The consideration consists of C$4 million in cash and a 5% gross overriding royalty providing Barnwell with continued participation in future drilling, valued at C$5 million for purposes of the transaction. All amounts in this release are in Canadian dollars. Barnwell's Board of Directors determined the transaction is in the best interests of the Company and the Board of Directors is recommending that Barnwell shareholders vote in favor of the transaction.

The agreement marks another significant step in Barnwell's transformation. Following the completed sale of its remaining Hawaii development interests in September, the Company today separately announced its decision to terminate its defined benefit pension plan and the planned reversion of surplus assets after satisfying benefit obligations, costs and applicable taxes. Together, these actions are intended to simplify Barnwell, reduce legacy obligations, increase financial flexibility and position the Company to pursue strategic opportunities capable of materially increasing long-term per-share value. Management intends to devote the majority of its efforts to identifying opportunities to redeploy Barnwell's capital and public-company platform at greater scale.

Importantly, Barnwell will retain meaningful participation in the future development of the properties through a 5% gross overriding royalty on the acquired business's interest in future wells drilled on the all of Barnwell's Canadian lands. An affiliate of the buyer will have the right to purchase the royalty at any time after closing for C$5 million. Any royalty payments received by Barnwell prior to exercise of the option will not reduce the C$5 million purchase price, allowing Barnwell to retain those royalty payments in addition to the full C$5 million exercise price if the option is subsequently exercised. This structure gives the buyer a strong economic incentive to exercise the option rather than to continue making royalty payments. Future royalty payments will depend on future drilling and production, and exercise of the C$5 million purchase option is at the buyer affiliate's discretion and is not assured.

The buyer has paid a C$1 million deposit into escrow, which will be credited toward the purchase price at closing. The transaction is structured as a sale of the Canadian operating company's shares and an assignment of a related intercompany note, following a pre-closing reorganization. Barnwell will retain specified assets, including excess cash and near-cash assets, outside the sale.

Based on its available Canadian and U.S. tax attributes, Barnwell expects a limited tax impact on the C$9 million base consideration. Aggregate royalty payments and call-option proceeds exceeding the C$5 million value attributed to the royalty would be subject to tax.