Hallador Energy Company

What they do

Hallador operates two segments: Electric Operations, which owns and operates the 1,080 MW Merom coal-fired power plant selling accredited capacity and energy into MISO, and Coal Operations, which mines bituminous coal from the Illinois Basin through Sunrise Coal. The Oaktown Mining Complex is about twenty miles from Merom, allowing low-cost delivered fuel for the plant. The company also holds 50% interests in Sunrise Energy, LLC and Oaktown Gas, LLC, accounted for under the equity method.

Revenue drivers

• Electric Operations — Accredited Capacity — Hallador Power sells accredited capacity from Merom to utilities and energy market participants in MISO through power purchase agreements and bilateral transactions.
• Electric Operations — Energy — Wholesale energy is sold through PPAs, bilateral deals, and spot sales in MISO day-ahead and real-time markets.
• Coal Operations — Fuel — Sunrise Coal mines Illinois Basin bituminous coal sold primarily to power plants in the Midwest and Southeast, with rail and truck infrastructure for transport.
• Equity Method Investments — 50% interests in Sunrise Energy, LLC and Oaktown Gas, LLC, which had an aggregate carrying value of $2.3 million at June 30, 2026.

Recent performance

Q2 2026 revenue was $101.5 million, down from $102.1 million in Q4 2025 and $101.8 million in Q1 2026. Full-year 2025 revenue was $469.5 million with net income of $41.9 million and diluted EPS of $0.96, a recovery from a $226.1 million net loss in 2024. Q2 2026 results were pressured by higher maintenance costs from the planned 60-day outage at Merom Unit 1 and higher purchased power costs when Unit 2 had limited unplanned downtime during elevated market prices. Operating cash flow was $81.1 million in 2025. At June 30, 2026, Hallador had $29.0 million in cash, $39.2 million in long-term debt, and $190.3 million in shareholder equity.

Strategy

Hallador is advancing the Turtle Creek Gas project, a 460 MW natural gas peaking addition at Merom, with total project cost now expected below $800 million (about $1,700/kW) and targeted commercial operation in the second half of 2028. The interconnection application entered MISO's Expedited Resource Addition Study process on June 2, 2026, with results expected mid-August and a targeted final investment decision and generator interconnection agreement in September. The company is finalizing construction scope and financing discussions with the objective of minimizing equity dilution. Management reported $2.4 billion of contracted forward sales at the segment level through 2040 and is working toward additional forward sales before year-end.

Risks

• Customer contract concentration and renewal — A significant portion of 2025 electric power, accredited capacity, and coal sales were under long-term contracts; failure to renew or replace them could expose revenue to spot market volatility.
• Commodity price exposure — Hallador is exposed to spot and forward prices for natural gas, electricity, coal, oil, and emissions credits, which can affect cash flows from generation and mining.
• Operational and outage risk — Unplanned downtime at Merom units, such as the Unit 2 outages that coincided with high power prices in Q2 2026, forces the company to buy power at elevated prices to meet delivery obligations.
• Turtle Creek project execution and financing — The gas project depends on MISO interconnection study results, equipment delivery, construction, and financing, with the company aiming to avoid equity dilution.

Outlook

Management expects generation volumes to improve sequentially in Q3 2026 after completing the Unit 1 outage and reliability upgrades. The company targets a final investment decision on the 460 MW Turtle Creek peaking project in September 2026 and commercial operation in the second half of 2028. Hallador reports $2.4 billion of contracted forward sales through 2040 and is pursuing additional forward sales before the end of the year.