Hallador Energy Q1 2026 Earnings Report

Hallador Energy EPS Results

• Actual EPS: -$0.20
• Consensus EPS: -$0.16
• Beat/Miss: Missed by -$0.04
• One Year Ago EPS: N/A

Hallador Energy Revenue Results

• Actual Revenue: $101.81 million
• Expected Revenue: $102.28 million
• Beat/Miss: Missed by -$472.00 thousand
• YoY Revenue Growth: N/A

Hallador Energy Announcement Details

• Quarter: Q1 2026
• Date: 5/6/2026
• Time: After Market Closes
• Conference Call Date: Wednesday, May 6, 2026
• Conference Call Time: 5:00PM ET

Hallador Energy (NASDAQ:HNRG) is a coal producer and mine operator trading on NASDAQ under the symbol HNRG. The company’s primary business activities center on the production and sale of bituminous thermal coal. Hallador’s operations encompass two surface mines: the Shoal Creek Mine located in southwestern Indiana and the Bull Mountain Mine situated in eastern Montana. Both sites are designed to extract high-quality coal reserves for the power generation market.

Hallador Energy markets its coal primarily to electric utilities and industrial customers across the United States. The company arranges transportation by rail and barge, enabling deliveries to utilities in the Midwest, Mid-Atlantic and Rocky Mountain regions. By focusing on reliable, long-term offtake agreements, Hallador seeks to provide its customers with consistent supply while managing inventory levels and logistics costs.

Headquartered in Carmel, Indiana, Hallador Energy emphasizes operational efficiency, safety and environmental stewardship in its mining activities. The company maintains comprehensive health and safety programs and invests in equipment modernization to enhance productivity and minimize environmental impact. Hallador’s leadership team brings decades of experience in mining and energy, guiding strategic initiatives aimed at sustainable growth and compliance with evolving regulatory standards.

Hallador Energy Q1 2026 Earnings Call Transcript

Key Takeaways

• Positive Sentiment: Hallador signed a 12‑year capacity agreement (pending IURC approval in H2 2026) expected to generate more than $1 billion of contracted revenue from 2028–2040 at pricing over twice historical contracted capacity rates, and together with the March three‑year deal places roughly 14 years of accredited capacity substantially sold forward (~$1.1B total).
• Negative Sentiment: Q1 operational issues at the Merom plant — availability constraints and outage‑related replacement power — reduced generation, produced a net loss of $9.3M (Adjusted EBITDA $5.5M), and have led to a planned maintenance outage extending into Q2.
• Positive Sentiment: The company strengthened its balance sheet, exiting the quarter with no outstanding bank debt, total liquidity of $97.5 million, and a new credit facility (a $75M revolver and $45M delayed draw) that management says funds reliability investments and strategic growth initiatives.
• Neutral Sentiment: Management is intentionally selling capacity while retaining merchant energy exposure to capture future energy upside as large loads (notably data centers) come online, and is evaluating dual‑fuel conversions, a proposed 515 MW combustion turbine under MISO ERAS, and selective M&A — all contingent on further approvals, equipment/EPC availability, and economic alignment.

Presentation

[Operator]

Good afternoon. Thank you for attending Hallador Energy's 1st quarter 2026 earnings conference call. At this time, all participants are in a listen-only mode. Following our prepared remarks, we will conduct a question and answer session and instructions will follow at that time. As a reminder, this call will be recorded. I'd now like to turn the conference over to Sean Mansouri, the company's Investor Relations Advisor with Elevate IR. Please go ahead, Sean.

[Sean Mansouri, Investor Relations Advisor at Elevate IR]

Thank you, and good afternoon, everyone. We appreciate you joining us to discuss our first quarter 2026 results. With me today, our President and CEO, Brent Bilsland, and CFO, Todd Telesz. This afternoon, we released our first quarter 2026 financial and operating results in a press release that is now on the Hallador investor relations website. Today, we will discuss those results as well as our perspective on current market conditions and our outlook. Following prepared remarks, we will open the call to answer your questions. Before we begin, a reminder that some of our remarks today may include forward-looking statements subject to a variety of risks, uncertainties, and assumptions contained in our filings from time to time with the SEC and are also reflected in today's press release.

