10q10k10q10k.net

What changed in HALLADOR ENERGY CO's 10-K — 2023 vs 2024

vs

Paragraph-level year-over-year comparison of HALLADOR ENERGY CO's 2023 and 2024 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2024 report.

+885 added−565 removedSource: 10-K (2025-03-17) vs 10-K (2024-03-14)

Top changes in HALLADOR ENERGY CO's 2024 10-K

885 paragraphs added · 565 removed · 114 edited across 5 sections

Item 1. Business

Business — how the company describes what it does

109 edited+110 added−50 removed19 unchanged
Biggest changeFINANCIAL STATEMENTS Hallador Energy Company Consolidated Balance Sheets As of December 31, (in thousands) 2023 2022 ASSETS Current assets: Cash and cash equivalents $ 2,842 $ 3,009 Restricted cash 4,281 3,417 Accounts receivable 19,937 29,889 Inventory 23,075 49,796 Parts and supplies 38,877 28,295 Contract asset - coal purchase agreement — 19,567 Prepaid expenses 2,262 4,546 Total current assets 91,274 138,519 Property, plant and equipment: Land and mineral rights 115,486 115,595 Buildings and equipment 537,131 534,129 Mine development 158,642 140,108 Finance lease right-of-use assets 12,346 — Total property, plant and equipment 823,605 789,832 Less - accumulated depreciation, depletion and amortization (334,971 ) (309,370 ) Total property, plant and equipment, net 488,634 480,462 Investment in Sunrise Energy 2,811 3,988 Other assets 7,061 7,585 Total assets $ 589,780 $ 630,554 LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Current portion of bank debt, net $ 24,438 $ 33,031 Accounts payable and accrued liabilities 62,908 82,972 Current portion of lease financing 3,933 — Deferred revenue 23,062 35,485 Contract liability - power purchase agreement and capacity payment reduction 43,254 88,114 Total current liabilities 157,595 239,602 Long-term liabilities: Bank debt, net 63,453 49,713 Convertible notes payable 10,000 10,000 Convertible notes payable - related party 9,000 9,000 Long-term lease financing 8,157 — Deferred income taxes 9,235 4,606 Asset retirement obligations 14,538 17,254 Contract liability - power purchase agreement 47,425 84,096 Other 1,789 1,259 Total long-term liabilities 163,597 175,928 Total liabilities 321,192 415,530 Commitments and contingencies Stockholders' equity: Preferred stock, $ .10 par value, 10,000 shares authorized; none issued — — Common stock, $ .01 par value, 100,000 shares authorized; 34,052 and 32,983 issued and outstanding, respectively 341 330 Additional paid-in capital 127,548 118,788 Retained earnings 140,699 95,906 Total stockholders’ equity 268,588 215,024 Total liabilities and stockholders’ equity $ 589,780 $ 630,554 The accompanying notes are an integral part of these Consolidated Financial Statements 46 Table of Contents Hallador Energy Company Consolidated Statements of Operations For the years ended December 31, (in thousands, except per share data) 2023 2022 SALES AND OPERATING REVENUES: Coal sales $ 361,926 $ 289,376 Electric sales 267,927 66,252 Other revenues 4,627 6,363 Total sales and operating revenues 634,480 361,991 OPERATING EXPENSES: Operating expenses 473,390 266,608 Depreciation, depletion and amortization 67,211 46,875 Asset retirement obligations accretion 1,804 1,010 Exploration costs 904 651 General and administrative 26,159 16,417 Total operating expenses 569,468 331,561 INCOME FROM OPERATIONS 65,012 30,430 Interest expense (1) (13,711 ) (11,012 ) Loss on extinguishment of debt (1,491 ) — Equity method investment (loss) income (552 ) 443 INCOME BEFORE INCOME TAXES 49,258 19,861 INCOME TAX EXPENSE (BENEFIT): Current (164 ) — Deferred 4,629 1,756 Total income tax expense 4,465 1,756 NET INCOME $ 44,793 $ 18,105 NET INCOME PER SHARE: Basic $ 1.35 $ 0.57 Diluted $ 1.25 $ 0.55 WEIGHTED AVERAGE SHARES OUTSTANDING: Basic 33,133 32,043 Diluted 36,827 33,649 (1) Interest Expense: Interest on bank debt $ 8,636 $ 7,563 Other interest 1,842 715 Amortization and swap related interest: Payments on interest rate swap, net of changes in value — (867 ) Amortization of debt issuance costs 3,233 3,601 Total amortization and swap related interest 3,233 2,734 Total interest expense $ 13,711 $ 11,012 The accompanying notes are an integral part of these Consolidated Financial Statements 47 Table of Contents Hallador Energy Company Consolidated Statements of Cash Flows For the years ended December 31, (in thousands) 2023 2022 CASH FLOWS FROM OPERATING ACTIVITIES: Net income $ 44,793 $ 18,105 Adjustments to reconcile net income to net cash provided by operating activities: Deferred income taxes 4,629 1,756 Equity income (loss) – Sunrise Energy 552 (443 ) Cash distribution - Sunrise Energy 625 — Depreciation, depletion and amortization 67,211 46,875 Loss on extinguishment of debt 1,491 — Loss (gain) on sale of assets 398 (264 ) Payments on interest rate swap, net of changes in value — (867 ) Amortization of debt issuance costs 3,233 3,601 Asset retirement obligations accretion 1,804 1,010 Cash paid on asset retirement obligation reclamation (3,384) (3,162) Stock-based compensation 3,554 1,269 Provision for loss on customer contracts — 159 Amortization of contract asset and contract liabilities (39,791 ) (19,731 ) Change in current assets and liabilities: Accounts receivable 9,952 (16,305 ) Inventory 15,548 (25,863 ) Parts and supplies (10,582 ) (6,271 ) Prepaid expenses 1,186 (5,941 ) Accounts payable and accrued liabilities (18,992 ) 24,037 Deferred revenue (23,423 ) 35,485 Other 610 719 Net cash provided by operating activities $ 59,414 $ 54,169 48 Table of Contents Hallador Energy Company Consolidated Statements of Cash Flows For the years ended December 31, (in thousands) (continued) 2023 2022 CASH FLOWS FROM INVESTING ACTIVITIES: Capital expenditures $ (75,352 ) $ (54,020 ) Proceeds from sale of equipment 62 655 Net cash used in investing activities (75,290 ) (53,365 ) CASH FLOWS FROM FINANCING ACTIVITIES: Payments on bank debt (59,713 ) (78,225 ) Borrowings of bank debt 66,000 51,700 Proceeds from sale and leaseback arrangement 11,082 — Issuance of convertible notes payable — 11,000 Issuance of related party convertible notes payable — 18,000 Debt issuance costs (6,013 ) (2,097 ) Distributions to redeemable noncontrolling interests — (585 ) ATM offering 7,318 — Taxes paid on vesting of RSUs (2,101 ) — Net cash provided by (used in) financing activities 16,573 (207 ) Increase in cash, cash equivalents, and restricted cash 697 597 Cash, cash equivalents, and restricted cash, beginning of year 6,426 5,829 Cash, cash equivalents, and restricted cash, end of year $ 7,123 $ 6,426 CASH, CASH EQUIVALENTS, AND RESTRICTED CASH: Cash and cash equivalents $ 2,842 $ 3,009 Restricted cash 4,281 3,417 $ 7,123 $ 6,426 SUPPLEMENTAL CASH FLOW INFORMATION: Cash paid for interest $ 9,966 $ 8,123 SUPPLEMENTAL NON-CASH FLOW INFORMATION: Change in capital expenditures included in accounts payable and finance lease $ 1,882 $ 3,440 The accompanying notes are an integral part of these Consolidated Financial Statements 49 Table of Contents Hallador Energy Company Consolidated Statement of Stockholders’ Equity (in thousands) Additional Total Common Stock Issued Paid-in Retained Stockholders' Shares Amount Capital Earnings Equity BALANCE, DECEMBER 31, 2021 30,785 $ 308 $ 104,126 $ 77,801 182,235 Stock-based compensation — — 1,269 — 1,269 Cancellation of redeemable noncontrolling interests — — 3,415 — 3,415 Stock issued on redemption of convertible note 232 2 998 — 1,000 Stock issued on redemption of related party convertible notes 1,966 20 8,980 — 9,000 Net income — — — 18,105 18,105 BALANCE, DECEMBER 31, 2022 32,983 330 118,788 95,906 215,024 Stock-based compensation — — 3,554 — 3,554 Stock issued on vesting of RSUs 473 5 (5 ) — — Taxes paid on vesting of RSUs (198 ) (2 ) (2,099 ) — (2,101 ) Stock issued in ATM offering 794 8 7,310 — 7,318 Net income — — — 44,793 44,793 BALANCE, DECEMBER 31, 2023 34,052 341 127,548 140,699 268,588 The accompanying notes are an integral part of these Consolidated Financial Statements 50 Table of Contents NOTES TO CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 2023 AND 2022 ( 1 ) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Basis of Presentation and Consolidation The consolidated financial statements include the accounts of Hallador Energy Company (hereinafter, “we”, “our” or “us”) and our wholly owned subsidiaries Sunrise Coal, LLC (“Sunrise”), Hallador Power Company, LLC (“Hallador Power”) and Hourglass Sands, LLC (“Hourglass”), as well as Sunrise and Hallador Power's wholly owned subsidiaries.
Biggest changeFINANCIAL STATEMENTS Hallador Energy Company Consolidated Balance Sheets As of December 31, (in thousands) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 2024 2023 ASSETS ​ ​ ​ ​ ​ ​ Current assets: ​ ​ ​ ​ ​ ​ Cash and cash equivalents ​ $ 7,232 $ 2,842 Restricted cash ​ 4,921 4,281 Accounts receivable ​ 15,438 19,937 Inventory ​ 36,685 23,075 Parts and supplies ​ 39,104 38,877 Prepaid expenses ​ 1,478 2,262 Assets held-for-sale ​ ​ — ​ ​ 1,540 Total current assets ​ 104,858 92,814 Property, plant and equipment: ​ Land and mineral rights ​ 70,307 115,486 Buildings and equipment ​ 429,857 537,131 Mine development ​ 92,458 158,642 Finance lease right-of-use assets ​ 13,034 12,346 Total property, plant and equipment ​ 605,656 823,605 Less - accumulated depreciation, depletion and amortization ​ (347,952) (334,971) Total property, plant and equipment, net ​ 257,704 488,634 Equity method investments ​ 2,607 2,811 Other assets ​ 3,951 5,521 Total assets ​ $ 369,120 $ 589,780 ​ ​ ​ ​ ​ ​ ​ LIABILITIES AND STOCKHOLDERS' EQUITY ​ Current liabilities: ​ Current portion of bank debt, net ​ $ 4,095 $ 24,438 Accounts payable and accrued liabilities ​ 44,298 62,908 Current portion of lease financing ​ 6,912 3,933 Contract liabilities - current ​ 97,598 66,316 Total current liabilities ​ 152,903 157,595 Long-term liabilities: ​ Bank debt, net ​ 37,394 63,453 Convertible notes payable ​ — 10,000 Convertible notes payable - related party ​ — 9,000 Long-term lease financing ​ 8,749 8,157 Deferred income taxes ​ — 9,235 Asset retirement obligations ​ 14,957 14,538 Contract liabilities - long-term ​ 49,121 47,425 Other ​ 1,711 1,789 Total long-term liabilities ​ 111,932 163,597 Total liabilities ​ 264,835 321,192 Commitments and contingencies (Note 22) ​ Stockholders' equity: ​ Preferred stock, $.10 par value, 10,000 shares authorized; none issued ​ — — Common stock, $.01 par value, 100,000 shares authorized; 42,621 and 34,052 issued and outstanding, as of December 31, 2024 and December 31, 2023, respectively ​ 426 341 Additional paid-in capital ​ 189,298 127,548 Retained earnings (deficit) ​ (85,439) 140,699 Total stockholders’ equity ​ 104,285 268,588 Total liabilities and stockholders’ equity ​ $ 369,120 $ 589,780 ​ The accompanying notes are an integral part of these Consolidated Financial Statements ​ 65 Table of Contents Hallador Energy Company Consolidated Statements of Operations For the years ended December 31, (in thousands, except per share data) ​ ​ ​ ​ ​ ​ ​ ​ ​ 2024 2023 SALES AND OPERATING REVENUES: ​ ​ Electric sales ​ $ 261,527 ​ $ 267,927 Coal sales ​ 137,448 ​ 361,926 Other revenues ​ 5,419 ​ 5,025 Total sales and operating revenues ​ 404,394 ​ 634,878 EXPENSES: ​ ​ Fuel ​ ​ 49,343 ​ ​ 103,388 Other operating and maintenance costs ​ ​ 118,364 ​ ​ 199,855 Cost of purchased power ​ ​ 10,888 ​ ​ — Utilities ​ ​ 15,914 ​ ​ 17,730 Labor ​ ​ 116,164 ​ ​ 152,417 Depreciation, depletion and amortization ​ 65,626 ​ 67,211 Asset retirement obligations accretion ​ 1,628 ​ 1,804 Exploration costs ​ 260 ​ 904 General and administrative ​ 26,527 ​ 26,159 Asset impairment ​ ​ 215,136 ​ ​ — (Gain) loss on disposal or abandonment of assets, net ​ ​ (50) ​ ​ 398 Settlement of litigation ​ ​ 2,750 ​ ​ — Total operating expenses ​ 622,550 ​ 569,866 ​ ​ ​ ​ ​ ​ ​ INCOME (LOSS) FROM OPERATIONS ​ (218,156) ​ 65,012 ​ ​ ​ ​ ​ ​ ​ Interest expense (1) ​ (13,850) ​ (13,711) Loss on extinguishment of debt ​ (2,790) ​ (1,491) Equity method investment (loss) ​ (746) ​ (552) NET INCOME (LOSS) BEFORE INCOME TAXES ​ (235,542) ​ 49,258 ​ ​ ​ ​ ​ ​ ​ INCOME TAX EXPENSE (BENEFIT): ​ ​ Current ​ (169) ​ (164) Deferred ​ (9,235) ​ 4,629 Total income tax expense (benefit) ​ (9,404) ​ 4,465 ​ ​ ​ ​ ​ ​ ​ NET INCOME (LOSS) ​ $ (226,138) ​ $ 44,793 ​ ​ ​ ​ ​ ​ ​ NET INCOME (LOSS) PER SHARE: ​ ​ Basic ​ $ (5.72) ​ $ 1.35 Diluted ​ $ (5.72) ​ $ 1.25 ​ ​ ​ ​ ​ ​ ​ WEIGHTED AVERAGE SHARES OUTSTANDING ​ ​ Basic ​ 39,504 ​ 33,133 Diluted ​ 39,504 ​ 36,827 ​ ​ ​ ​ ​ ​ ​ ​ (1) Interest Expense: ​ ​ Interest on bank debt $ 9,286 $ 8,636 Other interest ​ 2,817 ​ 1,842 Amortization: ​ ​ ​ Amortization of debt issuance costs ​ 1,747 ​ 3,233 Total amortization ​ 1,747 ​ 3,233 Total interest expense ​ $ 13,850 ​ $ 13,711 The accompanying notes are an integral part of these Consolidated Financial Statements ​ 66 Table of Contents Hallador Energy Company Consolidated Statements of Cash Flows For the years ended December 31, (in thousands) ​ ​ ​ ​ ​ ​ ​ ​ ​ 2024 2023 CASH FLOWS FROM OPERATING ACTIVITIES: ​ ​ Net income (loss) ​ $ (226,138) ​ $ 44,793 Adjustments to reconcile net income to net cash provided by operating activities: ​ ​ ​ Deferred income tax (benefit) ​ (9,235) ​ 4,629 Equity method investment (loss) ​ 746 ​ 552 Cash distribution - equity method investment ​ — ​ 625 Depreciation, depletion and amortization ​ 65,626 ​ 67,211 Asset impairment ​ ​ 215,136 ​ ​ — Loss on extinguishment of debt ​ 2,790 ​ 1,491 (Gain) loss on disposal or abandonment of assets, net ​ (50) ​ 398 Amortization of debt issuance costs ​ 1,747 ​ 3,233 Asset retirement obligations accretion ​ 1,628 ​ 1,804 Cash paid on asset retirement obligation reclamation ​ (1,407) ​ (3,384) Stock-based compensation ​ 4,454 ​ 3,554 Amortization of contract asset and contract liabilities ​ (70,203) ​ (97,018) Director fees paid in stock ​ ​ 150 ​ ​ — Change in current assets and liabilities: ​ ​ ​ Accounts receivable ​ 4,499 ​ 9,952 Inventory ​ (13,610) ​ 15,548 Parts and supplies ​ (227) ​ (10,582) Prepaid expenses ​ 784 ​ 1,186 Accounts payable and accrued liabilities ​ (14,580) ​ (18,992) Contract liabilities ​ 103,181 ​ 33,804 Other ​ 643 ​ 610 Net cash provided by operating activities ​ $ 65,934 ​ $ 59,414 ​ ​ ​ ​ ​ 67 Table of Contents Hallador Energy Company Consolidated Statements of Cash Flows For the years ended December 31, (in thousands) (continued) ​ ​ ​ ​ ​ ​ ​ ​ ​ 2024 2023 CASH FLOWS FROM INVESTING ACTIVITIES: ​ ​ Capital expenditures ​ $ (53,367) ​ $ (75,352) Proceeds from sale of equipment ​ 4,239 ​ 62 Proceeds from held-for-sale assets ​ ​ 3,200 ​ ​ — Investment in equity method investments ​ ​ (542) ​ ​ — Net cash used in investing activities ​ (46,470) ​ (75,290) ​ ​ ​ ​ ​ ​ ​ CASH FLOWS FROM FINANCING ACTIVITIES: ​ ​ Payments on bank debt ​ (147,000) ​ (59,713) Borrowings of bank debt ​ 99,500 ​ 66,000 Payments on lease financing ​ ​ (5,633) ​ ​ — Proceeds from sale and leaseback arrangement ​ 5,134 ​ 11,082 Issuance of related party notes payable ​ 5,000 ​ — Payments on related party notes payable ​ (5,000) ​ — Debt issuance costs ​ (673) ​ (6,013) ATM offering ​ 34,515 ​ 7,318 Taxes paid on vesting of RSUs ​ (277) ​ (2,101) Net cash provided by (used in) financing activities ​ (14,434) ​ 16,573 Increase in cash, cash equivalents, and restricted cash ​ 5,030 ​ 697 Cash, cash equivalents, and restricted cash, beginning of year ​ 7,123 ​ 6,426 Cash, cash equivalents, and restricted cash, end of year ​ $ 12,153 ​ $ 7,123 ​ ​ ​ ​ ​ ​ ​ CASH, CASH EQUIVALENTS, AND RESTRICTED CASH: ​ ​ Cash and cash equivalents ​ $ 7,232 ​ $ 2,842 Restricted cash ​ 4,921 ​ 4,281 ​ ​ $ 12,153 ​ $ 7,123 ​ ​ ​ ​ ​ ​ ​ SUPPLEMENTAL CASH FLOW INFORMATION: ​ ​ Cash paid for interest ​ $ 10,511 ​ $ 9,966 ​ ​ ​ ​ ​ ​ ​ SUPPLEMENTAL NON-CASH FLOW INFORMATION: ​ ​ ​ Change in capital expenditures included in accounts payable and prepaid expense ​ $ 356 ​ $ 1,882 ​ The accompanying notes are an integral part of these Consolidated Financial Statements ​ 68 Table of Contents Hallador Energy Company Consolidated Statement of Stockholders’ Equity (in thousands) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Additional ​ Retained ​ Total ​ ​ Common Stock Issued ​ Paid-in ​ Earnings ​ Stockholders’ ​ Shares Amount Capital (Deficit) ​ Equity BALANCE, DECEMBER 31, 2022 32,983 ​ $ 330 ​ $ 118,788 ​ $ 95,906 ​ $ 215,024 Stock-based compensation — ​ — ​ 3,554 ​ — ​ 3,554 Stock issued on vesting of RSUs 473 ​ 5 ​ (5) ​ — ​ — Taxes paid on vesting of RSUs (198) ​ (2) ​ (2,099) ​ — ​ (2,101) Stock issued in ATM offering 794 ​ 8 ​ 7,310 ​ — ​ 7,318 Net income — ​ — ​ — ​ 44,793 ​ 44,793 BALANCE, DECEMBER 31, 2023 34,052 ​ $ 341 ​ $ 127,548 ​ $ 140,699 ​ $ 268,588 Stock-based compensation — ​ — ​ 4,454 ​ — ​ 4,454 Stock issued on vesting of RSUs 380 ​ 4 ​ (4) ​ — ​ — Taxes paid on vesting of RSUs (159) ​ (2) ​ (275) ​ — ​ (277) Stock issued on redemption of convertible notes ​ 3,672 ​ ​ 36 ​ ​ 22,957 ​ ​ — ​ ​ 22,993 Stock issued in ATM offering 4,655 ​ 47 ​ 34,468 ​ — ​ 34,515 Stock issued for director fees ​ 21 ​ ​ — ​ ​ 150 ​ ​ — ​ ​ 150 Net loss — ​ — ​ — ​ (226,138) ​ (226,138) BALANCE, DECEMBER 31, 2024 42,621 ​ $ 426 ​ $ 189,298 ​ $ (85,439) ​ $ 104,285 ​ The accompanying notes are an integral part of these Consolidated Financial Statements ​ 69 Table of Contents NOTES TO CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 2024 AND 2023 (1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Basis of Presentation and Consolidation The consolidated financial statements include the accounts of Hallador Energy Company (hereinafter, “we”, “our” or “us”) and our wholly owned subsidiaries Hallador Power Company, LLC (“Hallador Power”), Sunrise Coal, LLC (“Sunrise”), and Hourglass Sands, LLC (“Hourglass”), as well as Hallador Power and Sunrise’s wholly owned subsidiaries.
All significant intercompany accounts and transactions have been eliminated. Sunrise is engaged in the production of steam coal from mines located in western Indiana. Hallador Power is engaged in the production of coal-fired electric power generation located in Sullivan County, Indiana.
All significant intercompany accounts and transactions have been eliminated. Hallador Power is engaged in the production of coal-fired electric power generation located in Sullivan County, Indiana. Sunrise is engaged in the production of steam coal from mines located in western Indiana.
Disaggregation of Revenue Revenue is disaggregated by primary geographic markets for our coal operations and by revenue source for our electric operations, as we believe this best depicts how the nature, amount, timing, and uncertainty of its revenue and cash flows are affected by economic factors.
Disaggregation of Revenue Revenue is disaggregated by revenue source for our electric operations and primary geographic markets for our coal operations, as we believe this best depicts how the nature, amount, timing, and uncertainty of its revenue and cash flows are affected by economic factors.
