Hallador Energy Company Q1 2023 Earnings Call
Okay.
Okay.
Okay.
Okay.
Okay.
Okay.
[music].
Okay.
Okay.
Okay.
[music].
Yeah.
Good afternoon. Thank you for attending today's Palomar Energy's first quarter 2023 earnings call. My name is Anna and I will be your moderator for today's call all lines will be muted during the presentation portion of the call with an opportunity for questions and answers at the end.
I'd like to ask a question. Please press star one.
I'd now like to pass the conference over to our host Becky Palumbo with holiday you May go ahead.
Okay.
Hello, and thank you everybody for joining us today yesterday afternoon, we released our first quarter 2023 financial and operating results on Form 10-Q, which is now posted on our website.
With me today on this call is Brent Bill Flynn, our president and CEO and Larry Martin our CFO .
After the prepared remarks, we will open up the call to your questions.
Before we begin please note that the discussion today may contain certain forward looking statements.
Better statements related to future not past events.
In this context forward looking statements often address our expected future business and financial performance. 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 understanding assumptions prove incorrect actual results may vary materially from those we projected or expected.
For example, our estimates of mining costs future yourself legislation and regulation in providing these remarks, we have no obligation to publicly update or revise any forward looking statement, whether as a result of new information future events or otherwise that may be required by law.
For a discussion of some of those risks and uncertainties that may affect our future results.
You should review the risk factors described from time to time in the reports we filed with the SEC.
As a reminder, this call is being recorded.
In addition, a live and archived webcast of the earnings call is also available on our website.
We encourage you to ask questions during the Q&A and if you are on the webcast and would like to ask a question you will need to dial into the conference.
And that toll free number is 83347014 to eight.
018965, and with that I'll turn the call over to Larry.
Good afternoon, everybody before I get started I would like to define our adjusted EBITDA and operating cash flow.
Current income tax expense less the effects of certain subsidiaries and equity method investment activity plus bank Andrew.
Less the effects of working capital and other long term asset and liability period changes.
Cash paid for the asset retirement obligation reclamation close other amortization.
For the first quarter. Our results were net income of $22 1 million, which equated to 67 basic earnings per share and 61 cents diluted earnings per share.
Adjusted EBITDA for the quarter was $34 million.
<unk> decreased our bank debt by $10 million or funded bank debt as of the end of March was $75 2 million with our net funded bank debt being $72 8 million, we have letters of credit totaling $11 2 million with our banks.
And our debt to adjusted EBITDA leverage ratio was one two times at the end of the quarter.
I will now turn over the call to Brent builds on our CEO .
Yeah.
Thank you Larry.
Well, we're very happy with our first quarter results and the progress we continue to make.
Towards our goal as a company.
As we have noticed in past quarters out or is working diligently to do.
Deleverage our balance sheet.
This quarter, we made considerable progress towards that goal, reducing our bank debt by $10 million to just over $75 million.
Higher average prices in our coal business resulted in.
<unk> $34 million and adjusted EBITDA for the quarter.
As of March 31.
2023, our debt to EBITDA ratio dropped to one two times and our liquidity increased to $36 million.
Our coal business Salt production increased two 2 million tonnes.
Our cost of production decreased by $1 65 per ton.
Combined with an average sale price of $55 88 per ton for the quarter, our margins improved by $6.
<unk> 66 per ton as compared to the fourth quarter of 2022.
Throughout the rest of the year, we expect average sales prices to remain elevated.
We also continue to evaluate our cost of production as we strive to maintain our higher production are our higher margin.
In connection with this subsequent to the end of Q1, we typically temporarily idled, our higher cost Freeland Bill Mudd.
While we evaluate our production mix against market need.
So we have protected our employee base by utilizing the three one bill employees and other roles while we undertake this evaluation.
As we look to the immediate future we continue to be encouraged.
By the pricing indicators for coal energy and capacity.
As we think about the economics of mirror them based on current pricing.
