Posted at 1 p.m., Monday, May 7, 2001

Barnwell explains profit loss

Advertiser Staff

Barnwell Industries Inc., a Honolulu-based oil exploration company, said today its net earnings fell 52 percent in the first three months of 2001 compared with the same period a year ago because the previous earnings included profit from the sale of property rights on the Big Island.

Barnwell reported net earnings of $1.4 million, or $1.02 per share diluted, in the three months ended March 31, compared with $2.67 million, or $1.93 per share diluted, for the same period a year earlier. Revenues were $7.08 million for the period, compared with $11.41 million a year earlier.

"Revenues and net earnings for the three and six months ended March 31, 2001, were generated only by our oil and gas and contract drilling segments, while last year's second-quarter revenues and net earnings also included revenues and net earnings due to the receipt of option proceeds for the sale of rights to develop residential parcels within the Four Seasons Resort Hualalai at Historic Ka'upulehu," said Morton H. Kinzler, company chairman and chief executive.

Kinzler said that, excluding the impact from the sale of property rights, net earnings would have shown an increase of about $900,000 in the three months ended March 31 over the year-earlier period.

"These increases were due to increases in natural gas and natural gas liquids prices of 206 percent and 71 percent, respectively, as compared to last year's second quarter," Kinzler said.

The property sale last year consisted of 20 percent of residential parcels at the Four Seasons Resort, said Russell Gifford, Barnwell executive vice president and chief financial officer. The rights were sold to Hualalai Development Corp., a subsidiary of Kajima Corp. of Japan. Hualalai Development holds options to buy the remaining 80 percent of the residential property rights and must exercise half those options by April 30, 2003, Gifford said.

The company also said it had acquired an additional 27.5 percent of Ka'upulehu Developments, which holds the property rights, increasing its ownership from 50.1 percent to 77.6 percent in April. Barnwell paid $5 million for the additional stake, Gifford said.