During 2023 we recognized a loss on extinguishment of debt of $1.5 million for the write-off of unamortized loan fees related to the August 2, 2023 amendment to our credit agreement, which was accounted for as a debt extinguishment. The remaining costs were deferred and are being amortized over the term of the loan.
During 2023 we recognized a loss on extinguishment of debt of $1.5 million for the write-off of unamortized loan fees related to the August 2 nd Amendment to our credit agreement, which was accounted for as a debt extinguishment. The remaining costs were deferred and are being amortized over the term of the loan.
( 14 ) EQUITY METHOD INVESTMENTS Sunrise Energy, LLC We own a 50% interest in Sunrise Energy, which owns gas reserves and gathering equipment with plans to develop and operate such reserves. Sunrise Energy also plans to develop and explore for oil, natural gas, and coal-bed methane gas reserves on or near our underground coal reserves.
(14) EQUITY METHOD INVESTMENTS We own a 50% interest in Sunrise Energy, which owns gas reserves and gathering equipment with plans to develop and operate such reserves. Sunrise Energy also plans to develop and explore for oil, natural gas, and coal-bed methane gas reserves on or near our underground coal reserves.
Under the provision of the March 13, 2023 amendment, bank debt was comprised of term debt ($35.0 million as of March 13, 2023) and an $85 million revolver ($40.2 million borrowed as of March 13, 2023). The term debt required payment of $10 million in June 2023 each quarter thereafter in 2023 and $5.0 million by March 31, 2024.
Under the provision of the March 13 th Amendment, bank debt was comprised of term debt ($35.0 million as of March 13, 2023) and an $85.0 million revolver ($40.2 million borrowed as of March 13, 2023). The term debt required payment of $10.0 million in June 2023 each quarter thereafter in 2023 and $5.0 million by March 31, 2024.
The tax rate for the years ended December 31, 2023 and 2022 are not predictive of future tax rates. Our ETR differs from the statutory rate due to statutory depletion in excess of tax basis, return to provision adjustments, stock-based compensation and changes in the valuation allowance.
The tax rate for the years ended December 31, 2024 and 2023 are not predictive of future tax rates. Our ETR differs from the statutory rate due to statutory depletion in excess of tax basis, return to provision adjustments, stock-based compensation and changes in the valuation allowance.
Riley Securities, Inc. (the “Agent”), pursuant to which we may issue and sell, from time to time, shares (the “Shares”) of our common stock, par value $0.01 per share (the “Common Stock”), with aggregate gross proceeds of up to $50 million through an “at-the-market” equity offering program under which the Agent will act as sales agent (the “ATM Program”).
(the “Agent”), pursuant to which we may issue and sell, from time to time, shares (the “Shares”) of our common stock, par value $0.01 per share (the “Common Stock”), with aggregate gross proceeds of up to $50.0 million through an “at-the-market” equity offering program under which the Agent will act as sales agent (the “ATM Program”).
The contract capacity that Hallador Power shall provide to Hoosier is 917 megawatts (“MW”) for contract year one, and 300 MW for contract years two to four. Hoosier shall pay Hallador Power the capacity price of $5.80 per kilowatt month for the contract capacity.
The contract capacity that Hallador Power shall provide to Hoosier is 917 megawatts (“MW”) for contract year one, and on average 300 MW for contract years two to four. Hoosier shall pay Hallador Power the capacity price of $5.80 per kilowatt month for the contract capacity.
These levels are: Level 1: Unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities. We consider active markets as those in which transactions for the assets or liabilities occur in sufficient frequency and volume to provide pricing information on an ongoing basis. We have no Level 1 instruments.
These levels are: Level 1: Unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities. We consider active markets as those in which transactions for the assets or liabilities occur in sufficient frequency and volume to provide pricing information on an ongoing basis.
There were no long-lived asset impairments during the years ended December 31, 2023 or December 31, 2022. Mine Development Costs of developing new mines, including asset retirement obligation assets, or significantly expanding the capacity of existing mines, are capitalized and amortized using the units-of-production method over estimated recoverable reserves.
There were no long-lived asset impairments during the year ended December 31, 2023. Mine Development Costs of developing new mines, including asset retirement obligation assets, or significantly expanding the capacity of existing mines, are capitalized and amortized using the units-of-production method over estimated recoverable reserves.
The primary purpose of the amendment was to convert $35 million of the outstanding balance on the revolver into a new term loan with a maturity date of March 31, 2024, and extend the maturity date of the revolver to May 31, 2024.
The primary purpose of the March 13 th Amendment was to convert $35.0 million of the outstanding balance on the revolver into a new term loan with a maturity date of March 31, 2024, and extend the maturity date of the revolver to May 31, 2024.
Coal sales agreements will typically contain coal quality specifications. With coal quality specifications in place, the raw coal sold by us to the customer at the delivery point must be substantially free of magnetic material and other foreign material impurities and crushed to a maximum size as set forth in the respective coal sales agreement.
With coal quality specifications in place, the raw coal sold by us to the customer at the delivery point must be substantially free of magnetic material and other foreign material impurities and crushed to a maximum size as set forth in the respective coal sales agreement.
Level 3: Measured based on prices or valuation models that require inputs that are both significant to the fair value measurement and less observable from objective sources (i.e., supported by little or no market activity). ARO liabilities use Level 3 non-recurring fair value measures as further discussed in Note 1.
Level 3: Measured based on prices or valuation models that require inputs that are both significant to the fair value measurement and less observable from objective sources (i.e., supported by little or no market activity). ARO liabilities use Level 3 non-recurring fair value measures as further discussed in “ Note 1 – Summary of Significant Accounting Policies ”.
Additionally, this amendment provided for the transition in interest rates from the London Interbank Offered Rate (“LIBOR”) to the Secured Overnight Financing Rate (“SOFR”) based pricing with ranges from SOFR plus 4.00% to SOFR plus 5.00%, depending on our leverage ratio.
Additionally, the March 13 th Amendment provided for the transition in interest rates from the London Interbank Offered Rate (“LIBOR”) to the Secured Overnight Financing Rate (“SOFR”) based pricing with ranges from SOFR plus 4.00% to SOFR plus 5.00%, depending on our leverage ratio.
On August 2, 2023, we executed an additional amendment to our credit agreement with PNC, which was accounted for as a debt extinguishment.
On August 2, 2023, we executed an additional amendment (“August 2 nd Amendment”) to our credit agreement with PNC, which was accounted for as a debt extinguishment.
Under the August 2, 2023 amendment, bank debt was comprised of term debt ($58.5 million borrowed as of December 31, 2023) and a $75 million revolver ($33.0 million borrowed as of December 31, 2023. The term debt requires payments of $6.5 million beginning April 2024 through March 2026.
Under the August 2 nd Amendment, bank debt was comprised of term debt ($58.5 million borrowed as of December 31, 2023) and a $75.0 76 Table of Contents million revolver ($33.0 million borrowed as of December 31, 2023). The term debt requires quarterly payments of $6.5 million beginning April 2024 through March 2026.
For the period August 18, 2022 through August 17, 2024, the holder has the option to convert the Notes into shares of our common stock at a conversion price of $6.254.
For the period August 18, 2022, through August 17, 2024, the holder had the option to convert the Notes into shares of the Company’s common stock at a conversion price of $6.254.
Contract Asset - Coal Purchase Agreement Contract Asset - Coal Purchase Agreement (as defined in Note 15 ) is the result of a coal purchase agreement with Hoosier whereby we purchased coal from Hoosier through May 31, 2023, at fixed prices which were below market prices at the date of entry into the agreement.
Contract Asset - Coal Purchase Agreement Contract Asset - Coal Purchase Agreement, is the result of a coal purchase agreement with Hoosier whereby we purchased coal from Hoosier through May 31, 2023, at fixed prices which were below market prices at the date of entry into the agreement.
On August 8, 2022, we issued an additional $4 million of senior unsecured convertible notes to related parties affiliated with independent members of our board of directors. The Notes carry an interest rate of 8% per annum with a maturity date of December 29, 2028.
On August 8, 2022, we issued an additional $4.0 million of senior unsecured convertible notes (the “August 8 th Notes”) to related parties affiliated with independent members of our board of directors. The August 8 th Notes carried an interest rate of 8% per annum with a maturity date of December 29, 2028.
Contract Balances Under ASC 606, the timing of when a performance obligation is satisfied can affect the presentation of accounts receivable, contract assets, and contract liabilities. The main distinction between accounts receivable and contract assets is whether consideration is conditional on something other than the passage of time. A receivable is an entity’s right to consideration that is unconditional.
Contract Balances Under ASC 606, the timing of when a performance obligation is satisfied can affect the presentation of accounts receivable, contract assets, and contract liabilities. The main distinction between accounts receivable and contract assets is whether consideration is conditional on something other than the passage of time.
During the years ended December 31, 2023 and 2022, amortization of the power purchase agreement contract liability totaled $70.5 million and $23.3 million, respectively. The Power Purchase Agreement term is from October 21, 2022 to December 31, 2025. The Capacity Payment Reductions occurred on May 31, 2023 and November 30, 2023 in the amount of $7.5 million each.
During the years ended December 31, 2024 and 2023, amortization of the power purchase agreement contract liability totaled $47.1 million and $70.5 million, respectively. The Power Purchase Agreement term is from October 21, 2022 to May 31, 2028. The Capacity Payment Reductions occurred on May 31, 2023 and November 30, 2023 in the amount of $7.5 million each.
Our mine employees are also covered by workers’ compensation and such costs were approximately $4.9 million for 2023 and 2022, and are recorded in operating expenses in the consolidated statements of operations. Workers’ compensation is a no -fault system by which individuals who sustain work-related injuries or occupational diseases are compensated.
Our mine employees are also covered by workers’ compensation and such costs were approximately $4.0 million and $4.9 million for 2024 and 2023, respectively, and are recorded in “ labor ” in the consolidated statements of operations. Workers’ compensation is a no-fault system by which individuals who sustain work-related injuries or occupational diseases are compensated.
On August 12, 2022, we issued an additional $10 million senior unsecured convertible note to an unrelated party. The Note carries an interest rate of 8% per annum with a maturity date of December 31, 2026.
On August 12, 2022, we issued an additional $10.0 million senior unsecured convertible note (the “August 12 th Note”) to an unrelated party. The August 12 th Note carried an interest rate of 8% per annum with a maturity date of December 31, 2026.
Under the Sales Agreement, each of us and the Agent have the right, by giving five (5) days’ notice, to terminate the Sales Agreement in its sole discretion. The Agent may also terminate the Agreement, by notice to us, upon the occurrence of certain events described in the Sales Agreement.
Under the Sales Agreement, we or the Agent have the right, by giving five (5) days’ notice, to terminate the Sales Agreement in our and the Agents sole discretion. The Agent may also terminate the Agreement, by notice to us, upon the occurrence of certain events described in the Sales Agreement.
The funds received from the issuance of the various Notes described above in this Note 16 were used to provide additional working capital to the Company.
The funds received from the issuance of the various notes described above were used to provide additional working capital to the Company.
We have 2 operating leases for office space and processing facilities with remaining lease terms ranging from less than one year to approximately five years. As most of the leases do not provide an implicit rate, we calculate the ROU assets and lease liabilities using our secured incremental borrowing rate at the lease commencement date.
We have operating leases for office space with remaining lease terms ranging from one month to approximately eight years. As most of the leases do not provide an implicit rate, we calculate the ROU assets and lease liabilities using our secured incremental borrowing rate at the lease commencement date.
For the period August 18, 2022, through the maturity date, the holder has the option to convert the Note into shares of our common stock at a conversion price of $6.15.
For the period August 18, 2022, through the maturity date, the holder had the option to convert the August 12 th Note into shares of the Company’s common stock at a conversion price of $6.15.
Under our RSU plan, participants are allowed to relinquish shares to pay for their required statutory income taxes. The outstanding RSUs have a value of $7.2 million based on the March 8, 2024 closing stock price of $8.39. For the years ended December 31, 2023 and 2022, stock-based compensation was $3.6 million and $1.3 million, respectively.
Under our RSU plan, participants are allowed to relinquish shares to pay for their required statutory income taxes. The outstanding RSUs have a value of $8.9 million based on the March 10, 2025 closing stock price of $8.60. For the years ended December 31, 2024 and 2023, stock-based compensation was $4.5 million and $3.6 million, respectively.
We have remaining coal sales performance obligations relating to fixed priced contracts to third -party customers of approximately $324 million, which represent the average fixed prices on our committed contracts as of December 31, 2023. We expect to recognize approximately 55% of this coal sales revenue in 2024, with the remainder recognized through 2027.
We have remaining coal sales performance obligations relating to fixed priced contracts to third-party customers of approximately $460.4 million, which represent the average fixed prices on our committed contracts as of December 31, 2024. We expect to recognize approximately 32.7% of this coal sales revenue in 2025 , with the remainder recognized through 2028 .
The agreement was amended August 31, 2023 to extend through 2028 with additional obligations to Hoosier of $186.6 million as of December 31, 2023. In addition to delivered energy, under the APA, Hallador Power shall provide a stand-ready obligation to provide electricity, also known as contract capacity.
The agreement was amended August 31, 2023 to extend through 2028 . The amendment included additional obligations to Hoosier of $186.6 million, or $56.00 per MWh, as of December 31, 2024. ​ In addition to delivered energy, under the Hoosier APA, Hallador Power shall provide a stand-ready obligation to provide electricity to MISO, also known as contract capacity.
The federal NOLs generated in pre- 2018 years and remaining of $13.4 million can offset 100% of future years' taxable income. The federal NOLs generated in post 2017 years of $60.7 million can offset 80% of future years' taxable income. The pre- 2018 federal NOLs will expire in varying amounts from 2035 to 2037 if they are not utilized.
The remaining federal NOLs generated in pre-2018 years of $19.5 million can offset 100% of future years’ taxable income. The federal NOLs generated in post 2017 years of $104.9 million can offset 80% of future years’ taxable income. The pre-2018 federal NOLs will expire in varying amounts from 2035 to 2037 if they are not utilized.
We also concluded that the stand-ready obligation to be available to provide electricity is capable of being distinct as each unit of capacity provides an economic benefit to the holder and could be sold by the customer. 58 Table of Contents In accordance with the APA, as defined in Note 15.
We also concluded that the stand-ready obligation to be available to provide electricity is capable of being distinct as each unit of capacity provides an economic benefit to the holder and could be sold by the customer.
( 12 ) NET INCOME PER SHARE The following table (in thousands, except per share amounts) sets forth the computation of basic earnings per share for the periods presented: Year Ended December 31, 2023 2022 Basic earnings per common share: Net income - basic $ 44,793 $ 18,105 Weighted average shares outstanding - basic 33,133 32,043 Basic earnings per common share $ 1.35 $ 0.57 The following table (in thousands, except per share amounts) sets forth the computation of diluted net income per share: Year Ended December 31, 2023 2022 Diluted earnings per common share: Net income - basic $ 44,793 $ 18,105 Add: Convertible Notes interest expense, net of tax 1,201 527 Net income - diluted $ 45,994 $ 18,632 Weighted average shares outstanding - basic 33,133 32,043 Add: Dilutive effects of if converted Convertible Notes 3,164 1,398 Add: Dilutive effects of Restricted Stock Units 530 208 Weighted average shares outstanding - diluted 36,827 33,649 Diluted net earnings per share $ 1.25 $ 0.55 62 Table of Contents ( 13 ) FAIR VALUE MEASUREMENTS We account for certain assets and liabilities at fair value.
