Barnwell Industries(US:BRN)2020-12-16 21:36Production and Revenue - Barnwell's annual net production for fiscal 2020 was 649,000 Mcf of natural gas, 153,000 Bbls of oil, and 21,000 Bbls of natural gas liquids, representing increases of 3.35%, 24.39%, and 16.67% respectively compared to fiscal 2019[48]. - The average sales price per Mcf of natural gas in fiscal 2020 was $1.64, up 42.61% from $1.15 in fiscal 2019; however, the average price per Bbl of oil decreased by 19.14% to $33.85 from $41.84[48]. - Barnwell's oil and natural gas revenues were primarily derived from spot prices, with over 80% of revenues coming from products sold at these prices in fiscal 2020[59]. Capital Expenditures and Investments - Barnwell's total capital expenditures for fiscal 2020 amounted to $3,151,000, primarily due to the Twining horizontal development well and participation in a development well in the Spirit River area[49]. - Barnwell received $200,000 in net funding from the Alberta-administered Site Rehabilitation Program to reduce abandonment and reclamation obligations[76]. - Barnwell owns a 77.6% interest in Kaupulehu Developments, which has rights to payments from KD I and KD II based on lot sales within approximately 870 acres in Hawaii[78]. - In fiscal 2020, gross proceeds from single-family lot sales in Increment I reached $219.7 million, with Barnwell entitled to 10% of proceeds exceeding $100 million and 14% of proceeds over $300 million[84]. Production Operations - The successful Twining horizontal development well contributed approximately 15,900 barrels of net oil production, accounting for 10% of total net oil production for fiscal 2020[51]. - As of September 30, 2020, Barnwell had interests in 134 gross (50.4 net) producing wells, with 69 gross (42.2 net) being oil wells and 65 gross (8.2 net) being natural gas wells[54]. - Barnwell's undeveloped acreage includes 74,177 gross acres, with 89% not subject to expiration as of September 30, 2020[57]. - The company drilled one gross (1.0 net) horizontal development well in the Twining area in fiscal 2020, which started production in January 2020[51]. Contractual and Market Conditions - In fiscal 2020, 65% of well drilling and pump installation jobs were government contracts, contributing to 9% of total contract drilling revenues[96]. - As of September 30, 2020, Water Resources had a backlog of contracts valued at approximately $7.2 million, with $4.4 million expected to be recognized in fiscal 2021[97]. - Barnwell's land investment segment faces intense competition from larger entities in land development, affecting its market position[91]. Workforce and Management Outlook - The company employed 43 individuals as of December 1, 2020, with 42 full-time and 1 part-time[102]. - Management estimates that well drilling activity for fiscal 2021 will be significantly lower than in fiscal 2020 due to the current backlog[100]. Royalty Rates and Ownership Interests - In fiscal 2020, the weighted-average royalty rate paid on natural gas was 7%, while the rate for oil was 11%[66]. - Barnwell's indirect ownership interest in KD II is 10.8% following the admission of a new partner, Replay, in March 2019[86]. - The new agreement with KD II allows Barnwell to receive 15% of cumulative net profits from Increment II, with a priority payout of up to $3 million[88]. Operational Focus - Water Resources operates five water well drilling rigs and two pump rigs, focusing on land development activities in Hawaii[92].