Barnwell sells Canadian oil and gas assets for C$9 million

Barnwell Industries, Inc. has agreed to sell its Canadian oil and natural gas business to an unnamed local Canadian corporation for a base purchase price of C$9 million. The agreement, signed on October 5, 2026, includes a C$4 million cash component and a 5% gross overriding royalty valued at C$5 million for transaction purposes. The buyer will acquire the shares of the Canadian operating company and a related intercompany note following a pre-closing reorganization, while Barnwell’s publicly traded shares remain unaffected. A C$1 million deposit is currently held in escrow to be credited toward the cash consideration at closing.

The transaction leaves Barnwell with ongoing economic exposure through the retained royalty. A wholly owned Canadian subsidiary will receive the 5% gross overriding royalty on future wells drilled on the covered lands. Royalty receipts depend on future drilling activity, production levels, and commodity prices. The buyer’s affiliate holds an option to purchase the royalty for C$5 million at any time after closing. This buyout price is not reduced by royalties paid prior to the exercise; if Barnwell receives C$500,000 in royalties before the option is exercised, it retains that amount and receives the additional C$5 million, before taxes.

Barnwell continues to own and operate the Canadian business until closing, retaining pre-closing revenues and associated costs. Excess cash and near-cash assets are excluded from the sale, while working capital and indebtedness are reflected in closing adjustments. Future site restoration and abandonment obligations will transfer to the buyer and leave Barnwell’s consolidated balance sheet at closing. However, Barnwell remains subject to contractual indemnification obligations under the sale agreement, meaning residual liabilities are not entirely eliminated.

The contract bars Barnwell and its representatives from seeking rival bids. Prior to shareholder approval, limited exceptions permit the review of unsolicited offers. Barnwell can end the deal to accept a better offer only after meeting specific board approvals, providing notice, following buyer matching rules, paying a C$500,000 termination fee, and returning the deposit. The sale consideration is payable to Barnwell and its designated subsidiary, not directly to shareholders. Any future distribution of proceeds would be a separate company decision subject to applicable requirements.

The transaction remains subject to closing conditions. Barnwell intends to provide proxy materials for shareholder approval, noting that the Q&A document summarizes selected aspects of the deal but does not replace the full sale agreement or SEC filings. Forward-looking statements in the disclosure involve risks, including failure to obtain approvals, changes in commodity prices, and uncertainty regarding the exercise of the royalty purchase option.