10-Q 1 hnrg20230829_10q.htm FORM 10-Q hnrg20230829_10q.htm
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UNITED STATES 

SECURITIES AND EXCHANGE COMMISSION 

Washington, D.C. 20549 

  

FORM 10-Q

 

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

  

 

For the quarterly period ended September 30, 2023

OR

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

  

Commission file number:001-34743

 

 

logo.jpg

 

HALLADOR ENERGY COMPANY

(www.halladorenergy.com)

Colorado

(State of incorporation)

 

84-1014610

(IRS Employer Identification No.)

 

 

 

1183 East Canvasback Drive, Terre Haute, Indiana

(Address of principal executive offices)

 

47802

(Zip Code)

  

Registrant’s telephone number, including area code: 812.299.2800

  

Securities registered pursuant to Section 12(b) of the Act:

 

Title of each class

 

Trading Symbol

 

Name of each exchange on which registered

Common Shares, $.01 par value

 

HNRG

 

Nasdaq

  

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☑ No 

 

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulations S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☑ No 

 

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of "large accelerated filer," "accelerated filer," "smaller reporting company," and "emerging growth company" in Rule 12b-2 of the Exchange Act.

  

Large accelerated filer ☐

 

Accelerated filer ☑

Non-accelerated filer ☐

 

Smaller reporting company

 

 

Emerging growth company 

  

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.

 

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes  No ☑

 

As of November 3, 2023, we had 33,142,403 shares of common stock outstanding.

 

 

 
 
 

 

PART I - FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS  

Hallador Energy Company 

Condensed Consolidated Balance Sheets 

(in thousands, except per share data) 

(unaudited) 

  September 30,  

December 31,

 
  

2023

  

2022

 

ASSETS

        

Current assets:

        

Cash and cash equivalents

 $2,573  $3,009 

Restricted cash

  4,143   3,417 

Accounts receivable

  20,692   29,889 

Inventory

  23,749   49,796 

Parts and supplies

  37,012   28,295 

Contract asset - coal purchase agreement

     19,567 

Prepaid expenses

  4,158   4,546 

Total current assets

  92,327   138,519 

Property, plant and equipment:

        

Land and mineral rights

  115,486   115,595 

Buildings and equipment

  572,885   534,129 

Mine development

  153,240   140,108 

Total property, plant and equipment

  841,611   789,832 

Less - accumulated depreciation, depletion and amortization

  (358,944)  (309,370)

Total property, plant and equipment, net

  482,667   480,462 

Investment in Sunrise Energy

  3,038   3,988 

Other assets

  7,154   7,585 

Total Assets

 $585,186  $630,554 

LIABILITIES AND STOCKHOLDERS' EQUITY

        

Current liabilities:

        

Current portion of bank debt, net

 $21,188  $33,031 

Accounts payable and accrued liabilities

  76,602   82,972 

Deferred revenue

  25,712   35,485 

Contract liability - power purchase agreement and capacity payment reduction

  48,087   88,114 

Total current liabilities

  171,589   239,602 

Long-term liabilities:

        

Long-term bank debt, excluding current maturities, net

  36,482   49,713 

Convertible note payable

  10,000   10,000 

Convertible notes payable - related party

  9,000   9,000 

Deferred income taxes

  12,244   4,606 

Asset retirement obligations

  16,348   17,254 

Contract liability - power purchase agreement

  55,439   84,096 

Other

  2,395   1,259 

Total long-term liabilities

  141,908   175,928 

Total liabilities

  313,497   415,530 

Commitments and contingencies

          

Stockholders' equity:

        

Preferred stock, $.10 par value, 10,000 shares authorized; none issued and outstanding

      

Common stock, $.01 par value, 100,000 shares authorized; 33,142 and 32,983 issued and outstanding, as of September 30, 2023 and December 31, 2022, respectively

  332   330 

Additional paid-in capital

  120,410   118,788 

Retained earnings

  150,947   95,906 

Total stockholders’ equity

  271,689   215,024 

Total liabilities and stockholders’ equity

 $585,186  $630,554 

    

See accompanying notes to the condensed consolidated financial statements.

 

 

 

Hallador Energy Company 

Condensed Consolidated Statements of Operations

(in thousands, except per share data) 

(unaudited) 

 

   

Three Months Ended September 30,

   

Nine Months Ended September 30,

 
   

2023

   

2022

   

2023

   

2022

 

SALES AND OPERATING REVENUES:

                               

Coal sales

  $ 97,420     $ 83,562     $ 280,596     $ 204,733  

Electric sales

    67,403           $ 230,812        

Other revenues

    945       1,522       3,888       5,187  

Total revenue

    165,768       85,084       515,296       209,920  

EXPENSES:

                               

Operating expenses

    119,042       64,557       367,983       170,552  

Depreciation, depletion and amortization

    16,230       11,187       51,375       31,882  

Asset retirement obligations accretion

    468       255       1,380       751  

Exploration costs

    171       121       682       393  

General and administrative

    6,054       3,569       18,596       10,440  

Total operating expenses

    141,965       79,689       440,016       214,018  
                                 

INCOME (LOSS) FROM OPERATIONS

    23,803       5,395       75,280       (4,098 )
                                 

Interest expense (1)

    (3,030 )     (3,355 )     (10,470 )     (7,476 )

Loss on extinguishment of debt

    (1,491 )           (1,491 )      

Equity method investment (loss) income

    (177 )     168       (325 )     506  

NET INCOME (LOSS) BEFORE INCOME TAXES

    19,105       2,208       62,994       (11,068 )
                                 

INCOME TAX EXPENSE (BENEFIT):

                               

Current

    (178 )           315        

Deferred

    3,208       596       7,638       840  

Total income tax expense

    3,030       596       7,953       840  
                                 

NET INCOME (LOSS)

  $ 16,075     $ 1,612     $ 55,041     $ (11,908 )
                                 

NET INCOME (LOSS) PER SHARE:

                               