[Sean Mansouri, Investor Relations Advisor at Elevate IR]

While these forward-looking statements are based on information currently available to us, if one or more of these risks or uncertainties materialize, or if our underlying assumptions prove incorrect, actual results may vary materially from those we projected or expected. In providing these remarks, Hallador has no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events, or otherwise, unless required by law to do so. With the preliminaries out of the way, I'll turn the call over to President and CEO, Brent Bilsland.

[Brent Bilsland, President and CEO at Hallador Energy]

Thank you, Sean, and thank you everyone for joining us this afternoon. Before diving into our first quarter results, I want to begin with what we believe is an important milestone in a multi-year transformation of Hallador. One that has been in the works for a long time now and reflects the steady, deliberate execution of a strategy our long-term shareholders have been patient with. Subsequent to quarter end, we executed a 12-year capacity agreement with a subsidiary of utility that is expected to generate more than $1 billion of contracted revenue from 2028 through 2040 at pricing levels more than 2x our historical contracted capacity pricing. This agreement is subject to approval by the Indiana Utility Regulatory Commission, which we anticipate will occur in the second half of 2026. The agreement represents one of the most significant commercial achievements in our company's history.

[Brent Bilsland, President and CEO at Hallador Energy]

It may be helpful to put today's announcement in the context of the path that brought us here. Six years ago, Hallador was originally an underground coal mining company. In 2021, we began acquiring a 1 GW interconnection. In 2022, we acquired the one-gigawatt power plant that utilizes the interconnection. In 2024, we began marketing long-term output of the plant. In 2025, those discussions broadened from data center developers to utilities. In March of this year, we executed a three-year capacity agreement at approximately twice our historical pricing. Today, we are announcing a 12-year, $1 billion plus capacity agreement that follows directly behind it. Each of those steps was deliberate, each built on the one before, and we believe the same pattern of disciplined, sequential execution will continue to define how we create shareholder value from here.

[Brent Bilsland, President and CEO at Hallador Energy]

Combined with the three-year capacity agreement we announced in March that contracted our accredited capacity for planning years 2026, 2027, and 2028. The agreement we are announcing today contracts the back portion of planning year 2028 and each year thereafter through mid-2040. Together, these two capacity-only sales total approximately $1.1 billion and place Hallador in a substantially sold forward position on accredited capacity for approximately the next 14 consecutive years. We believe this represents a meaningful structural improvement in the durability of our earnings power and our balance sheet, and importantly, it provides the capital raising foundation from which to pursue the next set of opportunities in front of us. The agreement initially covers a smaller volume of accredited capacity in planning year 2028, increasing to approximately 2/3 of our accredited capacity beginning in planning year 2029 and continuing through 2040.

[Brent Bilsland, President and CEO at Hallador Energy]

This structure provides the kind of long-duration revenue visibility that is increasingly rare for dispatchable generation in MISO and validates the durable economic value of our dispatchable generation platform. It is worth noting that this agreement is only for our capacity. We are not committing energy under this contract, which enables us to secure durable contracted revenue while preserving full exposure to future upside in energy markets as demand for power continues to rise across MISO. Preserving that energy side optionality is intentional. As we will discuss in a moment, we believe the energy market is on a different timeline than the capacity market, and we are positioning the portfolio to participate in both as they develop. To us, that is the bigger story.