(12) NET INCOME (LOSS) PER SHARE The following table (in thousands, except per share amounts) sets forth the computation of basic earnings per share for the periods presented: ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended December 31, ​ ​ 2024 ​ 2023 Basic earnings per common share: ​ ​ Net income (loss) - basic ​ $ (226,138) ​ $ 44,793 Weighted average shares outstanding - basic ​ 39,504 ​ 33,133 Basic earnings (loss) per common share ​ $ (5.72) ​ $ 1.35 ​ The following table (in thousands, except per share amounts) sets forth the computation of diluted net income (loss) per share: ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended December 31, ​ ​ 2024 ​ 2023 Diluted earnings per common share: ​ ​ Net income (loss) - basic ​ $ (226,138) ​ $ 44,793 Add: Convertible Notes interest expense, net of tax ​ — ​ 1,201 Net income (loss) - diluted ​ $ (226,138) ​ $ 45,994 ​ ​ ​ ​ ​ ​ ​ Weighted average shares outstanding - basic ​ 39,504 ​ 33,133 Add: Dilutive effects of if converted Convertible Notes ​ — ​ 3,164 Add: Dilutive effects of Restricted Stock Units ​ — ​ 530 Weighted average shares outstanding - diluted ​ 39,504 ​ 36,827 ​ ​ ​ ​ ​ ​ ​ Diluted net income (loss) per share ​ $ (5.72) ​ $ 1.25 ​ ​ ​ ​ (13) FAIR VALUE MEASUREMENTS We account for certain assets and liabilities at fair value.
Due to historical cumulative earnings over the prior three years as well as projected earnings into the future, we believe that it is more likely than not that the benefit from certain federal and state deferred tax assets will be realized. As such, we released the valuation allowance as of December 31, 2023.
Due to historical cumulative losses over the prior three years as well as projected losses over the next year, we believe that it is not more likely than not that the benefit from certain federal and state deferred tax assets will be realized. As such, we have recorded a full valuation allowance as of December 31, 2024.
Indiana NOLs have a 20 -year carryforward period and will expire in the years 2034 to 2041 if they are not utilized.
Indiana NOLs, which total $168.0 million, have a 20-year carryforward period and will expire in the years 2034 to 2044 if they are not utilized.
All committed tons to Merom are priced. For 2023 , we derived 93% of our third -party coal sales from five customers, each representing at least 10% of coal sales. At December 31, 2023, 85% of our coal operations accounts receivable was from four customers, each representing more than 10%.
At December 31, 2024, 98% of our coal operations accounts receivable was from four customers, each representing more than 10%. For 2023, we derived 93% of our third-party coal sales from five customers, each representing at least 10% of coal sales.
The primary purpose of the amendment was to convert $65 million of the outstanding funded debt into a new term loan with a maturity of March 31, 2026, and enter into a revolver of $75 million with a maturity of July 31, 2026. The amendment increased the maximum annual capital expenditure limit to $100 million.
The primary purpose of the August 2 nd Amendment was to convert $65.0 million of the outstanding funded debt into a new term loan with a maturity of March 31, 2026, and enter into a revolver of $75.0 million with a maturity of July 31, 2026.
We apply the treasury stock method to account for the dilutive impact of its restricted stock units and the if converted method for its convertible notes. Anti-dilutive securities are excluded from diluted EPS.
Potential common shares include shares of restricted stock units as if the units issued by us were vested and convertible debt. We apply the treasury stock method to account for the dilutive impact of its restricted stock units and the if converted method for its convertible notes. Anti-dilutive securities are excluded from diluted EPS.
As of December 31, 2023 and 2022, we were not a party to any interest rate swaps. Commitments and Contingencies From time to time, we are involved in legal proceedings and/or may be subject to industry rulings that could bring rise to claims in the ordinary course of business.
Commitments and Contingencies From time to time, we are involved in legal proceedings and/or may be subject to industry rulings that could bring rise to claims in the ordinary course of business.
Level 2: Quoted prices in markets that are not active, or inputs that are observable, either directly or indirectly, for substantially the full term of the asset or liability. We have no Level 2 instruments.
We have no Level 1 instruments. 87 Table of Contents Level 2: Quoted prices in markets that are not active, or inputs that are observable, either directly or indirectly, for substantially the full term of the asset or liability. See asset impairment discussion below in Nonrecurring Fair Value Measurements sections below.
Future Maturities (in thousands): 2024 26,000 2025 26,000 2026 39,500 Total $ 91,500 56 Table of Contents ( 5 ) ACCOUNTS PAYABLE AND ACCRUED LIABILITIES (IN THOUSANDS) December 31, 2023 2022 Accounts payable $ 43,636 $ 62,306 Accrued property taxes 2,987 1,917 Accrued payroll 6,575 5,933 Workers' compensation reserve 3,629 3,440 Group health insurance 2,300 2,250 Asset retirement obligation - current portion 2,150 3,580 Other 1,631 3,546 Total accounts payable and accrued liabilities $ 62,908 $ 82,972 ( 6 ) REVENUE Revenue from Contracts with Customers We account for a contract with a customer when the parties have approved the contract and are committed to performing their respective obligations, the rights of each party are identified, payment terms are identified, the contract has commercial substance, and it is probable substantially all of the consideration will be collected.
As of December 31, 2024, we were paying SOFR plus 5.00% on the outstanding bank debt which equates to an all-in rate of 9.48%. ​ ​ ​ ​ ​ Future Maturities (in thousands): ​ 2025 $ 6,000 2026 ​ 38,000 2027 ​ — Total ​ $ 44,000 ​ ​ ​ 78 Table of Contents (5) ACCOUNTS PAYABLE AND ACCRUED LIABILITIES (IN THOUSANDS) ​ ​ ​ ​ ​ ​ ​ ​ ​ December 31, ​ 2024 2023 Accounts payable $ 24,291 $ 43,636 Accrued property taxes ​ 4,185 ​ 2,987 Accrued payroll ​ 3,258 ​ 6,575 Workers' compensation reserve ​ 4,321 ​ 3,629 Group health insurance ​ 1,700 ​ 2,300 Asset retirement obligation - current portion ​ 1,952 ​ 2,150 Other ​ 4,591 ​ 1,631 Total accounts payable and accrued liabilities ​ $ 44,298 ​ $ 62,908 ​ ​ ​ (6) REVENUE Revenue from Contracts with Customers We account for a contract with a customer when the parties have approved the contract and are committed to performing their respective obligations, the rights of each party are identified, payment terms are identified, the contract has commercial substance, and it is probable substantially all of the consideration will be collected.
The undiscounted asset retirement obligation was $26.6 million and $27.0 million at December 31, 2023 and 2022, respectively. 52 Table of Contents The table below (in thousands) reflects the changes to ARO for the periods presented: Year Ended December 31, 2023 2022 Balance, beginning of year $ 20,834 $ 14,125 Merom acquisition — 7,230 Freelandville addition — 1,631 Accretion 1,804 1,010 Change in estimate (2,566 ) — Payments (3,384 ) (3,162 ) Balance, end of year 16,688 20,834 Less current portion (2,150 ) (3,580 ) Long-term balance, end of year $ 14,538 $ 17,254 Contract Liabilities - Power Purchase Agreement and Capacity Payment Reduction Contract Liabilities - Power Purchase Agreement and Capacity Payment Reduction (both as defined in Note 15 ) are the result of a power purchase agreement with Hoosier whereby Hallador Power is selling power to Hoosier through 2025 at fixed prices which were below market prices at the date the parties entered into the agreement.
The undiscounted asset retirement obligation was $26.1 million and $26.6 million at December 31, 2024 and 2023, respectively. 72 Table of Contents The table below (in thousands) reflects the changes to ARO for the periods presented: ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended December 31, ​ 2024 2023 Balance, beginning of year ​ $ 16,688 ​ $ 20,834 Accretion ​ 1,628 ​ 1,804 Change in estimate ​ — ​ (2,566) Payments ​ (1,407) ​ (3,384) Balance, end of year ​ 16,909 ​ 16,688 Less current portion ​ (1,952) ​ (2,150) Long-term balance, end of year ​ $ 14,957 ​ $ 14,538 ​ Contract Liabilities Contract Liabilities include the PPA with Hoosier whereby Hallador Power is selling power to Hoosier through 2025 at fixed prices which were below market prices at the date the parties entered into the agreement.
Contract liabilities also arise when consideration is received in advance of performance. ( 7 ) INCOME TAXES Our income tax is different than the expected amount computed using the applicable federal statutory income tax rate of 21%.
(7) INCOME TAXES Our income tax is different than the expected amount computed using the applicable federal statutory income tax rate of 21%.
Merom Acquisition, with Hoosier, Hallador Power shall sell, and Hoosier shall buy, at least 70% of the delivered energy quantities through 2025 at the contract price, which is $34.00 per MWh. We have remaining delivered energy obligations to Hoosier totaling $115.6 million through 2025 as of December 31, 2023.
In accordance with our Asset Purchase Agreement (“Hoosier APA”) with Hoosier in which Hallador Power shall sell, and Hoosier shall buy, delivered energy quantities through 2025 at the contract price, which is $34.00 per MWh. We have remaining delivered energy obligations to Hoosier totaling $59.0 million through 2025 as of December 31, 2024.
We entered into three finance leases during 2023, which are accounted for as failed sale-leaseback transactions. Finance lease assets are included in finance lease right-of-use assets on the consolidated balance sheets and the associated finance lease liabilities are reflected within current portion of lease financing and long-term lease financing on the consolidated balance sheets as applicable.
Finance lease assets are included in finance lease right-of-use assets on the consolidated balance sheets and the associated finance lease liabilities are reflected within current portion of lease financing and long-term lease financing on the consolidated balance sheets as applicable.
Deferred tax assets and liabilities are recognized for the future expected tax consequences of temporary differences between income tax and financial reporting and principally relate to differences in the tax basis of assets and liabilities and their reported amounts, using enacted tax rates in effect for the year in which differences are expected to reverse. 53 Table of Contents Net Income per Share Basic earnings per share (“EPS”) are computed by dividing net earnings by the weighted average number of common shares outstanding for the period.
Deferred tax assets and liabilities are recognized for the future expected tax consequences of temporary differences between income tax and financial reporting and principally relate to differences in the tax basis of assets and liabilities and their reported amounts, using enacted tax rates in effect for the year in which differences are expected to reverse.
In December 2023, the FASB issued ASU 2023 - 09, Income Taxes (Topic 740 ): Improvements to Income Tax Disclosures ("ASU 2023 - 09" ).
Recent Accounting Pronouncements Not Yet Adopted In December 2023, the Financial Accounting Standards Board ("FASB") issued ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures ("ASU 2023-09").
( 9 ) EMPLOYEE BENEFITS Our employee benefit expenses for the years ended December 31 are below (in thousands): 2023 2022 Health benefits, including premiums $ 18,483 $ 14,607 401(k) matching 2,910 2,549 Deferred bonus plan 687 809 Total $ 22,080 $ 17,965 Of the amounts in the above table, $21.5 million and $17.4 million are recorded in operating expenses in the consolidated statements of operations for the years ended December 31, 2023 and 2022, respectively, with the remainder in general and administrative.
Stock Options We have no stock options outstanding. 84 Table of Contents (9) EMPLOYEE BENEFITS Our employee benefit expenses for the years ended December 31st are below (in thousands): ​ ​ ​ ​ ​ ​ ​ ​ ​ 2024 2023 Health benefits, including premiums ​ $ 13,796 ​ $ 18,483 401(k) matching ​ 1,851 ​ 2,910 Deferred bonus plan ​ 553 ​ 687 Total ​ $ 16,200 ​ $ 22,080 ​ Of the amounts in the above table, $15.2 million and $21.5 million are recorded in “ labor ” in the consolidated statements of operations for the years ended December 31, 2024 and 2023, respectively, with the remainder in general and administrative.
Information related to leases was as follows as of December 31 ( in thousands): December 31, 2023 2022 Operating lease information: Operating cash outflows from operating leases $ 208 $ 218 Weighted average remaining lease term in years 8.50 1.30 Weighted average discount rate 9.5 % 6.0 % Finance lease information: Financing cash outflows from finance leases $ — $ — Proceeds from sale and leaseback arrangement 11,082 — Weighted average remaining lease term in years 3.00 — Weighted average discount rate 8.5 % — % 61 Table of Contents We recognized the following costs related to our leases in our consolidated balance sheets: Classification on Consolidated Balance Sheets December 31, 2023 2022 (in thousands) Operating lease assets Buildings and equipment $ 712 $ 230 Operating lease liabilities: Current operating lease liabilities Accounts payable and accrued liabilities $ 58 $ 173 Non-current operating lease liabilities Other long-term liabilities $ 654 $ 57 Total operating lease liabilities $ 712 $ 230 Finance lease assets Finance lease right-of-use assets $ 12,346 $ — Finance lease liabilities: Current finance lease liabilities Current portion of lease financing $ 3,933 $ — Non-current finance lease liabilities Long-term lease financing $ 8,157 $ — Total finance lease liabilities $ 12,090 $ — Future minimum lease payments under non-cancellable leases as of December 31, 2023, were as follows: Year Operating Leases Finance Leases (in thousands) 2024 $ 58 $ 4,947 2025 118 4,645 2026 122 4,333 2027 125 — 2028 129 — Thereafter 483 — Total minimum lease payments $ 1,035 $ 13,925 Less imputed interest and deferred finance fees (323 ) (1,835 ) Total lease liability $ 712 $ 12,090 ( 11 ) SELF INSURANCE We self-insure non-leased underground mining equipment.
These deferred financing fees will be amortized on a straight-line basis over the term of the finance leases. 85 Table of Contents Information related to leases was as follows as of December 31st (in thousands): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ December 31, ​ ​ 2024 ​ 2023 Operating lease information: ​ ​ ​ Operating cash outflows from operating leases ​ $ 169 ​ $ 208 ​ Weighted average remaining lease term in years ​ 8.0 ​ 8.5 ​ Weighted average discount rate ​ 9.5 % 9.5 % Finance lease information: ​ ​ ​ Financing cash outflows from finance leases ​ $ 5,633 ​ $ — ​ Proceeds from sale and leaseback arrangement ​ 5,134 ​ 11,082 ​ Weighted average remaining lease term in years ​ 2.18 ​ 3.00 ​ Weighted average discount rate ​ 9.0 % 8.5 % ​ We recognized the following costs related to our leases in our consolidated balance sheets: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ For the Year Ended December 31, ​ For the Year Ended December 31, ​ ​ ​ 2024 2023 ​ ​ ​ ​ ​ (In thousands) ​ Operating lease assets ​ Buildings and equipment $ 664 ​ $ 712 Operating lease liabilities: ​ ​ Current operating lease liabilities ​ Accounts payable and accrued liabilities $ 99 ​ $ 58 Non-current operating lease liabilities ​ Other long-term liabilities ​ 565 ​ ​ 654 Total operating lease liability ​ ​ ​ $ 664 ​ $ 712 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Finance lease assets ​ Finance lease right-of-use assets ​ $ 13,034 ​ $ 12,346 ​ Finance lease liabilities: ​ ​ ​ ​ Current finance lease liabilities ​ Current portion of lease financing ​ $ 6,912 ​ $ 3,933 ​ Non-current finance lease liabilities ​ Long-term lease financing ​ ​ 8,749 ​ ​ 8,157 ​ Total finance lease liabilities ​ ​ ​ $ 15,661 ​ $ 12,090 ​ ​ Future minimum lease payments under non-cancellable leases as of December 31, 2024, were as follows: ​ ​ ​ ​ ​ ​ ​ ​ ​ Operating Leases Finance Leases ​ ​ (In thousands) 2025 ​ $ 108 ​ $ 8,147 2026 ​ 121 ​ 7,972 2027 ​ 125 ​ 1,391 2028 ​ 129 ​ — 2029 ​ 133 ​ — Thereafter ​ 361 ​ — Total minimum lease payments ​ $ 977 ​ $ 17,510 Less imputed interest and deferred finance fees ​ (313) ​ (1,849) Total lease liability ​ $ 664 ​ $ 15,661 ​ ​ ​ ​ 86 Table of Contents (11) SELF INSURANCE We self-insure non-leased underground mining equipment.
Prepaid Expenses Prepaid expenses include prepaid insurance and other prepaid balances with vendors for various services paid for in advance of use. 51 Table of Contents Advanced Royalties Coal leases that require minimum annual or advance payments and are recoverable from future production are generally deferred and charged to expense as the coal is subsequently produced.
Advanced Royalties Coal leases that require minimum annual or advance payments and are recoverable from future production are generally deferred and charged to expense as the coal is subsequently produced. Advance royalties are included in other assets.
We have remaining capacity obligations to Hoosier through 2025 totaling $41.6 million as of December 31, 2023. The agreement was amended August 31, 2023 to extend through 2028 with additional capacity obligation to Hoosier of $60.9 million as of December 31, 2023.
We have remaining capacity obligations to Hoosier through 2025 totaling $18.6 million as of December 31, 2024. The agreement was amended August 31, 2023, to extend through 2028 , with additional capacity obligation to Hoosier of $59.5 million as of December 31, 2024, at a price of $7.02 per kilowatt month for the contract capacity.
Actual amounts could differ from those estimates. The most significant estimates included in the preparation of the financial statements relate to: (i) deferred income tax accounts, (ii) coal reserves, (iii) depreciation, depletion, and amortization, (iv) estimates related to the Merom Acquisition, (v) estimates used in our impairment analysis, and (vi) estimates used in the calculation of ARO.
The most significant estimates included in the preparation of the financial statements relate to: (i) deferred income tax accounts, (ii) coal reserves, (iii) SMCRA and other state statutes, (iv) depreciation, depletion, and amortization, (v) the lower of cost or net realizable value for our inventory (vi) estimates used in our impairment analysis, and (vii) estimates used in the calculation of ARO.
The remainder of our operations, which are not significant enough on a stand-alone basis to warrant treatment as an operating segment, are presented as “Corporate and Other” and primarily are comprised of unallocated corporate costs and activities, including a 50% interest in Sunrise Energy, LLC (“Sunrise Energy”), a private gas exploration company with operations in Indiana, which we account for using the equity method, and our wholly-owned subsidiary Summit Terminal LLC, a logistics transport facility located on the Ohio River.
