Barnwell Industries Inc. has a market cap of $49.4 million; its shares were traded at around $6.75 with a P/E ratio of 12.7 and P/S ratio of 1.2. Barnwell Industries Inc. had an annual average earning growth of 6.8% over the past 10 years.Hedge Fund Gurus that owns BRN: Jim Simons of Renaissance Technologies LLC.
Highlight of Business Operations:Contract drilling revenues and operating costs decreased $719,000 (31%) and $265,000 (16%), respectively, for the three months ended December 31, 2010, as compared to the same period in the prior year. The contract drilling segment generated a $57,000 operating profit before general and administrative expenses in the three months ended December 31, 2010, a decrease of $484,000 as compared to the $541,000 operating profit generated during the same period of the prior year, primarily due to decreased well drilling activity during the current year quarter.
Net cash used in investing activities totaled $1,639,000 during the three months ended December 31, 2010, as compared to $3,099,000 of cash flows provided by investing activities during the same period of the prior year. The $4,738,000 change was primarily attributable to a $3,667,000 increase in capital expenditures due to higher oil and natural gas capital expenditures and the purchase of the Companys office in New York City during the three months ended December 31, 2010, as compared to the same period of the prior year.
Cash flows used in financing activities totaled $360,000 for the three months ended December 31, 2010, as compared to $85,000 of cash flows used in financing activities during the same period of the prior year. The $275,000 change was primarily due to debt repayments of $500,000 during the three months ended December 31, 2010.
Barnwell has a credit facility at Royal Bank of Canada, a Canadian bank, for $20,000,000 Canadian dollars, or approximately US$20,108,000 at the December 31, 2010 exchange rate of 1.0054. At December 31, 2010, borrowings under this facility were US$13,000,000 and Barnwell had approximately US$7,108,000 of unused credit available. The interest rate on this facility at December 31, 2010 was 3.5%. Under the financing agreement with Royal Bank of Canada, the facility is reviewed annually, with the next review planned for April 2011. Subject to that review, the facility may be extended one year with no required debt repayments for one year or converted to a two-year term loan by the bank.
Barnwell also has a non-revolving credit facility with a Hawaii financial institution through its 80%-owned real estate joint venture, Kaupulehu 2007. Under the terms of the credit facility agreement, Kaupulehu 2007 is required to make a scheduled principal payment of $500,000 per quarter due on March 31, June 30, September 30 and December 31 of each year. Kaupulehu 2007 made a $500,000 principal payment in December 2010, reducing the facility amount to $12,500,000 at December 31, 2010. If Kaupulehu 2007 sells one of its homes, it will be required to make a principal payment in an amount equal to the greater of (1) 100% of the net sales proceeds of the home or (2) $7,000,000, and the scheduled quarterly payment would be reduced to $250,000 per quarter. The outstanding principal balance bears interest at a rate equal to the higher of the financial institutions floating base rate or 4.5%. The interest rate on this facility at December 31, 2010 was 4.5%. Any unpaid principal balance and accrued interest will be due and payable on February 1, 2012. The credit facility, which is fully guaranteed by Barnwell and guaranteed 20% by Mr. Terry Johnston, is collateralized by, among other things, a first mortgage lien on the parcels and homes.
Barnwells oil and natural gas capital expenditures, including accrued capital expenditures, totaled $2,357,000 for the three months ended December 31, 2010, as compared to $1,170,000 for the three months ended December 31, 2009. Management expects that oil and natural gas capital expenditures in fiscal 2011 will range from $7,000,000 to $9,000,000. This estimated amount may increase or decrease as dictated by cash flows and managements assessment of the oil and natural gas environment and prospects.
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