UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-QSB
X QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES
--- EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 2000
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 small business issuer as specified in its charter)
DELAWARE 72-0496921
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
1100 ALAKEA STREET, SUITE 2900, HONOLULU, HAWAII 96813
(Address of principal executive offices) (Zip code)
(808) 531-8400
(Issuer's telephone number, including area code)
Check whether the issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Exchange Act during the past 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.
Yes X No
----- -----
As of May 12, 2000 there were 1,316,952 shares of common stock, par value $0.50,
outstanding.
Transitional Small Business Disclosure Format Yes No X
----- -----
2
<PAGE>
BARNWELL INDUSTRIES, INC.
-------------------------
AND SUBSIDIARIES
----------------
INDEX
-----
PART I. FINANCIAL INFORMATION:
Item 1. Financial Statements
Condensed Consolidated Balance Sheets -
March 31, 2000 and September 30, 1999 (Unaudited)
Consolidated Statements of Operations -
three and six months ended March 31, 2000 and 1999 (Unaudited)
Condensed Consolidated Statements of Cash Flows -
six months ended March 31, 2000 and 1999 (Unaudited)
Consolidated Statements of
Stockholders' Equity and Comprehensive Income (Loss) -
three months ended March 31, 2000 and 1999 (Unaudited)
Consolidated Statements of
Stockholders' Equity and Comprehensive Income (Loss) -
six months ended March 31, 2000 and 1999 (Unaudited)
Notes to Condensed Consolidated Financial Statements (Unaudited)
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations
PART II. OTHER INFORMATION:
Item 6. Exhibits and reports on Form 8-K
3
<PAGE>
BARNWELL INDUSTRIES, INC.
-------------------------
AND SUBSIDIARIES
----------------
CONDENSED CONSOLIDATED BALANCE SHEETS
-------------------------------------
(Unaudited, see Note A below)
ASSETS March 31, September 30,
- ------ 2000 1999
------------ ------------
CURRENT ASSETS:
Cash and cash equivalents $ 6,231,000 $ 2,577,000
Accounts receivable, net 1,453,000 1,873,000
Other current assets 774,000 1,147,000
------------ ------------
TOTAL CURRENT ASSETS 8,458,000 5,597,000
INVESTMENT IN LAND 3,694,000 3,519,000
OTHER ASSETS 204,000 207,000
NET PROPERTY AND EQUIPMENT 24,957,000 23,972,000
------------ ------------
TOTAL ASSETS $ 37,313,000 $ 33,295,000
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
- ------------------------------------
CURRENT LIABILITIES:
Accounts payable $ 1,408,000 $ 1,894,000
Accrued expenses 2,355,000 1,975,000
Current portion of long-term debt 400,000 1,650,000
Income taxes payable 912,000 251,000
Other current liabilities 1,163,000 787,000
------------ ------------
TOTAL CURRENT LIABILITIES 6,238,000 6,557,000
------------ ------------
LONG-TERM DEBT 10,380,000 12,631,000
------------ ------------
DEFERRED INCOME TAXES 7,063,000 6,301,000
------------ ------------
MINORITY INTEREST 2,249,000 -
------------ ------------
STOCKHOLDERS' EQUITY:
Common stock, par value $.50 per share:
Authorized, 4,000,000 shares
Issued, 1,642,797 shares 821,000 821,000
Additional paid-in capital 3,103,000 3,103,000
Retained earnings 15,011,000 11,801,000
Accumulated other comprehensive loss -
foreign currency translation adjustments (2,763,000) (3,130,000)
Treasury stock, at cost, 325,845 shares (4,789,000) (4,789,000)
------------ ------------
TOTAL STOCKHOLDERS' EQUITY 11,383,000 7,806,000
------------ ------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 37,313,000 $ 33,295,000
============ ============
Note A: The condensed consolidated balance sheet at September 30, 1999 has
been derived from the audited consolidated financial statements at that
date.
See Notes to Condensed Consolidated Financial Statements
4
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<TABLE>
<CAPTION>
BARNWELL INDUSTRIES, INC.
