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Barnwell mystified by stock's rapid rise since start of year

Share value is up 147% with volume surging, prompting the NYSE to request an explanation

By Dave Segal


Honolulu-based Barnwell Industries Inc., which derives the majority of its revenue from oil and natural gas operations in Alberta, Canada, said it knows of no reason why its stock has more than doubled since the start of the year.

The stock closed up $1.01, or 12.7 percent, at $8.94 yesterday on volume of 300,612 shares on the American Stock Exchange. Barnwell's shares, which began the year at $3.62, are up 147.2 percent in the first nine trading days of 2011 and are at their highest level since closing at $9 on Oct. 3, 2008.

More than 500,000 shares have exchanged hands the last two days, far greater than the company's 52-week average daily trading volume of 9,463 shares.

Barnwell said in a news release after the market closed yesterday that "it was unaware of any nonpublic information" that caused "significant" increases in trading volume and in the stock price. Barnwell added that its policy is not to comment on unusual market activity or rumors.

The company was asked by the New York Stock Exchange, which oversees the AMEX, to disseminate a release explaining the stock and volume movement.

"I think the market is reacting on a delayed basis to the turnaround we've already made," said Barnwell President Alex Kinzler.

Barnwell earned $3.8 million, or 46 cents a share, in the year ended Sept. 30, compared with a loss of $24.4 million, or $2.96 a share, in the year-earlier period. The company expects to report its earnings for the October-December quarter around Feb. 9.

In addition to oil and gas operations, the company has a joint development partnership on the Big Island -- 77.6 percent-owned Kaupulehu Developments -- and statewide water-drilling operations.

Kinzler, who is the company's fourth-largest shareholder with 3.6 percent of the stock, said an investor appeared to be selling a large holding in the company at the end of last year.

"Someone was probably unwinding a large position ... so the stock never could rise," Kinzler said. "Now there appears to be very little on the sell side and more on the buy side."

Barnwell hit its all-time high of $27.80 on Nov. 15, 2005.

But the stock slipped 4.6 percent in 2006, declined 48.4 percent in 2007 as the recession began to take hold and then fell another 64 percent in 2008. Barnwell's shares eked out a 3 percent gain in 2009 but fell again 21.1 percent last year.

Kinzler said he expects the company's financials to continue to improve on the heels of its fiscal 2010 results.

"We had a good year in fiscal 2010, and our financials were much stronger than they were in the prior year," he said. "Things are going well across all of our industries. Natural gas prices are still low, but oil prices are quite high at over $90 (a barrel) in the U.S."

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