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Barnwell Industries, Inc.
Unaudited Pro Forma Condensed Combined Balance Sheet
September 30, 2024
 
   
Barnwell
Industries, Inc.
(Historical)
    
Pro Forma Adjustments
    
Barnwell
Industries, Inc.
Pro Forma as
Adjusted
  
ASSETS
                  
Current Assets:
                  
Cash and cash equivalents
  
$
4,505,000
      
30,000
    
$
4,535,000
  
Accounts and other receivables
    
2,770,000
      
(580,000
)
    
2,190,000
  
Assets held for sale
    
69,000
      
(69,000
)
        
Note receivable
            
800,000
      
800,000
  
Other current assets
    
1,539,000
      
(667,000
)
    
872,000
  
Total current assets
    
8,883,000
      
(486,000
)
    
8,397,000
  
Assets for retirement benefits
    
4,889,000
              
4,899,000
  
Operating lease right-of-use assets
    
39,000
              
39,0000
  
Property and equipment:
                        
Proved oil and natural gas properties, net
    
16,554,000
              
16,554,000
  
Drilling rigs and other property and equipment, net
    
294,000
      
(282,000
)
    
12,000
  
Total property and equipment, net
    
16,848,000
      
(282,000
)
    
16,566,000
  
Total assets
  
$
30,669,000
      
(768,000
)
  
$
29,901,000
  
                         
LIABILITIES AND EQUITY
                        
Current liabilities:
                        
Accounts payable
  
$
1,822,000
      
(37,000
)
  
$
1,785,000
  
Accrued capital expenditures
    
2,407,000
              
2,407.000
  
Accrued compensation
    
650,000
      
(124,000
)
    
526,000
  
Accrued operating and other expenses
    
1,834,000
      
(369,000
)
    
1,465,000
  
Current portion of asset retirement obligation
    
798,000
              
798,000
  
Other current liabilities
    
301,000
              
301,000
  
Total current liabilities
    
7,812,000
      
(530,000
)
    
7,282,000
  
Operating lease liabilities
    
7,000
              
7,000
  
Liability for retirement benefits
    
1,898,000
              
1,898,000
  
Asset retirement obligation
    
7,790,000
              
7,790,000
  
Deferred income tax liabilities
    
100,000
              
100,000
  
Total liabilities
    
17,607,000
      
(530,000
)
    
17,077,000
  
Commitments and contingencies
                        
Equity:
                        
Common stock, par value $0.50 per share;
authorized, 40,000,000 shares: 10,195,990 issued at
September 30, 2024
    
5,098,000
              
5,098,000
  
Additional paid-in capital
    
7,690,000
              
7,690,000
  
Retained earnings
    
595,000
      
(238,000
)
    
357,000
  
Accumulated other comprehensive income, net
    
1,943,000
              
1,943,000
  
Treasury stock, at cost: 167,900 shares at
September 30, 2024
    
(2,286,000
)
            
(2,286,000
)
Total stockholders’ equity
    
13,040,000
      
(238,000
)
    
12,802,000
  
Non-controlling interests
    
22,000
              
22,000
  
Total equity
    
13,062,000
              
11,774,000
  
Total liabilities and equity
  
$
30,669,000
      
(768,000
)
  
$
29,901,000
  
See accompanying notes to the unaudited pro forma condensed combined financial statements
 
Barnwell Industries, Inc.
Unaudited Pro Forma Condensed Combined Statement of Operations
For Year Ended September 30, 2024
 
   
Barnwell
Industries, Inc.
(Historical)
    
Pro Forma Adjustments
    
Barnwell
Industries, Inc.
Pro Forma as
Adjusted
  
Revenues:
                  
Oil and natural gas
  
$
17,396,000
          
$
17,396,000
  
Contract drilling
    
3,612,000
      
(3,162,000
)
        
Sale of interest in leasehold land
    
500,000
              
500,000
  
Gas processing and other
    
216,000
      
(38,000
)
    
178,000
  
     
21,724,000
      
(3,650,000
)
    
18,074,000
  
Costs and expenses:
                        
Oil and natural gas operating
    
9,849,000
              
9,849,000
  
Contract drilling operating
    
4,483,000
      
(4,483,000
)
        
General and administrative
    
5,598,000
      
(468,000
)
    
5,130,000
  
Depletion, depreciation, and amortization
    
5,106,000
      
(156,000
)
    
4,950,000
  
Impairment of assets
    
2,885,000
              
2,885,000
  
Foreign currency gain
    
(10,000
)
            