[Brent Bilsland, President and CEO at Hallador Energy]

Where our first quarter results were generally in line with our expectations due to previously mentioned availability constraints at Merom, the underlying value of Hallador is increasingly tied to the growing scarcity of reliable dispatchable generation. The agreement we announced today is one clear data point of that dynamic, we believe it is one of several you should expect to see emerge from the role our assets can play in meeting this demand. When we look at the market, we view capacity as the critical first step. For large load customers, particularly data centers, access to accredited capacity is often the gating factor. Without it, projects cannot move forward. As a result, we are seeing capacity markets tighten and reprice ahead of the physical demand that these developments will ultimately bring. Energy demand follows on a different timeline.

[Brent Bilsland, President and CEO at Hallador Energy]

These projects require several years to build, and as they come online and begin to draw power from the grid, 24/7, 365, that is when we expect to see more meaningful response in energy pricing. Our portfolio is constructed to participate in both phases. The capacity contracts we have announced this year address the first. The merchant energy position we have intentionally retained is positioned to address the second when it arrives. This dynamic is central to how we are positioning the business. Our strategy is to monetize capacity where we can secure attractive long-term value today while maintaining flexibility to participate in future upside in energy markets. We are being deliberate in how we contract our portfolio, locking in value where scarcity is already evident, and preserving exposure where we believe demand has yet to be fully reflected.

[Brent Bilsland, President and CEO at Hallador Energy]

Capacity remains a critical requirement for large load development, and we continue to see strong interest from counterparties seeking reliable supply over longer periods. The agreement we signed is an important anchor in our forward sales book, but it is by design, not the last commercial step we expect to take. We continue to evaluate additional ways to monetize our remaining capacity and optimize our forward energy position. We will maintain a disciplined approach, and we will be deliberate about the timing and structure of any future commercial agreements. That said, the level of inbound interest we are seeing today is meaningfully higher than it was even six months ago across multiple counterparty types and contract structures. The contracted high conversion cash flows from these agreements also support a broader transformation we are pushing.

[Brent Bilsland, President and CEO at Hallador Energy]

Building at Hallador over time into a multi-fuel independent power producer with a more diversified generating fleet. We have spoken previously about the proposed 515 MW combustion turbine project at our Merom Generating Station site under the MISO ERAS program. Additionally, we are continuing to evaluate dual fuel initiatives for our existing generation. We will work towards making progress on these work streams in the same disciplined, sequential way as the contracting strategy has unfolded under the past year. Now turning to our first quarter 2026 results. As we discussed on our last call, we experienced availability constraints at Merom in Q4 that continued into the first quarter and reduced generation from the plant. First quarter results reflected those constraints as lower generation at Merom pressured electric sales and intercompany coal sales, which ultimately impacted our profitability for the quarter.

[Brent Bilsland, President and CEO at Hallador Energy]

We also incurred outage related replacement power costs during Q1, which created an additional headwind. While these results were generally in line with the expectations we provided in March, they are below the level of performance that we expect from our Merom power plant over time. Maintaining high levels of reliability remains a top priority for our team, particularly as MISO increasingly depends on dispatchable resources during periods of peak demand. As such, the generating unit in question is currently in a planned maintenance outage, and we are using this period to make reliability related investments that we believe should improve performance as we move through the balance of the year. As we have discussed previously, Hallador operates as a vertically integrated platform, and Merom sits at the center of that system.

[Brent Bilsland, President and CEO at Hallador Energy]

When the plant is running efficiently, it drives performance across the business, supporting electric sales, creating consistent internal demand for coal, improving mine productivity, and enhancing overall operating efficiency. When performance at Merom falls below plant levels, those impacts extend throughout the platform. Coal inventories increase, production at Sunrise becomes less efficient, and it becomes more difficult to optimize our cost structure. That is why our focus on improving reliability at Merom is so important. The outage currently underway is a key part of that effort. We are making targeted capital investments in the unit, and we believe that that is the right decision, given both the value of Merom today and the increasing importance of reliable, dispatchable generation going forward.

