BARNWELL INDUSTRIES INC

BARNWELL INDUSTRIES INC

Previous company name
BMA CORP
Name change date
3/24/1977
Company Overview
Barnwell Industries, Inc. is primarily engaged in various petroleum activities such as exploring for, developing, producing, and selling natural gas and oil in Canada, investing in leasehold land in Hawaii, and drilling well services, contracting labor service for geothermal well drilling and related works, and installing and repairing water pumping system in Hawaii. The company was founded in 1956 and its corporate headquarters is located in Honolulu, Hawaii in the United States.
Barnwell Industries’ companies include: Barnwell of Canada, Limited – includes investments in oil and natural gas properties in Canada, principally in the Province of Alberta, with minor holdings in the Provinces of Saskatchewan and British Columbia, which are principally held under governmental leases or licenses; Kaupulehu Developments – include land development rights under option, the rights to receive percentage and interim payments from sales of lots, the leasehold land zoned for resort/residential development, and approximately 1,000 acres of leasehold land zoned conservation; and Water Resources International, Inc. – an industry leader in Hawaii in deep drilling and deep well pumping. This subsidiary specializes in exploration and development of groundwater resources for government, commercial and private clients throughout the Pacific Basin.
The company’s Canadian office is located in Calgary, Alberta.
Business Summary
Barnwell Industries, Inc. (Barnell) operates in four business segments: oil and natural gas segment, land investment segment, residential real estate segment and contract drilling segment. The Company’s oil and natural gas segment is engaged in oil and natural gas exploration, development, production and sales in Canada. Its land investment segment is engaged in investing in land interests in Hawaii. The residential real estate segment develops homes for sale in Hawaii. The Company’s contract drilling segment provides well drilling services and water pumping system installation and repairs in Hawaii. During the fiscal year ended September 30, 2010 (fiscal 2010), Barnwell acquired undeveloped land in Seagram Lakes (1,584 net acres), which is located in Saskatchewan. During fiscal 2010, Water Resources acquired the second GEFCO 40-T drill rig.
Description and history
Barnwell Industries, Inc. (Barnell), incorporated in 1956, operates in four business segments: oil and natural gas segment, land investment segment, residential real estate segment and contract drilling segment. The Company’s oil and natural gas segment is engaged in oil and natural gas exploration, development, production and sales in Canada. Its land investment segment is engaged in investing in land interests in Hawaii. The residential real estate segment develops homes for sale in Hawaii. The Company’s contract drilling segment provides well drilling services and water pumping system installation and repairs in Hawaii. During the fiscal year ended September 30, 2010 (fiscal 2010), Barnwell acquired undeveloped land in Seagram Lakes (1,584 net acres), which is located in Saskatchewan. During fiscal 2010, Water Resources acquired the second GEFCO 40-T drill rig.

Oil and Natural Gas Segment

Barnell’s, through its wholly-owned subsidiary, Barnwell of Canada, Limited (Barnwell of Canada), is engaged in the acquisition, exploration and development of oil and natural gas properties. The Company’s investments in oil and natural gas properties are located in Canada, principally in the province of Alberta, with minor holdings in the provinces of Saskatchewan and British Columbia. Barnwell’s oil and natural gas property is located in the Dunvegan area, the Dunvegan Unit, of Alberta, Canada. As at September 30, 2010, Barnwell held an 8.9% working interest in the Dunvegan Unit which had 223 producing natural gas wells. During fiscal 2010, Barnwell was engaged in the drilling of 12 gross (1.1 net) gas wells in the Dunvegan area of which nine gross (0.8 net) wells and three gross (0.3 net) wells were being evaluated. As at September 30, 2010, Barnwell also participated in seven gross (0.6 net) recompletions in the Dunvegan Unit.

As of September 30, 2010, the Company’s Dunvegan’s proved natural gas reserves included 10,408,000 gross (9,542,000 net) 1,000 cubic feet of natural gas or 53% of its total proved natural gas reserves. Dunvegan’s proved oil and natural gas liquids reserves included 433,000 gross (301,000 net) barrel of oil equivalent or 24% of its total proved oil and natural gas liquids reserves. During fiscal 2010, Barnwell was engaged in drilling of 22 development wells. During fiscal 2010, it was also engaged in the drilling of one exploratory well. As of September 30, 2010, the Company had interests in approximately 776 gross (99.6 net) productive wells, of which 175 gross (30.5 net) were oil wells and 601 gross (69.1 net) were natural gas wells. All wells are located in Canada. The Company’s undeveloped acreage includes concentrations in Alberta at Doris (6,720 net acres), Thornbury (5,949 net acres), Bonanza/Balsam (4,456 net acres), Rycroft (3,558 net acres) and Swalwell (3,480 net acres). The Company’s oil and natural gas segment customers include Shell Trading Canada, ProGas Limited and Glencoe Resources Ltd.

Land Investment Segment

The Company owns a 77.6% interest in Kaupulehu Developments, which is a Hawaii general partnership that owns interests in leasehold land and development rights for property located approximately six miles north of the Kona International Airport in the North Kona District of the island of Hawaii. Barnwell, through its wholly-owned subsidiary, Kaupulehu Mauka Investors, LLC. It owns acquisition rights in 14 lots within agricultural-zoned leasehold land in the upland area of Kaupulehu (Mauka Lands) on the island of Hawaii. During fiscal 2010, nine ocean front single-family lots were sold.

Residential Real Estate Segment

The Company’s Kaupulehu 2007, LLLP (Kaupulehu 2007) develops luxury residences for sale. As of September 30, 2010, Kaupulehu 2007 had completed two luxury residences and listed for sale. One home is a fully furnished 5-bedroom, 6.5-bath ranch-style home and is 6,337 square feet in size. The second home, which is unfurnished, is of similar design and is 6,275 square feet in size.

Contract Drilling Segment

Barnwell’s wholly-owned subsidiary, Water Resources International, Inc. (Water Resources), drills water, water monitoring and geothermal wells of varying depths in Hawaii. It installs and repairs water pumping systems and is the Hawaii’s distributor for Floway pumps and equipment. Water Resources owns and operates two Spencer-Harris portable rotary drill rigs capable of drilling up to approximately 7,000 feet, an IDECO H-35 rotary drill/workover rig, two GEFCO 40-T portable rotary drill rigs, and other drilling, installation and service equipment. Water Resources leases a three-quarter of an acre maintenance facility in Honolulu, Hawaii, and one acre maintenance and storage facility with 2,800 square feet of interior space in Kawaihae, Hawaii. The Company also maintains an inventory of drilling materials and pump supplies. During fiscal 2010, Water Resources started five well drilling contracts and ten pump installation and repair contracts and completed five well drilling contracts and six pump installation and repair contracts. As at September 30, 2010, Water Resources had a backlog of four well drilling contracts and 11 pump installation and repair contracts, of which three well drilling and seven pump installation and repair contracts were in progress.

Business Line
Engaged in various petroleum activities such as exploring for, developing, producing, and selling natural gas and oil in Canada, investing in leasehold land in Hawaii, and drilling well services, contracting labor service for geothermal well drilling and workovers, and installing and repairing water pumping system in Hawaii
Subsidiary
BARNWELL ALAKEA PROPERTIES INC
Advisor
KPMG LLP
IPO date
2/1957
US SIC Code
1311
Company Address
Suite 2900
1100, Alakea Street
City province or state postal code
96813, HONOLULU, HI
Phone: +1 808 531 8400
Fax: +1 808 531 7181
Country address: UNITED STATES OF AMERICA
Website url: www.brninc.com