-------------------------
AND SUBSIDIARIES
----------------
CONSOLIDATED STATEMENTS OF OPERATIONS
-------------------------------------
(Unaudited)
Three months ended Six months ended
March 31, March 31,
-------------------------- -------------------------
2000 1999 2000 1999
------------ ----------- ----------- -----------
Revenues:
<S> <C> <C> <C> <C>
Oil and natural gas $ 3,530,000 $ 2,070,000 $ 6,660,000 $ 4,420,000
Contract drilling 870,000 580,000 1,850,000 1,330,000
Gas processing and other 470,000 190,000 670,000 390,000
Property sold 6,540,000 - 6,540,000 -
------------ ----------- ----------- -----------
11,410,000 2,840,000 15,720,000 6,140,000
------------ ----------- ----------- -----------
Costs and expenses:
Oil and natural gas operating 830,000 688,000 1,580,000 1,505,000
Contract drilling operating 682,000 479,000 1,443,000 1,055,000
General and administrative 922,000 662,000 1,642,000 1,426,000
Depreciation, depletion and
amortization 867,000 623,000 1,571,000 1,317,000
Interest 202,000 193,000 406,000 399,000
Foreign exchange losses 206,000 - 206,000 -
Minority interest in earnings 3,297,000 - 3,297,000 -
------------ ----------- ----------- -----------
7,006,000 2,645,000 10,145,000 5,702,000
------------ ----------- ----------- -----------
Earnings before income taxes 4,404,000 195,000 5,575,000 438,000
Income tax provision 1,734,000 165,000 2,365,000 358,000
------------ ----------- ----------- -----------
NET EARNINGS $ 2,670,000 $ 30,000 $ 3,210,000 $ 80,000
============ =========== =========== ===========
BASIC EARNINGS PER COMMON SHARE $ 2.03 $ 0.02 $ 2.44 $ 0.06
============ =========== =========== ===========
DILUTED EARNINGS PER COMMON SHARE $ 1.93 $ 0.02 $ 2.34 $ 0.06
============ =========== =========== ===========
<FN>
See Notes to Condensed Consolidated Financial Statements
</FN>
</TABLE>
5
<PAGE>
<TABLE>
<CAPTION>
BARNWELL INDUSTRIES, INC.
-------------------------
AND SUBSIDIARIES
----------------
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
-----------------------------------------------
(Unaudited)
Six months ended
March 31,
----------------------------
2000 1999
----------- -----------
Cash Flows from Operating Activities:
<S> <C> <C>
Net earnings $ 3,210,000 $ 80,000
Adjustments to reconcile net earnings
to net cash provided by operating activities:
Minority interest in earnings 3,297,000 -
Depreciation, depletion, and amortization 1,571,000 1,317,000
Deferred income taxes 673,000 30,000
Foreign exchange losses 206,000 -
Pre-tax gain on sale of equity securities (238,000) -
Pre-tax earnings on property sold (6,540,000) -
----------- -----------
2,179,000 1,427,000
Increase (decrease) from changes
in current assets and liabilities 1,553,000 (1,153,000)
----------- -----------
Net cash provided by operating activities 3,732,000 274,000
----------- -----------
Cash Flows from Investing Activities:
Cash received on sale of property 6,540,000 -
Proceeds from sale of equity securities 381,000 -
Proceeds from sale of oil and natural gas properties 52,000 70,000
Decrease in other assets 3,000 3,000
Capital expenditures - contract drilling and other (168,000) (162,000)
Additions to investment in land (350,000) (416,000)
Capital expenditures - oil and natural gas (2,152,000) (503,000)
----------- -----------
Net cash provided by (used in)
investing activities 4,306,000 (1,008,000)
----------- -----------
Cash Flows from Financing Activities:
Long-term debt borrowings 50,000 546,000
Distribution to minority interest partner (873,000) -
Repayments of long-term debt (3,566,000) (200,000)
----------- -----------
Net cash (used in) provided by
financing activities (4,389,000) 346,000
----------- -----------
Effect of exchange rate
changes on cash and cash equivalents 5,000 5,000
----------- -----------
Net increase (decrease) in cash and cash equivalents 3,654,000 (383,000)
Cash and cash equivalents at beginning of period 2,577,000 2,178,000
----------- -----------
