,309,000 $ 1,201,000 Contract drilling 49,000 26,000 98,000 52,000 Other 137,000 46,000 164,000 64,000 ----------- ----------- ----------- ----------- Total $ 867,000 $ 623,000 $ 1,571,000 $ 1,317,000 =========== =========== =========== =========== Operating profit (before general and administrative expenses): Oil and natural gas $ 2,019,000 $ 831,000 $ 3,771,000 $ 1,714,000 Contract drilling 139,000 75,000 309,000 223,000 Land development 3,243,000 - 3,243,000 - Other 240,000 126,000 353,000 291,000 ----------- ----------- ----------- ----------- Total 5,641,000 1,032,000 7,676,000 2,228,000 General and administrative expenses (922,000) (662,000) (1,642,000) (1,426,000) Interest expense (202,000) (193,000) (406,000) (399,000) Interest income 93,000 18,000 153,000 35,000 Foreign exchange losses (206,000) - (206,000) - ----------- ----------- ----------- ----------- Earnings before income taxes $ 4,404,000 $ 195,000 $ 5,575,000 $ 438,000 =========== =========== =========== ===========
5. FUTURE ACCOUNTING CHANGES ------------------------- In June 1998, the Financial Accounting Standards Board ("FASB") issued Statement of Financial Accounting Standards ("SFAS") No. 133, "Accounting for Derivative Instruments and Hedging Activities," which establishes accounting and reporting standards for derivative instruments and hedging activities and requires that an entity recognize all derivatives as either assets or liabilities in the statement of financial position and measure those instruments at fair value. The provisions of SFAS No. 133 are effective for all fiscal quarters of fiscal years beginning after June 15, 1999. In July 1999, the FASB issued SFAS No. 137, "Accounting for Derivative Instruments and Hedging Activities - Deferral of the Effective Date of FASB Statement No. 133, an Amendment of FASB Statement No. 133," which defers the effective date of SFAS No. 133 to be effective for all fiscal quarters of fiscal years beginning after June 15, 2000. Management does not expect adoption of SFAS No. 133 will have a material effect on the Company's financial condition, results of operations or liquidity. 11 Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS ----------------------------------------------------------------------- OF OPERATIONS ------------- FORWARD-LOOKING STATEMENTS - -------------------------- This Form 10-QSB contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934, including various forecasts, projections of the Company's future performance, statements of the Company's plans and objectives or other similar types of information. Although the Company believes that its expectations are based on reasonable assumptions, it cannot assure that the expectations contained in such forward-looking statements will be achieved. Such statements involve risks, uncertainties and assumptions which could cause actual results to differ materially from those contained in such statements. These forward-looking statements speak only as of the date of filing of this Form 10-QSB, and the Company expressly disclaims any obligation or undertaking to publicly release any updates or revisions to any forward-looking statements contained herein. LIQUIDITY AND CAPITAL RESOURCES - ------------------------------- Cash flows from operations totaled $3,732,000 for the six months ended March 31, 2000, an increase of $3,458,000 as compared to the same period in the prior year, due to an increase in operating profit generated by the Company's oil and natural gas segment and to the timing of receivable collections and payables disbursements. In January 2000, Kaupulehu Makai Venture, an affiliate of Kajima Corporation of Japan, exercised a portion of the option granted in 1990 by Kaupulehu Developments, a 50.1%-owned general partnership, for the development of residential parcels within the Four Seasons Resort Hualalai at Historic Ka'upulehu on the Island of Hawaii. $1,300,000 of the proceeds were used to repay Kaupulehu Developments' borrowings from a Hawaii bank, and $873,000 were distributed to Kaupulehu Developments' minority interest partner. During the six months ended March 31, 2000, the Company repaid $2,066,000 of its borrowings under a credit facility with a Canadian bank. This credit facility has been renewed through April 2001 for $17,000,000 Canadian dollars, or its U.S. dollar equivalent of approximately $11,500,000, subject to the Company pledging several of its properties which are not currently pledged; the Company intends to pledge such properties. At March 31, 2000, the Company had $6,231,000 in cash and cash equivalents and approximately $2,100,000 of available credit under their credit facility with a Canadian bank. The Company