Here are 1-2 brief analogies for Hallador Energy (HNRG):

• For its coal mining operations, it's like a regional Peabody Energy.
• For its power generation business, it's like a smaller, coal-focused unit of a major utility such as Southern Company or Duke Energy.

• Thermal Coal: Mined and sold primarily to electric utilities for power generation.

Hallador Energy (HNRG) Major Customers

Hallador Energy Company (HNRG) is primarily a coal producer, with its main subsidiary being Sunrise Coal, LLC. The company's business model is focused on selling coal and, to a lesser extent, power generation, primarily to other companies rather than individuals.

Major Customers

Hallador Energy sells its coal primarily to electric utilities and industrial customers. While specific customer names are not always detailed in SEC filings for competitive reasons, company investor communications have historically identified key utility partners. The company's 2023 10-K filing stated that its largest customer, described as a regulated utility in Indiana, accounted for approximately 45% of its coal sales revenue in 2023.

Based on official company investor presentations and SEC filing descriptions, major utility customers include:

• Duke Energy (NYSE: DUK) - Highly likely the "regulated utility in Indiana" that constitutes Hallador's largest customer, given Duke Energy Indiana's significant operations in the state.
• NiSource Inc. (NYSE: NI) - Parent company of Northern Indiana Public Service Company (NIPSCO), another significant utility customer in the region, which has been identified in Hallador's investor materials.

In addition to these named major utilities, Hallador Energy also serves other undisclosed electric utilities and various industrial customers.

• Canadian National Railway Company (CNI)
• Norfolk Southern Railway Company (NSC)

Brent Bilsland, Chief Executive Officer

Brent Bilsland has over two decades of experience in the energy sector, driving strategic growth and building transformative relationships. He was a founding investor of Sunrise Coal in 2004, which Hallador acquired in 2006. He served as President of Sunrise Coal before becoming President and Director at Hallador. In 2014, he was appointed CEO, leading Hallador through significant acquisitions and its evolution into an independent power provider. Before his time at Hallador, he co-founded Knapper Corporation.

Todd Telesz, Chief Financial Officer

Todd Telesz joined Hallador Energy as Chief Financial Officer in June 2025. He is an accomplished financial executive with more than two decades of leadership experience in the power and utilities sector. Prior to Hallador, he served as CFO of Tri-State Generation and Transmission Association, Inc., and as CEO of Basin Electric, one of the nation's largest cooperative associations. He also held the position of Senior Vice President in CoBank's Power, Energy, and Utilities division for 14 years.

Heath Lovell, President of Hallador Power Company

Heath Lovell is a dynamic leader with extensive mining expertise and a strategic vision for growth, contributing to Hallador Power's operational success. Before joining Hallador, he was Vice President at Alliance Coal, where he oversaw operations in Illinois, Indiana, and Kentucky, and was instrumental in the development of River View Coal. He has also served as past president of the Indiana Coal Council, Kentucky Coal Association, and West Virginia Coal Association, and was a Vice President and Partner at Dodge Hill Mining.

Elliott Batson, Chief Commercial Officer

Elliott Batson drives Hallador's business development strategies. He joined Hallador in 2016, bringing 30 years of expertise from Duke Energy, where he managed fuel origination and led the integration of Duke's acquisition of Progress Fuels. His work at Duke involved collaboration with stakeholders from the Carolinas to the Midwest.

Lawrence D. Martin, President of Sunrise Coal (subsidiary)

Lawrence D. Martin, a Certified Public Accountant, serves as President of Hallador's subsidiary, Sunrise Coal. He was Hallador's CFO from 2014 to April 2024, and prior to that, CFO of Sunrise Coal from 2007 to 2017. He possesses extensive expertise in accounting and finance, including the financing and integration of the 2014 Vectren Fuels acquisition, and has led negotiations for numerous credit facilities. Before joining Sunrise Coal, he spent two decades in management roles with a major national accounting firm.

Key Risks to Hallador Energy (HNRG)

Hallador Energy (HNRG) faces significant risks primarily stemming from its substantial reliance on the coal industry, alongside evolving regulatory and environmental pressures, and the inherent volatility of energy markets.

