DELAWARE | 72-0496921 | |
(State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) |
1100 Alakea Street, Suite 2900, Honolulu, Hawaii | 96813 | |
(Address of principal executive offices) | (Zip code) |
(808) 531-8400 | ||
(Registrant’s telephone number, including area code) |
Large accelerated filer | o | Accelerated filer | o | |
Non-accelerated filer | o | (Do not check if a smaller reporting company) | Smaller reporting company | x |
March 31, 2016 | September 30, 2015 | ||||||
ASSETS | |||||||
Current assets: | |||||||
Cash and cash equivalents | $ | 8,949,000 | $ | 8,471,000 | |||
Restricted cash | 218,000 | 7,458,000 | |||||
Accounts and other receivables, net of allowance for doubtful accounts of: $41,000 at March 31, 2016; $23,000 at September 30, 2015 | 1,283,000 | 2,300,000 | |||||
Income taxes receivable | 2,537,000 | 82,000 | |||||
Investment held for sale | 1,192,000 | 1,192,000 | |||||
Real estate held for sale | 5,132,000 | 5,132,000 | |||||
Other current assets | 1,423,000 | 1,043,000 | |||||
Total current assets | 20,734,000 | 25,678,000 | |||||
Restricted cash, net of current portion | 57,000 | 119,000 | |||||
Investments | 6,704,000 | 6,288,000 | |||||
Property and equipment | 78,730,000 | 75,953,000 | |||||
Accumulated depletion, depreciation, and amortization | (69,150,000 | ) | (66,485,000 | ) | |||
Property and equipment, net | 9,580,000 | 9,468,000 | |||||
Total assets | $ | 37,075,000 | $ | 41,553,000 | |||
LIABILITIES AND EQUITY | |||||||
Current liabilities: | |||||||
Accounts payable | $ | 1,557,000 | $ | 2,653,000 | |||
Accrued capital expenditures | 298,000 | 363,000 | |||||
Accrued operating and other expenses | 1,412,000 | 1,343,000 | |||||
Accrued incentive and other compensation | 337,000 | 560,000 | |||||
Billings in excess of costs | 111,000 | 569,000 | |||||
Payable to joint interest owners | 150,000 | 428,000 | |||||
Current portion of asset retirement obligation | 930,000 | 506,000 | |||||
Current portion of long-term debt | 3,440,000 | 3,440,000 | |||||
Other current liabilities | 123,000 | 141,000 | |||||
Total current liabilities | 8,358,000 | 10,003,000 | |||||
Liability for retirement benefits | 5,244,000 | 5,409,000 | |||||
Asset retirement obligation | 6,467,000 | 6,430,000 | |||||
Deferred income taxes | 493,000 | 449,000 | |||||
Total liabilities | 20,562,000 | 22,291,000 | |||||
Commitments and contingencies (Note 13) | |||||||
Equity: | |||||||
Common stock, par value $0.50 per share; authorized, 20,000,000 shares: 8,445,060 issued at March 31, 2016 and September 30, 2015 | 4,223,000 | 4,223,000 | |||||
Additional paid-in capital | 1,340,000 | 1,335,000 | |||||
Retained earnings | 14,450,000 | 17,467,000 | |||||
Accumulated other comprehensive loss, net | (1,929,000 | ) | (2,122,000 | ) | |||
Treasury stock, at cost: 167,900 shares at March 31, 2016 and September 30, 2015 | (2,286,000 | ) | (2,286,000 | ) | |||
Total stockholders' equity | 15,798,000 | 18,617,000 | |||||
Non-controlling interests | 715,000 | 645,000 | |||||
Total equity | 16,513,000 | 19,262,000 | |||||
Total liabilities and equity | $ | 37,075,000 | $ | 41,553,000 |
Three months ended March 31, | Six months ended March 31, | ||||||||||||||
2016 | 2015 | 2016 | 2015 | ||||||||||||
Revenues: | |||||||||||||||
Oil and natural gas | $ | 621,000 | $ | 2,092,000 | $ | 1,469,000 | $ | 5,064,000 | |||||||
Contract drilling | 550,000 | 491,000 | 1,382,000 | 2,424,000 | |||||||||||
Sale of interest in leasehold land, net | 284,000 | 817,000 | 413,000 | 1,849,000 | |||||||||||
Gas processing and other | 67,000 | 92,000 | 111,000 | 187,000 | |||||||||||
1,522,000 | 3,492,000 | 3,375,000 | 9,524,000 | ||||||||||||
Costs and expenses: | |||||||||||||||
Oil and natural gas operating | 1,014,000 | 1,818,000 | 1,753,000 | 3,441,000 | |||||||||||
Contract drilling operating | 618,000 | 472,000 | 1,168,000 | 1,997,000 | |||||||||||
General and administrative | 1,528,000 | 2,104,000 | 3,369,000 | 4,379,000 | |||||||||||
Depletion, depreciation, and amortization | 391,000 | 868,000 | 753,000 | 1,847,000 | |||||||||||
Interest expense | 33,000 | 82,000 | 66,000 | 172,000 | |||||||||||
3,584,000 | 5,344,000 | 7,109,000 | 11,836,000 | ||||||||||||
Loss before equity in income of affiliates and income taxes | (2,062,000 | ) | (1,852,000 | ) | (3,734,000 | ) | (2,312,000 | ) | |||||||
Equity in income of affiliates | 253,000 | 368,000 | 416,000 | 456,000 | |||||||||||
Loss before income taxes | (1,809,000 | ) | (1,484,000 | ) | (3,318,000 | ) | (1,856,000 | ) | |||||||
Income tax (benefit) provision | (264,000 | ) | 389,000 | (457,000 | ) | 300,000 | |||||||||
Net loss | (1,545,000 | ) | (1,873,000 | ) | (2,861,000 | ) | (2,156,000 | ) | |||||||
Less: Net earnings attributable to non-controlling interests | 63,000 | 144,000 | 156,000 | 328,000 | |||||||||||
Net loss attributable to Barnwell Industries, Inc. | $ | (1,608,000 | ) | $ | (2,017,000 | ) | $ | (3,017,000 | ) | $ | (2,484,000 | ) | |||
Basic and diluted net loss per common share attributable to Barnwell Industries, Inc. stockholders | $ | (0.19 | ) | $ | (0.24 | ) | $ | (0.36 | ) | $ | (0.30 | ) | |||
Weighted-average number of common shares outstanding: | |||||||||||||||
Basic and diluted | 8,277,160 | 8,277,160 | 8,277,160 | 8,277,160 |
Three months ended March 31, | Six months ended March 31, | ||||||||||||||
2016 | 2015 | 2016 | 2015 | ||||||||||||
Net loss | $ | (1,545,000 | ) | $ | (1,873,000 | ) | $ | (2,861,000 | ) | $ | (2,156,000 | ) | |||
Other comprehensive income (loss): | |||||||||||||||
Foreign currency translation adjustments, net of taxes of $0 | 272,000 | (772,000 | ) | 116,000 | (1,179,000 | ) | |||||||||
Retirement plans - amortization of accumulated other comprehensive loss into net periodic benefit cost, net of taxes of $0 | 38,000 | 27,000 | 77,000 | 53,000 | |||||||||||
Total other comprehensive income (loss) | 310,000 | (745,000 | ) | 193,000 | (1,126,000 | ) | |||||||||
Total comprehensive loss | (1,235,000 | ) | (2,618,000 | ) | (2,668,000 | ) | (3,282,000 | ) | |||||||
Less: Comprehensive income attributable to non-controlling interests | 63,000 | 144,000 | 156,000 | 328,000 | |||||||||||
Comprehensive loss attributable to Barnwell Industries, Inc. | $ | (1,298,000 | ) | $ | (2,762,000 | ) | $ | (2,824,000 | ) | $ | (3,610,000 | ) |
Six months ended March 31, | |||||||
2016 | 2015 | ||||||
Cash flows from operating activities: | |||||||
Net loss | $ | (2,861,000 | ) | $ | (2,156,000 | ) | |
Adjustments to reconcile net loss to net cash | |||||||
used in operating activities: | |||||||
Equity in income of affiliates | (416,000 | ) | (456,000 | ) | |||
Depletion, depreciation, and amortization | 753,000 | 1,847,000 | |||||
Foreign exchange loss | — | 146,000 | |||||
Loss on sale of investment | — | 16,000 | |||||
Retirement benefits expense | 265,000 | 204,000 | |||||
Accretion of asset retirement obligation | 226,000 | 308,000 | |||||
Deferred income tax (benefit) expense | (89,000 | ) | 647,000 | ||||
Asset retirement obligation payments | (125,000 | ) | (489,000 | ) | |||
Share-based compensation benefit | (23,000 | ) | (47,000 | ) | |||
Retirement plan contributions | (353,000 | ) | (253,000 | ) | |||
Sale of interest in leasehold land, net | (413,000 | ) | (1,849,000 | ) | |||
Decrease from changes in current assets and liabilities | (1,571,000 | ) | (2,361,000 | ) | |||
Net cash used in operating activities | (4,607,000 | ) | (4,443,000 | ) | |||
Cash flows from investing activities: | |||||||
Decrease in restricted cash | 4,957,000 | — | |||||
Proceeds from sale of interest in leasehold land, net of fees paid | 413,000 | 1,849,000 | |||||
Proceeds from sale of investment, net of closing costs | — | 266,000 | |||||
Payment to acquire oil and natural gas properties | — | (526,000 | ) | ||||
Capital expenditures - oil and natural gas | (598,000 | ) | (564,000 | ) | |||
Capital expenditures - all other | (39,000 | ) | (75,000 | ) | |||
Net cash provided by investing activities | 4,733,000 | 950,000 | |||||
Cash flows from financing activities: | |||||||
Repayments of long-term debt | — | (2,445,000 | ) | ||||
Decrease in restricted cash | 166,000 | — | |||||
Contributions from non-controlling interests | — | 90,000 | |||||
Distributions to non-controlling interests | (86,000 | ) | (334,000 | ) | |||
Net cash provided by (used in) financing activities | 80,000 | (2,689,000 | ) | ||||
Effect of exchange rate changes on cash and cash equivalents | 272,000 | (825,000 | ) | ||||
Net increase (decrease) in cash and cash equivalents | 478,000 | (7,007,000 | ) | ||||
Cash and cash equivalents at beginning of period | 8,471,000 | 16,104,000 | |||||
Cash and cash equivalents at end of period | $ | 8,949,000 | $ | 9,097,000 |
Shares Outstanding | Common Stock | Additional Paid-In Capital | Retained Earnings | Accumulated Other Comprehensive Income (Loss) | Treasury Stock | Non-controlling Interests | Total Equity | |||||||||||||||||||||||
Balance at December 31, 2014 | 8,277,160 | $ | 4,223,000 | $ | 1,322,000 | $ | 15,737,000 | $ | (639,000 | ) | $ | (2,286,000 | ) | $ | 765,000 | $ | 19,122,000 | |||||||||||||
Contributions from non-controlling interests | 45,000 | 45,000 | ||||||||||||||||||||||||||||
Distributions to non-controlling interests | (123,000 | ) | (123,000 | ) | ||||||||||||||||||||||||||
Net earnings (loss) | (2,017,000 | ) | 144,000 | (1,873,000 | ) | |||||||||||||||||||||||||
Share-based compensation | 4,000 | 4,000 | ||||||||||||||||||||||||||||
Foreign currency translation adjustments, net of taxes of $0 | (772,000 | ) | (772,000 | ) | ||||||||||||||||||||||||||
Retirement plans - amortization of accumulated other comprehensive loss into net periodic benefit cost, net of taxes of $0 | 27,000 | 27,000 | ||||||||||||||||||||||||||||
Balance at March 31, 2015 | 8,277,160 | $ | 4,223,000 | $ | 1,326,000 | $ | 13,720,000 | $ | (1,384,000 | ) | $ | (2,286,000 | ) | $ | 831,000 | $ | 16,430,000 | |||||||||||||
Balance at December 31, 2015 | 8,277,160 | $ | 4,223,000 | $ | 1,338,000 | $ | 16,058,000 | $ | (2,239,000 | ) | $ | (2,286,000 | ) | $ | 710,000 | $ | 17,804,000 | |||||||||||||
Distributions to non-controlling interests | (58,000 | ) | (58,000 | ) | ||||||||||||||||||||||||||
Net earnings (loss) | (1,608,000 | ) | 63,000 | (1,545,000 | ) | |||||||||||||||||||||||||
Share-based compensation | 2,000 | 2,000 | ||||||||||||||||||||||||||||
Foreign currency translation adjustments, net of taxes of $0 | 272,000 | 272,000 | ||||||||||||||||||||||||||||
Retirement plans - amortization of accumulated other comprehensive loss into net periodic benefit cost, net of taxes of $0 | 38,000 | 38,000 | ||||||||||||||||||||||||||||