invested $1,695,000 and $2,152,000 in oil and natural gas properties in Canada for the three and six months ended March 31, 2000, respectively, as compared to $292,000 and $503,000 for the three and six months ended March 31, 1999, respectively. During the three and six months ended March 31, 2000, the Company participated in the drilling of wells in Alberta and British Columbia, Canada, as follows: Three months ended March 31, 2000 - --------------------------------- Productive Productive Oil Wells Gas Wells Dry Holes Total Wells ------------- ------------- ------------- -------------- Exp. Dev. Exp. Dev. Exp. Dev. Exp. Dev. ---- ---- ---- ---- ---- ---- ---- ----- Gross - 4.00 - 6.00 - - - 10.00 Net - 0.42 - 1.08 - - - 1.50 Six months ended March 31, 2000 - ------------------------------- Productive Productive Oil Wells Gas Wells Dry Holes Total Wells ------------- -------------- ------------- -------------- Exp. Dev. Exp. Dev. Exp. Dev. Exp. Dev. ---- ---- ---- ----- ---- ---- ---- ----- Gross - 7.00 - 10.00 - - - 17.00 Net - 0.73 - 2.43 - - - 3.16 Additionally, during the three and six months ended March 31, 2000, the Company participated in the recompletion of 6 gross wells (0.80 net wells) and 12 gross wells (2.10 net wells), respectively, in Alberta, Canada. 12 The Company invested $350,000 (including interest costs capitalized) towards the rezoning of the North Kona, Hawaii property held by Kaupulehu Developments. In December 1999, the Third Circuit Court of the County of Hawaii remanded Kaupulehu Developments' Special Management Area ("SMA") Use Permit Petition back to the County of Hawaii Planning Commission for further review due to procedural issues. In late December 1999, the County of Hawaii Planning Commission reaffirmed their approval of the SMA Use Permit Petition. Additional steps must be completed in order for Kaupulehu Developments to proceed with development of this area, including the resolution of a legal challenge to a prior State of Hawaii zoning approval for this project which is before the Hawaii Supreme Court. If Kaupulehu Developments is unable to prevail in the case which is before the Hawaii Supreme Court, and if Kaupulehu Developments is subsequently unable to obtain the State of Hawaii's approval after making additional efforts with the modifications it believes are necessary to obtain the approval, there will be a materially adverse impairment of the value of the Company's investment in land. RESULTS OF OPERATIONS - --------------------- Oil and Natural Gas - ------------------- SELECTED OPERATING STATISTICS ----------------------------- Average Prices ----------------------------------------------- Three months ended Increase March 31, (Decrease) ---------------------- ----------------- 2000 1999 $ % ------ ------- ------ ---- Oil (Bbls)* $26.68 $ 11.04 $15.64 142% Liquids (Bbls)* $16.64 $ 7.32 $ 9.32 127% Gas (MCF)** $ 1.90 $ 1.48 $ 0.42 28% Six months ended Increase March 31, (Decrease) ---------------------- ----------------- 2000 1999 $ % ------ ------- ------ ---- Oil (Bbls)* $24.63 $ 11.63 $13.00 112% Liquids (Bbls)* $15.37 $ 7.87 $ 7.50 95% Gas (MCF)** $ 1.95 $ 1.45 $ 0.50 34% Net Sales Volumes ----------------------------------------------- Three months ended Increase March 31, (Decrease) ---------------------- ------------------ 2000 1999 Units % ------- ------- ------- ---- Oil (Bbls)* 50,000 56,000 (6,000) (11%) Liquids (Bbls)* 25,000 22,000 3,000 14% Gas (MCF)** 868,000 889,000 (21,000) (2%) Six months ended Increase March 31, (Decrease) ---------------------- ------------------ 2000 1999 Units % --------- --------- ------- ---- Oil (Bbls)* 96,000 118,000 (22,000) (19%) Liquids (Bbls)* 55,000 42,000 13,000 31% Gas (MCF)** 1,698,000 1,891,000 (193,000) (10%) *Bbls = stock tank barrel equivalent to 42 U.S. gallons **MCF = 1,000 cubic feet Oil and natural gas revenues increased $1,460,000 (71%) for the three months ended March 31, 2000, as compared to the same period in the prior year, due to 142%, 127% and 28% increases in oil, liquids and natural gas prices, respectively. The increase was partially offset by 11% and 2% decreases in oil and natural gas production, respectively, due to an increase in net royalties (royalties increase and the Alberta Royalty Tax Credit declines as prices rise) and a decline in production from the Company's mature oil properties. 