(10,000
)
Interest expense
    
2,000
      
(2,000
)
        
     
27,913,000
      
(5,109,000
)
    
22,804,000
  
Loss before equity in income of affiliates and income taxes
    
(6,189,000
)
    
1,459,000
      
(4,730,000
)
Equity in income of affiliates
    
1,071,000
              
1,071,000
  
Loss before income taxes
    
(5,118,000
)
    
1,459,000
      
(3,659,000
)
Income tax provision
    
213,000
              
213,000
  
Net loss
    
(5,331,000
)
    
1,459,000
      
(3,872,000
)
Less: Net earnings attributable to non-controlling interests
    
234,000
              
234,000
  
Net loss attributable to Barnwell Industries, Inc.
  
$
(5,565,000
)
    
1,459,000
    
$
(4,106,000
)
Basic and diluted net loss per common share attributable to Barnwell Industries, Inc. stockholders
  
$
(0.56
)
          
$
(0.41
)
Weighted-average number of common shares outstanding:
                        
Basic and diluted
    
10,017,997
              
10,017,997
  
See accompanying notes to the unaudited pro forma condensed combined financial statement
 
Barnwell Industries, Inc.
Unaudited Pro Forma Condensed Combined Balance Sheet
December 31, 2024
 
   
Barnwell
Industries, Inc.
(Historical)
    
Pro Forma Adjustments
    
Barnwell
Industries, Inc.
Pro Forma as
Adjusted
  
ASSETS
                  
Current Assets:
                  
Cash and cash equivalents
  
$
1,957,000
      
(98,000
)
  
$
1,859,000
  
Accounts and other receivables
    
2,403,000
      
(428,000
)
    
1,975,000
  
Assets held for sale
    
69,000
      
(69,000
)
        
Note receivable
            
800,000
      
800,000
  
Other current assets
    
1,547,000
      
(608,000
)
    
939,000
  
Total current assets
    
5,976,000
      
(403,000
)
    
5,573,000
  
Assets for retirement benefits
    
5,002,000
              
5,002,000
  
Operating lease right-of-use assets
    
153,000
              
153,0000
  
Property and equipment:
                        
Proved oil and natural gas properties, net
    
14,610,000
              
14,610,000
  
Drilling rigs and other property and equipment, net
    
269,000
      
(258,000
)
    
11,000
  
Total property and equipment, net
    
14,879,000
      
(258,000
)
    
14,621,000
  
Total assets
  
$
26,010,000
      
(661,000
)
  
$
25,349,000
  
                         
LIABILITIES AND EQUITY
                        
Current liabilities:
                        
Accounts payable
  
$
1,319,000
      
(25,000
)
  
$
1,294,000
  
Accrued capital expenditures
    
105,000
              
105,000
  
Accrued compensation
    
609,000
      
(77,000
)
    
532,000
  
Accrued operating and other expenses
    
1,575,000
      
(307,000
)
    
1,268,000
  
Current portion of asset retirement obligation
    
938,000
              
938,000
  
Other current liabilities
    
788,000
      
(585,000
)
    
203,000
  
Total current liabilities
    
5,334,000
      
(994,000
)
    
4,340,000
  
Operating lease liabilities
    
122,000
              
122,000
  
Liability for retirement benefits
    
1,921,000
              
1,921,000
  
Asset retirement obligation
    
7,237,000
              
7,237,000
  
Deferred income tax liabilities
    
91,000
              
91,000
  
Total liabilities
    
14,705,000
      
(994,000
)
    
13,711,000
  
Commitments and contingencies
                        
Equity:
                        
Common stock, par value $0.50 per share;
authorized, 40,000,000 shares: 10,221,434 issued at
December 31, 2024
    
5,111,000
              
5,111,000
  
Additional paid-in capital
    
7,746,000
              
7,746,000
  
(Accumulated deficit) retained earnings
    
(1,322,000
)
    
333,000
      
(989,000
)
Accumulated other comprehensive income, net
    
2,036,000
              
2,036,000
  
Treasury stock, at cost: 167,900 shares at
September 30, 2024
    
(2,286,000
)
            
(2,286,000
)
Total stockholders’ equity
    
11,285,000
      
333,000
      
11,618,000
  
Non-controlling interests
    
20,000
              
20,000
  
Total equity
    
11,305,000
      
333,000
      
11,638,000
  
Total liabilities and equity
  
$
26,010,000
      
(661,000
)
  
