BARNWELL INDUSTRIES INC

Previous wording

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 ("PSLRA"). 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. All such statements we make are forward-looking statements made under the safe harbor of the PSLRA, except to the extent such statements relate to the operations of a partnership or limited liability company. 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 2024 Annual Report. 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.

Current wording

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 ("PSLRA"). 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. All such statements we make are forward-looking statements made under the safe harbor of the PSLRA, except to the extent such statements relate to the operations of a partnership or limited liability company. 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 2024 Annual Report and Barnwell’s Quarterly Reports on Form 10-Q for the quarters ending March 31, 2025, and December 31, 2024. 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.

Previous wording

Management has determined that our most critical accounting policies and estimates are those related to the full-cost ceiling calculation and depletion of our oil and natural gas properties and the calculation of our income taxes, all of which are discussed in our 2024 Annual Report. There have been no significant changes to these critical accounting policies and estimates during the three and six months ended March 31, 2025. We continue to monitor our accounting policies to ensure proper application of current rules and regulations.

Current wording

Management has determined that our most critical accounting policies and estimates are those related to the full-cost ceiling calculation and depletion of our oil and natural gas properties and the calculation of our income taxes, all of which are discussed in our 2024 Annual Report. There have been no significant changes to these critical accounting policies and estimates during the three and nine months ended June 30, 2025. We continue to monitor our accounting policies to ensure proper application of current rules and regulations.

Previous wording

Our ability to sustain our business in the future will depend on sufficient oil and natural gas operating cash flows, which are highly sensitive to potentially volatile oil and natural gas prices, timely repayment of the note receivable from the buyers of our contract drilling segment, and the amount and timing of costs incurred related to the shareholder consent solicitation and ongoing proxy contest. A sufficient level of such cash inflows are necessary to fund discretionary oil and natural gas capital expenditures, which must be economically successful to provide sufficient returns to grow reserves and production or at a minimum replace declining production from aging wells. Such a level of oil and natural gas capital expenditures may require funding from external debt or equity sources that are not currently in place, but those sources may not be feasible or sufficient. In addition, we will need sufficient cash flows to fund our non-discretionary outflows such as oil and natural gas asset retirement obligations and ongoing operating and general and administrative expenses.

Current wording

A sufficient level of oil and natural gas operating cash flows are necessary to fund discretionary oil and natural gas capital expenditures which must be economically successful to provide sufficient returns to grow reserves and production or at a minimum replace declining production from aging wells. Such a level of oil and natural gas capital expenditures will require funding from external debt and/or equity sources that are not currently in place, but those sources may not be feasible or sufficient. In addition, we will need sufficient cash flows to fund our non-discretionary outflows such as oil and natural gas asset retirement obligations, ongoing oil and natural gas operating expenses and general and administrative expenses, both those related to our oil and natural gas operations and those related to our being a public company such as costs incurred related to the shareholder consent solicitation and proxy contest.

Previous wording

Due to the recent shareholder consent solicitation and the ongoing proxy contest costs incurred and estimated to be incurred and the impacts of recently imposed tariffs which have caused a reduction in oil prices and have had an impact on the U.S. economy as a whole, we now face a greater uncertainty about our oil and natural gas operating cash inflows as described above, which in turn limits our ability to make the required discretionary cash outflows for the capital expenditures necessary to convert our proved undeveloped reserves to proved developed reserves. Furthermore, because of the greater uncertainty about our cash inflows described above, there is substantial doubt about our ability to fund our non-discretionary cash outflows and thus substantial doubt about our ability to continue as a going concern for one year from the date of the filing of this report.

Current wording

Due to the recent shareholder consent solicitation and the proxy contest costs incurred and estimated to be incurred and the impacts of recently imposed tariffs which have caused a reduction in oil prices and have had an impact on the U.S. economy as a whole, we now face a greater uncertainty about our oil and natural gas operating cash inflows as described above, which in turn limits our ability to make the required discretionary cash outflows for the capital expenditures necessary to convert our proved undeveloped reserves to proved developed reserves. Furthermore, because of the greater uncertainty about our cash inflows described above, there is substantial doubt about our ability to fund our non-discretionary cash outflows and thus substantial doubt about our ability to continue as a going concern for one year from the date of the filing of this report.

Previous wording

The Company is investigating potential sources of funding, including debt financing, non-core oil and natural gas property sales and the partial or complete sale of its remaining interests in the Kukio Resort Land Development Partnerships, however, no probable timing or amounts of such funding have yet been secured. Because of this uncertainty as well as uncertainties regarding the potential duration and depth of the impacts of recently legislated tariffs on the economy as a whole, which in turn affects oil prices and our business as described above, substantial doubt about our ability to continue as a going concern for one year from the date of the filing of this report exists. These financial statements do not include any adjustments that might result from the outcome of these uncertainties.

