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SUPPLEMENTARY OIL AND NATURAL GAS INFORMATION (UNAUDITED) | 12 Months Ended
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Sep. 30, 2011
SUPPLEMENTARY OIL AND NATURAL GAS INFORMATION (UNAUDITED) |
SUPPLEMENTARY OIL AND NATURAL GAS INFORMATION (UNAUDITED) |
21. SUPPLEMENTARY OIL AND NATURAL GAS INFORMATION (UNAUDITED) The following tables summarize information relative to Barnwell’s oil and natural gas operations, which are conducted in Canada. Proved reserves are the estimated quantities of oil, natural gas and natural gas liquids which geological and engineering data demonstrate with reasonable certainty to be recoverable in future years from known reservoirs under existing economic and operating conditions. Proved producing oil and natural gas reserves are reserves that can be expected to be recovered through existing wells with existing equipment and operating methods. The estimated net interests in total proved and proved producing reserves are based upon subjective engineering judgments and may be affected by the limitations inherent in such estimations. The process of estimating reserves is subject to continual revision as additional information becomes available as a result of drilling, testing, reservoir studies and production history. There can be no assurance that such estimates will not be materially revised in subsequent periods. (A) Oil and Natural Gas Reserves The following table summarizes changes in the estimates of Barnwell’s net interests in total proved developed reserves of oil and natural gas liquids and natural gas, which are all in Canada. The Company has no proved undeveloped reserves. All of the information regarding reserves in this Form 10-K is derived from the report of our independent petroleum reserve engineers, InSite, and is included as an Exhibit to this Form 10-K.
|  | OIL & NGL |  | GAS |  | Total |
|  | (Bbls) |  | (Mcf) |  | (Boe) |
Proved reserves: |  |  |  |  |  |  |  |  |  |  |  |  |
Balance at September 30, 2009 |  |  | 1,334,000 |  |  |  | 20,610,000 |  |  |  | 4,887,000 |  |
Revisions of previous estimates |  |  | 100,000 |  |  |  | 256,000 |  |  |  | 144,000 |  |
Extensions, discoveries and other additions |  |  | 81,000 |  |  |  | 246,000 |  |  |  | 124,000 |  |
Less production |  |  | (243,000 | ) |  |  | (3,245,000 | ) |  |  | (802,000 | ) |
Balance at September 30, 2010 |  |  | 1,272,000 |  |  |  | 17,867,000 |  |  |  | 4,353,000 |  |
Revisions of previous estimates |  |  | 42,000 |  |  |  | (298,000 | ) |  |  | (10,000 | ) |
Extensions, discoveries and other additions |  |  | 120,000 |  |  |  | 324,000 |  |  |  | 176,000 |  |
Less production |  |  | (250,000 | ) |  |  | (2,950,000 | ) |  |  | (759,000 | ) |
Balance at September 30, 2011 |  |  | 1,184,000 |  |  |  | 14,943,000 |  |  |  | 3,760,000 |  |
(B) Capitalized Costs Relating to Oil and Natural Gas Producing Activities All capitalized costs relating to oil and natural gas producing activities, which were being depleted in all years, are summarized as follows:
|  | September 30,
|  |  | 2011 |  |  |  | 2010 |  |
Proved properties |  |  | $ | 220,362,000 |  |  |  | $ | 210,679,000 |  |
Unproved properties |  |  | 4,490,000 |  |  |  | 3,570,000 |  |
Total capitalized costs |  |  | 224,852,000 |  |  |  | 214,249,000 |  |
Accumulated depletion and depreciation |  |  | 175,715,000 |  |  |  | 168,199,000 |  |
Net capitalized costs |  |  | $ | 49,137,000 |  |  |  | $ | 46,050,000 |  |
(C) Costs Incurred in Oil and Natural Gas Property Acquisition, Exploration and Development
|  | Year ended September 30,
|  |  | 2011 |  |  |  | 2010 |  |
Acquisition of properties: |  |  |  |  |  |  |  |  |
Unproved |  |  | $ | 1,455,000 |  |  |  | $ | 380,000 |  |
Proved |  |  | - |  |  |  | - |  |
Exploration costs |  |  | 2,253,000 |  |  |  | 1,288,000 |  |
Development costs |  |  | 9,591,000 |  |  |  | 3,817,000 |  |
Total |  |  | $ | 13,299,000 |  |  |  | $ | 5,485,000 |  |
(D) Results of Operations for Oil and Natural Gas Producing Activities
|  | Year ended September 30,
|  |  | 2011 |  |  |  | 2010 |  |
Gross revenues |  |  | $ | 36,008,000 |  |  |  | $ | 34,762,000 |  |
Royalties, net of credit |  |  | 7,204,000 |  |  |  | 7,206,000 |  |
Net revenues |  |  | 28,804,000 |  |  |  | 27,556,000 |  |
Production costs |  |  | 11,404,000 |  |  |  | 10,203,000 |  |
Depletion |  |  | 9,469,000 |  |  |  | 8,735,000 |  |