Cash and cash equivalents at end of period $ 6,231,000 $ 1,795,000
=========== ===========
Supplemental disclosures of cash flow information:
Cash paid during the period for:
Interest (net of amounts capitalized) $ 438,000 $ 440,000
=========== ===========
Income taxes $ 1,150,000 $ 52,000
=========== ===========
<FN>
See Notes to Condensed Consolidated Financial Statements
</FN>
</TABLE>
6
<PAGE>
<TABLE>
<CAPTION>
BARNWELL INDUSTRIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY AND COMPREHENSIVE INCOME (LOSS)
Three months ended March 31, 2000 and 1999
(Unaudited)
Accumulated
Additional Comprehensive Other Total
Common Paid-In Income Retained Comprehensive Treasury Stockholders'
Stock Capital (Loss) Earnings Loss Stock Equity
-------- ---------- ------------- ----------- ------------- ------------- -------------
<S> <C> <C> <C> <C> <C> <C> <C>
Balances at December 31, 1998 $821,000 $3,103,000 $11,331,000 $ (3,688,000) $ (4,789,000) $ 6,778,000
Comprehensive income:
Net earnings $ 30,000 30,000 30,000
Other comprehensive income,
net of income taxes -
foreign currency
translation adjustments 201,000 201,000 201,000
-------------
Total comprehensive income $ 231,000
-------- ---------- ============= ----------- ------------- ------------- -------------
Balances at March 31, 1999 $821,000 $3,103,000 $11,361,000 $ (3,487,000) $ (4,789,000) $ 7,009,000
======== ========== =========== ============= ============= =============
Balances at December 31, 1999 $821,000 $3,103,000 $12,341,000 $ (2,917,000) $ (4,789,000) $ 8,559,000
Comprehensive income:
Net earnings $ 2,670,000 2,670,000 2,670,000
Other comprehensive loss,
net of income taxes -
foreign currency
translation adjustments (52,000) (52,000) (52,000)
-------------
Total comprehensive income $ 2,618,000
=============
Foreign exchange
losses recognized 206,000 206,000
-------- ---------- ----------- ------------- ------------- -------------
Balances at March 31, 2000 $821,000 $3,103,000 $15,011,000 $ (2,763,000) $ (4,789,000) $ 11,383,000
======== ========== =========== ============= ============= =============
<FN>
See Notes to Condensed Consolidated Financial Statements
</FN>
</TABLE>
7
<PAGE>
<TABLE>
<CAPTION>
BARNWELL INDUSTRIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY AND COMPREHENSIVE INCOME (LOSS)
Six months ended March 31, 2000 and 1999
(Unaudited)
Accumulated
Additional Comprehensive Other Total
Common Paid-In Income Retained Comprehensive Treasury Stockholders'
Stock Capital (Loss) Earnings Loss Stock Equity
-------- ---------- ------------- ----------- ------------- ------------- -------------
<S> <C> <C> <C> <C> <C> <C> <C>
Balances at
September 30, 1998 $821,000 $3,103,000 $11,281,000 $ (3,672,000) $ (4,789,000) $ 6,744,000
Comprehensive income:
Net earnings $ 80,000 80,000 80,000
Other comprehensive income,
net of income taxes -
foreign currency
translation adjustments 185,000 185,000 185,000
-------------
Total comprehensive income $ 265,000
-------- ---------- ============= ----------- ------------- ------------- -------------
Balances at March 31, 1999 $821,000 $3,103,000 $11,361,000 $ (3,487,000) $ (4,789,000) $ 7,009,000
======== ========== =========== ============= ============= =============
Balances at
September 30, 1999 $821,000 $3,103,000 $11,801,000 $ (3,130,000) $ (4,789,000) $ 7,806,000
Comprehensive income:
Net earnings $ 3,210,000 3,210,000 3,210,000
Other comprehensive income,
net of income taxes -
foreign currency
translation adjustments 161,000 161,000 161,000
-------------
Total comprehensive income $ 3,371,000
=============
Foreign exchange
losses recognized 206,000 206,000
-------- ---------- ----------- ------------- ------------- -------------
Balances at March 31, 2000 $821,000 $3,103,000 $15,011,000 $ (2,763,000) $ (4,789,000) $ 11,383,000
======== ========== =========== ============= ============= =============
<FN>
See Notes to Condensed Consolidated Financial Statements
</FN>
</TABLE>
8
<PAGE>
BARNWELL INDUSTRIES, INC.