[Brent Bilsland, President and CEO at Hallador Energy]

Historically, similar investments have led to meaningful improvement in operating performance, and we expect the work being completed now to position the plant for higher availability as we move into the summer and upcoming peak demand periods. We are also in a much stronger financial position to support these investments. At quarter end, we had no outstanding bank debt and meaningfully improved liquidity compared to year-end. That improved capital position gives us greater financial flexibility to invest in the asset, support our ongoing operation, and pursue the strategic opportunities we are seeing across the power market. Looking ahead, our second quarter results will reflect the planned outage currently underway, which we expect will temporarily reduce generation as we complete the necessary maintenance. As we move into the second half of the year, the underlying setup begins to shift, with the plant returning from outage and availability improving.

[Brent Bilsland, President and CEO at Hallador Energy]

We expect to be better positioned heading into the peak summer demand period. As I mentioned earlier, more consistent performance at Merom supports not only electric sales but also internal coal demand, mine productivity, and overall operating efficiency across the platform. This is important because the opportunity in front of us ultimately depends on execution. While the agreement we discussed earlier reinforces the value of accredited capacity and dispatchable generation, realizing that value over time requires consistent performance at Merom. We're focused on improving reliability, driving efficiency across our coal operations, and translating the market opportunity we see into durable cash flow. Although the first quarter was operationally challenging, it does not change our view of the long-term earnings potential of the platform.

[Brent Bilsland, President and CEO at Hallador Energy]

The fundamental signals across our markets remain constructive. We believe Hallador is well-positioned to compound shareholder value over a multi-year horizon as the strategy we have been describing continues to unfold milestone by milestone. With that, I'll turn the call over to Todd to take you through our financial results.

[Todd Telesz, CFO at Hallador Energy]

Thank you, Brent. Good afternoon, everyone. Jumping into our first quarter results, electric sales for the first quarter were $65.1 million compared to $85.9 million in the prior-year period, while third-party coal sales increased to $35.1 million compared to $30.2 million in the prior-year period. Electric sales in the first quarter reflected the availability constraints at Merom that Brent discussed earlier, which reduced generation during the period and resulted in lower electric sales compared to the prior year. These impacts were partially offset by stronger accredited capacity revenue during the quarter. The increase in third-party coal sales during the first quarter was driven primarily by improved pricing on shipments to customers, reflecting continued execution across our external customer book and Sunrise Coal's ability to supply both internal fuel requirements at Merom and external market demand.

[Todd Telesz, CFO at Hallador Energy]

On a consolidated basis, total operating revenue was $101.8 million for the first quarter compared to $117.7 million in the prior year period. Net loss for the first quarter was $9.3 million compared to net income of $10 million in the prior year period. Operating cash flow for the first quarter was $20.5 million compared to $38.4 million in the prior year period, with the decrease primarily reflecting lower generation at Merom, higher purchase power costs during the quarter, and an increase in coal inventory of approximately $4.6 million.

[Todd Telesz, CFO at Hallador Energy]

Adjusted EBITDA, a non-GAAP measure, which is reconciled in our earnings press release issued earlier today, was $5.5 million for the first quarter compared to $19.3 million in the prior year period. We invested $7.7 million in capital expenditures during the first quarter of 2026 compared to $11.7 million in the year-ago period. As Brent mentioned earlier, we are currently in a planned major maintenance outage at Merom and expect capital spending to remain focused on planned maintenance, reliability, and operational improvements across the platform. For the full year, we continue to expect capital expenditures to increase modestly compared to 2025 levels, excluding potential ERIS related development investments.

[Todd Telesz, CFO at Hallador Energy]

As of March 31, 2026, our forward energy and capacity sales position was $571.2 million, compared to $543.5 million at December 31, 2025, and $630.4 million at March 31, 2025. When combined with our third-party forward coal sales of $288.4 million, as well as intercompany sales to Merom, our total forward sales book as of March 31, 2026 was approximately $1.2 billion. Importantly, these figures do not include the 12-year capacity agreement signed last week. Hallador had no outstanding bank debt at March 31, 2026, compared to $29.7 million at December 31, 2025, and $21 million at March 31, 2025.