The capacity payments that we receive secure covered nearly all of the fixed cost of the plant.
Including maintenance Capex.
But excluding future environmental upgrades.
Beginning next month <unk> deliveries will be almost exclusively coal produced by Sunrise coal our subsidiary.
I say almost exclusively as an example of the flexibility that Marin provides us.
It's the most profitable way to utilize our goal is to sell it tomorrow and then converted to electronic.
We will do that.
Currently we have 3 billion tonnes earmarked.
For 2024 for this exact scenario.
However, the market has changed in such a way that is more profitable to sell our sunrise coal to third parties of purchase deal Premier on the open market and we will do so.
There are numerous rules around.
How we price our coal to mirror and the accounting rules make things complex.
But when you strip all that out and break it down to its most simple form.
If hypothetically we were deliver our coal to the plant at our current coal production cost.
The variable cost of mayor I'm not covered by capacity payments.
<unk> costs, such as scrubber stone.
And other.
Other things beyond just fuel.
We expect our variable costs and then to be in the range of $30 per megawatt hour.
For the remaining nine months of 2023.
Uh huh.
Beyond what we've already contracted to sell we expect an additional 1 million megawatt hours.
I've yet to be priced.
For 2024 in addition to what we have contracted to sell.
We expect to sell approximately 5 million megawatt hours that have yet to be priced.
So while we cannot share our view of market prices due to ongoing negotiation and other factors.
We believe that various pricing curves for power at the Indiana hub.
Divide a reasonably indicative view of how meaningful Miriam will become to our company's company starting as early as the third quarter of this year.
So with that that ends my prepared remarks, I'll open up the call to questions.
Pardon me.
If you would like to ask a question. Please press star followed by one on your telephone keypad.
Any reason you would like to remove that question. Please press star followed by two.
Again to ask a question press star one.
As a reminder, if you are using a speaker phone. Please remember to pick up your handset before asking your question.
We will pause here briefly ask questions are registered.
Our first question is from the line of Lucas pipes with B Riley B Riley. Please proceed.
Thank you very much operator, and good afternoon, everyone.
Good afternoon, How're you doing.
I'm doing well I hope, you're well as well.
Thank you very much for the update and.
Brent I wanted to get a little bit more color on the contributions from Marin.
During Q1, and I wonder that sorry, if I missed it but.
I wonder what the megawatt hour production was at Marin during Q1, and if they were like capacity payments included in there.
The revenue contribution from some of the power side in Q1, Thank you very much for that color.
Well.
We had about 1 million megawatt hours that we sold for the quarter Lukas.
Yes, we had a fifth close to $16 million in capacity payments in that revenue.
Yeah.
Very helpful. Thank you and the capacity payments is that how should we model that going forward with that.
Kind of a lumpy one off or would that be consistent for the remaining quarters 50 year. Thank you.
No I think that.
So just to reiterate.
From the closing date of the plant on October 22020.
Two.
Through May 31 of 2023.
100% of the.
The electrical output.
Of the plan.
It is sold to who is your energy and 100%.
Of the.
Capacity of the plant through that time period.
Is sold to who is your energy.
And so the economics of the plant will be fairly consistent for the for.
For the first two months of Q2.
Do we think then starting in June .
About.
30% of the capacity of the plant.
This is contracted to them and we have sold capacity to other parties.
So, we'll probably see a bit of an increase.
Pass through payments, that's not all fully sold because part of that capacity has been offered into the MISO auction, which is ongoing.
So we haven't seen the results of that yet, but so far we're pretty pleased.
All of the capacity or the robustness of the capacity market.
And which is why we say.
We feel that the capacity market is strong enough today and into the future.
Currently.
Two.
Cover.
Almost.
We're slightly more than cover depending on the year, we're talking about the fixed cost of the plant.
So then.
When we look at energy for the balance of this year.
So we open up on price significantly starting in June .
And we anticipate selling to the market.
Roughly 1 million megawatt hours.
For the balance of 2023.
And we anticipate selling.