13 Oil and natural gas revenues increased $2,240,000 (51%) for the six months ended March 31, 2000, as compared to the same period in the prior year, due to 112%, 95% and 34% increases in oil, liquids and natural gas prices, respectively. The increase was partially offset by 19% and 10% decreases in oil and natural gas production, respectively, due to an increase in net royalties (royalties increase and the Alberta Royalty Tax Credit declines as prices rise) and declines in production from the Company's mature oil and natural gas properties. Oil and natural gas operating expenses increased $142,000 (21%) for the three months ended March 31, 2000, as compared to the same period in the prior year, due primarily to workovers and well servicing at the Dunvegan and Red Earth areas. Oil and natural gas operating expenses remained relatively unchanged (increased $75,000 or 5%) for the six months ended March 31, 2000, as compared to the same period in the prior year. Contract Drilling - ----------------- Contract drilling revenues increased $290,000 (50%) and $520,000 (39%) for the three and six months ended March 31, 2000, respectively, as compared to the same periods in the prior year. Contract drilling operating expenses increased $203,000 (42%) and $388,000 (37%) for the three and six months ended March 31, 2000, respectively, as compared to the same periods in the prior year. These increases are due to an increase in the number of drilling jobs for the current year periods, as compared to the same periods in the prior year. Accordingly, operating profit before depreciation increased $87,000 (86%) and $132,000 (48%) for the three and six months ended March 31, 2000, respectively, as compared to the same periods in the prior year. Gas Processing and Other - ------------------------ Gas processing and other income increased $280,000 (147%) and $280,000 (72%) for the three and six months ended March 31, 2000, respectively, as compared to the same periods in the prior year, due primarily to a $238,000 gain on the sale of equity securities. Property Sold - ------------- In January 2000, Kaupulehu Makai Venture, an affiliate of Kajima Corporation of Japan, exercised a portion of the option granted by Kaupulehu Developments, a 50.1%-owned general partnership, for the development of residential parcels within the Four Seasons Resort Hualalai at Historic Ka'upulehu on the Island of Hawaii. As a result, the Company recognized $3,243,000 of pre-tax earnings, net of minority interests, in the three and six months ended March 31, 2000. There were no property sales in the three and six months ended March 31, 1999. General and Administrative Expenses - ----------------------------------- General and administrative expenses increased $260,000 (39%) and $216,000 (15%) for the three and six months ended March 31, 2000, respectively, as compared to the same periods in the prior year, due primarily to costs associated with the $6,540,000 earnings on property sold, and higher personnel costs due in part to the Company taking almost all of its natural gas and oil in kind and marketing such products itself, instead of through the operator of the oil or natural gas property. Depletion, Depreciation and Amortization - ---------------------------------------- Depletion, depreciation and amortization increased $244,000 (39%) and $254,000 (19%) for the three and six months ended March 31, 2000, respectively, as compared to same periods in the prior year. The increases are due to an increase in the depletion rate, resulting from increased capital expenditures, and depreciation of fixed assets purchased in fiscal 1999. Foreign Exchange Losses - ----------------------- The Company conducts foreign operations in Canada. Consequently, the Company is subject to foreign currency transaction gains and losses due to fluctuations of the exchange rates between the Canadian dollar and the U.S. dollar. During the three and six months ended March 31, 2000, the Company realized foreign currency transaction losses of $206,000. There were no foreign currency transaction gains or losses in the three and six months ended March 31, 1999. The Company cannot accurately predict future fluctuations between the Canadian and U.S. dollars. 14 PART II. OTHER INFORMATION Item 6. Exhibits and reports on Form 8-K None. SIGNATURE --------- Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. BARNWELL INDUSTRIES, INC. - ------------------------- (Registrant) /s/ Russell M. Gifford - ---------------------- Russell M. Gifford Executive Vice President and Chief Financial Officer Date: May 12, 2000 EX-27 2
5 This schedule contains summary financial information extracted from Barnwell Industries Inc.'s 2000 second quarter 10-QSB and is qualified in its entirety by reference to such 10-QSB. 1000 6-MOS SEP-30-2000 MAR-31-2000 6231 0 1649 196 118 8458 62454 37497 37313 6238 10380 0 0 821 10562 37313 8510 15720 3023 6320 1571 0 406 5575 2365 3210 0 0 0 3210 2.44 2.34
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