Current wording

The Company is investigating potential sources of funding, including debt financing, the issuance of stock, and the partial or complete sale of its remaining interests in the Kukio Resort Land Development Partnerships, however, no probable timing or amounts of such funding have yet been secured. Because of this uncertainty as well as uncertainties regarding the potential duration and depth of the impacts of recently imposed tariffs on the economy as a whole, which in turn affects oil prices and our business as described above, substantial doubt about our ability to continue as a going concern for one year from the date of the filing of this report exists. While the sale of our U.S. oil and natural gas properties on August 8, 2025 will help to provide cash for the near term, the amount is not estimated to be sufficient to overcome the substantial doubt for one year from the date of this filing in the absence of other sources of funding, none of which are probable at the date of this filing. These financial statements do not include any adjustments that might result from the outcome of these uncertainties.

Previous wording

As disclosed in Note 3 “Discontinued Operations,” on March 14, 2025, the Company entered into and completed the sale of its wholly-owned subsidiary, Water Resources. Water Resources drilled water wells and installed and repaired water pumping systems in Hawaii and represented our contract drilling segment. As a result of the sale, the Company has classified the related assets and liabilities and the results of its contract drilling business as discontinued operations in the condensed consolidated financial statements for all periods presented.

Current wording

As disclosed in Note 3 “Discontinued Operations” to the Condensed Consolidated Financial Statements (unaudited) included in this report, on March 14, 2025, the Company entered into and completed the sale of its wholly-owned subsidiary, Water Resources. Water Resources drilled water wells and installed and repaired water pumping systems in Hawaii and represented our contract drilling segment. As a result of the sale, the Company has classified the related assets and liabilities and the results of its contract drilling business as discontinued operations in the condensed consolidated financial statements for all periods presented.

Previous wording

Barnwell is involved in the acquisition and development of oil and natural gas properties in Canada where we initiate and participate in acquisition 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 exploratory and developmental operations elsewhere. Additionally, through its wholly-owned subsidiaries, Barnwell is involved in several non-operated oil and natural gas investments in Oklahoma and Texas.

Current wording

Barnwell is involved in the acquisition and development of oil and natural gas properties in Canada where we initiate and participate in acquisition 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 exploratory and developmental operations elsewhere. Additionally, through its wholly-owned subsidiaries, Barnwell was, until August 8, 2025, involved in several non-operated oil and natural gas investments in Oklahoma and Texas.

Previous wording

The Kukio Resort Land Development Partnerships have remaining Increment I obligations to complete project amenities, infrastructure, beautification, and restoration of certain areas and therefore has yet to fully recognize its deferred profit on the Increment I project as a whole. The Increment I deferred profit at March 31, 2025 for the Kukio Resort Land Development Partnerships as a whole was approximately $4,100,000; the recognition of which is dependent upon the completion of the Increment I obligations. The Kukio Resort Land Development Partnerships have accrued estimated costs of these obligations of approximately $2,700,000. The Kukio Resort Land Development Partnerships currently appears to have the ability to fund those obligations but there are no assurances that it can ultimately do so in the future if unforeseen events occur. The Kukio Resort Land Development Partnerships will recognize the Increment I deferred revenue and costs of sales on a percentage completion basis as the cash outlays to complete the remaining project obligations are made. The Kukio Resort Land Development Partnerships’ deferred profit and accrued costs to complete are not reflected in Barnwell’s Condensed Consolidated Balance Sheets as we account for our investment in the Kukio Resort Land Development Partnerships under the equity method of accounting. No percentage of sales payments will be earned by Barnwell on any future recognition of Increment I deferred profit as such payments were already fully earned and received based on cash received by the Kukio Resort Land Development Partnerships as the Increment I lots were sold.

Current wording

The Kukio Resort Land Development Partnerships have remaining Increment I obligations to complete project amenities, infrastructure, beautification, and restoration of certain areas and therefore has yet to fully recognize its deferred profit on the Increment I project as a whole. The Increment I deferred profit at June 30, 2025 for the Kukio Resort Land Development Partnerships as a whole was approximately $4,000,000; the recognition of which is dependent upon the completion of the Increment I obligations. The Kukio Resort Land Development Partnerships have accrued estimated costs of these obligations of approximately $2,600,000. The Kukio Resort Land Development Partnerships currently appears to have the ability to fund those obligations but there are no assurances that it can ultimately do so in the future if unforeseen events occur. The Kukio Resort Land Development Partnerships will recognize the Increment I deferred revenue and costs of sales on a percentage completion basis as the cash outlays to complete the remaining project obligations are made. The Kukio Resort Land Development Partnerships’ deferred profit and accrued costs to complete are not reflected in Barnwell’s Condensed Consolidated Balance Sheets as we account for our investment in the Kukio Resort Land Development Partnerships under the equity method of accounting. No percentage of sales payments will be earned by Barnwell on any future recognition of Increment I deferred profit as such payments were already fully earned and received based on cash received by the Kukio Resort Land Development Partnerships as the Increment I lots were sold.