[Todd Telesz, CFO at Hallador Energy]

Total liquidity at March 31, 2026 was $97.5 million, compared to $38.8 million at December 31, 2025, and $69 million at March 31, 2025. The increase reflects both the capital raised during the quarter, capacity payments received, and the addition of borrowing capacity under our new credit facility. As Brent mentioned earlier, we took several steps during the quarter to strengthen our capital structure. In early March, we entered into a new credit agreement with Texas Capital Bank, Old National Bank, and other long-term relationship lenders, replacing our prior facility. The new agreement includes a $75 million revolving credit facility and a $45 million delayed draw term loan with a maturity in March 2029, and includes an accordion feature that provides additional flexibility.

[Todd Telesz, CFO at Hallador Energy]

We believe this new facility, combined with our improved liquidity position and the absence of outstanding bank debt at quarter end, provides a more flexible capital structure than we had entering the year. It allows us to fund the planned outage and reliability investments at Merom, manage working capital across both segments, and support the commercial strategy Brent outlined while maintaining a disciplined approach to leverage and preserving the financial flexibility to support the disciplined multi-year transformation Brent described. With that, operator, we can now open the line for questions.

[Operator]

At this time, I would like to remind everyone, in order to ask a question, press star then the number 1 on your telephone keypad. We will pause for just a moment to compile the Q&A roster. Your first question comes from the line of Julien Dumoulin-Smith with Jefferies. Your line is open.

[Analyst at Jefferies]

Hey, guys. This is Kusrat here on for Julien. Thanks for taking my question. Congrats on the big contract. It's been a long time coming, nicely done there. Just wanted to ask you know, now looking forward towards the gas extension, can you talk about what would get you more confident here in pursuing that moving forward with the gas extension and what your strategy there is, both with regards to securing the turbine and towards the EPC? I think you've talked about partnerships on the turbine side. We're also hitting constraints on the EPC side. Curious if you can add more color on how you move forward with the gas piece here. Thank you.

[Brent Bilsland, President and CEO at Hallador Energy]

Yes, thank you. Look, I mean, certainly selling a big block of capacity, you know, puts us in better financial footing. It increases our confidence. As far as equipment, yeah, equipment's hard to get. EPCs are hard to get, but we're in conversations with those parties. You know, we're moving those discussions forward. When we secure equipment in an EPC, we will announce such a transaction if we decide to go forward with that. Yeah, it's, you know, what we're seeing in the market is the value of PPAs go up, but equipment prices also go up. You know, we're trying to align those economics and see if we can get a development bill.

[Analyst at Jefferies]

Got it. Thank you.

[Brent Bilsland, President and CEO at Hallador Energy]

Thank you.

[Operator]

Your next question comes from the line of Nick Giles with B. Riley Securities. Your line is open.

[Nick Giles, Analyst at B. Riley Securities]

Yes. Thank you, operator. Good evening, everyone. Congrats on the capacity deal. That's really great to see. Brent, in your prepared remarks, you noted that capacity is the bottleneck between data center deals being finalized. I know you've signed this deal with the utility, but, you know, should we assume that this deal is ultimately linked to a hyperscaler end user? You know, how should we think about how, you know, end users have shifted on the energy front? Thanks.

[Brent Bilsland, President and CEO at Hallador Energy]

Well, we're a little limited on what we can say just based on some of the confidentiality requirements in the agreement. That said, this is a material agreement, it will be filed as an exhibit with our 10-Q. There'll be a little more information there. You know, I would say overall, you know, data centers are the big demand that we're seeing everywhere. It's not the only demand. I mean, we're seeing, you know, potential steel plant expansions in Indiana. We're seeing, you know, announcements of new aluminum smelters, I think, in Oklahoma. I mean, you're seeing manufacturing show up as well, particularly, you know, as you look at energy disruption around the world. You know, United States truly is energy independent.