Corporate and Other and Eliminations primarily consist of unallocated corporate costs and activities, including a 50% interest in Sunrise Energy, LLC (“Sunrise Energy”), a private gas exploration company with operations in Indiana and Oaktown Gas, LLC, which we account for using the equity method. ​ During the fourth quarter of 2024, we sold our held-for-sale wholly-owned subsidiary Summit Terminal LLC, a logistics transport facility located on the Ohio River.
Inventory and Parts and Supplies Inventory and parts and supplies are valued at the lower of cost or net realizable value determined using the first -in first -out method.
No charges for credit losses were recognized during the years ended December 31, 2024 or 2023. Inventory and Parts and Supplies Inventory and parts and supplies are valued at the lower of cost or net realizable value determined using the first-in first-out method.
We have concluded that the likelihood is remote that the ultimate resolution of any pending litigation or pending claims will be material or have a material adverse effect on our business, financial position, results of operations or liquidity. Income Taxes Income taxes are provided based on the liability method of accounting.
We have concluded that the likelihood is remote that the ultimate resolution of any pending litigation or pending claims will be material or have a material adverse effect on our business, financial position, results of operations or liquidity. See “Note 22 – Contingencies” related to our decision to settle certain litigation in February of 2025.
As of December 31, 2023 , our Debt Service Coverage Ratio of 3.30 was in compliance with the requirements of the credit agreement. Interest Rate The interest rate on the facility ranges from SOFR plus 4.00% to SOFR plus 5.00%, depending on our Leverage Ratio.
As of December 31, 2024, our liquidity of $37.8 million and quarterly EBITDA of $6.2 million were in compliance with the requirements of the Credit Agreement. Interest Rate The interest rate on the facility ranges from SOFR plus 4.00% to SOFR plus 5.00%, depending on our Leverage Ratio.
We recognize revenue at a point in time as the customer does not have control over the asset at any point during the fulfillment of the contract. For substantially all of our customers, this is supported by the fact that title and risk of loss transfer to the customer upon loading of the truck or railcar at the mine.
For substantially all of our customers, this is supported by the fact that title and risk of loss transfer to the customer upon loading of the truck or railcar at the mine.
Other equipment is recorded at cost. Expenditures that extend the useful lives or increase the productivity of the assets are capitalized. The cost of maintenance and repairs that do not extend the useful lives or increase the productivity of the assets are expensed as incurred.
Interest costs applicable to major asset additions are capitalized during the construction period. Expenditures that extend the useful lives or increase the productivity of the assets are capitalized. The cost of maintenance and repairs that do not extend the useful lives or increase the productivity of the assets are expensed as incurred.
Price adjustments are made and billed in the month the coal sale was recognized based on quality standards that are specified in the coal sales agreement, such as British thermal unit (“Btu”) factor, moisture, ash, and sulfur content, and can result in either increases or decreases in the value of the coal shipped. 57 Table of Contents Electric operations We concluded that for a Power Purchase Agreement (“PPA”) that is not determined to be a lease or derivative, the definition of a contract and the criteria in ASC 606, Revenue from Contracts with Customers (“ASC 606” ), is met at the time a PPA is executed by the parties, as this is the point at which enforceable rights and obligations are established.
Electric operations We concluded that for a Power Purchase Agreement (“PPA”) that is not determined to be a lease or derivative, the definition of a contract and the criteria in ASC 606, Revenue from Contracts with Customers (“ASC 606”), is met at the time a PPA is executed by the parties, as this is the point at which enforceable rights and obligations are established.
ASU 2023 - 07 primarily requires enhanced disclosures about significant segment expenses regularly provided to the chief operating decision maker ("CODM"), the amount and composition of other segment items, and the title and position of the CODM.
ASU 2023-07 primarily enhances disclosures about significant segment expenses regularly provided to the chief operating decision maker ("CODM"), the amount and composition of other segment items, and the title and position of the CODM. The Company updated the “ Segment of Business ” footnote below to reflect changes for what the CODM reviews on a regular basis.
Performance Obligations Coal operations A performance obligation is a promise in a contract with a customer to provide distinct goods or services. Performance obligations are the unit of account for purposes of applying the revenue recognition standard and therefore determine when and how revenue is recognized.
Performance obligations are the unit of account for purposes of applying the revenue recognition standard and therefore determine when and how revenue is recognized. In most of our coal contracts, the customer contracts with us to provide coal that meets certain quality criteria.
Beginning August 8, 2025, we may elect to redeem the Notes and the holder shall be obligated to surrender the Notes at 100% of the outstanding principal balance together with any accrued unpaid interest. Upon receipt of the redemption notice from us, the holder may elect to convert the principal balance and accrued interest into the Company's common stock.
Beginning August 8, 2025, we could elect to redeem the August 8 th Notes and the holder was obligated to surrender them at 100% of the outstanding principal balance together with any accrued unpaid interest.
We recognize revenue when we satisfy a performance obligation by transferring control of a good or service to a customer. Coal operations Our coal revenue is derived from sales to customers of coal produced at its facilities.
We recognize revenue when we satisfy a performance obligation by transferring control of a good or service to a customer.
The conversion price and number of shares of our common stock issuable upon conversion of the above notes are subject to adjustment from time to time for any subdivision or consolidation of our shares of common stock and other standard dilutive events. 65 Table of Contents ( 17 ) AT MARKET AGREEMENT On December 18, 2023, we entered into an At Market Issuance Sales Agreement (the “Sales Agreement”) with B.
The conversion price and number of shares of our common stock issuable upon conversion of the above notes are subject to adjustment from time to time for any subdivision or consolidation of our shares of common stock and other standard dilutive events.
Diluted EPS attributable to common shareholders is computed by adjusting net earnings by the weighted average number of common shares and potential common shares outstanding (if dilutive) during each period. Potential common shares include shares of restricted stock units as if the units issued by us were vested and convertible debt.
Net Income per Share Basic earnings per share (“EPS”) are computed by dividing net earnings by the weighted average number of common shares outstanding for the period. Diluted EPS attributable to common shareholders is computed by adjusting net earnings by the weighted average number of common shares and potential common shares outstanding (if dilutive) during each period.
Restricted cash of $4.3 million and $3.4 million as of December 31, 2023 and 2022, respectively, represents cash held and controlled by a third party and is restricted for future workers’ compensation claim payments.
Under this program, we are responsible for the first $1.0 million per claim up to an aggregate of $4.0 million annually. Restricted cash of $3.4 million and $3.8 million as of December 31, 2024 and 2023, respectively, represents cash held and controlled by a third party and is restricted for future workers’ compensation claim payments.
Beginning August 12, 2025, we may elect to redeem the Note and the holder shall be obligated to surrender the Note at 100% of the outstanding principal balance together with any accrued unpaid interest. Upon receipt of the redemption notice from us, the holder may elect to convert the principal balance and accrued interest into the Company's common stock.
Beginning August 12, 2025, we could elect to redeem the August 12 th Note and the holder would have been obligated to surrender at 100% of the outstanding principal balance together with any accrued unpaid interest.
The reasons for and effects of such differences for the years ended December 31 are below (in thousands): 2023 2022 Expected amount $ 10,344 $ 4,171 State income taxes, net of federal benefit 1,246 391 Percentage depletion (3,348 ) (2,081 ) Change in valuation allowance (3,681 ) (970 ) Stock-based compensation (844 ) — Return to provision adjustments 159 153 Other 589 92 Total income tax expense $ 4,465 $ 1,756 The deferred tax assets and liabilities resulting from temporary differences between book and tax basis are comprised of the following at December 31 (in thousands): 2023 2022 Deferred tax assets: Net operating loss $ 20,029 $ 26,570 Power contracts 23,302 34,233 Compensation 2,287 1,344 Accrued liabilities 570 556 Other 2,016 471 Total deferred tax assets 48,204 63,174 Valuation allowance — (3,681 ) Deferred tax assets, net of valuation allowance 48,204 59,493 Deferred tax liabilities: Coal properties (25,764 ) (27,700 ) Power properties (31,126 ) (35,702 ) Investment partnerships (549 ) (494 ) Other — (203 ) Total deferred tax liabilities (57,439 ) (64,099 ) Net deferred tax liability $ (9,235 ) $ (4,606 ) 59 Table of Contents Our effective tax rate (“ETR”) for 2023 and 2022 was approximately 9%.
The reasons for and effects of such differences for the years ended December 31st are below (in thousands): ​ ​ ​ ​ ​ ​ ​ ​ ​ 2024 2023 Expected amount ​ $ (49,464) ​ $ 10,344 State income taxes, net of federal benefit ​ (9,059) ​ 1,246 Percentage depletion ​ — ​ (3,348) Change in valuation allowance ​ 49,695 ​ (3,681) Stock-based compensation ​ 121 ​ (844) Return to provision adjustments ​ (722) ​ 159 Nondeductible items ​ ​ 175 ​ ​ — Other ​ (150) ​ 589 Total income tax expense ​ $ (9,404) ​ $ 4,465 ​ 82 Table of Contents The deferred tax assets and liabilities resulting from temporary differences between book and tax basis are comprised of the following at December 31st (in thousands): ​ ​ ​ ​ ​ ​ ​ ​ ​ 2024 2023 Deferred tax assets: ​ ​ ​ ​ ​ ​ Net operating loss ​ $ 32,725 ​ $ 20,029 Power contracts ​ 10,828 ​ 23,302 Compensation ​ 1,955 ​ 2,287 Accrued liabilities ​ 423 ​ 570 ARO liabilities ​ ​ 2,293 ​ ​ 2,798 Lease liabilities ​ ​ 3,938 ​ ​ 3,044 Coal properties ​ ​ 26,191 ​ ​ — Other ​ 5,215 ​ 2,016 Total deferred tax assets ​ 83,568 ​ 54,046 Valuation allowance ​ (49,695) ​ — Deferred tax assets, net of valuation allowance ​ 33,873 ​ 54,046 ​ ​ ​ ​ ​ ​ ​ Deferred tax liabilities: ​ ​ ​ ​ ​ ​ Coal properties ​ — ​ (28,535) Power properties ​ (27,960) ​ (31,126) Investment partnerships ​ (531) ​ (549) ROU assets ​ (5,382) ​ (3,071) Total deferred tax liabilities ​ (33,873) ​ (63,281) ​ ​ ​ ​ ​ ​ ​ Net deferred tax liability ​ $ — ​ $ (9,235) ​ Our effective tax rate (“ETR”) for 2024 and 2023 was approximately 4% and 9% respectively.
For the year ended December 31, 2023 ,100% of our electric sales and accounts receivable were with two customers. For 2022 , we derived 90% of our coal sales from five customers, each representing at least 10% of our coal sales.
At December 31, 2024, 100% of our accounts receivable were with three customers. For 2023, we derived 100% of our electric delivered energy generation from Hoosier and 91% of our capacity sales revenue from three customers, each representing at least 10% of capacity sales revenue.
( 8 ) STOCK COMPENSATION PLANS Restricted Stock Units (RSUs) The table below shows the number of RSUs available for issuance at December 31, 2023 : Total authorized RSUs in Plan approved by shareholders 4,850,000 Stock issued out of the Plan from vested grants (3,540,178 ) Non-vested grants (858,363 ) RSUs available for future issuance 451,459 Non-vested grants at December 31, 2021 183,000 Granted – weighted average share price on grant date was $6.74 881,437 Vested — Forfeited (7,500 ) Non-vested grants at December 31, 2022 1,056,937 Granted – weighted average share price on grant date was $9.30 312,147 Vested (472,721 ) Forfeited (38,000 ) Non-vested grants at December 31, 2023 858,363 RSU Vesting Schedule Vesting Year RSUs Vesting 2024 319,419 2025 538,944 60 Table of Contents Shares vested in 2023 had a value of $5.0 million based on the share price of $10.69 on their vesting dates.
Tax returns filed with the Internal Revenue Service and state entities generally remain subject to examination for three years after filing. 83 Table of Contents (8) STOCK COMPENSATION PLANS Restricted Stock Units (RSUs) The table below shows the number of RSUs available for issuance at December 31, 2024: ​ ​ ​ ​ Total authorized RSUs in Plan approved by shareholders 4,850,000 Stock issued out of the Plan from vested grants (3,761,430) Non-vested grants (1,034,486) RSUs available for future issuance 54,084 ​ ​ ​ ​ Non-vested grants at December 31, 2022 1,056,937 Granted – weighted average share price on grant date was $9.30 312,147 Vested (472,721) Forfeited (38,000) Non-vested grants as of December 31, 2023 858,363 Awarded - weighted average share price on award date was $5.69 599,013 Vested (380,390) Forfeited (42,500) Non-vested grants as of December 31, 2024 1,034,486 ​ RSU Vesting Schedule ​ ​ ​ ​ Vesting Year RSUs Vesting 2025 682,068 2026 176,210 2027 ​ 176,208 ​ ​ 1,034,486 ​ Shares vested in 2024 had a value of $2.0 million based on the share price of $5.33 on their vesting dates.
For the period August 18, 2022 through August 17, 2024, the holder has the option to convert the Note into shares of our common stock at a conversion price of $6.254.
The July 29 th Note carried an interest rate of 8 % per annum with a maturity date of December 29, 2028. For the period August 18, 2022, through August 17, 2024, the holder had the option to convert the July 29 th Note into shares of the Company’s common stock at a conversion price of $6.254 .
In the event we are not able to perform reclamation, we have surety bonds at December 31, 2023 totaling $37.5 million to cover ARO.
In the event the Company is not able to perform reclamation, it has surety bonds at December 31, 2024 totaling $30.8 million to cover ARO.
During December 2023, we issued 794,000 shares of Common Stock under the ATM Program for net proceeds of $7.3 million. For the period January 1, 2024, to March 14, 2024, we issued 710,623 shares of Common Stock under the ATM Program for net proceeds of $6.6 million.
During December 2023, we issued 794,000 shares of Common Stock under the ATM Program for net proceeds of $7.3 million. During the year ended December 31, 2024, we issued 4,654,430 shares of Common Stock under the ATM Program for net proceeds of $34.5 million.
The amendment also reduced the total capacity under the revolver to $85 million and waived the maximum annual capital expenditure covenant for 2022 and increased the covenant for 2023 to $75 million. Subsequent to December 31, 2022, and prior to the effective date of this amendment, we had borrowed an additional $17 million under the revolver.
The March 13 th Amendment also reduced the total capacity under the revolver to $85.0 million and waived the maximum annual capital expenditure covenant for 2022 and increased the covenant for 2023 to $75.0 million.
Prior to the March 13, 2023 amendment, bank debt was comprised of term debt ($5.5 million as of December 31, 2022) and a $120 million revolver ($79.7 million borrowed as of December 31, 2022). The term debt amortization was to conclude with the final payment of $5.5 million in March 2023. The revolver was to mature in September 2023.
The term debt amortization was to conclude with the final payment of $5.5 million in March 2023. The revolver was to mature in September 2023.
As of December 31, 2023, accounts receivable for coal sales billed to customers was $14.3 million. We do not currently have any other contracts in place where it would transfer coal, electricity or capacity in advance of knowing the final price, and thus do not have any other contract assets recorded.
We do not currently have any other contracts in place where it would transfer coal, electricity or capacity in advance of knowing the final price, and thus do not have any other contract assets recorded. Contract liabilities also arise when consideration is received in advance of performance.
Invoices typically include customary adjustments for the resolution of price variability, such as coal quality thresholds. Payments are generally received within thirty days of invoicing. Historically, credit losses have been insignificant. No charges for credit losses were recognized during the years ended December 31, 2023 or 2022.
Customers are invoiced as power is delivered or as coal is shipped or at periodic intervals in accordance with contractual terms. Coal invoices typically include customary adjustments for the resolution of price variability, such as coal quality thresholds. Payments are generally received within thirty days of invoicing. Historically, credit losses have been insignificant.
During the years ended December 31, 2023 and 2022, $19.6 million and $14.7 million, respectively, were amortized, of which $30.7 million and $3.6 million, respectively, was recognized in operating expenses on the consolidated statements of operations. The Coal Purchase Agreement term was from October 21, 2022 to May 31, 2023.
This agreement was entered into as consideration in our 2022 acquisition of Merom. The asset was amortized to inventory as coal was purchased over the term of the agreement as the contract was fulfilled. During the years ended December 31, 2023, $19.6 million was amortized, of which $30.7 million was recognized in operating expenses on the consolidated statements of operations.
At December 31, 2022, 86% of our coal operations accounts receivable was from four customers, each representing more than 10%. For the year ended December 31, 2022, 100% of our electric sales and accounts receivable was with one customer.
At December 31, 2023, 85% of our coal operations accounts receivable was from four customers, each representing more than 10%.

