Q4 2024 Hallador Energy Co Earnings Call
Operator: Good afternoon. Thank you for attending Hallador Energy's fourth quarter and full year 2024 earnings conference. At this time, all participants are in listen-only mode.
Good afternoon. Thank.
Thank you for attending.
Fourth quarter.
Year 2024 earnings conference call.
At this time, all participants are in listen only mode.
Operator: Later, we will conduct a question and answer session. and instructions will follow it.
Later, we will conduct a question and answer session and instructions will follow at that time.
Sean Mansouri: As a reminder, this call may be I'd now like to turn the conference over to Sean Mansouri, the company's Investor Relations Advisor with Elevate IR. Please go ahead, Sean.
As a reminder, this call maybe recorded.
I'd now like to turn the conference.
Sean: The company's Investor Relations adviser with elevate IR. Please go ahead Sean.
Sean Mansouri: Thank you and good afternoon everyone. We appreciate you joining us to discuss our fourth quarter and full year 2024 results. With me today are President and CEO Brent Bilsland and CFO Marjorie Hargrave.
Sean: Thank you and good afternoon, everyone. We appreciate you joining us to discuss our fourth quarter and full year 2024 results.
Speaker Change: With me today are president and CEO, Brent build one and CFO Marty hardware.
Sean Mansouri: This afternoon, we released our fourth quarter and full year 2024 financial and operating results in a press release that is now on the Hallador Investor Relations website. Today, we will discuss those results as well as our perspective on current market conditions and our outlook.
Speaker Change: This afternoon, we released our fourth quarter and full year 2024 financial and operating results.
Speaker Change: In our press release that is now on the <unk> Investor Relations website.
Speaker Change: Today, we will discuss those results as well as our perspective on current market conditions and our outlook.
Sean Mansouri: Following prepared remarks, we will open the call to answer your question. Before we begin, a reminder that some of our remarks today may include forward-looking statements. subject to a variety of risks, uncertainties, and assumptions contained in our filings from time to time with the SEC and are also reflected in today's press release. 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 underlying assumptions prove incorrect, actual results may vary materially from those we projected or expected. In providing these remarks, Hallador has no obligation to publicly update or revise any forward looking statements, whether as a result of new information, future events, or otherwise, unless required by law to do so.
Following prepared remarks, we will open the call to answer your questions.
Speaker Change: Before we begin a reminder, that some of our remarks today may include forward looking statements.
Subject to a variety of risks uncertainties and assumptions contained in our filings from time to time with the SEC and are also reflected in todays press release.
Speaker Change: While these forward looking statements are based on information currently available to us.
Speaker Change: If one or more of these risks or uncertainties materialize work, our underlying assumptions prove incorrect actual results may vary materially from those we projected or expected.
Speaker Change: In providing these remarks <unk> has no obligation to publicly update or revise any forward looking statements, whether as a result of new information future events or otherwise unless required by law to do so.
Sean Mansouri: We plan on filing our Form 10-K shortly.
Speaker Change: We plan on filing our Form 10-K shortly.
Brent Bilsland: And with the preliminaries out of the way, I'll turn the call over to President and CEO, Brent Bilsland. Thanks, Sean. Thank you, everyone, for joining us this afternoon. 2024 was a transformative year for Hallador as we evolved from our traditional position as a co-producer. to a vertically integrated power producer or IT. while also advancing our products and services up the energy value chain. This deliberate shift aligns with broader market trends and our beliefs in the superior economics of the IPP model, which we feel is essential to unlocking long-term value for our shareholders. at October of 24.
Speaker Change: And with the preliminaries out of the way I'll turn the call over to President and CEO Brent Thielman.
Speaker Change: Thanks, Sean Thank you everyone for joining us this afternoon two.
Speaker Change: 2024 was a transformative year for Howard or as we evolved from our traditional position as a coal producer.
Speaker Change: Vertically integrated power producer or IPP.
