Hallador Energy Co. raised its 2019 sales guidance to 8.2 million tons from 7.3 million after its subsidiary Sunrise Coal Co. LLC contracted 12 million tons in additional coal sales from 2019 to 2022.
CEO Brent Bilsland said on a March 12 earnings call that the company has 78% of its production sold for the next four years "at an 8-million-ton pace," an increase from the nearly 7.4 million sold in 2018. In 2017, the company served nine power plants and now serves 17 in eight states.
A larger percentage of Illinois Basin coal is being exported, which is tightening supply in the region and led to new customers contracting with Sunrise, he said. The company has also benefited from an Indiana industrial customer closing its mines and purchasing coal from Hallador's subsidiary under long-term contracts, as well as the company's Princeton Rail Loop in Indiana helped it access new markets served by Norfolk Southern Corp.
The CEO pointed to comments made recently by some of the larger global coal companies, some of which, including Glencore PLC, are capping their production, as rationale for increasing the company's production.
"Now there's been much debate about the sustainability of Illinois Basin exports," Bilsland said. "... At this time, we do not see enough new coal supply coming online and feel Illinois Basin coal exports will be needed to meet this new demand throughout the world."
Hallador ran one production unit through most of the second half of 2018 at its Carlisle mine, where it restarted operations about three years after idling it in 2015, he said. The company moved some employees and equipment from its Oaktown operation to the Carlisle mine, retrained workers and then waited for sales to develop. In December it added a second production unit and has been "pleasantly surprised" at the improvement in the mine's cost structure.