Hallador Energy adjusts coal contracts; cuts 175 workers

Hallador Energy, the parent of Indiana coal produce Sunrise Coal LLC, said July 27 that 2015 brought mild weather and a glut of low priced natural gas, meaning that some of its customers wound up purchasing too much coal for 2015.

In an effort to assist these customers to balance their current needs and to secure long-term fuel supply, Hallador said it agreed to modify several of its coal sales contracts. To implement these changes, production at the Oaktown Complex, bought in August 2014 from Vectren Corp., will be increased and production at the company’s longstanding Carlisle mine will be decreased. For the next couple of years, Hallador expects Oaktown to represent more than 90% of its production. Not all changes are finalized, but Hallador anticipates its contracted position through 2020 will be as follows:








 

Last Half 2015

    

2016

 

 2017

 

 2018

 

 2019

 

 2020

                       

Tons (MM)

    3.3

 

6.1

 

 4.2

 

 4.7

  

 5.0

 

 5.0

Price

    $44.57

 

$43.12

 

 $42.64

 

 $41.69

 

 $42.30

  

$43.96

% Priced

    100%

 

100%

 

 89%

 

 69%

 

 50%

 

 50%

A large number of employees will transfer from Carlisle to Oaktown. A reduction in force of 175 employees is necessary, effective July 27.

Hallador didn’t identify the affected customers. In its May 8 quarterly Form 10-Q report, the company said that it sells coal to: Duke Energy Indiana, Hoosier Energy, Indianapolis Power & Light, Northern Indiana Public Service, Vectren and three unnamed Florida utilities.

In August 2014, Hallador acquired Vectren Fuels, which owned three underground coal mines in southwestern Indiana, including the Oaktown 1 and Oaktown 2 mines in Oaktown, Indiana, and the Prosperity Mine in Petersburg, Indiana. The Prosperity Mine was idled that same month. The two underground mines located near Oaktown are seven miles south of the Carlisle underground mine, which Hallador owned before the Vectren Fuels buy.

Hallador will discuss its 2nd Quarter 2015 financial results in a conference call that will be webcast live on Aug. 11. Participating on the call will be Hallador’s President and CEO Brent Bilsland, CFO Andy Bishop and Sunrise Coal CFO Larry Martin. Hallador is headquartered in Denver, Colorado, and through its wholly owned subsidiary, Sunrise Coal, produces coal in the Illinois Basin for the electric power generation industry.

About Barry Cassell 20414 Articles
Barry Cassell is Chief Analyst for GenerationHub covering coal and emission controls issues, projects and policy. He has covered the coal and power generation industry for more than 24 years, beginning in November 2011 at GenerationHub and prior to that as editor of SNL Energy’s Coal Report. He was formerly with Coal Outlook for 15 years as the publication’s editor and contributing writer, and prior to that he was editor of Coal & Synfuels Technology and associate editor of The Energy Report. He has a bachelor’s degree from Central Michigan University.