OIL AND NATURAL GAS PROPERTIES

9 Months Ended

Jun. 30, 2016

OIL AND NATURAL GAS PROPERTIES [Abstract]

OIL AND NATURAL GAS PROPERTIES

OIL AND NATURAL GAS PROPERTIES

Under the full cost method of accounting, we are required to perform quarterly ceiling test calculations. Barnwell’s net capitalized costs exceeded the ceiling limitation at June 30, 2016. As such, Barnwell reduced the carrying value of its oil and natural gas properties by $1,154,000 during the three and nine months ended June 30, 2016. No such reduction was necessary during the three and nine months ended June 30, 2015. The reduction is included in the Condensed Consolidated Statements of Operations under the caption “Impairment of oil and natural gas properties.”

In September 2015, Barnwell sold its interests in its principal oil and natural gas properties located in the Dunvegan and Belloy areas of Alberta, Canada. The disposition was recorded in the fourth quarter of fiscal 2015 using preliminary purchase price adjustments. The purchase price is subject to final adjustments in accordance with the terms of the purchase and sale agreement. Barnwell and the purchaser updated the estimated purchase price adjustments during the current quarter which resulted in the recognition of an additional gain in the amount of $472,000 during the three and nine months ended June 30, 2016, bringing the total gain on the sale of these properties to $6,689,000. The estimated purchase price adjustments remain subject to change pending finalization.