Speaker Change: While also advancing our product.
Speaker Change: Services up the energy value chain.
Speaker Change: This deliberate shift.
Speaker Change: Aligns with broader market trends and our beliefs in the superior economics of the IPP model.
Which we feel is essential to unlocking long term value for our shareholders.
Speaker Change: At October 24.
Brent Bilsland: We reached an important milestone in our transformation by signing a non-binding term sheet with a leading global data center developer to support their power and accredited capacity needs for over a decade. We followed up the non-binding term sheet with an exclusivity agreement that runs from January through early June of 2025. and provides us with comfort based on our partner's willingness to pay up to $5 million throughout the exclusivity period. These agreements, in combination with our partners' additional large-scale financial commitments to third-party stakeholders necessary for the transaction, highlight the meaningful progress. feel we've made towards finalizing a definitive agreement within our exclusivity period.
Speaker Change: We reached an important milestone in our transformation by signing a non binding term sheet with a leading global data center developer to support their power and accredited capacity needs.
Speaker Change: Over a decade.
Speaker Change: We followed up the non binding term sheet with an exclusivity agreement that runs from January through early June of 2025.
Speaker Change: It provides us with comfort based on our partners' willingness to pay up to $5 million throughout the exclusivity period.
Speaker Change: These agreements in combination with our partners additional large scale financial commitments, the third party stakeholders necessary for the transaction.
Speaker Change: Highlight the meaningful progress that we see.
We've made towards finalizing definitive agreements within our exclusivity period.
Brent Bilsland: While navigating these complex transactions requires coordination across multiple stakeholders. We remain encouraged by the commitment of our partners. and believe this strategic partnership will drive long-term value for our shareholders. We continue to witness the prevalent industry trend of retiring dispatchable generation. including Cole. in favor of non-dispatchable resources such as wind and solar. We believe this transition from dispatchable to non-dispatchable makes the attributes of our subsidiary, Hallador Power. much more valuable due to the enhanced reliability that we provide versus non-dispatchable generators. However, we believe the retirement of coal-based generation and lower natural gas prices could return.
Speaker Change: While navigating these complex transactions required coordination across multiple stakeholders.
Speaker Change: We remain encouraged by the commitment of our partners.
Speaker Change: And believe this strategic partnership will drive long term value for our shareholders.
Speaker Change: We continue to witness the prevalent industry trend of retiring dispatch of coal generation, including coal.
Speaker Change: In favor of non detachable resources, such as wind and solar.
Speaker Change: We believe this transition from dispatch able to non dispatch of coal generation.
Speaker Change: The attributes of our subsidiary how it or power.
Speaker Change: Much more valuable due to the enhanced reliability that we provide versus non dispatch all generators.
Speaker Change: However, we believe the retirement of coal based generation at lower natural gas prices could reduce the demand for coal supply potentially lowering the value of our sunrise coal subsidiary.
Brent Bilsland: to demand for coal supply, potentially lowering the value of our Sunrise Coal subsidiary. In anticipation of these market dynamics and in connection with our active management of the cost structures within Sunrise Coal, we proactively reduced volumes and shed higher cost coal reserves. which lowered our operational cash costs in the fourth quarter.
Speaker Change: In anticipation of these market dynamics and in connection with our active management of the cost structures within Sunrise coal, we proactively reduced volumes and shed higher cost coal reserves, which lowered our operational cash costs in the fourth quarter.
Brent Bilsland: During the fourth quarter of 2024, we also completed our annual impairment analysis. which was based upon our current operating plan.
Speaker Change: During the fourth quarter of 2024, we also completed our annual impairment analysis.
Speaker Change: Which was based upon our current operating plans.
