Barnwell Industries, Inc. Reports First Quarter Results
- Revenue of $6,155,000 and a net loss of $664,000 reported for Q1.
- Oil, natural gas, and liquids production increased by 21%, 26%, and 80% respectively.
- General and administrative expenses decreased by $845,000, or 38%.
- Company entered into agreements to fix prices of Canadian oil and natural gas sales.
- Exploring strategic alternatives for Water Resources subsidiary.
- Planning investments in Twining oil property.
- Debt-free with $2,478,000 in working capital at the end of the quarter.
- None.
Insights
The reported financial results from Barnwell Industries, Inc. indicate a significant shift from a net earnings position to a net loss year-over-year. The key drivers behind this transition appear to be a combination of declining commodity prices and a lack of one-time gains from asset sales that were present in the prior year. Specifically, the reported 7%, 57% and 34% declines in prices for oil, natural gas and natural gas liquids, respectively, are substantial and likely reflect broader market trends that investors should be mindful of. The decrease in land investment results and the absence of gains from the sale of drilling rigs further exacerbated the company's financial performance.
Despite the revenue downturn, the company's strategic hedging through fixed-price sale agreements for a portion of its Canadian oil and natural gas sales could provide some stability amidst price volatility. This move may shield a portion of the company's revenues from further price declines, which could be a prudent risk management strategy. Additionally, the reduction in general and administrative expenses by 38% is noteworthy and reflects a cost-cutting measure that investors often look favorably upon, as it can improve operational efficiency and profitability margins in the long term.
From a balance sheet perspective, the company's debt-free status and positive working capital position, including a cash reserve, offer some financial flexibility. This could be critical for funding planned investments and operational activities without the need to raise capital through more dilutive means such as issuing equity or taking on debt.
Within the energy sector, Barnwell Industries' increase in production volumes across oil, natural gas and natural gas liquids is significant, especially considering the 21%, 26% and 80% increases respectively. This suggests that the company is effectively scaling its operations and could be well-positioned to capitalize on future price recoveries. However, the timing of these increases coinciding with price declines is unfortunate and highlights the cyclical and volatile nature of the commodities market.
The termination of the stock purchase agreement for the sale of Water Resources International, Inc. indicates potential challenges in the company's divestiture strategy. This development could be a concern for investors looking for signs of successful portfolio optimization and capital reallocation. The mention of strategic alternatives, including a potential wind-down or liquidation of operations, suggests that the company is exploring various avenues to enhance shareholder value but also signals uncertainty regarding the future of this subsidiary.
As the company plans to further invest in its core oil property in Twining, it's important to note that such capital expenditures could be a double-edged sword. While they may lead to increased production and potential revenue growth, they also represent a risk if commodity prices remain depressed or if the new wells fail to meet production expectations.
The energy industry is known for its volatility and Barnwell Industries' latest financial results reflect the impact of fluctuating commodity prices on producers. The strategic decision to enter into fixed-price sale agreements for a portion of its production is a common industry practice known as hedging. This can help companies manage risk by locking in prices for their commodities, providing a measure of predictability for revenue streams. However, it's important to note that such strategies also limit the upside potential should prices rebound during the hedged period.
The focus on the Twining oil property and the planned drilling of one or two wells in the upcoming quarters suggest a targeted approach to resource development. Twining's record quarterly production is a positive indicator, but the decision to invest further should be weighed against the current market conditions and the company's ability to sustain production levels in the face of potential price volatility.
Lastly, the company's debt-free status is particularly notable in the energy sector, where many companies are heavily leveraged. This positions Barnwell Industries favorably in terms of financial resilience and may provide a competitive advantage in navigating the cyclical nature of the industry.
Meaningful Production Increases Across all Products
Continued Reduction in General and Administrative Expenses
HONOLULU, Feb. 12, 2024 (GLOBE NEWSWIRE) -- Barnwell Industries, Inc. (NYSE American: BRN) today reported financial results for the first quarter ended December 31, 2023. The Company posted quarterly revenue of
Mr. Alexander C. Kinzler, Chief Executive Officer of Barnwell, commented, “Our loss for the quarter was the result of a decline in prices of all products; oil, natural gas, and natural gas liquids which decreased
Oil and Gas Production Increases Offset by Price Declines
“We are pleased to report that our oil, natural gas, and natural gas liquids production increased from the prior year’s quarter by
“To partially protect against further declines in oil and natural gas prices, during the quarter the Company entered into certain sale agreements to fix the price of a portion of its Canadian natural gas sales from April 1, 2024 to October 31, 2024 and to fix the price of a portion of its Canadian oil sales from January 1, 2024 to June 30, 2024. With these agreements, based on the Canadian oil and natural gas production per day during the three months ended December 31, 2023, we anticipate approximately
Strategic Alternatives for Water Resources
“In December 2023, the Company entered into a stock purchase agreement with a construction company for the sale of a Company subsidiary, Water Resources International, Inc. (“Water Resources” or “WRI”), subject to customary post-closing price adjustments and the purchaser’s completion of due diligence. Subsequently, the stock purchase agreement was terminated by the buyer prior to closing. The Company continues to investigate the appropriate strategic, business and financial alternatives for Water Resources which may include, among other things, a sale of its stock or assets, or an orderly wind-down of its operations after all contracts in backlog are complete, along with a liquidation of WRI’s drilling rigs and equipment.
Planned Investment in Core Business
“We remain extremely encouraged by the prospects in our Twining oil property and are planning to follow up on our fiscal 2023 approximately
“The Company remains debt free, and ended the quarter with
The information contained in this press release contains “forward-looking statements,” within the meaning of the Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. 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. 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,” “Risk Factors” and other sections of Barnwell’s annual report on Form 10-K for the last fiscal year and Barnwell’s other filings with the Securities and Exchange Commission. Investors should not place undue reliance on the forward-looking statements contained in this press release, as they speak only as of the date of this press release, and Barnwell expressly disclaims any obligation or undertaking to publicly release any updates or revisions to any forward-looking statements contained herein.
| COMPARATIVE RESULTS | ||||||
| (Unaudited) | ||||||
| Quarter ended December 31, | ||||||
| 2023 | 2022 | |||||
| Revenues | $ | 6,155,000 | $ | 7,511,000 | ||
| Net (loss) earnings attributable to Barnwell Industries, Inc. | $ | (664,000 | ) | $ | 1,089,000 | |
| Net (loss) earnings per share – basic and diluted | $ | (0.07 | ) | $ | 0.11 | |
| Weighted-average shares and equivalent shares outstanding: | ||||||
| Basic and diluted | 9,996,760 | 9,956,687 | ||||
| CONTACT: | Alexander C. Kinzler Chief Executive Officer and President Russell M. Gifford Executive Vice President and Chief Financial Officer Telephone (808) 531-8400 Fax (808) 531-7181 Website: www.brninc.com |
FAQ
What were Barnwell Industries, Inc.'s Q1 revenue and net loss?
By how much did production of oil, natural gas, and liquids increase in the prior year's quarter?
What caused the decline in general and administrative expenses?
What strategic alternatives are being explored for the Water Resources subsidiary?
How much working capital did Barnwell Industries, Inc. have at the end of the quarter?