Previous wording

The net loss from continuing operations attributable to Barnwell for the three months ended March 31, 2025 totaled $1,538,000, a $232,000 increase from a net loss from continuing operations attributable to Barnwell of $1,306,000 for the three months ended March 31, 2024. The following factors affected the results of operations for the three months ended March 31, 2025 as compared to the prior year period:

Current wording

The net loss from continuing operations attributable to Barnwell for the three months ended June 30, 2025 totaled $1,550,000, a $532,000 increase from a net loss from continuing operations attributable to Barnwell of $1,018,000 for the three months ended June 30, 2024. The following factors affected the results of operations for the three months ended June 30, 2025 as compared to the prior year period:

Previous wording

•A $1,012,000 decrease in the ceiling test impairment which was $1,677,000 in the prior year period compared to a ceiling test impairment of $665,000 in the current year period, and a $1,143,000 decrease in oil and natural gas depletion in the current year period as compared to the same period in the prior year, partially offset by a decrease in operating results primarily from decreased production.

Current wording

•A $299,000 decrease in oil and natural gas segment operating results, before income taxes, primarily attributable to a $1,299,000 decrease in oil and natural gas revenues in the current year period as compared to the same period in the prior year, partially offset by a $399,000 decrease in the ceiling test impairment which was $599,000 in the prior year period compared to a ceiling test impairment of $200,000 in the current year period, and a $449,000 decrease in oil and natural gas depletion in the current year period as compared to the same period in the prior year. The decrease in depletion was due to a decrease in the depletion rate largely due to ceiling test impairments incurred in the prior year period; and

Previous wording

The net loss from continuing operations attributable to Barnwell for the six months ended March 31, 2025 totaled $3,136,000, a $1,480,000 increase from a net loss from continuing operations attributable to Barnwell of $1,656,000 for the six months ended March 31, 2024. The following factors affected the results of operations for the six months ended March 31, 2025 as compared to the prior year period:

Current wording

The net loss from continuing operations attributable to Barnwell for the nine months ended June 30, 2025 totaled $4,686,000, a $2,012,000 increase from a net loss from continuing operations attributable to Barnwell of $2,674,000 for the nine months ended June 30, 2024. The following factors affected the results of operations for the nine months ended June 30, 2025 as compared to the prior year period:

Previous wording

•Equity in income from affiliates decreased $1,071,000 and land investment segment operating results, before non-controlling interests’ share of such profits, decreased $500,000 due to the Kukio Resort Land Development Partnerships' sale of two lots in the prior year period, whereas there were no lots sold in the current year period; and

Current wording

•Equity in income from affiliates decreased $1,071,000 and land investment segment operating results, before non-controlling interests’ share of such profits, decreased $500,000 due to the

Previous wording

•Equity in income from affiliates decreased $1,071,000 and land investment segment operating results, before non-controlling interests’ share of such profits, decreased $500,000 due to the Kukio Resort Land Development Partnerships' sale of two lots in the prior year period, whereas there was no lots sold in the current year period; and

Current wording

Kukio Resort Land Development Partnerships' sale of two lots in the prior year period, whereas there was no lots sold in the current year period; and

Previous wording

•A $1,625,000 decrease in the ceiling test impairment which was $1,677,000 in the prior year period compared to a ceiling test impairment of $52,000 in the current year period, and a $589,000 decrease in oil and natural gas depletion in the current year period as compared to the same period in the prior year, partially offset by a decrease in operating results primarily from decreased production.

Current wording

•A $1,411,000 decrease in the ceiling test impairment which was $2,276,000 in the prior year period compared to a ceiling test impairment of $865,000 in the current year period, and a $1,592,000 decrease in oil and natural gas depletion in the current year period as compared to the same period in the prior year partially offset by a decrease in oil and natural gas segment revenues due primarily to decreases in oil and natural gas prices and production.