Balance at March 31, 2016 | 8,277,160 | $ | 4,223,000 | $ | 1,340,000 | $ | 14,450,000 | $ | (1,929,000 | ) | $ | (2,286,000 | ) | $ | 715,000 | $ | 16,513,000 |
Shares Outstanding | Common Stock | Additional Paid-In Capital | Retained Earnings | Accumulated Other Comprehensive Income (Loss) | Treasury Stock | Non-controlling Interests | Total Equity | |||||||||||||||||||||||
Balance at September 30, 2014 | 8,277,160 | $ | 4,223,000 | $ | 1,315,000 | $ | 16,204,000 | $ | (258,000 | ) | $ | (2,286,000 | ) | $ | 747,000 | $ | 19,945,000 | |||||||||||||
Contributions from non-controlling interests | 90,000 | 90,000 | ||||||||||||||||||||||||||||
Distributions to non-controlling interests | (334,000 | ) | (334,000 | ) | ||||||||||||||||||||||||||
Net earnings (loss) | (2,484,000 | ) | 328,000 | (2,156,000 | ) | |||||||||||||||||||||||||
Share-based compensation | 11,000 | 11,000 | ||||||||||||||||||||||||||||
Foreign currency translation adjustments, net of taxes of $0 | (1,179,000 | ) | (1,179,000 | ) | ||||||||||||||||||||||||||
Retirement plans - amortization of accumulated other comprehensive loss into net periodic benefit cost, net of taxes of $0 | 53,000 | 53,000 | ||||||||||||||||||||||||||||
Balance at March 31, 2015 | 8,277,160 | $ | 4,223,000 | $ | 1,326,000 | $ | 13,720,000 | $ | (1,384,000 | ) | $ | (2,286,000 | ) | $ | 831,000 | $ | 16,430,000 | |||||||||||||
Balance at September 30, 2015 | 8,277,160 | $ | 4,223,000 | $ | 1,335,000 | $ | 17,467,000 | $ | (2,122,000 | ) | $ | (2,286,000 | ) | $ | 645,000 | $ | 19,262,000 | |||||||||||||
Distributions to non-controlling interests | (86,000 | ) | (86,000 | ) | ||||||||||||||||||||||||||
Net earnings (loss) | (3,017,000 | ) | 156,000 | (2,861,000 | ) | |||||||||||||||||||||||||
Share-based compensation | 5,000 | 5,000 | ||||||||||||||||||||||||||||
Foreign currency translation adjustments, net of taxes of $0 | 116,000 | 116,000 | ||||||||||||||||||||||||||||
Retirement plans - amortization of accumulated other comprehensive loss into net periodic benefit cost, net of taxes of $0 | 77,000 | 77,000 | ||||||||||||||||||||||||||||
Balance at March 31, 2016 | 8,277,160 | $ | 4,223,000 | $ | 1,340,000 | $ | 14,450,000 | $ | (1,929,000 | ) | $ | (2,286,000 | ) | $ | 715,000 | $ | 16,513,000 |
Three months ended March 31, 2016 | ||||||||||
Net Loss (Numerator) | Shares (Denominator) | Per-Share Amount | ||||||||
Basic net loss per share | $ | (1,608,000 | ) | 8,277,160 | $ | (0.19 | ) | |||
Effect of dilutive securities - | ||||||||||
common stock options | — | — | ||||||||
Diluted net loss per share | $ | (1,608,000 | ) | 8,277,160 | $ | (0.19 | ) |
Six months ended March 31, 2016 | ||||||||||
Net Loss (Numerator) | Shares (Denominator) | Per-Share Amount | ||||||||
Basic net loss per share | $ | (3,017,000 | ) | 8,277,160 | $ | (0.36 | ) | |||
Effect of dilutive securities - | ||||||||||
common stock options | — | — | ||||||||
Diluted net loss per share | $ | (3,017,000 | ) | 8,277,160 | $ | (0.36 | ) |
Three months ended March 31, 2015 | ||||||||||
Net Loss (Numerator) | Shares (Denominator) | Per-Share Amount | ||||||||
Basic net loss per share | $ | (2,017,000 | ) | 8,277,160 | $ | (0.24 | ) | |||
Effect of dilutive securities - | ||||||||||
common stock options | — | — | ||||||||
Diluted net loss per share | $ | (2,017,000 | ) | 8,277,160 | $ | (0.24 | ) |
Six months ended March 31, 2015 | ||||||||||
Net Loss (Numerator) | Shares (Denominator) | Per-Share Amount | ||||||||
Basic net loss per share | $ | (2,484,000 | ) | 8,277,160 | $ | (0.30 | ) | |||
Effect of dilutive securities - | ||||||||||
common stock options | — | — | ||||||||
Diluted net loss per share | $ | (2,484,000 | ) | 8,277,160 | $ | (0.30 | ) |
March 31, 2016 | September 30, 2015 | ||||||
Investment in Kukio Resort land development partnerships | $ | 6,654,000 | $ | 6,238,000 | |||
Investment in leasehold land interest – Lot 4C | 50,000 | 50,000 | |||||
Total investments | $ | 6,704,000 | $ | 6,288,000 |
Three months ended March 31, 2016 | Three months ended March 31, 2015 | ||||||
Revenue | $ | 4,416,000 | $ | 6,081,000 | |||
Gross profit | $ | 2,097,000 | $ | 2,982,000 | |||
Net earnings | $ | 1,168,000 | $ | 2,143,000 |
Six months ended March 31, 2016 | Six months ended March 31, 2015 | ||||||
Revenue | $ | 8,119,000 | $ | 10,707,000 | |||
Gross profit | $ | 3,454,000 | $ | 4,409,000 | |||
Net earnings | $ | 1,991,000 | $ | 2,563,000 |
Three months ended March 31, | Six months ended March 31, | ||||||||||||||
2016 | 2015 | 2016 | 2015 | ||||||||||||
Sale of interest in leasehold land: | |||||||||||||||
Proceeds | $ | 330,000 | $ | 950,000 | $ | 480,000 | $ | 2,150,000 | |||||||
Fees | (46,000 | ) | (133,000 | ) | (67,000 | ) | (301,000 | ) | |||||||
Revenues – sale of interest in leasehold land, net | $ | 284,000 | $ | 817,000 | $ | 413,000 | $ | 1,849,000 |
Pension Plan | SERP | Postretirement Medical | |||||||||||||||||||||
Three months ended March 31, | |||||||||||||||||||||||
2016 | 2015 | 2016 | 2015 | 2016 | 2015 | ||||||||||||||||||
Service cost | $ | 65,000 | $ | 77,000 | $ | 16,000 | $ | 16,000 | $ | — | $ | — | |||||||||||
Interest cost | 91,000 | 91,000 | 20,000 | 20,000 | 14,000 | 13,000 | |||||||||||||||||
Expected return on plan assets | (112,000 | ) | (125,000 | ) | — | — | — | — | |||||||||||||||
Amortization of prior service cost (credit) | 1,000 | 2,000 | (1,000 | ) | (1,000 | ) | — | — | |||||||||||||||
Amortization of net actuarial loss (gain) | 34,000 | 22,000 | 4,000 | 6,000 | — | (2,000 | ) | ||||||||||||||||
Net periodic benefit cost | $ | 79,000 | $ | 67,000 | $ | 39,000 | $ | 41,000 | $ | 14,000 | $ | 11,000 |
Pension Plan | SERP | Postretirement Medical | |||||||||||||||||||||
Six months ended March 31, | |||||||||||||||||||||||
2016 | 2015 | 2016 | 2015 | 2016 | 2015 | ||||||||||||||||||
Service cost | $ | 130,000 | $ | 128,000 | $ | 32,000 | $ | 31,000 | $ | — | $ | — | |||||||||||
Interest cost | 182,000 | 178,000 | 40,000 | 38,000 | 28,000 | 26,000 | |||||||||||||||||
Expected return on plan assets | (224,000 | ) | (250,000 | ) | — | — | — | — | |||||||||||||||
Amortization of prior service cost (credit) | 2,000 | 3,000 | (2,000 | ) | (2,000 | ) | — | — | |||||||||||||||
Amortization of net actuarial loss (gain) | 68,000 | 43,000 | 9,000 | 12,000 | — | (3,000 | ) | ||||||||||||||||
Net periodic benefit cost | $ | 158,000 | $ | 102,000 | $ | 79,000 | $ | 79,000 | $ | 28,000 | $ | 23,000 |
Three months ended March 31, | Six months ended March 31, | ||||||||||||||
2016 | 2015 | 2016 | 2015 | ||||||||||||
United States | $ | (682,000 | ) | $ | (179,000 | ) | $ | (1,408,000 | ) | $ | (415,000 | ) | |||
Canada | (1,190,000 | ) | (1,449,000 | ) | (2,066,000 | ) | (1,769,000 | ) | |||||||
$ | (1,872,000 | ) | $ | (1,628,000 | ) | $ | (3,474,000 | ) | $ | (2,184,000 | ) |
Three months ended March 31, | Six months ended March 31, | ||||||||||||||
2016 | 2015 | 2016 | 2015 | ||||||||||||
Current | $ | (159,000 | ) | $ | (350,000 | ) | $ | (368,000 | ) | $ | (347,000 | ) | |||
Deferred | (105,000 | ) | 739,000 | (89,000 | ) | 647,000 | |||||||||
$ | (264,000 | ) | $ | 389,000 | $ | (457,000 | ) | $ | 300,000 |
Three months ended March 31, | Six months ended March 31, | ||||||||||||||
2016 | 2015 | 2016 | 2015 | ||||||||||||
Revenues: | |||||||||||||||
Oil and natural gas | $ | 621,000 | $ | 2,092,000 | $ | 1,469,000 | $ | 5,064,000 | |||||||
Land investment | 284,000 | 817,000 | 413,000 | 1,849,000 | |||||||||||
Contract drilling | 550,000 | 491,000 | 1,382,000 | 2,424,000 | |||||||||||
Other | 47,000 | 76,000 | 89,000 | 154,000 | |||||||||||
Total before interest income | 1,502,000 | 3,476,000 | 3,353,000 | 9,491,000 | |||||||||||
Interest income | 20,000 | 16,000 | 22,000 | 33,000 | |||||||||||
Total revenues | $ | 1,522,000 | $ | 3,492,000 | $ | 3,375,000 | $ | 9,524,000 | |||||||
Depletion, depreciation, and amortization: | |||||||||||||||
Oil and natural gas | $ | 305,000 | $ | 772,000 | $ | 579,000 | $ | 1,655,000 | |||||||
Contract drilling | 62,000 | 70,000 | 123,000 | 141,000 | |||||||||||
Other | 24,000 | 26,000 | 51,000 | 51,000 | |||||||||||
Total depletion, depreciation, and amortization | $ | 391,000 | $ | 868,000 | $ | 753,000 | $ | 1,847,000 | |||||||
Operating profit (loss) (before general and administrative expenses): | |||||||||||||||
Oil and natural gas | $ | (698,000 | ) | $ | (498,000 | ) | $ | (863,000 | ) | $ | (32,000 | ) | |||
Land investment | 284,000 | 817,000 | 413,000 | 1,849,000 | |||||||||||
Contract drilling | (130,000 | ) | (51,000 | ) | 91,000 | 286,000 | |||||||||
Other | 23,000 | 50,000 | 38,000 | 103,000 | |||||||||||
Total operating profit (loss) | (521,000 | ) | 318,000 | (321,000 | ) | 2,206,000 | |||||||||
Equity in income of affiliates: | |||||||||||||||
Land investment | 253,000 | 368,000 | 416,000 | 456,000 | |||||||||||
General and administrative expenses | (1,528,000 | ) | (2,104,000 | ) | (3,369,000 | ) | (4,379,000 | ) | |||||||
Interest expense | (33,000 | ) | (82,000 | ) | (66,000 | ) | (172,000 | ) | |||||||
Interest income | 20,000 | 16,000 | 22,000 | 33,000 | |||||||||||
Loss before income taxes | $ | (1,809,000 | ) | $ | (1,484,000 | ) | $ | (3,318,000 | ) | $ | (1,856,000 | ) |
Three months ended March 31, | Six months ended March 31, | ||||||||||||||
2016 | 2015 | 2016 | 2015 | ||||||||||||
Foreign currency translation: | |||||||||||||||
Beginning accumulated foreign currency translation | $ | 663,000 | $ | 1,285,000 | $ | 819,000 | $ | 1,692,000 | |||||||
Change in cumulative translation adjustment before reclassifications | 272,000 | (918,000 | ) | 116,000 | (1,325,000 | ) | |||||||||
Amounts reclassified from accumulated other comprehensive income | — | 146,000 | — | 146,000 | |||||||||||
Income taxes | — | — | — | — | |||||||||||
Net current period other comprehensive income (loss) | 272,000 | (772,000 | ) | 116,000 | (1,179,000 | ) | |||||||||
Ending accumulated foreign currency translation | 935,000 | 513,000 | 935,000 | 513,000 | |||||||||||
Retirement plans: | |||||||||||||||
Beginning accumulated retirement plans benefit cost | (2,902,000 | ) | (1,924,000 | ) | (2,941,000 | ) | (1,950,000 | ) | |||||||
Amortization of net actuarial loss and prior service cost | 38,000 | 27,000 | 77,000 | 53,000 | |||||||||||
Income taxes | — | — | — | — | |||||||||||
Net current period other comprehensive income | 38,000 | 27,000 | 77,000 | 53,000 | |||||||||||
Ending accumulated retirement plans benefit cost | (2,864,000 | ) | (1,897,000 | ) | (2,864,000 | ) | (1,897,000 | ) | |||||||
