10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

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

For the quarterly period ended March 31, 2013

or

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

Commission File Number 1-5103

BARNWELL INDUSTRIES, INC.

(Exact name of registrant as specified in its charter)

DELAWARE	72-0496921
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)

1100 Alakea Street, Suite 2900, Honolulu, Hawaii	96813
(Address of principal executive offices)	(Zip code)

(808) 531-8400

(Registrant’s telephone number, including area code)

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

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).                                                                                           S Yes     o No

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

Large accelerated filer	o	Accelerated filer o
Non-accelerated filer	o(Do not check if a smaller reporting company)	Smaller reporting company S

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

As of May 10, 2013 there were 8,277,160 shares of common stock, par value $0.50, outstanding.

BARNWELL INDUSTRIES, INC.

AND SUBSIDIARIES

INDEX

PART I.	FINANCIAL INFORMATION:
Item 1.	Financial Statements (Unaudited)
	Condensed Consolidated Balance Sheets - March 31, 2013 and September 30, 2012	3
	Condensed Consolidated Statements of Operations - three and six months ended March 31, 2013 and 2012	4
	Condensed Consolidated Statements of Comprehensive Loss - three and six months ended March 31, 2013 and 2012	5
	Condensed Consolidated Statements of Cash Flows - six months ended March 31, 2013 and 2012	6
	Condensed Consolidated Statements of Equity - three months ended March 31, 2013 and 2012	7
	Condensed Consolidated Statements of Equity - six months ended March 31, 2013 and 2012	8
	Notes to Condensed Consolidated Financial Statements	9
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	19
Item 4.	Controls and Procedures	30
PART II.	OTHER INFORMATION:
Item 5.	Other Information	31
Item 6.	Exhibits	32
	Signature	33
	Index to Exhibits	34

PART I - FINANCIAL INFORMATION

ITEM 1.FINANCIAL STATEMENTS

BARNWELL INDUSTRIES, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited)

	March 31,				September 30,
	2013				2012
ASSETS
Current assets:
Cash and cash equivalents		$	8,316,000			$	8,845,000
Accounts receivable, net of allowance for doubtful accounts of:
$44,000 at March 31, 2013; $45,000 at September 30, 2012		4,363,000				3,600,000
Prepaid expenses		496,000				361,000
Real estate held for sale		5,448,000				5,309,000
Other current assets		649,000				770,000
Total current assets		19,272,000				18,885,000
Investments		2,381,000				2,381,000
Property and equipment		252,009,000				256,153,000
Accumulated depletion, depreciation, and amortization		(210,580,000		)		(207,529,000		)
Property and equipment, net		41,429,000				48,624,000
Total assets		$	63,082,000			$	69,890,000
LIABILITIES AND EQUITY
Current liabilities:
Accounts payable		$	2,965,000			$	2,680,000
Accrued capital expenditures		1,757,000				341,000
Accrued incentive and other compensation		1,469,000				1,593,000
Payable to joint interest owners		682,000				854,000
Income taxes payable		78,000				-
Current portion of long-term debt		4,903,000				5,764,000
Other current liabilities		3,381,000				3,083,000
Total current liabilities		15,235,000				14,315,000
Long-term debt		12,000,000				11,400,000
Liability for retirement benefits		5,039,000				5,114,000
Asset retirement obligation		5,554,000				5,629,000
Deferred income taxes		1,563,000				3,307,000
Total liabilities		39,391,000				39,765,000
Commitments and contingencies (Note 11)
Equity:
Common stock, par value $0.50 per share; authorized, 20,000,000 shares:
8,445,060 issued at March 31, 2013 and September 30, 2012		4,223,000				4,223,000
Additional paid-in capital		1,289,000				1,289,000
Retained earnings		18,405,000				24,095,000
Accumulated other comprehensive income, net		1,482,000				2,322,000
Treasury stock, at cost:
167,900 shares at March 31, 2013 and September 30, 2012		(2,286,000		)		(2,286,000		)
Total stockholders’ equity		23,113,000				29,643,000
Non-controlling interests		578,000				482,000
Total equity		23,691,000				30,125,000
Total liabilities and equity		$	63,082,000			$	69,890,000

See Notes to Condensed Consolidated Financial Statements

3

BARNWELL INDUSTRIES, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)

	Three months ended								Six months ended
	March 31,								March 31,
	2013				2012				2013				2012
Revenues:
Oil and natural gas		$	5,605,000			$	6,408,000			$	11,245,000			$	14,197,000
Contract drilling		703,000				281,000				1,420,000				706,000
Sale of interest in leasehold land, net		282,000				353,000				282,000				353,000
Gas processing and other		179,000				124,000				373,000				412,000
		6,769,000				7,166,000				13,320,000				15,668,000
Costs and expenses:
Oil and natural gas operating		3,049,000				2,792,000				5,042,000				5,533,000
Contract drilling operating		653,000				460,000				1,261,000				1,097,000
General and administrative		2,107,000				2,367,000				4,249,000				4,213,000
Depletion, depreciation, and amortization		2,332,000				2,806,000				5,011,000				5,715,000
Reduction of carrying value of assets		2,179,000				1,854,000				4,506,000				1,854,000
Interest expense		144,000				219,000				296,000				438,000
		10,464,000				10,498,000				20,365,000				18,850,000
Loss before income taxes		(3,695,000		)		(3,332,000		)		(7,045,000		)		(3,182,000		)
Income tax (benefit) provision		(772,000		)		(3,000		)		(1,336,000		)		487,000
Net loss		(2,923,000		)		(3,329,000		)		(5,709,000		)		(3,669,000		)
Less: Net earnings (loss) attributable to non-controlling interests		21,000				(348,000		)		(19,000		)		(406,000		)
Net loss attributable to Barnwell Industries, Inc.		$	(2,944,000	)		$	(2,981,000	)		$	(5,690,000	)		$	(3,263,000	)
Basic net loss per common share attributable to Barnwell Industries, Inc. stockholders		$	(0.36	)		$	(0.36	)		$	(0.69	)		$	(0.39	)
Diluted net loss per common share attributable to Barnwell Industries, Inc. stockholders		$	(0.36	)		$	(0.36	)		$	(0.69	)		$	(0.39	)
Weighted-average number of common shares outstanding:
Basic		8,277,160				8,277,160				8,277,160				8,277,160
Diluted		8,277,160				8,277,160				8,277,160				8,277,160

See Notes to Condensed Consolidated Financial Statements

4

BARNWELL INDUSTRIES, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS

(Unaudited)

	Three months ended								Six months ended
	March 31,								March 31,
	2013				2012				2013				2012
Net loss		$	(2,923,000	)		$	(3,329,000	)		$	(5,709,000	)		$	(3,669,000	)
Other comprehensive (loss) income:
Foreign currency translation adjustments, net of taxes of $0		(600,000		)		662,000				(970,000		)		1,443,000
Retirement plans - amortization of accumulated other comprehensive loss into net periodic benefit cost, net of taxes of $0		65,000				65,000				130,000				130,000
Total other comprehensive (loss) income		(535,000		)		727,000				(840,000		)		1,573,000
Total comprehensive loss		(3,458,000		)		(2,602,000		)		(6,549,000		)		(2,096,000		)
Less: Comprehensive income (loss) attributable to non-controlling interests		21,000				(348,000		)		(19,000		)		(406,000		)
Comprehensive loss attributable to Barnwell Industries, Inc.		$	(3,479,000	)		$	(2,254,000	)		$	(6,530,000	)		$	(1,690,000	)

See Notes to Condensed Consolidated Financial Statements

5

BARNWELL INDUSTRIES, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

	Six months ended
	March 31,
	2013				2012
Cash flows from operating activities:
Net loss		$	(5,709,000	)		$	(3,669,000	)
Adjustments to reconcile net loss to net cash provided by operating activities:
Depletion, depreciation, and amortization		5,011,000				5,715,000
Reduction of carrying value of assets		4,506,000				1,854,000
Retirement benefits expense		308,000				364,000
Accretion of asset retirement obligation		190,000				174,000
Gain on sale of drilling equipment		-				(40,000		)
Deferred income tax benefit		(1,680,000		)		(176,000		)
Asset retirement obligation payments		(133,000		)		(281,000		)
Share-based compensation benefit		(41,000		)		(68,000		)
Retirement plan contributions		(253,000		)		(673,000		)
Sale of interest in leasehold land, net		(282,000		)		(353,000		)
Real estate held for sale		(139,000		)		-
(Decrease) increase from changes in current assets and liabilities		(270,000		)		180,000
Net cash provided by operating activities		1,508,000				3,027,000
Cash flows from investing activities:
Proceeds from sale of interest in leasehold land, net of fees paid		282,000				375,000
Proceeds from gas over bitumen royalty adjustments		24,000				40,000
Proceeds from sale of drilling equipment, net		-				59,000
Capital expenditures - oil and natural gas		(2,127,000		)		(4,304,000		)
Capital expenditures - all other		(2,000		)		(27,000		)
Net cash used in investing activities		(1,823,000		)		(3,857,000		)
Cash flows from financing activities:
Proceeds from long-term debt borrowings		503,000				-
Repayments of long-term debt		(757,000		)		(670,000		)
Contributions from non-controlling interests		115,000				240,000
Net cash used in financing activities		(139,000		)		(430,000		)
Effect of exchange rate changes on cash and cash equivalents		(75,000		)		25,000
Net decrease in cash and cash equivalents		(529,000		)		(1,235,000		)
Cash and cash equivalents at beginning of period		8,845,000				9,834,000
Cash and cash equivalents at end of period		$	8,316,000			$	8,599,000

See Notes to Condensed Consolidated Financial Statements

6

BARNWELL INDUSTRIES, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF EQUITY

Three months ended March 31, 2013 and 2012

(Unaudited)

													Accumulated
						Additional							Other
	Shares		Common			Paid-In			Retained				Comprehensive				Treasury				Non-controlling				Total
	Outstanding		Stock			Capital			Earnings				Income				Stock				Interests				Equity
Balance at December 31, 2011		8,277,160		$	4,223,000		$	1,289,000		$	33,949,000			$	1,136,000			$	(2,286,000	)		$	1,029,000			$	39,340,000
Contributions from non-controlling interests																						120,000				120,000
Net loss										(2,981,000		)										(348,000		)		(3,329,000		)
Foreign currency translation adjustments, net of taxes of $0														662,000												662,000
Retirement plans - amortization of accumulated other comprehensive loss into net periodic benefit cost, net of taxes of $0														65,000												65,000
Balance at March 31, 2012		8,277,160		$	4,223,000		$	1,289,000		$	30,968,000			$	1,863,000			$	(2,286,000	)		$	801,000			$	36,858,000
Balance at December 31, 2012		8,277,160		$	4,223,000		$	1,289,000		$	21,349,000			$	2,017,000			$	(2,286,000	)		$	497,000			$	27,089,000
Contributions from non-controlling interests																						60,000				60,000
Net (loss) earnings										(2,944,000		)										21,000				(2,923,000		)
Foreign currency translation adjustments, net of taxes of $0														(600,000		)										(600,000		)
Retirement plans - amortization of accumulated other comprehensive loss into net periodic benefit cost, net of taxes of $0														65,000												65,000
Balance at March 31, 2013		8,277,160		$	4,223,000		$	1,289,000		$	18,405,000			$	1,482,000			$	(2,286,000	)		$	578,000			$	23,691,000

See Notes to Condensed Consolidated Financial Statements

7

BARNWELL INDUSTRIES, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF EQUITY

Six months ended March 31, 2013 and 2012

(Unaudited)

													Accumulated
						Additional							Other
	Shares		Common			Paid-In			Retained				Comprehensive				Treasury				Non-controlling				Total
	Outstanding		Stock			Capital			Earnings				Income				Stock				Interests				Equity
Balance at September 30, 2011		8,277,160		$	4,223,000		$	1,289,000		$	34,231,000			$	290,000			$	(2,286,000	)		$	967,000			$	38,714,000
Contributions from non-controlling interests																						240,000				240,000
Net loss										(3,263,000		)										(406,000		)		(3,669,000		)
Foreign currency translation adjustments, net of taxes of $0														1,443,000												1,443,000
Retirement plans - amortization of accumulated other comprehensive loss into net periodic benefit cost, net of taxes of $0														130,000												130,000
Balance at March 31, 2012		8,277,160		$	4,223,000		$	1,289,000		$	30,968,000			$	1,863,000			$	(2,286,000	)		$	801,000			$	36,858,000
Balance at September 30, 2012		8,277,160		$	4,223,000		$	1,289,000		$	24,095,000			$	2,322,000			$	(2,286,000	)		$	482,000			$	30,125,000
Contributions from non-controlling interests																						115,000				115,000
Net loss										(5,690,000		)										(19,000		)		(5,709,000		)
Foreign currency translation adjustments, net of taxes of $0														(970,000		)										(970,000		)
Retirement plans - amortization of accumulated other comprehensive loss into net periodic benefit cost, net of taxes of $0														130,000												130,000
Balance at March 31, 2013		8,277,160		$	4,223,000		$	1,289,000		$	18,405,000			$	1,482,000			$	(2,286,000	)		$	578,000			$	23,691,000

See Notes to Condensed Consolidated Financial Statements

8

BARNWELL INDUSTRIES, INC.

AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

1.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) and two 80%-owned joint ventures (Kaupulehu 2007, LLLP and Kaupulehu Investors, LLC). All significant intercompany accounts and transactions have been eliminated.

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, 2012 Annual Report on Form 10-K. The Condensed Consolidated Balance Sheet as of September 30, 2012 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, 2013, results of operations, comprehensive loss, and equity for the three and six months ended March 31, 2013 and 2012, and cash flows for the six months ended March 31, 2013 and 2012, have been made. The results of operations for the period ended March 31, 2013 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

Barnwell’s significant accounting policies are 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.

9

2.LOSS PER COMMON SHARE

Basic earnings (loss) per share excludes dilution and is computed by dividing net earnings (loss) attributable to Barnwell stockholders by the weighted-average number of common shares outstanding for the period. Diluted earnings (loss) per share includes the potentially dilutive effect of outstanding common stock options, to the extent their inclusion would be dilutive. Potentially dilutive shares are excluded from the computation of diluted earnings (loss) per share if their effect is anti-dilutive.

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:

	Three months ended March 31, 2013
	Net Loss				Shares		Per-Share
	(Numerator)				(Denominator)		Amount
Basic net loss per share		$	(2,944,000	)		8,277,160		$	(0.36	)
Effect of dilutive securities - common stock options		-				-
Diluted net loss per share		$	(2,944,000	)		8,277,160		$	(0.36	)
	Six months ended March 31, 2013
	Net Loss				Shares		Per-Share
	(Numerator)				(Denominator)		Amount
Basic net loss per share		$	(5,690,000	)		8,277,160		$	(0.69	)
Effect of dilutive securities - common stock options		-				-
Diluted net loss per share		$	(5,690,000	)		8,277,160		$	(0.69	)
	Three months ended March 31, 2012
	Net Loss				Shares		Per-Share
	(Numerator)				(Denominator)		Amount
Basic net loss per share		$	(2,981,000	)		8,277,160		$	(0.36	)
Effect of dilutive securities - common stock options		-				-
Diluted net loss per share		$	(2,981,000	)		8,277,160		$	(0.36	)

10

	Six months ended March 31, 2012
	Net Loss				Shares		Per-Share
	(Numerator)				(Denominator)		Amount
Basic net loss per share		$	(3,263,000	)		8,277,160		$	(0.39	)
Effect of dilutive securities - common stock options		-				-
Diluted net loss per share		$	(3,263,000	)		8,277,160		$	(0.39	)

Potentially dilutive shares consist of the common shares issuable upon the exercise of outstanding stock options (both vested and non-vested) using the treasury stock method. Options to purchase 777,250 and 815,375 shares of common stock were excluded from the computation of diluted shares for the three and six months ended March 31, 2013 and 2012, respectively, as their inclusion would have been antidilutive due to the net loss attributable to Barnwell stockholders.

3.REAL ESTATE HELD FOR SALE

Kaupulehu 2007 constructs and sells single-family homes. Kaupulehu 2007 currently owns one luxury residence that is 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.

In April 2012, Kaupulehu 2007 entered into a contract to sell one of the luxury residences at a price below carrying value. Accordingly, during the three and six months ended March 31, 2012, Barnwell recorded a $1,854,000 reduction in the carrying value of real estate held for sale to reflect this decline in the estimated market value. No reduction was necessary during the three and six months ended March 31, 2013.

4.INVESTMENTS

A summary of Barnwell’s investments as of March 31, 2013 and September 30, 2012 is as follows:

Investment in two residential parcels	$	2,331,000
Investment in land interest – Lot 4C	50,000
Total investments	$	2,381,000

Investment in two residential parcels

Kaupulehu 2007 owns two residential parcels 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.

11

Lot 4C

Kaupulehu Developments holds an interest in Lot 4C, an area of approximately 1,000 acres of vacant leasehold land zoned conservation located adjacent to Lot 4A. WB KD Acquisition, LLC (“WB”) and/or WB KD Acquisition II, LLC (“WBKD”), entities not affiliated with Barnwell and its subsidiaries, have the exclusive right to negotiate with Kaupulehu Developments with respect to Lot 4C until June 2013 unless extended by Barnwell.

There is no assurance that the required land use reclassification and rezoning from regulatory agencies will be obtained, that the necessary development terms and agreements will be successfully negotiated for Lot 4C, or that WB and/or WBKD will enter into an agreement with Kaupulehu Developments regarding Lot 4C.

5.LONG-TERM DEBT

A summary of Barnwell’s long-term debt is as follows:

	March 31,				September 30,
	2013				2012
Canadian revolving credit facility		$	12,000,000			$	12,000,000
Real estate loan		4,903,000				5,164,000
		16,903,000				17,164,000
Less: current portion		(4,903,000		)		(5,764,000		)
Total long-term debt		$	12,000,000			$	11,400,000

Canadian revolving credit facility

In March 2013, Barnwell’s credit facility at Royal Bank of Canada was renewed through April 2014 for $20,000,000 Canadian dollars, unchanged from the prior year amount, or US$19,692,000 at the March 31, 2013 exchange rate. Unused credit available under this facility was US$7,692,000 and the interest rate on the facility was 2.70% at March 31, 2013.

The renewed facility is available in U.S. dollars at the London Interbank Offer Rate plus 2.50%, at the Royal Bank of Canada’s U.S. base rate plus 1.50%, or in Canadian dollars at the Royal Bank of Canada’s prime rate plus 1.50%. A standby fee of 0.625% per annum is charged on the unused facility balance. Under the financing agreement with Royal Bank of Canada, the facility is reviewed annually, with the next review planned for April 2014. Subject to that review, the facility may be renewed for one year with no required debt repayments or converted to a two-year term loan by the bank. If the facility is converted to a two-year term loan, Barnwell has agreed to the following repayment schedule of the then outstanding loan balance: first year of the term period – 20% (5% per quarter), and in the second year of the term period – 80% (5% per quarter for the first three quarters and 65% in the final quarter). Based on the terms of this agreement, if Royal Bank of Canada were to convert the facility to a two-year term loan upon its next review in April 2014, Barnwell would be obligated to make quarterly principal and interest repayments beginning in July 2014. As no debt repayments will be required on or before March 31, 2014, the entire outstanding loan balance at March 31, 2013 is classified as long-term debt.

12

Real estate loan

Barnwell, together with its real estate joint venture, Kaupulehu 2007, has a non-revolving real estate loan with a Hawaii bank. Principal and interest are paid monthly and are determined based on a loan amortization schedule. The monthly payment will change as a result of an annual change in the interest rate, the sale of a house or the sale of a residential parcel. The interest rate adjusts each April for the remaining term of the loan to the lender’s then prevailing interest rate for similarly priced commercial mortgage loans or a floating rate equal to the lender’s base rate. The interest rate at March 31, 2013 was 3.57%, and was adjusted to 3.53% effective April 1, 2013. Any unpaid principal balance and accrued interest will be due and payable on April 1, 2018.

The loan is collateralized by, among other things, a first mortgage on Kaupulehu 2007’s lots together with all improvements thereon. Kaupulehu 2007 will be required to make a principal payment upon the sale of a house or a residential parcel in the amount of the net sales proceeds of the house or residential parcel; the loan agreement defines net sales proceeds as the gross sales proceeds for the house or residential parcel, less reasonable commissions and normal closing costs.

The loan agreement contains 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. As of March 31, 2013, we were in compliance with the loan covenants.

The home collateralizing the loan is currently available for sale; therefore, the entire balance outstanding at March 31, 2013 under the term loan has been classified as a current liability.