Basic

  $ 0.49     $ 0.05     $ 1.66     $ (0.38 )

Diluted

  $ 0.44     $ 0.05     $ 1.52     $ (0.38 )
                                 

WEIGHTED AVERAGE SHARES OUTSTANDING

                               

Basic

    33,140       32,983       33,088       31,727  

Diluted

    36,848       33,268       36,748       31,727  
                                 

(1) Interest Expense:

                               

Interest on bank debt

  $ 2,006     $ 2,133     $ 6,316     $ 5,555  

Other interest

    422       227       1,316       285  

Amortization and swap-related interest:

                               

Payments on interest rate swap, net of changes in value

                      (867 )

Amortization of debt issuance costs

    602       995       2,838       2,503  

Total amortization and swap related interest

    602       995       2,838       1,636  

Total interest expense

  $ 3,030     $ 3,355     $ 10,470     $ 7,476  

 

See accompanying notes to the condensed consolidated financial statements.

 

 

Hallador Energy Company 

Condensed Consolidated Statements of Cash Flows 

(in thousands) 

(unaudited)

   

Nine Months Ended September 30,

 
   

2023

   

2022

 

OPERATING ACTIVITIES:

               

Net income (loss)

  $ 55,041     $ (11,908 )

Deferred income taxes

    7,638       840  

Equity loss (income) – Sunrise Energy

    325       (506 )

Cash distribution - Sunrise Energy

    625        

Depreciation, depletion, and amortization

    51,375       31,882  

Loss (gain) on sale of assets

    78       (367 )

Change in fair value of interest rate swaps

          (867 )

Loss on extinguishment of debt

    1,491        

Amortization of debt issuance costs

    2,838       2,503  

Asset retirement obligations accretion

    1,380       751  

Cash paid on asset retirement obligation reclamation

    (2,286 )     (2,483 )

Stock-based compensation

    2,774       230  

Provision for loss on customer contracts

          159  

Amortization of contract asset and contract liabilities

    (32,444 )      

Other

    914       943  

Change in operating assets and liabilities:

               

Accounts receivable

    9,197       (3,160 )

Inventory

    14,874       (6,035 )

Parts and supplies

    (8,717 )     (4,975 )

Prepaid expenses

    1,116       (2,390 )

Accounts payable and accrued liabilities

    (11,419 )     9,318  

Deferred revenue

    (15,273 )      

Cash provided by operating activities

    79,527       13,935  

INVESTING ACTIVITIES:

               

Capital expenditures

    (48,746 )     (38,344 )

Proceeds from sale of equipment

    62       758  

Cash used in investing activities

    (48,684 )     (37,586 )

FINANCING ACTIVITIES:

               

Payments on bank debt

    (56,463 )     (35,713 )

Borrowings of bank debt

    33,000       37,700  

Issuance of convertible note

          11,000  

Issuance of related party convertible notes payable

          18,000  

Debt issuance costs

    (5,940 )     (2,097 )

Distributions to redeemable noncontrolling interests

          (585 )

Taxes paid on vesting of RSUs

    (1,150 )      

Cash (used in) provided by financing activities

    (30,553 )     28,305  

Increase in cash, cash equivalents, and restricted cash

    290       4,654  

Cash, cash equivalents, and restricted cash, beginning of period

    6,426       5,829  

Cash, cash equivalents, and restricted cash, end of period

  $ 6,716     $ 10,483  

CASH, CASH EQUIVALENTS, AND RESTRICTED CASH CONSIST OF THE FOLLOWING:

               

Cash and cash equivalents

  $ 2,573     $ 7,000  

Restricted cash

    4,143       3,483  
    $ 6,716     $ 10,483  
                 

SUPPLEMENTAL CASH FLOW INFORMATION:

               

Cash paid for interest

  $ 8,069     $ 4,791  

SUPPLEMENTAL NON-CASH FLOW INFORMATION:

               

Change in capital expenditures included in accounts payable and prepaid expense

  $ 3,214     $ 2,396  

Convertible notes payable and related party convertible notes payable converted to common stock

  $     $ 10,000  

 

See accompanying notes to the condensed consolidated financial statements.

 

 Hallador Energy Company 

Condensed Consolidated Statements of Stockholders’ Equity

(in thousands) 

(unaudited)

 

                   

Additional

           

Total

 
   

Common Stock Issued

   

Paid-in

   

Retained

   

Stockholders'

 
   

Shares

   

Amount

   

Capital

   

Earnings

   

Equity

 

Balance, June 30, 2023

    33,137     $ 332     $ 119,678     $ 134,872     $ 254,882  

Stock-based compensation

                773             773  

Stock issued on vesting of RSUs

    10                          

Taxes paid on vesting of RSUs

    (5 )           (41 )           (41 )

Net income

                      16,075       16,075  

Balance, September 30, 2023

    33,142     $ 332     $ 120,410     $ 150,947     $ 271,689  
                                         

Balance, December 31, 2022

    32,983     $ 330     $ 118,788     $ 95,906     $ 215,024  

Stock-based compensation

                2,774             2,774  

Stock issued on vesting of RSUs

    285       3       (3 )            

Taxes paid on vesting of RSUs

    (126 )     (1 )     (1,149 )           (1,150 )

Net income

                      55,041       55,041  

Balance, September 30, 2023

    33,142     $ 332     $ 120,410     $ 150,947     $ 271,689  

  

                   

Additional

           

Total

 
   

Common Stock Issued

   

Paid-in

   

Retained

   

Stockholders'

 
   

Shares

   

Amount

   

Capital

   

Earnings

   

Equity

 

Balance, June 30, 2022

    32,983     $ 330     $ 114,212     $ 64,281     $ 178,823  

Stock-based compensation

                122             122  

Cancellation of redeemable noncontrolling interests

                3,415             3,415  

Net income

                      1,612       1,612  

Balance, September 30, 2022

    32,983     $ 330     $ 117,749     $ 65,893     $ 183,972  
                                         

Balance, December 31, 2021

    30,785     $ 308     $ 104,126     $ 77,801     $ 182,235  

Stock-based compensation

                230             230  

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 loss

                      (11,908 )     (11,908 )

Balance, September 30, 2022

    32,983     $ 330     $ 117,749     $ 65,893     $ 183,972  

 

See accompanying notes to the condensed consolidated financial statements.

