Barnwell Industries, Inc. (BRN): 5 FORCES Analysis [Nov-2025 Updated]

You're looking at Barnwell Industries, Inc. (BRN) right now, and honestly, the picture is complex: a small player with a $\mathbf{\$11.585 \text{ million}}$ market cap facing high-stakes operational realities, like the $\mathbf{\$3.192 \text{ million}}$ revenue in Q3 2025 and the need for $\mathbf{\$2.4 \text{ million}}$ in funding. As someone who has mapped these competitive landscapes for years, I can tell you that understanding the pressure points-from the high power of Hawaiian land suppliers to the intense rivalry in Canadian oil and gas, all while managing $\mathbf{\$0.657 \text{ million}}$ in G&A costs-is defintely key to seeing where this goes next. Below, we break down Porter's Five Forces to show you exactly where the leverage sits for BRN's suppliers, customers, rivals, substitutes, and potential new entrants, giving you the sharpest view of their competitive footing as of late 2025.

Barnwell Industries, Inc. (BRN) - Porter's Five Forces: Bargaining power of suppliers

You're analyzing Barnwell Industries, Inc.'s supplier landscape as of late 2025, and the power dynamics are shifting based on recent divestitures and capital raises. For the Canadian oil and gas segment, which centers on the Twining, Alberta asset-encompassing 16,000 net acres and producing approximately 1,100 barrels of oil equivalent (BOE) per day pre-royalty-oilfield service providers hold moderate power. This power stems from the specialized nature of the equipment required for operations in that specific field.

Historically, the Land Investment segment, focused on resort property development in Hawaii, faced high supplier power. Land development contractors in that niche market often benefit from limited local supply and high switching costs for specialized construction or permitting services. However, recent strategic moves suggest a pivot away from this area, as the closure of the Hawaii headquarters has been announced.

The recent divestiture of U.S. oil and natural gas assets for a purchase price of $2.3 million directly impacts supplier leverage in that former area. This sale, which is expected to result in an estimated loss on sale of approximately $700,000, fundamentally reduces Barnwell Industries, Inc.'s reliance on those specific equipment and service suppliers, thereby lowering their future negotiation leverage in the U.S. market.

Barnwell Industries, Inc.'s small size inherently constrains its ability to command favorable terms. With a market capitalization around $11.58 million as of November 2025, the company's financial weight is limited when negotiating with large, established service firms across its remaining operational footprint.

The critical nature of maintaining production at the core Canadian asset means key suppliers involved in the Twining field workovers will maintain elevated power. These workovers are essential for production stabilization, and the company has identified multiple highly economic investment opportunities in capital workovers, suggesting a necessary, near-term dependency on specialized vendors to execute these value-accretive projects.

Here is a snapshot of the financial context influencing these supplier negotiations:

The shift in focus is clear, and you should track the following supplier-related factors:

• Canadian service contracts for the Twining field.
• Switching costs for specialized drilling equipment providers.
• Impact of the $2.4 million private placement on immediate purchasing power.
• Supplier terms negotiated for upcoming capital workovers.

Barnwell Industries, Inc. (BRN) - Porter's Five Forces: Bargaining power of customers

You're analyzing Barnwell Industries, Inc.'s (BRN) customer power, and the numbers from late 2025 paint a clear picture of a company facing significant headwinds, which inherently shifts leverage toward its buyers.

For the Oil and Natural Gas segment, which has now been largely streamlined to Canadian assets following the U.S. divestiture, customer power remains high. Crude is a commodity product, meaning midstream buyers and refiners purchase based on price and specification, not brand loyalty. Barnwell Industries' small production volume in Canada gives it virtually no pricing power over these large commodity buyers. This is underscored by the company's financial performance; Q3 2025 revenue from continuing operations was only $3.192 million, a 29% year-over-year decline from the $4.506 million reported in Q3 2024. This declining revenue base directly weakens Barnwell Industries' negotiating position with its energy purchasers.