5 million megawatt hours outside of what we've already contracted for 2024.
Sorry could you repeat those those last two numbers again for the balance of 2023, and then for 2024.
And basically <unk>.
Due to the December of 'twenty three.
We anticipate selling 1 million megawatt hours.
Which are currently unpriced.
In addition to what we have contracted with <unk>.
That is correct very helpful. I'm, sorry, that's the clarification.
And then same for 2024.
We have.
Yes, something like that.
A million.
Six.
$1 6 million megawatt hours sold to Hoosier than we anticipated something like 5 million megawatt hours.
Outside parties.
Or just or just the.
Or just the MISO wholesale market.
Which are currently on price I think the point, we're trying to make here is that current market prices are significantly higher.
And then what we had previously.
Previously.
Agreed to.
With the <unk>.
And it's that power prices are at capacity.
Prices for both.
Well more so on the energy side power prices.
Got it so so.
Days forward curve.
Yes.
On price portion of your power you said it was 5 million megawatt hours did I hear that right and at what price would you expect to sell that in today's market.
Yes so.
As I said in the prepared remarks, we will have ongoing negotiations. So we don't really.
0.2.
Prices are but I think there's I think it's relatively easy for.
The investors to look at.
Various pricing curves out on the Indiana hub.
Yeah.
We sell to the mayor I'm hub, but.
It's easily fairly fairly closely linked to the Indiana hub.
Market prices.
And it varies by month those prices change every day, but.
Right now the market is pretty robust.
And that doesn't necessarily mean, we haven't we haven't.
No we haven't had a lot of power.
And there's reasons for that.
We are working to add some power.
We'll see if we're successful or unsuccessful.
Again, we're pointing to these are indicators of the market those are not contracted deals the market.
Could be stronger when we get there it could be weaker when we get there.
We're just saying it.
And others.
The markets are pretty robust right now and and.
Some people want to look at natural gas prices and say well the power prices shouldn't be.
Hi.
And they are.
And we think there is a premium potentially being paid because.
The market.
Is concerned about reliability.
Back two years ago, nobody was talking about reliability.
Last year, we had a couple of people talking about reliability and today I think there's all sorts of public comments from.
Dark Burke PJM MISO, everyone is talking about Oh, My Gosh reserve margins have gotten so sad meaning.
We have so little excess generation to cover load.
We're seeing more and more extreme pricing events I think this has pushed putting upward pressure on the power markets.
Because nobody wants to be caught make.
Naked.
Our unhedged.
When we go through this.
These events were.
Generation struggles to meet load.
Which is happening more and more frequently.
As Baseload generation.
Is replaced by.
Generation that cannot be dispatched does not have an on switch.
So all of that.
Kind of leads to because we have because our.
Sales position with the plant.
It starts to open up next month.
The pricing is significantly higher today than what we.
It had been selling of megawatt hours for in the rearview mirror.
We think we think.
At today's prices.
The Marin becomes a significant contributor to our company.
Probably starting in July .
July .
So.
But we certainly feel that way about 2024, so it.
Oh, it's very meaningful.
We couldnt be more excited about the <unk>.
Position of our company is in with.
With the market conditions that are being presented in front of us so.
We want to make sure that excitement resumes on this call because.
Last year, we were talking about hey, we're selling coal at really high prices and that's going to show up in 2023. This year I think were saying Hey, we have a very large unsold positioned for power.
And that is going to show up later in the year and into 'twenty four.
If prices hold.
Which today are thinking is that it will.
Yeah.
Very helpful. Thank you.
I I I did something really quickly here back of the envelope and maybe I'm way off but.
If I look at the electric sales in Q1, $92 4 million I took out the 16 million for capacity payments.
Then Larry you mentioned you sold about 1 million megawatt hours so.
Hey, Brian .
About $76 per megawatt hour.
On the revenue side is that the right approach.
Lucas remember last quarter, we talked about our GAAP.
GAAP accounting, we had to do for the.
Track that.