Accumulated other comprehensive loss, net of taxes | $ | (1,929,000 | ) | $ | (1,384,000 | ) | $ | (1,929,000 | ) | $ | (1,384,000 | ) |
Six months ended March 31, | |||||||
2016 | 2015 | ||||||
Supplemental disclosure of cash flow information: | |||||||
Cash paid during the year for: | |||||||
Interest | $ | 64,000 | $ | 164,000 | |||
Supplemental disclosure of non-cash investing and financing activities: | |||||||
Release of restricted cash held in escrow for tax installment | $ | 2,000,000 | $ | — | |||
Note receivable for sale of investment | $ | — | $ | 907,000 |
• | The right to receive percentage of sales payments from KD Acquisition, LLLP ("KD I") resulting from the sale of single-family residential lots by KD I, within Increment I of the approximately 870 acres of the Kaupulehu Lot 4A area located in the North Kona District of the island of Hawaii. Kaupulehu Developments is entitled to receive payments from KD I based on the following percentages of the gross receipts from KD I’s sales: 9% of the gross proceeds from single-family lot sales up to aggregate gross proceeds of $100,000,000; 10% of such aggregate gross proceeds greater than $100,000,000 up to $300,000,000; and 14% of such aggregate gross proceeds in excess of $300,000,000. Increment I is an area zoned for approximately 80 single-family lots, of which 26 remained to be sold at March 31, 2016, and a beach club on the portion of the property bordering the Pacific Ocean, and is partially developed. |
• | The right to receive percentage of sales payments from KD Acquisition II, LLLP ("KD II") resulting from the sale of lots and/or residential units by KD II, within Increment II of Kaupulehu Lot 4A. Increment II is the remaining portion of the approximately 870-acre property and is zoned for single-family and multi-family residential units and a golf course and clubhouse. Kaupulehu Developments is entitled to receive payments from KD II based on a percentage of the gross proceeds from KD II’s sales ranging from 8% to 10% of the price of improved or unimproved lots or 2.60% to 3.25% of the |
• | An indirect 19.6% non-controlling ownership interest in the Kukio Resort land development partnerships which is comprised of KD Kukio Resorts, LLLP, KD Maniniowali, LLLP and KD Kaupulehu, LLLP. These entities own certain real estate and development rights interests in the Kukio, Maniniowali and Kaupulehu portions of Kukio Resort, a private residential community on the Kona coast of the island of Hawaii, as well as Kukio Resort’s real estate sales office operations. KD Kaupulehu, LLLP, which wholly owns KD I and KD II, is the developer of Kaupulehu Lot 4A Increments I and II, the area in which Barnwell has interests in percentage of sales payments. The partnerships derive income from the sale of residential parcels as well as from commission on real estate sales by the real estate sales office. As of March 31, 2016, 26 lots remained to be sold at Kaupulehu Increment I, two ocean front parcels in Kaupulehu Increment II were available for sale, of which one of the parcels was sold in April 2016, and one lot remained to be sold at Maniniowali. |
• | Approximately 1,000 acres of vacant leasehold land zoned conservation in the Kaupulehu Lot 4C area located adjacent to the 870-acre Lot 4A described above. |
• | A $533,000 decrease in land investment segment operating profit, before income taxes and non-controlling interests’ share of such profits, due to decreased percentage of sales receipts as a result of fewer lot sales by the Kukio Resort land development partnerships; |
• | A $200,000 decrease in oil and natural gas segment operating results, before income taxes, due primarily to decreases in prices for oil and natural gas; |
• | A $576,000 decrease in general and administrative expenses primarily due to cost reduction efforts; |
• | A $115,000 decrease in equity in income from affiliates as a result of decreased Kukio Resort land development partnerships’ operating results; and |
• | A $785,000 valuation allowance recorded in the prior year period for deferred tax assets under Canadian tax law related to asset retirement obligations which increased deferred income tax expense. |
• | A $1,436,000 decrease in land investment segment operating profit, before income taxes and non-controlling interests’ share of such profits, due to decreased percentage of sales receipts as a result of fewer lot sales by the Kukio Resort land development partnerships; |
• | An $831,000 decrease in oil and natural gas segment operating results, before income taxes, due primarily to decreases in prices for oil and natural gas; |
• | A $195,000 decrease in contract drilling operating results, before income taxes, primarily resulting from decreased water well drilling activity; |
• | A $1,010,000 decrease in general and administrative expenses primarily due to cost reduction efforts; and |
• | A $785,000 valuation allowance recorded in the prior year period for deferred tax assets under Canadian tax law related to asset retirement obligations which increased deferred income tax expense. |
Average Price Per Unit | ||||||||||||||
Three months ended | Increase | |||||||||||||
March 31, | (Decrease) | |||||||||||||
2016 | 2015 | $ | % | |||||||||||
Natural Gas (Mcf)* | $ | 0.93 | $ | 2.03 | $ | (1.10 | ) | (54 | %) | |||||
Oil (Bbls)** | $ | 21.95 | $ | 35.70 | $ | (13.75 | ) | (39 | %) | |||||
Liquids (Bbls)** | $ | 22.00 | $ | 15.94 | $ | 6.06 | 38 | % |
Average Price Per Unit | ||||||||||||||
Six months ended | Increase | |||||||||||||
March 31, | (Decrease) | |||||||||||||
2016 | 2015 | $ | % | |||||||||||
Natural Gas (Mcf)* | $ | 1.33 | $ | 2.47 | $ | (1.14 | ) | (46 | %) | |||||
Oil (Bbls)** | $ | 26.46 | $ | 48.16 | $ | (21.70 | ) | (45 | %) | |||||
Liquids (Bbls)** | $ | 22.22 | $ | 22.14 | $ | 0.08 | — | % |
Net Production | |||||||||||
Three months ended | Increase | ||||||||||
March 31, | (Decrease) | ||||||||||
2016 | 2015 | Units | % | ||||||||
Natural Gas (Mcf)* | 120,000 | 461,000 | (341,000 | ) | (74 | %) | |||||
Oil (Bbls)** | 21,000 | 20,000 | 1,000 | 5 | % | ||||||
Liquids (Bbls)** | 1,000 | 18,000 | (17,000 | ) | (94 | %) |
Net Production | |||||||||||
Six months ended | Increase | ||||||||||
March 31, | (Decrease) | ||||||||||
2016 | 2015 | Units | % | ||||||||
Natural Gas (Mcf)* | 252,000 | 900,000 | (648,000 | ) | (72 | %) | |||||
Oil (Bbls)** | 39,000 | 37,000 | 2,000 | 5 | % | ||||||
Liquids (Bbls)** | 3,000 | 36,000 | (33,000 | ) | (92 | %) |
Three months ended March 31, | Six months ended March 31, | ||||||||||||||
2016 | 2015 | 2016 | 2015 | ||||||||||||
Sale of interest in leasehold land: | |||||||||||||||
Proceeds | $ | 330,000 | $ | 950,000 | $ | 480,000 | $ | 2,150,000 | |||||||
Fees | (46,000 | ) | (133,000 | ) | (67,000 | ) | (301,000 | ) | |||||||
Revenues – sale of interest in leasehold land, net | $ | 284,000 | $ | 817,000 | $ | 413,000 | $ | 1,849,000 |
Exhibit Number | Description | |
31.1 | Certification of Chief Executive Officer Pursuant To Section 302 of the Sarbanes-Oxley Act of 2002 | |
31.2 | Certification of Chief Operating Officer Pursuant To Section 302 of the Sarbanes-Oxley Act of 2002 | |
31.3 | Certification of Chief Financial Officer Pursuant To Section 302 of the Sarbanes-Oxley Act of 2002 | |
32 | Certification Pursuant To Section 906 of the Sarbanes-Oxley Act of 2002 | |
101.INS | XBRL Instance Document | |
101.SCH | XBRL Taxonomy Extension Schema Document | |
101.CAL | XBRL Taxonomy Extension Calculation Linkbase Document | |
101.DEF | XBRL Taxonomy Extension Definition Linkbase Document | |
101.LAB | XBRL Taxonomy Extension Label Linkbase Document | |
101.PRE | XBRL Taxonomy Extension Presentation Linkbase Document |
BARNWELL INDUSTRIES, INC. | ||
(Registrant) | ||
Date: | May 12, 2016 | /s/ Russell M. Gifford |
Russell M. Gifford | ||
Chief Financial Officer, | ||
Executive Vice President, | ||
Treasurer and Secretary |
Exhibit Number | Description | |
31.1 | Certification of Chief Executive Officer Pursuant To Section 302 of the Sarbanes-Oxley Act of 2002 | |
31.2 | Certification of Chief Operating Officer Pursuant To Section 302 of the Sarbanes-Oxley Act of 2002 | |
31.3 | Certification of Chief Financial Officer Pursuant To Section 302 of the Sarbanes-Oxley Act of 2002 | |
32 | Certification Pursuant To Section 906 of the Sarbanes-Oxley Act of 2002 | |
101.INS | XBRL Instance Document | |
101.SCH | XBRL Taxonomy Extension Schema Document | |
101.CAL | XBRL Taxonomy Extension Calculation Linkbase Document | |
101.DEF | XBRL Taxonomy Extension Definition Linkbase Document | |
101.LAB | XBRL Taxonomy Extension Label Linkbase Document | |
101.PRE | XBRL Taxonomy Extension Presentation Linkbase Document |
1. | I have reviewed this quarterly report on Form 10-Q of Barnwell Industries, Inc.; |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4. | The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
c) | Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
d) | Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
5. | The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of registrant’s board of directors (or persons performing the equivalent functions): |
a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and |
b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
Date: | May 12, 2016 | /s/ Morton H. Kinzler |
Morton H. Kinzler | ||
Chief Executive Officer |
1. | I have reviewed this quarterly report on Form 10-Q of Barnwell Industries, Inc.; |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4. | The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
c) | Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
d) | Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
5. | The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of registrant’s board of directors (or persons performing the equivalent functions): |
a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and |
b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
Date: | May 12, 2016 | /s/ Alexander C. Kinzler |
Alexander C. Kinzler | ||
President, Chief Operating Officer, General Counsel |
1. | I have reviewed this quarterly report on Form 10-Q of Barnwell Industries, Inc.; |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4. | The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
c) | Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
d) | Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
5. | The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of registrant’s board of directors (or persons performing the equivalent functions): |
