Barnwell Industries(BRN) - 2025 Q2 - Quarterly Results

Financial Highlights Barnwell Industries reported Q2 2025 revenue from continuing operations of $3.57 million and a net loss of $1.54 million, primarily due to increased general and administrative expenses from a proxy contest Comparative Financial Performance | Financial Metric | Q2 2025 | Q2 2024 | | :--- | :--- | :--- | | Revenue from Continuing Operations | $3,569,000 | $4,678,000 | | Net Loss from Continuing Operations | $(1,538,000) | $(1,306,000) | | Net Loss per Share from Continuing Operations | $(0.15) | $(0.13) | | Net Loss Attributable to Barnwell | $(1,207,000) | $(1,772,000) | - The net loss from continuing operations for Q2 2025 was exacerbated by a $906,000 (72%) increase in general and administrative expenses, which included $978,000 in new costs related to a shareholder consent solicitation and proxy contest[3] Analysis of Operations Operational performance was impacted by production declines in oil and gas, no land sales, and the reclassification of the contract drilling business as discontinued operations Oil and Gas Operations The oil and gas segment saw production declines but a significantly lower non-cash impairment charge and decreased depletion expenses partially offset the financial impact Year-over-Year Production Changes | Production Change (YoY) | Percentage Decrease | | :--- | :--- | | Oil | 14% | | Natural Gas | 24% | | Natural Gas Liquids | 13% | - A non-cash ceiling test impairment of $52,000 was recorded, a decrease of $1,625,000 from the $1,677,000 impairment in the prior year's second quarter[4] - Oil and natural gas depletion expense decreased by $589,000 compared to Q2 2024, due to a lower depletion rate from prior years' write-downs and decreased production[4] Land Investment Segment Operating results for the land investment segment decreased by $500,000 due to no lot sales in Q2 2025, compared to two lots sold in the prior year - The land investment segment's operating results decreased by $500,000 as no lots were sold in Q2 2025, compared to two lots sold in Q2 2024[3] Sale of Contract Drilling Business (Discontinued Operations) The company sold its water drilling subsidiary for $1.05 million, recording a $193,000 loss, and reclassified the business as discontinued operations - Completed the sale of its subsidiary, Water Resources International, Inc., for $1,050,000[5] - Recorded a loss of $193,000 on the sale in the quarter ended March 31, 2025[5] - The results of the contract drilling business have been reclassified as discontinued operations for all periods presented[5] Corporate Developments and Outlook The company faces significant financial pressure from a proxy contest and lower oil prices, raising substantial doubt about its going concern ability, prompting exploration of funding and cost reductions Proxy Contest and Going Concern The ongoing proxy contest and oil price impacts are causing high administrative expenses and cash flow uncertainty, leading to substantial doubt about the company's going concern ability - The ongoing proxy contest will continue to affect general and administrative expenses beyond March 31, 2025[6] - The company faces substantial doubt about its ability to continue as a going concern due to proxy contest costs and the impact of tariffs on oil prices[7] - Potential funding sources being investigated include debt financing, non-core property sales, and the sale of interests in the Kukio Resort Land Development Partnerships[7] CEO's Summary and Outlook CEO Craig D. Hopkins noted the proxy contest harmed liquidity, while the contract drilling business sale aims to refocus and reduce costs, with the company ending Q2 2025 with a working capital deficit and $1.43 million cash - CEO Craig D. Hopkins noted the proxy contest has negatively impacted liquidity and hindered investment[8] - The sale of the contract drilling business is a strategic move to refocus efforts and reduce fixed costs[8] - The company ended the quarter with a working capital deficit of $57,000 and cash and cash equivalents of $1,432,000[8] Comparative Operating Results The company presented comparative operating results for the three and six-month periods ending March 31, 2025, showing year-over-year declines in revenues and increased net losses from continuing operations Comparative Operating Results (Unaudited) | (Unaudited) | Three months ended March 31, | Six months ended March 31, | | :--- | :--- | :--- | | | 2025 | 2024 | 2025 | 2024 | | Revenues | $3,569,000 | $4,678,000 | $7,503,000 | $9,840,000 | | Net loss from continuing operations | $(1,538,000) | $(1,306,000) | $(3,136,000) | $(1,656,000) | | Net earnings (loss) from discontinued operations | $331,000 | $(466,000) | $12,000 | $(780,000) | | Net loss attributable to Barnwell | $(1,207,000) | $(1,772,000) | $(3,124,000) | $(2,436,000) | | Net loss per share from continuing operations | $(0.15) | $(0.13) | $(0.31) | $(0.16) |