$
25,349,000
  
See accompanying notes to the unaudited pro forma condensed combined financial statements
 
Barnwell Industries, Inc.
Unaudited Pro Forma Condensed Combined Statement of Operations
For Three Months Ended December 31, 2024
 
   
Barnwell
Industries, Inc.
(Historical)
    
Pro Forma Adjustments
    
Barnwell
Industries, Inc.
Pro Forma as
Adjusted
  
Revenues:
                  
Oil and natural gas
  
$
3,897,000
          
$
3,897,000
  
Contract drilling
    
543,000
      
(543,000
)
        
Gas processing and other
    
37,000
              
37,000
  
     
4,477,000
      
(543,000
)
    
3,934,000
  
Costs and expenses:
                        
Oil and natural gas operating
    
2,496,000
              
2,496,000
  
Contract drilling operating
    
720,000
      
(720,000
)
        
General and administrative
    
1,281,000
      
(118,000
)
    
1,163,000
  
Depletion, depreciation, and amortization
    
928,000
      
(24,000
)
    
904,000
  
Impairment of assets
    
613,000
              
613,000
  
Foreign currency loss
    
351,000
              
351,000
  
     
6,389,000
      
(862,000
)
    
5,527,000
  
Loss before equity in income of affiliates and income taxes
    
(1,912,000
)
    
319,000
      
(1,593,000
)
Equity in income of affiliates
    
-
              
-
  
Loss before income taxes
    
(1,912,000
)
    
319,000
      
(1,593,000
)
Income tax provision
    
7,000
              
7,000
  
Net loss
    
(1,919,000
)
    
319,000
      
(1,600,000
)
Less: Net earnings attributable to non-controlling interests
    
(2,000
)
            
(2,000
)
Net loss attributable to Barnwell Industries, Inc.
  
$
(1,917,000
)
    
319,000
    
$
(1,598,000
)
Basic and diluted net loss per common share
attributable to Barnwell Industries, Inc.
stockholders
  
$
(0.19
)
          
$
(0.16
)
Weighted-average number of common shares outstanding:
                        
Basic and diluted
    
10,047,173
              
10,047,173
  
See accompanying notes to the unaudited pro forma condensed combined financial statement
 
1.    Description of the Disposition and Basis of Presentation
 
The Disposition
 
On March 14, 2025, Barnwell Industries, Inc. (“BII”) and Barnwell of Canada, Limited (“Barnwell Canada” and, collectively with BII, the “Sellers”), a subsidiary of BII, entered into a Stock Purchase Agreement with Denise Miyasato, Chad Arima and Eric Eldred (collectively the “Buyer”) whereby the Buyer acquired from the Sellers all of the shares of capital stock of Water Resources International, Inc. (the “Shares”) owned by the Sellers (the “Purchase Agreement”), hereafter referred to as the Transaction. Water Resources International, Inc. (“WRI”) explores and develops groundwater resources for government, commercial and private clients in Hawaii and conducts deep drilling and deep well pumping in Hawaii (the “Business”). The sale and purchase of the Shares (the “Transaction”) closed (the “Closing”) simultaneously with the execution and delivery of the Purchase Agreement by each of the parties thereto on March 14, 2025 (the “Closing Date”).
 
The aggregate purchase price for the Shares is $1,050,000 (the “Purchase Price”), which was paid at Closing by the Buyer as follows: an initial aggregate cash payment of $250,000 and the delivery of a promissory note with a principal amount of $800,000 to the Sellers (the “Promissory Note”). The principal payments on the Promissory Note are to be paid in installments on the following schedule:  May 15, 2025: $200,000; June 16, 2025: $150,000; July 15, 2025: $150,000; August 15, 2025: $150,000; and September 15, 2025: $150,000. The Promissory Note is secured by certain specified assets of WRI.
 
The Basis of Presentation
 
The unaudited pro forma condensed consolidated financial statements and related notes are prepared in accordance with Article 11 of Regulation S-X. While the historical consolidated financial statements reflect the Company’s past financial results, the pro forma condensed consolidated financial statements are included solely for informational purposes and are intended to illustrate how the Transaction might have affected the historical consolidated financial statements had it been completed earlier, as indicated herein:
 
• The Unaudited Pro Forma Condensed Consolidated Balance Sheet as of September 30, 2024, as adjusted, gives effect to the Disposition Adjustments as if they had occurred or become effective on September 30, 2024;
 
• The Unaudited Pro Forma Condensed Consolidated Balance Sheet as of December 31, 2024, as adjusted, gives effect to the Disposition Adjustments as if they had occurred or become effective on December 31, 2024;
 
• The Unaudited Pro Forma Condensed Consolidated Statements of Operations for the year ended September 30, 2024 and for the three months ended December 31, 2024, as adjusted, give effect to the Disposition Adjustments as if they had occurred or become effective on October 1, 2023.
 