1. Dependence on the Declining Coal Industry: Hallador Energy's business is heavily concentrated in coal operations, encompassing both its mining activities and the coal-fired Merom Generating Station, which accounts for the vast majority of its revenue. The global energy landscape is shifting away from coal due to environmental concerns and a strong push towards cleaner energy sources. This trend poses a fundamental threat, as it can lead to decreased demand, unfavorable policy changes, and reduced access to capital for coal-related projects. While Hallador is exploring diversification into natural gas generation, coal remains the dominant revenue driver, leaving the company highly exposed to the long-term decline of the coal sector.
2. Regulatory and Environmental Compliance Risks: Operating within the coal industry subjects Hallador to a complex and increasingly stringent regulatory and environmental framework. The Merom Generating Station, as a legacy coal-fired plant, requires continuous and significant capital expenditures to meet environmental standards and comply with various air, wastewater, and solid waste permits. Failure to adhere to these evolving regulations could result in substantial fines, penalties, and potentially the revocation of crucial operating permits, severely impacting the company's profitability and cash flow. Furthermore, increasing social and investor pressure related to environmental, social, and governance (ESG) factors is diminishing access to capital for coal producers.
3. Market Volatility and Price Fluctuations: The broader energy sector, in which Hallador operates, is characterized by intense competition and significant price volatility. While the company has recently benefited from increased energy demand and higher prices, projections indicate a potential decline in coal prices in 2025 and 2026. This is attributed to a slowdown in global economic growth, weakening coal demand (especially a projected halt in China's coal consumption), and the possibility of an oversupply in the market. Such price declines and market instability can negatively affect Hallador's revenues and profitability. The company also recently experienced the loss of a key data center contract, which could undermine future growth prospects.

The clear emerging threat for Hallador Energy (HNRG) is the ongoing development and potential implementation of more stringent environmental regulations by the U.S. Environmental Protection Agency (EPA) targeting greenhouse gas emissions from existing coal-fired power plants. These proposed regulations, such as those under consideration for existing fossil fuel-fired electricity generating units, could mandate significant emissions reductions, potentially requiring costly upgrades like carbon capture and storage technologies, co-firing with natural gas, or ultimately accelerating the retirement of coal-fired power generation capacity. Given that HNRG's core business relies on supplying thermal coal to these power plants, including its own vertically integrated Merom Generating Station, the imposition of such regulations would directly increase operational costs for its customers and its own power asset, thereby reducing demand for coal and diminishing the economic viability of its primary revenue stream.

Hallador Energy's primary products and services involve coal mining, specifically the production of thermal coal, and electric power generation. The addressable market sizes for their main products are as follows:

• The United States coal market, which includes thermal coal primarily used for electricity generation, was valued at approximately USD 68.30 billion in 2024. This market is projected to reach USD 74.10 billion by 2033, demonstrating a compound annual growth rate (CAGR) of 0.80% during the period of 2025-2033.

• For the North American thermal coal market, which is directly relevant to Hallador Energy's coal production for power plants, the market size was approximately USD 50 billion in 2024.

Hallador Energy (HNRG) is positioned for future revenue growth over the next 2-3 years, driven by several strategic initiatives and market dynamics:

1. Increased Contracted Sales Prices for Energy and Coal: The company anticipates a meaningful increase in average contracted sales prices for both energy and coal in 2026. Its largest Power Purchase Agreement (PPA) contract is expected to see a price increase of over $20 per megawatt-hour (MWh) in 2026 compared to 2025. Additionally, average contracted coal sales prices across all contracts are projected to be approximately $4 per ton higher in 2026 than in 2025.

2. Securing Long-Term Power Purchase Agreements (PPAs): Hallador Energy is actively pursuing and strengthening strategies to secure multiple long-term power purchase agreements, particularly with utilities and data center developers. This focus aims to enhance business resilience, expand scale, and ensure long-term revenue stability.

3. Potential Acquisitions of Dispatchable Generation Units: The company is evaluating strategic acquisitions of additional dispatchable generation units. This initiative is aimed at expanding Hallador's generation footprint and enhancing its electric operations.

4. Integration of Natural Gas Co-firing Capabilities at Merom: Hallador is exploring the integration of natural gas co-firing capabilities at its Merom Generating Station. This strategic move could present significant growth opportunities and contribute to future profitability, contingent upon long-term PPA terms.

5. Growth in Electric Sales as a Vertically Integrated Power Producer (IPP): Hallador has undergone a strategic transformation, shifting its primary focus from coal production to becoming a vertically integrated Independent Power Producer. Electric sales now constitute a substantial portion of its total revenue, and this transition is expected to drive sustainable growth by capitalizing on expanding energy market margins and the increasing demand for reliable, dispatchable power.

Share Issuance

• Hallador Energy issued approximately $9.721 million in stock upon the redemption of convertible notes and interest in the period preceding Q1 2025.
• The number of common shares outstanding increased from 42,621 to 42,978 (in thousands) between December 31, 2024, and June 30, 2025.

Outbound Investments

• In 2022, Hallador Energy acquired the one-gigawatt Merom power generator in Sullivan County, Indiana, as part of its strategy to convert fuel into higher-value wholesale electricity.
• The company is actively exploring the acquisition of additional dispatchable assets to diversify revenue and enhance scale.

Capital Expenditures

• Capital expenditures were $13 million in Q2 2025, $11.7 million in Q1 2025, and a total of $24.8 million for the first half of 2025.
• For the full year 2024, capital expenditures amounted to approximately $53 million.
• The primary focus of capital expenditures includes maintaining and expanding productive capacities, developing infrastructure at extraction plants, and evaluating potential dual-fuel upgrades at the Merom plant.