Dear Barnwell Industries Shareholders:
On February 14, after repeated attempts to reach a mutually acceptable slate of directors for the 2025 Annual Meeting, I have submitted a slate of five Director nominees to be considered for BRN’s 2025 Board. Also on February 14, BRN issued its quarterly report of results for the period ending December 31, 2024 — reporting a loss of $1,917,000 or $0.19 per share — adding to the urgency to get my slate elected so we can attempt a turnaround of the company before it is too late.
I am pleased to have submitted a slate of five Directors to be considered for election at BRN’s 2025 annual meeting. I am confident that all members of my slate will work diligently to build shareholder value — not build their personal net wealth via excessive remuneration and perquisites. I have assembled my slate to address the various disciplines and expertise that I believe are necessary for BRN to achieve success in the future. In my opinion, BRN has two main assets which need to be exploited 1) Its oil and gas assets and operations; and 2) Its tax loss carryforwards (which have been accumulated via the excessive remuneration received by the Kinzler family over decades). Additionally, I believe it is imperative that we dramatically reduce overhead and shut down extraneous money losing operations immediately.
Given the above priorities, I selected a slate consisting of (1) Doug Woodrum (finance and operations), (2) Heather Isidoro (oil and gas expertise), (3) Brian Henry (mergers and acquisitions expertise), (4) Ben Pierson (investment and oil and gas knowledge) and (5) me (over 40 years of private equity and general business expertise). I have included bios for each proposed director as Exhibit A to this letter; however, to sum up briefly –
1) Doug Woodrum has been CFO of two significant public companies and a member of BRN’s board for four years. I am confident once Doug is free from the obstructions imposed by Kinzler/Grossman/Horowitz he will be a great asset helping CEO, Craig Hopkins to rationalize BRN’s operations.
2) Heather Isidoro is a seasoned oil and gas professional, who, among other reserves and business development positions, worked at Pine Cliff Energy (our partner in BRN’s largest Canadian oil field - Twining) for seven years including five as the Vice President of Business Development. She is a licensed Professional Engineer, and currently serves as an independent director for a public company board, Helium Evolution, also serving as the ESG and Reserves Committee Chair. Heather has been a Director of the Petroleum Acquisitions and Divestitures Association (PADA) for ten years, and Association President since 2020. Given Heather’s extensive 25 years of experience in the industry, she is highly capable of providing Craig and his team with valuable advice to improve results.
3) Brian Henry is a seasoned and highly successful M&A executive. During his 29-year tenure at Terex, Brian helped the company grow from a ~$50 million market cap to a current $3 billion market cap by completing more than 60 transactions, most recently as Sr. Vice President of Business Development and Investor Relations. I hope to work with Brian and attempt to find add on acquisitions for BRN using our $41 million tax loss carryforward as a lure for profitable tax paying companies.
4) Ben Pierson is an investment professional with over twenty years’ experience, including five recent years at Wafra, Inc, a $25+ billion asset management firm owned by the Social Security Plan of Kuwait. Ben has significant experience sourcing and executing investment deals, notably within oil, gas, and commodities, where he has extensive industry contacts. He will concentrate along with Heather on attempting to find add-on entities to bulk up BRN’s oil and gas properties. Ben will also be focused on BRN’s minority interest in its Hawaiian properties.
5) I will attempt to utilize my over 40 years of experience in private equity and investing to make BRN another successful investment in my portfolio. Let’s hope that I can maintain my return history at its greater than 35% per annum rate with BRN.
In summary, the various business experience and expertise that my selections possess should help BRN to achieve much better results in the future.
On the other hand, I believe Kinzler/Grossman/Horowitz plus whatever candidates that they choose for their slate will be hard-pressed to compare favorably to my slate for some of the reasons I highlight below.
1) Ken Grossman is a retired bankruptcy lawyer. In my opinion his primary role at BRN is to protect and perpetuate Alex Kinzler and his remuneration and perquisites and keep the “gravy train” going without regard for shareholder value/appreciation for the rest of us. On August 9, 2022, BRN issued a release to remove Grossman as Vice Chairman and take him off the Audit and Nominating Committees due to “Mr. Grossman’s unfortunate pattern of unprofessional and disruptive behavior, which has included ad hominem attacks and threats against other members of the Board.” However, with Kinzler and Horowitz’s vote, Grossman is back as vice chairman and “attack dog” in Chief. I believe he has been key in encouraging BRN to spend more than $4 million in “non-productive” legal and shareholder “defense” expenses that he has funneled into the pockets of his brother’s law firm, in order to fight against my efforts during the past several years.