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6.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 tables detail the components of net periodic benefit cost for Barnwell’s retirement plans:

	Pension Plan								SERP							Postretirement Medical
	Three months ended March 31,
	2013				2012				2013				2012			2013			2012
Service cost		$	68,000			$	76,000			$	13,000			$	12,000		$	3,000		$	3,000
Interest cost		74,000				81,000				15,000				15,000			13,000			12,000
Expected return on plan assets		(97,000		)		(82,000		)		-				-			-			-
Amortization of prior service cost (credit)		2,000				2,000				(2,000		)		-			34,000			34,000
Amortization of net actuarial loss (gain)		26,000				27,000				5,000				4,000			-			(2,000		)
Net periodic benefit cost		$	73,000			$	104,000			$	31,000			$	31,000		$	50,000		$	47,000
	Pension Plan								SERP							Postretirement Medical
	Six months ended March 31,
	2013				2012				2013				2012			2013			2012
Service cost		$	136,000			$	151,000			$	26,000			$	25,000		$	7,000		$	6,000
Interest cost		149,000				162,000				29,000				30,000			25,000			24,000
Expected return on plan assets		(194,000		)		(164,000		)		-				-			-			-
Amortization of prior service cost (credit)		3,000				3,000				(3,000		)		-			68,000			68,000
Amortization of net actuarial loss (gain)		52,000				56,000				10,000				8,000			-			(5,000		)
Net periodic benefit cost		$	146,000			$	208,000			$	62,000			$	63,000		$	100,000		$	93,000

Barnwell contributed $250,000 to the Pension Plan during the six months ended March 31, 2013 and does not expect to make any further contributions during the remainder of fiscal 2013. The SERP and Postretirement Medical plans are unfunded, and Barnwell will fund benefits when payments are made. Barnwell does not expect to make any benefit payments under the Postretirement Medical plan during fiscal 2013 and expected payments under the SERP for fiscal 2013 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.

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7.INCOME TAXES

The components of loss before income taxes, after adjusting the loss for non-controlling interests, are as follows:

	Three months ended								Six months ended
	March 31,								March 31,
	2013				2012				2013				2012
United States		$	(1,014,000	)		$	(2,972,000	)		$	(2,302,000	)		$	(4,302,000	)
Canada		(2,702,000		)		(12,000		)		(4,724,000		)		1,526,000
		$	(3,716,000	)		$	(2,984,000	)		$	(7,026,000	)		$	(2,776,000	)

The components of the income tax (benefit) provision are as follows:

	Three months ended								Six months ended
	March 31,								March 31,
	2013				2012				2013				2012
Current		$	(214,000	)		$	105,000			$	344,000			$	663,000
Deferred		(558,000		)		(108,000		)		(1,680,000		)		(176,000		)
		$	(772,000	)		$	(3,000	)		$	(1,336,000	)		$	487,000

Barnwell’s effective consolidated income tax rate for the three and six months ended March 31, 2013, after adjusting loss before income taxes for non-controlling interests, was 21% and 19%, respectively, as compared to 0% and (18%) for the three and six months ended March 31, 2012, respectively.

Consolidated taxes do not bear a customary relationship to pretax (losses) earnings due primarily to the fact that Canadian income taxes are not sheltered by current period U.S. source losses, Canadian income taxes are not estimated to have a current or future benefit as foreign tax credits or deductions for U.S. tax purposes, and U.S. consolidated net operating losses are not estimated to have any future U.S. tax benefit prior to expiration.

The Canada Revenue Agency is currently examining the Company’s Canadian federal income tax returns for fiscal 2010 and 2011.

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8.SEGMENT INFORMATION

Barnwell operates the following segments: 1) exploring for, 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.

	Three months ended								Six months ended
	March 31,								March 31,
	2013				2012				2013				2012
Revenues:
Oil and natural gas		$	5,605,000			$	6,408,000			$	11,245,000			$	14,197,000
Land investment		282,000				353,000				282,000				353,000
Contract drilling		703,000				281,000				1,420,000				706,000
Other		178,000				121,000				344,000				397,000
Total before interest income		6,768,000				7,163,000				13,291,000				15,653,000
Interest income		1,000				3,000				29,000				15,000
Total revenues		$	6,769,000			$	7,166,000			$	13,320,000			$	15,668,000
Depletion, depreciation, and amortization:
Oil and natural gas		$	2,195,000			$	2,649,000			$	4,730,000			$	5,402,000
Contract drilling		108,000				128,000				223,000				257,000
Other		29,000				29,000				58,000				56,000
Total depletion, depreciation, and amortization		$	2,332,000			$	2,806,000			$	5,011,000			$	5,715,000
Reduction of carrying value of assets:
Oil and natural gas		$	2,179,000			$	-			$	4,506,000			$	-
Residential real estate		-				1,854,000				-				1,854,000
Total reduction of carrying value of assets		$	2,179,000			$	1,854,000			$	4,506,000			$	1,854,000
Operating (loss) profit (before general and administrative expenses):
Oil and natural gas		$	(1,818,000	)		$	967,000			$	(3,033,000	)		$	3,262,000
Land investment		282,000				353,000				282,000				353,000
Contract drilling		(58,000		)		(307,000		)		(64,000		)		(648,000		)
Residential real estate		-				(1,854,000		)		-				(1,854,000		)
Other		149,000				92,000				286,000				341,000
Total operating (loss) profit		(1,445,000		)		(749,000		)		(2,529,000		)		1,454,000
General and administrative expenses		(2,107,000		)		(2,367,000		)		(4,249,000		)		(4,213,000		)
Interest expense		(144,000		)		(219,000		)		(296,000		)		(438,000		)
Interest income		1,000				3,000				29,000				15,000
Loss before income taxes		$	(3,695,000	)		$	(3,332,000	)		$	(7,045,000	)		$	(3,182,000	)

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9.ACCUMULATED OTHER COMPREHENSIVE INCOME

The components of accumulated other comprehensive income, net of taxes, are as follows:

	March 31,			September 30,
	2013			2012
Foreign currency translation	$	4,050,000		$	5,020,000
Retirement plans liability	(2,568,000		)	(2,698,000		)
Accumulated other comprehensive income	$	1,482,000		$	2,322,000

10.FAIR VALUE MEASUREMENTS

Assets and Liabilities Measured at Fair Value on a Nonrecurring Basis

Certain of our assets and liabilities are reported at fair value in the accompanying balance sheets on a nonrecurring basis; that is, the assets and liabilities are not measured at fair value on an ongoing basis but are subject to fair value adjustments in certain circumstances. The following table provides carrying value and fair value measurement information for nonrecurring fair value measurements recorded during the three and six months ended March 31, 2012:

		Fair Value Measurements Using:
	Carrying	Quoted	Significant		Total Reduction of
	Amount	Prices in	Other	Significant	Carrying Value
	as of	Active	Observable	Unobservable	for the three and
	March 31,	Markets	Inputs	Inputs	six months ended
	2012	(Level 1)	(Level 2)	(Level 3)	March 31, 2012
Real estate held for sale*	$ 10,786,000	$    -	$ 10,786,000	$     -	$ 1,854,000

_________________

*The fair value included in the table above represents only those assets whose carrying values were adjusted to fair value in each respective period.

The fair value of our real estate held for sale was based on a contract to sell one of the luxury residences at a price below carrying value entered into in April 2012. The fair values of both homes held for sale at March 31, 2012 were revised downward as a result of the information provided by those negotiations. Such fair value measurements have been classified as Level 2 valuations.

Fair Value of Financial Instruments

The carrying values of cash and cash equivalents, accounts receivable, accounts payable, accrued current liabilities and payables to joint interest owners 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.

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11.       COMMITMENTS AND CONTINGENCIES

Environmental Matters

At March 31, 2013, a liability was established for recently discovered soil contamination from infrastructure issues at the Dunvegan and Wood River properties. The estimated amount accrued for probable environmental remediation costs was $696,000, which has not been discounted, and is accrued in “Other current liabilities” 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. No accrual for environmental remediation costs was necessary at September 30, 2012.

12.INFORMATION RELATING TO THE CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

	Six months ended March 31,
	2013			2012
Supplemental disclosure of cash flow information:
Cash paid during the year for:
Interest		$	285,000		$	388,000
Income taxes		$	215,000		$	455,000

Capital expenditure accruals related to oil and natural gas exploration and development increased $1,450,000 and decreased $2,153,000 during the six months ended March 31, 2013 and 2012, respectively. Additionally, during the six months ended March 31, 2013 and 2012, capital expenditure accruals related to oil and natural gas asset retirement obligations increased $48,000 and $28,000, respectively.

13.       OIL AND NATURAL GAS PROPERTIES

Under the full cost method of accounting, the Company performs quarterly ceiling test calculations. Barnwell’s net capitalized costs exceeded the ceiling limitation at March 31, 2013. As such, Barnwell reduced the carrying value of its oil and natural gas properties by $2,179,000 during the three months ended March 31, 2013. The current quarter’s reduction of the carrying value of oil and natural gas properties combined with the first quarter’s reduction of $2,327,000 resulted in a reduction of $4,506,000 for the six months ended March 31, 2013. No such reduction was necessary during the three and six months ended March 31, 2012. The reduction is included in the Condensed Consolidated Statements of Operations under the caption “Reduction of carrying value of assets.”

14.       SUBSEQUENT EVENTS

There were no material subsequent events that would require recognition or disclosure in the accompanying condensed consolidated financial statements.

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ITEM 2.MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Cautionary Statement Relevant to Forward-Looking Information

For the Purpose Of “Safe Harbor” Provisions Of The

Private Securities Litigation Reform Act of 1995

This Form 10-Q, and the documents incorporated herein by reference, contain “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. A forward-looking statement is one which is based on current expectations of future events or conditions and does not relate to historical or current facts. These statements include various estimates, forecasts, projections of Barnwell’s future performance, statements of Barnwell’s plans and objectives, and other similar statements. Forward-looking statements include phrases such as “expects,” “anticipates,” “intends,” “plans,” “believes,” “predicts,” “estimates,” “assumes,” “projects,” “may,” “will,” “will be,” “should,” or similar expressions. Although Barnwell believes that its current expectations are based on reasonable assumptions, it cannot assure that the expectations contained in such forward-looking statements will be achieved. Forward-looking statements involve risks, uncertainties and assumptions which could cause actual results to differ materially from those contained in such statements. The risks, uncertainties and other factors that might cause actual results to differ materially from Barnwell’s expectations are set forth in the “Forward-Looking Statements” and “Risk Factors” sections of Barnwell’s Annual Report on Form 10-K for the year ended September 30, 2012. Investors should not place undue reliance on these forward-looking statements, as they speak only as of the date of filing of this Form 10-Q, and Barnwell expressly disclaims any obligation or undertaking to publicly release any updates or revisions to any forward-looking statements contained herein.

Critical Accounting Policies and Estimates

Management has determined that our most critical accounting policies and estimates are those related to the evaluation of recoverability of assets, depletion of our oil and natural gas properties, income taxes and asset retirement obligation which are discussed in our Annual Report on Form 10-K for the fiscal year ended September 30, 2012. There have been no significant changes to these critical accounting policies and estimates during the three and six months ended March 31, 2013. We continue to monitor our accounting policies to ensure proper application of current rules and regulations.

Impact of Recently Issued Accounting Standards on Future Filings

In February 2013, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2013-02, “Reporting of Amounts Reclassified Out of Accumulated Other Comprehensive Income.” This update requires an entity to provide information about the amounts reclassified out of accumulated other comprehensive income by component. In addition, an entity is required to present, either on the face of the statement where net income is presented or in the notes, significant amounts reclassified out of accumulated other comprehensive income by the respective line items of net income but only if the amount reclassified is required under U.S. GAAP to be reclassified to net income in its entirety in the same reporting period. For other amounts that are not required under U.S. GAAP to be reclassified in their entirety to net income, an entity is required to cross-reference to other disclosures required under U.S. GAAP that provide additional detail about those amounts. The amendments are effective on a prospective basis for fiscal years, and interim reporting periods within those years, beginning after December 15, 2012. Adoption of this standard will impact the presentation of Barnwell’s consolidated financial statements.

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In February 2013, the FASB issued ASU No. 2013-04, “Obligations Resulting from Joint and Several Liability Arrangements for Which the Total Amount of the Obligation is Fixed at the Reporting Date.” This update provides guidance for the recognition, measurement, and disclosure of obligations resulting from joint and several liability arrangements for which the total amount of the obligation within the scope of this guidance is fixed at the reporting date, except for obligations addressed within existing guidance in U.S. GAAP. Examples of obligations within this guidance are debt arrangements, other contractual obligations, and settled litigation and judicial rulings. The amendments are effective retrospectively for fiscal years, and interim reporting periods within those years, beginning after December 15, 2013. The adoption of this update is not expected to have a material impact on Barnwell’s consolidated financial statements.

In March 2013, the FASB issued ASU No. 2013-05, “Parent’s Accounting for the Cumulative Translation Adjustment upon Derecognition of Certain Subsidiaries or Groups of Assets within a Foreign Entity or of an Investment in a Foreign Entity.” This update provides guidance on releasing cumulative translation adjustments when a reporting entity ceases to have a controlling financial interest in a subsidiary or group of assets that is a nonprofit activity or a business within a foreign entity. In addition, these amendments provide guidance on the release of cumulative translation adjustments in partial sales of equity method investments and in step acquisitions. The amendments are effective on a prospective basis for fiscal years, and interim reporting periods within those years, beginning after December 15, 2013. The adoption of this update is not expected to have a material impact on Barnwell’s consolidated financial statements.

In April 2013, the FASB issued ASU No. 2013-07, “Liquidation Basis of Accounting,” which provides guidance on when and how to apply the liquidation basis of accounting and on what to disclose. The update requires an entity to prepare its financial statements using the liquidation basis of accounting when liquidation is imminent, as defined in the update. The amendments are effective on a prospective basis for an entity that determines liquidation is imminent during annual reporting periods beginning after December 15, 2013, and interim reporting periods therein. The adoption of this update is not expected to have a material impact on Barnwell’s consolidated financial statements.

Overview

Barnwell is engaged in the following lines of business: 1) exploring for, developing, producing and selling oil and natural gas in Canada (oil and natural gas segment), 2) investing in land interests in Hawaii (land investment segment), 3) drilling wells and installing and repairing water pumping systems in Hawaii (contract drilling segment), and 4) developing homes for sale in Hawaii (residential real estate segment).

Oil and Natural Gas Segment

Barnwell is involved in the acquisition, exploration and development of oil and natural gas properties in Canada where we initiate and participate in exploratory and developmental operations for oil and natural gas on properties in which we have an interest, and evaluate proposals by third parties with regard to participation in such exploratory and developmental operations elsewhere.

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Land Investment Segment

The land investment segment is comprised of the following components:

1)  Barnwell owns a 77.6% controlling interest in Kaupulehu Developments, a Hawaii general partnership which owns interests in leasehold land at Kaupulehu located approximately six miles north of the Kona International Airport in the North Kona District of the island of Hawaii, adjacent to Hualalai Resort at Historic Ka’upulehu, between the Queen Kaahumanu Highway and the Pacific Ocean. Kaupulehu Developments’ interests include the following:

·The right to receive payments from WB KD Acquisition, LLC (“WB”) and WB KD Acquisition II, LLC (“WBKD”), entities not affiliated with Barnwell and its subsidiaries, resulting from the sale of lots and/or residential units within approximately 870 acres of the Kaupulehu Lot 4A area by WB and WBKD in two increments (“Increment I” and “Increment II”). Increment I is an area planned for approximately 80 single-family lots and a beach club on the portion of the property bordering the Pacific Ocean. The purchasers of the 80 single-family lots will have the right to apply for membership in the Kuki’o Golf and Beach Club, which is located adjacent to and south of the Four Seasons Resort Hualalai at Historic Ka’upulehu. 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.

·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. Kaupulehu Developments has an agreement which provides WB and/or WBKD the exclusive right to negotiate with Kaupulehu Developments with respect to these 1,000 acres. This right expires in June 2013 unless extended by Barnwell.

2)  Barnwell owns an 80% controlling interest in Kaupulehu 2007, LLLP (“Kaupulehu 2007”), a Hawaii limited liability limited partnership. Kaupulehu 2007 owns two residential parcels in the Kaupulehu area that are held for investment.

Contract Drilling Segment

Barnwell drills water, water monitoring and geothermal wells and installs and repairs water pumping systems in Hawaii. Contract drilling results are highly dependent upon the quantity, dollar value and timing of contracts awarded by governmental and private entities and can fluctuate significantly.

Residential Real Estate Segment

Barnwell, through its 80%-owned real estate joint venture, Kaupulehu 2007, constructs and sells luxury single-family homes. Kaupulehu 2007, in addition to the two parcels described above, owns a luxury residence in the Kaupulehu area that is available for sale. Kaupulehu 2007 does not currently have any homes under construction.

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Results of Operations

Summary

Barnwell incurred a net loss of $2,944,000 for the three months ended March 31, 2013, a $37,000 increase in operating results from a net loss of $2,981,000 for the three months ended March 31, 2012.  The following factors affected the results of operations for the three months ended March 31, 2013 as compared to the prior year period:

·A non-cash reduction of the carrying value of oil and natural gas properties of $2,179,000 recorded in the current year period as compared to a $1,854,000 reduction of the carrying value of residential real estate, before impact of non-controlling interests, recorded in the prior year period;

·A $606,000 decrease in oil and natural gas segment operating profit, before reduction in carrying value of assets and taxes, primarily resulting from lower prices received for oil, lower net natural gas production and increased operating expenses due to estimated costs incurred to remediate soil contamination issues;

·A $260,000 decrease in general and administrative expenses due primarily to decreased stock appreciation rights expense; and

·A $249,000 increase in contract drilling operating results, before taxes, primarily due to increased water well drilling activity.

Barnwell incurred a net loss of $5,690,000 for the six months ended March 31, 2013, a $2,427,000 decrease in operating results from a net loss of $3,263,000 for the six months ended March 31, 2012. The following factors affected the results of operations for the six months ended March 31, 2013 as compared to the prior year period:

·A non-cash reduction of the carrying value of oil and natural gas properties of $4,506,000 recorded in the current year period as compared to a $1,854,000 reduction of the carrying value of residential real estate, before impact of non-controlling interests, recorded in the prior year period;

·A $1,789,000 decrease in oil and natural gas segment operating profit, before reduction in carrying value of assets and taxes, primarily resulting from lower prices received for oil and natural gas liquids, lower net oil and net natural gas production and increased operating expenses due to estimated costs incurred to remediate soil contamination issues; and

·A $584,000 increase in contract drilling operating results, before taxes, primarily due to increased water well drilling activity.

General

Barnwell conducts operations in the U.S. and Canada.  Consequently, Barnwell is subject to foreign currency translation and transaction gains and losses due to fluctuations of the exchange rates between the Canadian dollar and the U.S. dollar. The impact of fluctuations of the exchange rates between the Canadian dollar and the U.S. dollar may be material from period to period. Barnwell cannot accurately predict future fluctuations between the Canadian and U.S. dollar.

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The average exchange rate of the Canadian dollar to the U.S. dollar decreased 1% and increased 1% in the three and six months ended March 31, 2013, respectively, as compared to the same periods in the prior year, and the exchange rate of the Canadian dollar to the U.S. dollar decreased 3% at March 31, 2013, as compared to September 30, 2012. Accordingly, the assets, liabilities, stockholders’ equity and revenues and expenses of Barnwell’s subsidiaries operating in Canada have been adjusted to reflect the change in the exchange rates. Barnwell’s Canadian dollar assets are greater than its Canadian dollar liabilities; therefore, increases or decreases in the value of the Canadian dollar to the U.S. dollar generate other comprehensive income or loss, respectively. Other comprehensive income and losses are not included in net loss. Other comprehensive loss due to foreign currency translation adjustments, net of taxes, for the three months ended March 31, 2013 was $600,000, a $1,262,000 change from other comprehensive income due to foreign currency translation adjustments, net of taxes, of $662,000 for the same period in the prior year. Other comprehensive loss due to foreign currency translation adjustments, net of taxes, for the six months ended March 31, 2013 was $970,000, a $2,413,000 change from other comprehensive income due to foreign currency translation adjustments, net of taxes, of $1,443,000 for the same period in the prior year. There were no taxes on other comprehensive (loss) income due to foreign currency translation adjustments in the three and six months ended March 31, 2013 and 2012 due to a full valuation allowance on the related deferred tax asset.

Oil and natural gas revenues

The following tables set forth Barnwell’s average prices per unit of production and net production volumes. Production amounts reported are net of royalties.

	Average Price Per Unit
	Three months ended					Increase
	March 31,					(Decrease)
		2013		2012			$		%
Natural Gas (Mcf)*		$	2.75	$	1.85		$	0.90	49%
Oil (Bbls)**		$	70.33	$	88.44		$	(18.11)	(20%)
Liquids (Bbls)**		$	45.52	$	46.39		$	(0.87)	(2%)

	Average Price Per Unit
	Six months ended					Increase
	March 31,					(Decrease)
		2013		2012			$		%
Natural Gas (Mcf)*		$	2.63	$	2.38		$	0.25	11%
Oil (Bbls)**		$	72.55	$	88.57		$	(16.02)	(18%)
Liquids (Bbls)**		$	42.73	$	49.21		$	(6.48)	(13%)

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	Net Production
	Three months ended			Increase
	March 31,			(Decrease)
		2013	2012		Units	%
Natural Gas (Mcf)*		568,000	719,000		(151,000)	(21%)
Oil (Bbls)**		42,000	43,000		(1,000)	(2%)
Liquids (Bbls)**		21,000	23,000		(2,000)	(9%)

	Net Production
	Six months ended			Increase
	March 31,			(Decrease)
		2013	2012		Units	%
Natural Gas (Mcf)*		1,228,000	1,484,000		(256,000)	(17%)
Oil (Bbls)**		80,000	91,000		(11,000)	(12%)
Liquids (Bbls)**		45,000	46,000		(1,000)	(2%)

*Mcf = 1,000 cubic feet.  Natural gas price per unit is net of pipeline charges.