The Land Investment customers, primarily resort buyers in Hawaii, possess moderate power. This power is highly dependent on the specific location and stage of the property. Barnwell Industries, Inc. holds a minority interest in developments near the ultra-luxury Kūki'o and Hualalai Resorts on the Big Island. While the remaining 420 entitled acres for up to 350 additional homesites benefit from high barriers to entry-like regulatory hurdles and high land prices-the segment's revenue is lumpy. For instance, Q2 2025 saw a $500,000 drop in operating results compared to the prior quarter because no lots were sold in the quarter ending March 31, 2025, versus two lots sold in the quarter before that. The ability to secure a sale at a favorable price is therefore contingent on buyer demand for that specific, high-end parcel.

Regarding Contract Drilling, which was previously tied to the Water Resources International subsidiary (sold for $1,050,000) and Foremost Industries' equipment support, customer power is moderate. While specialized services or equipment like Foremost's Dual Rotary Drills or hydrovacs require specific expertise, the overall market for such services faces competition. The strategic decision to sell the U.S. oil and gas assets for $2.300 million cash post-quarter, with an expected loss of approximately $700,000 in Q4 2025, suggests a strategic retreat from segments where customer power or operational costs were challenging.

The overall financial strain on Barnwell Industries, Inc. amplifies customer leverage. The company reported a net loss from continuing operations of $(1.550) million in Q3 2025, compared to a loss of $(1.02) million in the prior year period. This financial pressure is severe enough that management disclosed substantial doubt about the company's ability to continue as a going concern. The need to secure external funding, evidenced by the recent November 2025 announcement of a private placement expected to raise approximately $2.4 million at $1.10 per share, clearly indicates that Barnwell Industries is in a reactive position, which customers are quick to exploit.

Here is a summary of the financial context influencing customer negotiations:

The current operational structure and financial health mean that Barnwell Industries, Inc. must prioritize securing revenue, even if it means accepting less favorable terms from its buyers across its remaining segments:

• Crude oil buyers dictate terms due to commodity status.
• Land buyers hold leverage based on property uniqueness.
• The company's small Canadian oil volume offers no leverage.
• Revenue decline to $3.192 million in Q3 2025 signals weakness.
• The need for a $2.4 million capital raise confirms financial strain.

Barnwell Industries, Inc. (BRN) - Porter's Five Forces: Competitive rivalry

High rivalry in the Canadian oil and gas E&P sector where Barnwell Industries is a small player. The current Market Cap as of November 26, 2025, stands at $12.19M.

Rivalry is intense due to the commodity nature of oil and gas, leading to price-based competition. Barnwell Industries' Q3 2025 revenue from continuing operations was $3.192 million, a 29% year-over-year decline.

Hawaiian land investment faces rivalry from larger resort developers with greater capital. Barnwell Industries closed its Hawaii headquarters.

The company's small size and recent liquidity concerns raise competitive vulnerability. Management disclosed substantial doubt about going concern due to proxy/tariff impacts. The company is raising capital via a private placement expected to yield gross proceeds of about $2,443,255.

Ongoing proxy contest and high G&A costs of $0.657 million (Q3 2025) distract management from core operations. These non-recurring proxy/legal fees contributed to a 43% increase in Q3 general and administrative expenses, totaling $0.565 million year-over-year.

Key financial metrics underscore the competitive pressure:

Management's focus has been diverted by internal governance issues, as evidenced by the following:

• Non-recurring proxy/legal fees: $0.657 million
• Total Q3 G&A increase: $0.565 million
• New equity raised (Nov 2025): ~$2.443 million
• Warrants exercise price: $1.65
• Board member appointment due to financing

Barnwell Industries, Inc. (BRN) - Porter's Five Forces: Threat of substitutes

You're assessing the competitive landscape for Barnwell Industries, Inc. (BRN) as of late 2025, and the threat of substitutes is definitely a major factor, especially given the company's heavy reliance on conventional oil and gas.