Brent Bilsland: market driven pricing and cost As part of that analysis, we determined the carrying amount of Sunrise's long-lived assets were not recoverable and recorded a non-cash Long Live Asset Impairment Charge $215.1 million in the fourth quarter of 2024. We believe this analysis underscores the necessity and foresight of our ongoing focus and transition. and the Power Generators. Hallador Power's ability to generate up to 6 million megawatt hours annually at Merham continues to provide significant opportunity. The forward power price curves indicate that the margins earned on energy produced at Merrick. and the value of accredited capacity sales assigned to the plan continue to increase.
Speaker Change: Market, driven pricing and cost trends.
Speaker Change: As part of that analysis, we determined the carrying amount of Sunrises long lived assets were not recoverable and recorded a noncash long lived asset impairment charge of $215 1 million in the fourth quarter of 2024.
Speaker Change: We believe this analysis underscores the necessity and foresight of our ongoing focus and transition to power generation.
Speaker Change: Powder power's ability to generate up to 6 million megawatt hours annually at marrow continues to provide significant opportunities.
Speaker Change: The forward power price curves indicate that the margins earned on energy produced at Baird.
Speaker Change: And the value of our credit capacity sales assigned to them.
Speaker Change: Continue to increase.
Brent Bilsland: We have seen strong indications for price improvements in 2025 and beyond. particularly in relation to data center development efforts in Indiana. It is unclear whether the forward pricing curve has yet factored in. fast-growing demand. We have historically focused on selling energy through bespoke bilateral agreements on a unit or plant contingent based However, during 2024, we sold a limited amount of power on a firm While we continue to limit these types of firm sales to mitigate risk. as we wait for high price unit contingent contracts to take We expect to strategically utilize them to smooth our exposure to this problem.
Speaker Change: We have seen strong indications or price improvements in 2025 and beyond.
Particularly in relation to data center development efforts in Indiana.
Speaker Change: It is unclear whether the forward pricing curve, yet factored in this fast growing demand.
Speaker Change: We have historically focused on selling energy through bespoke bilateral agreements on a unit or plant contingent basis.
Speaker Change: However, during 2024, we sold a limited about power on a firm basis.
Speaker Change: While we continued to limit these types of firm sales to mitigate risk as.
Speaker Change: As we wait for a high price unit contingent contracts to take effect.
Speaker Change: We expect to strategically utilize them to smooth our exposure to the spot market.
Brent Bilsland: This approach enables us to capture some of the episodic cash generation. largely driven by demand from extreme weather and various other conditions. that stress the power. while also lessening the negative pricing impacts during the period of mild weather and low natural gas. This also enables us to shift from the lower pricing related to our initial merit of acquisition. to traditional wholesale market prices. where we currently are in some regard and will largely be starting in 2026. and ultimately, to the enhanced pricing and margins associated with supporting data. and other large load. as we look beyond 2026 and into the next decade.
Speaker Change: This approach enables us to capture some of the episodic cash generation.
Speaker Change: Largely driven by demand from extreme weather.
Speaker Change: And various other conditions that stress the power grid.
Speaker Change: While also lessening the negative pricing impacts during the period of mild weather and low natural gas prices.
Speaker Change: This also enables us to shift from the lower pricing related to our initial <unk> acquisition.
Two traditional wholesale market pricing.
Speaker Change: Where we currently are in some regard and will largely be starting in 2026.
Speaker Change: And ultimately to the enhanced pricing and margins associated with supporting data centers and other large load end users as we look beyond 2026 and into the next decade.
Brent Bilsland: Despite an ongoing surplus of natural gas and mild weather patterns moderating energy prices throughout 2024, We began to see favorable pricing trends towards the end of the fourth quarter and early 2025. Combined with progress in our data center negotia This reinforces our belief that Merrim's earnings potential will expand meaningfully. if we execute on our strategic initiative. Additionally, we continue to believe that the ability to store commodities is inherently tied to the volatility of that. Coal can be piled up for years, thus the volatility is low. Oil and natural gas face transportation and storage challenges, which increase price volatility.
Speaker Change: Despite an ongoing surplus of natural gas and mild weather patterns moderating energy prices throughout 2024.