 

 

Hallador Energy Company

Notes to Condensed Consolidated Financial Statements

(unaudited) 

 

 

(1)

GENERAL BUSINESS

 

The interim financial data is unaudited; however, in our opinion, it includes all adjustments, consisting only of normal recurring adjustments necessary for a fair statement of the results for the interim periods. The condensed consolidated financial statements included herein have been prepared pursuant to the Securities and Exchange Commission's (the "SEC") rules and regulations; accordingly, certain information and footnote disclosures normally included in generally accepted accounting principles ("GAAP") financial statements have been condensed or omitted.

 

The results of operations and cash flows for the three and nine months ended September 30, 2023, are not necessarily indicative of the results to be expected for future quarters or for the year ending December 31, 2023.

 

Our organization and business, the accounting policies we follow, and other information are contained in the notes to our consolidated financial statements filed as part of our 2022 Annual Report on Form 10-K. This quarterly report should be read in conjunction with such Annual Report on Form 10-K.

 

The condensed consolidated financial statements include the accounts of Hallador Energy Company (hereinafter known as “we, us, or our”) and its wholly owned subsidiaries Sunrise Coal, LLC ("Sunrise"), Hallador Power Company, LLC ("Hallador Power"), as well as Sunrise and Hallador Power's wholly owned subsidiaries. All significant intercompany accounts and transactions have been eliminated. 

 

As the result of Hallador Power’s acquisition of the Merom one gigawatt power plant in Sullivan County, Indiana (the “Merom Power Plant”) from Hoosier Energy Rural Electric Cooperative, Inc. (“Hoosier”) on  October 21, 2022 (the “Merom Acquisition”), as further described in Note 14, beginning in the fourth quarter of 2022 we began to strategically view and manage our operations through two reportable segments:  Coal Operations and Electric Operations.  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 Eliminations" and primarily are comprised of unallocated corporate costs and activities, the elimination of coal sales from coal operations to electric operations, a 50% interest in Sunrise Energy, LLC, 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.  Prior periods have been recast to reflect Corporate and Other and Eliminations apart from Coal Operations, which previously were aggregated into a single reportable segment.

 

The Coal Operations reportable segment includes current operating mining complexes Oaktown 1 and 2 underground mines, Prosperity surface mine, Freelandville surface mine, and Carlisle wash plant.

 

The Electric Operations reportable segment includes electric power generation facilities of the Merom Power Plant.

 

 

(2)

LONG-LIVED ASSET IMPAIRMENTS

 

Long-lived assets are reviewed for impairment whenever events or changes in circumstance indicate that the carrying amount of the assets may not be recoverable.  For the three and nine-month periods ended September 30, 2023 and for the three and nine-month periods ended September 30, 2022, no impairment charges were recorded for long-lived assets.

 

 

(3)

INVENTORY

 

Inventory is valued at a lower of average cost or net realizable value (NRV).  As of September 30, 2023, and December 31, 2022, coal inventory includes NRV adjustments of $1.1 million and $4.9 million, respectively.

 

5

  
 

(4)

BANK DEBT

 

On March 13, 2023, we executed an amendment to our credit agreement with PNC Bank, National Association (in its capacity as administrative agent, "PNC"), administrative agent for our lenders under our credit agreement, which was accounted for as a debt modification. 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 of March 31, 2024, and extend the maturity date of the revolver to May 31, 2024. The amendment reduced the total capacity under the revolver to $85 million from $120 million, waived the maximum annual capital expenditure covenant for 2022, and increased the covenant for 2023 to $75 million.

 

On August 2, 2023, we executed an additional amendment to our credit agreement with PNC, which was accounted for as a debt extinguishment. 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.

 

Bank debt was reduced by $23.5 million during the nine months ended September 30, 2023.  Under the terms of the August 2, 2023 amendment, bank debt is comprised of term debt ($61.8 million as of September 30, 2023) and a $75 million revolver ($0.0 million borrowed as of September 30, 2023).  The term debt requires payments of $3.3 million each quarter, which commenced in September 2023, increasing to $6.5 million in March 2024 through maturity. Our debt is recorded at amortized cost, which approximates fair value due to the variable interest rates in the agreement and is collateralized primarily by our assets.

 

Liquidity

 

As of September 30, 2023, we had an additional borrowing capacity of $63.8 million and total liquidity of $66.4 million.  Our additional borrowing capacity is net of $11.2 million in outstanding letters of credit as of September 30, 2023, that were required to maintain surety bonds.  Liquidity consists of our additional borrowing capacity and cash and cash equivalents.

 

Fees

 

Unamortized bank fees and other costs incurred in connection with the initial facility and subsequent amendments totaled $2.5 million as of December 31, 2022. Additional costs incurred with the March 13, 2023 and August 2, 2023 amendments totaled $1.6 million and $4.3 million, respectively.  During the three and nine months ended September 30, 2022, 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. Unamortized costs as of September 30, 2023, and December 31, 2022, were $4.1 million and $2.5 million, respectively. 

 

Bank debt, less debt issuance costs, is presented below (in thousands):

  

September 30,

  

December 31,

 
  

2023

  

2022

 

Current bank debt

 $22,750  $35,500 

Less unamortized debt issuance cost

  (1,562)  (2,469)

Net current portion

 $21,188  $33,031 
         

Long-term bank debt

 $39,000  $49,713 

Less unamortized debt issuance cost

  (2,518)   

Net long-term portion

 $36,482  $49,713 
         

Total bank debt

 $61,750  $85,213 

Less total unamortized debt issuance cost

  (4,080)  (2,469)

Net bank debt

 $57,670  $82,744 

 

6

 

Covenants

 

The credit facility includes a Maximum Leverage Ratio (consolidated funded debt/trailing twelve months adjusted EBITDA), calculated as of the end of each fiscal quarter for the trailing twelve months, not to exceed the amounts below:

 

Fiscal Periods Ending

 

Ratio

 

September 30, 2023, and each fiscal quarter thereafter

 2.25 to 1.00 

 

As of September 30, 2023, our Leverage Ratio of 0.71 was in compliance with the 2.25 covenant defined in the credit agreement.