We sold Hoosier at discounted prices.
So there is.
About 30 some million in that.
Revenue that is just that.
Credit.
Cause it to reverse the discounted.
Contract prices that we sold the Hoosier base when we closed on the deal prices had taken off so we had told them.
Discounted.
Contract that now we have to reverse that.
Two revenue okay.
Okay.
Yeah.
Accounting never makes it easy.
That's it I.
I think we have disclosed before our contract with who's you're at $34 a megawatt hour.
Mhm.
But you know that.
Significantly.
Is less of our business starting June 1st.
I'm sure it.
Get gets all of our power through May 31st and then.
As Brent said from from there on it are the power the power grid runs on a June 1st to May 31st.
Fiscal year.
So we're selling them $1 6 million megawatt out of $7 million that we could six five to 7 million, we're going to produce after June one.
That's helpful.
Thank you. Thank you for that additional color.
Sure.
Second topic really quickly.
Last summer you disclosed that you sold 2.2 million tonnes at $125 per ton over several years and I.
I wonder how much of status for 2000 22024, Thank you very much.
Well I'm not exactly I don't know that.
Yes, I don't know that well.
Were prepared today to give you.
Exactly what that number is off the top of our head.
I mean, I think I think we've basically shown in the table that we expect our average price.
For the year to be $57.
Yeah, and I think we're in a scenario where.
We still feel pretty good about that because.
In the event that.
Well first of all customers are doing a decent job of picking up their coal on time.
Yeah, it's always subject to change.
What's changed for us is particularly in 2023.
We can currently take that.
Call over to the mayor and power plant and turn it into electrons at prices that are comparable or better to those prices. So.
From that standpoint.
We we feel really good so I don't know if that fully answers. Your question I think we did show in the so let me add you have.
Let me add here Brent also Lucas.
Where incremental tons, we actually ended up blending and extending some of those tons with lower price contracts to blend up our price or 23.
So and the majority of those higher priced tons are in 'twenty.
It would be delivered in 'twenty three we have some carried over but as we stated in the table. Our average contracted price for $2 8 million tons next year is about $51 and then as Brent said, we plan on taking 3 million tons to the plant.
The mayor and power plant.
And converting that was the megawatts at a higher price than than equivalent at 50.
$7.
Got it.
So.
So if I assume kind of a production capacity of seven 5 million tons on the coal side too.
$2 7 million tons contracted at 51, and then do you expect to sell $3 million to Marin. So these.
Less than 2 million tons to be sold in the open market for 2024 is that kind of the right way to think about it.
And we do have $1 million committed that we are now negotiating prices on so.
Got it right.
Right.
<unk> committed on price and then we have about a.
$1 billion or a little less to sell.
Very helpful.
Where would you put the market today for Illinois Basin coal for 2024.
Yeah. So again, we're in the middle of negotiations on that so.
Will decline too.
To answer that.
Understood fair enough.
Well look forward to the update on the pricing front end.
Brent you into team continued best of luck really appreciate all the color.
Thank you for your questions Lucas.
Thank you Mr pipes.
Our next question is from Kevin Tracey with Oberon, you mean Christine.
Great.
So I suppose will be here in the results from the MISO capacity auction relatively soon but it sounds like you probably sold the majority of your capacity in bilateral transactions can you give us a sense of where the pricing shook out for that and maybe if you're not willing to give a precise number.
Can you just tell us directionally, where the capacity payments for these bilateral deals came relative to where you are contracted with <unk>.
So a little.
They are at higher prices than where we previously contracted I would say that going into the MISO auction. We felt we had 88% of our fixed costs covered heading into the auction.
Auction was delayed by three weeks.
So I think we expect to see the results of that.
Come may 19th ish somewhere in there give or take a day.
So we'll be curious to see how those come that come out but really.
That's a one year auction and.
What we're seeing is.
As indications.
Pricing for multiple years.
Is that like I said before prices that we feel will.
Let's just say it will cover our fixed cost of the plant give or take $5 million.