Speaker Change: We began to see favorable pricing trends towards the end of the fourth quarter and early 2025.
Speaker Change: Combined with progress in our data center negotiations this reinforces our belief that <unk> earnings potential we will expand meaningfully.
Speaker Change: If we execute on our strategic initiatives.
Speaker Change: Additionally, we continue to believe that the ability to store commodity is inherently tied to the volatility of that commodity.
Speaker Change: Coal can be piled up for years that the volatility is low.
Speaker Change: Oil and natural gas phase transportation, and storage challenges, which increase price volatility.
Brent Bilsland: The Limitations of Storing Viable Energy. coupled with non-dispatchable generation, gaining market share in an environment where the sun does not always shine and the wind does not always blow. indicates that energy price volatility could increase over the next decade. We believe this uncertain volatility. will sustain a premium in forward power prices. benefiting our long-term. We are also optimistic about Hallador Power. ability to capture higher prices and energy volumes in 2025. In 2024, we generated 3.8 million megawatt hours. at an average price of $48.62 per megawatt hour. However, for 2025, we have already four and a quarter million megawatt hours at an average price of $37.24 per megawatt hour.
Speaker Change: The limitations of storing viable energy, coupled with non dispatch of coal generation gaining market share in an environment, where the sun does not always shine.
Speaker Change: When does not always below.
Speaker Change: Indicates that energy price volatility could increase over the next decade.
Speaker Change: We believe this uncertain volatility.
Speaker Change: We'll sustain a premium and forward power prices benefiting our long term position.
Speaker Change: We are also optimistic about how it or power.
Speaker Change: The ability to capture higher prices and energy volumes in 2025 and beyond.
Speaker Change: In 2024, we generated $3 8 million megawatt hours.
Speaker Change: At an average price of $48 62 per megawatt hour.
Speaker Change: However for 2025, we have already contracted.
Speaker Change: Four in a quarter million megawatt hours at an average price of $37 24 per megawatt hour.
Brent Bilsland: And for 2026, we have secured 3.4 million megawatt of sales at an average price of $44.43 per megawatt. This reflects approximately 71% and 57% of our potential energy sales for 2025 and 2026 respectively. Beyond 2026, we are optimistic in our ability to sell energy at higher prices in support of data center development. or to traditional wholesale customers. as indicated by the higher forward curve. Beyond the transaction, we are negotiating for Merrill. We are actively evaluating additional strategic transactions. that could expand our electric operation. increasing geographic reach and enhanced scale. while opportunities to acquire dispatchable generation assets are limited and complex.
Speaker Change: And for 2026, we have secured $3 4 million megawatt hours.
Speaker Change: Of sales at an average price of $44 43 per megawatt hour.
Speaker Change: This reflects approximately 71%.
Speaker Change: 57% of our potential energy sales for 2025 and 2026, respectively.
Speaker Change: Beyond 2026, we are optimistic in our ability to sell energy at higher prices in support of data Center development.
Speaker Change: Or two traditional wholesale customers as indicated by the higher forward curve.
Speaker Change: Beyond the transaction, we are negotiating for Miriam.
Speaker Change: We are actively evaluating additional strategic transactions.
Speaker Change: That could expand our electric operations increasing.
Speaker Change: Increasing geographic reach and enhance scale.
Speaker Change: While opportunities to acquire dispatch will generation assets are limited and complex.
Brent Bilsland: Hallador is uniquely positioned to repurpose underperforming or retiring assets to meet rising demand from data centers and onshore industrial customers. We are optimistic about the potential to add to our strategic portfolio and the long-term benefits that such a transaction could produce for the company, its shareholders, and its customers.
Speaker Change: <unk> is uniquely positioned to repurpose underperforming our retiring assets to meet rising demand from data centers and onshore industrial customers.
Speaker Change: We are optimistic about the potential to add to our strategic portfolio.