… 189 more changes not shown on this page.

Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

0 edited+118 added−254 removed0 unchanged
Removed
ITEM 1A. RISK FACTORS Risks Related to our Business Global economic conditions or economic conditions in any of the industries in which our customers operate as well as sustained uncertainty in financial markets could have material adverse impacts on our business and financial condition that we currently cannot predict.
Added
Item 1A. Risk Factors " for discussion of risks associated with the estimates of the Company’s reserves and resources. Summary of All Mining Properties The Company has seven total mining properties.
Removed
Weakness in global economic conditions or economic conditions in any of the industries we serve or in the financial markets could materially adversely affect our business and financial condition.
Added
These properties are the Oaktown Mining Complex (“Oaktown”), which is comprised of Oaktown Fuels No. 1 Mine and Oaktown Fuels No. 2 Mine, the Ace in the Hole Mine, the Ace in the Hole Mine #2 Reserves, Prosperity, Freelandville and Carlisle.
Removed
For example: ● the demand for electricity in the U.S. and globally may decline if economic conditions deteriorate, which may negatively impact the revenues, margins, and profitability of our business; ● any inability of our customers to raise capital could adversely affect their ability to honor their obligations to us; and ● our future ability to access the capital markets may be restricted as a result of future economic conditions, which could materially impact our ability to grow our business, including development of our coal reserves.
Added
Oaktown Fuels No. 2, Prosperity and Freelandville were temporarily idled in February of 2024 as part of the Organizational Restructuring in “ Note 17 – Organizational Restructuring ” to the Consolidated Financial Statements below.
Removed
The stability and profitability of our operations could be adversely affected if our customers do not honor existing contracts or do not extend existing or enter into new long-term contracts for coal or electric power.
Added
Ace in the Hole Mine and Carlisle are fully depleted. 46 Table of Contents The Oaktown Fuels No. 1 Mine is an underground mine in the Illinois Basin located near Oaktown in Knox County, Indiana. Oaktown Fuels No. 1 Mine utilizes continuous mining units operating in room and pillar mining techniques to produce high-sulfur coal.
Removed
In 2023, a significant portion of our coal, capacity and energy sales were under contracts having a term greater than one year, which we refer to as long-term contracts. These contracts have historically provided a relatively secure market for the amount of production committed under the terms of the contracts.
Added
The Oaktown Fuels No. 2 Mine is an underground mine in the Illinois Basin (“ILB”) located near Oaktown in Knox County, Indiana. The Oaktown Fuels No. 2 Mine utilizes continuous mining units operating in room and pillar mining techniques to produce high-sulfur coal. The preparation plant at Oaktown has a throughput capacity of 1,600 tons of raw coal per hour.
Removed
From time to time industry conditions could make it more difficult for us to enter into long-term contracts with our electric utility customers, and if supply exceeds demand in the coal and power industries, our customers may become less willing to lock in price or quantity commitments for an extended period of time.
Added
Freelandville is a surface mine in the Illinois Basin located near Freelandville in Knox County, Indiana. Freelandville utilizes surface mining techniques to produce high-sulfur coal from as many as three seams. Prosperity is a surface mine in the Illinois Basin located near Petersburg in Pike County, Indiana. Prosperity utilizes surface mining techniques to produce low-sulfur coal.
Removed
Accordingly, we may not be able to continue to obtain long-term sales contracts with reliable customers as existing contracts expire, which could subject a portion of our revenue stream to the increased volatility of the spot market. 15 Table of Contents Some of our long-term sales contracts contain provisions allowing for the renegotiation of prices and, in some instances, the termination of the contract or the suspension of purchases by customers.
Added
The low-sulfur coal is trucked to the Oaktown and other Sunrise Coal logistic facilities where it is blended with coal from the Oaktown Mines.
Removed
Some of our long-term coal sales contracts contain provisions that allow for the purchase price to be renegotiated at periodic intervals. These price reopener provisions may automatically set a new price based on the prevailing market price or, in some instances, require the parties to the contract to agree on a new price.
Added
These properties and further summaries concerning property description, purpose, property overview, geology, background, processing operations, mine infrastructure, and market analysis can be found and are hereby incorporated by reference from Sections 1.1, 1.2, 1.3, 1.6, 2.1, 3, 4, 5, 6, 7.1, 7.3, 7.4, 8, 9, and 10 from the March 2025 Technical Report Summary prepared by the John T.
Removed
Any adjustment or renegotiation leading to a significantly lower contract price could adversely affect our operating profit margins. Accordingly, long-term contracts may provide only limited protection during adverse market conditions. In some circumstances, failure of the parties to agree on a price under a reopener provision can also lead to early termination of a contract.
Added
Boyd Company, attached as Exhibit 99.1 to this Form 10-K. The following figure shows the general location of Merom and our mining properties discussed above: Individual Mining Properties The following information concerning our mining properties has been prepared in accordance with the requirements of subpart 1300 of Regulation S-K.
Removed
Several of our long-term contracts also contain provisions that allow the customer to suspend or terminate performance under the contract upon the occurrence or continuation of certain events that are beyond the customer’s reasonable control.
Added
Subpart 1300 of Regulation S-K requires us to disclose our mineral (coal) resources, which we have none, in addition to our mineral (coal) reserves, as of the end of our most recently completed fiscal year both in the aggregate and for each of our individually material mining properties.
Removed
Such events could include labor disputes, mechanical malfunctions and changes in government regulations, including changes in environmental regulations rendering use of our coal inconsistent with the customer’s environmental compliance strategies. Additionally, most of our long-term coal contracts contain provisions requiring us to deliver coal within stated ranges for specific coal characteristics.
Added
As used in this Annual Report on Form 10-K, the terms “mineral resources,” “mineral reserve,” “proven mineral reserve” and “probable mineral reserve” are defined and used in accordance with subpart 1300 of Regulation S-K.
Removed
Failure to meet these specifications can result in economic penalties, rejection or suspension of shipments or termination of the contracts. In the event of early termination of any of our long-term contracts, if we are unable to enter into new contracts on similar terms, our business, financial condition and results of operations could be adversely affected.
Added
Under subpart 1300 of Regulation S-K, mineral resources may not be classified as “mineral reserves” unless the determination 47 Table of Contents has been made by a qualified person (“QP”) that the mineral resources can be the basis of an economically viable project.
Removed
We depend on a few customers for a significant portion of our revenue, and the loss of one or more significant customers could affect our ability to maintain the sales volume and price of our products. During 2023, we derived 93% of our coal revenue from four third-party customers, each representing at least 10% of our coal sales.
Added
You are specifically cautioned not to assume that any part or all of the mineral deposits (including any mineral resources) in these categories will ever be converted into mineral reserves, as defined by the SEC.
Removed
If in the future we lose any of these customers without finding replacement customers willing to purchase an equivalent amount of coal on similar terms, or if these customers were to decrease the amounts of coal purchased or the terms, including pricing terms, on which they buy coal from us, it could have a material adverse effect on our business, financial condition and results of operations.
Added
Internal qualified person(s) have estimated the Company’s mineral reserves and mineral resources based on geologic data, coal ownership (control) information, and current and/or proposed operating plans. Periodic updates occur to mineral reserve and mineral resource estimates attributable to revised mine plans, new exploration data, depletion from coal production, property acquisitions or dispositions, and/or other geologic or mining data.
Removed
Our electric operations revenue for the first half of 2023 was generated largely by one customer as required by the terms of the Asset Purchase Agreement for our acquisition of Hoosier Energy's Merom Generation Station ("Merom").
Added
Sunrise’s estimates of mineral reserves are proven and probable reserves that could be extracted or produced at the time of the reserve determination, economically, legally, and after considering all material modifying factors. Modifications or updates of the estimates of the Company’s mineral reserves is limited to qualified geologists and mining engineers.
Removed
While we have subsequently added additional electric power customers and purchasers of accredited capacity, the loss of one or more of these material customers could have a material adverse effect on our business, financial condition and results of operations.
Added
All modifications or updates of the estimates of recoverable coal reserves are documented. The John T. Boyd Company, a qualified person firm, has assessed the Company’s estimates of mineral reserves and mineral resources and supporting information. Based upon the review, John T. Boyd Company provided modification to the Company’s estimates of mineral reserves where warranted.
Removed
Our ability to collect payments from our customers could be impaired if their creditworthiness declines or if they fail to honor their contracts with us. Our ability to receive payment for coal and electric power sold and delivered depends on the continued creditworthiness of our customers. If the creditworthiness of our customers declines significantly, our business could be adversely affected.
Added
The information that follows is derived, for the most part, from, and in some instances is extracted from, the Oaktown Mining Complex technical report summary (“TRS”) from John T.
Removed
In addition, if a customer refuses to accept shipments of our coal for which they have an existing contractual obligation, our revenues will decrease, and we may have to reduce production at our mines until our customer’s contractual obligations are honored. Although none of our coal employees are members of unions, our workforce may not remain union-free in the future.
Added
Boyd Company dated March 2025 in accordance with Subpart 1300 of Regulation S-K (Coal Resources and Coal Reserves, Oaktown Mining Complex) attached hereto as Exhibit 99.1 to this Form 10-K; and a letter, dated March 7, 2025, from John T.
Removed
None of our employees are represented under collective bargaining agreements. However, all of our workforce may not remain union-free in the future, and legislative, regulatory or other governmental action could make it more difficult to remain union-free.
Added
Boyd Company providing an update of estimated coal reserves at the Oaktown Mining Complex as of December 31, 2024, attached as Exhibit 99.2 to this Form 10-K. The Oaktown Mining Complex is the Company’s individually material property. Sections of the following information provided herein do not fully describe assumptions, qualifications, and procedures.
Removed
If some or all of our currently union-free operations were to become unionized, it could adversely affect our productivity and increase the risk of work stoppages at our mining complexes.
Added
Reference should be made to the full text of the TRS which is made a part of this Annual report on Form 10-K and incorporated hereby by reference. The Oaktown Mining Complex TRS was prepared by the John T. Boyd Company in compliance with the Item 60(b)(96) and subpart 1300 of Regulation S-K.
Removed
In addition, even if we remain union-free, our operations could still be adversely affected by work stoppages at unionized companies, particularly if union workers were to orchestrate boycotts against our operations. Contractors that we use to provide employees at our power plant may experience work stoppages, slowdowns, lockouts or other labor disputes.
Added
The Company hereby incorporates by reference Section 6.3 "Coal Reserves" from the TRS, attached as Exhibit 99.1 to this Form 10-K, as to the mineral price, cut-off grade, and metallurgical recovery factors utilized in John T. Boyd Company’s preparation of the mineral reserve estimates. The Company hereby incorporates the letter, dated March 7, 2025, from John T.
Removed
At our power plant, our operator, Consolidated Asset Management Services (CAMS), employs represented workers.
Added
Boyd Company, attached as Exhibit 99.2 to this Form 10-K, providing an update of the Company’s mineral reserves at the Oaktown Mining Complex as of December 31, 2024 and including a comparison of the Company’s mineral reserves at the Oaktown Mining Complex as of December 31, 2024 and as of December 31, 2023.
Removed
While these workers are not Hallador Power employees, work stoppages, slowdowns, lockouts or other labor disputes within the CAMS workforce could adversely affect and disrupt our productivity and operations at the plant. 16 Table of Contents Our recent acquisition of Merom may not achieve its intended results.
Added
The following table provides a summary of all of the Company’s mineral reserves determined by the John T.
Removed
On October 21, 2022, the Company, through its subsidiary Hallador Power, completed its acquisition of the one Gigawatt Merom Generating Station located in Sullivan County, Indiana pursuant to an Asset Purchase Agreement with Hoosier Energy.
Added
Boyd Company as of the end of the fiscal year ended December 31, 2024: SUMMARY MINERAL RESERVES AT END OF THE FISCAL YEAR ENDED DECEMBER 31, 2024 ​ ​ ​ ​ ​ ​ ​ ​ ​ Mineral Reserves (tons in millions) ​ Proven Probable Total Oaktown ​ ​ ​ ​ ​ ​ Oaktown Fuels No. 1 Mine 25.7 ​ 2.7 28.4 Oaktown Fuels No. 2 Mine 5.9 ​ 0.2 6.1 Total 31.6 2.9 34.5 ​ Oaktown Mining Complex The Oaktown Mining Complex is a coal mining and processing operation located in Knox and Sullivan counties, Indiana, and Crawford and Lawrence counties, Illinois.
Removed
The Company entered into the Asset Purchase Agreement with the expectation that the acquisition of Merom would result in various benefits, including, among other things, securing future demand for a material portion of the Company’s coal production and also providing a path for Merom’s possible transition to renewable energy when the coal plant is eventually retired.
Added
Oaktown is an underground Room-and-Pillar (“R&P”) coal mining complex. It is comprised of 83 square miles within the ILB coal-producing region of the mid-western U.S. Oaktown operations currently consists of one active underground mine - Oaktown Fuels No. 1 Mine - and related infrastructure.
Removed
Achieving the anticipated benefits of the acquisition (including the eventual transition to renewable energy) is subject to a number of uncertainties. Failure to achieve these anticipated benefits could result in lower-than-expected revenues or income generated by the combined businesses and diversion of management’s time and energy and could have an adverse effect on the Company’s business, financial results and prospects.
Added
Geographically, the Oaktown Complex Coal Preparation 48 Table of Contents Plant is located at approximately 28°51’24.7” N latitude and 87°25’30.9” W longitude. Within the Oaktown area and its immediate vicinity, our Company controls approximately 64,000 acres of mineral rights. We have a complex collection of leases that apply to more than 1,000 tracts.
Removed
In addition, in connection with the Asset Purchase Agreement, the Company assumed certain decommissioning costs and environmental responsibilities. In the event these assumed costs and responsibilities exceed the Company’s estimates, the Company may incur additional liabilities that could have an adverse effect on the Company’s business, financial results and prospects.
Added
Leased tracts range from less than an acre to several hundred acres in size. Ownership of the surface rights and the mineral rights is often severed for the properties and the estates are often fractions, in which mineral rights are split between several owners.
Removed
The operation and maintenance of the Merom facilities or future investment in the Merom facilities are subject to operational risks that could adversely affect our financial position, results of operations and cash flows.
Added
The Company and its predecessors have acquired the necessary rights to support development and operations through purchase or lease agreements with predominately private owners or entities. The Company controls surface rights through fee simple ownership for over 1,700 permitted acres, holding mine accesses, processing, storing, shipping, and refuse disposal facilities (i.e., refuse impoundment site and fine refuse injection sites).
Removed
The operation and maintenance of generating facilities involves many risks, including the performance by key contracted suppliers and maintenance providers; increases in the costs for or limited availability of key supplies, labor and services; breakdown or failure of facilities; curtailment of facilities by counterparties; or the impact of unusual, adverse weather conditions or other natural events, as well as the risk of performance below expected levels of output or efficiency.
Added
We acquired Oaktown Fuels No. 1 and No. 2 Mines from Vectren Fuels in 2014. Oaktown utilizes R&P mining (employing Continuous Miners, or CM) for primary production. This mining method is highly productive and commercially demonstrated; it has been one of the primary approaches to underground mining the Indiana V Seam for decades.
Removed
The Merom facilities contain older generating equipment, which even if maintained in accordance with good engineering practices, may require additional capital expenditures to continue operating at peak efficiency, while additional costs may be required as we eventually transition the Merom facilities to renewable energy.
Added
Oaktown has utilized this mining method since the inception of each operation. To date, Oaktown has produced a combined 75.0 million tons of clean coal. Oaktown is configured to operate up to 6 CM sections (currently operating 4 CM sections), with an annual production target of approximately 3.6 million tons.
Removed
In October 2023, the Merom facilities experienced a transformer failure causing one unit to be offline for the month of October; the failed transformer has since been replaced. We may experience similar failures in the future.
Added
The Oaktown Preparation Plant serves as the coal washing and shipment facility for Oaktown’s two R&P mines. The plant was commissioned in 2009 to wash coal by the Oaktown Fuels No. 1 Mine. The Oaktown Preparation Plant’s processing capacity was upgraded to 1,800 raw tons-per-hour (TPH) from its previous 1,600 raw TPH in 2023.
Removed
We could also be subject to costs associated with any unexpected failure to produce and deliver power, including failure caused by breakdown or forced outage, as well as the repair of damage to facilities due to storms, natural disasters, wars, sabotage, terrorist acts and other catastrophic events.
Added
Coal from Oaktown is transported to customers via rail and truck. The Oaktown Preparation Plant is served by both the CSX Railroad and Indiana Railroad (INRD) via a rail spur and rail loop that connects the complex with the mainline rail just north of Oaktown, Indiana.
Removed
Additionally, supply chain shortages or delays on key operating components, including but not limited to, transformers, boiler equipment and chemicals or catalysts could materially and adversely impact our operations and reduce revenues or expose the company to significant cover damages related to longer term contracts.
Added
Additionally, the Oaktown Preparation Plant can facilitate the loading of trucks for direct transport to select customers, or to our transload facility in Princeton, Indiana serviced by the Norfolk Southern (NS) Railroad. Sources of electrical power, water, supplies, and materials are readily available. Electrical power is provided to the mines and facilities by regional utility companies.
Removed
Completion of growth projects and future expansion could require significant amounts of financing that may not be available to us on acceptable terms, or at all. We plan to fund capital expenditures for our current growth projects with existing cash balances, future cash flows from operations, borrowings under credit facilities and cash provided from the issuance of debt or equity.
Added
Water is supplied by public water services, surface impoundments, or water wells. Multiple permits are required by federal and state law for underground mining, coal preparation and related facilities, and other incidental activities. All necessary permits to support current operations are in place or pending approval.
Removed
Under our outstanding Form S-3 “universal shelf” registration statement, we have the ability, subject to market conditions, to access the debt and equity capital markets as needed, including through the use of our outstanding “at the market” (ATM) offering program. If we raise additional funds by issuing equity securities under our ATM program or otherwise, our stockholders may experience dilution.
Added
New permits or permit revisions may be necessary from time to time to facilitate future operations. Given sufficient time and planning, we should be able to secure new permits, as required, to maintain our planned operations within the context of the current regulations.
Removed
At times, weakness in the energy sector in general and coal, in particular, has significantly impacted access to the debt and equity capital markets. Accordingly, our funding plans may be negatively impacted by this constrained environment as well as numerous other factors, including higher than anticipated capital expenditures or lower than expected cash flow from operations.
Added
Permits generally require that the Company post a performance bond in an amount established by the regulator program to: (1) provide assurance that any disturbance or liability created during mining operation is properly mitigated, and (2) assure that all regulation requirements of the permit are fully satisfied.
Removed
In addition, we may be unable to refinance our current debt obligations when they expire or obtain adequate funding prior to expiry because our lending counterparties may be unwilling or unable to meet their funding obligations.
Added
We hold surety bonds of $10.0 million to cover obligations relating to mining and reclamation, road repair, etc. at the Oaktown Mining Complex.
Removed
Furthermore, additional growth projects and expansion opportunities may develop in the future that could also require significant amounts of financing that may not be available to us on acceptable terms or in the amounts we expect, or at all.
Added
Additional information is provided in the following table regarding Oaktown’s mineral reserves: OAKTOWN Recoverable Coal Reserves as of December 31, 2024 and 2023 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ As Received As Received ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Heat ​ SO2 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Value ​ Content ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ (Btu/lb) ​ (lbs/MMBtu) ​ Owned ​ Leased ​ Recoverable Coal Reserves (As-Received) Mine/Reserve Approximate Approximate (%) (%) Proven Probable 12/31/2024 12/31/2023 Oaktown Mining Complex Oaktown Fuels No. 1 Mine 11,630 ​ 6.0 — 100.0 25.7 ​ 2.7 28.4 34.1 Oaktown Fuels No. 2 Mine 11,576 ​ 5.0 — 100.0 5.9 ​ 0.2 6.1 26.6 Total ​ ​ ​ ​ ​ ​ ​ 31.6 2.9 34.5 60.7 ​ 49 Table of Contents Oaktown Fuels No. 1 Mine As of December 31, 2024, the assigned and accessible reserve base for the Oaktown Fuels No. 1 Mine contains 28.4 million tons of recoverable Indiana V seam coal, of which 28.4 million tons are currently permitted.
Removed
Various factors could adversely impact the debt and equity capital markets as well as our credit ratings or our ability to remain in compliance with the financial covenants under our then current debt agreements, which in turn could have a material adverse effect on our financial condition, results of operations and cash flows.
Added
The reserve contains saleable tons which average heating content of approximately 11,630 Btu per pound with approximately 6.0 pounds of sulfur dioxide per MMBtu on an as-received basis.
Removed
If we are unable to finance our growth and future expansions as expected, we could be required to seek alternative financing, the terms of which may not be attractive to us, or to revise or cancel our plans. Terrorist attacks or cyber-incidents could result in information theft, data corruption, operational disruption and/or financial loss.
Added
Access to the Oaktown Fuels No. 1 Mine is via a 90-foot-deep box cut and a 2,200-foot long slope, which facilitates the egress of coals being mined in excess of 375 feet below the surface.