a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and |
b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
Date: | May 12, 2016 | /s/ Russell M. Gifford |
Russell M. Gifford | ||
Executive Vice President, Chief Financial Officer |
(1) | The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and |
(2) | The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. |
Dated: | May 12, 2016 | /s/ Morton H. Kinzler |
Name: Morton H. Kinzler | ||
Title: Chief Executive Officer | ||
Dated: | May 12, 2016 | /s/ Alexander C. Kinzler |
Alexander C. Kinzler | ||
Title: President, Chief Operating Officer, General Counsel | ||
Dated: | May 12, 2016 | /s/ Russell M. Gifford |
Name: Russell M. Gifford | ||
Title: Executive Vice President, Chief Financial Officer |
Document and Entity Information - shares |
6 Months Ended | |
---|---|---|
Mar. 31, 2016 |
May. 11, 2016 |
|
Document and Entity Information | ||
Entity Registrant Name | BARNWELL INDUSTRIES INC | |
Entity Central Index Key | 0000010048 | |
Document Type | 10-Q | |
Document Period End Date | Mar. 31, 2016 | |
Amendment Flag | false | |
Current Fiscal Year End Date | --09-30 | |
Entity Current Reporting Status | Yes | |
Entity Filer Category | Smaller Reporting Company | |
Entity Common Stock, Shares Outstanding | 8,277,160 | |
Document Fiscal Year Focus | 2016 | |
Document Fiscal Period Focus | Q2 |
CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($) $ in Thousands |
Mar. 31, 2016 |
Sep. 30, 2015 |
---|---|---|
Statement of Financial Position [Abstract] | ||
Accounts receivable, allowance for doubtful accounts | $ 41 | $ 23 |
Common stock, par value | $ 0.50 | $ 0.50 |
Common stock, authorized shares | 20,000,000 | 20,000,000 |
Common stock, issued shares | 8,445,060 | 8,445,060 |
Treasury stock, shares | 167,900 | 167,900 |
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS - USD ($) $ in Thousands |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Mar. 31, 2016 |
Mar. 31, 2015 |
Mar. 31, 2016 |
Mar. 31, 2015 |
|
Statement of Comprehensive Income [Abstract] | ||||
Net loss | $ (1,545) | $ (1,873) | $ (2,861) | $ (2,156) |
Other comprehensive income (loss): | ||||
Foreign currency translation adjustments, net of taxes of $0 | 272 | (772) | 116 | (1,179) |
Retirement plans - amortization of accumulated other comprehensive loss into net periodic benefit cost, net of taxes of $0 | 38 | 27 | 77 | 53 |
Total other comprehensive income (loss) | 310 | (745) | 193 | (1,126) |
Total comprehensive loss | (1,235) | (2,618) | (2,668) | (3,282) |
Less: Comprehensive income attributable to non-controlling interests | 63 | 144 | 156 | 328 |
Comprehensive loss attributable to Barnwell Industries, Inc. | $ (1,298) | $ (2,762) | $ (2,824) | $ (3,610) |
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS (Parenthetical) - USD ($) $ in Thousands |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Mar. 31, 2016 |
Mar. 31, 2015 |
Mar. 31, 2016 |
Mar. 31, 2015 |
|
Statement of Comprehensive Income [Abstract] | ||||
Foreign currency translation adjustments, taxes | $ 0 | $ 0 | $ 0 | $ 0 |
Amortization of accumulated other comprehensive loss into net periodic benefit cost, taxes | $ 0 | $ 0 | $ 0 | $ 0 |
CONDENSED CONSOLIDATED STATEMENTS OF EQUITY (Parenthetical) - USD ($) $ in Thousands |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Mar. 31, 2016 |
Mar. 31, 2015 |
Mar. 31, 2016 |
Mar. 31, 2015 |
|
Statement of Stockholders' Equity [Abstract] | ||||
Foreign currency translation adjustments, taxes | $ 0 | $ 0 | $ 0 | $ 0 |
Amortization of accumulated other comprehensive loss into net periodic benefit cost, taxes | $ 0 | $ 0 | $ 0 | $ 0 |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES |
6 Months Ended |
---|---|
Mar. 31, 2016 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Principles of Consolidation The condensed consolidated financial statements include the accounts of Barnwell Industries, Inc. and all majority-owned subsidiaries (collectively referred to herein as “Barnwell,” “we,” “our,” “us,” or the “Company”), including a 77.6%-owned land investment general partnership (Kaupulehu Developments), a 75%-owned land investment partnership (KD Kona 2013 LLLP) and two 80%-owned joint ventures (Kaupulehu 2007, LLLP and Kaupulehu Investors, LLC). All significant intercompany accounts and transactions have been eliminated. Barnwell’s investments in both unconsolidated entities in which a significant, but less than controlling, interest is held and in variable interest entities (“VIE”) in which the Company is not deemed to be the primary beneficiary are accounted for by the equity method. Unless otherwise indicated, all references to “dollars” in this Form 10-Q are to U.S. dollars. Unaudited Interim Financial Information The accompanying unaudited condensed consolidated financial statements and notes have been prepared by Barnwell in accordance with the rules and regulations of the United States (“U.S.”) Securities and Exchange Commission. Accordingly, certain information and footnote disclosures normally included in the annual financial statements prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) have been condensed or omitted pursuant to those rules and regulations, although the Company believes that the disclosures made are adequate to make the information not misleading. These condensed consolidated financial statements and notes should be read in conjunction with the consolidated financial statements and notes thereto included in Barnwell’s September 30, 2015 Annual Report on Form 10-K. The Condensed Consolidated Balance Sheet as of September 30, 2015 has been derived from audited consolidated financial statements. In the opinion of management, all adjustments (which include only normal recurring adjustments) necessary to present fairly the financial position at March 31, 2016, results of operations, comprehensive loss, and equity for the three and six months ended March 31, 2016 and 2015, and cash flows for the six months ended March 31, 2016 and 2015, have been made. The results of operations for the period ended March 31, 2016 are not necessarily indicative of the operating results for the full year. Use of Estimates The preparation of the financial statements in conformity with U.S. GAAP requires management of Barnwell 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. Significant Accounting Policies There have been no changes to Barnwell’s significant accounting policies as described in the Notes to Consolidated Financial Statements included in Item 8 of the Company’s most recently filed Annual Report on Form 10-K. Recent Accounting Pronouncements In April 2014, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2014-08, “Reporting Discontinued Operations and Disclosures of Disposals of Components of an Entity.” This ASU relates to discontinued operations reporting for disposals of components of an entity that represent strategic shifts that have, or will have, a major effect on an entity’s operations and financial results. The standard expands the disclosures for discontinued operations and requires new disclosures related to individually material disposals that do not meet the definition of a discontinued operation. The Company adopted the provisions of this ASU effective October 1, 2015. The adoption of this update did not have a material impact on Barnwell’s consolidated financial statements. |
LIQUIDITY |
6 Months Ended |
---|---|
Mar. 31, 2016 | |
Risks and Uncertainties [Abstract] | |
LIQUIDITY | LIQUIDITY In September 2015, Barnwell sold its interests in its principal oil and natural gas properties located in the Dunvegan and Belloy areas of Alberta, Canada. Barnwell's net proceeds from the sale, after broker's fees and other closing costs, were $14,162,000. On closing, approximately half of the proceeds were withheld in an escrow account for the Canada Revenue Agency for potential amounts due for Barnwell’s Canadian income taxes related to the sale. In February 2016, the Canada Revenue Agency instructed the Company to make an installment payment of approximately $2,000,000 related to the sale, prior to their issuance of a Certificate of Compliance and release of the remaining escrow funds. The Company made the installment payment using a portion of the funds held in escrow and received the remaining funds of $4,957,000 from escrow in March 2016. An income tax receivable of $2,537,000 was recorded at March 31, 2016, primarily for the excess of Canadian federal and provincial income tax installment payments over tax liability, as all necessary Canadian income taxes related to the sale were paid in the tax installment payment made in September 2015. The Canadian income tax refunds were received in April and May 2016. On September 30, 2015, as a result of the sale of Dunvegan, Barnwell’s revolving credit facility at Royal Bank of Canada was amended and reduced by the bank to $1,000,000 Canadian dollars, or U.S. $771,000 at the March 31, 2016 exchange rate. Upon the April 2016 review the credit facility was terminated (see Note 7). Barnwell's oil and natural gas segment is subject to the provisions of the Alberta Energy Regulator's (“AER”) Licensee Liability Rating (“LLR”) program. Under the LLR program the AER calculates a Liability Management Ratio (“LMR”) for a company based on the ratio of the company’s deemed assets over its deemed liabilities relating to wells and facilities for which the company is the licensed operator. The value of the deemed assets is based on each well's most recent twelve months of production and an industry average netback as determined by the AER annually. The LMR assessment is designed to assess a company’s ability to address its suspension, abandonment, remediation, and reclamation liabilities. Companies with a LMR less than 1.0 are required to deposit funds with the AER to cover future deemed liabilities. In February 2016, Barnwell's LMR fell below 1.0, due to the transfer of a well license with a favorable LMR, and Barnwell was required to make a $142,000 cash deposit with the AER. However, in March 2016, Barnwell's LMR ratio exceeded 1.0 as a result of the AER's credit for recent abandonment work performed and some recent well production restarts and the cash deposit was refunded in April 2016. It is possible that Barnwell will have to transfer an additional well license which would necessitate an additional cash deposit with the AER and/or the implementation of a structured LLR Program Management Plan; management currently estimates that the total amount of the required deposits within the next 12-months could be $3,000,000, however