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SUPPLEMENTARY OIL AND NATURAL GAS INFORMATION (UNAUDITED) | 12 Months Ended
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Sep. 30, 2021
Oil and Gas Exploration and Production Industries Disclosures [Abstract] |
SUPPLEMENTARY OIL AND NATURAL GAS INFORMATION (UNAUDITED) | 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 and in the U.S state of Oklahoma. 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 reserves of oil and natural gas liquids and natural gas, which are all in Canada. Proved oil, natural gas liquids and natural gas reserves located in the U.S. state of Oklahoma are not significant and are therefore not included in the table below. All of the information regarding Canadian 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. The Company emphasizes that reserve estimates are inherently imprecise and that estimates of new discoveries and undeveloped locations are more imprecise than estimates of established proved producing oil and natural gas properties. Accordingly, these estimates are expected to change as future information becomes available. Proved oil and natural gas reserves are the estimated quantities of oil and natural gas that geological and engineering data demonstrate, with reasonable certainty, to be recoverable in future years from known reservoirs under economic and operating conditions (i.e., prices and costs) existing at the time the estimate is made. Proved developed oil and natural gas reserves are proved reserves that can be expected to be recovered through existing wells and equipment in place and under operating methods being utilized at the time the estimates were made.
| OIL & NGL (Bbls) |  | GAS (Mcf) |  | Total (Boe)
Proved reserves: |  |  |  |  |
Balance at September 30, 2019 | 1,419,000 |  |  | 4,520,000 |  |  | 2,198,000 |
Revisions of previous estimates | (740,000) |  |  | (1,746,000) |  |  | (1,041,000) |
Acquisitions of reserves | 68,000 |  |  | 628,000 |  |  | 176,000 |
Less sales of reserves | (38,000) |  |  | (443,000) |  |  | (114,000) |
Less production | (174,000) |  |  | (649,000) |  |  | (286,000) |
Balance at September 30, 2020 | 535,000 |  |  | 2,310,000 |  |  | 933,000 |
Revisions of previous estimates | 291,000 |  |  | 1,345,000 |  |  | 523,000 |
Acquisitions of reserves | 80,000 |  |  | 289,000 |  |  | 130,000 |
Less sales of reserves | (97,000) |  |  | (341,000) |  |  | (156,000) |
Less production | (169,000) |  |  | (690,000) |  |  | (288,000) |
Proved Reserves, September 30, 2021 | 640,000 |  |  | 2,913,000 |  |  | 1,142,000 |
Proved Developed Reserves, September 30, 2021 | 636,000 |  |  | 2,913,000 |  |  | 1,138,000 |
Proved Undeveloped Reserves, September 30, 2021 | 4,000 |  |  | — |  |  | 4,000 |
(B) Capitalized Costs Relating to Oil and Natural Gas Producing Activities All capitalized costs relating to oil and natural gas producing activities in Canada and the U.S. are summarized as follows:
| September 30, 2021
| Canada |  | United States |  | Total
Proved properties | $ | 58,273,000 |  |  | $ | 217,000 |  |  | $ | 58,490,000 |
Unproved properties | — |  |  | 962,000 |  |  | 962,000 |
Total capitalized costs | 58,273,000 |  |  | 1,179,000 |  |  | 59,452,000 |
Accumulated depletion, depreciation, and impairment | 56,053,000 |  |  | 14,000 |  |  | 56,067,000 |
Net capitalized costs | $ | 2,220,000 |  |  | $ | 1,165,000 |  |  | $ | 3,385,000 |
| September 30, 2020
| Canada |  | United States |  | Total
Proved properties | $ | 64,142,000 |  |  | $ | — |  |  | $ | 64,142,000 |
Unproved properties | — |  |  | — |  |  | — |
Total capitalized costs | 64,142,000 |  |  | — |  |  | 64,142,000 |
Accumulated depletion, depreciation, and impairment | 61,839,000 |  |  | — |  |  | 61,839,000 |
Net capitalized costs | $ | 2,303,000 |  |  | $ | — |  |  | $ | 2,303,000 |
(C) Costs Incurred in Oil and Natural Gas Property Acquisition, Exploration and Development
| Year ended September 30, 2021
| Canada |  | United States |  | Total
Acquisition of properties: |  |  |  |  |
Proved | $ | 1,032,000 |  |  | $ | 70,000 |  |  | $ | 1,102,000 |
Unproved | — |  |  | — |  |  | — |
Exploration costs | 255,000 |  |  | — |  |  | 255,000 |
Development costs | 563,000 |  |  | 1,108,000 |  |  | 1,671,000 |
Total | $ | 1,850,000 |  |  | $ | 1,178,000 |  |  | $ | 3,028,000 |
| Year ended September 30, 2020
| Canada |  | United States |  | Total
Acquisition of properties: |  |  |  |  |
Proved | $ | 242,000 |  |  | $ | — |  |  | $ | 242,000 |