**   Bbl = stock tank barrel equivalent to 42 U.S. gallons

Oil and natural gas revenues decreased $803,000 (13%) for the three months ended March 31, 2013, as compared to the same period in the prior year, primarily due to a decline in oil prices, which decreased 20% as compared to the same period in the prior year, and a decrease in net natural gas production, which decreased 21% as compared to the same period in the prior year due to natural declines in production from older properties and natural gas well shut ins. The decrease was partially offset by an increase in natural gas prices, which increased 49% as compared to the same period in the prior year. Net oil production was relatively unchanged as a decline in oil production from older areas was offset by new oil production from recent drilling activity.

Oil and natural gas revenues decreased $2,952,000 (21%) for the six months ended March 31, 2013, as compared to the same period in the prior year, primarily due to declines in oil and natural gas liquids prices of 18% and 13%, respectively, and declines in net oil and net natural gas production of 12% and 17%, respectively, as compared to the same period in the prior year. The impact of these declines was partially offset by an increase in natural gas prices, which increased 11% as compared to the same period in the prior year. The decline in natural gas production was due to natural declines in production from older properties and natural gas well shut ins.  The decline in oil production was due to natural declines in production from older properties, partially offset by new oil production from recent drilling activity.

Due to low natural gas prices, certain natural gas wells have been shut in by the Company and independent operators of such properties due to economic or operational issues where necessary repairs have been deferred. Net natural gas production from these wells in the three and six month periods of the prior year accounted for approximately 4% and 5%, respectively, of the net natural gas production for those periods. As natural gas prices have increased from the lows encountered during much of fiscal 2012, no natural gas well shut ins have occurred since August 2012 and in December 2012 production was restored at three of the natural gas wells shut in during fiscal 2012. The level of future natural gas prices remains uncertain and a decline in prices could result in additional shut ins of natural gas wells. Future additional shut ins may result in the Company receiving materially less than anticipated production or no production and associated revenues from affected properties until the Company or independent operator elects to return such wells to production. The impact of any future natural gas well shut ins is unknown as such events are dependent upon the level of future natural gas prices, which the Company is unable to predict.

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Oil and natural gas operating expenses

Oil and natural gas operating expenses increased $257,000 (9%) for the three months ended March 31, 2013, as compared to the same period in the prior year. The increase was due to $696,000 of estimated costs incurred to remediate recently discovered soil contamination from infrastructure issues at the Dunvegan and Wood River properties. The increase was partially offset by lower production and lower repair and workover costs in the current year period.

Oil and natural gas operating expenses decreased $491,000 (9%) for the six months ended March 31, 2013, as compared to the same period in the prior year. The decrease was due to lower production and a $220,000 equalization credit for previously allocated operating expenses received from an operator of a property, partially offset by $696,000 of estimated costs incurred to remediate recently discovered soil contamination from infrastructure issues at the Dunvegan and Wood River properties.

Sale of interest in leasehold land

The following table summarizes the percentage of sales payment revenues received from WB:

	Three months ended							Six months ended
	March 31,							March 31,
		2013			2012				2013			2012
Sale of interest in leasehold land:
Proceeds		$	300,000		$	375,000			$	300,000		$	375,000
Fees		(18,000		)	(22,000		)		(18,000		)	(22,000		)
Revenues - sale of interest in leasehold land, net		$	282,000		$	353,000			$	282,000		$	353,000

WB sold one single-family lot in Increment I during the three and six months ended March 31, 2013 and one single-family lot in Increment I during the three and six months ended March 31, 2012.

As of March 31, 2013, 31 of the 38 single-family lots in Phase I of Increment I have been sold by WB. Forty-two single-family lots are planned for Phase II of Increment I, for a total of 80 single-family lots planned for Increment I. The developer released and began marketing a portion of the 42 single-family lots in Phase II of Increment I, and as of March 31, 2013, one of the lots has been sold. The Company cannot predict when or if WB will complete the remaining single-family lots in Phase II of Increment I and there is no assurance with regards to the amounts of future sales from Increment I.

Contract drilling

Contract drilling revenues and contract drilling costs increased $422,000 (150%) and $193,000 (42%), respectively, for the three months ended March 31, 2013, as compared to the same period in the prior year. The contract drilling segment generated a $58,000 operating loss before general and administrative expenses in the three months ended March 31, 2013, an increase in operating results of $249,000 as compared to the $307,000 operating loss generated during the same period of the prior year. Contract drilling revenues and contract drilling costs increased $714,000 (101%) and $164,000 (15%), respectively, for the six months ended March 31, 2013, as compared to the same period in the prior year. The contract drilling segment generated a $64,000 operating loss before general and administrative expenses in the six months ended March 31, 2013, an increase in operating results of $584,000 as compared to the $648,000 operating loss generated during the same period of the prior year. The increases in operating results were primarily due to increased water well drilling activity.

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Contract drilling revenues and costs are not seasonal in nature, but can fluctuate significantly based on the awarding and timing of contracts, which are determined by contract drilling customer demand. In general, there has been a significant decrease in demand for water well drilling contracts in the last three years due largely to the impact of the recession and continuing weak economic conditions on both private real estate development and governmental capital improvement budgets. Lack of availability of contracts has also resulted in increased competition for available contracts, which generally has resulted in lower estimated margins on awarded contracts. Continued lack of water well drilling contracts may necessitate future cost reduction measures, temporary shutdown of water well drilling operations, or sale or liquidation of a portion of our contract drilling equipment. The Company is unable to predict the near-term and long-term availability of water well drilling and pump installation and repair contracts as the duration of the slowdown in construction activity is unknown.

General and administrative expenses

General and administrative expenses decreased $260,000 (11%) for the three months ended March 31, 2013 as compared to the same period in the prior year. The decrease was primarily due to the fact that general and administrative expenses in the prior year quarter included a $227,000 increase in stock appreciation rights expense resulting from an increase in the market price of the Company’s stock, as compared to a $9,000 reduction in stock appreciation rights expense in the current quarter.

General and administrative expenses for the six months ended March 31, 2013 were comparable to the prior year period.

Depletion, depreciation, and amortization

Depletion, depreciation, and amortization decreased $474,000 (17%) for the three months ended March 31, 2013 as compared to the same period in the prior year. The decrease was primarily due to a 15% decrease in net production, a 1% decrease in the depletion rate and a 1% decrease in the average exchange rate of the Canadian dollar to the U.S. dollar. The decrease in the depletion rate for the three months ended March 31, 2013 was due to the impact of the reductions in the carrying value of oil and natural gas properties at September 30, 2012 and December 31, 2012, partially offset by increases in Barnwell’s costs of finding and developing proven reserves and the drilling of unsuccessful wells.

Depletion, depreciation, and amortization decreased $704,000 (12%) for the six months ended March 31, 2013 as compared to the same period in the prior year. The decrease was primarily due to a 14% decrease in net production, offset by a 1% increase in the depletion rate and a 1% increase in the average exchange rate of the Canadian dollar to the U.S. dollar. The increase in the depletion rate for the six months ended March 31, 2013 was due to increases in Barnwell’s costs of finding and developing proven reserves and the drilling of unsuccessful wells, partially offset by the impact of the reductions in the carrying value of oil and natural gas properties at September 30, 2012 and December 31, 2012.

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Reduction of carrying value of assets

The reduction of carrying value of assets increased $325,000 (18%) and $2,652,000 (143%) for the three and six months ended March 31, 2013, respectively, as compared to the same periods in the prior year.

Under the full cost method of accounting, the Company performs quarterly oil and natural gas ceiling test calculations. Barnwell’s net capitalized costs exceeded the ceiling limitation at March 31, 2013. As such, Barnwell reduced the carrying value of its oil and natural gas properties by $2,179,000 during the three months ended March 31, 2013. The current quarter’s reduction of the carrying value of oil and natural gas properties combined with the first quarter’s reduction of $2,327,000 resulted in a reduction of $4,506,000 for the six months ended March 31, 2013. No such reduction was necessary during the three and six months ended March 31, 2012.

Changes in the 12-month rolling average first-day-of-the-month prices for oil, natural gas and natural gas liquids prices, the value of reserve additions as compared to the amount of capital expenditures to obtain them, and changes in production rates and estimated levels of reserves, future development costs and the market value of unproved properties, impact the determination of the maximum carrying value of oil and natural gas properties. If oil, natural gas and natural gas liquids prices do not increase sufficiently or if the Company is not sufficiently successful in its exploration activities, the Company may be required to record additional reductions in the carrying value of its oil and natural gas properties. The Company is unable to estimate a range of the amount of any potential future reduction in carrying value as variables that impact the ceiling limitation are dependent upon future prices and actual results of activity.

During the three and six months ended March 31, 2012, Barnwell recorded a $1,854,000 reduction in the carrying value of its real estate held for sale to reflect a decline in the estimated market value of the two luxury residences. No such reduction was necessary during the three and six months ended March 31, 2013.

Income taxes

Barnwell’s effective consolidated income tax rate for the three and six months ended March 31, 2013, after adjusting loss before income taxes for non-controlling interests, was 21% and 19%, respectively, as compared to 0% and (18%) for the three and six months ended March 31, 2012, respectively.

Consolidated taxes do not bear a customary relationship to pretax (losses) earnings due primarily to the fact that Canadian income taxes are not sheltered by current period U.S. source losses, Canadian income taxes are not estimated to have a current or future benefit as foreign tax credits or deductions for U.S. tax purposes, and U.S. consolidated net operating losses are not estimated to have any future U.S. tax benefit prior to expiration.

The Canada Revenue Agency is currently examining the Company’s Canadian federal income tax returns for fiscal 2010 and 2011.

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Net earnings (loss) attributable to non-controlling interests

Earnings and losses attributable to non-controlling interests represent the non-controlling interests’ share of revenues and expenses related to the various partnerships and joint ventures in which Barnwell has interests.

Net earnings attributable to non-controlling interests for the three months ended March 31, 2013 totaled $21,000, as compared to net loss attributable to non-controlling interests of $348,000 for the three months ended March 31, 2012. The $369,000 (106%) change is due primarily to impacts to non-controlling interests of prior year write-downs of Barnwell’s assets, as compared to the same period in the current year.

Net loss attributable to non-controlling interests for the six months ended March 31, 2013 totaled $19,000, as compared to net loss attributable to non-controlling interests of $406,000 for the same period in the prior year. The $387,000 (95%) change is due primarily to impacts to non-controlling interests of prior year write-downs of Barnwell’s assets, as compared to the same period in the current year.

Liquidity and Capital Resources

Barnwell’s primary sources of liquidity are cash on hand, cash flows from operations, land investment segment proceeds and available credit. At March 31, 2013, Barnwell had $8,316,000 in cash and cash equivalents, $4,037,000 in working capital, and $7,692,000 of available credit under its credit facility with its Canadian bank.

Cash Flows

Cash flows provided by operations totaled $1,508,000 for the six months ended March 31, 2013, as compared to $3,027,000 for the same period in the prior year. The $1,519,000 change was primarily due to lower oil and natural gas segment operating results.

Net cash used in investing activities totaled $1,823,000 during the six months ended March 31, 2013, as compared to $3,857,000 during the same period of the prior year. The decrease was primarily due to a $2,177,000 decrease in cash outflows for oil and natural gas capital expenditures due to differences in the timing of disbursements for capital projects.

Cash flows used in financing activities totaled $139,000 for the six months ended March 31, 2013, as compared to $430,000 during the same period of the prior year. The $291,000 decrease in cash outflows was primarily due to decreased net debt repayments.

Credit Arrangements

In March 2013, Barnwell’s credit facility at Royal Bank of Canada was renewed through April 2014 for $20,000,000 Canadian dollars, unchanged from the prior year amount, or US$19,692,000 at the March 31, 2013 exchange rate of 0.9846. Borrowings under this facility were US$12,000,000 and unused credit available under this facility was US$7,692,000 at March 31, 2013. The interest rate on the facility at March 31, 2013 was 2.70%. The renewed facility is available in U.S. dollars at the London Interbank Offer Rate plus 2.50%, at the Royal Bank of Canada’s U.S. base rate plus 1.50%, or in Canadian dollars at the Royal Bank of Canada’s prime rate plus 1.50%. A standby fee of 0.625% per annum is charged on the unused facility balance.

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Barnwell, together with its 80%-owned real estate joint venture, Kaupulehu 2007, has a non-revolving real estate loan with a Hawaii bank that terminates on April 1, 2018. Principal and interest are paid monthly and are determined based on a loan amortization schedule.  Monthly payments of principal and interest are due on the first day of each month and will change as a result of an annual change in the interest rate, the sale of a house or the sale of a residential parcel. The interest rate adjusts each April for the remaining term of the loan to the lender’s then prevailing interest rate for similarly priced commercial mortgage loans or a floating rate equal to the lender’s base rate. The interest rate at March 31, 2013 was 3.57%, and was adjusted to 3.53% effective April 1, 2013. Any unpaid principal balance and accrued interest will be due and payable on April 1, 2018. The loan is collateralized by, among other things, a first mortgage on Kaupulehu 2007’s lots together with all improvements thereon. Kaupulehu 2007 will be required to make a principal payment upon the sale of a house or a residential parcel in the amount of the net sales proceeds of the house or residential parcel; the loan agreement defines net sales proceeds as the gross sales proceeds for the house or residential parcel, less reasonable commissions and normal closing costs.

The non-revolving real estate loan agreement contains provisions requiring us to maintain compliance with certain covenants including a consolidated debt service coverage ratio of not less than 1.20 to 1 and a consolidated total liabilities to tangible net worth ratio not to exceed 1.85 to 1. As of March 31, 2013, we were in compliance with the loan covenants.

Oil and Natural Gas and Other Capital Expenditures

Barnwell’s oil and natural gas capital expenditures, including accrued capital expenditures, totaled $1,760,000 and $3,625,000 for the three and six months ended March 31, 2013, respectively, as compared to $229,000 and $2,179,000 for the same periods in the prior year. Management expects that oil and natural gas capital expenditures in fiscal 2013 will range from $5,000,000 to $6,000,000. This estimated amount may increase or decrease as dictated by cash flows and management’s assessment of the oil and natural gas environment and prospects.

During the three months ended March 31, 2013, Barnwell drilled 1 gross (1.0 net) exploratory well in Canada, which was not successful. During the six months ended March 31, 2013, Barnwell participated in the drilling of 4 gross (1.1 net) development wells in Canada, all of which were successful, and 1 gross (1.0 net) exploratory well in Canada, which was not successful. The term “gross” refers to the total number of wells in which Barnwell owns an interest, and “net” refers to Barnwell’s aggregate interest therein. For example, a 50% interest in a well represents 1 gross well, but 0.5 net well. The gross figure includes interests owned of record by Barnwell and, in addition, the portion owned by others.

Other Considerations

We believe our sources of funds such as current cash balances, future operating cash flows, land investment segment proceeds, and available credit will provide sufficient liquidity to fund our operations, planned future capital expenditures, scheduled debt repayments and related interest. However, in the event oil and natural gas prices and production, land investment segment proceeds, and residential real estate home sale proceeds are less than current expectations, Barnwell’s Canadian revolving credit facility is reduced below the current level of borrowings under the facility upon the

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April 2014 review, and/or we fall short of our key financial debt covenants for our real estate loan and are required to repay a portion of our loan borrowings earlier than anticipated, we will be faced with reduced cash inflows and/or higher cash outflows than expected, which in turn could have a material adverse effect on our operations, liquidity, cash flows and financial condition. Absent a sufficient increase in natural gas and/or oil prices, it is unlikely that future oil and natural gas operating cash flows will be sufficient to fund the capital expenditure levels necessary to maintain current production and reserve levels. As such, the near-term and longer-term outlook for sources and uses of funds and oil and natural gas capital resources remains highly dependent on the factors noted above.

In the event our liquidity and capital resources are not sufficient to fund our future cash needs, the Company will need to obtain alternative terms or sources of financing or liquidate investments and/or operating assets to make any required cash outflows. Events and circumstances that lead to results that significantly differ from management’s expectations could have a material adverse effect on our operations, liquidity, cash flows, and financial condition.

ITEM 4.CONTROLS AND PROCEDURES

Disclosure Controls and Procedures

We have established disclosure controls and procedures to ensure that material information relating to Barnwell, including its consolidated subsidiaries, is made known to the officers who certify Barnwell’s financial reports and to other members of executive management and the Board of Directors.

As of March 31, 2013, an evaluation was carried out by Barnwell’s Chief Executive Officer and Chief Financial Officer of the effectiveness of Barnwell’s disclosure controls and procedures. Based on that evaluation, the Chief Executive Officer and Chief Financial Officer have concluded that Barnwell’s disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934) were effective as of March 31, 2013 to ensure that information required to be disclosed by Barnwell in the reports that it files or submits under the Securities Exchange Act of 1934 is recorded, processed, summarized and reported within the time periods specified in the Securities Exchange Act of 1934 and the rules thereunder.

Changes in Internal Control Over Financial Reporting

There was no change in Barnwell’s internal control over financial reporting during the quarter ended March 31, 2013 that materially affected, or is reasonably likely to materially affect, Barnwell’s internal control over financial reporting.

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PART II - OTHER INFORMATION

ITEM 5.OTHER INFORMATION

On May 9, 2013, the Board of Directors of Barnwell amended the Company’s Amended and Restated By-laws (the “By-laws”), effective on such date.  A copy of the By-laws, as so amended and restated, is filed as Exhibit 3.2 to this Quarterly Report on Form 10-Q and incorporated by reference herein.

The following is a summary of the material amendments to the By-laws:

Section 1.02 – Annual Meetings.  This By-law was amended to remove the requirement that the annual meeting of stockholders must be held in March and to add a provision that, at the sole discretion of the Board, the annual meeting of stockholders could be held by remote communication.

Section 1.02 – Special Meetings. This By-law provides, among other things, that the Secretary of the Company shall call a special meeting of stockholders upon the request of stockholders of record holding at least 25% in amount of the entire issued and outstanding capital stock of the Company.  Prior to the amendment, that threshold was 10%.  This By-law also clarifies that any business transacted at a special meeting of stockholders shall be limited to the purpose or purposes stated in the notice of such meeting.  Additionally this By-law was amended to provide that, at the sole discretion of the Board, a special meeting of stockholders could be held by remote communication.

Section 1.12 – Notice of Stockholder Business and Nominations. This new By-law was added to the By-laws to provide that if a stockholder wishes to nominate a person or persons for election to the Board of Directors or bring other business before a stockholders meeting, such stockholder may only do so by delivering prior written notice to the Company’s Secretary, within the time period specified in the By-law, and by complying with certain other requirements specified therein.  The stockholder’s notice must include, among other things, certain information as to each person whom the stockholder proposes to nominate for election as a director or as to each matter of business that the stockholder proposes to bring before a meeting of stockholders.  The stockholder’s notice also must include certain information as to the stockholder giving the notice, the beneficial owner, if any, on whose behalf the nomination or proposal is made or other proponent persons, if any.

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ITEM 6.         EXHIBITS

Exhibit Number		Description
3	.2	Amended and Restated By-laws
31	.1	Certification of Chief Financial Officer Pursuant To Section 302 of the Sarbanes-Oxley Act of 2002
31	.2	Certification of Chief Executive 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

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SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

	BARNWELL INDUSTRIES, INC.
		(Registrant)
Date:  May 14, 2013	/s/ Russell M. Gifford
	Russell M. Gifford
	Chief Financial Officer,
	Executive Vice President,
	Treasurer and Secretary

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INDEX TO EXHIBITS

Exhibit Number		Description
3	.2	Amended and Restated By-laws
31	.1	Certification of Chief Financial Officer Pursuant To Section 302 of the Sarbanes-Oxley Act of 2002
31	.2	Certification of Chief Executive 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

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EX-3.2

Exhibit No. 3.2

BARNWELL INDUSTRIES, INC.

–A Delaware Corporation–

BY-LAWS

AMENDED AND RESTATED

As Amended and Restated as of May 9, 2013

ARTICLE I

Meetings of Stockholders

Section 1.1.Annual Meetings.  The annual meeting of the stockholders of Barnwell Industries, Inc. (the “Corporation”) for the election of directors and for the transaction of such other business as may properly come before such meeting shall be held at such date, time and place, if any, as shall be determined by the Board of Directors.  The Board of Directors may, in its sole discretion, determine that the meeting shall not be held at any place, but may instead be held solely by means of remote communication in accordance with Section 211(a)(2) of the General Corporation Law of the State of Delaware (the “DGCL”).

Section 1.2.Special Meetings.  Special meetings of the stockholders of the Corporation may be called by or at the direction a majority of the members of the Board of Directors, the Chairman of the Board of Directors, the Chief Executive Officer or the President of the Corporation and shall be called by the Secretary at the request in writing of stockholders of record of at least twenty-five percent (25%) in amount of the entire capital stock of the corporation issued and outstanding and entitled to vote thereat.  Any such request shall state the purpose or purposes of the proposed special meeting and shall comply with all the requirements set forth in these By-laws.  The business transacted at a special meeting of the stockholders shall be limited to the purpose or purposes stated in the notice of the meeting.  Special meetings of the stockholders shall be held at such place, if any, and on such date and at such time as the Board of Directors shall determine (or the Chairman of the Board of Directors in the absence of a designation by the Board of Directors).  The Board of Directors may, in its sole discretion, determine that any special meeting shall not be held at any place, but may instead be held solely by means of remote communication in accordance with Section 211(a)(2) of the DGCL.

