# TO OUR SHAREHOLDERS

_Source: `DeepSeekOCR_Ardian_pruned_1k/energy-oil-gas-e-p/AMEX_BRN_2021/AMEX_BRN_2021.mmd` · pages 2-8_

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TO OUR SHAREHOLDERS:

We are pleased to report that Barnwell returned to profitability in fiscal 2021. We overcame the challenges of the COVID-19 pandemic and low commodity prices and firmly believe that the decisions by our Board of Directors and management over the last few years position us for a strong future.

For fiscal 2021, we reported net earnings of \(6,253,000, our best year since 2008 and achieved greatly improved operating results, revenues and cash flows through December 31, 2021. We reported a profit of \)1,073,000 for the three months ended December 31, 2021 and our outlook for fiscal 2022 continues to be strong as oil prices continue to strengthen.

Fiscal 2021 saw the accomplishment of several objectives of the Company, including the sale of our office condominium in Honolulu, Hawaii for \(2 million, the implementation of an at-the-market equity financing, which resulted in the Company selling 1,167,987 shares of common stock for net proceeds of \)3,784,000. In addition, the Company terminated a post-retirement medical benefit plan generating non-cash income for the Company during fiscal 2021. This assisted in our return to compliance with the NYSE American listing requirements and, further, as a result of our profitability and improved cashflow, the removal of a going concern caveat from our financial statements.

Our Canadian operations showed strong results throughout fiscal 2021, with \(10,254,000 in oil and gas revenue for fiscal 2021 as compared to \)6,693,000 for fiscal 2020. For the quarter ended December 31, 2021, our first quarter of fiscal 2022, oil and gas revenues were \(3,920,000, more than doubling our first quarter oil and gas revenues of fiscal 2021. Our Twining property, acquired in 2018, is contributing significantly to these improved results. The initial well drilled in January 2019 continues to produce 110 barrels of oil per day, with virtually no decline. This well reached payout within two years of being drilled, despite the low commodities prices encountered throughout calendar year 2020. In December 2021, we participated in the drilling of three new wells at Twining; one well 100% owned by Barnwell and two wells in partnership with Pine Cliff Energy Ltd., a larger Canadian public company with whom we are a partner in the Twining area. The initial results of one of the Pine Cliff wells indicates oil production in excess of 400 barrels per day. At the time of writing this letter, the other two wells are just coming on line and results will be reported in future financial statements and press releases.

In January 2022, the Company acquired additional working interests in our core Twining property for approximately \(1,250,000; those interests are currently generating daily production of approximately 65 barrels of oil, 10 barrels of natural gas liquids and 170 MCF of natural gas. During fiscal 2021, the Company began recognizing revenue from the investment it made as a passive partner in oil and gas development properties in Oklahoma.

The land division saw eight lots sold during fiscal 2021 which resulted in the Company recognizing \(5,793,000 in equity in income of affiliates and receiving over \)6 million in net cash distributions from the land partnerships, including a \(459,000 preferred return. In our first quarter of fiscal 2022, three lots were sold by the Kukio resort development partnerships at Kaupulehu and the Company received \)600,000 in percentage of sales payments and \(1,075,000 in net cash distributions. Two additional lots closed in early March 2022, leaving only 4 unsold developer lots in Increment I, although resale activity and the sale of memberships will continue to produce revenues from our interest in that project. This recent sales activity will be reflected in our results for the quarter ending March 31, 2022.

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Peter O'Malley, Chairman of the Board, comments that "Management and the Board have successfully navigated the vicissitudes of the Covid pandemic while shedding non-core assets, deploying capital in a multi-well program in the Lower 48, engaging in new stable business lines while effecting cost cutting strategies."

As of December 31, 2021, the end of our first quarter of fiscal 2022, the Company had \(10,676,000 in working capital, including \)12,142,000 in cash and cash equivalents. This demonstrates a significant improvement in our liquidity, as compared to cash of \(5,334,000 at December 31, 2020. Other than a \)47,000 Canadian Covid-related loan facility and long-term oil and gas abandonment liabilities, the Company has no long term debt. The strong balance sheet and prudent management of our core assets allowed us to regain profitability and navigate through a very challenging period.

Alexander C. Kinzler, Chief Executive Officer and President, comments that "Over the past few years, management has labored to re-position the expense structure of the Company, focus on our core competencies in local real estate and Canadian oil and gas, and continue to build a substantial cash position which we will use to increase shareholder value. The current WTI oil price exceeds $100 per barrel and with significant new production coming online during our fiscal second quarter of 2022, we anticipate continued strong results and further reinvestment in the Twining property."

On behalf of the Board of Directors of Barnwell Industries, Inc., we thank you, our shareholders, for your support.

For the Board of Directors,

![](images/3_0.jpg)

Peter J. O'Malley

Chairman of the Board

![](images/3_1.jpg)

Alexander C. Kinzle

Chief Executive Officer,

President and Director