… 292 more changes not shown on this page.

Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

1 edited+1 added−0 removed8 unchanged
Biggest changeAs these systems, processes, training, and upgrades are implemented, updates are provided to the Executive Team. We have not identified an indication of a substantive cyber security incident that would have a material impact on our business, results of operations or financial statements. For additional information regarding risks from cybersecurity threats, please refer to Item 1A, “Risk Factors,” above.
Biggest changeAs these systems, processes, training, and upgrades are implemented, updates are provided to the Executive Team. We have not identified an indication of a substantive cyber security incident that would have a material impact on our business, results of operations or financial statements.
Added
For additional information regarding risks from cybersecurity threats, please refer to Item 1A, “ Risk Factors ” above.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

2 edited+66 added−0 removed0 unchanged
Biggest changeOn March 8, 2024, we had 215 shareholders of record of our common stock; this number does not include the shareholders holding stock in “street name.” We estimate we have over 5,000 street name holders. Equity Compensation Plan Information See Note 8 to our consolidated financial statements. ITEM 6. [RESERVED]
Biggest changeOn March 10, 2025, we had 193 shareholders of record of our common stock; this number does not include the shareholders holding stock in “street name.” We estimate we have over 5,000 street name holders. Equity Compensation Plan Information See “Note 8 – Stock Compensation Plans” to our consolidated financial statements.
ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES. Stock Price Information Our common stock trades on the NASDAQ Capital Market under the symbol HNRG, and 30.5% is held by our officers, directors, and their affiliates.
ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES. Stock Price Information Our common stock trades on the NASDAQ Capital Market under the symbol HNRG, and 40.9% is held by our officers, directors, and their affiliates.
Added
ITEM 6. [RESERVED] ​ 40 Table of Contents ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS. Our consolidated financial statements should be read in conjunction with this discussion.
Added
The following analysis includes a discussion of metrics on a per mega-watt hour (MWh) and per ton and basis as derived from the consolidated financial statements, which are considered non-GAAP measurements. These metrics are significant factors in assessing our operating results and profitability.
Added
OVERVIEW Hallador Energy Company (the “Company” or “Hallador”) is an energy company operating in the state of Indiana. Our wholly owned subsidiary Hallador Power, operates our Merom Power Plant ("Merom"), a one gigawatt (“GW”) power plant located in Sullivan County, Indiana. Merom is located in the Midcontinent Independent System Operator’s ("MISO") footprint.
Added
We also mine coal in the State of Indiana through our wholly-owned subsidiary Sunrise Coal, LLC (“Sunrise”), serving the electric power generation industry. During the fourth quarter of 2024, we completed our review of the coal mining facilities and future mining plans. The impairment analysis was based upon our finalized coal mining operating plans, market driven pricing and cost trends.
Added
As part of that analysis, we determined the carrying amount of our coal mining long-lived asset group was not recoverable and recorded a non-cash, long-lived asset impairment charge of $215.1 million in the fourth quarter of 2024.
Added
See “Note 19 – Impairment of Coal Properties” to the Consolidated Financial Statements in this Form 10-K for further information on the impairment analysis. ​ Our business is organized based on the services and products we provide in two segments: (i) Electric Operations and (ii) Coal Operations.
Added
The Chief Operating Decision Maker (“CODM”), who is the Company’s Chief Executive Officer, reviews and assesses operating performance measures related to our Electric Operations and our Coal Operations segments. In addition to these reportable segments, the Company has a “Corporate and Other and Eliminations” category, which is not significant enough, on a stand-alone basis, to be considered an operating segment.
Added
Corporate and Other and Eliminations primarily consist of unallocated corporate costs and activities, including a 50% interest in Sunrise Energy LLC and Oaktown Gas, LLC, which are accounted for using the equity method. ​ Throughout 2024, we made progress on transitioning Hallador Energy from a bituminous coal producer to an integrated independent power producer (“IPP”).
Added
This strategic transition has been a deliberate response to market signals and what we believe to be the superior economics of the IPP business model. As such, our focus remains on maximizing the value of Merom while actively seeking opportunities to acquire additional dispatchable generators.
Added
We have also prioritized building strong relationships with counterparties to secure favorable terms for collateral, enabling us to effectively leverage forward power sales in 2025 to offset pricing volatility in the spot market.
Added
This approach enhances our financial flexibility and strengthens our position in the evolving energy market. ​ In the fall of 2024, we reached a key milestone in our IPP transformation by signing a non-binding term sheet with a leading global data center developer for the supply of a significant portion of Merom's output of capacity and energy for well over a decade.
Added
As evidenced by our announcement of an exclusivity agreement with this development partner in January 2025, we are continuing to make progress as we seek to finalize a definitive agreement.
Added
As we have previously disclosed, the exclusivity period runs through the beginning of June 2025, in exchange for payments from the developer to Hallador Power of up to $5.0 million, depending on if and when a definitive agreement is finalized. This type of deal is complex and involves multiple parties, which adds time and challenges to negotiations.
Added
Despite these challenges, we remain encouraged by our partners and the steady progress that we continue to make. Our pursuit of this agreement further demonstrates our commitment towards forging a strategic partnership that we believe will create significant value for our shareholders for years to come.
Added
The completion of this proposed transaction is subject to, among other matters, the negotiation and execution of definitive agreements and there can be no assurance that definitive agreements will be entered into or that the proposed transaction will be consummated on the terms or timeframe currently contemplated, or at all. ​ 41 Table of Contents We continue to witness the prevalent industry trend of retiring dispatchable generators, including coal, in favor of non-dispatchable resources such as wind and solar.
Added
We believe this transition from dispatchable to non-dispatchable generation made the attributes of our subsidiary, Hallador Power, much more valuable due to the enhanced reliability that we provide versus non-dispatchable generators. However, we believe the retirement of coal-based generation and lower natural gas prices could reduce the demand for coal supply, potentially lowering the value of Sunrise.
Added
During 2024, in response to declining coal demand, we reduced our coal production volume by approximately 40% and idled the higher cost surface mines. This optimization of coal production reduced our operational cash cost structure and better aligned our coal strategy to primarily support our internal electric generation. ​ Merom can produce up to 6.0 million Mega-Watthours (“MWh”) annually.
Added
The forward power price curves indicate that the margins earned on energy produced at Merom and the value of the accredited capacity sales assigned to the plant continues to increase. We are seeing strong indications for both energy and capacity sales in 2025 and beyond, especially considering our negotiations related to supporting data center development within the State of Indiana.
Added
In addition, while we largely held to our traditional approach of selling energy through bespoke bi-lateral agreements on a unit or plant contingent basis, during 2024 we sold a limited amount of power on a firm basis.
Added
While we continue to limit these types of firm sales to mitigate risk and wait for higher priced contracts to take effect, we will strategically utilize them to smooth our exposure to the spot market.
Added
This approach enables us to capture some of the episodic cash generation driven by demand from extreme weather and various other conditions stressing the power grid while limiting our exposure to periods of mild weather and lower demand. ​ In 2024, the ongoing surplus of natural gas in the market and mild weather patterns continued to moderate energy prices throughout the year and kept spot energy prices weak.
Added
We began to see favorable pricing signals at the end of the fourth quarter of 2024 and subsequent to year-end. ​ The ability to store a commodity is inherently tied to the volatility of that commodity. Coal can be piled up for years, thus its volatility is low.
Added
Oil and natural gas face transportation and storage challenges which increase price volatility. The limitations of storing viable energy, coupled with non-dispatchable generation gaining market share in an environment where there is unpredictability in the weather, indicates to us that energy's price volatility is likely to increase over the next decade.
Added
This volatility will keep the forward power price premium intact. ​ We are excited by the opportunity for Hallador Power to capture higher prices and energy volumes in 2025 and beyond compared to what we have historically achieved in our relatively short ownership tenure of Merom.
Added
In 2024, we sold 4.2 million MWh at an average sales price of approximately $48.62 per MWh. At the start of the year, we had 1.9 million MWh contracted, leaving us with significant exposure to the spot electricity market.
Added
Heading into 2025, we have contracted approximately 4.3 million MWh at an average price of $37.24 per MWh, which should help to smooth our exposure to the spot market. For 2026, we have already contracted 3.4 million MWh at $44.43 per MWh.
Added
Following 2026, we are optimistic that we can sell energy at higher prices in support of data center development and/or to traditional wholesale customers in line with the indicators of a higher forward curve. The tables included below highlight some of the revenue and margin improvements we have seen in our forward contracted power sales for 2025 and thereafter.
Added
These tables do not include the significantly higher prices that we are expecting if we are able to finalize our agreements in support of data center development. ​ In addition to the transaction we are negotiating with Merom, we continue to evaluate other strategic transactions that could add durability, scale, and geographic expansion opportunities to our electric operations.
Added
While these types of deals are limited and complex, we believe that Hallador is uniquely positioned to transform retiring and/or underperforming assets into future opportunities.
Added
This will enable us to supply high demand end users, such as data centers and on-shored industrial customers, with minimal impact to retail consumers, unlike a traditional utility siphoning off consumer power to serve these types of large load end-users.
Added
By continuing the operations of the dispatchable plants to support large load industrial users as the utilities transition to non-dispatchable generation, the new generation becomes additive to the already struggling grid rather than cannibalizing the overall reliability of what exists today.
Added
We are optimistic about the potential to add to our strategic portfolio and the long-term benefits that such a transaction could produce for the Company, its shareholders and its customers.
Added
This model for growth enables us to shift from transactional pricing related to plant acquisition, to traditional wholesale market pricing, and ultimately to the enhanced pricing associated with supporting data centers and other large load end users. 42 Table of Contents ​ In the first quarter of 2024, we announced a restructuring of our Coal Operations to address the increase in costs we experienced at our mines.
Added
See “Note 17 – Organizational Restructuring” to the Consolidated Financial Statements in this Form 10-K for further information. We spent much of the year adjusting to this restructuring to optimize production, headcount, and strategy to best support our Electric Operations and our existing third-party coal contracts.
Added
By reducing headcount, focusing production on our most profitable mines and units within those mines, and improving our infrastructure and processes within those favored units, we were able to both slow the impact of rapidly increasing costs and reduce costs to better support the continued operations of our mines. ​ Historically, Sunrise has produced between four and six million tons annually.
Added
As we continue to optimize the mines in support of the plant, we expect to produce approximately 3.6 million tons of coal in 2025, with approximately 2.3 million tons produced directed to support our Electric Operations.
Added
We have also secured supplemental coal from third party suppliers at favorable prices to diversify self-production supply risk and to provide us additional flexibility in our sales portfolio and to fulfill future sales obligations to third-parties and Merom as shown in the table below.
Added
The optionality to obtain low-cost tons either internally or from third parties while capturing upward swings in the commodity markets for coal should further maximize margins while optimizing fuels costs at Merom. ​ We remain excited about the continued and deliberate transformation of Hallador from a commodity focused producer of coal to an IPP.
Added
We believe this transition provides significant opportunity to capture the expanding margins of the energy markets and capitalize on the soaring demand for electricity.
Added
We are pleased by the strong interest we continue to see from potential counterparties in our energy and capacity offerings, bolstered by Indiana’s efforts to attract data centers and other high-density power users through its business-friendly climate and favorable tax policies.
Added
With the continued growth of our sales book, coupled with our ongoing focus to transition our operations to primarily electricity generation, we believe we are well positioned to materially strengthen our opportunities for growth and cash flow generation. ​ 43 Table of Contents Solid Forward Sales Position - Segment Basis, Before Intercompany Eliminations ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 2025 2026 2027 2028 2029 Total Power ​ ​ ​ ​ ​ ​ Energy ​ ​ ​ ​ ​ ​ Contracted MWh (in millions) ​ 4.25 ​ 3.36 ​ 1.78 ​ 1.09 ​ 0.27 ​ 10.75 Average contracted price per MWh ​ $ 37.24 ​ $ 44.43 ​ $ 54.66 ​ $ 52.94 ​ $ 51.33 ​ ​ ​ Contracted revenue (in millions) ​ $ 158.27 ​ $ 149.28 ​ $ 97.29 ​ $ 57.70 ​ $ 13.86 ​ $ 476.40 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Capacity ​ ​ ​ ​ ​ ​ Average daily contracted capacity MWh ​ 773 ​ 727 ​ 623 ​ 454 ​ 100 ​ ​ Average contracted capacity price per MWd ​ $ 201 ​ $ 230 ​ $ 226 ​ $ 225 ​ $ 230 ​ ​ ​ Contracted capacity revenue (in millions) ​ $ 55.95 ​ $ 61.12 ​ $ 51.40 ​ $ 37.33 ​ $ 3.47 ​ $ 209.27 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Total Energy & Capacity Revenue ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Contracted Power revenue (in millions) ​ $ 214.22 ​ $ 210.40 ​ $ 148.69 ​ $ 95.03 ​ $ 17.33 ​ $ 685.67 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Coal ​ ​ ​ ​ ​ ​ Priced tons - 3rd party (in millions) ​ 2.95 ​ 2.50 ​ 2.50 ​ 0.50 ​ — ​ 8.45 Avg price per ton - 3rd party ​ $ 51.04 ​ $ 55.49 ​ $ 56.74 ​ $ 59.00 ​ $ — ​ ​ ​ Contracted coal revenue - 3rd party (in millions) ​ $ 150.57 ​ $ 138.73 ​ $ 141.85 ​ $ 29.50 ​ $ — ​ $ 460.65 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ TOTAL CONTRACTED REVENUE (IN MILLIONS) - CONSOLIDATED ​ $ 364.79 ​ $ 349.13 ​ $ 290.54 ​ $ 124.53 ​ $ 17.33 ​ $ 1,146.32 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Priced tons - Intercompany (in millions) ​ 2.30 ​ 2.30 ​ 2.30 ​ 2.30 ​ — ​ 9.20 Avg price per ton - Intercompany ​ $ 51.00 ​ $ 51.00 ​ $ 51.00 ​ $ 51.00 ​ $ — ​ ​ ​ Contracted coal revenue - Intercompany (in millions) ​ $ 117.30 ​ $ 117.30 ​ $ 117.30 ​ $ 117.30 ​ $ — ​ $ 469.20 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ TOTAL CONTRACTED REVENUE (IN MILLIONS) - SEGMENT ​ $ 482.09 ​ $ 466.43 ​ $ 407.84 ​ $ 241.83 ​ $ 17.33 ​ $ 1,615.52 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ * Actual revenue related to solid forward sales positions may differ materially for various reasons, including price adjustment features for coal quality and cost escalations, volume optionality provisions and potential force majeure events. ​ Electric Operations Internal Controls Disclosure Our electric operations employ third party service providers for the day-to-day operations and maintenance of Merom as well as managing market transactions and optimizing plant dispatch.
Added
We contract with Consolidated Asset Management Services (“CAMS”) to manage ongoing operations, maintenance and asset management functions at Merom. CAMS provides an operations and maintenance program which includes daily management of plant performance, safety protocols and workforce management. CAMS develops and implements predictive and preventative maintenance schedules designed to maximize plant availability and maintain compliance with environmental and regulatory standards.
Added
In coordination with our engineering teams, CAMS identifies and manages capital projects that aim to improve operational efficiency and reduce long-term costs. CAMS also provides performance monitoring and reporting. CAMS provides regular reports on key performance indicators (“KPIs”) such as heat rates and forced outage rates to help us assess plant efficiency.
Added
CAMS assists in ensuring adherence to local, state and federal regulations including 44 Table of Contents environmental rules and safety mandates. We maintain oversight of CAMS through regular audits and performance reviews, confirming all procedures align with our company policies and best practices.
Added
We engage with Alliance for Cooperative Energy Services Power Marketing, LLC (“ACES”), as our agent to manage our wholesale power market activities and risk management strategies related to electric operations. Through this relationship, ACES manages the dispatch and scheduling on the real-time and day-ahead markets.
Added
ACES manages bidding strategies, scheduling our generation in the relevant regional transmission organizations (“RTOs”) or independent system operators (“ISOs”). To optimize our sales portfolio, ACES analyzes energy market dynamics, identifies opportunities to optimize plant dispatch, and recommends operational adjustments to capture favorable margins.
Added
ACES assists in risk management by executing short-term trades on our behalf to mitigate price volatility and lock in predictable revenues as well as ensures that our participation in the energy markets adheres to relevant market rules and regulations.
Added
We receive regular risk reports and settlement statements, which our internal teams review to confirm accuracy and compliance with our company policies. We regularly review the performance and controls of CAMS and ACES. Our formal review processes include monthly performance reviews through joint meetings with CAMS and ACES to evaluate KPI trends, discuss operational challenges, and plan market strategies.
Added
Periodic internal and external audits examine environmental, safety, and financial compliance, ensuring third-party activities align with regulatory standards and Company objectives. We also have a risk committee that evaluates all marketing activities and exposures. Merom operates under permits issued by various agencies. CAMS provides support and expertise to ensure compliance with emissions requirements, water use regulations, and waste disposal guidelines.
Added
The power markets we operate in periodically update their rules and tariffs, which may affect how we dispatch our plants or manage financial positions. ACES continuously monitors changes, recommending updates to our strategies as needed. Volatility in wholesale power prices can impact revenue. ACES provides strategies to mitigate price risk.
Added
Equipment failures or unexpected downtime at coal plants can lead to missed market opportunities or contractual liabilities. Our relationship with CAMS is designed to minimize these risks through comprehensive operations and maintenance practices. Future environmental or market regulations may require capital investments or shift market behavior.
Added
Our teams, in conjunction with CAMS and ACES, monitor emerging policies to proactively plan operational or strategic adjustments. ​ Property Through Hallador Power, the Company owns and operates Merom, a 1,080 MW net coal fired power generating station, consisting of two 590 MW sub-critical water tube drum type steam turbine generators.
Added
Unit 1 entered commercial operations in 1982 and Unit 2 in 1983. The units are dispatched to the MISO interconnection. Hallador Power sells wholesale energy and accredited capacity to utilities within the MISO system through PPA’s and other bilateral transactions. Merom is located in Sullivan County, Indiana, on approximately 691 acres, which also holds a 112-acre landfill.
Added
Hallador Power has two tracts under option for approximately 72 acres for expansion and future development at Merom. Merom is about twenty miles from Sunrise’s Oaktown Mining Complex and has rail and truck access.
Added
The Company acquired Merom from Hoosier Energy Rural Electric Cooperative, Inc. in 2022. ​ ​ ​ ​ ​ ​ ​ ​ Year Ended December 31, ​ 2024 2023 Power Capacity and Utilization ​ Nameplate capacity (MW) (i) 1,080 1,080 ​ Accredited capacity for the period (MW) (ii) 823 860 ​ Accredited capacity utilization (iii) 49 % 45 % i.
Added
Nameplate capacity for the Merom Power Plant refers to the maximum electric output generated by the plant in the period presented and may not reflect actual production. Actual production each period varies based on weather conditions, operational conditions, and other factors. 45 Table of Contents ii. Accredited capacity is based on MISO’s average seasonal accreditations for the year.
Added
Average seasonal accreditations were 808 MW and 838 MW per day for 2024 and 2023, respectively. Accreditations are weighted and adjusted annually based on 3-year rolling performance metrics. iii. Accredited capacity utilization is measured as power produced (MWh) divided by accredited capacity for the period (MW) multiplied by 24 times the number of days for the period.
Added
Permits are required by federal and state law for Merom’s facilities and landfill. Merom holds several construction and environmental permits for air, wastewater and solids waste disposal. All necessary permits to support current operations are in place.
Added
New permits or permit revisions may be necessary from time to time to facilitate future operations or to keep pace with the changing regulatory landscape. Given sufficient time and planning, we should be able to secure new permits, as required, to maintain our planned operations within the context of the current regulations. Merom continually excels in environmental excellence and compliance.
Added
Permits generally require that the Company post a performance bond in an amount established by the regulator program to: (1) provide assurance that any disturbance or liability created is properly mitigated, and (2) assure that all regulation requirements of the permit are fully satisfied. We hold surety bonds of $9.7 million to cover obligations relating to reclamation at Merom.
Added
Coal Operations Internal Controls Disclosure The preparation of coal reserve and resource estimates is conducted by independent individuals who are by virtue of their education, experience and professional association considered qualified persons (as defined in SEC rules). Company personnel meet on an annual basis with the independent qualified person to provide updates to the reserve and resource estimates.
Added
Company personnel review the work of the qualified person to ensure such work is prepared in accordance with applicable rules and regulations and that the data and assumptions provided were properly applied to the final reserve and resource model.
Added
The Company’s engineering personnel ensure estimates are based on current mine plans, incorporate the most recent drilling and lab data, properly reflect changes in permitting status, consider known encumbrances, and are consistent with operating knowledge and expectations in terms of mining methods, recovery rates, minimum seam heights or maximum strip ratios, and saleable qualities.
Added
An American National Standards Institute-certified third-party laboratory is utilized to support reserve and resource estimates. The laboratory follows standard sample preparation, security, and environmental procedures. In addition, the Company’s qualified person performs independent data verification procedures to ensure data is of sufficient quantity and reliability to reasonably support the coal reserve and resource estimates.
Added
Estimates of any mineral reserve and resources are always subject to a degree of uncertainty. The level of confidence that can be applied to a particular estimate is a function of, among other things, the amount, quality, and completeness of exploration data; geological complexity of the deposit; and economic, legal, social, and environmental factors associated with mining the reserve/resource.
Added
The Company’s current coal reserves and resource estimates are based on the best information available and are subject to updates as conditions change. Also refer to "