 

The credit facility requires a Minimum Debt Service Coverage Ratio (consolidated adjusted EBITDA/annual debt service) calculated as of the end of each fiscal quarter for the trailing twelve months of 1.25 to 1.00 through the credit facility's maturity.

 As of September 30, 2023, our Debt Service Coverage Ratio of 3.75 was in compliance with the requirements of the credit agreement.

 

As of September 30, 2023, we were in compliance with all other covenants defined in 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  September 30, 2023, we are paying SOFR plus 4.25% on the outstanding bank debt.

 

 

(5)

ACCOUNTS PAYABLE AND ACCRUED LIABILITIES (in thousands)

 

   

September 30,

   

December 31,

 
   

2023

   

2022

 

Accounts payable

  $ 52,491     $ 62,306  

Accrued property taxes

    3,008       1,917  

Accrued payroll

    7,373       5,933  

Workers' compensation reserve

    4,130       3,440  

Group health insurance

    2,300       2,250  

Asset retirement obligation - current portion

    3,580       3,580  

Other

    3,720       3,546  

Total accounts payable and accrued liabilities

  $ 76,602     $ 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 the consideration will be collected. 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 our facilities. Our customers typically purchase coal directly from our mine sites or our rail facility in Princeton, Indiana, where the sale occurs and where title, risk of loss, and control pass to the customer at that point. Our customers arrange for and bear the costs of transporting their coal from our mines to their plants or other specified discharge points. Our customers are typically domestic utility companies. Our coal sales agreements with our customers are fixed-priced, fixed-volume supply contracts or include a pre-determined escalation in price for each year. Price re-opener and index provisions  may allow either party to commence a renegotiation of the contract price at a pre-determined time. Price re-opener provisions  may automatically set a new price based on the prevailing market price or, in some instances, require us to negotiate a new price, sometimes within specified ranges of prices. The terms of our coal sales agreements result from competitive bidding and extensive negotiations with customers. Consequently, the terms of these contracts vary by customer.

 

7

 

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. 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 Btu factor, moisture, ash, and sulfur content, and can result in either increases or decreases in the value of the coal shipped.

 

Electric operations

 

The Company 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. Accordingly, the Company concluded that a PPA that is not determined to be a lease or derivative constitutes a valid contract under ASC 606.

 

The Company will recognize revenue daily, based on an output method of capacity made available as part of any stand-ready obligations for contract capacity performance obligations and daily, based on an output method of MWh of electricity delivered.

 

For the delivered energy performance obligation in the PPA with Hoosier, the Company will recognize revenue daily for actual delivered electricity plus the amortization of the contract liability as a result of the Asset Purchase Agreement with Hoosier.

 

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 our revenue and cash flows are affected by economic factors.

 

Coal operations

 

51% and 52% of our coal revenue for the three and nine months ended September 30, 2023, was sold to customers in the State of Indiana, with the remainder sold to customers in Florida, North Carolina, Georgia, and Alabama.  70% and 79% of our coal revenue for the three and nine months ended September 30, 2022, respectively, was sold to customers in the State of Indiana, with the remainder sold to customers in Florida, Georgia, and North Carolina.

 

Electric operations

 

100% of our electric revenue for the three and nine months ended September 30, 2023, was sold to Hoosier or the Midcontinent Independent System Operator ("MISO") wholesale market.  MISO is the independent system operator managing the flow of high-voltage electricity across 15 U.S. states and the Canadian province of Manitoba.  100% of our electric revenue through May 31, 2023, was sold to Hoosier in the state of Indiana.  32% of our electric revenue for the months of June 2023 to September 2023 was sold to Hoosier.  For the three and nine months ended September 30, 2023, revenue from delivered energy was $54.4 million and $184.7 million, respectively.  For the three and nine months ended September 30, 2023, revenue from capacity payments was $13.0 million and $46.1 million, respectively.

 

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. In most of our coal contracts, the customer contracts with us to provide coal that meets certain quality criteria. We consider each ton of coal a separate performance obligation and allocate the transaction price based on the base price per the contract, increased or decreased, for quality adjustments.

 

We recognize revenue at a point in time as the customer does not have control over the asset during the contract's fulfillment. 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. This is also the point at which physical possession of the coal transfers to the customer, as well as the right to receive substantially all benefits and the risk of loss in ownership of the coal.  

 

We have remaining coal sales performance obligations relating to fixed-priced contracts of approximately $426.1 million, which represent the average fixed prices on our committed contracts as of September 30, 2023. Approximately 31% of this relates to committed obligations in 2023, with the remainder committed in 2024 through 2027.

 

8

 

We have remaining performance obligations relating to 3.0 million tons of unpriced coal sales contracts of approximately $155 million, which represents our estimate of the expected price on committed contracts as of September 30, 2023. We expect to recognize all of this coal sales revenue beginning in 2025.

 

The coal tons used to determine the remaining performance obligations are subject to adjustment in instances of force majeure and exercise of customer options to either take additional tons or reduce tonnage if such an option exists in the customer contract.

 

Electric operations

 

The Company concluded that each megawatt-hour ("MWh") of delivered energy is capable of being distinct as a customer could benefit from each on its own by using/consuming it as a part of its operations.  The Company also concluded that the stand-ready obligation to be available to provide electricity to Hoosier is capable of being distinct as each unit of capacity provides an economic benefit to the holder and could be sold by the customer.

 

We have remaining delivered energy obligations through 2028 totaling $312 million as of September 30, 2023.