High threat for oil and gas from renewable energy sources and alternative fuels over the long term.

The long-term substitution risk for Barnwell Industries, Inc.'s core Oil and Natural Gas segment, which generated about $\mathbf{79.2\%}$ of its revenue, is substantial. The economics of new energy generation clearly favor renewables. For instance, in 2025, unsubsidized utility-scale solar Levelized Cost of Electricity (LCOE) ranged from $\mathbf{\$0.038}$ to $\mathbf{\$0.217}$ per kWh, while onshore wind was even cheaper, at $\mathbf{\$0.037}$ to $\mathbf{\$0.086}$ per kWh. Compare that to natural gas combined cycle plants, which had an LCOE of $\mathbf{\$0.048}$ to $\mathbf{\$0.109}$ per kWh. Honestly, in 2024, $\mathbf{91\%}$ of all new utility-scale renewable projects delivered power cheaper than the least expensive new fossil fuel alternative. This cost-competitiveness means substitutes aren't just an environmental preference; they're a growing financial reality.

Land investment faces substitution from other asset classes like public equities or different real estate markets.

For Barnwell Industries, Inc.'s Land Investment segment, which was listed as $\mathbf{0\%}$ of revenue in one recent breakdown, the threat comes from the relative attractiveness of other asset classes. Public equities, represented by the S&P 500, have seen high valuations, with the Shiller CAPE ratio around $\mathbf{35x}$ in mid-2025, which historically suggests lower forward returns. Private real estate, on the other hand, has shown resilience; over the last 20 years, US private real estate delivered stronger average income returns at $\mathbf{5.22\%}$ compared to US stocks at $\mathbf{1.94\%}$. Public REITs, a direct substitute, have a high correlation to the broader market, showing a $\mathbf{0.5397}$ correlation coefficient with the S&P 500. You see, land investment competes against these liquid, measurable alternatives.

Here's a quick look at how asset classes stack up:

Contract drilling for water/geothermal has a low threat of substitution due to specialized technical requirements.

While Barnwell Industries, Inc. has exited its water well drilling business, analyzing the threat for that service type shows a relatively lower substitution risk, primarily due to technical specialization. The global water well drilling market was valued at $\mathbf{\$4911.8}$ million in 2025 and is only projected to grow at a $\mathbf{3\%}$ CAGR through 2033. This moderate growth suggests stable demand that isn't being rapidly displaced. Drilling into hard rock or deep formations requires specialized rigs and expertise, which acts as a barrier. For example, drilling costs in hard rock can be $\mathbf{\$50}$ to $\mathbf{\$75}$ per foot, compared to $\mathbf{\$25}$ to $\mathbf{\$35}$ per foot in soft soils, reflecting the need for more robust, specialized equipment. Furthermore, in the geothermal space, a specific study estimated the CAPEX for drilling one injection well at $\mathbf{USD\ 1,252,000}$. These high, specialized capital costs keep general-purpose drillers out.

Government policy shifts toward clean energy could suddenly increase the substitution threat to Canadian O&G.

Since Barnwell Industries, Inc.'s revenue is $\mathbf{68\%}$ derived from Canada, policy risk is acute. The threat here is not just market economics but regulatory mandates that could rapidly devalue long-life assets. Under announced global net-zero pledges, $\mathbf{39\%}$ of projected Canadian oil and gas capital investment between 2025 and 2040 is expected to become stranded. If the world moves faster toward a 1.5ºC alignment scenario, that risk jumps to $\mathbf{66\%}$ of capital investment. This policy-driven demand destruction directly threatens the long-term cash flows Barnwell relies on.

BRN's focus on conventional oil in Canada makes it more exposed to price-volatile substitutes.

