DEFA14A: Barnwell Industries Urges Stockholders to Reject Ned Sherwood's Consent Solicitation

Barnwell Industries is urging its stockholders to discard a blue consent card sent by Ned Sherwood, who is attempting to take control of the company without paying a control premium.

Summary

• Barnwell Industries is in a dispute with Ned Sherwood, who is seeking to replace the current Board of Directors.
• The company accuses Sherwood of attempting to take control without offering a control premium to stockholders.
• Barnwell's board claims Sherwood has been disruptive since 2020, shifting his support among various individuals.
• The company alleges Sherwood invested in a competitor, undermining Barnwell's interests.
• Barnwell states that Sherwood has failed to provide a concrete plan to improve the company, despite claiming to have one.
• The company highlights its recent sale of Water Resources International, Inc. for $1,050,000, with proceeds to be reinvested in oil and gas operations.
• Barnwell emphasizes its strong financial position with virtually no debt and plans to secure funding for new wells in Alberta.
• The company is winding down its Hawaiian presence and transitioning back-office functions to Calgary.
• Stockholders are advised to ignore Sherwood's blue consent card and any attempts to solicit it.
• The board believes it has a clear plan to enhance value for stockholders.

Sentiment

Score: 4

Explanation: The document conveys a defensive tone due to the ongoing dispute with Ned Sherwood. While the company highlights some positive developments, the overall sentiment is negatively impacted by the potential disruption and uncertainty caused by the consent solicitation.

Positives

• Barnwell has virtually no debt and is engaged with investment bankers to obtain funding for new wells.
• The company is winding down its Hawaiian presence to streamline operations.
• The sale of Water Resources International, Inc. for $1,050,000 will provide funds for reinvestment in oil and gas operations.
• The Hawaii land division has collected distributions in excess of $15,000,000 since mid-2020 with virtually no offsetting expenses.
• The company's water well drilling subsidiary contributed approximately $6,000,000 in cash flow in fiscal 2020.

Negatives

• The company is facing a disruptive consent solicitation from Ned Sherwood.
• Sherwood allegedly invested in a competitor, potentially undermining Barnwell's interests.
• The company is winding down its Hawaiian presence, which may result in job losses or other disruptions.

Risks

• The actions of the Sherwood Group could disrupt the company's operations and strategy.
• The company's ability to successfully solicit revocations of consents from stockholders is uncertain.
• There are risks related to defending against potential claims by the Sherwood Group.
• The company's ability to execute on its strategy and business plan is subject to various risks and uncertainties.
• Uncertainty around U.S.-Canadian relations could impact funding for new wells in Alberta.

Future Outlook

Barnwell continues to take decisive action toward enhancing the financial and operational strength of Barnwell and strongly believes in the value potential of your investment as we continue to execute on our strategic plan.

Management Comments

• We have tried in good faith to settle with Sherwood and avoid yet another year of his ramblings, missives and attempts to disrupt the Company.
• Stockholders should not expect Sherwood to be loyal to Barnwell.
• Your Board has a clear plan to enhance value for stockholders.

Industry Context

The consent solicitation highlights the ongoing challenges faced by smaller companies in dealing with activist investors. The focus on cost-cutting and strategic realignment reflects broader trends in the oil and gas industry, where companies are seeking to optimize operations and improve profitability.

Comparison to Industry Standards

• It is difficult to compare Barnwell directly to industry standards without more specific financial data and operational details.
• However, the company's focus on winding down its Hawaiian presence and reinvesting in oil and gas operations aligns with the broader industry trend of focusing on core competencies.
• The company's claim of having virtually no debt is a positive sign, as many companies in the oil and gas sector carry significant debt loads.

Stakeholder Impact

• Shareholders are urged to discard the blue consent card and support the current board.
• Employees in Hawaii may be affected by the winding down of the Hawaiian presence.
• The company's strategic decisions could impact suppliers and customers in the oil and gas sector.

Next Steps

• Barnwell plans to file proxy materials with the SEC in connection with the solicitation of proxies for the Company's 2025 annual meeting of stockholders.
• The Company will also file a definitive revocation statement together with a WHITE revocation card.

Key Dates

Keywords

Barnwell Industries, Ned Sherwood, consent solicitation, proxy, board of directors, stockholders, corporate governance, oil and gas, Hawaii, Alberta, Water Resources International