 

In addition to delivered energy, Hallador provides stand-ready obligations to provide electricity, also known as contract capacity.  We have remaining capacity obligations through 2028 totaling $204 million as of September 30, 2023.

 

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.

 

Under the typical payment terms of our contracts with customers, the customer pays us a base price for the coal, increased or decreased for quality adjustments, electricity, or capacity. Amounts billed and due are recorded as trade accounts receivable and included in accounts receivable in our consolidated balance sheets. As of  January 1, 2022, accounts receivable for coal sales billed to customers was $12.8 million. We do not currently have any contracts in place where we would transfer coal, electricity, or capacity in advance of knowing the final price, and thus do not have any contract assets recorded. Contract liabilities also arise when consideration is received in advance of performance. As of January 1, 2023, deferred revenue for payments related to coal operations in advance of performance was $8.9 million, and deferred revenue for payments related to electric operations in advance of performance was $26.6 million.  Additional payments for electric operations in advance of performance for the three and nine months ended September 30, 2023 were $0.0 million and $43.8 million, respectively.  For the three and nine months ended  September 30, 2023, we recognized revenue from coal operations of $2.5 million and $7.5 million, respectively, as tons of outstanding coal delivery obligations were fulfilled, and we recognized revenue from electric operations of $12.9 million and $46.0 million, respectively, as outstanding capacity obligations were fulfilled.  Pursuant to the terms of the underlying contracts, performance obligations representing $1.3 million and $8.3 million will be satisfied and recognized as revenue related to our coal operations and electric operations, respectively, during the three-month period ending December 31, 2023.

 

 

(7)

INCOME TAXES

 

For the nine months ended September 30, 2023, and 2022, we recorded income taxes using an estimated annual effective tax rate based upon projected annual income, forecasted permanent tax differences, discrete items, and statutory rates in states in which we operate.  The effective tax rate for the nine months ended September 30, 2023, and 2022 was ~13% and ~ (8%), respectively. Historically, our actual effective tax rates have differed from the statutory effective rate primarily due to the benefit received from statutory percentage depletion in excess of tax basis. The deduction for statutory percentage depletion does not necessarily change proportionately to changes in income (loss) before income taxes.

 

 

(8)

STOCK COMPENSATION PLANS

 

Non-vested grants as of December 31, 2022

  1,056,937 

Awarded - weighted average share price on award date was $9.38

  267,000 

Vested - weighted average share price on vested date was $9.18

  (285,221)

Forfeited

  (10,000)

Non-vested grants as of September 30, 2023

  1,028,716 

 

9

 

For the three and nine months ended September 30, 2023, our stock compensation was $0.8 million and $2.8 million, respectively. For the three and nine months ended September 30, 2022, our stock compensation was $0.1 million and $0.2 million, respectively.  

 

Non-vested RSU grants will vest as follows:

 

Vesting Year

 

RSUs Vesting

 

2023

  189,000 

2024

  300,608 

2025

  539,108 
   1,028,716 

 

The outstanding RSUs have a value of $14.8 million based on the September 30, 2023 closing stock price of $14.42.

 

As of September 30, 2023, unrecognized stock compensation expense is $4.7 million, and we had 395,657 RSUs available for future issuance.  RSUs are not allocated earnings and losses as they are considered non-participating securities.

 

 

(9)

LEASES

 

We have operating leases for office space with remaining lease terms ranging from 10 months to 96 months. As most of the leases do not provide an implicit rate, we calculated the right-of-use assets and lease liabilities using our secured incremental borrowing rate at the lease commencement date. We currently do not have any finance leases outstanding.
 

The following table (in thousands) relates to our operating leases:

  

Three Months Ended September 30,

  

Nine Months Ended September 30,

 
  

2023

  

2022

  

2023

  

2022

 

Operating lease information:

                

Operating cash outflows from operating leases

 $52  $54  $156  $164 

Weighted average remaining lease term in years

  8.75   1.51   8.75   1.51 

Weighted average discount rate

  6.0%  6.0%  6.0%  6.0%

 

Future minimum lease payments under non-cancellable leases as of September 30, 2023, were as follows:

 Amount 
 

(In thousands)

 

2023

$85 

2024

 89 

2025

 121 

2026

 124 

2027

 128 

After 2027

 516 

Total minimum lease payments

$1,063 

Less imputed interest

 (323)
    

Total operating lease liability

$740 
    

As reflected within the following balance sheet line items:

   

Accounts payable and accrued liabilities

$85 

Other long-term liabilities

 655 
    

Total operating lease liability

$740 

 

As of  September 30, 2023 and December 31, 2022, we had approximately $0.7 million and $0.2 million, respectively, of right-of-use operating lease assets recorded within “buildings and equipment” on the condensed consolidated balance sheets.

 

10

  
 

(10)

SELF-INSURANCE

 

We self-insure our underground mining equipment. Such equipment is allocated among seven mining units dispersed over ten miles. The historical cost of such equipment was approximately $299 million and $280 million as of September 30, 2023, and December 31, 2022, respectively.

 

Restricted cash of $4.1 million and $3.4 million as of September 30, 2023, and December 31, 2022, respectively, represents cash held and controlled by a third party and is restricted for future workers’ compensation claim payments and cash collateral to provide power in the MISO grid.

 

 

(11)

FAIR VALUE MEASUREMENTS

 

We account for certain assets and liabilities at fair value. The hierarchy below lists three levels of fair value based on the extent to which inputs used in measuring fair value are observable in the market. We categorize each of our fair value measurements in one of these three levels based on the lowest level input that is significant to the fair value measurement in its entirety. 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.

                                                                                 

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.

 

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). We have no Level 3 instruments.

 

 

(12)

EQUITY METHOD INVESTMENTS

 

We own a 50% interest in Sunrise Energy, LLC, which owns gas reserves and gathering equipment and generates revenue from gas sales. Sunrise Energy plans to continue developing and exploring for oil, gas, and coal-bed methane gas reserves on or near our underground coal reserves. The carrying value of the investment included in our condensed consolidated balance sheets as of September 30, 2023, and December 31, 2022, was $3.0 million and $4.0 million, respectively.