-------------------------
AND SUBSIDIARIES
----------------
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
----------------------------------------------------
(Unaudited)
1. CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
-------------------------------------------
The Condensed Consolidated Balance Sheet as of March 31, 2000, the
Consolidated Statements of Operations for the three and six months ended March
31, 2000 and 1999, the Condensed Consolidated Statements of Cash Flows for the
six months ended March 31, 2000 and 1999, and the Consolidated Statements of
Stockholders' Equity and Comprehensive Income (Loss) for the three and six
months ended March 31, 2000 and 1999 have been prepared by Barnwell Industries,
Inc. (referred to herein together with its subsidiaries as "Barnwell" or the
"Company") and are unaudited. In the opinion of management, all adjustments
(which include only normal recurring adjustments) necessary to present fairly
the financial position, results of operations and cash flows at March 31, 2000
and for all periods presented have been made. The Condensed Consolidated Balance
Sheet as of September 30, 1999 has been derived from audited financial
statements.
Certain information and footnote disclosures normally included in
financial statements prepared in accordance with generally accepted accounting
principles have been condensed or omitted. These condensed consolidated
financial statements should be read in conjunction with the financial statements
and notes thereto included in the Company's September 30, 1999 annual report to
stockholders. The results of operations for the period ended March 31, 2000 are
not necessarily indicative of the operating results for the full year.
The preparation of financial statements in conformity with generally
accepted accounting principles requires management 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.
2. EARNINGS PER COMMON SHARE
-------------------------
Basic earnings per share ("EPS") excludes dilution and is computed by
dividing net earnings by the weighted-average number of common shares
outstanding for the period. The weighted-average number of common shares
outstanding was 1,316,952 for the three and six months ended March 31, 2000 and
1999.
Diluted EPS includes the potentially dilutive effect of outstanding common
stock options and securities which are convertible to common shares. The
weighted-average number of common and potentially dilutive common shares
outstanding was 1,398,365 and 1,393,162 for the three and six months ended March
31, 2000, respectively, and 1,316,952 for the three and six months ended March
31, 1999.
Reconciliations between the numerator and denominator of the basic and
diluted earnings per share computations for the three and six months ended March
31, 2000 is as follows:
Three months ended March 31, 2000
---------------------------------------
Net Earnings Shares Per-Share
(Numerator) (Denominator) Amount
---------------------------------------
Basic earnings per share $2,670,000 1,316,952 $ 2.03
======
Effect of dilutive securities -
common stock options - 11,413
Convertible debentures 23,000 70,000
---------- ----------
Diluted earnings per share $2,693,000 1,398,365 $ 1.93
========== ========== ======
9
<PAGE>
Six months ended March 31, 2000
---------------------------------------
Net Earnings Shares Per-Share
(Numerator) (Denominator) Amount
---------------------------------------
Basic earnings per share $3,210,000 1,316,952 $ 2.44
======
Effect of dilutive securities -
common stock options - 6,210
Convertible debentures 48,000 70,000
---------- ----------
Diluted earnings per share $3,258,000 1,393,162 $ 2.34
========== ========== ======
Assumed conversion of certain common stock options was excluded from the
computation of diluted EPS for the three and six months ended March 31, 2000 and
1999 because their inclusion would be antidilutive. For the three and six months
ended March 31, 2000, antidilutive options to acquire 50,000 and 74,000 shares,
respectively, of the Company's common stock were outstanding. For the three and
six months ended March 31, 1999, antidilutive options to acquire 55,000 shares
of the Company's common stock were outstanding.
Assumed conversion of the convertible debentures to 90,000 shares of
common stock at March 31, 1999 was excluded from the computation of diluted EPS
for the three and six months ended March 31, 1999 because their inclusion would
be antidilutive.