we cannot be certain of the ultimate amount. Due to the decline in oil and natural gas prices and related netbacks over the past year it is possible that the value of the Company’s deemed assets will further decline which in turn could dictate that the Company place a larger deposit with the AER than is currently estimated, although recent well production restarts may help to provide some offset to such declines. The requirement to provide security deposit funds to the AER in the future will result in the diversion of cash and cash flows that could otherwise be used to fund oil and natural gas reserve replacement efforts, which in turn will have a material adverse effect on our business, financial condition and results of operations. If Barnwell fails to comply with the requirements of the LLR program, Barnwell's oil and natural gas subsidiary would be subject to the AER's enforcement provisions which could include suspension of operations and non-compliance fees and could ultimately result in the AER serving the Company with a closure order to shut-in all operated wells. Additionally, if Barnwell is non-compliant, the Company would be prohibited from transferring well licenses which would prohibit us from selling any oil and natural gas assets until the required cash deposit is made with the AER. In April 2016, Kaupulehu 2007, LLLP ("Kaupulehu 2007") sold its remaining luxury residence for $5,700,000 and repaid the real estate loan in full from a portion of the proceeds. After the repayment of the real estate loan and distributions to minority interests, the Company netted approximately $1,500,000 in cash proceeds from the sale of the residence (see Notes 5 and 7). Additionally, in April 2016, KD Acquisition II, LLLP, which is part of the Kukio Resort land development partnerships in which the Company has an indirect ownership interest and an entity from which the Company has rights to receive percentage of sales payments, sold one ocean front parcel in Kaupulehu Increment II for $20,000,000. As a result of the sale, the Company received a percentage of sale payment in the amount of $1,600,000. The Company also received $5,320,000 in cash distributions from the Kukio Resort land development partnerships in April 2016 (see Note 6). Because of the combined impact of declines in oil and natural gas prices, declines in production due to oil and natural gas property sales, and increasing costs due to the age of Barnwell's properties, Barnwell's oil and natural gas segment is projected to have negative cash flow from operations at current prices and production levels. A portion of the recently received proceeds mentioned above will be needed in order to provide sufficient liquidity to fund our current cash needs including the aforementioned deposits with the AER, asset retirement obligations, retirement plan funding, and ongoing operating and general and administrative expenses, such that some or potentially all of the proceeds may not be available for reinvestment. Consequently, Barnwell is reliant upon future land investment segment proceeds from percentage of sales payments and any potential future cash distributions from the Kukio Resort land development partnerships, the timing of which is highly uncertain and out of our control, to fund operations and provide capital for reinvestment on a long term basis. |
LOSS PER COMMON SHARE |
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Earnings Per Share [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
LOSS PER COMMON SHARE | LOSS PER COMMON SHARE Basic earnings (loss) per share is computed using the weighted-average number of common shares outstanding for the period. Diluted earnings (loss) per share is calculated using the treasury stock method to reflect the assumed issuance of common shares for all potentially dilutive securities, which consist of outstanding stock options. Potentially dilutive shares are excluded from the computation of diluted earnings (loss) per share if their effect is anti-dilutive. Options to purchase 621,250 shares of common stock were excluded from the computation of diluted shares for the three and six months ended March 31, 2016 and 2015, as their inclusion would have been antidilutive. Reconciliations between net loss attributable to Barnwell stockholders and common shares outstanding of the basic and diluted net loss per share computations are detailed in the following tables:
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INVESTMENT HELD FOR SALE (Notes) |
6 Months Ended |
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Mar. 31, 2016 | |
Investment held for sale [Abstract] | |
INVESTMENT HELD FOR SALE | INVESTMENT HELD FOR SALE At March 31, 2016, Kaupulehu 2007 owned one residential lot available for sale in the Lot 4A Increment I area located in the North Kona District of the island of Hawaii, north of Hualalai Resort at Historic Ka`upulehu, between the Queen Kaahumanu Highway and the Pacific Ocean. A second residential parcel was sold in October 2014 for $1,250,000 for a nominal loss which is included in "General and administrative" expenses in the Condensed Consolidated Statements of Operations for the six months ended March 31, 2015. |
REAL ESTATE HELD FOR SALE |
6 Months Ended |
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Mar. 31, 2016 | |
Real Estate [Abstract] | |
REAL ESTATE HELD FOR SALE | REAL ESTATE HELD FOR SALE At March 31, 2016, Kaupulehu 2007 also owned one luxury residence available for sale in Lot 4A Increment I. In April 2016, the residence was sold for $5,700,000 in gross proceeds, before commission and other closing costs, which is above the $5,132,000 book value of the residence at March 31, 2016. This transaction will be recognized in the quarter ending June 30, 2016. |
INVESTMENTS |
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Investments, All Other Investments [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
INVESTMENTS | INVESTMENTS A summary of Barnwell’s investments is as follows:
Investment in Kukio Resort land development partnerships On November 27, 2013, Barnwell, through a wholly-owned subsidiary, entered into two limited liability limited partnerships, KD Kona 2013 LLLP ("KD Kona") and KKM Makai, LLLP ("KKM Makai"), and indirectly acquired, through their ownership of interest in Kaupulehu Makai, LLLP ("Kaupulehu Makai"), a 19.6% non-controlling ownership interest in each of KD Kukio Resorts, LLLP, KD Maniniowali, LLLP and KD Kaupulehu, LLLP for $5,140,000. These entities own certain real estate and development rights interests in the Kukio, Maniniowali and Kaupulehu portions of Kukio Resort, a private residential community on the Kona coast of the island of Hawaii, as well as Kukio Resort’s real estate sales office operations. KD Kaupulehu, LLLP, which is comprised of KD Acquisition, LLLP (“KD I”) and KD Acquisition II, LLLP (“KD II”), is the developer of Kaupulehu Lot 4A Increments I and II, the area in which Barnwell has interests in percentage of sales payments. Barnwell’s investment in these entities is accounted for using the equity method of accounting. The partnerships derive income from the sale of residential parcels as well as from commission on real estate sales by the real estate sales office. As of March 31, 2016, 26 lots remained to be sold at Kaupulehu Increment I, two ocean front parcels in Kaupulehu Increment II were available for sale, of which one of the parcels was sold in April 2016, and one lot remained at Maniniowali. In April 2016, KD II, which is part of the Kukio Resort land development partnerships in which the Company has an indirect ownership interest, sold one ocean front parcel for $20,000,000, as noted above. In addition, the Kukio Resort land development partnerships made a cash distribution to its partners of which Barnwell received its share totaling $5,320,000 in April 2016. The cash distribution received and the equity in income of affiliates related to the sale of the parcel will be recognized in the quarter ending June 30, 2016. Equity in income of affiliates was $253,000 and $416,000 for the three and six months ended March 31, 2016, respectively, and $368,000 and $456,000 for the three and six months ended March 31, 2015, respectively. The equity in the underlying net assets of the Kukio Resort land development partnerships exceeds the carrying value of the investment in affiliates by approximately $373,000 as of March 31, 2016, which is attributable to differences in the value of capitalized development costs and a note receivable. The basis difference will be recognized as the partnerships sell lots and recognize the associated costs and sell memberships for the Kuki`o Golf and Beach Club for which the receivable relates. The basis difference adjustments of $4,000 and $17,000 for the three and six months ended March 31, 2016, respectively, increased equity in income of affiliates, and the basis difference adjustments for the three and six months ended March 31, 2015 were inconsequential. Barnwell, as well as KD I, KD II and certain other owners of the partnerships, have jointly and severally executed a surety indemnification agreement. Bonds issued by the surety at March 31, 2016 totaled approximately $4,144,000 and relate to certain construction contracts of KD I. If any such performance bonds are called, we may be obligated to reimburse the issuer of the performance bond as Barnwell, KD I and certain other partners are jointly and severally liable, however we believe that it is remote that a material amount of any currently outstanding performance bonds will be called. Performance bonds do not have stated expiration dates. Rather, the performance bonds are released as the underlying performance is completed. As of March 31, 2016, Barnwell’s maximum loss exposure as a result of its investment in the Kukio Resort land development partnerships was approximately $10,798,000, consisting of the carrying value of the investment of $6,654,000 and $4,144,000 from the surety indemnification agreement of which we are jointly and severally liable. Summarized financial information for the Kukio Resort land development partnerships is as follows:
Percentage of sales payments Kaupulehu Developments has the right to receive payments from KD I and KD II resulting from the sale of lots and/or residential units within approximately 870 acres of the Kaupulehu Lot 4A area by KD I and KD II in two increments (“Increment I” and “Increment II”) (see Note 15). The following table summarizes the Increment I percentage of sales payment revenues received from KD I.
