SUPPLEMENTARY OIL AND NATURAL GAS INFORMATION (UNAUDITED)

The following tables summarize information relative to Barnwell’s oil and natural gas operations, which are conducted in Canada. Proved reserves are the estimated quantities of oil, natural gas and natural gas liquids which geological and engineering data demonstrate with reasonable certainty to be recoverable in future years from known reservoirs under existing economic and operating conditions. Proved producing oil and natural gas reserves are reserves that can be expected to be recovered through existing wells with existing equipment and operating methods. The estimated net interests in total proved and proved producing reserves are based upon subjective engineering judgments and may be affected by the limitations inherent in such estimations. The process of estimating reserves is subject to continual revision as additional information becomes available as a result of drilling, testing, reservoir studies and production history. There can be no assurance that such estimates will not be materially revised in subsequent periods.

(A) Oil and Natural Gas Reserves

The following table summarizes changes in the estimates of Barnwell’s net interests in total proved reserves of oil and natural gas liquids and natural gas, which are all in Canada. All of the information regarding reserves in this Form 10-K is derived from the report of our independent petroleum reserve engineers, InSite, and is included as an Exhibit to this Form 10-K. The Company emphasizes that reserve estimates are inherently imprecise and that estimates of new discoveries and undeveloped locations are more imprecise than estimates of established proved producing oil and natural gas properties. Accordingly, these estimates are expected to change as future information becomes available.

Proved oil and natural gas reserves are the estimated quantities of oil and natural gas that geological and engineering data demonstrate, with reasonable certainty, to be recoverable in future years from known reservoirs under economic and operating conditions (i.e., prices and costs) existing at the time the estimate is made. Proved developed oil and natural gas reserves are proved reserves that can be expected to be recovered through existing wells and equipment in place and under operating methods being utilized at the time the estimates were made.



	OIL & NGL (Bbls)		GAS (Mcf)		Total (Boe)
Proved reserves:
Balance at September 30, 2017	413,000		3,005,000		931,000
Revisions of previous estimates	(2,000	)	(1,571,000	)	(273,000	)
Extensions, discoveries and other additions	46,000		144,000		71,000
Acquisitions of reserves	1,296,000		4,060,000		1,997,000
Less sales of reserves	(96,000	)	(255,000	)	(141,000	)
Less production	(67,000	)	(328,000	)	(123,000	)
Balance at September 30, 2018	1,590,000		5,055,000		2,462,000
Revisions of previous estimates	(74,000	)	(21,000	)	(78,000	)
Extensions, discoveries and other additions	14,000		33,000		20,000
Acquisitions of reserves	30,000		81,000		44,000
Less production	(141,000	)	(628,000	)	(250,000	)
Proved Reserves, September 30, 2019	1,419,000		4,520,000		2,198,000
Proved Developed Reserves, September 30, 2019	529,000		1,900,000		856,000
Proved Undeveloped Reserves, September 30, 2019	890,000		2,620,000		1,342,000

(B) Capitalized Costs Relating to Oil and Natural Gas Producing Activities

All capitalized costs relating to oil and natural gas producing activities, which were being depleted in all years, are summarized as follows:



	September 30,
	2019		2018
Proved properties	$	62,075,000	$	63,766,000
Unproved properties	130,000		180,000
Total capitalized costs	62,205,000		63,946,000
Accumulated depletion and depreciation	55,972,000		48,769,000
Net capitalized costs	$	6,233,000	$	15,177,000



	Year ended September 30,
	2019			2018
Acquisition of properties:
Unproved	$	—		$	6,000
Proved	668,000			13,422,000
Development costs	(622,000		)	—
Total	$	46,000		$	13,428,000

Costs incurred in the table above include additions and revisions to Barnwell’s asset retirement obligation of $(755,000) and $2,538,000 for the years ended September 30, 2019 and 2018, respectively.