Section 1.3.Notice of Meetings; Waiver of Notice.

(a)Notice of Meetings.  Whenever stockholders are required or permitted to take any action at a meeting, a written notice of the meeting shall be given and shall state the place (if any), date and time of the meeting and, in the case of a special meeting, the purpose or purposes for which the meeting is called.  Unless otherwise provided by law, the written notice of any meeting shall be given not less than ten (10) nor more than sixty (60) days before the date of the meeting to each stockholder entitled to vote at such meeting.  If mailed, such notice shall be directed to each stockholder at his address as it appears on the records of the Corporation.

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(b)Waiver of Notice.  Whenever notice is required to be given to the stockholders under any provision of law, the Certificate of Incorporation of the Corporation or these By-laws, a written waiver signed by a stockholder entitled to notice, whether before or after the time stated therein, shall be deemed equivalent to notice.  Attendance of a stockholder at a meeting shall constitute a waiver of notice of such meeting, except when the stockholder attends such meeting for the express purpose of objecting, at the beginning of the meeting, to the transaction of business because the meeting is not lawfully called or convened.  Neither the business to be transacted at, nor the purpose of, any regular or special meeting of the stockholders need be specified in any written waiver of notice unless so required by the Certificate of Incorporation of the Corporation.

Section 1.4.Quorum.  The presence at any meeting, in person or by proxy, of the holders of record of a majority of the shares then issued and outstanding and entitled to vote shall be necessary and sufficient to constitute a quorum for the transaction of business, except as otherwise provided by law or the Certificate of Incorporation of the Corporation.

Section 1.5.Adjournments.  In the absence of a quorum, a majority in interest of the stockholders entitled to vote, present in person or by proxy at a meeting, or, if no stockholder entitled to vote is present in person or by proxy, any officer entitled to act as chairman or secretary of such meeting, may adjourn the meeting to another time or place.

When a meeting is adjourned to another time or place, notice need not be given of the adjourned meeting if the time and place thereof are announced at the meeting at which the adjournment is taken.  At the adjourned meeting the Corporation may transact any business which might have been transacted at the original meeting.  If the adjournment is for more than 30 days, or if after the adjournment a new record date is fixed for the adjourned meeting, a notice of the adjourned meeting shall be given to each stockholder of record entitled to vote at the meeting.

Section 1.6.Organization.  The Chairman of the Board, or, if there is no Chairman or in his absence or disability, the Vice Chairman, if any, the President or any Vice President, or, in the absence of all of them, a chairman appointed by the stockholders, shall act as chairman of all meetings of stockholders.  The Secretary of the Corporation or, in his absence or disability, any Assistant Secretary of the Corporation, or, in the absence of both of them, a secretary appointed by the chairman of the meeting, shall act as secretary at all meetings of stockholders.

Section 1.7.Voting.  Unless otherwise provided in the Certificate of Incorporation of the Corporation or required by law, each stockholder shall be entitled to one vote for each share of capital stock held by such stockholder which is registered in his name on the record date for the meeting.  Unless otherwise provided in the Certificate of Incorporation, directors shall be elected by a plurality of the votes of the shares present in person or represented by proxy at the meeting and entitled to vote on the election of directors.  Except as otherwise provided by law, in all other matters the affirmative vote of a majority of the shares present in person or represented by proxy at the meeting and entitled to vote on the subject matter shall be the act of the stockholders.  Voting, including voting for the election of directors, need not be by written ballot.

Section 1.8.Proxies.  Each stockholder entitled to vote at a meeting of stockholders or to express consent or dissent to corporate actions in writing may authorize another person or persons to act for him by proxy, but no such proxy shall be voted or acted upon after three years from its date, unless the proxy provides for a longer period.  A duly executed proxy shall be irrevocable if it states that it is irrevocable and if, and only as long as, it is coupled with an interest sufficient in law to support an irrevocable power.

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Section 1.9.Voting by Fiduciaries and Pledgors.  Persons holding stock in a fiduciary capacity shall be entitled to vote the shares so held, and persons whose stock is pledged shall be entitled to vote, unless in the transfer by the pledgor on the books of the Corporation, he has expresslyempowered the pledgee to vote thereon, in which case only the pledgee or his proxy may represent said stock and vote thereon.

Section 1.10.Stockholder List.  For a period of at least ten (10) days before every meeting of stockholders, a complete list of the stockholders entitled to vote at the meeting showing the address and number of shares registered in the name of each stockholder shall be open to the examination of any stockholder, for any purpose germane to the meeting, (i) on a reasonably accessible electronic network, provided that, the information required to access such list is provided with the notice of meeting or (ii) during ordinary business hours, at the principal place of business of the Corporation.  The list shall also be produced and kept at the time and place of the meeting during the entire time thereof, and may be inspected by any stockholder who is present.

Section 1.11.Inspectors of Election.  In advance of any stockholders’ meeting, the Board of Directors shall appoint one or more inspectors to act at the meeting and make a written report thereof.  The Board of Directors may designate one or more persons as alternate inspectors to replace any inspector who fails to act.  If no inspector or alternate is able to act at a meeting of stockholders, the person presiding at the meeting shall appoint one or more inspectors to act at the meeting.  Each inspector, before entering upon the discharge of his duties, shall take and sign an oath faithfully to execute the duties of inspector with strict impartiality and according to the best of his ability.

Section 1.12.Fixing the Record Date.  So that the Corporation may determine the stockholders entitled to notice of or to vote at any meeting of stockholders or any adjournment thereof, or to express consent to corporate action in writing without a meeting, or to receive payment of any dividend or other distribution or allotment of any rights, or to exercise any rights in respect of any change, conversion or exchange of stock or for the purpose of any other lawful action, the Board of Directors may fix in advance a record date, which shall not precede the date upon which the resolution fixing the record date is adopted by the Board of Directors, and (i) in the case of a meeting, shall not be more than 60 nor less than 10 days before the date of such meeting, or (ii) in the case of a written consent, shall not exceed by more than 10 days the date upon which the resolution fixing the record date is adopted by the Board of Directors, or (iii) in the case of any other action, shall not be more than 60 days prior to such action.  Only those stockholders of record on the date so fixed shall be entitled to any of the foregoing rights, notwithstanding the transfer of any stock on the books of the Corporation after any such record date fixed by the Board of Directors.

Section 1.13.Notice of Stockholder Business and Nominations.

(A)Annual Meetings of Stockholders.

(1)Nominations of persons for election to the Board of Directors and the proposal of other business to be considered by the stockholders may be made at an annual meeting of stockholders only (a) pursuant to the Corporation’s notice of meeting (or any supplement thereto) delivered pursuant to Article I, Section 1.3 of these By-Laws, (b) by or at the direction of the Board of Directors or any committee thereof or (c) by any stockholder of the Corporation who is entitled to vote on such election or such other business at the meeting, who complied with the notice procedures set forth in subparagraphs (2) and (3) of this paragraph (A) of this By-Law and who was a stockholder of record at the time such notice is delivered to the Secretary of the Corporation.

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(2)For nominations or other business to be properly brought before an annual meeting by a stockholder, the stockholder must have given timely notice thereof in writing to the Secretary of the Corporation, and, in the case of business other than nominations of persons for election to the Board of Directors, such other business must be a proper matter for stockholder action. To be timely, a stockholder’s notice shall be delivered to the Secretary at the principal executive offices of the Corporation not less than ninety (90) days nor more than one hundred twenty (120) days prior to the first anniversary of the preceding year’s annual meeting; provided, however, that in the event that no annual meeting was held in the previous year or the date of the annual meeting is changed by more than thirty (30) days from such anniversary date, notice by the stockholder to be timely must be so delivered not earlier than the 120th day prior to such annual meeting and not later than the close of business on the later of the 90th day prior to such annual meeting or the tenth day following the day on which public announcement of the date of such meeting is first made; and provided further, that for purposes of the application of Rule 14a-4(c) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”) (or any successor provision), the date for notice specified in this paragraph (A)(2) shall be the earlier of the date calculated as hereinbefore provided or the date specified in paragraph (c)(1) of Rule 14a-4.

Such stockholder’s notice shall set forth (a) as to each person whom the stockholder proposes to nominate for election or re-election as a director all information relating to such person that is required to be disclosed in solicitations of proxies for election of directors, or is otherwise required, in each case pursuant to Section 14(a) of the Exchange Act and the rules and regulations promulgated thereunder, including such person’s written consent to being named in the proxy statement as a nominee and to serving as a director if elected; (b) as to any other business that the stockholder proposes to bring before the meeting, a brief description of the business desired to be brought before the meeting, the text of the proposal or business (including the text of any resolutions proposed for consideration and, in the event that such business includes a proposal to amend these By-Laws, the language of the proposed amendment), the reasons for conducting such business at the meeting and any material interest in such business of such stockholder and the beneficial owner, if any, on whose behalf the proposal is made; (c) as to the stockholder giving the notice and the beneficial owner, if any, on whose behalf the nomination or proposal is made (i) the name and address of such stockholder, as they appear on the Corporation’s books, and of such beneficial owner, (ii) the class or series and number of shares of the Corporation which are owned beneficially and of record by such stockholder and such beneficial owner, (iii) a representation that the stockholder is a holder of record of stock of the Corporation entitled to vote at such meeting and intends to appear in person or by proxy at the meeting to propose such business or nomination, (iv) a representation whether the stockholder or the beneficial owner, if any, intends or is part of a group which intends (A) to deliver a proxy statement and/or form of proxy to holders of at least the percentage of the Corporation’s outstanding capital stock required to approve or adopt the proposal or elect the nominee and/or (B) otherwise to solicit proxies from stockholders in support of such proposal or nomination, (v) a certification regarding whether such stockholder and beneficial owner, if any, have complied with all applicable federal, state and other legal requirements in connection with the stockholder’s and/or beneficial owner’s acquisition of

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shares of capital stock or other securities of the Corporation and/or the stockholder’s and/or beneficial owner’s acts or omissions as a stockholder of the Corporation and (vi) any other information relating to such stockholder and beneficial owner, if any, required to be disclosed in a proxy statement or other filings required to be made in connection with solicitations of proxies for, as applicable, the proposal and/or for the election of directors in an election contest pursuant to and in accordance with Section 14(a) of the Exchange Act and the rules and regulations promulgated thereunder; (d) a description of any agreement, arrangement or understanding with respect to the nomination or proposal and/or the voting of shares of any class or series of stock of the Corporation between or among the stockholder giving the notice, the beneficial owner, if any, on whose behalf the nomination or proposal is made, any of their respective affiliates or associates and/or any others acting in concert with any of the foregoing (collectively, “proponent persons”); and (e) a description of any agreement, arrangement or understanding (including without limitation any contract to purchase or sell, acquisition or grant of any option, right or warrant to purchase or sell, swap or other instrument) to which any proponent person is a party, the intent or effect of which may be (i) to transfer to or from any proponent person, in whole or in part, any of the economic consequences of ownership of any security of the Corporation, (ii) to increase or decrease the voting power of any proponent person with respect to shares of any class or series of stock of the Corporation and/or (iii) to provide any proponent person, directly or indirectly, with the opportunity to profit or share in any profit derived from, or to otherwise benefit economically from, any increase or decrease in the value of any security of the Corporation.  A stockholder providing notice of a proposed nomination for election to the Board of Directors or other business proposed to be brought before a meeting (whether given pursuant to this paragraph (A)(2) or paragraph (B) of this By-Law) shall update and supplement such notice from time to time to the extent necessary so that the information provided or required to be provided in such notice shall be true and correct as of the record date for the meeting and as of the date that is fifteen (15) days prior to the meeting or any adjournment or postponement thereof; such update and supplement shall be delivered in writing to the Secretary at the principal executive offices of the Corporation not later than five (5) days after the record date for the meeting (in the case of any update and supplement required to be made as of the record date), and not later than ten (10) days prior to the date for the meeting or any adjournment or postponement thereof (in the case of any update and supplement required to be made as of fifteen (15) days prior to the meeting or any adjournment or postponement thereof).  The Corporation may require any proposed nominee to furnish such other information as it may reasonably require to determine the eligibility of such proposed nominee to serve as a director of the Corporation and to determine the independence of such director under the Exchange Act and rules and regulations thereunder and applicable stock exchange rules.

(3)Notwithstanding anything in paragraph (A)(2) of this By-Law to the contrary, in the event that the number of directors to be elected to the Board of Directors is increased, effective after the time period for which nominations would otherwise be due under paragraph (A)(2) of this By-Law, and there is no public announcement naming all of the nominees for director or specifying the size of the increased Board of Directors made by the Corporation at least eighty (80) days prior to the first anniversary of the preceding year’s annual meeting, a stockholder’s notice required by this By-Law shall also be considered timely, but only with respect to nominees for any new positions created by such increase, if it shall be delivered to the Secretary at the principal executive offices of the Corporation not later than the close of business on the tenth day following the day on which a public announcement of such increase is first made by the Corporation; provided that, if no such announcement is made at least ten (10) days before the meeting, then no such notice shall be required.

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(B)Special Meetings of Stockholders.  Only such business shall be conducted at a special meeting of stockholders as shall have been brought before the meeting pursuant to the Corporation’s notice of meeting pursuant to Article I, Section 1.3 of these By-Laws. Nominations of persons for election to the Board of Directors may be made at a special meeting of stockholders at which directors are to be elected pursuant to the Corporation’s notice of meeting (a) by or at the direction of the Board of Directors or a committee thereof (or stockholders pursuant to Article I, Section 1.2 of these By-Laws) or (b) provided that the Board of Directors (or stockholders pursuant to Article I, Section 1.22 of these By-Laws) has determined that directors shall be elected at such meeting, by any stockholder of the Corporation who is entitled to vote on such election at the meeting who complies with the notice procedures set forth in this By-Law and who is a stockholder of record at the time such notice is delivered to the Secretary of the Corporation. The proposals by stockholders of other business to be conducted at a special meeting of stockholders may be made only in accordance with Article I, Section 1.2 of these By-Laws.  In the event the Corporation calls a special meeting of stockholders for the purpose of electing one or more directors to the Board of Directors, any such stockholder entitled to vote in such election of directors may nominate a person or persons (as the case may be) for election to such position(s) as specified in the Corporation’s notice of meeting if the stockholder’s notice as required by paragraph (A)(2) of this By-Law shall be delivered to the Secretary at the principal executive offices of the Corporation not earlier than the 120th day prior to such special meeting and not later than the close of business on the later of the 90th day prior to such special meeting or the tenth day following the day on which public announcement is first made of the date of the special meeting and of the nominees proposed by the Board of Directors to be elected at such meeting.

(C)General.

(1)Only persons who are nominated in accordance with the procedures set forth in this By-Law shall be eligible to serve as directors and only such business shall be conducted at a meeting of stockholders as shall have been brought before the meeting in accordance with the procedures set forth in this By-Law.  In addition, nominations of persons by a stockholder for election to the Board of Directors and business proposed to be brought by a stockholder may not be brought before the meeting if such stockholder or any proponent persons, as applicable, takes action contrary to the representations made in the notice referred to in the second paragraph of subparagraph (2) of paragraph (A) of this By-Law applicable to such nomination or business or if such notice applicable to such nomination or business contains an untrue statement of a material fact or omits to state a material fact necessary to make the statements therein not misleading.  Except as otherwise provided by law, the Certificate of Incorporation of the Corporation or these By-Laws, the chairman of the meeting shall, if the facts warrant, determine and declare to the meeting that any nomination or business was not properly brought before the meeting in accordance with the provisions of these By-Laws, and if he or she should so determine, the chairman shall so declare to the meeting, and any such nomination or business not properly brought before the meeting shall not be transacted.

Notwithstanding the foregoing provisions of this Section 1.13, if the stockholder (or a qualified representative of the stockholder) does not appear at the annual or special meeting of stockholders of the Corporation to present a nomination or business, such nomination shall be disregarded and such proposed business shall not be transacted, notwithstanding that proxies in

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respect of such vote may have been received by the Corporation. For purposes of this Section 1.13, to be considered a qualified representative of the stockholder, a person must be a duly authorized officer, manager or partner of such stockholder or must be authorized by a writing executed by such stockholder or an electronic transmission delivered by such stockholder to act for such stockholder as proxy at the meeting of stockholders and such person must produce such writing or electronic transmission, or a reliable reproduction of the writing or electronic transmission, at the meeting of stockholders.

(2)For purposes of this By-Law, “public announcement” shall mean disclosure in a press release reported by the Dow Jones News Service, Associated Press or comparable national news service or in a document publicly filed or furnished by the Corporation with the Securities and Exchange Commission pursuant to Section 13, 14 or 15(d) of the Exchange Act.

(3)For purposes of this By-Law, no adjournment or postponement or notice of adjournment or postponement of any meeting shall be deemed to constitute a new notice of such meeting for purposes of this Section 1.13, and in order for any notification required to be delivered by a stockholder pursuant to this Section 1.13 to be timely, such notification must be delivered within the periods set forth above with respect to the originally scheduled meeting.

(4)Notwithstanding the foregoing provisions of this By-Law, a stockholder shall also comply with all applicable requirements of the Exchange Act and the rules and regulations thereunder with respect to the matters set forth in this By-Law; provided, however, that to the fullest extent permitted by law, any references in these By-Laws to the Exchange Act or the rules and regulations promulgated thereunder are not intended to and shall not limit any requirements applicable to nominations or proposals as to any other business to be considered pursuant to this By-Law (including paragraphs (A)(1)(c) and (B) hereof), and compliance with paragraphs (A)(1)(c) and (B) of this By-Law shall be the exclusive means for a stockholder to make nominations or submit other business (other than, as provided in the last sentence of this paragraph (C)(4), matters properly brought under and in compliance with Rule 14a-8 of the Exchange Act as amended from time to time).  Nothing in these By-Laws shall be deemed to affect any rights of stockholders to request inclusion of proposals in the Corporation’s proxy statement pursuant to Rule 14a-8 under the Exchange Act.  The foregoing notice requirements of this Section 1.13 shall be deemed satisfied by a stockholder with respect to business other than a nomination if the stockholder has notified the Corporation of his, her or its intention to present a proposal at an annual meeting in compliance with applicable rules and regulations promulgated under the Exchange Act and such stockholder’s proposal has been included in a proxy statement that has been prepared by the Corporation to solicit proxies for such annual meeting.

ARTICLE II

Consent of Stockholders In Lieu of Meeting

Unless otherwise provided in the Certificate of Incorporation, any action required by law or these By-laws to be taken at any annual or special meeting of stockholders of the Corporation may be taken without a meeting, without prior notice and without a vote if a consent or consents in writing, setting forth the action so taken, shall be signed by the holders of outstanding stock having not less than the minimum number of votes that would be necessary to authorize or take such action at a meeting at which all shares entitled to vote thereon were present and voted and shall be delivered to the Corporation as required by law.  Prompt notice of the taking of the corporate action without a meeting by less than unanimous written consent shall be given to those stockholders who have not so consented in writing.

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Every written consent shall bear the date of signature of each stockholder who signs the consent, and no written consent shall be effective to take the action referred to therein unless, within sixty (60) days of the earliest dated consent delivered in the manner required by this Article III and the DGCL to the Corporation, written consents signed by a sufficient number of holders of shares of stock of the Corporation to take action are delivered to the Corporation as required by law.

ARTICLE III

Board of Directors

Section 3.1.Number.  The Board of Directors shall consist of not less than three nor more than fifteen directors, as fixed from time to time by resolution of either the Board of Directors or the stockholders in accordance with applicable law (each being subject to any subsequent resolutions of either of them).

Section 3.2.Election and Term of Office.  Directors shall be elected at the annual meeting of the stockholders, except as provided in Sections 3.3 or 3.11 of these By-laws.  Each director (whether elected at an annual meeting or to fill a vacancy or otherwise) shall hold office until his successor shall have been duly elected and qualified or until his earlier death, resignation or removal in the manner hereinafter provided.

Section 3.3.Vacancies and Additional Directorships.  Unless otherwise provided in the Certificate of Incorporation of the Corporation, vacancies and newly created directorships resulting from any increase in the authorized number of directors elected by all of the stockholders having the right to vote as a single class may be filled by a majority of the directors then in office, although less than a quorum, or by a sole remaining director.  Unless otherwise provided in the Certificate of Incorporation of the Corporation, when one or more directors shall resign from the Board, effective at a future date, a majority of the directors then in office, including those who have so resigned, shall have power to fill such vacancy or vacancies, the vote thereon to be effective upon the effectiveness of such resignation or resignations.

Section 3.4.Meetings.

(a)Regular Meetings.  The Board of Directors may by resolution provide for the holding of regular meetings for the organization of the Corporation, for the election of officers and for the transaction of such other business as may properly come before the meeting, and may fix the times and places at which such meetings shall be held.  Notice of regular meetings shall not be required to be given, provided that whenever the time or place of regular meetings shall be fixed or changed, notice of such action shall be given promptly by electronic transmission, mail, facsimile, telegram, radio, cable, telephone or personal delivery to each director who shall not have been present at the meeting at which such action was taken.

(b)Special Meetings.  Special meetings of the Board of Directors may be called by or at the direction of the Chairman of the Board, if any, the Vice Chairman, if any, the President, or a majority of the directors then in office, except that when the Board of Directors consists of one director, then such director may call a special meeting.  Except as otherwise required by law, notice of each special meeting shall be mailed to each director, addressed to him at his residence or usual place of business, at least five days before the day on which such meeting is to be held, or shall be sent to him at such place by electronic transmission, facsimile, telegram, radio or cable, or telephoned or delivered to him personally, not later than 24 hours before the day on which such meeting is to be held.  Such notice shall state the time and place of such meeting, but need not state the purpose thereof, unless otherwise required by law, the Certificate of Incorporation of the Corporation or these By-laws.