Previous wording

The average exchange rate of the Canadian dollar to the U.S. dollar decreased 6% and 4% in the three and six months ended March 31, 2025, respectively, as compared to the same periods in the prior year. The exchange rate of the Canadian dollar to the U.S. dollar decreased 6% at March 31, 2025, as compared to September 30, 2024. 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. Other comprehensive income and losses are not included in net earnings and net loss. Other comprehensive loss due to foreign currency translation adjustments, net of taxes, for the three months ended March 31, 2025 was $3,000, a $19,000 change from other comprehensive loss due to foreign currency translation adjustments, net of taxes, of $22,000 for the same period in the prior year. Other comprehensive income due to foreign currency translation adjustments, net of taxes, for the six months ended March 31, 2025 was $90,000, a $82,000 change from other comprehensive income due to foreign currency translation adjustments, net of taxes, of $8,000 for the same period in the prior year. There were no taxes on other comprehensive income (loss) due to foreign currency translation adjustments in the three and six months ended March 31, 2025 and 2024 due to a full valuation allowance on the related deferred tax asset.

Current wording

The average exchange rate of the Canadian dollar to the U.S. dollar decreased 1% and 3% in the three and nine months ended June 30, 2025, respectively, as compared to the same periods in the prior year. The exchange rate of the Canadian dollar to the U.S. dollar decreased 1% at June 30, 2025, as compared to September 30, 2024. 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. Other comprehensive income and losses are not included in net earnings and net loss. Other comprehensive loss due to foreign currency translation adjustments, net of taxes, for the three months ended June 30, 2025 was $37,000, a $49,000 change from other comprehensive income due to foreign currency translation adjustments, net of taxes, of $12,000 for the same period in the prior year. Other comprehensive income due to foreign currency translation adjustments, net of taxes, for the nine months ended June 30, 2025 was $53,000, a $33,000 change from other comprehensive income due to foreign currency translation adjustments, net of taxes, of $20,000 for the same period in the prior year. There were no taxes on other comprehensive income (loss) due to foreign currency translation adjustments in the three and nine months ended June 30, 2025 and 2024 due to a full valuation allowance on the related deferred tax asset.

Previous wording

The oil and natural gas segment generated a $636,000 operating profit before general and administrative expenses in the six months ended March 31, 2025, an increase in operating results of $960,000 as compared to the $324,000 operating loss before general and administrative expenses generated during the same period of the prior year primarily due to a decrease of $1,012,000 in the ceiling test impairment and a $1,143,000 decrease in oil and natural gas depletion in the current year period, partially offset by a decrease in operating results primarily from decreased production.

Current wording

The oil and natural gas segment generated a $27,000 operating profit before general and administrative expenses in the three months ended June 30, 2025, a decrease in operating results of $299,000 as compared to the $326,000 operating profit before general and administrative expenses generated during the same period of the prior year due to a decrease in operating results primarily from decreased revenues, partially offset by a decrease of $399,000 in the ceiling test impairment and a $449,000 decrease in oil and natural gas depletion in the current year period.

Previous wording

The oil and natural gas segment generated a $752,000 operating profit before general and administrative expenses in the three months ended March 31, 2025, an increase in operating results of $1,957,000 as compared to the $1,205,000 operating loss before general and administrative expenses generated during the same period of the prior year primarily due to a decrease of $1,625,000 in the ceiling test impairment and a $589,000 decrease in oil and natural gas depletion in the current year period, partially offset by a decrease in operating results primarily from decreased production.

Current wording

The oil and natural gas segment generated a $663,000 operating profit before general and administrative expenses in the nine months ended June 30, 2025, an increase in operating results of $661,000 as compared to the $2,000 operating profit before general and administrative expenses generated during the same period of the prior year primarily due to a decrease of $1,411,000 in the ceiling test impairment and a $1,592,000 decrease in oil and natural gas depletion in the current year period, partially offset by a decrease in operating results primarily from decreased revenues.

Previous wording

The following table sets forth Barnwell’s oil and natural gas segment operating (loss) profit before general and administrative expenses by geographic location:

Current wording

The following table sets forth Barnwell’s oil and natural gas segment operating profit before general and administrative expenses by geographic location:

Previous wording

(1) The operating loss for Canada for the three and six months ended March 31, 2024 includes a non-cash ceiling test impairment of $1,677,000.

Current wording

(1) The operating profit (loss) for Canada for the three and nine months ended June 30, 2024 includes non-cash ceiling test impairments of $487,000 and $2,164,000, respectively.

Previous wording

(2) The operating profit (loss) for the United States for the three and six months ended March 31, 2025 includes a non-cash ceiling test impairment of $52,000 and $665,000, respectively.