3. INCOME TAXES
------------
The components of the provision for income taxes for the three and six
months ended March 31, 2000 and 1999 are as follows:
Three months ended Six months ended
March 31, March 31,
-------------------------- -------------------------
2000 1999 2000 1999
---------- --------- ---------- ---------
Current - U.S. $ 267,000 $ - $ 267,000 $ -
Current - Foreign 936,000 150,000 1,425,000 328,000
---------- --------- ---------- ---------
Total - Current 1,203,000 150,000 1,692,000 328,000
---------- --------- ---------- ---------
Deferred - U.S. 600,000 15,000 660,000 30,000
Deferred - Foreign (69,000) - 13,000 -
---------- --------- ---------- ---------
Total - Deferred 531,000 15,000 673,000 30,000
---------- --------- ---------- ---------
$1,734,000 $ 165,000 $2,365,000 $ 358,000
========== ========= ========== =========
4. SEGMENT INFORMATION
-------------------
The Company operates three segments: exploring for, developing, producing
and selling oil and natural gas in Canada; investing in leasehold land in
Hawaii; and drilling wells and installing and repairing water pumping systems in
Hawaii. The Company's reportable segments are strategic business units that
offer different products and services. They are managed separately as each
segment requires different operational methods, operational assets and marketing
strategies, and operate in different geographical locations.
The Company does not allocate general and administrative expenses,
interest expense, interest income or income taxes to segments, and there are no
transactions between segments that affect segment profit or loss.
10
<PAGE>
<TABLE>
<CAPTION>
Three months ended March 31, Six months ended March 31,
-------------------------- --------------------------
2000 1999 2000 1999
----------- ----------- ----------- -----------
Revenues:
<S> <C> <C> <C> <C>
Oil and natural gas $ 3,530,000 $ 2,070,000 $ 6,660,000 $ 4,420,000
Contract drilling 870,000 580,000 1,850,000 1,330,000
Land development 6,540,000 - 6,540,000 -
Other 377,000 172,000 517,000 355,000
----------- ----------- ----------- -----------
Total $11,317,000 $ 2,822,000 $15,567,000 $ 6,105,000
=========== =========== =========== ===========
Depreciation, depletion
and amortization:
Oil and natural gas $ 681,000 $ 551,000 $ 1,309,000 $ 1,201,000
Contract drilling 49,000 26,000 98,000 52,000
Other 137,000 46,000 164,000 64,000
----------- ----------- ----------- -----------
Total $ 867,000 $ 623,000 $ 1,571,000 $ 1,317,000
=========== =========== =========== ===========
Operating profit
(before general and
administrative expenses):
Oil and natural gas $ 2,019,000 $ 831,000 $ 3,771,000 $ 1,714,000
Contract drilling 139,000 75,000 309,000 223,000
Land development 3,243,000 - 3,243,000 -
Other 240,000 126,000 353,000 291,000
----------- ----------- ----------- -----------
Total 5,641,000 1,032,000 7,676,000 2,228,000
General and
administrative expenses (922,000) (662,000) (1,642,000) (1,426,000)
Interest expense (202,000) (193,000) (406,000) (399,000)
Interest income 93,000 18,000 153,000 35,000
Foreign exchange losses (206,000) - (206,000) -
----------- ----------- ----------- -----------
Earnings before
income taxes $ 4,404,000 $ 195,000 $ 5,575,000 $ 438,000
=========== =========== =========== ===========
</TABLE>
5. FUTURE ACCOUNTING CHANGES
-------------------------
In June 1998, the Financial Accounting Standards Board ("FASB") issued
Statement of Financial Accounting Standards ("SFAS") No. 133, "Accounting for
Derivative Instruments and Hedging Activities," which establishes accounting and
reporting standards for derivative instruments and hedging activities and
requires that an entity recognize all derivatives as either assets or
liabilities in the statement of financial position and measure those instruments
at fair value. The provisions of SFAS No. 133 are effective for all fiscal
quarters of fiscal years beginning after June 15, 1999. In July 1999, the FASB
issued SFAS No. 137, "Accounting for Derivative Instruments and Hedging
Activities - Deferral of the Effective Date of FASB Statement No. 133, an
Amendment of FASB Statement No. 133," which defers the effective date of SFAS
No. 133 to be effective for all fiscal quarters of fiscal years beginning after
June 15, 2000. Management does not expect adoption of SFAS No. 133 will have a
material effect on the Company's financial condition, results of operations or
liquidity.