In April 2016, Kaupulehu Developments received a percentage of sales payment from KD II in the amount of $1,600,000, representing 8% of the gross sales proceeds from the sale of one ocean front parcel in Increment II, which will be recognized in the quarter ending June 30, 2016. Investment in leasehold land interest - Lot 4C Kaupulehu Developments holds an interest in an area of approximately 1,000 acres of vacant leasehold land zoned conservation located adjacent to Lot 4A. The lease terminates in December 2025. |
LONG-TERM DEBT |
6 Months Ended |
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Mar. 31, 2016 | |
Long-term Debt, Unclassified [Abstract] | |
LONG-TERM DEBT | LONG-TERM DEBT Canadian revolving credit facility On September 30, 2015, Barnwell’s revolving credit facility at Royal Bank of Canada was amended and reduced by the bank to $1,000,000 Canadian dollars, or U.S. $771,000 at the March 31, 2016 exchange rate, as a result of the sale of the Company's principal oil and natural gas property, Dunvegan, in September 2015. Barnwell repaid the credit facility in full in September 2015 from the proceeds of the disposition. Borrowings under this facility were U.S. $0 at March 31, 2016 and September 30, 2015. Issued letters of credit were $35,000 at March 31, 2016. Upon the April 2016 review the credit facility was terminated. The termination was due to a tightening credit market for oil and natural gas companies due to current low oil and natural gas prices and reductions in Royal Bank of Canada's forecast of oil and natural gas prices which decreased their valuation of the Company's oil and natural gas assets pledged as security. In February 2015, Barnwell repaid $2,000,000, representing a portion of the then outstanding borrowings under the Canadian revolving credit facility. During the three and six months ended March 31, 2015, Barnwell realized a foreign currency transaction loss of $146,000 as a result of that repayment of U.S. dollar denominated debt using Canadian dollars. Real estate loan Barnwell, together with its real estate joint venture, Kaupulehu 2007, had a non-revolving real estate loan with a Hawaii bank. At March 31, 2016 and September 30, 2015, the balance of the real estate loan was $3,440,000. In April 2016, the home collateralizing the loan was sold. In accordance with the terms of the loan agreement a portion of the proceeds from the sale were used to repay the real estate loan in full. The loan agreement contained provisions requiring us to maintain compliance with certain covenants including a consolidated debt service coverage ratio and a consolidated total liabilities to tangible net worth ratio. However, in June 2015, the bank suspended these financial covenants in exchange for an interest reserve account which had a balance of $181,000 and $242,000 at March 31, 2016 and September 30, 2015, respectively, and is included with other reserve account amounts in "Restricted cash" on the accompanying Condensed Consolidated Balance Sheets. After the real estate loan was repaid in April 2016, the restricted reserve account balances were released. |
RETIREMENT PLANS |
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Compensation and Retirement Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
RETIREMENT PLANS | RETIREMENT PLANS Barnwell sponsors a noncontributory defined benefit pension plan (“Pension Plan”) covering substantially all of its U.S. employees. Additionally, Barnwell sponsors a Supplemental Employee Retirement Plan (“SERP”), a noncontributory supplemental retirement benefit plan which covers certain current and former employees of Barnwell for amounts exceeding the limits allowed under the Pension Plan, and a postretirement medical insurance benefits plan (“Postretirement Medical”) covering eligible U.S. employees. The following table details the components of net periodic benefit cost for Barnwell’s retirement plans:
Barnwell contributed $350,000 to the Pension Plan during the six months ended March 31, 2016 and estimates that it will make further contributions of approximately $750,000 during the remainder of fiscal 2016. The SERP and Postretirement Medical plans are unfunded, and Barnwell funds benefits when payments are made. Barnwell does not expect to make any benefit payments under the Postretirement Medical plan during fiscal 2016 and expected payments under the SERP for fiscal 2016 are not material. Fluctuations in actual equity market returns as well as changes in general interest rates will result in changes in the market value of plan assets and may result in increased or decreased retirement benefits costs and contributions in future periods. |
INCOME TAXES |
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Income Tax Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
INCOME TAXES | INCOME TAXES The components of loss before income taxes, after adjusting the loss for non-controlling interests, are as follows:
The components of the income tax provision (benefit) are as follows:
In the second quarter of fiscal 2015, Barnwell determined that it was not more likely than not that all of our oil and natural gas deferred tax assets under Canadian tax law were realizable due to significant declines in oil and natural gas prices, which in turn restricted funds available for the oil and natural gas capital expenditures needed to replace production and abate declining reserves. As a result, the Company recorded a valuation allowance of $785,000 during the quarter ended March 31, 2015 for the portion of Canadian tax law deferred tax assets related to asset retirement obligations that may not be realizable. Included in the deferred income tax benefit for the three and six months ended March 31, 2016, was a charge of $85,000 and $138,000, respectively, for the additional valuation allowance necessary for the portion of Canadian tax law deferred tax assets that may not be realizable. Consolidated taxes do not bear a customary relationship to pretax results due primarily to the fact that the Company is taxed separately in Canada based on Canadian source operations and in the U.S. based on consolidated operations, Canadian income taxes are not estimated to have a future benefit as foreign tax credits or deductions for U.S. tax purposes, and U.S. consolidated net operating losses and other deferred tax assets under U.S. tax law are not estimated to have any future U.S. tax benefit. In addition, consolidated taxes include the aforementioned valuation allowances for a portion of deferred tax assets under Canadian tax law. |
SEGMENT INFORMATION |
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Segment Reporting [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
SEGMENT INFORMATION | SEGMENT INFORMATION Barnwell operates the following segments: 1) acquiring, developing, producing and selling oil and natural gas in Canada (oil and natural gas); 2) investing in land interests in Hawaii (land investment); 3) drilling wells and installing and repairing water pumping systems in Hawaii (contract drilling); and 4) developing homes for sale in Hawaii (residential real estate). The following table presents certain financial information related to Barnwell’s reporting segments. All revenues reported are from external customers with no intersegment sales or transfers.