Current wording

(2) The operating loss for the United States for the three and nine months ended June 30, 2025 includes non-cash ceiling test impairments of $200,000 and $865,000, respectively. The operating profit for the United States for the three and nine months ended June 30, 2024 includes a non-cash ceiling test impairment of $112,000.

Previous wording

Oil and natural gas revenues decreased $601,000 (15%) and $1,834,000 (20%) for the three and six months ended March 31, 2025, respectively, as compared to the same periods in the prior year, primarily due to decreases in natural gas, oil, and natural gas liquids production in the current year periods as compared to the same periods in the prior year. The decreases in production are primarily the result of natural declines as the wells age.

Current wording

Oil and natural gas revenues decreased $1,299,000 (29%) and $3,133,000 (23%) for the three and nine months ended June 30, 2025, respectively, as compared to the same periods in the prior year, primarily due to decreases in natural gas, oil, and natural gas liquids production in the current year periods as compared to the same periods in the prior year. The decreases in production are primarily the result of natural declines in production from wells in the Company's Twining area as the wells age, and to a lesser extent due to properties sold in the prior year. Revenues also decreased due to a decrease in oil prices.

Previous wording

In February 2025, the Company amended the sales price on 1,055 gross Mcf per day of the Canadian natural gas it will sell during the period from April 1, 2025 to October 31, 2025 to a fixed index price before differentials of $1.95 Canadian dollars per Mcf, with remaining volumes continuing to be sold at spot prices. This per day volume of natural gas under this fixed index price contract that will affect the period from April 1, 2025 to June 30, 2025, is equivalent to approximately 39% of Canadian natural gas gross production per day for the six months ended March 31, 2025. These natural gas contracts were eligible for and elected as normal purchase and normal sales exception contracts and were thus excluded from derivative accounting.

Current wording

In February 2025, the Company amended the sales price on 1,055 gross Mcf per day of the Canadian natural gas it will sell during the period from April 1, 2025 to October 31, 2025 to a fixed index price before differentials of $1.95 Canadian dollars per Mcf, with remaining volumes continuing to be sold at spot prices. This per day volume of natural gas under this fixed index price contract was equivalent to approximately 39% of Canadian natural gas gross production per day for the nine months ended June 30, 2025. These natural gas contracts were eligible for and elected as normal purchase and normal sales exception contracts and were thus excluded from derivative accounting.

Previous wording

Oil and natural gas operating expenses decreased $344,000 (15%) and $639,000 (12%) for the three and six months ended March 31, 2025, respectively, as compared to the same periods in the prior year, primarily due decreases in production in the current year periods as compared to the same periods in the prior year. Additionally, the decrease in oil and natural gas operating expenses for the six months ended March 31, 2025, was partially offset by an increase in workovers in the current year period, as compared to the same period in the prior year.

Current wording

Oil and natural gas operating expenses decreased $152,000 (7%) and $791,000 (11%) for the three and nine months ended June 30, 2025, respectively, as compared to the same periods in the prior year, primarily due to decreases in production in the current year periods, partially offset by an increase in workovers in the current year periods, as compared to the same periods in the prior year.

Previous wording

Oil and natural gas segment depletion decreased $589,000 (44%) and $1,143,000 (41%) for the three and six months ended March 31, 2025, respectively, as compared to the same periods in the prior year. The decreases were due to decreases in the depletion rate and due to decreases in production in the current year periods as compared to the same periods in the prior year. The depletion rate decreased as a result of a decrease in the depletable base from significant ceiling test impairments between the prior year periods and the current year periods.

Current wording

Oil and natural gas segment depletion decreased $449,000 (35%) and $1,592,000 (39%) for the three and nine months ended June 30, 2025, respectively, as compared to the same periods in the prior year. The decreases were due to decreases in the depletion rate and due to decreases in production in the current year periods as compared to the same periods in the prior year. The depletion rate decreased as a result of a decrease in the depletable base from significant ceiling test impairments between the prior year periods and the current year periods.

Previous wording

No lots were sold during the three and six months ended March 31, 2025. During the three and six months ended March 31, 2024, Barnwell received $500,000 in percentage of sales payments from KD I from the sale of the last two single-family lots within Increment I.

Current wording

No lots were sold during the three months ended June 30, 2025 and 2024. No lots were sold during the nine months ended June 30, 2025. During the nine months ended June 30, 2024, Barnwell received $500,000 in percentage of sales payments from KD I from the sale of the last two single-family lots within Increment I.