[Brent Bilsland, President and CEO at Hallador Energy]

We truly do have some of the cheapest energy and most secure energy in the world. If you're gonna build anything, it's gonna be built upon that foundation. Now, AI, you know, I think it's revolutionary technology. I think people are just starting to get the first taste of some of these new products. I mean Anthropic's new offering is amazing. Once, you know, your teams start to experience that, you see the productivity gains. You know, that's just You know, I don't know that any of this is new information. It's just we're seeing it. Why are we seeing it in Indiana? Specifically, you know, we've talked about Indiana as welcoming data centers to the state, whereas there's something like 30 different states across the country who have some form of pause or moratorium on new data centers.

[Brent Bilsland, President and CEO at Hallador Energy]

You know, where can you go that has population or is near population, has a great business climate, has favorable tax policy to attract data centers? Indiana is checking that box, and that's why we're just seeing such a intensified interest level in the state. You know, that's the wind behind our sails. We executed on it in March. We've executed again here in May. You know, we hope to announce, hopefully, we can execute on further deals later this year.

[Nick Giles, Analyst at B. Riley Securities]

Appreciate that perspective, Brent. Maybe just back on the energy side. You know, in the past, you've talked about, kind of where you saw pricing at any given time and you know, you've made references to the forward curve. I was hoping just to get an updated view on that. You know, it's been a while. There were some other deals across the space, you know, some on the nuclear side, that we could use as precedent, but I don't think we've seen any of that nature here more recently. Just was hoping for an updated view on kind of where you see energy pricing today. Thanks.

[Brent Bilsland, President and CEO at Hallador Energy]

Yeah. There's a lot of different curves out there. A lot of different companies put them out. You know, we generally think capacity is a lead indicator for energy, right? I mean, first, if you're gonna build a data center or even a factory for that matter, you really need to secure your accredited capacity first. Once you've secured that, now you can start building your, you know, factory or data center. Let's just use data centers. That is the biggest portion of the demand we're seeing. Once you see that being built, you know, once it gets turned on, now we're using energy, right? There's typically a couple year lag between, you know, what we're seeing in the capacity markets to kind of the response we're seeing in the energy markets.

[Brent Bilsland, President and CEO at Hallador Energy]

I think the curves are just starting to reflect that. We've seen a little price movement up, which is encouraging. We'll see if that holds. By and large, I mean, everything we're seeing is encouraging.

[Nick Giles, Analyst at B. Riley Securities]

Maybe just one more, if I could. You know, given that some of the juice on the energy side, if you will, could come with a lag, you know, would you be willing to kind of wait it out given you have the stability of the capacity revenue secured now, or, you know, would you rather, you know, sign something sooner? Thanks.

[Brent Bilsland, President and CEO at Hallador Energy]

Well, I think, look, first of all, we're well hedged for 2026, right? That's, you know, this year's book is in great shape. These capacity deals sets a great foundation for the company through 2040. That's 14 years of forward visibility, a large portion of the book. Again, if you kind of look back to our March release, you know, we talked about if we could continue to sell capacity at the prices we sold at in March, you know, and we could sell everything at that price, that'd be $130 million of revenue before we turn the plant on, right? We have fixed costs of roughly $60. This deal was priced higher than that.

[Brent Bilsland, President and CEO at Hallador Energy]

You know, we think we've locked in. Now, we've only sold two-thirds of the forward capacity that we have to sell, but we've locked in a profit for 14 years before we even turn the plant on. I think that's a great position for us to be in. We feel no pressure. I think as far as selling energy goes, I think we just have to take the deals as they come. Different customers have different needs, different opportunities. You know, if we see opportunities to lock in energy tomorrow at prices that we deem, you know, appropriate for the future, we will do so. Where we've seen the biggest response, again, more than doubling the price of what we were doing 2 years ago, is in the capacity markets. That's where we've been most aggressive.