(D) Results of Operations for Oil and Natural Gas Producing Activities



	Year ended September 30,
	2019			2018
Net revenues	$	6,406,000		$	3,706,000
Production costs	(5,213,000		)	(2,633,000		)
Depletion	(2,680,000		)	(826,000		)
Reduction of carrying value of oil and natural gas properties	(5,710,000		)	—
Pre-tax results of operations (1)	(7,197,000		)	247,000
Estimated income tax (expense) benefit (2)	(160,000		)	83,000
Results of operations (1)	$	(7,357,000	)	$	330,000

_________________

(1) Before gain on sale of oil and natural gas properties, general and administrative expenses, interest expense, and foreign exchange gains and losses.

(2) Estimated income tax (expense) benefit includes changes to the deferred income tax valuation allowance necessary for the portion of Canadian tax law deferred tax assets that may not be realizable.

(E) Standardized Measure, Including Year-to-Year Changes Therein, of Estimated Discounted Future Net Cash Flows

The following tables utilize reserve and production data estimated by independent petroleum reserve engineers. The information may be useful for certain comparison purposes but should not be solely relied upon in evaluating Barnwell or its performance. Moreover, the projections should not be construed as realistic estimates of future cash flows, nor should the standardized measure be viewed as representing current value.

The estimated future cash flows at September 30, 2019 and 2018 were based on average sales prices in effect on the first day of the month for the preceding twelve month period in accordance with SEC Release No. 33-8995. The future production and development costs represent the estimated future expenditures that we will incur to develop and produce the proved reserves, assuming continuation of existing economic conditions. The future income tax expenses were computed by applying statutory income tax rates in existence at September 30, 2019 and 2018 to the future pre-tax net cash flows relating to proved reserves, net of the tax basis of the properties involved.

Material revisions to reserve estimates may occur in the future, development and production of the oil and natural gas reserves may not occur in the periods assumed and actual prices realized and actual costs incurred are expected to vary significantly from those used. Management does not rely upon this information in making investment and operating decisions; rather, those decisions are based upon a wide range of factors, including estimates of probable reserves as well as proved reserves and price and cost assumptions different than those reflected herein.

In December 2018, the Society of Petroleum Evaluation Engineers and associated industry professionals updated the Canadian Oil and Gas Evaluation (“COGE”) Handbook. The updates clarify and streamline existing guidelines and offer additional guidance regarding Canadian reserves evaluations. Barnwell has included all abandonment, decommissioning and reclamation costs and inactive well costs in accordance with best practice recommendations into the Company’s September 30, 2019 year-end reserve report.

Standardized Measure of Discounted Future Net Cash Flows



	September 30,
	2019			2018
Future cash inflows	$	65,720,000		$	83,947,000
Future production costs	(54,923,000		)	(41,130,000		)
Future development costs	(13,295,000		)	(13,753,000		)
Future income tax expenses	(450,000		)	(6,236,000		)
Future net cash flows	(2,948,000		)	22,828,000
10% annual discount for timing of cash flows	5,258,000			(8,992,000		)
Standardized measure of discounted future net cash flows	$	2,310,000		$	13,836,000

Changes in the Standardized Measure of Discounted Future Net Cash Flows



	Year ended September 30,
	2019			2018
Beginning of year	$	13,836,000		$	4,317,000
Sales of oil and natural gas produced, net of production costs	(1,193,000		)	(1,073,000		)
Net changes in prices and production costs, net of royalties and wellhead taxes	(15,358,000		)	(726,000		)
Extensions and discoveries	891,000			2,224,000
Net change due to purchases and sales of minerals in place	334,000			10,373,000
Revisions of previous quantity estimates	(71,000		)	(491,000		)
Net change in income taxes	3,792,000			(3,388,000		)
Accretion of discount	1,350,000			418,000
Other - changes in the timing of future production and other	(932,000		)	2,315,000
Other - net change in Canadian dollar translation rate	(339,000		)	(133,000		)
Net change	(11,526,000		)	9,519,000
End of year	$	2,310,000		$	13,836,000