A long term benefit that such a transaction could produce for the company its shareholders and its customers.
Brent Bilsland: Shifting to coal, we spent much of 2024 optimizing our sunrise coal division. to better align with our electric op. Following the restructuring we initiated in the first quarter. We reduced head count. focus production on our most profitable reserve. and made infrastructure improvements to increase efficiency. These efforts successfully offset cost pressure. while enhancing operational flexibility. In 2025, we expect our Merrim Power Plant to consume 2.3 million tons of coal from our Sunrise Coal Subsidiary, as well as Third Park. We expect Sunrise to sell an additional 3 million tons of coal to third parties.
Speaker Change: Shifting to coal we spent much of 2020 for optimizing our Sunrise coal division too.
Speaker Change: To better align with our electric operations.
Speaker Change: Following the restructuring we initiated in the first quarter.
Speaker Change: We reduced head count.
Focus production on our most profitable reserves and made infrastructure improvements to increase efficiency.
Speaker Change: These efforts successfully offset cost pressures, while enhancing operational flexibility.
Speaker Change: In 2025, we expect our mirror and power plant to consume $2 3 million tonnes of coal from our Sunrise coal subsidiary as well as third parties.
Speaker Change: We expect sunrise to sell an additional 3 million tons of coal.
To third parties.
Brent Bilsland: Turning to our results for the fourth quarter, our Holium subsidiary, Hallador Power, generated 1.16 million kilowatts of power. million megawatt hours in Q4, up 5% from the 1.1 million megawatts in the third quarter. While the energy environment remains volatile, during the quarter, we continued to see incremental improvements. based on stronger pricing and higher dispatch. The gas inventory levels are returning towards the historic norm. resulting in higher natural gas prices than we have seen in recent quarters. Our gross margin for our power segment was $62.13 per megawatt hour sold. compared to $52.70 in the third quarter.
Speaker Change: Turning to our results for the fourth quarter, our wholly owned subsidiary how it or power generated 1.16.
Speaker Change: Million megawatt hours in Q4 up 5% from the $1 1 million megawatts in the third quarter.
Speaker Change: While the energy environment remains volatile during the quarter, we continued to see incremental improvements based on stronger pricing and higher dispatch rates.
Speaker Change: The gas inventory levels are returning towards the historic norms, resulting in higher natural gas prices that we have seen in recent quarters.
Our gross margin for our power segment was $62 13 per megawatt hours sold.
Speaker Change: Compared to $52 70 in the third quarter.
Brent Bilsland: Looking ahead, our focus remains on maximizing the value of our mirror and power. while actively pursuing opportunities to acquire additional dispatchable generators that can add durability, scale, and geographic expansion to our electric operation. Additionally... We are forging strong relationships with counterparties, seeking limited volume firm energy sales to secure favorable collateral terms. and effectively manage our Ford's power sales and risk in 2025 and 2026. which we believe will enhance our financial flexibility. in the short to medium term.
Speaker Change: Looking ahead, our focus remains on maximizing the value of our mayor and power plant.
Speaker Change: While actively pursuing opportunities to acquire additional dispatch of coal generators that can add durability scale and geographic expansion to our electric operations.
Additionally.
Speaker Change: We are forging strong relationship with Counterparties speaking limited volume firm energy sales to secure favorable collateral terms and effectively manage our forward power sales and risk in 2025 and 2026.
Speaker Change: Which we believe will enhance our financial flexibility.
Speaker Change: In the short to medium term.
Brent Bilsland: We are excited about our continued transformation from a commodities focused co-producer. to an IP. a strategy we believe will unlock for the Expanding Energy Market March. drive sustainable growth. that enhance cash flow generation for our.
Speaker Change: We are excited about our continued transformation from a commodities focused co producer to an IPP.
Speaker Change: A strategy, we believe will unlock.
Speaker Change: Expanding energy market margins.
Speaker Change: Sustainable growth.
Speaker Change: And enhance cash flow generation for our shareholders.