 

 

(13)

CONVERTIBLE NOTES

 

On May 2, 2022, and May 20, 2022, we issued senior unsecured convertible notes (the "Notes") to five parties, in the aggregate principal amount of $10 million, with $9 million going to related parties affiliated with independent members of our board of directors and the remainder to a non-affiliated party. The Notes were scheduled to mature on December 29, 2028, and accrue interest at 8% per annum, with interest payable on the date of maturity. Pursuant to the terms of the Notes, the holders of the Notes were entitled to convert the entire principal balance and all accrued and unpaid interest then outstanding during the period beginning June 1, 2022, and ending on May 31, 2027, into shares of the Company Common Stock at a conversion price the greater of (i)$3.33 and (ii) the 30-day trailing volume-weighted average sales price for the Common Stock on the Nasdaq Capital Market ending on and including the date on which the Note was converted.

 

In June 2022, the four holders of the $9 million related party Notes converted them into 1,965,841 shares of common stock of the Company, and the one holder of the $1 million Note converted it into 231,697 shares of common stock pursuant to the terms of the Notes and their related agreements.

 

11

 

On July 29, 2022, we issued $5 million of a senior unsecured convertible note to a related party affiliated with an independent member of our board of directors.  The note carries 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 has the option to convert the notes into shares of the Company's common stock at a conversion price of $6.254.  Beginning August 18, 2025, the Company 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 the Company, the holder may elect to convert the principal balance and accrued interest into the Company's common stock.

 

On August 8, 2022, we issued $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.  For the period August 18, 2022, through August 17, 2024, the holder has the option to convert the notes into shares of the Company's common stock at a conversion price of $6.254.  Beginning August 8, 2025, the Company 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 the Company, the holder may elect to convert the principal balance and accrued interest into the Company's common stock.

 

On August 12, 2022, we issued a $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.  For the period August 18, 2022, through the maturity date, the holder has the option to convert the notes into shares of the Company's common stock at a conversion price of $6.15.  Beginning August 12, 2025, the Company 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 the Company, the holder may elect to convert the principal balance and accrued interest into the Company's common stock.

 

The funds received from the notes described above were used to provide additional working capital to the Company.  Each Conversion Share will consist of one share of our common stock. The conversion price and number of shares of the Company’s Common Stock issuable upon conversion of the notes are subject to adjustment from time to time for any subdivision or consolidation of the Company’s shares and other standard dilutive events.

  

 

(14)

MEROM ACQUISITION

 

On February 14, 2022, Hallador Power signed an Asset Purchase Agreement (“APA”) with Hoosier, a rural electric membership corporation organized and existing under the laws of the state of Indiana.

 

Under the APA, Hallador acquired the Merom power plant, along with equipment and machinery in the power plant; materials inventory; a coal purchase agreement; a coal combustion certified coal ash landfill, certain Generation Interconnection Agreements, and coal inventory (collectively, the “Acquired Assets”). Additionally, contemporaneous with entering into the APA, Hallador entered into three other agreements with Hoosier comprised of (1) a Power Purchase Agreement (the "PPA”), (2) a Coal Supply Purchase Agreement (the "Coal Purchase Agreement"), and (3) a Closing Side Letter agreeing to a reduction in future capacity payments of $15.0 million (“Capacity Payment Reduction”).  The purchase price for the Acquired Assets also consists of the assumption of the power plant’s closure and post-closure remediation, valued at approximately $7.2 million; no cash will be paid by Hallador to Hoosier to effectuate the APA other than payments totaling approximately $17.0 million for coal inventory on hand, with an initial payment of $5.4 million and subsequent periodic payments over time, subject to post-close adjustments based on actual on-site inventories. The acquisition closed on October 21, 2022.

 

12

 

The acquisition was accounted for as an asset acquisition under ASC 805-50 as substantially all of the fair value of the gross assets acquired are concentrated in a group of similar identifiable assets. As such, the total purchase consideration (which includes $2.9 million of transaction costs) was allocated to the assets acquired on a relative fair value basis.

   

Consideration:

 

(in thousands)

 

Direct transaction costs

 $2,855 

Contract liability - PPA

  184,500 

Contract liability - Capacity payment reduction

  11,000 

Contract asset - Coal purchase agreement

  (34,300)

Coal inventory purchased

  5,400 

Deferred coal inventory payment

  11,600 

Total consideration

 $181,055 

Relative fair value of assets acquired:

    

Plant

 $165,816 

Materials and supplies

  12,009 

Coal inventory

  10,460 

Amount attributable to assets acquired

 $188,285 

Fair value of liabilities assumed:

    

Asset retirement obligations

 $7,230 

Amount attributable to liabilities assumed

 $7,230 

 

 

Operating revenue for the Electric Operations segment includes revenue derived from a power purchase agreement signed with Hoosier in conjunction with the Merom Acquisition at fixed prices below market prices on the date we closed the transaction.  The power purchase agreement expires in 2025 and requires us to provide a fixed amount of power over the term of the agreement.  As a result of the below-market contract, we recorded a contract liability at the close of the acquisition totaling $184.5 million that will be amortized over the term of the agreement as the contract is fulfilled.  For the three and nine months ended September 30, 2023, we recorded $10.3 million and $63.2 million, respectively, of revenue as a result of amortizing the contract liability, resulting in an ending balance as of September 30, 2023, of $98.0 million that is recorded within current and long-term contract liabilities in our condensed consolidated balance sheets.