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(c)Waiver of Notice.  Whenever notice is required to be given to the directors under any provision of law, the Certificate of Incorporation of the Corporation or these By-laws, a written waiver, signed by the director entitled to notice, whether before or after the time stated therein, shall be deemed equivalent to notice.  Attendance of a director at a meeting shall constitute a waiver of notice of such meeting, except when a director attends a meeting for the express purpose of objecting at the beginning of the meeting to the transaction of business because the meeting is not lawfully called or convened.  Neither the business to be transacted at, nor the purpose of, any regular or special meeting of the directors need be specified in any written waiver of notice unless so required by the Certificate of Incorporation of the Corporation.

(d)Participation by Conference Call.  Members of the Board of Directors may participate in any meeting of the Board by means of conference telephone or similar communications equipment by means of which all persons participating in the meeting can hear each other, and such participation shall constitute presence in person at the meeting.

Section 3.5.Quorum; Voting.  Unless the Certificate of Incorporation of the Corporation provides otherwise, at each regular meeting of the Board of Directors one-half of the total number of members of the Board of Directors but not less than two directors, and at each special meeting of the Board of Directors, one-third of the total number of members of the Board of Directors but not less than two directors shall constitute a quorum for the transaction of business, except that when the Board consists of only one director, then one director shall constitute a quorum.  Unless otherwise required by the Certificate of Incorporation of the Corporation or these By-laws, a vote of the majority of the directors present at any meeting at which a quorum is present shall be the act of the Board.

Section 3.6.Adjournments.  A majority of the directors present, whether or not a quorum is present, may adjourn any meeting to another time and place.  Notice of any adjournment of a meeting of the Board of Directors to another time or place shall be given to the directors who were not present at the time of the adjournment and, unless such time and place are announced at such meeting, to the directors who were present.

Section 3.7.Organization.  The Chairman of the Board, or if there is no Chairman or in his absence or disability, the Vice Chairman, if any, the President, or any Vice President, or in the absence of all of them, a chairman appointed by the directors present at such meeting, shall act as chairman at meetings of directors.  The Secretary of the Corporation, or in his absence or disability, any Assistant Secretary of the Corporation, or in the absence of all of them, a secretary appointed by the chairman of the meeting, shall act as secretary at all meetings of the Board of Directors.

Section 3.8.Action of Board Without Meeting.  Any action required or permitted to be taken at any meeting of the Board of Directors may be taken without a meeting if all members of the Board of Directors consent thereto in writing (including by electronic transmission) and such writing or writings (including by electronic transmission) are filed with the minutes of proceedings of the Board of Directors.

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Section 3.9.Manner of Acting.  A member of the Board of Directors shall, in the performance of his duties, be fully protected in relying in good faith upon the records of the Corporation and upon such information, opinions, reports or statements presented to the Corporation by any of the Corporation’s officers or employees, or committees of the Board of Directors, or by any other person as to matters the director reasonably believes are within such other person’s professional or expert competence and who has been selected with reasonable care by or on behalf of the Corporation.

Section 3.10.Resignation of Directors.  Any director may resign at any time upon giving written notice of such resignation to the Board of Directors, the Chairman of the Board, if any, the Vice Chairman, if any, the President, any Vice President or the Secretary.  Unless otherwise specified in such notice, such resignation shall take effect upon receipt thereof by the Board of Directors or any such officer, and acceptance of such resignation shall not be necessary to make it effective.

Section 3.11.Removal of Directors.  At any meeting of the stockholders duly called as provided in these By-laws, any director or directors may be removed from office, either with or without cause, as provided by law.  At such meeting, a successor or successors may be elected by a plurality of the votes cast, or if any such vacancy is not so filled, it may be filled by the directors as provided in Section 3.3 of these By-laws.

Section 3.12.Compensation of Directors.  Directors may receive such reasonable compensation for their services as directors, whether in the form of salary or a fixed fee for attendance at meetings, with expenses, if any, as the Board of Directors may from time to time determine.  Nothing contained herein shall be construed to preclude any director from serving the Corporation in any other capacity and receiving compensation therefor.

ARTICLE IV

Committees of the Board

Section 4.1.Designation and Powers.  The Board of Directors may, by a resolution passed by a majority of the entire Board of Directors, designate one or more committees, each committee to consist of one or more of the directors of the Corporation.  Any such committee, to the extent provided in such resolution and permitted by law, shall have and may exercise all the powers and authority of the Board of Directors in the management of the business and affairs of the Corporation, and may authorize the seal of the Corporation to be affixed to all papers which may require it; provided, however, that no such committee shall have the power or authority to (i) amend the Certificate of Incorporation of the Corporation, except as permitted by law, (ii) adopt an agreement of merger or consolidation, (iii) recommend to the stockholders the sale, lease or exchange of all or substantially all of the Corporation’s property or assets, (iv) recommend to the stockholders a dissolution of the Corporation, or a revocation of a dissolution, or (v) amend the By-laws of the Corporation. Any such committee, to the extent provided in such resolution, shall have the power and authority to (i) declare a dividend, (ii) authorize the issuance of stock, or (iii) adopt a certificate of ownership and merger as permitted by law.

Section 4.2.Term of Office.  The term of office of the members of each committee shall be as fixed from time to time by the Board of Directors, subject to these By-laws; provided, however, that any committee member who ceases to be a member of the Board of Directors shall ipso facto cease to be a member of any committee thereof.

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Section 4.3.Alternate Members and Vacancies.  The Board of Directors may designate one or more directors as alternate members of any committee who, in the order specified by the Board of Directors, may replace any absent or disqualified member at any meeting of the committee.  If at a meeting of any committee one or more of the members thereof should be absent or disqualified, and if either the Board of Directors has not so designated any alternate member or members or the number of absent or disqualified members exceeds the number of alternate members who are present at such meeting, then the member or members of such committee (including alternates) present at any meeting and not disqualified from voting, whether or not he or they constitute a quorum, may unanimously appoint another director to act at the meeting in the place of any such absent or disqualified member.  If any vacancy shall occur in any committee by reason of death, resignation, disqualification, removal or otherwise, the remaining member or members of such committee, so long as a quorum is present, may continue to act until such vacancy is filled by the Board of Directors.

Section 4.4.Meetings.  Meetings of a committee may be called by the Chairman of the Board or the President of the Corporation or by any member of the committee on not less than one day’s notice, which notice may be written (including electronic transmission) or oral.  Any member of a committee may waive notice of any meeting and no notice of any meeting need be given to any member thereof who attends the meeting.  The notice of a meeting need not state the business proposed to be transaction at the meeting.  Each committee shall fix its own rules of procedure, and shall meet where and as and upon such notice as provided by such rules or by resolution of the Board of Directors so long as the same are not inconsistent with these By-Laws.  Each committee shall keep regular minutes of its proceedings and all actions by each committee shall be reported to the Board of Directors at its next regular meeting succeeding any such action.  Members of any committee designated by the Board of Directors may participate in a meeting of the committee by means of conference telephone or similar communications equipment by means of which all persons participating in the meeting can hear each other, and such participation shall constitute presence in person at the meeting.

Section 4.5.Quorum; Voting.  At each meeting of any committee the presence of a majority of the total number of its members then in office shall constitute a quorum for the transaction of business; except that when a committee consists of one member, then one member shall constitute a quorum.  A vote of the majority of committee members present at any meeting of a committee at which a quorum is present shall be the act of such committee.

Section 4.6.Adjournments.  A majority of the members of a committee present, whether or not a quorum is present, may adjourn any meeting of such committee to another place and time.

Section 4.7.Action of Committee Without Meeting.  Any action required or permitted to be taken at any meeting of any committee designated by the Board of Directors may be taken without a meeting if all members of such committee consent thereto in writing (including electronic transmission) and such writing or writings (including electronic transmission) are filed with the minutes of the proceedings of such committee.

Section 4.8.Manner of Acting.  A member of any committee designated by the Board of Directors shall, in the performance of his duties, be fully protected in relying in good faith upon the records of the Corporation and upon such information, opinions, reports or statements presented to the Corporation by any of the Corporation’s officers or employees, or other committees of the Board of Directors, or by any other person as to matters the member reasonably believes are within such other person’s professional or expert competence and who has been selected with reasonable care by or on behalf of the Corporation.

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Section 4.9.Resignation of Committee Members.  Any member of a committee may resign at any time by giving written notice of such resignation to the Board of Directors, the Chairman of the Board, if any, the Vice Chairman, if any, the President, any Vice President or the Secretary.  Unless otherwise specified in such notice, such resignation shall take effect upon receipt thereof by the Board of Directors or any such officer, and acceptance of such resignation shall not be necessary to make it effective.

Section 4.10.Removal of Committee Members.  Any member of any committee may be removed with or without cause at any time by the Board of Directors.

Section 4.11.Compensation of Committee Members.  Committee members may receive such reasonable compensation for their services as committee members, whether in the form of salary or a fixed fee for attendance at meetings, with expenses, if any, as the Board of Directors may from time to time determine.  Nothing contained herein shall be construed to preclude any committee member from serving the Corporation in any other capacity and receiving compensation therefor.

ARTICLE IVA

Executive and Compensation Committees of the Board

Section 4.1A.Executive Committee.  The Board of Directors may, by a resolution passed by a majority of the entire Board of Directors, designate an Executive Committee (and may discontinue the same at any time) to consist of two or more of the directors of the Corporation.  The members shall be appointed by the Board and shall hold office during the pleasure of the Board.  The Executive Committee shall have and may exercise all the powers of the Board of Directors (when the Board is not in session) in the management of the business and affairs of the Corporation (and may authorize the seal of the Corporation to be affixed to all papers which may require it), except that the Executive Committee shall have no power (a) to elect directors; (b) to alter, amend or repeal these By-Laws or any resolution or resolutions of the directors designating an Executive Committee; or (c) to appoint any member of the Executive Committee. Regular meetings of the Executive Committee shall be held at such time and place as the Committee may determine, and special meetings may be called at any time by any officer or any member of the Committee.  Notice of each meeting of the Executive Committee shall be given (or waived) in the same manner as notice for a director’s meeting, and a majority of the members of the Executive Committee shall constitute a quorum for the transaction of business.

Section 4.2A.Compensation Committee.  The Board of Directors may, by a resolution passed by a majority of the entire Board of Directors, designate a Compensation Committee (and may discontinue the same at any time) to consist of two or more of the directors of the Corporation.  The members shall be appointed by the Board and shall hold office during the pleasure of the Board.  The Compensation Committee shall have, and may exercise, any and all of the following powers of the Board of Directors: (a) to determine compensation to be payable to officers and key employees of subsidiaries of the Corporation, and the terms and conditions attendant thereto; (b) to determine the terms and conditions of, and to authorize employment contracts with officers and key employees of the Corporation, and officers and key employees of subsidiaries of the Corporation; (c) to determine the bonuses and fringe benefits, if any, that shall be granted to officers and key employees of the Corporation, and to determine the terms and conditions of any loans to be granted.

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ARTICLE V

Officers

Section 5.1.Officers.  The officers of the Corporation shall be a Chairman of the Board (if elected by the Board of Directors), a Vice Chairman of the Board (if elected by the Board of Directors), a President, one or more Vice Presidents (if elected by. the Board of Directors), a Secretary, a Treasurer, and such other officers as may be appointed in accordance with the provisions of Section 5.3 of these By-laws.  The Chairman of the Board of Directors and the President shall be chosen from among the Board of Directors of the Corporation, but the other officers need not be members of such Board of the Corporation.

Section 5.2.Election, Term of Office and Qualifications.  Each officer (except such officers as may be appointed in accordance with the provisions of Section 5.3 of these By-laws) shall be elected or appointed by a majority of the Board of Directors present at any meeting at which such election is held.  Unless otherwise provided in the resolution of election, each officer (whether elected at the first meeting of the Board of Directors after the annual meeting of stockholders or to fill a vacancy or otherwise) shall hold his office until the first meeting of the Board of Directors after the next annual meeting of stockholders and until his successor shall have been elected and qualified, or until his earlier death, resignation or removal.

Section 5.3.Subordinate Officers and Agents.  The Board of Directors may from time to time appoint other officers or agents (including, without limitation, one or more Assistant Vice Presidents, one or more Assistant Secretaries and one or more Assistant Treasurers), to hold office for such periods, have such authority and perform such duties as are provided in these By-laws or as may be provided in the resolutions appointing them.  The Board of Directors may delegate to any officer or agent the power to appoint any such subordinate officers or agents and to prescribe their respective terms of office, authority and duties.

Section 5.4.The Chairman of the Board.  The Chairman of the Board shall be elected by the Board of Directors.  He shall preside at all meetings of the Board of Directors and stockholders and shall see that all orders and resolutions of the Board of Directors are carried into effect. Subject to the direction of the Board of Directors, he shall have general charge of the business, affairs and property of the Corporation and general supervision over its officers and agents.  He may sign (which signature may be a facsimile signature), with any other officer thereunto duly authorized, certificates representing stock of the Corporation, the issuance of which shall have been duly authorized, and may sign (which signature may be a facsimile signature) and execute, in the name and on behalf of the Corporation, deeds, mortgages, bonds, contracts, agreements and other instruments and documents duly authorized by the Board of Directors, except where the signing and execution thereof shall be expressly delegated by the Board of Directors to another officer or agent.  From time to time the Chairman shall report to the Board of Directors all matters within his knowledge which the interests of the Corporation may require to be brought to the attention of the directors.  He shall also have such other powers and perform such other duties as may from time to time be prescribed by the Board of Directors or these By-laws.

Section 5.5.The Vice Chairman.  At the request of the Chairman of the Board, if there is one, or in his absence or disability, the Vice Chairman, if there is one, shall perform all the duties of the Chairman of the Board and, when so acting, shall have all the powers of and be subject to all the restrictions on the Chairman of the Board.  The Vice Chairman may sign (which signature may be a facsimile signature), with any other officer thereunto duly authorized, certificates representing

47

stock of the Corporation, the issuance of which shall have been duly authorized, and may sign (which signature may be a facsimile signature) and execute, in the name and on behalf of the Corporation, deeds, mortgages, bonds, contracts, agreements and other instruments and documents duly authorized by the Board of Directors, except where the signing and execution thereof shall be expressly delegated by the Board of Directors to another officer or agent.  The Vice Chairman shall also have such other powers and perform such other duties as may from time to time be prescribed by the Board of Directors, the Chairman of the Board or these By-laws.

Section 5.6.The President.  If there is no Chairman of the Board or Vice Chairman, or at the request of the Chairman of the Board or the Vice Chairman, or, in the absence or disability of the Chairman of the Board and the Vice Chairman, the President shall be the chief executive officer of the Corporation.  Subject to the authority and direction of the Chairman of the Board and the Vice Chairman, if any, and the Board of Directors, the President shall have all the powers of and be subject to all the restrictions on the Chairman of the Board, and shall have charge of the day to day supervision of the business, affairs and property of the Corporation.  The President may sign (which signature may be a facsimile signature), with any other officer thereunto duly authorized, certificates representing stock of the Corporation, the issuance of which shall have been duly authorized, and may sign (which signature may be a facsimile signature) and execute, in the name and on behalf of the Corporation, deeds, mortgages, bonds, contracts, agreements and other instruments and documents duly authorized by the Board of Directors, except where the signing and execution thereof shall be expressly delegated by the Board of Directors to another officer or agent.  The President shall also have such other powers and perform such other duties as may from time to time be prescribed by the Board of Directors, the Chairman of the Board, the Vice Chairman or these By-laws.

Section 5.7.Vice Presidents.  At the request of the President, or in his absence or disability, the Vice President designated by the Board of Directors shall perform all the duties of the President and, when so acting, shall have all the powers of and be subject to all the restrictions on the President.  Any Vice President may also sign (which signature may be a facsimile signature), with any other officer thereunto duly authorized, certificates representing stock of the Corporation, the issuance of which shall have been duly authorized, and may sign (which signature may be a facsimile signature) and execute, in the name and on behalf of the Corporation, deeds, mortgages, bonds, contracts, agreements and other instruments and documents duly authorized by the Board of Directors, except where the signing and execution thereof shall be expressly delegated by the Board of Directors to another officer or agent.  Each Vice President shall have such other powers and perform such other duties as may from time to time be prescribed by the Board of Directors, the Chairman of the Board, the Vice Chairman, the President or these By-laws.

Section 5.8.The Secretary.  The Secretary shall

(a)record all the proceedings of meetings of the stockholders, the Board of Directors, and any committees thereof in a book or books to be kept for that purpose;

(b)cause all notices to be duly given in accordance with the provisions of these By-laws and as required by law;

(c)whenever any committee shall be appointed pursuant to a resolution of the Board of Directors, furnish the chairman of such committee with a copy of such resolution;

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(d)be custodian of the records and the seal of the Corporation, and cause such seal to be affixed to (or a facsimile to be reproduced on) all certificates representing stock of the Corporation prior to the issuance thereof and all instruments the execution of which in the name and on behalf of the Corporation and under its seal shall have been duly authorized;

(e)see that the lists, books, reports, statements, certificates and other documents and records required by law are properly kept and filed;

(f)have charge of the stock and transfer books of the Corporation, and exhibit such books at all reasonable times to such persons as are entitled by law to have access thereto;

(g)sign (which signature may be a facsimile signature), with any other officer thereunto duly authorized, certificates representing stock of the Corporation, the issuance of which shall have been duly authorized, and sign (which signature may be a facsimile signature) and execute, in the name and on behalf of the Corporation, instruments and documents duly authorized by the Board of Directors, except where the signing and execution thereof shall be expressly delegated by the Board of Directors to another officer or agent; and

(h)in general, perform all duties incident to the office of Secretary and have such other powers and perform such other duties as may from time to time be prescribed by the Board of Directors, the Chairman of the Board, the Vice Chairman, the President or these By-laws.

Section 5.9.Assistant Secretaries.  At the request of the Secretary, or in his absence or disability, the Assistant Secretary designated by the Secretary, the Board of Directors, the Chairman of the Board, the Vice Chairman, or the President, shall perform all the duties of the Secretary, and, when so acting, shall have all the powers of and be subject to all the restrictions on the Secretary.  Each Assistant Secretary shall have such other powers and perform such other duties as may from time to time be prescribed by the Board of Directors, the Chairman of the Board, the Vice Chairman, the President, the Secretary or these By-laws.

Section 5.10.The Treasurer.  The Treasurer shall

(a)have charge of and supervision over and be responsible for the funds, securities, receipts and disbursements of the Corporation;

(b)cause the moneys and other valuable effects .of the Corporation to be deposited in the name and to the credit of the Corporation in such banks or trust companies, or with such bankers or other depositaries, as shall be selected in accordance with Section 7.3 of these By-laws, or to be otherwise dealt with in such manner as the Board of Directors may direct from time to time;

(c)cause the funds of the Corporation to be disbursed by checks or drafts upon the authorized depositaries of the Corporation, and cause to be taken and preserved proper vouchers for all moneys disbursed;

49

(d)render to the Board of Directors, the Chairman of the Board, if any, the Vice Chairman, if any, and/or the President, whenever requested, a statement of the financial condition of the Corporation and of all of his transactions as Treasurer;

(e)cause to be kept at the Corporation’s principal office correct books of account of all of the Corporation’s business and transactions and such duplicate books of account as he shall determine and, upon application, cause such books or duplicates thereof to be exhibited to any director;

(f)be empowered, from time to time, to require from the officers or agents of the Corporation reports or statements giving such information as he may desire or deem appropriate with respect to any or all financial transactions of the Corporation;

(g)sign (which signature may be a facsimile signature), with any other officer thereunto duly authorized, certificates representing stock of the Corporation, the issuance of which shall have been duly authorized, and sign (which signature may be a facsimile signature) and execute, in the name and on behalf of the Corporation, instruments and documents duly authorized by the Board of Directors, except where the signing and execution thereof shall be expressly delegated by the Board of Directors to another officer or agent; and

(h)in general, perform all duties incident to the office of Treasurer and have such other powers and perform such other duties as may from time to time be prescribed by the Board of Directors, the Chairman of the Board, the Vice Chairman, the President or these By-laws.

Section 5.11.Assistant Treasurer.  At the request of the Treasurer, or in his absence or disability, the Assistant Treasurer designated by the Treasurer, the Board of Directors, the Chairman of the Board, if any, the Vice Chairman, if any, or the President shall perform all the duties of the Treasurer, and, when so acting, shall have all the powers of and be subject to all the restrictions on the Treasurer.  Each Assistant Treasurer shall have such other powers and perform such other duties as may from time to time be prescribed by the Board of Directors, the Chairman of the Board, the Vice Chairman, the President, the Treasurer or these By-laws.

Section 5.12.Resignations.  Any officer may resign at any time by giving written notice of such resignation to the Board of Directors, the Chairman of the Board, the Vice Chairman, the President, any Vice President or the Secretary.  Unless otherwise specified in such written notice, such resignation shall take effect upon receipt thereof by the Board of Directors or any such officer, and the acceptance of such resignation shall not be necessary for it to be effective.

