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Hallador Energy to ramp up coal sales in H2'18, eyes export market

Hallador Energy Co.'s CEO expects a strong second half in 2018 with higher coal sales volumes at a greater price than the Denver-based mining company realized during the first six months of the year.

The company shipped 3.2 million tons of coal in the first half and has contracted volumes of 3.8 million tons for the remaining two quarters, according to President and CEO Brent Bilsland during an Aug. 7 earnings call.

"Looking at the second quarter, our sales price was $38.54. However, we have shipped on our lower-price contracts in the first half of the year and now expect our sales prices to average $2 a ton higher or approximately $40.50 in the second half of the year," he said.

Coal sales could surpass contracted tonnage as well, given a strong export market and healthy power burn. "There's potential in the market for spot sales later this year," Bilsland said. The company has built inventories in preparation for the additional demand in the back half of 2018. Since the beginning of the year, Hallador increased its inventory by $21.6 million, or 770,000 tons, and reopened its Carlisle mine in Indiana.

"Reopening the Carlisle mine increases our production capacity, putting us in position to make additional sales should they materialize," the CEO said.

Looking ahead, Bilsland said Hallador is well-positioned over the next five years with 20.6 million tons contracted, and none of its current customers have announced plans to close power plants in that time frame. Bilsland is also hoping that Hallador can earn a piece of forecast international demand growth where more countries appear willing to burn higher-sulfur coal like that produced in the Illinois Basin. Though the export market is more volatile, the new demand is significant, "especially when you consider how small the Illinois Basin tonnage is relative to that new demand," he said.

"We have not yet signed any export deals, but ... we see the potential to do export deals in the near future," the CEO said.

The company reported a second-quarter net loss of $23,000 compared with $389,000 in earnings during the same period in 2017.

Separately, Hallador announced several changes to its board. Sheldon Lubar, who is 89, resigned on Aug. 4. He had joined the board in August 2008. His spot will be filled by his son, David Lubar, who is 63. The board also voted to increase its size from five to six effective Aug. 4, and appointed Charles Wesley IV to fill the new seat, according to a filing.

David Lubar is the president and CEO of Lubar & Co. Inc., where he oversees their investments in more than 20 companies covering a range of industries, Bilsland said during the call. Wesley is president and CEO of Thoroughbred Resources LP. He had previously served as chief planning and commercial officer of Ramaco Resources Inc. and senior counsel at Level 3 Communications LLC, a role in which he was also responsible for the company's coal mining operations.