Marjorie Hargrave: I will now hand the call over to our CFO, Marjorie Hargrave. to take you through our financial results. Marjorie. Thank you, Brent, and good afternoon, everyone. Jumping right into the fourth quarter results. On a segment basis, electric sales for the fourth quarter were 69.7 million compared to 71.7 million for Q3 and 37.1 million in the prior year period, while coal sales were 23.4 million for the fourth quarter compared to 31.7 million in Q3 and 91.7 million in the prior year period. The expected year-over-year decline in coal sales was driven by our decision to reduce coal production as part of the restructuring of our Sunrise Coal Division.
Speaker Change: I will now hand, the call over to our CFO marching hard grade to take you through our financial results.
Speaker Change: Marty.
Marty: Thank you, Brian and good afternoon, everyone jumping right into the fourth quarter results.
Marty: On a segment basis electric sales for the fourth quarter was 69 7 million compared to $71 7 million for Q3, and $37 1 million in the prior year period.
Coal sales were $23 4 million for the fourth quarter compared to $31 7 million in Q3 and $91 79 in the prior year period.
Marty: The expected year over year decline in coal sales was driven by our decision to reduce call protection as part of the restructuring of our Sunrise coal Division.
Marjorie Hargrave: On a consolidated basis, we generated $94.8 million in revenue for the fourth quarter, compared to $104.8 million in Q3 and $119.2 million in the prior year period. Net loss for the quarter was $215.8 million compared to net income of $1.6 million in Q3 and net loss of $10.2 million in the prior year period. As Brent mentioned earlier, Q4 net loss was impacted by an approximate $215 million non-cash write-down associated with the value of our Sunrise Coal subsidiary. Operating cash flow for the fourth quarter increased to $38.9 million compared to operating cash used of $12.9 million in Q3 and $20.1 million in the prior year period with the increase driven by a prepaid fiscal delivered power contract entered into during the fourth quarter.
Marty: Holiday basis, we generated $94 8 million in revenue for the fourth quarter compared to $104 8 million in Q3, and $119 2 million in the prior year period.
Marty: Net loss for the quarter was $215 8 million compared to net income of $1 6 million in Q3, and net loss of $10 2 million in the prior year period.
Marty: As Brent mentioned earlier Q4, net loss was impacted by an approximate 215 million noncash write down associated with the value of our Sunrise coal subsidiary.
Marty: Operating cash flow for the fourth quarter increased to $38 9 million.
Marty: Bear to operating cash use of $12 9 million in Q3, and $20 1 million in the prior year period with the increase driven by our prepaid physical delivered power contract and they're into during the fourth quarter.
Marjorie Hargrave: Adjusted EBITDA, a non-GAAP measure which is reconciled in our earnings press release, issued earlier today was $6.2 million for Q4 compared to $9.6 million in Q3 and $2.1 million in the prior year period. We invested $13.8 million in capital expenditures during the fourth quarter, bringing total 2024 CapEx to $53.4 million. As we look to 2025, we expect CapEx to be approximately $66 million for the year, with roughly 20% related to federally mandated EPA ELG regulation. As of December 31, 2024, our forward energy and capacity sales position increased to $685.7 million, compared to $616.9 million at the end of Q3, and $658.1 million as of December 31, 2023.
Marty: Adjusted EBITDA, a non-GAAP measure, which is reconciled in our earnings press release issued earlier today was $6 2 million for Q4 compared to nine 6 million in Q3, and $2 1 million in the prior year period.
Marty: We invested $13 8 million in capital expenditures during the fourth quarter.
Marty: Until the 'twenty 'twenty, four capex to $53.4 million.
Marty: As we look to 2025, we expect capex to be approximately $66 million for the year with roughly 20% related to federally mandated EPA E. L. G regulation.
Marty: As of December 31, 2024, our forward energy and capacity sales position increased to $685 7 million compared to $616 9 million at the end of Q3 and $658 1 million as of December 31.