Section 5.13.Removal.  Any officer specifically designated in Section 5.1 of these By-laws may be removed with or without cause at any meeting of the Board of Directors by the affirmative vote of a majority of the directors then in office.  Any officer or agent appointed pursuant to the provisions of Section 5.3 of these By-laws may be removed with or without cause at any meeting of the Board of Directors by the affirmative vote of a majority of the directors present at such meeting or at any time by any superior officer or agent upon whom such power of removal shall have been conferred by the Board of Directors.

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Section 5.14.Vacancies.  Any vacancy in any office (whether by reason of death, resignation, removal, disqualification or otherwise) shall be filled for the unexpired portion of .the term in the manner prescribed by these By-laws for regular elections or appointments to such office.

Section 5.15.Compensation.  The salaries of the officers of the Corporation shall be fixed from time to time by the Board of Directors, except that the Board of Directors may delegate to any person the power to fix the salaries or other compensation of any officers or agents appointed pursuant to the provisions of Section 5.3 of these By-laws.  No officer shall be prevented from receiving such salary by reason of the fact that he is also a director of the Corporation.

Section 5.16.Bonding.  The Corporation may secure the fidelity of any or all of its officers or agents by bond or otherwise.

ARTICLE VI

Indemnification

The Corporation shall indemnify, in the manner and to the fullest extent permitted by applicable law, any person (or the estate of any person) who was or is a party to, or is threatened to be made a party to, any threatened, pending or completed action, suit or proceeding, whether or not by or in the right of the Corporation, and whether civil, criminal, administrative, investigative or otherwise, by reason of the fact that such person is or was a director, officer, employee, fiduciary or agent of the Corporation, or is or was serving at the request of the Corporation as a director, officer, trustee, fiduciary, employee or agent of another corporation, partnership, joint venture, trust or other enterprise, against expenses (including attorneys’ fees), judgments, fines and amounts paid in settlement actually and reasonably incurred by such person in connection with such action, suit or proceeding.  To the extent and in the manner provided by applicable law, any such expenses may be paid by the Corporation in advance of the final disposition of such action, suit or proceeding.  Unless otherwise permitted by applicable law, the indemnification provided for herein shall be made only as authorized in the specific case upon a determination, made in the manner provided by applicable law, that indemnification of such director, officer, employee or agent is proper in the circumstances.  The Corporation may, to the fullest extent permitted by applicable law, purchase and maintain insurance on behalf of any person who is or was a director, officer, employee or agent of the Corporation, or is or was serving at the request of the Corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise against any liability which may be asserted against him and incurred by him in any such capacity, or arising out of his status as such, whether or not the Corporation would have the power to indemnify him against such liability under applicable law.  The indemnification and advancement of expenses provided for herein shall not be deemed to limit the right of the Corporation to indemnify or make advances to any other person for any expenses (including attorneys’ fees), judgments, fines or other amounts to the fullest extent permitted by applicable law, nor shall they be deemed exclusive of any other rights to which any person seeking indemnification or advancement of expenses may be entitled under any agreement, vote of stockholders or disinterested directors or otherwise, both as to action in his official capacity and as to action in another capacity while holding such office.

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ARTICLE VII

Execution of Instruments and

Deposit of Corporate Funds

Section 7.1.Execution of Instruments Generally.  Subject to the approval of the Board of Directors, the Chairman of the Board, the Vice Chairman, the President, any Vice President, the Secretary or the Treasurer may enter into any contract or execute and deliver any instrument in the name and on behalf of the Corporation.  The Board of Directors may authorize any officer or officers or agent or agents to enter into any contract or execute and deliver any instrument in the name and on behalf of the Corporation, and such authorization may be general or confined to specific instances.

Section 7.2.Borrowing.  No loans or advances shall be obtained or contracted for, by or on behalf of the Corporation, and no negotiable paper shall be issued in the name of the Corporation, unless and except as authorized by the Board of Directors.  Such authorization may be general or confined to specific instances.  Any officer or agent of the Corporation thereunto so authorized may obtain loans and advances for the Corporation, and in connection with such loans and advances may make, execute and deliver promissory notes, bonds or other evidences of indebtedness of the Corporation.  Any officer or agent of the Corporation so authorized may pledge, hypothecate or transfer as security for the payment of any and all loans, advances, indebtedness and liabilities of the Corporation any and all stocks, bonds, other securities and other personal property at any time held by the Corporation, and to that end may endorse, assign and deliver the same and do every act and thing necessary or proper in connection therewith.

Section 7.3.Deposits.  All funds of the Corporation not otherwise employed shall be deposited from time to time to its credit in such banks or trust companies or with such bankers or other depositaries as the Board of Directors may select, or as may he selected by any officer or officers or agent or agents authorized to do so by the Board of Directors.  Endorsements for deposit to the credit of the Corporation in any of its duly authorized depositaries shall be made in such manner as the Board of Directors may from time to time determine.

Section 7.4.Checks, Drafts, Etc.  All checks, drafts or other orders for the payment of money, and all notes or other evidences of indebtedness issued in the name of the Corporation, shall be signed by such officer or officers or agent or agents of the Corporation, and in such manner, as from time to time shall be determined by the Board of Directors.

Section 7.5.Proxies.  Proxies to vote with respect to shares of stock of other corporations owned by or standing in the name of the Corporation may be executed and delivered from time to time on behalf of the Corporation by the Chairman of the Board, the Vice Chairman, the President, or any Vice President, or by any other person or persons thereunto authorized by the Board of Directors.

ARTICLE VIII

Stock

Section 8.1.Certificates of Stock.  Shares of capital stock of the Corporation may be certificated or uncertificated, as provided under the Delaware General Corporation Law.  Each stockholder, upon written request to the transfer agent or registrar of the Corporation, shall be entitled to a certificate of the capital stock of the Corporation in such form as may from time to time be

52

prescribed by the Board of Directors.  Each certificate shall bear the Corporation seal and shall be signed by the Chairman of the Board, the Vice Chairman, the President or any Vice President and by the Treasurer or an Assistant Treasurer or the Secretary or an Assistant Secretary.  The Corporation seal and the signatures by Corporation officers may be facsimiles if the certificate is manually countersigned by an authorized person on behalf of a transfer agent or registrar other than the Corporation or its employee.  In case any officer, transfer agent or registrar who has signed or whose facsimile signature has been placed on the certificate shall have ceased to be an officer, transfer agent or registrar before the certificate is issued, it may be issued by the Corporation with the same effect as if the officer, transfer agent or registrar were the officer, transfer agent or registrar at the time of its issue.  Every certificate for shares of stock which are subject to any restriction on transfer and every certificate issued when the Corporation is authorized to issue more than one class or series of stock shall contain a legend with respect thereto as is required by law.  The Corporation shall be permitted to issue fractional shares.

Section 8.2.Regulations.  Upon the surrender to the Corporation or the transfer agent of the Corporation of a certificate for shares duly endorsed or accompanied by proper evidence of succession, assignation or authority to transfer, the Corporation shall issue a new certificate or evidence of the issuance of uncertificated shares to the stockholder entitled thereto, cancel the old certificate and record the transaction upon the Corporation’s books.  Upon the surrender of any certificate for transfer of stock, the certificate shall at once be conspicuously marked on its face “Cancelled” and filed with the permanent stock records of the Corporation.  Upon the receipt of proper transfer instructions from the registered owner of uncertificated shares, the uncertificated shares shall be cancelled and new equivalent uncertificated shares or certificated shares shall be issued to the stockholder entitled thereto and the transaction shall be recorded upon the Corporation’s books.  If the Corporation has a transfer agent or registrar acting on its behalf, the signature of any officer or representative thereof may be in a facsimile.  The Board of Directors may make such rules and regulations consistent with any governing statute as it may deem expedient concerning the issue, transfer and registration of stock (whether certificated or uncertificated) and concerning stock issued, transferred or registered in lieu or replacement of any lost, stolen, destroyed or mutilated certificates of stock.

Section 8.3.Transfer Agent and Registrar.  The Board of Directors may appoint a transfer agent or transfer agents and a registrar or registrars of transfers for any or all classes of the capital stock of the Corporation, and may require stock certificates of any or all classes to bear the signature of either or both.

Section 8.4.Registered Holders.  The Corporation shall be entitled to treat the person in whose name any share of stock or any warrant, right or option is registered as the owner thereof for all purposes and shall not be bound to recognize any equitable or other claim to, or interest in, such share, warrant, right or option on the part of any other person, whether or not the Corporation shall have notice thereof, save as may be expressly provided otherwise by the laws of the State of Delaware.  No transfer of stock shall be valid as against the Corporation, its stockholders and creditors for any purpose until it shall have been entered in the stock book by an entry showing from and to whom transferred, save as expressly provided otherwise by the laws of the State of Delaware.

53

ARTICLE IX

Corporate Seal

The corporate seal shall be circular in form, shall bear the name of the Corporation and words and figures denoting its organization under the laws of the State of Delaware and the year thereof, and otherwise shall be in such form as shall be approved from time to time by the Board of Directors.

ARTICLE X

Fiscal Year

The fiscal year of the Corporation shall begin on the first day of October in each year or such other day as the Board of Directors may determine by resolution.

ARTICLE XI

Amendments

In addition to the provisions, if any, in the Certificate of Incorporation of the Corporation relating to the amendment of the Corporation’s By-laws, the By-laws of the Corporation may be amended or repealed, and new By-laws may be made and adopted, by a majority of the votes cast at any annual or special stockholders’ meeting by holders of outstanding shares of stock of the Corporation entitled to vote thereon.

54

EX-31.1

Exhibit No. 31.1

Certifications

I, Russell M. Gifford, certify that:

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 14, 2013	/s/ Russell M. Gifford
	Russell M. Gifford
	Chief Financial Officer

55

EX-31.2

Exhibit No. 31.2

Certifications

I, Morton H. Kinzler, certify that:

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 14, 2013	/s/ Morton H. Kinzler
	Morton H. Kinzler
	Chief Executive Officer

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EX-32

Exhibit No. 32

Barnwell Industries, Inc.

Certification Pursuant to

Section 906 of the Sarbanes-Oxley Act of 2002

In connection with the Quarterly Report of Barnwell Industries, Inc. (the “Company”) on Form 10-Q for the quarter ended March 31, 2013 as filed with the Securities and Exchange Commission (the “Report”), each of the undersigned officers of the Company does hereby certify, pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to his knowledge:

(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 14, 2013	/s/ Morton H. Kinzler
	Name: Morton H. Kinzler
	Title: Chief Executive Officer
Dated:  May 14, 2013	/s/ Russell M. Gifford
	Name: Russell M. Gifford
	Title: Chief Financial Officer

The foregoing certification is being furnished solely pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (subsections (a) and (b) of Section 1350, Chapter 63 of Title 18, United States Code) and is not being filed as part of the Form 10-Q or as a separate disclosure document.

A signed original of the written statement required by Section 906 has been provided to the Company and will be retained by the Company and furnished to the Securities and Exchange Commission or its staff upon request.

57

XML

RETIREMENT PLANS (Details) (USD $)	3 Months Ended		6 Months Ended
	Mar. 31, 2013	Mar. 31, 2012	Mar. 31, 2013	Mar. 31, 2012
Pension Plan
Retirement plans
Service cost	$ 68,000	$ 76,000	$ 136,000	$ 151,000
Interest cost	74,000	81,000	149,000	162,000
Expected return on plan assets	(97,000)	(82,000)	(194,000)	(164,000)
Amortization of prior service cost (credit)	2,000	2,000	3,000	3,000
Amortization of net actuarial loss (gain)	26,000	27,000	52,000	56,000
Net periodic benefit cost	73,000	104,000	146,000	208,000
Contribution by the entity to the Pension Plan			250,000
SERP
Retirement plans
Service cost	13,000	12,000	26,000	25,000
Interest cost	15,000	15,000	29,000	30,000
Amortization of prior service cost (credit)	(2,000)		(3,000)
Amortization of net actuarial loss (gain)	5,000	4,000	10,000	8,000
Net periodic benefit cost	31,000	31,000	62,000	63,000
Postretirement Medical
Retirement plans
Service cost	3,000	3,000	7,000	6,000
Interest cost	13,000	12,000	25,000	24,000
Amortization of prior service cost (credit)	34,000	34,000	68,000	68,000
Amortization of net actuarial loss (gain)		(2,000)		(5,000)
Net periodic benefit cost	$ 50,000	$ 47,000	$ 100,000	$ 93,000

XML

OIL AND NATURAL GAS PROPERTIES (Details) (USD $)	3 Months Ended			6 Months Ended
	Mar. 31, 2013	Dec. 31, 2012	Mar. 31, 2012	Mar. 31, 2013	Mar. 31, 2012
Oil and Natural Gas Properties
Reduction of carrying value of assets	$ 2,179,000		$ 1,854,000	$ 4,506,000	$ 1,854,000
Oil and natural gas properties
Oil and Natural Gas Properties
Reduction of carrying value of assets	$ 2,179,000	$ 2,327,000	$ 0	$ 4,506,000	$ 0

XML

INFORMATION RELATING TO THE CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Tables)

6 Months Ended

Mar. 31, 2013

INFORMATION RELATING TO THE CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

Schedule of supplemental cash flow information

	Six months ended March 31,
	2013			2012
Supplemental disclosure of cash flow information:
Cash paid during the year for:
Interest		$	285,000		$	388,000
Income taxes		$	215,000		$	455,000

XML

LOSS PER COMMON SHARE (Tables)

6 Months Ended

Mar. 31, 2013

LOSS PER COMMON SHARE

Reconciliations between net loss attributable to the entity's stockholders and common shares outstanding of the basic and diluted net loss per share computations

	Three months ended March 31, 2013
	Net Loss				Shares		Per-Share
	(Numerator)				(Denominator)		Amount
Basic net loss per share		$	(2,944,000	)		8,277,160		$	(0.36	)
Effect of dilutive securities - common stock options		-				-
Diluted net loss per share		$	(2,944,000	)		8,277,160		$	(0.36	)
	Six months ended March 31, 2013
	Net Loss				Shares		Per-Share
	(Numerator)				(Denominator)		Amount
Basic net loss per share		$	(5,690,000	)		8,277,160		$	(0.69	)
Effect of dilutive securities - common stock options		-				-
Diluted net loss per share		$	(5,690,000	)		8,277,160		$	(0.69	)
	Three months ended March 31, 2012
	Net Loss				Shares		Per-Share
	(Numerator)				(Denominator)		Amount
Basic net loss per share		$	(2,981,000	)		8,277,160		$	(0.36	)
Effect of dilutive securities - common stock options		-				-
Diluted net loss per share		$	(2,981,000	)		8,277,160		$	(0.36	)
	Six months ended March 31, 2012
	Net Loss				Shares		Per-Share
	(Numerator)				(Denominator)		Amount
Basic net loss per share		$	(3,263,000	)		8,277,160		$	(0.39	)
Effect of dilutive securities - common stock options		-				-
Diluted net loss per share		$	(3,263,000	)		8,277,160		$	(0.39	)

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ACCUMULATED OTHER COMPREHENSIVE INCOME (Details) (USD $)	Mar. 31, 2013	Sep. 30, 2012
ACCUMULATED OTHER COMPREHENSIVE INCOME
Foreign currency translation	$ 4,050,000	$ 5,020,000
Retirement plans liability	(2,568,000)	(2,698,000)
Accumulated other comprehensive income	$ 1,482,000	$ 2,322,000

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INVESTMENTS (Details) (USD $)	Mar. 31, 2013	Sep. 30, 2012
Summary of investments
Total investments	$ 2,381,000	$ 2,381,000
Investment in two residential parcels
Summary of investments
Total investments	2,331,000	2,331,000
Number of residential parcels held for investment	2
Investment in land interest - Lot 4C
Summary of investments
Total investments	$ 50,000	$ 50,000
Area of land (in acres)	1,000

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CONDENSED CONSOLIDATED STATEMENTS OF EQUITY (Parenthetical) (USD $)	3 Months Ended		6 Months Ended
	Mar. 31, 2013	Mar. 31, 2012	Mar. 31, 2013	Mar. 31, 2012
CONDENSED CONSOLIDATED STATEMENTS OF EQUITY
Foreign currency translation adjustments, taxes	$ 0	$ 0	$ 0	$ 0
Retirement plans - amortization of accumulated other comprehensive loss into net periodic benefit cost, taxes	$ 0	$ 0	$ 0	$ 0

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FAIR VALUE MEASUREMENTS (Details) (USD $)	3 Months Ended		6 Months Ended			1 Months Ended	3 Months Ended	6 Months Ended
	Mar. 31, 2013	Mar. 31, 2012	Mar. 31, 2013	Mar. 31, 2012	Sep. 30, 2012	Apr. 30, 2012 Real estate held for sale item	Mar. 31, 2012 Nonrecurring Real estate held for sale	Mar. 31, 2012 Nonrecurring Real estate held for sale	Mar. 31, 2012 Nonrecurring Significant Other Observable Inputs (Level 2) Real estate held for sale	Mar. 31, 2012 Nonrecurring Carrying Amount Real estate held for sale
Fair value measurements
Real estate held for sale	$ 5,448,000		$ 5,448,000		$ 5,309,000				$ 10,786,000	$ 10,786,000
Total reduction of carrying value of assets	$ 2,179,000	$ 1,854,000	$ 4,506,000	$ 1,854,000			$ 1,854,000	$ 1,854,000
Number of homes entered into a contract to sell						1

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INCOME TAXES (Tables)

6 Months Ended

Mar. 31, 2013

INCOME TAXES

Components of loss before income taxes, after adjusting the loss for non-controlling interests

	Three months ended								Six months ended
	March 31,								March 31,
	2013				2012				2013				2012
United States		$	(1,014,000	)		$	(2,972,000	)		$	(2,302,000	)		$	(4,302,000	)
Canada		(2,702,000		)		(12,000		)		(4,724,000		)		1,526,000
		$	(3,716,000	)		$	(2,984,000	)		$	(7,026,000	)		$	(2,776,000	)

Schedule of components of the income tax (benefit) provision

	Three months ended								Six months ended
	March 31,								March 31,
	2013				2012				2013				2012
Current		$	(214,000	)		$	105,000			$	344,000			$	663,000
Deferred		(558,000		)		(108,000		)		(1,680,000		)		(176,000		)
		$	(772,000	)		$	(3,000	)		$	(1,336,000	)		$	487,000

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RETIREMENT PLANS (Tables)

6 Months Ended

Mar. 31, 2013

RETIREMENT PLANS

Schedule of components of net periodic benefit cost

	Pension Plan								SERP							Postretirement Medical
	Three months ended March 31,
	2013				2012				2013				2012			2013			2012
Service cost		$	68,000			$	76,000			$	13,000			$	12,000		$	3,000		$	3,000
Interest cost		74,000				81,000				15,000				15,000			13,000			12,000
Expected return on plan assets		(97,000		)		(82,000		)		-				-			-			-
Amortization of prior service cost (credit)		2,000				2,000				(2,000		)		-			34,000			34,000
Amortization of net actuarial loss (gain)		26,000				27,000				5,000				4,000			-			(2,000		)
Net periodic benefit cost		$	73,000			$	104,000			$	31,000			$	31,000		$	50,000		$	47,000
	Pension Plan								SERP							Postretirement Medical
	Six months ended March 31,
	2013				2012				2013				2012			2013			2012
Service cost		$	136,000			$	151,000			$	26,000			$	25,000		$	7,000		$	6,000
Interest cost		149,000				162,000				29,000				30,000			25,000			24,000
Expected return on plan assets		(194,000		)		(164,000		)		-				-			-			-
Amortization of prior service cost (credit)		3,000				3,000				(3,000		)		-			68,000			68,000
Amortization of net actuarial loss (gain)		52,000				56,000				10,000				8,000			-			(5,000		)
Net periodic benefit cost		$	146,000			$	208,000			$	62,000			$	63,000		$	100,000		$	93,000

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COMMITMENTS AND CONTINGENCIES (Details) (USD $)	Mar. 31, 2013	Sep. 30, 2012
COMMITMENTS AND CONTINGENCIES
Accrual for environmental remediation costs	$ 696,000	$ 0

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SEGMENT INFORMATION (Tables)

6 Months Ended

Mar. 31, 2013

SEGMENT INFORMATION

Schedule of financial information related to reporting segments

	Three months ended								Six months ended
	March 31,								March 31,
	2013				2012				2013				2012
Revenues:
Oil and natural gas		$	5,605,000			$	6,408,000			$	11,245,000			$	14,197,000
Land investment		282,000				353,000				282,000				353,000
Contract drilling		703,000				281,000				1,420,000				706,000
Other		178,000				121,000				344,000				397,000
Total before interest income		6,768,000				7,163,000				13,291,000				15,653,000
Interest income		1,000				3,000				29,000				15,000
Total revenues		$	6,769,000			$	7,166,000			$	13,320,000			$	15,668,000
Depletion, depreciation, and amortization:
Oil and natural gas		$	2,195,000			$	2,649,000			$	4,730,000			$	5,402,000
Contract drilling		108,000				128,000				223,000				257,000
Other		29,000				29,000				58,000				56,000
Total depletion, depreciation, and amortization		$	2,332,000			$	2,806,000			$	5,011,000			$	5,715,000
Reduction of carrying value of assets:
Oil and natural gas		$	2,179,000			$	-			$	4,506,000			$	-
Residential real estate		-				1,854,000				-				1,854,000
Total reduction of carrying value of assets		$	2,179,000			$	1,854,000			$	4,506,000			$	1,854,000
Operating (loss) profit (before general and administrative expenses):
Oil and natural gas		$	(1,818,000	)		$	967,000			$	(3,033,000	)		$	3,262,000
Land investment		282,000				353,000				282,000				353,000
Contract drilling		(58,000		)		(307,000		)		(64,000		)		(648,000		)
Residential real estate		-				(1,854,000		)		-				(1,854,000		)
Other		149,000				92,000				286,000				341,000
Total operating (loss) profit		(1,445,000		)		(749,000		)		(2,529,000		)		1,454,000
General and administrative expenses		(2,107,000		)		(2,367,000		)		(4,249,000		)		(4,213,000		)
Interest expense		(144,000		)		(219,000		)		(296,000		)		(438,000		)
Interest income		1,000				3,000				29,000				15,000
Loss before income taxes		$	(3,695,000	)		$	(3,332,000	)		$	(7,045,000	)		$	(3,182,000	)