11
<PAGE>
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
-----------------------------------------------------------------------
OF OPERATIONS
-------------
FORWARD-LOOKING STATEMENTS
- --------------------------
This Form 10-QSB contains forward-looking statements within the meaning of
Section 27A of the Securities Act of 1933 and Section 21E of the Securities
Exchange Act of 1934, including various forecasts, projections of the Company's
future performance, statements of the Company's plans and objectives or other
similar types of information. Although the Company believes that its
expectations are based on reasonable assumptions, it cannot assure that the
expectations contained in such forward-looking statements will be achieved. Such
statements involve risks, uncertainties and assumptions which could cause actual
results to differ materially from those contained in such statements. These
forward-looking statements speak only as of the date of filing of this Form
10-QSB, and the Company expressly disclaims any obligation or undertaking to
publicly release any updates or revisions to any forward-looking statements
contained herein.
LIQUIDITY AND CAPITAL RESOURCES
- -------------------------------
Cash flows from operations totaled $3,732,000 for the six months ended
March 31, 2000, an increase of $3,458,000 as compared to the same period in the
prior year, due to an increase in operating profit generated by the Company's
oil and natural gas segment and to the timing of receivable collections and
payables disbursements.
In January 2000, Kaupulehu Makai Venture, an affiliate of Kajima
Corporation of Japan, exercised a portion of the option granted in 1990 by
Kaupulehu Developments, a 50.1%-owned general partnership, for the development
of residential parcels within the Four Seasons Resort Hualalai at Historic
Ka'upulehu on the Island of Hawaii. $1,300,000 of the proceeds were used to
repay Kaupulehu Developments' borrowings from a Hawaii bank, and $873,000 were
distributed to Kaupulehu Developments' minority interest partner.
During the six months ended March 31, 2000, the Company repaid $2,066,000
of its borrowings under a credit facility with a Canadian bank. This credit
facility has been renewed through April 2001 for $17,000,000 Canadian dollars,
or its U.S. dollar equivalent of approximately $11,500,000, subject to the
Company pledging several of its properties which are not currently pledged; the
Company intends to pledge such properties. At March 31, 2000, the Company had
$6,231,000 in cash and cash equivalents and approximately $2,100,000 of
available credit under their credit facility with a Canadian bank.
The Company invested $1,695,000 and $2,152,000 in oil and natural gas
properties in Canada for the three and six months ended March 31, 2000,
respectively, as compared to $292,000 and $503,000 for the three and six months
ended March 31, 1999, respectively. During the three and six months ended March
31, 2000, the Company participated in the drilling of wells in Alberta and
British Columbia, Canada, as follows:
Three months ended March 31, 2000
- ---------------------------------
Productive Productive
Oil Wells Gas Wells Dry Holes Total Wells
------------- ------------- ------------- --------------
Exp. Dev. Exp. Dev. Exp. Dev. Exp. Dev.
---- ---- ---- ---- ---- ---- ---- -----
Gross - 4.00 - 6.00 - - - 10.00
Net - 0.42 - 1.08 - - - 1.50
Six months ended March 31, 2000
- -------------------------------
Productive Productive
Oil Wells Gas Wells Dry Holes Total Wells
------------- -------------- ------------- --------------
Exp. Dev. Exp. Dev. Exp. Dev. Exp. Dev.
---- ---- ---- ----- ---- ---- ---- -----
Gross - 7.00 - 10.00 - - - 17.00
Net - 0.73 - 2.43 - - - 3.16
Additionally, during the three and six months ended March 31, 2000, the
Company participated in the recompletion of 6 gross wells (0.80 net wells) and
12 gross wells (2.10 net wells), respectively, in Alberta, Canada.