Previous wording

General and administrative expenses increased $906,000 (72%) for the three months ended March 31, 2025 as compared to the same period in the prior year. The increase was due to $978,000 in new fees for legal services, proxy solicitation, proxy advisory, and public relations costs related to a shareholder consent solicitation and proxy contest in the current year period as compared to the same period in the prior year. The increase was partially offset by decreases in compensation and other costs in the current year period as compared to the same period in the prior year.

Current wording

General and administrative expenses increased $565,000 (43%) for the three months ended June 30, 2025 as compared to the same period in the prior year. The increase was due to $657,000 in new fees and costs incurred, net of $348,000 of estimated accrued insurance recoveries receivable, for legal services, proxy solicitation, proxy advisory, and public relations costs related to a shareholder consent solicitation, various legal actions between the Sherwood Group and the Company and certain of its directors, and a proxy contest in the current year period as compared to the same period in the prior year. The increase was partially offset by decreases in compensation and other costs in the current year period as compared to the same period in the prior year.

Previous wording

General and administrative expenses increased $749,000 (29%) for the six months ended March 31, 2025 as compared to the same period in the prior year. The increase was due to $941,000 in new fees for legal services, proxy solicitation, proxy advisory, and public relations costs related to a shareholder consent solicitation and proxy contest in the current year period as compared to the same period in the prior year. The increase was partially offset by decreases in compensation and other costs in the current year period as compared to the same period in the prior year.

Current wording

General and administrative expenses increased $1,314,000 (34%) for the nine months ended June 30, 2025 as compared to the same period in the prior year. The increase was due to $1,599,000 in new fees and costs incurred, net of $348,000 of estimated accrued insurance recoveries receivable, for legal services, proxy solicitation, proxy advisory, and public relations costs related to a shareholder consent solicitation, various legal actions between the Sherwood Group and the Company and certain of its directors, and a proxy contest in the current year period as compared to the same period in the prior year. The increase was partially offset by decreases in compensation and other costs in the current year period as compared to the same period in the prior year.

Previous wording

The aforementioned shareholder proxy contest is continuing as of the date of this report and thus related costs will continue to be incurred until the matter is resolved. Accordingly, general and administrative expenses will continue to be affected by this matter beyond March 31, 2025. The Company is unable to estimate the amount of such future costs as the matter is ongoing and such costs will depend upon the future actions to be taken, which are yet to be determined.

Current wording

While the aforementioned shareholder proxy contest is not continuing as of the date of this report, the Company's annual stockholders meeting has been rescheduled to September 10, 2025 as a result of the Sherwood Group’s repeated refusals to attend the annual meeting despite having solicited proxies in connection with the 2025 Annual Meeting, thus causing the annual meeting to be adjourned numerous times and ultimately rescheduled due to a lack of a quorum. Therefore, related costs will continue to be incurred until the matter is resolved. Accordingly, general and administrative expenses will continue to be affected by this matter beyond June 30, 2025. The Company is unable to estimate the amount of such future costs as the matter is ongoing and such costs will depend upon the future actions to be taken, which are yet to be determined. In addition, the amount of estimated accrued insurance recoveries receivable is management's best estimate of the probable recoverable amount under the insurance policies. While the insurer has confirmed that certain costs incurred by the Company are eligible for claim under the Company's insurance policies, the amount ultimately recoverable through insurance is dependent upon the insurer's completion of their review of eligible legal costs incurred and the recoverable amount may differ from management's estimate.

Previous wording

Depletion, depreciation, and amortization decreased $588,000 (44%) and $1,143,000 (41%) for the three and six months ended March 31, 2025, respectively, as compared to the same periods in the prior year, primarily due to decreases in the depletion rate and decreases in production, as discussed in the “Oil and natural gas” section above.

Current wording

Depletion, depreciation, and amortization decreased $450,000 (35%) and $1,593,000 (39%) for the three and nine months ended June 30, 2025, respectively, as compared to the same periods in the prior year, primarily due to decreases in the depletion rate and decreases in production, as discussed in the “Oil and natural gas” section above.

Previous wording

During the three and six months ended March 31, 2025, the Company incurred a non-cash ceiling test impairment for our U.S. oil and natural gas properties of $52,000 and $665,000, respectively. During the three and six months ended March 31, 2024, the Company incurred a non-cash ceiling test impairment for our Canadian oil and natural gas properties of $1,677,000.

Current wording

During the three months ended June 30, 2024, the Company incurred a non-cash ceiling test impairment of $599,000, which included impairments for our U.S. and Canadian oil and natural gas properties of $112,000 and $487,000, respectively. During the nine months ended June 30, 2024, the Company incurred a non-cash ceiling test impairment of $2,276,000, which included impairments for our U.S. and Canadian oil and natural gas properties of $112,000 and $2,164,000, respectively.