That kind of depends on the year, they've gone to a seasonal construct this year. So it's.
A new twist on the capacity markets, but we feel that.
We feel happy from the standpoint of.
The capacity payments or to some degree.
Well it just kind of insurers.
The market signals are saying look coal plants are needed.
And reliability.
Is being talked about more and more and more becoming more of a concern which.
It's basically just another way of saying.
Yes.
The grid needs.
The slow generation.
That has onsite fuel.
That's become an issue this year is that.
Some of the gas plants and some of the markets.
Haven't been able to get fuel to the plant when they need it.
So now all of a sudden there's a lot of conversation in the industry about well gosh onsite fuel, which coal and nuclear plants have.
Is an attribute that.
Is is becoming.
More valuable as other generating sources.
With that right.
You know the attributes had been there all along but when you start.
Decreasing the fleet you start.
Seeing the cracks of OCA.
Oh gosh.
The market Didnt pay for on site fuel it didnt pay for spending generation and these are these are attributes that always kind of showed up for free now.
You see the grid operators, saying way.
Or are we going to start compensated in the industry for this because these are attributes that we absolutely need so.
As you have this transition.
Yes.
The challenges that are created for that.
Created by that are revealed.
And so all of that.
It takes us.
Excited about the asset we have.
Excited about the economics that we're seeing the market signals show us.
See how meaningful that is going to be come to our company.
And so and see what we feel is this isn't just a one or two year.
Economic case, we're seeing the market kind of show a signal that look longer data, we'll see if they're real.
Alright, we will see if we can contract there.
But early indications are.
We're seeing.
Indicators that are 567 years out that show.
Hey, this is as this asset is going to be we think pretty profitable for quite some time and thats why you heard us in our last call.
We our board had approved.
Spend the capital to invest in the lgs because.
We feel this plant is going to be needed beyond 2025, and $1 28.
So that could change market conditions.
Conditions change.
But.
The direction, we're seeing so far is this.
Plan is more needed not less needed at least by the economic indicators. So for all those reasons we're very.
Got it.
Okay and can you put a number on what the total fixed cost of the plant.
<unk> in a given year.
No that's not something we've.
<unk>.
Disclose yet.
Again, we've only owned this asset since October 22nd So we want to make sure.
That.
What we.
Project and estimate is accurate.
But I think I think we feel comfortable that.
That.
Capacity today, it looks to be.
Very very close to cover all or maybe exceed in some cases, depending on the year.
<unk> of our fixed cost needs. So as time goes on we may elaborate more on that but today, we haven't disclosed that.
Okay and just.
Make sure I heard you right at the beginning of the.
Beginning of the answer the first question you did in the bilateral capacity contracts.
The capacity for a higher price than your solid at four two huge or did I hear that right.
Yeah.
Yes, you heard me correctly.
Okay.
Okay and going in those contracts.
So the auction is just for a single year, but am I right in thinking, but often these bilateral contracts.
Negotiate it for multiple years does that.
What youre doing now or are you kind of doing on a year to year basis.
Well.
We can yes.
<unk>.
And it's always.
Hard to say because sometimes negotiations start out one way and finished completely different way. So I would say that we have.
Enough market indicators that we feel.
That capacity values.
Our robust for multiple years.
The MISO auction is kind of a market.
Where it was meant to be kind of where everybody sells an incremental about.
Of capacity and I think they even want to encourage.
Everyone too.
Either genera.
Generate their own capacity or <unk>.
Acquire that bilateral agreements of course of course MISO sees all of these transactions. So they may.
They very much know what's going on.
Yeah.
What comes out of the MISO auction.
It's kind of indicative of kind of isn't.
It's the first year that we've seen.
Yeah.
It's the first year that MISO has had a seasonal construct for capacity.
This is the first time the auction has.
Yes kind of dealt with this new animal.
We.
I've seen a whole range of predictions.
Of what's going to come out of this auction, which just tells me nobody really knows right.