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ACCUMULATED OTHER COMPREHENSIVE (LOSS) INCOME |
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Equity [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
ACCUMULATED OTHER COMPREHENSIVE (LOSS) INCOME | ACCUMULATED OTHER COMPREHENSIVE (LOSS) INCOME The changes in each component of accumulated other comprehensive (loss) income were as follows:
The realized foreign currency transaction loss related to the repayment of debt during the six months ended March 31, 2015 was reclassified from accumulated other comprehensive loss to general and administrative expenses on the accompanying Condensed Consolidated Statements of Operations. The amortization of accumulated other comprehensive loss components for the retirement plans are included in the computation of net periodic benefit cost which is a component of "General and administrative" expenses on the accompanying Condensed Consolidated Statements of Operations (see Note 8 for additional details). |
FAIR VALUE MEASUREMENTS |
6 Months Ended |
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Mar. 31, 2016 | |
Fair Value Disclosures [Abstract] | |
FAIR VALUE MEASUREMENTS | FAIR VALUE MEASUREMENTS The carrying values of cash and cash equivalents, restricted cash, accounts and other receivables, accounts payable and accrued current liabilities approximate their fair values due to the short-term nature of the instruments. The carrying value of long-term debt approximates fair value as the terms approximate current market terms for similar debt instruments of comparable risk and maturities. |
COMMITMENTS AND CONTINGENCIES |
6 Months Ended |
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Mar. 31, 2016 | |
Commitments and Contingencies Disclosure [Abstract] | |
COMMITMENTS AND CONTINGENCIES | COMMITMENTS AND CONTINGENCIES Environmental Matters In January 2015, there was an oil and salt water release from one of our operated oil pipelines in Alberta, Canada. We have estimated that probable environmental remediation costs will be approximately $2,300,000. Barnwell’s working interest in the well is 58%, and we have recovered substantially all of the monies from the other working interest owners for their share of the costs. Additionally, we have filed a claim under our insurance policy, which has a deductible of approximately $80,000, and as of March 31, 2016, we have collected $1,103,000 in insurance proceeds. The estimated remaining unpaid liability for the release as of March 31, 2016 and September 30, 2015 was $77,000 and $75,000, respectively, and has not been discounted and was accrued in "Accrued operating and other expenses" on the Condensed Consolidated Balance Sheets. In February 2016, a gas leak was detected at one of our previously abandoned non-operated wells in Alberta, Canada. We have estimated that probable environmental remediation costs will be within the range of $400,000 to $800,000. Barnwell’s working interest in the well is 50%, and accordingly we have accrued approximately $200,000 at March 31, 2016, which has not been discounted and was accrued in "Accrued operating and other expenses" on the Condensed Consolidated Balance Sheets. Because of the inherent uncertainties associated with environmental assessment and remediation activities, future expenses to remediate the currently identified sites, and sites identified in the future, if any, could be incurred. Guarantee See Note 6 for a discussion of Barnwell’s guarantee of the Kukio Resort land development partnership’s performance bonds. |
INFORMATION RELATING TO THE CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS |
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Mar. 31, 2016 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Supplemental Cash Flow Elements [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
INFORMATION RELATING TO THE CONSOLIDATED STATEMENTS OF CASH FLOWS | INFORMATION RELATING TO THE CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
Capital expenditure accruals related to oil and natural gas exploration and development decreased $69,000 and increased $295,000 during the six months ended March 31, 2016 and 2015, respectively. Additionally, capital expenditure accruals related to oil and natural gas asset retirement obligations increased $123,000 and $938,000 during the six months ended March 31, 2016 and 2015, respectively. |
RELATED PARTY TRANSACTIONS |
6 Months Ended |
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Mar. 31, 2016 | |
Related Party Transactions [Abstract] | |
RELATED PARTY TRANSACTIONS | RELATED PARTY TRANSACTIONS Kaupulehu Developments is entitled to receive a percentage of the gross receipts from the sales of lots in Increment I from KD I and the sales of lots and/or residential units in Increment II from KD II; KD I and KD II are part of the Kukio Resort land development partnerships in which Barnwell holds an indirect 19.6% non-controlling ownership interest accounted for under the equity method of investment. The percentage payments are part of transactions which took place in 2004 and 2006 where Kaupulehu Developments sold its leasehold interests in Increment I and Increment II to KD I's and KD II's predecessors in interest, respectively, which was prior to Barnwell’s affiliation with KD I and KD II which commenced on November 27, 2013, the acquisition date of our ownership interest in the Kukio Resort land development partnerships. During the six months ended March 31, 2016, Barnwell received $480,000 in percentage of sales payments from KD I from the sale of two lots within Phase II of Increment I. During the six months ended March 31, 2015, Barnwell received $2,150,000 in percentage of sales payments from KD I from the sale of six contiguous lots within Phase I of Increment I to a single buyer and five lots within Phase II of Increment I. |
SUBSEQUENT EVENTS |
6 Months Ended |
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Mar. 31, 2016 | |
Subsequent Events [Abstract] | |
SUBSEQUENT EVENTS | SUBSEQUENT EVENTS In April 2016, Kaupulehu 2007 sold the luxury residence that was held for sale for $5,700,000 and repaid the real estate loan in full (see Notes 5 and 7). In April 2016, Barnwell received a cash distribution in the amount of $5,320,000 from the Kukio Resort land development partnerships (see Note 6). In April 2016, Kaupulehu Developments received a percentage of sales payment of $1,600,000 from the sale of one ocean front parcel within Increment II (see Note 6). Financial results from these transactions will be reflected in Barnwell’s quarter ending June 30, 2016. |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies) |
6 Months Ended |
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Mar. 31, 2016 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Principles of Consolidation | Principles of Consolidation The condensed consolidated financial statements include the accounts of Barnwell Industries, Inc. and all majority-owned subsidiaries (collectively referred to herein as “Barnwell,” “we,” “our,” “us,” or the “Company”), including a 77.6%-owned land investment general partnership (Kaupulehu Developments), a 75%-owned land investment partnership (KD Kona 2013 LLLP) and two 80%-owned joint ventures (Kaupulehu 2007, LLLP and Kaupulehu Investors, LLC). All significant intercompany accounts and transactions have been eliminated. Barnwell’s investments in both unconsolidated entities in which a significant, but less than controlling, interest is held and in variable interest entities (“VIE”) in which the Company is not deemed to be the primary beneficiary are accounted for by the equity method. Unless otherwise indicated, all references to “dollars” in this Form 10-Q are to U.S. dollars. |
Unaudited Interim Financial Information | Unaudited Interim Financial Information The accompanying unaudited condensed consolidated financial statements and notes have been prepared by Barnwell in accordance with the rules and regulations of the United States (“U.S.”) Securities and Exchange Commission. Accordingly, certain information and footnote disclosures normally included in the annual financial statements prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) have been condensed or omitted pursuant to those rules and regulations, although the Company believes that the disclosures made are adequate to make the information not misleading. These condensed consolidated financial statements and notes should be read in conjunction with the consolidated financial statements and notes thereto included in Barnwell’s September 30, 2015 Annual Report on Form 10-K. The Condensed Consolidated Balance Sheet as of September 30, 2015 has been derived from audited consolidated financial statements. In the opinion of management, all adjustments (which include only normal recurring adjustments) necessary to present fairly the financial position at March 31, 2016, results of operations, comprehensive loss, and equity for the three and six months ended March 31, 2016 and 2015, and cash flows for the six months ended March 31, 2016 and 2015, have been made. The results of operations for the period ended March 31, 2016 are not necessarily indicative of the operating results for the full year. |
Use of Estimates | Use of Estimates The preparation of the financial statements in conformity with U.S. GAAP requires management of Barnwell 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. |
Recent Accounting Pronouncements | Recent Accounting Pronouncements In April 2014, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2014-08, “Reporting Discontinued Operations and Disclosures of Disposals of Components of an Entity.” This ASU relates to discontinued operations reporting for disposals of components of an entity that represent strategic shifts that have, or will have, a major effect on an entity’s operations and financial results. The standard expands the disclosures for discontinued operations and requires new disclosures related to individually material disposals that do not meet the definition of a discontinued operation. The Company adopted the provisions of this ASU effective October 1, 2015. The adoption of this update did not have a material impact on Barnwell’s consolidated financial statements. |
LOSS PER COMMON SHARE (Tables) |
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Earnings Per Share [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Reconciliations between net loss attributable to the entity's stockholders and common shares outstanding of the basic and diluted net loss per share computations | Reconciliations between net loss attributable to Barnwell stockholders and common shares outstanding of the basic and diluted net loss per share computations are detailed in the following tables:
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INVESTMENTS (Tables) |
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Investments, All Other Investments [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of investments | A summary of Barnwell’s investments is as follows:
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Summarized financial information for the land development partnerships | Summarized financial information for the Kukio Resort land development partnerships is as follows:
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Kaupulehu Developments | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
INVESTMENTS | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of Increment I percentage of sales payment revenues received | The following table summarizes the Increment I percentage of sales payment revenues received from KD I.
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RETIREMENT PLANS (Tables) |
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Compensation and Retirement Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of components of net periodic benefit cost | The following table details the components of net periodic benefit cost for Barnwell’s retirement plans:
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INCOME TAXES (Tables) |
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Income Tax Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Components of income (loss) before income taxes, after adjusting the income (loss) for non-controlling interests | The components of loss before income taxes, after adjusting the loss for non-controlling interests, are as follows:
