Hallador Energy pany(HNRG) - 2022 Q2 - Quarterly Report

Financial Performance - Q2 2022 net loss was $3.4 million, with operating cash flow decreasing by$2.7 million[80][82]. - Earnings per share for Q1 2022 was $(0.33), compared to$(0.03) in Q1 2021, indicating a decline in performance[102]. - Operating margins decreased by $8.3 million in the first half of 2022 compared to the same period in 2021, with margins expected to increase to approximately$20 per ton starting in Q4 2022[91]. - The effective tax rate for the six months ended June 30, 2022, was estimated at ~(2)%, significantly lower than ~25% for the same period in 2021[103]. - Management's evaluation of going concern indicates uncertainty regarding the ability to continue operations without substantial doubt[111]. Sales and Contracts - 1.6 million tons were shipped at an average sales price of $40.23 per ton, with remaining tons expected to average over$49 per ton[82][94]. - Total contracted tons for 2022 (Q3-Q4) are 4.0 million at an average price of $49 per ton, and 6.7 million tons for 2023 at an average price of$58 per ton[86][94]. - Average sales price for 2023 is projected to be approximately $17 per ton higher than the first half of 2022[87]. - The company added 2.2 million tons of new coal contracts priced over$125 per ton for delivery from Q4 2022 through 2025, expected to significantly increase margins[83]. Production and Costs - Production costs in Q2 2022 were $31.83 per ton, a decrease of$7.71 per ton from Q1 2022[82][100]. - Projected Adjusted EBITDA for 2023 is expected to exceed $160 million, up from the traditional$50 million, due to higher-priced coal contracts[87]. - Capital expenditures for the first six months of 2022 were $22.9 million, with an additional projected budget of$15 million for the remainder of the year[91]. Regulatory and Compliance - The company anticipates completing the acquisition of the Merom Power Plant in Q3 2022, subject to regulatory approvals[87]. - The company does not consider unreimbursed costs related to compliance matters to be material as of June 30, 2022[104]. - The company has identified its federal and Indiana state tax returns as major tax jurisdictions, expecting no material changes from audits[109]. Accounting and Valuation - Critical accounting estimates include coal reserves and asset retirement obligations, which could affect depreciation and impairment tests[106]. - Inventory valuation may be affected by the anticipated utilization of higher-cost coal from the Ace in the Hole mine[110]. - The fair value of interest rate swaps is based on anticipated future interest rates, which could impact financial results[108]. - The company plans to recognize certain costs related to government mandates when they can be estimated with reasonable certainty[104]. - No material changes in market risk disclosures were noted compared to the 2021 Annual Report[112].