2) Josh Horowitz is a fund manager of a microcap investment fund. Josh fashions himself as an expert in corporate governance. In BRN’s case, rather than working with me as I have tried to encourage through my compromise proposals to avoid a costly proxy fight, I believe Josh is utilizing his knowledge to encourage and support unbelievably bad corporate governance by the Kinzler/Grossman members of the Board. Josh, along with Kinzler and Grossman, have voted to form an “improper” Special Committee of the Board, to put in place a “poison pill” and change the bylaws of BRN to attempt to stymie my efforts on behalf of shareholders. As I understand, Josh has also condoned the refusal to provide important information about expenditures by the Special Committee to the entire board or even Craig Hopkins, BRN’s CEO! In my opinion, Josh’s support of Kinzler/Grossman’s “entrenchment” are contrary to the basic tenets of even mediocre corporate governance.
3) While Ken Grossman dutifully serves the role of “attack dog” and defender and Josh supports poor corporate governance, Alex Kinzler is most culpable in causing BRN shareholders to suffer with no value accretion while Kinzler/Grossman reap excessive compensation and benefits. Although I can’t be absolutely certain, Alex Kinzler must be ranked among the longest tenured worst public company CEO’s in terms of performance for shareholders. The following chart from Macro Trends shows that an investor who bought $1,000 worth of BRN stock in 1984 would now have stock worth $457!!
See: https://www.macrotrends.net/stocks/charts/BRN/barnwell-industries/stock-price-history
4) Nonetheless, Alex Kinzler rode the “gravy train” along with his father and received tens of millions in compensation and benefits during these decades. In my opinion, Alex should have been terminated and replaced for “poor performance” decades ago; however, he has been able to hang on via his family’s significant ownership in the company as well as via copious legal defense spending.
As an example of Alex’s value destroying business transactions, please refer to BRN’s February 14 earnings report and its discussion of a $613,000 impairment of the U.S oil and natural gas properties during the quarter ending December 31, 2024. In December 2022, BRN made an investment of $5,354,000 1 in a Texas and oil gas partnership (“Texas Investment”) — utilizing an extremely high percentage of the company’s cash balances. The following table shows the Texas impairments during BRN’s last two quarters:
December 2022 Impairments of Texas Investment $ (721,000 )2
September 2024 Impairments of Texas Investment $ (613,000 )3
Total Impairments of Texas Investment as of December 31, 2024 $ (1,334,000 )
Impairments as a % of original Texas Investment 24.90 %
As shown in the table, BRN‘s impairments during the past six months total 24.9% of its total $5,354,000 — a significant loss given BRN’s market value!!
I understand that Alex Kinzler improvidently and improperly caused BRN to enter into this Texas investment without providing his Calgary oil and gas management team or his Board with any due diligence materials. I also understand from former BRN Board members that the minutes will show that Company counsel, Chris Doyle, noted Alex’s improper behavior and that even Ken Grossman voted against the transaction. It is clear that Alex Kinzler has no regard for shareholder value and will do almost anything—including breaching his fiduciary duties to the stockholders—to retain power. Make no mistake, if my board slate is elected, we will promptly investigate these, and any other matters that come to light, and if warranted, will file appropriate litigation on behalf of the Company to recover any damages caused by faithless and feckless fiduciaries.
To be clear, and as iterated in my prior open letters to shareholders, I have tried to compromise and agree to a settlement with the Company that would avoid a costly proxy fight. The “Special Committee” has continued to put forth proposals consistent with the status quo and have used false and misleading negotiation tactics by claiming that Kinzler has 25% of the voting power. Of course, the “Special Committee” claimed this 25% includes the Magaro family and yet, there is no SEC filing on record that discloses Magaro has provided a proxy to Kinzler nor is there any Schedule 13D or 13G filing at all for Magaro that I could find. Further, BRN’s latest 10-K/A filed on January 27, 2025, indicates that Kinzler holds 9.7% of the Company’s voting shares while Joseph E. Magaro holds 8.6%. This is only 18.3% so perhaps Kinzler has also received a proxy from his sister or plans to improperly vote the BRN pension plan in favor of entrenching himself. I only highlight this as further evidence of the lengths that Kinzler/Grossman/Horowitz will go to entrench themselves in the interests of themselves rather than all BRN shareholders. In summary, I hope most shareholders approve of my selections for BRN’s 2025 Board. We need to act quickly to turn around the company and stem the losses that are directly attributable to Kinzler/Grossman/Horowitz’s entrenchment efforts and poor investment decision making.
1 See page 108 of Barnwell’s 10-K for the fiscal year ended September 30, 2024, filed on December 17, 2024.
2 See page 44 of Barnwell’s 10-K for the fiscal year ended September 30, 2024, filed on December 17, 2024.
3 See page 13 of Barnwell’s 10-Q for the fiscal quarter ended December 30, 2024, filed on February 14, 2025.
Please continue to send emails to dumpkinzler@gmail.com if you support us. You might also want to email the company at info@bocl.ca expressing outrage at their egregious behavior and excessive nonproductive spending and urging them to set the date for the 2025 Annual Meeting.
Sincerely,
/s/ Ned L. Sherwood
Ned L. Sherwood
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