[Nick Giles, Analyst at B. Riley Securities]

Understood. Well, appreciate the perspective. Congrats again, and continue. Best of luck.

[Brent Bilsland, President and CEO at Hallador Energy]

Thank you, Nick.

[Operator]

Your next question comes from the line of Jeff Grampp with Northland Capital Markets. Your line is open.

[Jeff Grampp, Analyst at Northland Capital Markets]

Good afternoon, guys, and congrats on the on the announcement.

[Brent Bilsland, President and CEO at Hallador Energy]

Thank you.

[Jeff Grampp, Analyst at Northland Capital Markets]

I wanted to talk on, Brent Bilsland, you're a little more vocal, it seems, in this, in this release regarding the dual fuel ambitions at Merom. Is there any more detail you can share regarding potential timing, next steps? As I recall, it was a little bit more of a potential bargaining chip, I suppose, for You know, prospective customers, with that seemingly not really a constraint or consideration, can you talk about what the, I guess, benefits for Hallador would be should you pursue a project like that? Thanks.

[Brent Bilsland, President and CEO at Hallador Energy]

Yeah, great question. You know, look, if we bring a gas line in for the gas plant, right? That has a dual use. It can be used for the gas plant, but it also could be used if we decide to dual fuel the coal-fired units. Again, it wouldn't be a replacement of coal, we would have the ability to burn both, right? We could burn coal, we could burn gas. There's a lot of reasons to do that, right? Some of it is there's times that gas is cheaper than coal. It could be, you know, it helps our investors, bankers, insurance companies, you know, kind of protect the company.

[Brent Bilsland, President and CEO at Hallador Energy]

Well, if we have a different administration with a different viewpoint, then all of a sudden, you know, Hallador is a multi-fuel company that isn't just a coal company. We think, you know, as you progress through this, right, we're locking in the economics of the existing generation. We're trying to step towards building of a gas unit to both expand our capacity but also add a separate fuel source. If we could then, upon that, dual fuel the existing plant, you know, now Hallador has really transitioned from a coal company to a multi-fuel company. I think there could potentially be a multiple uplift in being able to pull all that off. That doesn't mean, you know, I don't want to sit here today and say we're going to do that.

[Brent Bilsland, President and CEO at Hallador Energy]

I'm trying to say that because of the contracts we signed, we've de-risked our balance sheet, we've increased the ability to access capital, and these are the type of projects that we are reviewing and trying to work towards. I just wanna kinda give the investor a little bit of insight into how we're thinking. We'll have to see if those investments make economic sense and if it's ultimately what we decide is the best use of our capital.

[Jeff Grampp, Analyst at Northland Capital Markets]

Understood. I appreciate that thorough answer. For my follow-up, I know in the past you talked about, you know, M&A ambitions and some opportunities there. It's obviously the big de-risking event for the Hallador story at large. Does this help further or serve M&A ambitions or are these independent? Can you just give us a broad update on the opportunity set in that world?

[Brent Bilsland, President and CEO at Hallador Energy]

I think there's a lot of opportunity. You know, if you look at there's a lot of people that own assets that are funds. What is unique about Hallador is we have a public vehicle, we have a sales team that can help lock in long-term contracts to add value to those existing assets, and we have a team that is working on developing the interconnect and expanding upon that to meet market demands. I think Hallador is unique in that. We can touch coal assets. Those four attributes, I think, really set us apart and make us a more interesting vehicle for potential M&A possibilities down the road. We'll see if those come to pass.

[Brent Bilsland, President and CEO at Hallador Energy]

we're only gonna do deals that we think are smart, and we're gonna do, you know, the deals that we think bring the most value to the shareholder at the time, that they're in front of us.

