Hallador Energy Company — Q3 2026 Earnings Summary

Financial Performance:

• Total revenue was $130.3 million for Q3 2026, a decrease of 11% year-over-year (from $146.6 million in Q3 2025) and an increase of 28% quarter-over-quarter (from $101.5 million in Q2 2026).
• Net loss was $4.5 million in Q3 2026, compared to net income of $23.9 million in Q3 2025 and a net loss of $15.2 million in Q2 2026.
• Adjusted EBITDA was $17.3 million in Q3 2026, down from $24.9 million in Q3 2025 and up from $(2.9) million in Q2 2026.
• Operating cash flow was $(21.8) million in Q3 2026.
• Total debt increased to $551.9 million at September 30, 2026, from $45.0 million at June 30, 2026, following the closing of a $600.0 million senior secured construction bridge loan facility and debt refinancing.
• Total liquidity was $103.2 million at September 30, 2026, compared to $84.2 million at June 30, 2026 and $46.4 million at September 30, 2025.
• Capital expenditures were $57.1 million in Q3 2026, up from $19.5 million in the prior-year period.
• Electric sales revenue was $92.8 million in Q3 2026, while third-party coal sales revenue was $36.1 million.
• Merom generation increased 77% to approximately 1.4 million megawatt hours in Q3 2026 following a major maintenance outage.

Guidance and Future Outlook:

• Management targets a Final Investment Decision (FID) for the Turtle Creek project before the end of 2026.
• Commercial operation for Turtle Creek is targeted for the second half of 2028.
• The Company aims to secure long-term offtake agreements with investment-grade counterparties in early 2027.
• Management targets approximately $1.6 billion of value from the $800 million Turtle Creek investment over the next 24 months.
• Contract pricing for forward sales is expected to step up materially beginning in 2027.
• The Company expects to generate more hours at Merom and build value at each development stage with little to no equity dilution.

Business Segments and Product Lines:

• The Company is advancing the Turtle Creek Gas project, a 460-megawatt natural gas-fired generation project at the Merom site, which will diversify generation into natural gas.
• Hallador holds title to turbine and generator equipment acquired at a substantial discount from the Philippines; the equipment is en route to the US for inspection and refurbishment by Siemens.
• Total forward sales position increased 26% from Q2 2026 to $3.0 billion at the segment level as of September 30, 2026 (including impacts of October 7, 2026 contracts).
• As of September 30, 2026, the Company had $2.5 billion of contracted revenue from delivered energy, accredited capacity, and third-party coal sales, with accredited capacity commitments extending through 2040.
• The October 2026 energy agreement priced at over $80 per megawatt-hour, the highest in the forward sales book.
• Three major Merom offtake agreements signed in 2026, including the October agreement, priced substantially higher than previous ones.

Market and Competitive Landscape:

• The Midcontinent Independent System Operator (MISO) has completed the interconnection study for Turtle Creek.
• Hallador holds a speed-to-market advantage over competing projects due to the acquisition of pre-owned turbine equipment.
• The Company believes the market currently ascribes little to no value to the Turtle Creek project.
• The transition to natural gas generation aims to broaden the group of investors who can own shares and finance the company.

Risks and Challenges:

• Risks include the lack of a signed offtake agreement for Turtle Creek, uncertainty regarding timing, counterparties, and pricing.
• Execution risks involve the interconnection agreement, engineering and construction agreements, and equipment purchase orders.
• Potential for delays, cost overruns, or difficulties in completing Turtle Creek, including transport, inspection, and refurbishment of turbine equipment.
• Financing risks include the need to secure additional capital, potential equity dilution, and the terms of the $600 million senior secured term loan facility (including paid-in-kind interest and covenants).
• Regulatory risks include the need for approval by the Indiana Utility Regulatory Commission for contracted capacity agreements.
• Operational risks include forced outages, equipment failures, and unit contingencies in contracts.

Management Commentary and Tone:

• Brent Bilsland, Chairman and CEO, stated the goal is to seek to roughly double the $800 million investment into $1.6 billion of value over the next 24 months.
• Management expressed confidence that long-term contracts will improve terms for raising additional capital and that the project will diversify the generation portfolio.
• The tone emphasizes building value at each development stage with a focus on little to no equity dilution.
• Management noted that offtake contracts are the next step in building project value, though financing does not strictly require them to be in place.

Other Key Points:

• In October 2026, Hallador took title to turbine equipment under a $350 million asset purchase agreement with Energy World Corporation Ltd.
• The Company entered into a $600 million senior secured construction bridge loan facility with a term out option; $550 million was funded at closing, with a committed $50 million delayed draw tranche remaining undrawn.
• The Company is finalizing a $75 million super-priority revolving credit facility to supplement liquidity.
• $329.8 million of the funded proceeds from the new loan remained in restricted cash at quarter-end, primarily for turbine acquisition and related costs.
• The Company deposited the remaining $265 million of the turbine purchase consideration into escrow, with releases tied to milestones.
• The Company executed a public offering and ATM offering, raising net proceeds of $53.8 million and $0.2 million respectively in the nine months ended September 30, 2026.
• A loss on extinguishment of debt of $5.7 million was recorded in Q3 2026.
• The Company is a vertically-integrated Independent Power Producer with two core businesses: Hallador Power Company (electricity generation) and Sunrise Coal (fuel supply).