The company's exposure is concentrated. With $\mathbf{81\%}$ of its oil and $\mathbf{44\%}$ of its gas exported abroad, Barnwell Industries, Inc. is highly susceptible to global price swings driven by substitute fuels. This is compounded by the fact that Canadian production is generally higher on the cost curve, meaning its returns are more vulnerable when low-cost substitutes drive global prices down. The recent financial performance reflects this pressure; Q3 2025 revenue from continuing operations fell to $\mathbf{\$3.19}$ million from $\mathbf{\$4.51}$ million in Q3 2024, alongside a net loss of $\mathbf{\$1.55}$ million. The company's Return on Equity (ROE) was reported at $\mathbf{-60.99\%}$.

You should definitely track the capital allocation decisions following the recent $\mathbf{\$2.4}$ million private placement, as that capital will be key to navigating these substitution pressures. Finance: draft 13-week cash view by Friday.

Barnwell Industries, Inc. (BRN) - Porter's Five Forces: Threat of new entrants

The threat of new entrants for Barnwell Industries, Inc. (BRN) is segmented, reflecting the disparate nature of its remaining core activities: Canadian oil and gas exploration and production (E&P), Hawaiian land investment, and specialized contract drilling services.

Canadian Oil and Gas E&P

The threat of new entrants in the Canadian oil and gas E&P segment, where Barnwell Industries, Inc. derives 79.2% of its revenue from continuing operations, is decidedly low. This is primarily due to the sheer scale of required upfront capital. The entire Alberta oil and gas sector (excluding oil sands) maintained capital expenditures of $16.8 billion in 2024, with a forecast of $18.0 billion for 2025. For a new entrant, matching this industry scale is prohibitive. Furthermore, Barnwell Industries, Inc. itself recently required ~$2.4 million in private placement funding to support its operations and Twining field workovers.

The capital intensity is evident when considering the overall market. Total capital expenditures across all Alberta oil and gas resources are projected to reach Cdn$30.0 billion in 2025. This environment favors established players with deep pockets over startups.

Hawaiian Land Development

For the land investment segment, which represents 0% of Barnwell Industries, Inc.'s reported revenue by segment but remains a core asset class, the threat is moderate. The high barrier here is the cost of land acquisition in a supply-constrained market. Sparse one-acre vacant plots in high-demand areas like Honolulu or Maui listed for $500,000 or more per acre as of 2023. Even less developed acreage on the Big Island might start from $90,000 per acre.

Beyond the purchase price, the development process itself introduces significant fixed costs. Land acquisition can represent 20% to 50% of a total development budget. Moreover, the entitlement and permitting process is complex, with associated fees potentially ranging from a few thousand dollars up to $500,000+ depending on the project scope and local regulations.

Specialized Contract Drilling

Entry barriers for the specialized contract drilling segment, which historically involved water well drilling rigs, are moderate, driven by the need for specific, high-cost equipment. Barnwell Industries, Inc. previously owned five water well drilling rigs and two pump rigs. A new entrant must acquire similar assets, which carry substantial price tags:

The need for heavy-duty equipment capable of deep drilling or handling hard rock dictates a minimum investment in the tens of thousands of dollars, even for mid-range professional equipment.

Regulatory and Fixed Cost Barriers

Across all segments, regulatory and environmental compliance imposes a significant, defintely fixed barrier. For highly regulated industries like oil and gas, compliance costs can consume 5% to 10% of annual revenue. Even outside of direct operations, general U.S. business compliance costs average $10,000 per employee. Barnwell Industries, Inc.'s own Q3 2025 General and Administrative expenses increased by $0.565 million (+43%) due to non-recurring proxy and legal fees, illustrating the high, unavoidable costs associated with governance and regulatory navigation.

The capital intensity required for survival is underscored by Barnwell Industries, Inc.'s recent financing activity:

• Gross proceeds targeted from the late 2025 private placement: ~$2.4 million.
• Number of shares sold in the placement: 2,221,141.
• Purchase price per share: $1.10.
• Warrant exercise price for some investors: $1.65.

These financial maneuvers highlight that even for an existing entity, securing necessary capital is an active, ongoing challenge, which naturally deters smaller, new entrants.