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ACCUMULATED OTHER COMPREHENSIVE INCOME (Tables)

6 Months Ended

Mar. 31, 2013

ACCUMULATED OTHER COMPREHENSIVE INCOME

Schedule of components of accumulated other comprehensive income, net of taxes

	March 31,			September 30,
	2013			2012
Foreign currency translation	$	4,050,000		$	5,020,000
Retirement plans liability	(2,568,000		)	(2,698,000		)
Accumulated other comprehensive income	$	1,482,000		$	2,322,000

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CONDENSED CONSOLIDATED STATEMENTS OF EQUITY (USD $)	Total	Common Stock	Additional Paid-In Capital	Retained Earnings	Accumulated Other Comprehensive Income	Treasury Stock	Non-controlling Interests
Balance at Dec. 31, 2011	$ 39,340,000	$ 4,223,000	$ 1,289,000	$ 33,949,000	$ 1,136,000	$ (2,286,000)	$ 1,029,000
Balance (in shares) at Dec. 31, 2011		8,277,160
Increase (Decrease) in Stockholders' Equity
Contributions from non-controlling interests	120,000						120,000
Net (loss) earnings	(3,329,000)			(2,981,000)			(348,000)
Foreign currency translation adjustments, net of taxes of $0	662,000				662,000
Retirement plans - amortization of accumulated other comprehensive loss into net periodic benefit cost, net of taxes of $0	65,000				65,000
Balance at Mar. 31, 2012	36,858,000	4,223,000	1,289,000	30,968,000	1,863,000	(2,286,000)	801,000
Balance (in shares) at Mar. 31, 2012		8,277,160
Balance at Sep. 30, 2011	38,714,000	4,223,000	1,289,000	34,231,000	290,000	(2,286,000)	967,000
Balance (in shares) at Sep. 30, 2011		8,277,160
Increase (Decrease) in Stockholders' Equity
Contributions from non-controlling interests	240,000						240,000
Net (loss) earnings	(3,669,000)			(3,263,000)			(406,000)
Foreign currency translation adjustments, net of taxes of $0	1,443,000				1,443,000
Retirement plans - amortization of accumulated other comprehensive loss into net periodic benefit cost, net of taxes of $0	130,000				130,000
Balance at Mar. 31, 2012	36,858,000	4,223,000	1,289,000	30,968,000	1,863,000	(2,286,000)	801,000
Balance (in shares) at Mar. 31, 2012		8,277,160
Balance at Sep. 30, 2012	30,125,000	4,223,000	1,289,000	24,095,000	2,322,000	(2,286,000)	482,000
Balance (in shares) at Sep. 30, 2012		8,277,160
Increase (Decrease) in Stockholders' Equity
Contributions from non-controlling interests	115,000						115,000
Net (loss) earnings	(5,709,000)			(5,690,000)			(19,000)
Foreign currency translation adjustments, net of taxes of $0	(970,000)				(970,000)
Retirement plans - amortization of accumulated other comprehensive loss into net periodic benefit cost, net of taxes of $0	130,000				130,000
Balance at Mar. 31, 2013	23,691,000	4,223,000	1,289,000	18,405,000	1,482,000	(2,286,000)	578,000
Balance (in shares) at Mar. 31, 2013		8,277,160
Balance at Dec. 31, 2012	27,089,000	4,223,000	1,289,000	21,349,000	2,017,000	(2,286,000)	497,000
Balance (in shares) at Dec. 31, 2012		8,277,160
Increase (Decrease) in Stockholders' Equity
Contributions from non-controlling interests	60,000						60,000
Net (loss) earnings	(2,923,000)			(2,944,000)			21,000
Foreign currency translation adjustments, net of taxes of $0	(600,000)				(600,000)
Retirement plans - amortization of accumulated other comprehensive loss into net periodic benefit cost, net of taxes of $0	65,000				65,000
Balance at Mar. 31, 2013	$ 23,691,000	$ 4,223,000	$ 1,289,000	$ 18,405,000	$ 1,482,000	$ (2,286,000)	$ 578,000
Balance (in shares) at Mar. 31, 2013		8,277,160

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FAIR VALUE MEASUREMENTS (Tables)

6 Months Ended

Mar. 31, 2013

FAIR VALUE MEASUREMENTS

Schedule providing carrying value and fair value measurement information for nonrecurring fair value measurements

		Fair Value Measurements Using:
	Carrying	Quoted	Significant		Total Reduction of
	Amount	Prices in	Other	Significant	Carrying Value
	as of	Active	Observable	Unobservable	for the three and
	March 31,	Markets	Inputs	Inputs	six months ended
	2012	(Level 1)	(Level 2)	(Level 3)	March 31, 2012
Real estate held for sale*	$ 10,786,000	$    -	$ 10,786,000	$     -	$ 1,854,000

* The fair value included in the table above represents only those assets whose carrying values were adjusted to fair value in each respective period.

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INCOME TAXES (Details) (USD $)	3 Months Ended		6 Months Ended
	Mar. 31, 2013	Mar. 31, 2012	Mar. 31, 2013	Mar. 31, 2012
Components of loss before income taxes, after adjusting the loss for non-controlling interests
United States	$ (1,014,000)	$ (2,972,000)	$ (2,302,000)	$ (4,302,000)
Canada	(2,702,000)	(12,000)	(4,724,000)	1,526,000
Total	(3,716,000)	(2,984,000)	(7,026,000)	(2,776,000)
Components of the income tax (benefit) provision
Current	(214,000)	105,000	344,000	663,000
Deferred	(558,000)	(108,000)	(1,680,000)	(176,000)
Total	$ (772,000)	$ (3,000)	$ (1,336,000)	$ 487,000
Effective consolidated income tax rate (as a percent)	21.00%	0.00%	19.00%	(18.00%)

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CONDENSED CONSOLIDATED BALANCE SHEETS (USD $)	Mar. 31, 2013	Sep. 30, 2012
Current assets:
Cash and cash equivalents	$ 8,316,000	$ 8,845,000
Accounts receivable, net of allowance for doubtful accounts of: $44,000 at March 31, 2013; $45,000 at September 30, 2012	4,363,000	3,600,000
Prepaid expenses	496,000	361,000
Real estate held for sale	5,448,000	5,309,000
Other current assets	649,000	770,000
Total current assets	19,272,000	18,885,000
Investments	2,381,000	2,381,000
Property and equipment	252,009,000	256,153,000
Accumulated depletion, depreciation, and amortization	(210,580,000)	(207,529,000)
Property and equipment, net	41,429,000	48,624,000
Total assets	63,082,000	69,890,000
Current liabilities:
Accounts payable	2,965,000	2,680,000
Accrued capital expenditures	1,757,000	341,000
Accrued incentive and other compensation	1,469,000	1,593,000
Payable to joint interest owners	682,000	854,000
Income taxes payable	78,000
Current portion of long-term debt	4,903,000	5,764,000
Other current liabilities	3,381,000	3,083,000
Total current liabilities	15,235,000	14,315,000
Long-term debt	12,000,000	11,400,000
Liability for retirement benefits	5,039,000	5,114,000
Asset retirement obligation	5,554,000	5,629,000
Deferred income taxes	1,563,000	3,307,000
Total liabilities	39,391,000	39,765,000
Commitments and contingencies (Note 11)
Equity:
Common stock, par value $0.50 per share; authorized, 20,000,000 shares: 8,445,060 issued at March 31, 2013 and September 30, 2012	4,223,000	4,223,000
Additional paid-in capital	1,289,000	1,289,000
Retained earnings	18,405,000	24,095,000
Accumulated other comprehensive income, net	1,482,000	2,322,000
Treasury stock, at cost: 167,900 shares at March 31, 2013 and September 30, 2012	(2,286,000)	(2,286,000)
Total stockholders' equity	23,113,000	29,643,000
Non-controlling interests	578,000	482,000
Total equity	23,691,000	30,125,000
Total liabilities and equity	$ 63,082,000	$ 69,890,000

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INFORMATION RELATING TO THE CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Details) (USD $)	6 Months Ended
	Mar. 31, 2013	Mar. 31, 2012
Supplemental disclosures of cash flow information:
Interest	$ 285,000	$ 388,000
Income taxes	215,000	455,000
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	1,450,000	(2,153,000)
Increase in capital expenditure accruals related to oil and natural gas asset retirement obligations	$ 48,000	$ 28,000

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CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS (Parenthetical) (USD $)	3 Months Ended		6 Months Ended
	Mar. 31, 2013	Mar. 31, 2012	Mar. 31, 2013	Mar. 31, 2012
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS
Foreign currency translation adjustments, taxes	$ 0	$ 0	$ 0	$ 0
Retirement plans - amortization of accumulated other comprehensive loss into net periodic benefit cost, taxes	$ 0	$ 0	$ 0	$ 0

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LOSS PER COMMON SHARE (Details) (USD $)	3 Months Ended		6 Months Ended
	Mar. 31, 2013	Mar. 31, 2012	Mar. 31, 2013	Mar. 31, 2012
Net Loss (Numerator)
Basic	$ (2,944,000)	$ (2,981,000)	$ (5,690,000)	$ (3,263,000)
Diluted	$ (2,944,000)	$ (2,981,000)	$ (5,690,000)	$ (3,263,000)
Shares (Denominator)
Basic (in shares)	8,277,160	8,277,160	8,277,160	8,277,160
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)	$ (0.36)	$ (0.36)	$ (0.69)	$ (0.39)
Diluted net loss per share (in dollars per share)	$ (0.36)	$ (0.36)	$ (0.69)	$ (0.39)
Options
Antidilutive shares of common stock excluded from the computation of diluted shares
Antidilutive shares excluded from computation of earnings per share (in shares)	777,250	815,375	777,250	815,375

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OIL AND NATURAL GAS PROPERTIES

6 Months Ended

Mar. 31, 2013

OIL AND NATURAL GAS PROPERTIES

OIL AND NATURAL GAS PROPERTIES

13.       OIL AND NATURAL GAS PROPERTIES

Under the full cost method of accounting, the Company performs quarterly ceiling test calculations. Barnwell’s net capitalized costs exceeded the ceiling limitation at March 31, 2013. As such, Barnwell reduced the carrying value of its oil and natural gas properties by $2,179,000 during the three months ended March 31, 2013. The current quarter’s reduction of the carrying value of oil and natural gas properties combined with the first quarter’s reduction of $2,327,000 resulted in a reduction of $4,506,000 for the six months ended March 31, 2013. No such reduction was necessary during the three and six months ended March 31, 2012. The reduction is included in the Condensed Consolidated Statements of Operations under the caption “Reduction of carrying value of assets.”

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REAL ESTATE HELD FOR SALE (Details) (USD $)	1 Months Ended	3 Months Ended		6 Months Ended
	Apr. 30, 2012 item	Mar. 31, 2013 item	Mar. 31, 2012	Mar. 31, 2013 item	Mar. 31, 2012
Real estate held for sale
Reduction of carrying value of assets		$ 2,179,000	$ 1,854,000	$ 4,506,000	$ 1,854,000
Kaupulehu 2007
Real estate held for sale
Number of luxury residences owned		1		1
Number of homes entered into a contract to sell	1
Reduction of carrying value of assets		$ 0	$ 1,854,000	$ 0	$ 1,854,000

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SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies)

6 Months Ended

Mar. 31, 2013

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

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) and two 80%-owned joint ventures (Kaupulehu 2007, LLLP and Kaupulehu Investors, LLC). All significant intercompany accounts and transactions have been eliminated.

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, 2012 Annual Report on Form 10-K. The Condensed Consolidated Balance Sheet as of September 30, 2012 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, 2013, results of operations, comprehensive loss, and equity for the three and six months ended March 31, 2013 and 2012, and cash flows for the six months ended March 31, 2013 and 2012, have been made. The results of operations for the period ended March 31, 2013 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.

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CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (USD $)	6 Months Ended
	Mar. 31, 2013	Mar. 31, 2012
Cash flows from operating activities:
Net loss	$ (5,709,000)	$ (3,669,000)
Adjustments to reconcile net loss to net cash provided by operating activities:
Depletion, depreciation, and amortization	5,011,000	5,715,000
Reduction of carrying value of assets	4,506,000	1,854,000
Retirement benefits expense	308,000	364,000
Accretion of asset retirement obligation	190,000	174,000
Gain on sale of drilling equipment		(40,000)
Deferred income tax benefit	(1,680,000)	(176,000)
Asset retirement obligation payments	(133,000)	(281,000)
Share-based compensation benefit	(41,000)	(68,000)
Retirement plan contributions	(253,000)	(673,000)
Sale of interest in leasehold land, net	(282,000)	(353,000)
Real estate held for sale	(139,000)
(Decrease) increase from changes in current assets and liabilities	(270,000)	180,000
Net cash provided by operating activities	1,508,000	3,027,000
Cash flows from investing activities:
Proceeds from sale of interest in leasehold land, net of fees paid	282,000	375,000
Proceeds from gas over bitumen royalty adjustments	24,000	40,000
Proceeds from sale of drilling equipment, net		59,000
Capital expenditures - oil and natural gas	(2,127,000)	(4,304,000)
Capital expenditures - all other	(2,000)	(27,000)
Net cash used in investing activities	(1,823,000)	(3,857,000)
Cash flows from financing activities:
Proceeds from long-term debt borrowings	503,000
Repayments of long-term debt	(757,000)	(670,000)
Contributions from non-controlling interests	115,000	240,000
Net cash used in financing activities	(139,000)	(430,000)
Effect of exchange rate changes on cash and cash equivalents	(75,000)	25,000
Net decrease in cash and cash equivalents	(529,000)	(1,235,000)
Cash and cash equivalents at beginning of period	8,845,000	9,834,000
Cash and cash equivalents at end of period	$ 8,316,000	$ 8,599,000

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CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) (USD $)	Mar. 31, 2013	Sep. 30, 2012
CONDENSED CONSOLIDATED BALANCE SHEETS
Accounts receivable, allowance for doubtful accounts (in dollars)	$ 44,000	$ 45,000
Common stock, par value (in dollars per share)	$ 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

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SEGMENT INFORMATION

6 Months Ended

Mar. 31, 2013

SEGMENT INFORMATION

SEGMENT INFORMATION

8. SEGMENT INFORMATION

Barnwell operates the following segments: 1) exploring for, 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.

	Three months ended								Six months ended
	March 31,								March 31,
	2013				2012				2013				2012
Revenues:
Oil and natural gas		$	5,605,000			$	6,408,000			$	11,245,000			$	14,197,000
Land investment		282,000				353,000				282,000				353,000
Contract drilling		703,000				281,000				1,420,000				706,000
Other		178,000				121,000				344,000				397,000
Total before interest income		6,768,000				7,163,000				13,291,000				15,653,000
Interest income		1,000				3,000				29,000				15,000
Total revenues		$	6,769,000			$	7,166,000			$	13,320,000			$	15,668,000
Depletion, depreciation, and amortization:
Oil and natural gas		$	2,195,000			$	2,649,000			$	4,730,000			$	5,402,000
Contract drilling		108,000				128,000				223,000				257,000
Other		29,000				29,000				58,000				56,000
Total depletion, depreciation, and amortization		$	2,332,000			$	2,806,000			$	5,011,000			$	5,715,000
Reduction of carrying value of assets:
Oil and natural gas		$	2,179,000			$	-			$	4,506,000			$	-
Residential real estate		-				1,854,000				-				1,854,000
Total reduction of carrying value of assets		$	2,179,000			$	1,854,000			$	4,506,000			$	1,854,000
Operating (loss) profit (before general and administrative expenses):
Oil and natural gas		$	(1,818,000	)		$	967,000			$	(3,033,000	)		$	3,262,000
Land investment		282,000				353,000				282,000				353,000
Contract drilling		(58,000		)		(307,000		)		(64,000		)		(648,000		)
Residential real estate		-				(1,854,000		)		-				(1,854,000		)
Other		149,000				92,000				286,000				341,000
Total operating (loss) profit		(1,445,000		)		(749,000		)		(2,529,000		)		1,454,000
General and administrative expenses		(2,107,000		)		(2,367,000		)		(4,249,000		)		(4,213,000		)
Interest expense		(144,000		)		(219,000		)		(296,000		)		(438,000		)
Interest income		1,000				3,000				29,000				15,000
Loss before income taxes		$	(3,695,000	)		$	(3,332,000	)		$	(7,045,000	)		$	(3,182,000	)

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Document and Entity Information	6 Months Ended
	Mar. 31, 2013	May 10, 2013
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, 2013
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	2013
Document Fiscal Period Focus	Q2

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ACCUMULATED OTHER COMPREHENSIVE INCOME

6 Months Ended

Mar. 31, 2013

ACCUMULATED OTHER COMPREHENSIVE INCOME

ACCUMULATED OTHER COMPREHENSIVE INCOME

9. ACCUMULATED OTHER COMPREHENSIVE INCOME

The components of accumulated other comprehensive income, net of taxes, are as follows:

	March 31,			September 30,
	2013			2012
Foreign currency translation	$	4,050,000		$	5,020,000
Retirement plans liability	(2,568,000		)	(2,698,000		)
Accumulated other comprehensive income	$	1,482,000		$	2,322,000

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CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (USD $)	3 Months Ended		6 Months Ended
	Mar. 31, 2013	Mar. 31, 2012	Mar. 31, 2013	Mar. 31, 2012
Revenues:
Oil and natural gas	$ 5,605,000	$ 6,408,000	$ 11,245,000	$ 14,197,000
Contract drilling	703,000	281,000	1,420,000	706,000
Sale of interest in leasehold land, net	282,000	353,000	282,000	353,000
Gas processing and other	179,000	124,000	373,000	412,000
Total revenues	6,769,000	7,166,000	13,320,000	15,668,000
Costs and expenses:
Oil and natural gas operating	3,049,000	2,792,000	5,042,000	5,533,000
Contract drilling operating	653,000	460,000	1,261,000	1,097,000
General and administrative	2,107,000	2,367,000	4,249,000	4,213,000
Depletion, depreciation, and amortization	2,332,000	2,806,000	5,011,000	5,715,000
Reduction of carrying value of assets	2,179,000	1,854,000	4,506,000	1,854,000
Interest expense	144,000	219,000	296,000	438,000
Total costs and expenses	10,464,000	10,498,000	20,365,000	18,850,000
Loss before income taxes	(3,695,000)	(3,332,000)	(7,045,000)	(3,182,000)
Income tax (benefit) provision	(772,000)	(3,000)	(1,336,000)	487,000
Net loss	(2,923,000)	(3,329,000)	(5,709,000)	(3,669,000)
Less: Net earnings (loss) attributable to non-controlling interests	21,000	(348,000)	(19,000)	(406,000)
Net loss attributable to Barnwell Industries, Inc.	$ (2,944,000)	$ (2,981,000)	$ (5,690,000)	$ (3,263,000)
Basic net loss per common share attributable to Barnwell Industries, Inc. stockholders (in dollars per share)	$ (0.36)	$ (0.36)	$ (0.69)	$ (0.39)
Diluted net loss per common share attributable to Barnwell Industries, Inc. stockholders (in dollars per share)	$ (0.36)	$ (0.36)	$ (0.69)	$ (0.39)
Weighted-average number of common shares outstanding:
Basic (in shares)	8,277,160	8,277,160	8,277,160	8,277,160
Diluted (in shares)	8,277,160	8,277,160	8,277,160	8,277,160

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REAL ESTATE HELD FOR SALE

6 Months Ended

Mar. 31, 2013

REAL ESTATE HELD FOR SALE

REAL ESTATE HELD FOR SALE

3. REAL ESTATE HELD FOR SALE

Kaupulehu 2007 constructs and sells single-family homes. Kaupulehu 2007 currently owns one luxury residence that is 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.

In April 2012, Kaupulehu 2007 entered into a contract to sell one of the luxury residences at a price below carrying value. Accordingly, during the three and six months ended March 31, 2012, Barnwell recorded a $1,854,000 reduction in the carrying value of real estate held for sale to reflect this decline in the estimated market value. No reduction was necessary during the three and six months ended March 31, 2013.

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LOSS PER COMMON SHARE

6 Months Ended

Mar. 31, 2013

LOSS PER COMMON SHARE

LOSS PER COMMON SHARE

2. LOSS PER COMMON SHARE

Basic earnings (loss) per share excludes dilution and is computed by dividing net earnings (loss) attributable to Barnwell stockholders by the weighted-average number of common shares outstanding for the period. Diluted earnings (loss) per share includes the potentially dilutive effect of outstanding common stock options, to the extent their inclusion would be dilutive. Potentially dilutive shares are excluded from the computation of diluted earnings (loss) per share if their effect is anti-dilutive.