Previous wording

As discussed above, the ceiling test uses a 12-month historical rolling average first-day-of-the-month prices. As such, declines in the 12-month historical rolling average first-day-of-the-month prices used in our ceiling test calculation in future periods could result in impairment write-downs in future periods in the absence of any offsetting factors that are not currently known or projected. Based on the oil and gas prices for April 1 and May 1 of 2025, the oil prices and natural gas prices used in the 12-month historical rolling first-day-of-the-month average oil price for the ceiling test at June 30, 2025 will be lower than at March 31, 2025. Whereas we believe our Canadian full cost pool is below the ceiling limit, our U.S. full cost pool had no ceiling excess at March 31, 2025, and thus a further impairment charge is more likely than not for our U.S full cost pool in the quarter ending June 30, 2025. The Company is currently unable to estimate a range of the amount of any potential future impairment write-downs as variables that impact the ceiling limitation are dependent upon actual results of activity through the end of June 2025.

Current wording

As discussed above, the ceiling test uses a 12-month historical rolling average first-day-of-the-month prices. As such, declines in the 12-month historical rolling average first-day-of-the-month prices used in our ceiling test calculation in future periods could result in impairment write-downs in future periods in the absence of any offsetting factors that are not currently known or projected. Based on the oil and gas prices for July 1 and August 1 of 2025, the oil prices used in the 12-month historical rolling first-day-of-the-month average for the ceiling test at September 30, 2025 are likely to be lower than at June 30, 2025. As such, we may incur a further impairment charge in the quarter ending September 30, 2025. The Company is currently unable to estimate a range of the amount of any potential future impairment write-downs as variables that impact the ceiling limitation are dependent upon actual results of activity through the end of September 2025.

Previous wording

During the three and six months ended March 31, 2025, there was a $10,000 foreign currency gain and a $341,000 foreign currency loss, respectively, as compared to foreign currency losses of $128,000 and $2,000 during the three and six months ended March 31, 2024, respectively, due to the effects of foreign exchange rate changes on intercompany loans and advances as a result of changes in the exchange rate between the U.S. dollar against the Canadian dollar. The foreign currency losses or gains from intercompany balances are included in our condensed consolidated statement of operations as the intercompany balances were not considered long-term in nature because management estimates that these intercompany balances will be settled in the future.

Current wording

During the three and nine months ended June 30, 2025, there was a $219,000 foreign currency gain and a $122,000 foreign currency loss, respectively, as compared to foreign currency losses of $61,000 and $63,000 during the three and nine months ended June 30, 2024, respectively, due to the effects of foreign exchange rate changes on intercompany loans and advances as a result of changes in the exchange rate between the U.S. dollar against the Canadian dollar. The foreign currency losses or gains from intercompany balances are included in our Condensed Consolidated Statements of Operations as the intercompany balances were not considered long-term in nature because management estimates that these intercompany balances will be settled in the future.

Previous wording

Equity in income of affiliates was nil for the three and six months ended March 31, 2025, as compared to equity in income of affiliates of $1,071,000 for the three and six months ended March 31, 2024. The decrease in partnership income is primarily due to the Kukio Resort Land Development Partnerships' sale of the last two lots in Increment I in the prior year period, whereas there were no lots sold in the current year period.

Current wording

Equity in income of affiliates was nil for the three and nine months ended June 30, 2025, as compared to equity in income of affiliates of nil and $1,071,000 for the three and nine months ended June 30, 2024, respectively. The decrease in partnership income is primarily due to the Kukio Resort Land Development Partnerships' sale of the last two lots in Increment I in the prior year period, whereas there were no lots sold in the current year period.

Previous wording

No cash distributions were received during the three and six months ended March 31, 2025. During the three and six months ended March 31, 2024, Barnwell received cash distributions of $1,071,000 (resulting in a net amount of $953,000, after distributing $118,000 to non-controlling interests) from the Kukio Resort Land Development Partnerships.

Current wording

No cash distributions were received during the three months ended June 30, 2025 and 2024. No cash distributions were received during the nine months ended June 30, 2025. During the nine months ended June 30, 2024, Barnwell received cash distributions of $1,071,000 (resulting in a net amount of

Previous wording

In the quarter ended June 30, 2021, the Company received cumulative distributions from the Kukio Resort Land Development Partnerships in excess of our investment balance and in accordance with applicable accounting guidance, the Company suspended its equity method earnings recognition and the Kukio Resort Land Development Partnerships investment balance was reduced to zero with the distributions received in excess of our investment balance recorded as equity in income of affiliates because the distributions are not refundable by agreement or by law and the Company is not liable for the obligations of or otherwise committed to provide financial support to the Kukio Resort Land Development Partnerships. The Company will record future equity method earnings only after our share of the Kukio Resort Land Development Partnerships’ cumulative earnings in excess of distributions during the suspended period exceeds our share of the Kukio Resort Land Development Partnerships’ income recognized for the excess distributions, and during this suspended period any distributions received will be recorded as equity in income of affiliates. Accordingly, no equity in income of affiliates was recognized in the six months ended March 31, 2025.