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

2 edited+476 added−147 removed2 unchanged
Biggest changeDuring 2022, on a segment basis we derived 90% of our revenue from five customers (10 power plants), with each of the five customers representing at least 10% of our coal sales.
Biggest changeDuring 2024, we derived 89% of our delivered energy and 88% of our capacity sales revenue from three and four customers, respectively, each of which representing at least 10% of sales revenue. Additionally, we derived 96% of our third-party coal sales from four customers, each representing at least 10% of coal sales.
On October 21, 2022, the Company, through its wholly owned subsidiary Hallador Power, acquired the Merom Generating Energy Station ("Merom"), a one gigawatt (“GW”) power plant located in Sullivan County, Indiana. Merom is located in the Midcontinent Independent System Operator's ("MISO") footprint.
In October 2022, the Company, through its subsidiary Hallador Power, completed its acquisition of Merom, our one Gigawatt Generating Station located in Sullivan County, Indiana pursuant to an Asset Purchase Agreement (“APA”) with Hoosier Energy.
Removed
ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS. Our consolidated financial statements should be read in conjunction with this discussion. The following analysis includes a discussion of metrics on a per ton and per mega-watt hour (MWh) basis as derived from the condensed consolidated financial statements, which are considered non-GAAP measurements.
Added
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations ” for a discussion of our business.
Removed
These metrics are significant factors in assessing our operating results and profitability. OVERVIEW Hallador Energy Company (the “Company” or “Hallador”) is an energy company operating in the state of Indiana.
Added
Regulation and Laws The electric power generation and coal mining industries are subject to extensive regulation by federal, state, and local authorities on matters such as: ● employee health and safety; ● mine permits and other licensing requirements; ● air quality standards and greenhouse gas emissions; ● water quality standards; ● storage of petroleum products and substances that are regarded as hazardous under applicable laws or that, if spilled, could reach waterways, wetlands, or groundwater; ● plant and wildlife protection, and historic and archeological site and cultural resource protection, that could limit or prohibit electric power generation, mining or exploration; ● restricting the types, quantities, and concentration of materials that can be released into the environment in the performance of electric power generation, mining, exploration or production activities; ● discharge of materials; ● storage and handling of explosives; ● wetlands protection; ● surface subsidence from underground mining; and ● the effects, if any, that electric power generation or mining activities, including coal combustion residuals, have on groundwater quality and availability. 5 Table of Contents Failure to comply with environmental laws and regulations may result in the assessment of administrative, civil and criminal sanctions, including monetary penalties, the imposition of strict, joint and several liability, investigatory and remedial obligations, capital expenditures, interruptions, changes in operations, and the issuance of injunctions limiting or prohibiting some or all of the operations on our properties.
Removed
Historically, the largest portion of our business has been devoted to coal mining in the State of Indiana through Sunrise Coal, LLC (a wholly-owned subsidiary) serving the electric power generation industry.
Added
The regulatory burden on fossil fuel industries increases the cost of doing business and consequently affects profitability.
Removed
We believe this acquisition is the catalyst that began Hallador's transition from a producer of coal to a vertically integrated independent power producer ("IPP"). As a result of the Merom acquisition the Company has two reportable segments: coal operations (operated by Sunrise Coal, LLC) and electric operations (operated by Hallador Power).
Added
The trend in environmental regulation has been to place more restrictions and limitations on activities that may affect the environment, and thus, any changes in environmental laws and regulations or re-interpretation of enforcement policies that result in more stringent and costly obligations could increase our costs and adversely affect our performance.
Removed
In addition to our reportable segments, the remainder of our operations are presented as “Corporate and Other” and primarily are comprised of unallocated corporate costs in addition to activities such as a 50% interest in Sunrise Energy, LLC, a private gas exploration company with operations in Indiana, accounted for using the equity method, and our wholly-owned subsidiary Summit Terminal LLC, a logistics transport facility located on the Ohio River. 2023 was the first whole year in which Hallador Power operated Merom.
Added
In addition, the electric power industry is subject to extensive regulation regarding the environmental impact of its power generation activities, which has also adversely affected demand for coal.
Removed
In accordance with the Purchase and Sale Agreement associated with the Merom acquisition, for the first five months of 2023, all fuel consumed at Merom was delivered from a third party and all energy produced was sold at $34 per MWh. Beginning in June 2023, approximately seventy percent of Merom’s energy became available to sell on the open market.
Added
It is possible that new legislation or regulations may be adopted, that existing laws or regulations may be interpreted differently or more stringently enforced, that existing regulations may be repealed or that the authority of current regulators may be reduced or revoked, any of which could have a significant impact on our mining or electric power generating operations or our customers’ ability to use coal.
Removed
However, despite spot prices for electricity at Merom averaging $39 in 2021 and $69 in 2022, generally milder weather and depressed natural gas prices drove down the average spot price for electricity to $31 in 2023. Despite near record margins at our coal division for the full year, the fourth quarter was a particularly challenging quarter for Hallador Power.
Added
For more information, please see “Recent Regulatory Developments from the Presidential Transition” in this section, below, and the risk factors described in “Item 1A. Risk Factors” below. We are committed to conducting electric power generating and mining operations in compliance with applicable federal, state, and local laws and regulations.
Removed
A failure in Merom’s main Generator Step-Up Transformer (GSU) coupled with a scheduled maintenance outage took half of the plant offline for nearly the entire quarter. The planned maintenance resulted in $12.6 million in expenditures and the transformer replacement resulted in an additional $0.7 million in unplanned capital expenditures.
Added
However, because of the extensive and detailed nature of these regulatory requirements, including the regulatory system of the Mine Safety and Health Administration (“MSHA”), where citations can be issued without regard to fault and many of the standards include subjective elements, it is not reasonable to expect any electric power generating company or coal mining company to be free of citations.
Removed
Additionally, natural gas prices, which have great influence on overall electricity price, remained low throughout the second half of 2023 and dropped to an inflation adjusted all-time low in the first quarter of 2024.
Added
When we receive a citation, we attempt to remediate any identified condition immediately. While we have not quantified all of the costs of compliance with applicable federal and state laws and associated regulations, those costs have been and are expected to continue to be significant.
Removed
The acquisition of Merom, brought with it additional capex spending requirements to maintain and return the power plant to top condition, which we expected to pay for with fourth quarter free cash flow from in-quarter power sales.
Added
Compliance with these laws and regulations has substantially increased the cost of electric power generation and the cost of coal mining for domestic coal producers. Expenditures for environmental matters have not been material in recent years.
Removed
However, with fourth quarter challenges at both Merom and in our coal division, Sunrise Coal, we took steps to protect liquidity and to increase the efficiency of our operations. Thus, in December and early January we improved liquidity and provided operational flexibility through an At-The-Market (ATM) offering.
Added
We have accrued for the present value of the estimated cost of asset retirement obligations, power plant closing, and mine closings, including the cost of treating mine water discharge, when necessary.
Removed
Under the ATM, we sold approximately 800,000 shares of Hallador stock in December 2023 and raised approximately $7.3 million of equity resulting in 34,051,154 shares outstanding at December 31, 2023. Approximately 700,000 shares of Hallador stock was sold in January 2024 raising an additional $6.6 million of equity.
Added
The accruals for asset retirement obligations, power plant closing and mine closing costs are based upon permit requirements and the estimated costs and timing of asset retirement obligations and mine closing procedures.
Removed
Hallador’s share count stands at 34.9 million shares as of March 8, 2024. Liquidity at year end was $26.2 million. Subsequently, in February 2024, we further added to liquidity as several members of Hallador's Board of Directors loaned the company a total of $5 million through an unsecured one year note at an interest rate of 12% per annum.
Added
Although management believes it has made adequate provisions for all expected reclamation and other costs associated with mine closures, future operating results would be adversely affected if these accruals were insufficient. Electric Power Generation Permits and Approvals Numerous governmental permits or approvals are also required for electric power generation operations, including coal-fired power plants such as Merom Generating Station.
Removed
Receipt of roughly $36 million in capacity revenue for the 2024-2025 planning year will begin in the first quarter of 2024, further strengthening our financial position. See Note 4 to our consolidated financial statements for additional discussion about our bank debt and related liquidity.
Added
Applications for permits require extensive engineering and data analysis and presentation and must address a variety of environmental, health, and safety matters associated with electric power generation. These matters include air emissions, including greenhouse gas emissions, the management and disposal of coal combustion residuals and other wastes or materials, and wastewater effluent treatment and discharge, among others.
Removed
On February 23, 2024, our Coal Operations Segment undertook an initiative designed to strengthen our financial and operational efficiency and to create significant operational savings and higher margins in our coal segment. This step will advance our transition from a company primarily focused on coal production to a more resilient and diversified vertically integrated IPP.
Added
Meeting all requirements imposed to address these matters may be costly and may delay or prevent commencement or continuation of power generation operations. The permitting process for electric power generation operations can extend over many years as a result of necessary permit renewals and those permitting decisions can be subject to administrative and judicial challenge, including by the public.
Removed
As part of this initiative, we idled production at our higher cost Prosperity Mine, and substantially idled production at Freelandville Mine with minimal production. This should reduce our capital reinvestment for coal production in 2024 by approximately $10 million. We also focused our seven units of underground equipment on four units of our lowest cost production at our Oaktown Mine.
Added
We cannot assure you that we will not experience difficulty or delays in obtaining electric power generation permits in the future or that a current permit will not be revoked. 6 Table of Contents We are required to post bonds to secure performance under our coal combustion residuals landfill permit.
Removed
As part of the initiative, we reduced our workforce by approximately 110 employees. Historically, Sunrise Coal has generated approximately six million tons of coal annually. Following the restructuring, we expect Sunrise to produce roughly 4.5 million tons of coal annually at improved margins to our former structure.
Added
Under some circumstances, substantial fines and penalties, including revocation of electric power generating permits, may be imposed under the laws and regulations described above and below. Monetary sanctions and, in severe circumstances, criminal sanctions may be imposed for failure to comply with these laws and regulations.
Removed
Additionally, in 2024, we have secured supplemental coal from third party suppliers at favorable prices. This allows us to diversify self-production supply risk and provides us with additional flexibility in our sales portfolio.
Added
Although, like other power generating companies, we have been cited for violations in the ordinary course of our business, we have never had a permit suspended or revoked because of any violation, and the penalties assessed for these violations have not been material. Mining Permits and Approvals Numerous governmental permits or approvals are required for mining operations.
Removed
The optionality to obtain low-cost tons either internally or from third parties while capturing upward swings in the commodities markets for coal should further maximize margins while optimizing fuels costs at Merom. In addition to the expected improvements in coal margins, Merom has the capability to provide revenue on up to 6 million mega-watt-hours (MWh) annually.
Added
Applications for permits require extensive engineering and data analysis and presentation and must address a variety of environmental, health, and safety matters associated with a proposed mining operation.
Removed
Based on the currently available forward power price curves, we believe over time, the margins earned on energy and capacity sales will be more than double our historical margins of approximately eight dollars per ton on coal production.