Pre-tax results of operations* |  |  | 7,931,000 |  |  |  | 8,618,000 |  |
Estimated income tax expense |  |  | (2,459,000 | ) |  |  | (2,758,000 | ) |
Results of operations* |  |  | $ | 5,472,000 |  |  |  | $ | 5,860,000 |  |
* Before general and administrative expenses, interest expense, and foreign exchange gains and losses. (E) Standardized Measure, Including Year-to-Year Changes Therein, of Estimated Discounted Future Net Cash Flows The following tables utilize reserve and production data estimated by independent petroleum reserve engineers. The information may be useful for certain comparison purposes but should not be solely relied upon in evaluating Barnwell or its performance. Moreover, the projections should not be construed as realistic estimates of future cash flows, nor should the standardized measure be viewed as representing current value. The estimated future cash flows at September 30, 2011 and 2010 were based on weighted average sales prices, based upon the average of the price in effect on the first day of the month for the preceding twelve month period in accordance with SEC Release No. 33-8995. The future production and development costs represent the estimated future expenditures that we will incur to develop and produce the proved reserves, assuming continuation of existing economic conditions. The future income tax expenses were computed by applying statutory income tax rates in existence at September 30, 2011 and 2010 to the future pre-tax net cash flows relating to proved reserves, net of the tax basis of the properties involved. Material revisions to reserve estimates may occur in the future, development and production of the oil and natural gas reserves may not occur in the periods assumed and actual prices realized and actual costs incurred are expected to vary significantly from those used. Management does not rely upon this information in making investment and operating decisions; rather, those decisions are based upon a wide range of factors, including estimates of probable reserves as well as proved reserves and price and cost assumptions different than those reflected herein. Standardized Measure of Discounted Future Net Cash Flows
|  | September 30,
|  |  | 2011 |  |  |  | 2010 |  |
Future cash inflows |  |  | $ | 142,198,000 |  |  |  | $ | 152,591,000 |  |
Future production costs |  |  | (61,271,000 | ) |  |  | (66,856,000 | ) |
Future development costs |  |  | (2,428,000 | ) |  |  | (2,883,000 | ) |
Future income tax expenses |  |  | (13,839,000 | ) |  |  | (15,551,000 | ) |
Future net cash flows |  |  | 64,660,000 |  |  |  | 67,301,000 |  |
10% annual discount for timing of cash flows |  |  | (16,101,000 | ) |  |  | (17,675,000 | ) |
Standardized measure of discounted future net cash flows(1) |  |  | $ | 48,559,000 |  |  |  | $ | 49,626,000 |  |
(1) Based on natural gas prices of $3.65 and $3.90 per Mcf, and oil prices of $82.04 and $71.68 per Bbl, for 2011 and 2010, respectively. Changes in the Standardized Measure of Discounted Future Net Cash Flows
|  | Year ended September 30,
|  |  | 2011 |  |  |  | 2010 |  |
Beginning of year |  |  | $ | 49,626,000 |  |  |  | $ | 50,241,000 |  |
Sales of oil and natural gas produced, net of production costs |  |  | (17,400,000 | ) |  |  | (17,353,000 | ) |
Net changes in prices and production costs, net of royalties and wellhead taxes |  |  | 2,461,000 |  |  |  | 3,830,000 |  |
Extensions and discoveries |  |  | 4,407,000 |  |  |  | 3,532,000 |  |
Revisions of previous quantity estimates |  |  | 2,030,000 |  |  |  | 1,009,000 |  |
Net change in income taxes |  |  | 479,000 |  |  |  | (1,108,000 | ) |
Accretion of discount |  |  | 4,919,000 |  |  |  | 5,231,000 |  |
Other - changes in the timing of future production and other |  |  | 1,578,000 |  |  |  | 2,388,000 |  |
Other - net change in Canadian dollar translation rate |  |  | 459,000 |  |  |  | 1,856,000 |  |
Net change |  |  | (1,067,000 | ) |  |  | (615,000 | ) |
End of year |  |  | $ | 48,559,000 |  |  |  | $ | 49,626,000 |

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- Definition The entire disclosure for oil and gas producing industries. + References Reference 1: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Statement of Financial Accounting Standard (FAS) -Number 19 -Paragraph 59A-59Z, 59AA, 59BB, 59CC -LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy. + Details
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