Unproved | — |  |  | — |  |  | — |
Development costs | 2,857,000 |  |  | — |  |  | 2,857,000 |
Total | $ | 3,099,000 |  |  | $ | — |  |  | $ | 3,099,000 |
Costs incurred in the tables above include additions and revisions to Barnwell’s asset retirement obligation of $811,000 and $(52,000) for the years ended September 30, 2021 and 2020, respectively. (D) Results of Operations for Oil and Natural Gas Producing Activities
| Year ended September 30, 2021
| Canada |  | United States |  | Total
Net revenues | $ | 10,136,000 |  |  | $ | 118,000 |  |  | $ | 10,254,000 |
Production costs | (6,532,000) |  |  | (24,000) |  |  | (6,556,000) |
Depletion | (631,000) |  |  | (14,000) |  |  | (645,000) |
Reduction of carrying value of oil and natural gas properties | (630,000) |  |  | — |  |  | (630,000) |
Pre-tax results of operations (1) | 2,343,000 |  |  | 80,000 |  |  | 2,423,000 |
Estimated income tax expense (2) | — |  |  | — |  |  | — |
Results of operations (1) | $ | 2,343,000 |  |  | $ | 80,000 |  |  | $ | 2,423,000 |
| Year ended September 30, 2020
| Canada |  | United States |  | Total
Net revenues | $ | 6,693,000 |  |  | $ | — |  |  | $ | 6,693,000 |
Production costs | (4,850,000) |  |  | — |  |  | (4,850,000) |
Depletion | (1,747,000) |  |  | — |  |  | (1,747,000) |
Reduction of carrying value of oil and natural gas properties | (4,326,000) |  |  | — |  |  | (4,326,000) |
Pre-tax results of operations (1) | (4,230,000) |  |  | — |  |  | (4,230,000) |
Estimated income tax expense (2) | — |  |  | — |  |  | — |
Results of operations (1) | $ | (4,230,000) |  |  | $ | — |  |  | $ | (4,230,000) |
_________________ (1) Before gain on sale of oil and natural gas properties, general and administrative expenses, interest expense, and foreign exchange gains and losses. (2) Estimated income tax expense includes changes to the deferred income tax valuation allowance necessary for the portion of Canadian and U.S. federal tax law deferred tax assets that may not be realizable. (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. Additionally, proved oil, natural gas and natural gas liquids reserves located in the United States are not significant and are therefore not included in the tables below. The estimated future cash flows at September 30, 2021 and 2020 were based on average sales prices 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, 2021 and 2020 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. Barnwell has included all abandonment, decommissioning and reclamation costs and inactive well costs in accordance with best practice recommendations into the Company’s reserve reports. Standardized Measure of Discounted Future Net Cash Flows
| September 30,
| 2021 |  | 2020
Future cash inflows | $ | 36,130,000 |  |  | $ | 20,426,000 |
Future production costs | (25,323,000) |  |  | (17,860,000) |
Future development costs | (240,000) |  |  | (73,000) |
Future income tax expenses | (995,000) |  |  | (92,000) |
Future net cash flows excluding abandonment, decommissioning and reclamation | 9,572,000 |  |  | 2,401,000 |
Future abandonment, decommissioning and reclamation | (14,525,000) |  |  | (13,055,000) |
Future net cash flows | (4,953,000) |  |  | (10,654,000) |
10% annual discount for timing of cash flows | 7,598,000 |  |  | 8,969,000 |
Standardized measure of discounted future net cash flows | $ | 2,645,000 |  |  | $ | (1,685,000) |
Changes in the Standardized Measure of Discounted Future Net Cash Flows
| Year ended September 30,
| 2021 |  | 2020
Beginning of year | $ | (1,685,000) |  |  | $ | 2,310,000 |
Sales of oil and natural gas produced, net of production costs | (3,604,000) |  |  | (1,843,000) |
Net changes in prices and production costs, net of royalties and wellhead taxes | 5,702,000 |  |  | (1,876,000) |
Net change due to purchases and sales of minerals in place | (882,000) |  |  | 467,000 |
Previously estimated development costs incurred | — |  |  | 1,305,000 |
Changes in future development costs | — |  |  | 7,773,000 |
Revisions of previous quantity estimates | 4,217,000 |  |  | (10,274,000) |
Net change in income taxes | (845,000) |  |  | 288,000 |
Accretion of discount | (176,000) |  |  | 230,000 |
Other - changes in the timing of future production and other | (55,000) |  |  | (63,000) |
Other - net change in Canadian dollar translation rate | (27,000) |  |  | (2,000) |
Net change | 4,330,000 |  |  | (3,995,000) |
End of year | $ | 2,645,000 |  |  | $ | (1,685,000) |

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