12
<PAGE>
The Company invested $350,000 (including interest costs capitalized)
towards the rezoning of the North Kona, Hawaii property held by Kaupulehu
Developments. In December 1999, the Third Circuit Court of the County of Hawaii
remanded Kaupulehu Developments' Special Management Area ("SMA") Use Permit
Petition back to the County of Hawaii Planning Commission for further review due
to procedural issues. In late December 1999, the County of Hawaii Planning
Commission reaffirmed their approval of the SMA Use Permit Petition. Additional
steps must be completed in order for Kaupulehu Developments to proceed with
development of this area, including the resolution of a legal challenge to a
prior State of Hawaii zoning approval for this project which is before the
Hawaii Supreme Court. If Kaupulehu Developments is unable to prevail in the case
which is before the Hawaii Supreme Court, and if Kaupulehu Developments is
subsequently unable to obtain the State of Hawaii's approval after making
additional efforts with the modifications it believes are necessary to obtain
the approval, there will be a materially adverse impairment of the value of the
Company's investment in land.
RESULTS OF OPERATIONS
- ---------------------
Oil and Natural Gas
- -------------------
SELECTED OPERATING STATISTICS
-----------------------------
Average Prices
-----------------------------------------------
Three months ended Increase
March 31, (Decrease)
---------------------- -----------------
2000 1999 $ %
------ ------- ------ ----
Oil (Bbls)* $26.68 $ 11.04 $15.64 142%
Liquids (Bbls)* $16.64 $ 7.32 $ 9.32 127%
Gas (MCF)** $ 1.90 $ 1.48 $ 0.42 28%
Six months ended Increase
March 31, (Decrease)
---------------------- -----------------
2000 1999 $ %
------ ------- ------ ----
Oil (Bbls)* $24.63 $ 11.63 $13.00 112%
Liquids (Bbls)* $15.37 $ 7.87 $ 7.50 95%
Gas (MCF)** $ 1.95 $ 1.45 $ 0.50 34%
Net Sales Volumes
-----------------------------------------------
Three months ended Increase
March 31, (Decrease)
---------------------- ------------------
2000 1999 Units %
------- ------- ------- ----
Oil (Bbls)* 50,000 56,000 (6,000) (11%)
Liquids (Bbls)* 25,000 22,000 3,000 14%
Gas (MCF)** 868,000 889,000 (21,000) (2%)
Six months ended Increase
March 31, (Decrease)
---------------------- ------------------
2000 1999 Units %
--------- --------- ------- ----
Oil (Bbls)* 96,000 118,000 (22,000) (19%)
Liquids (Bbls)* 55,000 42,000 13,000 31%
Gas (MCF)** 1,698,000 1,891,000 (193,000) (10%)
*Bbls = stock tank barrel equivalent to 42 U.S. gallons
**MCF = 1,000 cubic feet
Oil and natural gas revenues increased $1,460,000 (71%) for the three
months ended March 31, 2000, as compared to the same period in the prior year,
due to 142%, 127% and 28% increases in oil, liquids and natural gas prices,
respectively. The increase was partially offset by 11% and 2% decreases in oil
and natural gas production, respectively, due to an increase in net royalties
(royalties increase and the Alberta Royalty Tax Credit declines as prices rise)
and a decline in production from the Company's mature oil properties.
13
<PAGE>
Oil and natural gas revenues increased $2,240,000 (51%) for the six months
ended March 31, 2000, as compared to the same period in the prior year, due to
112%, 95% and 34% increases in oil, liquids and natural gas prices,
respectively. The increase was partially offset by 19% and 10% decreases in oil
and natural gas production, respectively, due to an increase in net royalties
(royalties increase and the Alberta Royalty Tax Credit declines as prices rise)
and declines in production from the Company's mature oil and natural gas
properties.
Oil and natural gas operating expenses increased $142,000 (21%) for the
three months ended March 31, 2000, as compared to the same period in the prior
year, due primarily to workovers and well servicing at the Dunvegan and Red
Earth areas. Oil and natural gas operating expenses remained relatively
unchanged (increased $75,000 or 5%) for the six months ended March 31, 2000, as
compared to the same period in the prior year.