Added
These matters include the manner and sequencing of coal extraction, the storage, use, and disposal of waste and other substances and impacts on the environment, the construction of water containment areas, and reclamation of the area after coal extraction.
Removed
Furthering this belief, in Q3 we reported contracted sales of 3.4 million MWh to be delivered in 2026-2028 at MWh margins that we believe could exceed twenty-five dollars per MWh. We continue to see strong indications for both energy and capacity sales in 2024 and in future years.
Added
Meeting all requirements imposed by any of these authorities may be costly and may delay or prevent commencement or continuation of mining operations. The permitting process for certain mining operations can extend over several years and can be subject to administrative and judicial challenge, including by the public.
Removed
Our approach has been to sell energy primarily through bi-lateral agreements on a unit contingent basis in an attempt to reduce our exposure to market risk if we fail to produce due to operational issues in what we believe to be an increasingly volatile power market.
Added
Some required mining permits are becoming increasingly difficult to obtain in a timely manner, or at all. We cannot assure you that we will not experience difficulty or delays in obtaining mining permits in the future or that a current permit will not be revoked. We are required to post bonds to secure performance under our permits.
Removed
While we are seeing success in this approach, sales of this type are largely bespoke and require more time and negotiation than a typical firm power sale as we build our forward sales positions.
Added
Under some circumstances, substantial fines and penalties, including revocation of mining permits, may be imposed under the laws and regulations described above. Monetary sanctions and, in severe circumstances, criminal sanctions may be imposed for failure to comply with these laws and regulations.
Removed
As we methodically work to contract our forward sales book, we continue to sell energy on the spot market, resulting in episodic cash generation largely dependent on demand created by seasonal weather and various other conditions which stress the power grid. The ability to store a commodity is inherently tied to the volatility of that commodity.
Added
Regulations also provide that a mining permit can be refused or revoked if the permit applicant or permittee owns or controls, directly or indirectly through other entities, mining operations that have outstanding environmental violations.
Removed
Coal can be piled up for years, thus its volatility is low. Oil and gas face transportation and storage challenges which increase price volatility. Batteries and hydro generation are improving, but current technology and expense limit the ability to economic practicability of implementing the technology on a large-scale basis.
Added
Although, like other coal companies, we have been cited for violations in the ordinary course of our business, we have never had a permit suspended or revoked because of any violation, and the penalties assessed for these violations have not been material.
Removed
We believe that the lack of economically viable storage options coupled with the challenges of non-dispatchable generation gaining market share in an environment where the sun does not always shine and the wind does not always blow, indicates that energy’s price volatility is likely to increase over the next decade.
Added
Mine Health and Safety Laws The Federal Mine Safety and Health Act of 1977 (“FMSHA”) and regulations adopted pursuant thereto, imposes extensive and detailed safety and health standards on numerous aspects of mining operations, including training of mine personnel, mining procedures, blasting, the equipment used in mining operations, and numerous other matters.
Removed
This volatility appears to be keeping the forward power price premium intact.
Added
MSHA monitors and rigorously enforces compliance with these federal laws and regulations. In addition, the states where we operate have state programs for mine safety and health regulation and enforcement.
Removed
In an effort to capture additional margins above our traditional wholesale energy markets, we recently agreed to a structure with Hoosier Energy and their distribution member, WIN REMC, that should allow us to attract industrial users of power, such as data centers, AI providers and power dense manufacturers, to the Merom property.
Added
Federal and state safety and health regulations affecting the coal mining industry are perhaps the most comprehensive and rigorous system in the United States (the “U.S.”) for the protection of employee safety and have a significant effect on our operating costs.
Removed
We believe leveraging our plant to help supply these large users of energy with reliable, resilient electricity should allow us to operate more efficiently in a volatile power environment, generate increased margins and support the fragile power grid as it navigates the challenges of transition to new sources of energy in the coming decades.
Added
Although many of the requirements primarily impact underground mining, our competitors in all of the areas in which we operate are subject to the same laws and regulations.
Removed
These types of relationships should allow us to capture the upside of increasing demand and volatility while providing stability to our earnings and ability to dispatch in a world that is consistently seeking more electricity but lacks the real time infrastructure and generation to satisfy those increasing power needs.
Added
FMSHA has been construed as authorizing MSHA to issue citations and orders pursuant to the legal doctrine of strict liability or liability without fault, and FMSHA requires the imposition of a civil penalty for each cited violation.
Removed
Combined with our increased volume of forward power sales, we believe that these types of opportunities will continue to improve the outlook for the company and provide a stable platform to leverage both our power and coal assets in a responsible and sustainable manner.
Added
Negligence and gravity assessments, along with other factors, can result in the issuance of various types of orders, including orders requiring withdrawal from the mine or the affected area, and some orders can also result in the imposition of civil penalties. FMSHA also contains criminal liability provisions.
Removed
We are excited about the transformation of Hallador from a commodity focused producer of coal to a vertically integrated IPP.
Added
For example, criminal liability may be imposed upon corporate operators who knowingly and willfully authorize, order, or carry out violations of the FMSHA or its mandatory health and safety standards. 7 Table of Contents The Federal Mine Improvement and New Emergency Response Act of 2006 (“MINER Act”) significantly amended the FMSHA, imposing more extensive and stringent compliance standards, increasing criminal penalties and establishing a maximum civil penalty for non-compliance, and expanding the scope of federal oversight, inspection, and enforcement activities.
Removed
We believe that this transition provides significant opportunity to capture the increased margins of the energy markets, to take advantage of the increasing demand for electricity and to step up the value chain in a more sustainable and future proofed industry than that which we have traditionally operated in.
Added
Following the passage of the MINER Act, MSHA has issued new or more stringent rules and policies on a variety of topics, including: ● sealing off abandoned areas of underground coal mines; ● mine safety equipment, training, and emergency reporting requirements; ● substantially increased civil penalties for regulatory violations; ● training and availability of mine rescue teams; ● underground “refuge alternatives” capable of sustaining trapped miners in the event of an emergency; ● flame-resistant conveyor belts, fire prevention and detection, and use of air from the belt entry; and ● post-accident two-way communications and electronic tracking systems. ​ MSHA continues to interpret and implement various provisions of the MINER Act, along with introducing new proposed regulations and standards.
Removed
As evidenced by the ongoing build of our long-term sales book, our deliberate movement into the electricity sector should materially strengthen our company and the products that we sell. 30 Table of Contents Solid Forward Sales Position - Segment Basis, Before Intercompany Eliminations 2024 2025 2026 2027 2028 Total Coal Priced tons - 3rd party (in millions) 3.4 1.8 0.5 0.5 - 6.2 Average price per ton - 3rd party $ 51.82 $ 50.57 $ 56.09 $ 56.09 $ - Priced tons (in millions) - Hallador Power 1.5 2.3 2.3 2.3 2.3 10.7 Average price per ton - Hallador Power $ 51.00 $ 51.00 $ 51.00 $ 51.00 $ 51.00 Contracted coal revenue (in millions) $ 252.69 $ 208.33 $ 145.35 $ 145.35 $ 117.30 $ 869.02 % Priced 109 % 91 % 62 % 62 % 51 % Committed & unpriced tons (in millions) - 3rd party - 1.0 1.0 1.0 - 3.0 Committed & unpriced tons (in millions) - Hallador Power - - - - - - Total contracted tons (in millions) 4.9 5.1 3.8 3.8 2.3 19.9 % Coal Sold* 109 % 113 % 84 % 84 % 51 % Average cost per ton of coal sold was $33.67 for the year ended December 31, 2023 ($26.98 after eliminating for intercompany sales to Hallador Power) 2024 Coal Capex Budget (in millions) $ 25.00 Power Energy Contracted MWh (in millions) 1.87 1.90 1.83 1.78 1.09 8.47 Average contracted price per MWh $ 35.23 $ 36.06 $ 55.37 $ 54.65 $ 52.98 Contracted revenue (in millions) $ 65.88 $ 68.51 $ 101.33 $ 97.28 $ 57.75 $ 390.75 % Energy Sold* 31 % 32 % 31 % 30 % 18 % Capacity Average daily contracted capacity 810 748 743 623 454 % Capacity Contracted** 94 % 87 % 86 % 72 % 53 % Average contracted capacity price per MWd $ 200 $ 210 $ 230 $ 226 $ 224 Contracted capacity revenue (in millions) $ 59.13 $ 57.33 $ 62.37 $ 51.39 $ 37.12 $ 267.34 Total Energy & Capacity Revenue Contracted Power Revenue (in millions) $ 125.01 $ 125.84 $ 163.70 $ 148.67 $ 94.87 $ 658.09 Contracted Power Revenue per MWh* $ 45.69 $ 47.05 $ 67.40 $ 66.47 $ 64.70 2023 average cost per MWh sold was $33.67 for the year ended December 31, 2023 ($26.98 assuming intercompany sales of coal were sold at cost) 2024 Power Capex Budget (in millions) $ 18.00 TOTAL CONTRACTED REVENUE (IN MILLIONS) $ 377.70 $ 334.17 $ 309.05 $ 294.02 $ 212.17 $ 1,527.11 * Based on coal production of 4.5 million tons and 6.0 million MWh annually. ** Based on a MISO accreditation of 860MW per day.
Added
In 2014, MSHA began implementation of a finalized new regulation titled “Lowering Miners’ Exposure to Respirable Coal Mine Dust, Including Continuous Personal Dust Monitors.” The final rule implemented a reduction in the allowable respirable coal mine dust exposure limits, requires the use of sampling data taken from a single sample rather than an average of samples, and increases oversight by MSHA regarding coal mine dust and ventilation issues at each mine, including the approval process for ventilation plans at each mine, all of which increase mining costs.
Removed
Accreditations are adjusted annually based on 3-year rolling performance metrics. Internal Controls Disclosure The preparation of coal reserve and resource estimates is conducted by independent individuals who are by virtue of their education, experience and professional association considered qualified persons (as defined in SEC rules).
Added
The second phase of the rule began in February 2016 and requires additional sampling for designated and other occupations using the new continuous personal dust monitor technology, which provides real-time dust exposure information to the miner.
Removed
Company personnel meet on an annual basis with the independent qualified person to provide updates to the reserve and resource estimates. Company personnel review the work of the qualified person to ensure such work is prepared in accordance with applicable rules and regulations and that the data and assumptions provided were properly applied to the final reserve and resource model.
Added
Phase three of the rule began in August 2016 and resulted in lowering the current respirable dust level of 2.0 milligrams per cubic meter to 1.5 milligrams per cubic meter of air.
Removed
The Company’s engineering personnel ensure estimates are based on current mine plans, incorporate the most recent drilling and lab data, properly reflect changes in permitting status, consider known encumbrances, and are consistent with operating knowledge and expectations in terms of mining methods, recovery rates, minimum seam heights or maximum strip ratios, and saleable qualities.
Added
Compliance with these rules can result in increased costs on our operations, including, but not limited to, the purchasing of new equipment and the hiring of additional personnel to assist with monitoring, reporting, and recordkeeping obligations.
Removed
An American National Standards Institute-certified third-party laboratory is utilized to support reserve and resource estimates. The laboratory follows standard sample preparation, security, and environmental procedures. In addition, the Company’s qualified person performs independent data verification procedures to ensure data is of sufficient quantity and reliability to reasonably support the coal reserve and resource estimates.
Added
MSHA published a request for information regarding engineering controls and best practices to lower miners’ exposure to respirable coal mine dust, and the comment period closed in July 2022. It is uncertain whether MSHA will present additional proposed rules, or revisions to the final rule, following the closing of the comment period.
Removed
Estimates of any mineral reserve and resources are always subject to a degree of uncertainty. The level of confidence that can be applied to a particular estimate is a function of, among other things, the amount, quality, and completeness of exploration data; geological complexity of the deposit; and economic, legal, social, and environmental factors associated with mining the reserve/resource.
Added
MSHA has also published, and may continue to publish, various proposed and final rules or requests for information, which may result in additional rulemakings. For example, in June 2016, MSHA published a request for information on Exposure of Underground Miners to Diesel Exhaust.

… 545 more changes not shown on this page.

Other HNRG 10-K year-over-year comparisons