 

Operating expenses for the Electric Operations segment include coal purchased under an agreement signed with Hoosier in conjunction with the Merom Acquisition at fixed prices which were below market prices at the date we entered into the agreement.  The coal purchase agreement expired in May 2023 that required us to purchase a fixed amount of coal over the term of the agreement.  As a result of the below-market contract, we recorded a contract asset at the close of the acquisition totaling $34.3 million that was amortized over the term of the agreement as the contract was fulfilled.  For the three and six months ended June 30, 2023, we recorded $13.0 million and $30.7 million in additional operating expenses for coal purchased and used and a reduction of $6.8 million and $11.2 million, respectively, to inventory for coal purchased and unused as a result of amortizing the contract asset, thereby eliminating the remaining balance of the contract asset as of June 30, 2023.

 

13

 
 

(15)

SEGMENTS OF BUSINESS

 

As of September 30, 2023, our operations are divided into two primary reportable segments, the Coal Operations and Electric Operations segments.  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 Eliminations" and primarily are comprised of unallocated corporate costs and activities, the elimination of coal sales from coal operations to electric operations, a 50% interest in Sunrise Energy, LLC, 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.

 

  

Three Months Ended September 30,

  

Nine Months Ended September 30,

 
  

2023

  

2022

  

2023

  

2022

 
  

(in thousands)

  

(in thousands)

 

Operating Revenues

                

Coal Operations

 $134,896  $84,530  $343,267  $208,190 

Electric Operations

  67,544   -   231,141   - 

Corporate and Other and Eliminations

  (36,672)  554   (59,112)  1,730 

Consolidated Operating Revenues

 $165,768  $85,084  $515,296  $209,920 
                 

Income (Loss) from Operations

                

Coal Operations

 $24,764  $6,098  $64,215  $580 

Electric Operations

  (2,676)  (991)  25,285   (991)

Corporate and Other and Eliminations

  1,715   288   (14,220)  (3,687)

Consolidated Income (Loss) from Operations

 $23,803  $5,395  $75,280  $(4,098)
                 

Depreciation, Depletion and Amortization

                

Coal Operations

 $11,508  $11,149  $37,249  $31,772 

Electric Operations

  4,695   -   14,045   - 

Corporate and Other and Eliminations

  27   38   81   110 

Consolidated Depreciation, Depletion and Amortization

 $16,230  $11,187  $51,375  $31,882 
                 

Assets

                

Coal Operations

 $375,682  $374,223  $375,682  $374,223 

Electric Operations

  209,455   351   209,455   351 

Corporate and Other and Eliminations

  49   8,787   49   8,787 

Consolidated Assets

 $585,186  $383,361  $585,186  $383,361 
                 

Capital Expenditures

                

Coal Operations

 $11,570  $15,097  $38,654  $38,000 

Electric Operations

  6,566   344   10,092   344 

Corporate and Other and Eliminations

  -   -   -   - 

Consolidated Capital Expenditures

 $18,136  $15,441  $48,746  $38,344 

 

 

14

  
 

(16)

NET INCOME (LOSS) PER SHARE

 

The following table (in thousands, except per share amounts) sets forth the computation of basic net income (loss) per share:

 

   

Three Months Ended September 30,

   

Nine Months Ended September 30,

 
   

2023

   

2022

   

2023

   

2022

 

Basic earnings per common share:

                               

Net income (loss) - basic

  $ 16,075     $ 1,612     $ 55,041     $ (11,908 )

Weighted average shares outstanding - basic

    33,140       32,983       33,088       31,727  

Basic earnings (loss) per common share

  $ 0.49     $ 0.05     $ 1.66     $ (0.38 )
                                 
                                 

The following table (in thousands, except per share amounts) sets forth the computation of diluted net income (loss) per share:

 
                                 
   

Three Months Ended September 30,

   

Nine Months Ended September 30,

 
   

2023

   

2022

   

2023

   

2022

 

Diluted earnings per common share:

                               

Net income (loss) - basic

  $ 16,075     $ 1,612     $ 55,041     $ (11,908 )

Add: Convertible Notes interest expense, net of tax

    303       -       898       -  

Net income (loss) - diluted

  $ 16,378     $ 1,612     $ 55,939     $ (11,908 )
                                 

Weighted average shares outstanding - basic

    33,140       32,983       33,088       31,727  

Add: Dilutive effects of if converted Convertible Notes

    3,162       -       3,164       -  

Add: Dilutive effects of Restricted Stock Units

    546       285       496       -  

Weighted average shares outstanding - diluted

    36,848       33,268       36,748       31,727  
                                 

Diluted net income (loss) per share

  $ 0.44     $ 0.05     $ 1.52     $ (0.38 )

 

 

(17)

SUBSEQUENT EVENTS

 

On October 2, 2023, the Merom Power Plant had a transformer failure causing one unit to be offline for the month of October.  The failed transformer has since been replaced.  However, the unit will not return to service before entering its previously planned MISO scheduled outage for routine maintenance work.  The unit is expected to return to service in the second half of December and is not expected to impact our ability to perform under our power & capacity commitments.

 

15

 
 

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

 

THE FOLLOWING DISCUSSION UPDATES THE MD&A SECTION OF OUR 2022 ANNUAL REPORT ON FORM 10-K AND SHOULD BE READ IN CONJUNCTION THEREWITH.

 

Our condensed consolidated financial statements should also be read in conjunction with this discussion. The following analysis includes a discussion of metrics on a per-ton basis derived from the condensed consolidated financial statements, which are considered non-GAAP measurements.  These metrics are significant factors in assessing our operating results and profitability.

 

Net income of $16.1 million for the quarter helped add to net income of $55.0 million for the first nine months of the year.  Cash flow from operations of $79.5 million for the first nine months has been reinvested through $48.7 million of capital expenditures in our mines and power plant to improve efficiency and reliability.  In the first nine months of 2023, we have utilized $30.5 million in financing activities, including $23.5 million to repay debt. Improved earnings and debt repayment have improved our balance sheet by reducing our debt to adjusted EBITDA multiple to 0.71X and increasing our liquidity to $66.4 million. Liquidity consists of our additional borrowing capacity and cash and cash equivalents.

 

On August 2, 2023, we successfully amended our credit facility with PNC Bank, which we accounted for as a debt extinguishment.  This amendment is important as it extends the maturity of our credit into 2026.