Contract Drilling
- -----------------
Contract drilling revenues increased $290,000 (50%) and $520,000 (39%) for
the three and six months ended March 31, 2000, respectively, as compared to the
same periods in the prior year. Contract drilling operating expenses increased
$203,000 (42%) and $388,000 (37%) for the three and six months ended March 31,
2000, respectively, as compared to the same periods in the prior year. These
increases are due to an increase in the number of drilling jobs for the current
year periods, as compared to the same periods in the prior year. Accordingly,
operating profit before depreciation increased $87,000 (86%) and $132,000 (48%)
for the three and six months ended March 31, 2000, respectively, as compared to
the same periods in the prior year.
Gas Processing and Other
- ------------------------
Gas processing and other income increased $280,000 (147%) and $280,000
(72%) for the three and six months ended March 31, 2000, respectively, as
compared to the same periods in the prior year, due primarily to a $238,000 gain
on the sale of equity securities.
Property Sold
- -------------
In January 2000, Kaupulehu Makai Venture, an affiliate of Kajima
Corporation of Japan, exercised a portion of the option granted by Kaupulehu
Developments, a 50.1%-owned general partnership, for the development of
residential parcels within the Four Seasons Resort Hualalai at Historic
Ka'upulehu on the Island of Hawaii. As a result, the Company recognized
$3,243,000 of pre-tax earnings, net of minority interests, in the three and six
months ended March 31, 2000. There were no property sales in the three and six
months ended March 31, 1999.
General and Administrative Expenses
- -----------------------------------
General and administrative expenses increased $260,000 (39%) and $216,000
(15%) for the three and six months ended March 31, 2000, respectively, as
compared to the same periods in the prior year, due primarily to costs
associated with the $6,540,000 earnings on property sold, and higher personnel
costs due in part to the Company taking almost all of its natural gas and oil in
kind and marketing such products itself, instead of through the operator of the
oil or natural gas property.
Depletion, Depreciation and Amortization
- ----------------------------------------
Depletion, depreciation and amortization increased $244,000 (39%) and
$254,000 (19%) for the three and six months ended March 31, 2000, respectively,
as compared to same periods in the prior year. The increases are due to an
increase in the depletion rate, resulting from increased capital expenditures,
and depreciation of fixed assets purchased in fiscal 1999.
Foreign Exchange Losses
- -----------------------
The Company conducts foreign operations in Canada. Consequently, the
Company is subject to foreign currency transaction gains and losses due to
fluctuations of the exchange rates between the Canadian dollar and the U.S.
dollar. During the three and six months ended March 31, 2000, the Company
realized foreign currency transaction losses of $206,000. There were no foreign
currency transaction gains or losses in the three and six months ended March 31,
1999. The Company cannot accurately predict future fluctuations between the
Canadian and U.S. dollars.
14
<PAGE>
PART II. OTHER INFORMATION
Item 6. Exhibits and reports on Form 8-K
None.
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)
/s/ Russell M. Gifford
- ----------------------
Russell M. Gifford
Executive Vice President and
Chief Financial Officer
Date: May 12, 2000
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from
Barnwell Industries Inc.'s 2000 second quarter 10-QSB and is qualified in
its entirety by reference to such 10-QSB.
</LEGEND>
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> SEP-30-2000
<PERIOD-END> MAR-31-2000
<CASH> 6231
<SECURITIES> 0
<RECEIVABLES> 1649
<ALLOWANCES> 196
<INVENTORY> 118
<CURRENT-ASSETS> 8458
<PP&E> 62454
<DEPRECIATION> 37497
<TOTAL-ASSETS> 37313
<CURRENT-LIABILITIES> 6238
<BONDS> 10380
0
0
<COMMON> 821
<OTHER-SE> 10562
<TOTAL-LIABILITY-AND-EQUITY> 37313
<SALES> 8510
<TOTAL-REVENUES> 15720
<CGS> 3023
<TOTAL-COSTS> 6320
<OTHER-EXPENSES> 1571
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 406
<INCOME-PRETAX> 5575
<INCOME-TAX> 2365
<INCOME-CONTINUING> 3210
<DISCONTINUED> 0
<EXTRAORDINARY> 0
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<EPS-BASIC> 2.44
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</TABLE>