So at the end of the day, we know this the reserve margin.
MISO and I think we.
We will soon be followed by PJM.
These numbers have gotten much thinner.
And so.
As is.
We no longer have great excesses of capacity is showing up in the MISO auction, which has caused prices to go materially higher.
So for all those reasons.
We feel good about the pricing today.
And we will see how successful we will be about.
Contracting capacity in future.
Okay, and then just another clarification.
$30 per megawatt cost figure for megawatt hour cost figure you mentioned in the call is that's just the variable costs are kind of the fuel.
M calls but doesn't include.
The capex or the other fixed cost right. So.
So we include our maintenance capex in that number.
We do not include.
Any.
Future environmental.
Investment that we need to make right. So we have come out and said they were going to invest.
Technology to meet the effluent limitation guidelines standard.
Yeah, we think that gives us in compliance with all of the laws that exist today.
We know that there'll be additional loss in the future. We just don't know.
What those are or what the compliance costs may or may not be so.
But from a variable cost point of view.
If we if we were to sell at cost fuel to the plant again. This is kind of a hypothetical.
There are market rules around.
You know, how we have to price coal to ourselves.
Right.
So.
That can get a little confusing.
I'm trying to follow that so what we're saying, let's say hypothetically if we took our KOL at cost took it to the plant.
Where would our variable cost plus <unk> plus maintenance capex, all that kind of stuff kind of wash out.
And that number is roughly $30 per megawatt hour.
Okay. So that $30 is kind of everything but the environmental capex are going to have to do for the next couple of years.
Correct fuel.
And so so feel O&M and maintenance kind of yeah got it got it.
Okay.
Maintenance capex will be in our fixed costs.
Our variable costs, we look at that as fuel that it's scrubbers, though.
Nox compliance things like that.
Okay.
Okay and last question so your comment that.
Do you expect to sell 1 million megawatt hours.
Non who's your parties this year that would seem to imply.
Plan inventory constrained in the second half of the year I guess I'm wondering if there's potential upside to.
So that 1 million megawatt hours, if you're successful.
In sourcing more coal elsewhere.
Well I think we've looked at this you can always source more coal elsewhere. It's just about our pricing I think what we're looking at.
When we look at the power curve for 2023, we look at the obligations that we have to other parties.
We estimate based on those prices today that we will sell.
An additional million megawatt hours that are unpriced.
Okay, great. Thank you very much.
Alright, thank you.
Thank you Mr. Tracy.
Once again it is star one to ask a question.
Our next question comes from Kenneth pounds with Castleberry Advisory you May proceed.
Hello.
Great job gentlemen.
Two questions and maybe kind of covered.
No.
So.
That's a 24.
Six five to 7 million megawatt hours assess what you think you can produce.
Next year.
Yes.
We're a little choppy on the voice connection, but I think you said.
I think what I heard you say is we plan to produce somewhere around $6 5 million megawatt hours in 2024 and that is correct.
Now.
The named plant capacity for the plant.
Our nameplate capacity for the plant as a thousand 70 megawatts.
Okay.
Trends.
Okay that translates into.
Right.
You just gave a six and a half.
Well 1070, a day translates to about $8 one five.
Perfect. Thank you sorry, [laughter] eight claims line okay.
And.
Got it.
Is it possible.
Okay.
Uh huh.
This call will.
It will be has to produce.
Is that number.
Yeah.
I'm sorry, the connection is bad and we're just not hearing you.
Okay. Thank you.
Thank you.
Thank you Mr <unk>.
The next question is from the line of Mike <unk> with Butler Hall, you May proceed.
Hey, how are you doing thanks for taking my questions.
Yeah.
Just a follow up on that.
On the last question right. So it's an impressive number if you guys can do on a six and a half.
Megawatt hours nine megawatt hours.
What we're driving is just looking at historically right the plant never really done more than five and a half something like that obviously.
I respect that you guys are coming in and are looking to run it better but is there something structurally that's changing that gives you guys confidence that you can increase output by 1 million megawatt hours.