Current wording

In the quarter ended June 30, 2021, the Company received cumulative distributions from the Kukio Resort Land Development Partnerships in excess of our investment balance and in accordance with applicable accounting guidance, the Company suspended its equity method earnings recognition and the Kukio Resort Land Development Partnerships investment balance was reduced to zero with the distributions received in excess of our investment balance recorded as equity in income of affiliates because the distributions are not refundable by agreement or by law and the Company is not liable for the obligations of or otherwise committed to provide financial support to the Kukio Resort Land Development Partnerships. The Company will record future equity method earnings only after our share of the Kukio Resort Land Development Partnerships’ cumulative earnings in excess of distributions during the suspended period exceeds our share of the Kukio Resort Land Development Partnerships’ income recognized for the excess distributions, and during this suspended period any distributions received will be recorded as equity in income of affiliates. Accordingly, no equity in income of affiliates was recognized in the nine months ended June 30, 2025.

Previous wording

Cumulative distributions received from the Kukio Resort Land Development Partnerships in excess of our investment balance was $31,000 at March 31, 2025 and $373,000 at September 30, 2024.

Current wording

Cumulative distributions received from the Kukio Resort Land Development Partnerships in excess of our investment balance was $149,000 at June 30, 2025 and $373,000 at September 30, 2024.

Previous wording

Barnwell’s effective consolidated income tax rate from continuing operations, after adjusting loss from continuing operations before income taxes for non-controlling interests, was (12)% and (6)% for the three and six months ended March 31, 2025, respectively, as compared to (8)% and (11)% for the three and six months ended March 31, 2024, respectively.

Current wording

Barnwell’s effective consolidated income tax rate from continuing operations, after adjusting loss from continuing operations before income taxes for non-controlling interests, was 2% and (3)% for the three and nine months ended June 30, 2025, respectively, as compared to (2)% and (8)% for the three and nine months ended June 30, 2024, respectively.

Previous wording

Net loss attributable to non-controlling interests totaled nil and $2,000 for the three and six months ended March 31, 2025, respectively, as compared to net earnings attributable to non-controlling interests of $222,000 and $224,000 for the same periods in the prior year. The changes of $222,000 (100%) and $226,000 (101%) for the three and six months, respectively, are primarily due to decreases in the amount of equity in income of affiliates and percentage of sales revenues received in the current year periods as compared to the same periods in the prior year.

Current wording

Net loss attributable to non-controlling interests totaled $3,000 and $5,000 for the three and nine months ended June 30, 2025, respectively, as compared to net earnings attributable to non-controlling interests of $12,000 and $236,000 for the same periods in the prior year. The changes of $15,000 (125%) and $241,000 (102%) for the three and nine months, respectively, are primarily due to decreases in the amount of equity in income of affiliates and percentage of sales revenues received in the current year periods as compared to the same periods in the prior year.

Previous wording

Net earnings from discontinued operations was $331,000 and $12,000 during the three and six months ended March 31, 2025, respectively, as compared to net loss from discontinued operations of $466,000 and $780,000 during the three and six months ended March 31, 2024, respectively.

Current wording

Net earnings from discontinued operations was nil and $12,000 during the three and nine months ended June 30, 2025, respectively, as compared to net loss from discontinued operations of $228,000 and $1,008,000 during the three and nine months ended June 30, 2024, respectively.

Previous wording

On March 14, 2025, the Company completed the sale of Water Resources, which represented the Company’s contract drilling segment. The financial results of the Company’s contract drilling business has been presented as discontinued operations in the condensed consolidated financial statements for all periods presented. See Note 3 “Discontinued Operations” for further discussion and additional disclosures related to discontinued operations.

Current wording

On March 14, 2025, the Company completed the sale of Water Resources, which represented the Company’s contract drilling segment. The financial results of the Company’s contract drilling business has been presented as discontinued operations in the condensed consolidated financial statements for all periods presented. See Note 3 “Discontinued Operations” to the Condensed Consolidated Financial Statements (unaudited) included in this report for further discussion and additional disclosures related to discontinued operations.