[Jeff Grampp, Analyst at Northland Capital Markets]

Understood.

[Brent Bilsland, President and CEO at Hallador Energy]

Hopefully, we can have some success on that.

[Jeff Grampp, Analyst at Northland Capital Markets]

Sounds great. I appreciate the time, Brent. Thank you.

[Brent Bilsland, President and CEO at Hallador Energy]

Thanks, Jeff.

[Operator]

Your next question comes from the line of Matthew Key with Texas Capital. Your line is open.

[Matthew Key, Analyst at Texas Capital]

Hey, good afternoon, everyone, congrats on the new agreement. I was wondering if you could help quantify the pricing a little more on the new capacity agreement. I think you mentioned that it was done, you know, above the previous three-year deal that was announced. Could you provide a rough ballpark on, you know, that improvement on pricing?

[Brent Bilsland, President and CEO at Hallador Energy]

Yeah, Matthew. I apologize. We're somewhat limited on what we can say just due to the confidentiality that is in the agreements. I think that, you know, if you look at the tenor and the volume that we've talked about, you know, we've given, you know, roughly the total dollar amount, I think everybody can kind of get in the zip code. There were a lot of reports out on, you know, what our last deal was at. Some of that will show up now. The what we announced in March, some of that does show up in our forward sales book in this 10-Q. If you compare the previous 10-Q to this 10-Q, I think you can get a feel for what that pricing is.

[Brent Bilsland, President and CEO at Hallador Energy]

On this particular billion-dollar deal, once it's approved by the IURC, that, you know, then that deal is firmly bound, right? That's the last approval that we're waiting for. I mean, we're bound, the counterparty's bound, we just have to have IURC approval. Once that happens in our whatever Q follows that time period, then we'll start to report what the volumes and the pricing is on the deal we just announced.

[Matthew Key, Analyst at Texas Capital]

Got it. No, that's helpful color. For my follow-up, I wanted to talk a little bit about the natural gas expansion. I believe in the previous earnings call you mentioned that, you know, you would expect MISO to complete kind of the ERIS application in 3Q 2026. Have there been any changes to that timeline, and have they picked up the application at, you know, as we stand today?

[Brent Bilsland, President and CEO at Hallador Energy]

They've not picked up the application yet. We still anticipate them doing that in June and then that will require us to make a decision sometime in September.

[Matthew Key, Analyst at Texas Capital]

Got it. Yeah. About 90 days, right, after they pick it up to kind of work through the details of that?

[Brent Bilsland, President and CEO at Hallador Energy]

Yeah. That's how the ERIS program is supposed to work.

[Matthew Key, Analyst at Texas Capital]

Okay.

[Brent Bilsland, President and CEO at Hallador Energy]

You start the 90-day clock.

[Matthew Key, Analyst at Texas Capital]

Got it. Well, great.

[Brent Bilsland, President and CEO at Hallador Energy]

We do not control when they pick it up.

[Matthew Key, Analyst at Texas Capital]

Got it. Okay. Well, I appreciate the time, and best of luck moving forward.

[Brent Bilsland, President and CEO at Hallador Energy]

Thank you, Matthew.

[Operator]

I'll now turn the call back over to Brent Bilsland for closing remarks.

[Brent Bilsland, President and CEO at Hallador Energy]

Yes. I wanna thank everybody for their patience in us getting this capacity deal done. We're very excited about the future of the company, and we think we've got just great things in store. Thank you for your time today.

[Operator]

Ladies and gentlemen, that concludes today's call. Thank you for joining. You may now disconnect.

Participants

Executives

• Brent Bilsland, President and CEO
• Todd Telesz, CFO

Analysts

• Jeff Grampp, Analyst at Northland Capital Markets
• Matthew Key, Analyst at Texas Capital
• Nick Giles, Analyst at B. Riley Securities
• Sean Mansouri, Investor Relations Advisor at Elevate IR
• Analyst at Jefferies