Power prices are considerably higher than in the past.
So okay.
No.
If you looked at the ratio of <unk>.
Fuel cost.
We're vertically integrated.
Who is your was not.
And so when you look at the ratio of fuel cost the power prices.
We're in a better market today than they were historically.
And even if you look at last year, they had pretty strong power prices last year, but they had already kind of.
Began.
Backing down their maintenance capex and those sorts of things because they were going to close the plant right that was the game plan.
And then we were able to acquire.
Acquire the plant.
And so.
We began a process of reinvesting in maintenance of the plant to get it.
It wasn't in our bag condition, but to get it in a better condition.
So that we can achieve these.
<unk>.
Higher numbers.
Sure.
So we think that that.
It's doable the market.
Signals today are calling for that to happen.
Again.
We have it.
They haven't contracted a lot of this stuff right and so all we're really trying to say is hey, here's what we think today based on the market signals.
Today [laughter].
So market signals change quickly with a better for worse, but I think the general trend that.
It has been revealed.
<unk> talked about this in the past if you look at MISO.
And I'm going from memory here, So don't quote me exactly but you'll get the idea.
Prior to 2016.
I don't think they had had any Max generation event meeting, where the grid operator comes out and says everybody turned on this was struggling to meet load.
And in the trailing 12 months, it's been something like 11 times.
<unk> made that phone call.
What we're saying is because there's been such a.
Our rapid closing or retirement of Baseload generation.
And a large percentage of that basically generation has been replaced with generation.
Cannot be turned off there isn't.
And on switch located anywhere around a solar panel or windmill right.
These assets come on.
When the wind blows in the Sunshine Solar goes home every night.
Theres not hardly any battery capacity in the MISO system today.
So.
Because of that.
The.
The smaller fleet that remains has to work harder.
Alright, and so that is what we're see in.
And the pricing of the market.
And that's what we're trying to lease so we think the opportunity.
Is bigger than it was in the past.
Right.
That makes sense.
Yeah.
What power price.
I guess, where would power prices have fallen a farm down where they have to go for you guys to say, yes. It could have about the right number I mean, it seems like.
Relative to the curve today, you can still see power pricing.
They go down to $40 per megawatt hour.
Still seems like that would be achievable.
Yeah, So I mean.
We're vertically integrated so there comes a point, where we would make zero profit at the plant.
50 of profit at the plant in <unk> profit.
At the coal mine alright, so arguably theoretically in that scenario.
We would still run.
Where exactly that number is.
Yes.
That's about that's not something we're going to get into today, and then analysis that analysis, but.
I think our point is that.
We're at the opposite end of that scale in the markets are pretty robust.
They do change quickly.
We saw.
A lot of change.
In energy markets last year last year was probably the most dramatic.
Up and down.
<unk>.
I don't care, what energy market was oil whether it was cold weather. It was natural gas LNG power markets I mean, it's been very volatile but.
And that the opportunities there.
We're just we're excited about what we're seeing.
We're cautious.
To say these are the exact numbers when we don't have all of that.
Contracted so.
It's kind of this double edged sword for us of trying to indicate how good we think it can be.
Without overstating our position so what we're saying today is.
Capacity signals look good coal pricing signals look good.
Our pricing.
Excellent as well so.
That's the condition, we're in we think because.
Our power plant is going from being a 100% sold out this month.
Two or significantly sold out this month too.
Two we open up into a pretty large unsold positions starting next month.
We'll see what the power prices bring.
The entire year is 65 degrees in the Midwest power prices will be terrible.
Right.
It won't be that much load to meet.
If we see 110 degree heat indexes.
Look out it's going to be crazy.
Because the grid is really.
Starting to struggle you've had the grid operator.
Of MISO say publicly.
That MISO is being backed up by PJM.
And PJM is backing up myself.
But if it's hot or cold in either of those two markets at the same time.
There is not going to be any spare electrons from one market to share to the other.