 

During the third quarter of 2023, high coal sales prices coupled with large coal shipment volumes led to significant coal revenue growth.  Our well-contracted sales book supported our revenue growth despite operational challenges increasing our cost per ton during the quarter.  We chose to relocate 57% of our coal units of production during the third quarter and into October to obtain better geologic conditions.  This led to higher costs and decreased production during this timeframe but is resulting in overall production improvements following the moves.   

 

On the power side of the business, intercompany coal sales from our coal division to our power plant division increased average variable costs per MWh of electric operations to $40.03 per MWh, an increase of $9.98 per MWh over the prior quarter on a segment basis.  We set the price of the coal we sell to ourselves based on third-party market indicators that we review from time to time. Costs per MWh were $23.49 per MWh on a consolidated basis.

 

During the third quarter and subsequently, our power division was successful in securing $325 million of energy and capacity sales for the years 2024 - 2028.  Latest sales include approximately 3.3 million MWh of energy at $56 per MWh, totaling $186 million, delivered over energy years 2026, 2027, and 2028. An energy year is defined as June 1st through May 31st.  Additionally, we sold $139 million in capacity sales for energy years 2024-2028 at an average price of approximately $220 per MWd during the quarter and subsequently.

 

 

OVERVIEW

 

  I.

 

Q3 2023 Net Income of $16.1 million.

 

  a.    2.1 million tons of coal were shipped at an average sales price of $65.43 on a segment basis during the quarter, with approximately 0.5 million tons of that being shipped to the Merom Power Plant for $37.0 million.  The average sales price of coal was $62.41 per ton on a consolidated basis. 

 

  i.   The sales price for remaining tons to ship for 2023 is expected to average $54.3 per ton on a consolidated basis (not including coal shipped to Merom).

 

  b.   In Q3 2023, Hallador's coal operating costs were $46.54 per ton on a segment basis, which represents a $5.02 per ton increase from Q2 2023.  Coal operating costs were $48.92 per ton on a consolidated basis.

  

 

c.

 

We recorded coal margins for the quarter at $18.89 per ton on a segment basis.  This is a decline of $5.03 per ton from Q2 2023 margins, due to higher costs resulting from relocation of 57% of our coal production units to take advantage of improved geologic conditions.  Margins for the quarter were $13.49 on a consolidated basis.

 

  II.   Q3 2023 Activity

 

  a.   Cash Flow & Debt

 

  i.   During Q3 2023, our operating cash flow was $35.3 million, and we decreased our bank debt by $12.5 million.

 

  ii.   As of September 30, 2023, our bank debt was $61.8 million, liquidity was $66.4 million, and our leverage ratio came in at 0.71X, within our covenant of 2.25X.

 

  b.   Coal & Power

 

  i.   Coal production was 1.6 million tons for the quarter, 0.1 million less than Q2 2023.  Approximately 0.5 million tons of that production were shipped to the Merom Power Plant in Q2 2023.

 

  ii.   Power production was 1.3 million MWh for the quarter. 

 

 

  III.    Solid Forward Sales Position - Segment Basis, Before Intercompany Eliminations

  

   

2023 (Q4)

   

2024

   

2025

   

2026

   

2027

   

2028

   

Total

 

Coal

                                                       

Priced tons (in millions)

    2.4       3.4       1.3       0.5       0.5       -       8.1  

Average price per ton

  $ 54.30     $ 51.10     $ 50.80     $ 56.00     $ 56.00     $ -          

Contracted coal revenue (in millions)

  $ 130.32     $ 173.74     $ 66.04     $ 28.00     $ 28.00     $ -     $ 426.10  

% Priced

    100 %     49 %     19 %     7 %     7 %     0 %        
                                                         

Committed & unpriced tons (in millions) - 3rd party

    -       -       1.0       1.0       1.0       -       3.0  

Committed & unpriced tons (in millions) - Merom

    -       2.9       2.9       2.9       2.9       2.9       14.5  

Total contracted tons (in millions)

    2.4       6.3       5.2       4.4       4.4       2.9       25.6  
                                                         

% Coal Sold*

    100 %     90 %     74 %     63 %     63 %     41 %        
                                                         

Average cost per ton of coal was $42.57 for the nine months ending September 30, 2023 ($43.25 after eliminating for intercompany sales to Merom)

                                                       
                                                         

Coal Capex Budget (in millions)

  $ 10.00                                                  
                                                         

Power

                                                       

Energy

                                                       

Contracted MWh (in millions)

    0.4       1.6       1.7       1.6       1.3       0.4       7.0  

Contracted price per MWh

  $ 34.00     $ 34.00     $ 34.00     $ 56.00     $ 56.00     $ 56.00          

Contracted revenue (in millions)

  $ 13.60     $ 54.40     $ 57.80     $ 89.60     $ 72.80     $ 24.19     $ 312.39  

% Energy Sold*

    27 %     27 %     28 %     27 %     22 %     7 %        
                                                         

Capacity

                                                       

Average monthly contracted capacity

    828       670       450       508       550       354          

% Capacity Contracted**

    100 %     78 %     52 %     59 %     64 %     41 %        

Average contracted capacity price per MWd

  $ 146     $ 178     $ 200     $ 226     $ 225     $ 224          

Contracted capacity revenue (in millions)

  $ 11.00     $ 43.65     $ 32.92     $ 41.89     $ 45.26     $ 28.88     $ 203.60  
                                                         

Total Energy & Capacity Revenue

                                                       

Contracted Power Revenue (in millions)

  $ 24.60     $ 98.05     $ 90.72     $ 131.49     $ 118.06     $ 53.07     $ 515.99  

Contracted Power Revenue per MWh*

  $ 41.33     $ 43.34     $ 44.49     $ 67.82     $ 67.79     $ 67.69          
                                                         

2023 average cost per MWh was $33.43 for the nine months ending September 30, 2023 ($27.45 assuming intercompany sales of coal were sold at cost)