The unaudited pro forma condensed consolidated financial statements Disposition Adjustments column presents adjustments for the removal of historical operations of the Divested Business and the addition of intercompany revenue and expense from continuing operations of the Company previously eliminated within consolidation to illustrate the separation and transfer of the operations, assets, and liabilities of the Company’s historical financial results in accordance with ASC 205 and ASC 360 to Buyer for each respective period.
 
The unaudited pro forma condensed consolidated financial statements do not project the Company’s future consolidated financial statements, nor are they intended to represent or indicate the actual consolidated financial statements that the Company would have had if the Transaction had occurred on the indicated dates. Furthermore, the unaudited pro forma condensed consolidated financial statements do not reflect the realization of any expected cost savings, synergies, or dis-synergies resulting from the Transaction, and they do not encompass all actions that the Company may undertake subsequent to the closing of the Transaction.
 
 2. Pro Forma Adjustments
 
Adjustments included in the Pro Forma Adjustments column in the accompanying unaudited pro forma condensed consolidated financial statements include the following:
 
Disposition Adjustments: Pro Forma Adjustments to historical financial results directly attributable to the Transaction in accordance with ASC 205. This reflects the separation of the discontinued operations, including the elimination of associated assets, liabilities, equity, and income (loss) attributable to the Transaction, that were included in the Company’s historical financial statements. In accordance with ASC 205, the amounts exclude general corporate overhead costs that were historically allocated to the Divested Business and do not meet the requirements to be presented in discontinued operations.
 
The adjustment to Cash and cash equivalents and Note receivable includes the pro forma impact of the Disposition as of September 30, 2024. The final sales price is subject to change based on adjustments to transaction costs and post-closing working capital adjustments. Thus, the final net cash proceeds and gain or loss on the Disposition will be determined subsequent to the closing of the Transaction and may differ from the adjustment.
 
For purposes of the Unaudited Pro Forma Condensed Consolidated Balance Sheet, the estimated pro forma loss on sale is recognized in Stockholders’ Equity based on the historical net carrying value as of September 30, 2024, of the Divested Business rather than as of the closing date of the Transaction. The final gain or loss on disposition will be calculated based on the final amount of consideration received, carrying value of the Divested Business at the closing date, and the finalization of the Company’s current fiscal period tax provision. As a result, the pro forma gain reflected herein may differ from the actual gain or loss on the Transaction recorded as of the closing date.
 
The estimated pro forma loss on disposal has not been reflected in the Unaudited Pro Forma Condensed Consolidated Statements of Operations, as this amount pertains to discontinued operations and does not have a continuing impact on the Company’s consolidated results.
 
Pro forma Disposition Adjustments Assuming at September 30, 2024
      
Net cash proceeds from the Transaction
  
$
250,000
  
Note receivable from the Transaction
    
800,000
  
Total proceeds from the Transaction
    
1,050,000
  
Net assets of the Divested Business
    
(1,288,000
)
Pre-tax loss on sale
    
(238,000
)
Estimated income tax expense/benefit
    
-
  
Estimated after-tax loss on sale and adjustment to retained earnings
  
$
(238,000
)

Pro forma Disposition Adjustments Assuming at December 31, 2024
      
Net cash proceeds from the Transaction
  
$
250,000
  
Note receivable from the Transaction
    
800,000
  
Total proceeds from the Transaction
    
1,050,000
  
Net assets of the Divested Business *
    
(1,303,000
)
Pre-tax loss on sale
    
(252,000
)
Estimated income tax expense/benefit
    
-
  
Estimated after-tax loss on sale
    
(252,000
)
Adjustment to reflect $585,000 deposit on sale of drilling rig as gain on sale at time of Disposition*
    
585,000
  
Adjustment to accumulated deficit
  
$
333,000
  

*The historical balance sheet at December 31, 2024 reflected the $585,000 deposit on the sale of a WRI drilling rig to a party other than the Buyer as a liability. However, the sale of the drilling rig by WRI was consummated in February 2025 and therefore the net assets sold to Buyer as of the Transaction date included the derecognition of the deposit liability and corresponding recognition of the gain on the sale of the drilling rig.