Alright, this is where we see these extreme events where power prices go too.
A couple of thousand dollars an hour a megawatt hour.
And that.
So the market is saying way more of those types of events are out in the future because there's a lack of generation, we're going to pay a premium.
Above the price of.
A gas generator or a coal generator, because we don't want to be caught right. When the tide goes out you find out who is Nathan <unk>.
The market is saying we want to be caught in that scenario. So.
What we think we see as the market, saying will pay a premium.
To stay out of that.
Yet again.
Power demand stays low that premium will dissipate and go away if we see.
Extreme temperatures that power premium will increase.
Okay. So this transition is.
Everyone wants to look at the past.
And say well this is what it should be because this is what it was three years ago. We're in a completely different energy markets that we were in three years ago.
Alright, we have forced.
A lot of variable generation into the grid and that creates new challenges.
And empower markets are now forced to pay.
Two.
Try to.
No.
Solve those challenges.
Okay.
Just two questions one on <unk>.
On Maryland, one in the core, but so in Q1 and.
So if we just look at your electrical revenue was 93 or so million you had that 33 million that was a kind.
Kind of a contract liability amortization, so net of that it was about $59 million and $60 million was about the energy capacity revenue.
So the remaining kind of generation revenues about 43 I.
I think you noted that you generate about a 1000 megawatt hours.
And if youre getting paid $34 per megawatt hour shouldnt be $34 million.
I was having trouble reconciling why the generation revenue was $43 million.
Because of this capacity.
Hello.
Well he took those out I think I mean, I know it is not.
$9, a megawatt, but we do get some true ups and true downs in excess payments, Mike based on if we over generate.
For today and prices went up so.
I can look at that and send you an email or where we're at exactly.
Okay. Okay.
Okay.
Your.
Theory is correct.
34 Bucks, but we don't we don't net exactly $34.
On when we have some excess power that for instance, if we bid in 900 megawatts for today and we produced 910 for the day and we do get.
That excess power that doesn't go to <unk>, so that could be that will be most of the difference.
Okay, and then to the question. The first question on the carryover tonnage.
You guys sound like $2 2 million tonnes.
And I had $125 I think like the majority of it is in 'twenty three.
Obviously, you guys haven't specified how much in 'twenty four but I was playing around if I could.
Say, okay, let's just say 4 million tons is in 'twenty four right at $125 you guys noted.
For next year right for 24, you have about $2 7 million tonnes at $51, which includes these tonnages and 125, so in my kind of.
Quick back of the envelope at this point 4 million tonnes.
That implies the rest of the tonnage.
The $2 three in this example.
Is like contracted out of $38 price.
Just trying to figure out why it's so low.
Okay.
Well I mean.
I guess, we can't really speak to.
What all of our other contracts are there are I would say this I mean, we went from a.
A period of time.
Multi year contracts right.
And so.
We have prices that were low prices that were high.
Some of those lower prices came from coal that we priced two three years ago.
Right.
So.
I don't want the market to get hung up on exactly how many of these centers like we're showing you.
Our table, what our average prices are.
So.
Yes.
I think I think if you're trying to create your model what cash flow isn't a seizure or whatnot looked at the average price look here's how many tons we have.
Here's what our cost reduction has been as the volumes that we think move I think you'll get there.
I think you'll get to where you're trying to be.
Okay, well thank you so much.
Yes, I appreciate the questions. Thank you.
Thank you Mr <unk>.
Once again to ask a question press star one.
Yeah.
There are no additional questions waiting at this time, so I'll turn the call back over to Brian Portland for any further remarks.
Okay.
Yes. Once again I think we are very excited about the quarter, we're very excited about the future.
Marin brings to our company the pricing signals that we're seeing from the market and we appreciate all the interest.
From the participants of the call today, so with that I'll end the call.
The.
Get to work for next quarter. Thank you bye bye.
That concludes today's holiday energy first quarter 2023 earnings call. Thank you for your participation you may now disconnect your lines.