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Schedule of components of the income tax provision (benefit) | The components of the income tax provision (benefit) are as follows:
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SEGMENT INFORMATION (Tables) |
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Segment Reporting [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of financial information related to reporting segments | The following table presents certain financial information related to Barnwell’s reporting segments. All revenues reported are from external customers with no intersegment sales or transfers.
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ACCUMULATED OTHER COMPREHENSIVE (LOSS) INCOME (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2016 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Equity [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of changes in each component of accumulated other comprehensive (loss) income | The changes in each component of accumulated other comprehensive (loss) income were as follows:
|
INFORMATION RELATING TO THE CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2016 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Supplemental Cash Flow Elements [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of supplemental cash flow information |
|
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details) |
3 Months Ended |
---|---|
Mar. 31, 2016
venture
| |
Principles of Consolidation | |
Number of 80%-owned joint ventures | 2 |
Kaupulehu Developments | |
Principles of Consolidation | |
Ownership interest in subsidiaries | 77.60% |
KD Kona 2013 LLLP | |
Principles of Consolidation | |
Ownership interest in subsidiaries | 75.00% |
Kaupulehu 2007, LLLP | |
Principles of Consolidation | |
Ownership interest in subsidiaries | 80.00% |
Kaupulehu Investors, LLC | |
Principles of Consolidation | |
Ownership interest in subsidiaries | 80.00% |
LIQUIDITY - OIL & NATURAL GAS PROPERTIES (Details) - USD ($) |
3 Months Ended | 6 Months Ended | |||
---|---|---|---|---|---|
Mar. 31, 2016 |
Mar. 31, 2016 |
Mar. 31, 2015 |
Sep. 30, 2015 |
Sep. 16, 2015 |
|
Oil and Natural Gas Properties [Line Items] | |||||
Release of restricted escrow cash for tax installment | $ 2,000,000 | $ 0 | |||
Release of funds held in escrow | (4,957,000) | $ 0 | |||
Income taxes receivable | $ 2,537,000 | $ 2,537,000 | $ 82,000 | ||
Minimum required LMR ratio | 100.00% | 100.00% | |||
AER Cash Deposit | $ 142,000 | $ 142,000 | |||
Expected AER cash deposit required | 3,000,000 | 3,000,000 | |||
Oil and Gas Properties | Dunvegan area of Alberta | |||||
Oil and Natural Gas Properties [Line Items] | |||||
Sales price per the Purchase and Sale Agreement | $ 14,162,000 | ||||
Release of restricted escrow cash for tax installment | 2,000,000 | ||||
Release of funds held in escrow | 4,957,000 | ||||
Income taxes receivable | $ 2,537,000 | $ 2,537,000 |
LIQUIDITY - CREDIT FACILITY(Details) - Mar. 31, 2016 |
CAD |
USD ($) |
---|---|---|
Canadian revolving credit facility | ||
Line of Credit Facility [Line Items] | ||
Maximum borrowing capacity | CAD 1,000,000 | $ 771,000 |
LIQUIDITY - REAL ESTATE AND LAND INVESTMENT (Details) $ in Thousands |
1 Months Ended | 3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|---|
Apr. 30, 2016
USD ($)
lot
|
Mar. 31, 2016
USD ($)
|
Mar. 31, 2015
USD ($)
|
Mar. 31, 2016
USD ($)
|
Mar. 31, 2015
USD ($)
|
|
Kaupulehu Developments | |||||
Investment Holdings [Line Items] | |||||
Percentage of sales payment received | $ 330 | $ 950 | $ 480 | $ 2,150 | |
Subsequent Event | Investment in land development partnerships | |||||
Investment Holdings [Line Items] | |||||
Number of single family lots sold | lot | 1 | ||||
Gross proceeds from sale of lot by equity investee | $ 20,000 | ||||
Proceeds from equity method investment, dividends or distributions | 5,320 | ||||
Subsequent Event | Kaupulehu 2007, LLLP | |||||
Investment Holdings [Line Items] | |||||
Proceeds from sale of real estate | 5,700 | ||||
Net Cash Received On Sale Of Real Estate | $ 1,500 | ||||
Subsequent Event | Kaupulehu Developments | Increment II | |||||
Investment Holdings [Line Items] | |||||
Number of single family lots sold | lot | 1 | ||||
Percentage of sales payment received | $ 1,600 |
LOSS PER COMMON SHARE (Details) - USD ($) $ / shares in Units, $ in Thousands |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Mar. 31, 2016 |
Mar. 31, 2015 |
Mar. 31, 2016 |
Mar. 31, 2015 |
|
Net Loss (Numerator) | ||||
Basic | $ (1,608) | $ (2,017) | $ (3,017) | $ (2,484) |
Effect of dilutive securities - common stock options | 0 | 0 | 0 | 0 |
Diluted | $ (1,608) | $ (2,017) | $ (3,017) | $ (2,484) |
Shares (Denominator) | ||||
Basic (in shares) | 8,277,160 | 8,277,160 | 8,277,160 | 8,277,160 |
Effect of dilutive securities - common stock options (in shares) | 0 | 0 | 0 | 0 |
Diluted (in shares) | 8,277,160 | 8,277,160 | 8,277,160 | 8,277,160 |
Per-Share Amount | ||||
Basic net loss per share (in dollars per share) | $ (0.19) | $ (0.24) | $ (0.36) | $ (0.30) |
Diluted net loss per share (in dollars per share) | $ (0.19) | $ (0.24) | $ (0.36) | $ (0.30) |
Options | ||||
Antidilutive shares of common stock excluded from the computation of diluted shares | ||||
Antidilutive shares excluded from computation of loss per share (in shares) | 621,250 | 621,250 |
INVESTMENT HELD FOR SALE (Details) - Residential Parcel $ in Thousands |
Mar. 31, 2016
parcel
|
Oct. 31, 2014
USD ($)
|
---|---|---|
Investment Holdings [Line Items] | ||
Number of Real Estate Properties | parcel | 1 | |
Proceeds from sale of residential parcel | $ | $ 1,250 |
REAL ESTATE HELD FOR SALE (Details) $ in Thousands |
1 Months Ended | ||
---|---|---|---|
Apr. 30, 2016
USD ($)
|
Mar. 31, 2016
USD ($)
home
|
Sep. 30, 2015
USD ($)
|
|
Real estate held for sale | |||
Real estate held for sale | $ 5,132 | $ 5,132 | |
Kaupulehu 2007, LLLP | |||
Real estate held for sale | |||
Number of luxury residences owned | home | 1 | ||
Real estate held for sale | $ 5,132 | ||
Kaupulehu 2007, LLLP | Subsequent Event | |||
Real estate held for sale | |||
Proceeds from sale of real estate | $ 5,700 |
INVESTMENTS - SUMMARY OF INVESTMENTS (Details) - USD ($) $ in Thousands |
Mar. 31, 2016 |
Sep. 30, 2015 |
---|---|---|
Investment Holdings [Line Items] | ||
Investments | $ 6,704 | $ 6,288 |
Investment in land development partnerships | ||
Investment Holdings [Line Items] | ||
Investments | 6,654 | 6,238 |
Investment in leasehold land interest - Lot 4C | ||
Investment Holdings [Line Items] | ||
Investments | $ 50 | $ 50 |
INVESTMENTS - PERCENTAGE OF SALES PAYMENTS (Details) $ in Thousands |
1 Months Ended | 3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|---|
Apr. 30, 2016
USD ($)
lot
|
Mar. 31, 2016
USD ($)
a
increment
|
Mar. 31, 2015
USD ($)
|
Mar. 31, 2016
USD ($)
a
|
Mar. 31, 2015
USD ($)
|
|
Investment Holdings [Line Items] | |||||
Sale of interest in leasehold land, net | $ 284 | $ 817 | $ 413 | $ 1,849 | |
Kaupulehu Developments | |||||
Investment Holdings [Line Items] | |||||
Area of land (in acres) | a | 870 | 870 | |||
Number of development increments | increment | 2 | ||||
Fees Related to Sale of Interest in Leasehold Land | $ (46) | (133) | $ (67) | (301) | |
Sale of interest in leasehold land, net | 284 | 817 | 413 | 1,849 | |
Percentage of sales payment received | $ 330 | $ 950 | $ 480 | $ 2,150 | |
Land Interest | |||||
Investment Holdings [Line Items] | |||||
Area of land (in acres) | a | 1,000 | 1,000 | |||
Increment II | Subsequent Event | Kaupulehu Developments | |||||
Investment Holdings [Line Items] | |||||
Percentage of sales payment received | $ 1,600 | ||||
Percentage of gross proceeds | 8.00% | ||||
Number of single family lots sold | lot | 1 |
LONG-TERM DEBT (Details) |
1 Months Ended | 6 Months Ended | ||||
---|---|---|---|---|---|---|
Feb. 28, 2015
USD ($)
|
Mar. 31, 2016
USD ($)
|
Mar. 31, 2015
USD ($)
|
Mar. 31, 2016
CAD
|
Mar. 31, 2016
USD ($)
|
Sep. 30, 2015
USD ($)
|
|
Long-term debt | ||||||
Foreign currency transaction loss | $ 0 | $ (146,000) | ||||
Canadian revolving credit facility | ||||||
Long-term debt | ||||||
Long-term debt | $ 0 | $ 0 | ||||
Letters of Credit Outstanding, Amount | 35,000 | |||||
Maximum borrowing capacity | CAD 1,000,000 | 771,000 | ||||
Repayments of lines of credit | $ 2,000,000 | |||||
Foreign currency transaction loss | $ 146,000 | |||||
Real estate loan | ||||||
Long-term debt | ||||||
Long-term debt | 3,440,000 | 3,440,000 | ||||
Restricted Cash and Investments | $ 181,000 | $ 242,000 |
INCOME TAXES (Details) - USD ($) $ in Thousands |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Mar. 31, 2016 |
Mar. 31, 2015 |
Mar. 31, 2016 |
Mar. 31, 2015 |
|
Components of income (loss) before income taxes, after adjusting the income (loss) for non-controlling interests | ||||
United States | $ (682) | $ (179) | $ (1,408) | $ (415) |
Canada | (1,190) | (1,449) | (2,066) | (1,769) |
Total | (1,872) | (1,628) | (3,474) | (2,184) |
Components of the income tax provision (benefit) | ||||
Current | (159) | (350) | (368) | (347) |
Deferred | (105) | 739 | (89) | 647 |
Total | (264) | 389 | (457) | $ 300 |
Foreign Tax Authority | ||||
Components of the income tax provision (benefit) | ||||
Increase in valuation allowance, amount | $ 85 | $ 785 | $ 138 |
COMMITMENTS AND CONTINGENCIES (Detail) - USD ($) $ in Thousands |
6 Months Ended | |
---|---|---|
Mar. 31, 2016 |
Sep. 30, 2015 |
|
Oil pipeline release | ||
Oil and Natural Gas Properties [Line Items] | ||
Estimate of probable loss | $ 2,300 | |
Percentage of working interest | 58.00% | |
Insurance deductible | $ 80 | |
Insurance Recoveries | 1,103 | |
Loss contingency accrual | $ 77 | $ 75 |
Gas leak | ||
Oil and Natural Gas Properties [Line Items] | ||
Percentage of working interest | 50.00% | |
Loss contingency accrual | $ 200 | |
Range of possible loss, minimum | 400 | |
Range of possible loss, maximum | $ 800 |
INFORMATION RELATING TO THE CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Details) - USD ($) $ in Thousands |
6 Months Ended | |
---|---|---|
Mar. 31, 2016 |
Mar. 31, 2015 |
|
Supplemental disclosure of cash flow information: | ||
Interest | $ 64 | $ 164 |
Supplemental disclosure of non-cash investing and financing activities: | ||
Note receivable for sale of investment | 0 | 907 |
Release of restricted escrow cash for tax installment | 2,000 | 0 |
Oil and natural gas | ||
Supplemental disclosures of cash flow information: | ||
Increase (Decrease) in capital expenditure accruals related to oil and natural gas exploration and development | (69) | 295 |
Increase (Decrease) in capital expenditure accruals related to oil and natural gas asset retirement obligations | $ 123 | $ 938 |
RELATED PARTY TRANSACTIONS (Details) - Kaupulehu Developments $ in Thousands |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Mar. 31, 2016
USD ($)
|
Mar. 31, 2015
USD ($)
|
Mar. 31, 2016
USD ($)
lot
|
Mar. 31, 2015
USD ($)
lot
|
|
Related party transactions | ||||
Percentage of sales payment received | $ | $ 330 | $ 950 | $ 480 | $ 2,150 |
KD Kaupulehu, LLLP | Investment in land development partnerships | ||||
Related party transactions | ||||
Ownership interest acquired | 19.60% | 19.60% | ||
Percentage of sales payment received | $ | $ 480 | $ 2,150 | ||
KD Kaupulehu, LLLP | Investment in land development partnerships | increment I | Phase II | ||||
Related party transactions | ||||
Number of single family lots sold | lot | 2 | 5 | ||
KD Kaupulehu, LLLP | Investment in land development partnerships | increment I | Phase I | ||||
Related party transactions | ||||
Number of single family lots sold | lot | 6 |
SUBSEQUENT EVENTS (Details) $ in Thousands |
1 Months Ended | 3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|---|
Apr. 30, 2016
USD ($)
lot
|
Mar. 31, 2016
USD ($)
|
Mar. 31, 2015
USD ($)
|
Mar. 31, 2016
USD ($)
|
Mar. 31, 2015
USD ($)
|
|
Kaupulehu Developments | |||||
Subsequent events | |||||
Percentage of sales payment received | $ 330 | $ 950 | $ 480 | $ 2,150 | |
Subsequent Event | Investment in land development partnerships | |||||
Subsequent events | |||||
Proceeds from equity method investment, dividends or distributions | $ 5,320 | ||||
Number of single family lots sold | lot | 1 | ||||
Subsequent Event | Kaupulehu 2007, LLLP | |||||
Subsequent events | |||||
Proceeds from sale of real estate | $ 5,700 | ||||
Subsequent Event | Increment II | Kaupulehu Developments | |||||
Subsequent events | |||||
Percentage of sales payment received | $ 1,600 | ||||
Number of single family lots sold | lot | 1 |
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