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:

	Three months ended March 31, 2013
	Net Loss				Shares		Per-Share
	(Numerator)				(Denominator)		Amount
Basic net loss per share		$	(2,944,000	)		8,277,160		$	(0.36	)
Effect of dilutive securities - common stock options		-				-
Diluted net loss per share		$	(2,944,000	)		8,277,160		$	(0.36	)
	Six months ended March 31, 2013
	Net Loss				Shares		Per-Share
	(Numerator)				(Denominator)		Amount
Basic net loss per share		$	(5,690,000	)		8,277,160		$	(0.69	)
Effect of dilutive securities - common stock options		-				-
Diluted net loss per share		$	(5,690,000	)		8,277,160		$	(0.69	)
	Three months ended March 31, 2012
	Net Loss				Shares		Per-Share
	(Numerator)				(Denominator)		Amount
Basic net loss per share		$	(2,981,000	)		8,277,160		$	(0.36	)
Effect of dilutive securities - common stock options		-				-
Diluted net loss per share		$	(2,981,000	)		8,277,160		$	(0.36	)
	Six months ended March 31, 2012
	Net Loss				Shares		Per-Share
	(Numerator)				(Denominator)		Amount
Basic net loss per share		$	(3,263,000	)		8,277,160		$	(0.39	)
Effect of dilutive securities - common stock options		-				-
Diluted net loss per share		$	(3,263,000	)		8,277,160		$	(0.39	)

Potentially dilutive shares consist of the common shares issuable upon the exercise of outstanding stock options (both vested and non-vested) using the treasury stock method. Options to purchase 777,250 and 815,375 shares of common stock were excluded from the computation of diluted shares for the three and six months ended March 31, 2013 and 2012, respectively, as their inclusion would have been antidilutive due to the net loss attributable to Barnwell stockholders.

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SUBSEQUENT EVENTS

6 Months Ended

Mar. 31, 2013

SUBSEQUENT EVENTS

SUBSEQUENT EVENTS

14.       SUBSEQUENT EVENTS

There were no material subsequent events that would require recognition or disclosure in the accompanying condensed consolidated financial statements.

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FAIR VALUE MEASUREMENTS

6 Months Ended

Mar. 31, 2013

FAIR VALUE MEASUREMENTS

FAIR VALUE MEASUREMENTS

10. FAIR VALUE MEASUREMENTS

Assets and Liabilities Measured at Fair Value on a Nonrecurring Basis

Certain of our assets and liabilities are reported at fair value in the accompanying balance sheets on a nonrecurring basis; that is, the assets and liabilities are not measured at fair value on an ongoing basis but are subject to fair value adjustments in certain circumstances. The following table provides carrying value and fair value measurement information for nonrecurring fair value measurements recorded during the three and six months ended March 31, 2012:

		Fair Value Measurements Using:
	Carrying	Quoted	Significant		Total Reduction of
	Amount	Prices in	Other	Significant	Carrying Value
	as of	Active	Observable	Unobservable	for the three and
	March 31,	Markets	Inputs	Inputs	six months ended
	2012	(Level 1)	(Level 2)	(Level 3)	March 31, 2012
Real estate held for sale*	$ 10,786,000	$    -	$ 10,786,000	$     -	$ 1,854,000

* The fair value included in the table above represents only those assets whose carrying values were adjusted to fair value in each respective period.

The fair value of our real estate held for sale was based on a contract to sell one of the luxury residences at a price below carrying value entered into in April 2012. The fair values of both homes held for sale at March 31, 2012 were revised downward as a result of the information provided by those negotiations. Such fair value measurements have been classified as Level 2 valuations.

Fair Value of Financial Instruments

The carrying values of cash and cash equivalents, accounts receivable, accounts payable, accrued current liabilities and payables to joint interest owners 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.

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RETIREMENT PLANS

6 Months Ended

Mar. 31, 2013

RETIREMENT PLANS

RETIREMENT PLANS

6. 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 tables detail the components of net periodic benefit cost for Barnwell’s retirement plans:

	Pension Plan								SERP							Postretirement Medical
	Three months ended March 31,
	2013				2012				2013				2012			2013			2012
Service cost		$	68,000			$	76,000			$	13,000			$	12,000		$	3,000		$	3,000
Interest cost		74,000				81,000				15,000				15,000			13,000			12,000
Expected return on plan assets		(97,000		)		(82,000		)		-				-			-			-
Amortization of prior service cost (credit)		2,000				2,000				(2,000		)		-			34,000			34,000
Amortization of net actuarial loss (gain)		26,000				27,000				5,000				4,000			-			(2,000		)
Net periodic benefit cost		$	73,000			$	104,000			$	31,000			$	31,000		$	50,000		$	47,000
	Pension Plan								SERP							Postretirement Medical
	Six months ended March 31,
	2013				2012				2013				2012			2013			2012
Service cost		$	136,000			$	151,000			$	26,000			$	25,000		$	7,000		$	6,000
Interest cost		149,000				162,000				29,000				30,000			25,000			24,000
Expected return on plan assets		(194,000		)		(164,000		)		-				-			-			-
Amortization of prior service cost (credit)		3,000				3,000				(3,000		)		-			68,000			68,000
Amortization of net actuarial loss (gain)		52,000				56,000				10,000				8,000			-			(5,000		)
Net periodic benefit cost		$	146,000			$	208,000			$	62,000			$	63,000		$	100,000		$	93,000

Barnwell contributed $250,000 to the Pension Plan during the six months ended March 31, 2013 and does not expect to make any further contributions during the remainder of fiscal 2013. The SERP and Postretirement Medical plans are unfunded, and Barnwell will fund benefits when payments are made. Barnwell does not expect to make any benefit payments under the Postretirement Medical plan during fiscal 2013 and expected payments under the SERP for fiscal 2013 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.

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INVESTMENTS

6 Months Ended

Mar. 31, 2013

INVESTMENTS

INVESTMENTS

4. INVESTMENTS

A summary of Barnwell’s investments as of March 31, 2013 and September 30, 2012 is as follows:

Investment in two residential parcels	$	2,331,000
Investment in land interest – Lot 4C	50,000
Total investments	$	2,381,000

Investment in two residential parcels

Kaupulehu 2007 owns two residential parcels 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.

Lot 4C

Kaupulehu Developments holds an interest in Lot 4C, an area of approximately 1,000 acres of vacant leasehold land zoned conservation located adjacent to Lot 4A. WB KD Acquisition, LLC (“WB”) and/or WB KD Acquisition II, LLC (“WBKD”), entities not affiliated with Barnwell and its subsidiaries, have the exclusive right to negotiate with Kaupulehu Developments with respect to Lot 4C until June 2013 unless extended by Barnwell.

There is no assurance that the required land use reclassification and rezoning from regulatory agencies will be obtained, that the necessary development terms and agreements will be successfully negotiated for Lot 4C, or that WB and/or WBKD will enter into an agreement with Kaupulehu Developments regarding Lot 4C.

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LONG-TERM DEBT

6 Months Ended

Mar. 31, 2013

LONG-TERM DEBT

LONG-TERM DEBT

5. LONG-TERM DEBT

A summary of Barnwell’s long-term debt is as follows:

	March 31,				September 30,
	2013				2012
Canadian revolving credit facility		$	12,000,000			$	12,000,000
Real estate loan		4,903,000				5,164,000
		16,903,000				17,164,000
Less: current portion		(4,903,000		)		(5,764,000		)
Total long-term debt		$	12,000,000			$	11,400,000

Canadian revolving credit facility

In March 2013, Barnwell’s credit facility at Royal Bank of Canada was renewed through April 2014 for $20,000,000 Canadian dollars, unchanged from the prior year amount, or US$19,692,000 at the March 31, 2013 exchange rate. Unused credit available under this facility was US$7,692,000 and the interest rate on the facility was 2.70% at March 31, 2013.

The renewed facility is available in U.S. dollars at the London Interbank Offer Rate plus 2.50%, at the Royal Bank of Canada’s U.S. base rate plus 1.50%, or in Canadian dollars at the Royal Bank of Canada’s prime rate plus 1.50%. A standby fee of 0.625% per annum is charged on the unused facility balance. Under the financing agreement with Royal Bank of Canada, the facility is reviewed annually, with the next review planned for April 2014. Subject to that review, the facility may be renewed for one year with no required debt repayments or converted to a two-year term loan by the bank. If the facility is converted to a two-year term loan, Barnwell has agreed to the following repayment schedule of the then outstanding loan balance: first year of the term period – 20% (5% per quarter), and in the second year of the term period – 80% (5% per quarter for the first three quarters and 65% in the final quarter). Based on the terms of this agreement, if Royal Bank of Canada were to convert the facility to a two-year term loan upon its next review in April 2014, Barnwell would be obligated to make quarterly principal and interest repayments beginning in July 2014. As no debt repayments will be required on or before March 31, 2014, the entire outstanding loan balance at March 31, 2013 is classified as long-term debt.

Real estate loan

Barnwell, together with its real estate joint venture, Kaupulehu 2007, has a non-revolving real estate loan with a Hawaii bank. Principal and interest are paid monthly and are determined based on a loan amortization schedule. The monthly payment will change as a result of an annual change in the interest rate, the sale of a house or the sale of a residential parcel. The interest rate adjusts each April for the remaining term of the loan to the lender’s then prevailing interest rate for similarly priced commercial mortgage loans or a floating rate equal to the lender’s base rate. The interest rate at March 31, 2013 was 3.57%, and was adjusted to 3.53% effective April 1, 2013. Any unpaid principal balance and accrued interest will be due and payable on April 1, 2018.

The loan is collateralized by, among other things, a first mortgage on Kaupulehu 2007’s lots together with all improvements thereon. Kaupulehu 2007 will be required to make a principal payment upon the sale of a house or a residential parcel in the amount of the net sales proceeds of the house or residential parcel; the loan agreement defines net sales proceeds as the gross sales proceeds for the house or residential parcel, less reasonable commissions and normal closing costs.

The loan agreement contains 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. As of March 31, 2013, we were in compliance with the loan covenants.

The home collateralizing the loan is currently available for sale; therefore, the entire balance outstanding at March 31, 2013 under the term loan has been classified as a current liability.

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INCOME TAXES

6 Months Ended

Mar. 31, 2013

INCOME TAXES

INCOME TAXES

7. INCOME TAXES

The components of loss before income taxes, after adjusting the loss for non-controlling interests, are as follows:

	Three months ended								Six months ended
	March 31,								March 31,
	2013				2012				2013				2012
United States		$	(1,014,000	)		$	(2,972,000	)		$	(2,302,000	)		$	(4,302,000	)
Canada		(2,702,000		)		(12,000		)		(4,724,000		)		1,526,000
		$	(3,716,000	)		$	(2,984,000	)		$	(7,026,000	)		$	(2,776,000	)

The components of the income tax (benefit) provision are as follows:

	Three months ended								Six months ended
	March 31,								March 31,
	2013				2012				2013				2012
Current		$	(214,000	)		$	105,000			$	344,000			$	663,000
Deferred		(558,000		)		(108,000		)		(1,680,000		)		(176,000		)
		$	(772,000	)		$	(3,000	)		$	(1,336,000	)		$	487,000

Barnwell’s effective consolidated income tax rate for the three and six months ended March 31, 2013, after adjusting loss before income taxes for non-controlling interests, was 21% and 19%, respectively, as compared to 0% and (18%) for the three and six months ended March 31, 2012, respectively.

Consolidated taxes do not bear a customary relationship to pretax (losses) earnings due primarily to the fact that Canadian income taxes are not sheltered by current period U.S. source losses, Canadian income taxes are not estimated to have a current or future benefit as foreign tax credits or deductions for U.S. tax purposes, and U.S. consolidated net operating losses are not estimated to have any future U.S. tax benefit prior to expiration.

The Canada Revenue Agency is currently examining the Company’s Canadian federal income tax returns for fiscal 2010 and 2011.

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SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details)	6 Months Ended
	Mar. 31, 2013 item
Principles of Consolidation
Number of 80%-owned joint ventures	2
Kaupulehu Developments
Principles of Consolidation
Ownership interest in subsidiaries (as a percent)	77.60%
Kaupulehu 2007, LLLP
Principles of Consolidation
Ownership interest in subsidiaries (as a percent)	80.00%
Kaupulehu Investors, LLC
Principles of Consolidation
Ownership interest in subsidiaries (as a percent)	80.00%

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INFORMATION RELATING TO THE CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

6 Months Ended

Mar. 31, 2013

INFORMATION RELATING TO THE CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

INFORMATION RELATING TO THE CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

12. INFORMATION RELATING TO THE CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

	Six months ended March 31,
	2013			2012
Supplemental disclosure of cash flow information:
Cash paid during the year for:
Interest		$	285,000		$	388,000
Income taxes		$	215,000		$	455,000

Capital expenditure accruals related to oil and natural gas exploration and development increased $1,450,000 and decreased $2,153,000 during the six months ended March 31, 2013 and 2012, respectively. Additionally, during the six months ended March 31, 2013 and 2012, capital expenditure accruals related to oil and natural gas asset retirement obligations increased $48,000 and $28,000, respectively.

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INVESTMENTS (Tables)

6 Months Ended

Mar. 31, 2013

INVESTMENTS

Summary of investments

A summary of Barnwell’s investments as of March 31, 2013 and September 30, 2012 is as follows:

Investment in two residential parcels	$	2,331,000
Investment in land interest – Lot 4C	50,000
Total investments	$	2,381,000

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SEGMENT INFORMATION (Details) (USD $)	3 Months Ended		6 Months Ended
	Mar. 31, 2013	Mar. 31, 2012	Mar. 31, 2013	Mar. 31, 2012
SEGMENT INFORMATION
Intersegment sales or transfers	$ 0	$ 0	$ 0	$ 0
Revenues:
Total before interest income	6,768,000	7,163,000	13,291,000	15,653,000
Interest income	1,000	3,000	29,000	15,000
Total revenues	6,769,000	7,166,000	13,320,000	15,668,000
Depletion, depreciation, and amortization:
Total depletion, depreciation, and amortization	2,332,000	2,806,000	5,011,000	5,715,000
Reduction of carrying value of assets:
Total reduction of carrying value of assets	2,179,000	1,854,000	4,506,000	1,854,000
Operating (loss) profit (before general and administrative expenses):
Total operating (loss) profit	(1,445,000)	(749,000)	(2,529,000)	1,454,000
General and administrative expenses	(2,107,000)	(2,367,000)	(4,249,000)	(4,213,000)
Interest expense	(144,000)	(219,000)	(296,000)	(438,000)
Interest income	1,000	3,000	29,000	15,000
Loss before income taxes	(3,695,000)	(3,332,000)	(7,045,000)	(3,182,000)
Oil and natural gas
Revenues:
Total before interest income	5,605,000	6,408,000	11,245,000	14,197,000
Depletion, depreciation, and amortization:
Total depletion, depreciation, and amortization	2,195,000	2,649,000	4,730,000	5,402,000
Reduction of carrying value of assets:
Total reduction of carrying value of assets	2,179,000		4,506,000
Operating (loss) profit (before general and administrative expenses):
Total operating (loss) profit	(1,818,000)	967,000	(3,033,000)	3,262,000
Land investment
Revenues:
Total before interest income	282,000	353,000	282,000	353,000
Operating (loss) profit (before general and administrative expenses):
Total operating (loss) profit	282,000	353,000	282,000	353,000
Contract drilling
Revenues:
Total before interest income	703,000	281,000	1,420,000	706,000
Depletion, depreciation, and amortization:
Total depletion, depreciation, and amortization	108,000	128,000	223,000	257,000
Operating (loss) profit (before general and administrative expenses):
Total operating (loss) profit	(58,000)	(307,000)	(64,000)	(648,000)
Residential real estate
Reduction of carrying value of assets:
Total reduction of carrying value of assets		1,854,000		1,854,000
Operating (loss) profit (before general and administrative expenses):
Total operating (loss) profit		(1,854,000)		(1,854,000)
Other
Revenues:
Total before interest income	178,000	121,000	344,000	397,000
Depletion, depreciation, and amortization:
Total depletion, depreciation, and amortization	29,000	29,000	58,000	56,000
Operating (loss) profit (before general and administrative expenses):
Total operating (loss) profit	$ 149,000	$ 92,000	$ 286,000	$ 341,000

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CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS (USD $)	3 Months Ended		6 Months Ended
	Mar. 31, 2013	Mar. 31, 2012	Mar. 31, 2013	Mar. 31, 2012
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS
Net loss	$ (2,923,000)	$ (3,329,000)	$ (5,709,000)	$ (3,669,000)
Other comprehensive (loss) income:
Foreign currency translation adjustments, net of taxes of $0	(600,000)	662,000	(970,000)	1,443,000
Retirement plans - amortization of accumulated other comprehensive loss into net periodic benefit cost, net of taxes of $0	65,000	65,000	130,000	130,000
Total other comprehensive (loss) income	(535,000)	727,000	(840,000)	1,573,000
Total comprehensive loss	(3,458,000)	(2,602,000)	(6,549,000)	(2,096,000)
Less: Comprehensive income (loss) attributable to non-controlling interests	21,000	(348,000)	(19,000)	(406,000)
Comprehensive loss attributable to Barnwell Industries, Inc.	$ (3,479,000)	$ (2,254,000)	$ (6,530,000)	$ (1,690,000)

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SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

6 Months Ended

Mar. 31, 2013

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

1. 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) and two 80%-owned joint ventures (Kaupulehu 2007, LLLP and Kaupulehu Investors, LLC). All significant intercompany accounts and transactions have been eliminated.

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, 2012 Annual Report on Form 10-K. The Condensed Consolidated Balance Sheet as of September 30, 2012 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, 2013, results of operations, comprehensive loss, and equity for the three and six months ended March 31, 2013 and 2012, and cash flows for the six months ended March 31, 2013 and 2012, have been made. The results of operations for the period ended March 31, 2013 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

Barnwell’s significant accounting policies are 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.

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LONG-TERM DEBT (Tables)

6 Months Ended

Mar. 31, 2013

LONG-TERM DEBT

Schedule of long-term debt

	March 31,				September 30,
	2013				2012
Canadian revolving credit facility		$	12,000,000			$	12,000,000
Real estate loan		4,903,000				5,164,000
		16,903,000				17,164,000
Less: current portion		(4,903,000		)		(5,764,000		)
Total long-term debt		$	12,000,000			$	11,400,000

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LONG-TERM DEBT (Details)			6 Months Ended			6 Months Ended
	Mar. 31, 2013 USD ($)	Sep. 30, 2012 USD ($)	Mar. 31, 2013 Canadian revolving credit facility USD ($)	Mar. 31, 2013 Canadian revolving credit facility CAD	Sep. 30, 2012 Canadian revolving credit facility USD ($)	Mar. 31, 2013 Canadian revolving credit facility London Interbank Offer Rate	Mar. 31, 2013 Canadian revolving credit facility Royal Bank of Canada's base rate	Mar. 31, 2013 Canadian revolving credit facility Royal Bank of Canada's prime rate	Apr. 01, 2013 Real estate loan	Mar. 31, 2013 Real estate loan USD ($)	Sep. 30, 2012 Real estate loan USD ($)
Long-term debt
Long-term debt	$ 16,903,000	$ 17,164,000	$ 12,000,000		$ 12,000,000					$ 4,903,000	$ 5,164,000
Less: current portion	(4,903,000)	(5,764,000)	0
Total long-term debt	12,000,000	11,400,000
Maximum borrowing capacity			19,692,000	20,000,000
Unused credit available under the facility			7,692,000
Interest rate on the facility (as a percent)			2.70%
Interest rate base						London Interbank Offer Rate	Royal Bank of Canada's base rate	Royal Bank of Canada's prime rate
Interest rate margin (as a percent)						2.50%	1.50%	1.50%
Standby fee charged on unused facility balance (as a percent)			0.625%
Renewal period with no required debt repayments			1 year
Required debt repayments on renewal of facility for one year			$ 0
Period of term loan if credit facility term date is not extended			2 years
Repayment schedule if the facility is converted to a two-year term loan
Percentage of outstanding loan balance to be repaid in first year of the term period			20.00%
Percentage of outstanding loan balance to be repaid per quarter in first year of the term period			5.00%
Percentage of outstanding loan balance to be repaid in second year of the term period			80.00%
Percentage of outstanding loan balance to be repaid per quarter for first three quarters in second year of the term period			5.00%
Percentage of outstanding loan balance to be repaid in the final quarter of the second year of the term period			65.00%
Long-term debt, additional disclosures
Interest rate (as a percent)										3.57%
Interest rate (as a percent)									3.53%

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COMMITMENTS AND CONTINGENCIES

6 Months Ended

Mar. 31, 2013

COMMITMENTS AND CONTINGENCIES

COMMITMENTS AND CONTINGENCIES

11.       COMMITMENTS AND CONTINGENCIES

Environmental Matters

At March 31, 2013, a liability was established for recently discovered soil contamination from infrastructure issues at the Dunvegan and Wood River properties. The estimated amount accrued for probable environmental remediation costs was $696,000, which has not been discounted, and is accrued in “Other current liabilities” 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. No accrual for environmental remediation costs was necessary at September 30, 2012.