Barnwell Industries Inc has a market cap of $31.4 million; its shares were traded at around $3.8 with and P/S ratio of 1. Barnwell Industries Inc had an annual average earning growth of 20.9% over the past 10 years.BRN is in the portfolios of Chuck Royce of ROYCE & ASSOCIATES.
Highlight of Business Operations: quarterly averages during the three years ended December 31, 2009, have ranged from a low of $2.70 per thousand cubic feet (the average price for the quarter ended September 30, 2009) to a high of $9.70 per thousand cubic feet (the average price for the quarter ended June 30, 2008). Oil prices for Barnwell, based on quarterly averages for the period discussed above, ranged from a low of $35.20 per barrel (the average price for the quarter ended March 31, 2009) to a high of $117.22 per barrel (the average price for the quarter ended June 30, 2008). Declines in oil and natural gas prices could have a material adverse effect on our financial condition, results of operations, liquidity and cash flows.
The increase in proceeds from the sale of development rights during the three months ended December 31, 2009 as compared to the same period in the prior year is due to the timing of receipt of proceeds of scheduled development right options. The entire $2,656,000 development rights option due on December 31, 2009 was received during the three months ended December 31, 2009, whereas only $886,000 was received in the same period of the prior year as $1,770,000 of the $2,656,000 development rights option due in December 2008 was received ahead of schedule in May 2008.
Contract drilling revenues and costs increased $1,154,000 (102%) and $491,000 (43%), respectively, for the three months ended December 31, 2009, as compared to the same period in the prior year. The contract drilling segment generated a $541,000 operating profit before general and administrative expenses in the three months ended December 31, 2009, an increase of $651,000 as compared to the $110,000 operating loss generated during the same period of the prior year, primarily due to increased well drilling activity as a result of work on larger projects and projects with higher margins in the current quarter.
General and administrative expenses increased $443,000 (23%) for the three months ended December 31, 2009, as compared to the same period in the prior year. The increase was primarily attributable to i) a $657,000 increase in stock appreciation rights expense due to fluctuations in Barnwells stock price as well as the granting of new awards and incremental vesting of outstanding awards, and ii) a $256,000 increase in expenses incurred by the residential real estate segment and joint venture investments due to ongoing holding and maintenance costs. The increase was partially offset by i) a $289,000 decrease in current compensation costs and ii) a $222,000 decrease in professional services due to cost reduction efforts.
Net cash provided by investing activities totaled $3,099,000 during the three months ended December 31, 2009, as compared to $2,151,000 of cash flows used in investing activities during the same period of the prior year. The $5,250,000 increase in cash inflows was primarily attributable to a $2,861,000 increase in proceeds from land investment segment sales and a $2,079,000 reduction in capital expenditures during the three months ended December 31, 2009, as compared to the same period of the prior year.
Barnwell has a credit facility at Royal Bank of Canada, a Canadian bank, for $20,000,000 Canadian dollars, or approximately US$19,110,000 at the December 31, 2009 Canadian dollar to U.S. dollar exchange rate of 0.9555. At December 31, 2009, borrowings under this facility were US$15,000,000 and Barnwell had approximately $4,110,000 of unused credit available. Under the financing agreement with Royal Bank of Canada, the facility is reviewed annually, with the next review planned for April 2010. 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.
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