COMMITMENTS AND CONTINGENCIES

9 Months Ended

Jun. 30, 2016

Commitments and Contingencies Disclosure [Abstract]

COMMITMENTS AND CONTINGENCIES

COMMITMENTS AND CONTINGENCIES

Environmental Matters

In January 2015, there was an oil and saltwater 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 June 30, 2016, we have collected $1,103,000 in insurance proceeds. The estimated remaining unpaid liability for the release as of June 30, 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 migration 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 accrued approximately $200,000 at June 30, 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.

Other Matters

In June 2016, Barnwell received an assessment for underpaid royalties for one of our non-operated oil and natural gas properties for the period from January 2008 to present. Upon further investigation we noted that the royalty owner had been assessing us for royalties based on its incorrectly calculated royalty interest percentage during the subject period. The royalty owner has assessed $233,000 for its under-billed royalties and the full amount is accrued in "Accounts payable" on the Condensed Consolidated Balance Sheets at June 30, 2016, with a corresponding charge to "Oil and natural gas" revenues on the Condensed Consolidated Statements of Operations for the three and nine months ended June 30, 2016.

Guarantee

See Note 6 for a discussion of Barnwell’s guarantee of the Kukio Resort land development partnership’s performance bonds.