Marty: 2023.
Marjorie Hargrave: When combined with our forward fuel sales, which were up more than 40% to $460.7 million, compared to the end of Q3, our total forward sales book as of December 31, 2024, was $1.6 billion, compared to $1.4 billion at the end of Q3, and $1.5 billion as of December 31, 2023. In response to the more challenging environment for spot pricing, we continue to focus on strengthening our balance sheet. During the fourth quarter, we reduced our total bank debt to $44 million compared to $70 million at September 30, 2024, and $91.5 million outstanding at the end of last year.
Marty: When combined with our forward fuel sales, which were up more than 40% to $467 million compared to the end of Q3. Our total forward sales book as of December 31, 2024 was one 6 billion compared to $1 4 billion at the.
Marty: The end of Q3, and one 5 billion as of December 31, 2023.
Marty: In response to the more challenging environment for spot pricing, we continue to focus on strengthening our balance sheet. During the fourth quarter, we reduced our total bank debt to 44 million compared to $70 million.
Marty: Timber 32024, and $91 5 million outstanding at the end of last year.
Marjorie Hargrave: Additionally, we did not utilize our ATM program in the fourth quarter and have not utilized it since Q2 2024. Total Liquidity at December 31, 2024. 37,800,000 1000 compared to $34.9 million at September 30, 2024 and $26.2 million at December 31, 2023.
Marty: Additionally, we did not utilize our ATM program in the fourth quarter and if not utilize just since Q2 2024.
Marty: Total liquidity at December 30, 124.
Marty: $37 million 800.
Marty: <unk> thousand compared to $34 9 million at September 32024, and $26 2 million at December 31, 2023.
Sean Mansouri: This concludes our prepared remarks and we will now open it up for questions from those participating in the call. operator back to you.
Marty: This concludes our prepared remarks, and we will now open it up for questions from those participating in the call.
Speaker Change: Operator back to you.
Operator: To ask a question, please press star 1 1 on your telephone and wait for your name to be announced. After all your questions, please press star 1-1. Please stand by while we compile the Q&A raw.
Speaker Change: To ask a question. Please press star one on your telephone.
Speaker Change: Wait for your name to be announced.
Speaker Change: Your question. Please press star one again please.
Speaker Change: Please standby, while we compile the Q&A roster.
Nick Giles: Our first question comes from Nick Giles. B.
Speaker Change: Our first question comes from Nick Joseph with B Riley Securities. Your line is open.
Brent Bilsland: Reilly Securities, your line is open. Thank you very much, operator, and good evening, everyone. My first question, I wanted to ask about the regulatory and review process with the grid operator. There was obviously some reporting around a submitted EPR form. So it's curious if you'd be able to offer any additional color around where this fits into ultimately reaching a definitive agreement. Thanks very much. Yeah, hey Nick. Well, look, we, we, Those were EPR filings are done by utilities at various locations across the state and their network. their respective networks. We certainly can't comment to all of those.
Nick Joseph: Thank you very much operator, and good evening everyone.
Speaker Change: My first question.
Speaker Change: Wanted to ask about the regulatory review process with the grid operator, there was obviously some reporting around a submitted EPR form. So I was curious if you'd be able to offer any additional color around where this fits into ultimately reaching definitive agreement. Thanks.
Speaker Change: Much.
Speaker Change: Yeah, Hey, Nik.
Speaker Change: Uh huh.
Speaker Change: Well if we.
Speaker Change: Those were EPR filings are done by utilities at various locations across the state in their network.
Speaker Change: Their respective networks.
Speaker Change: We certainly can't comment to all of those.
Brent Bilsland: We would probably highlight that there are several developers and hyperscalers out there asking to take electrons off the grid for various You know, we can't we can't speak to which one we're particularly involved with at this time. We would say that we're thrilled that there are multiple. um access requests throughout the state because, you know, Hallador is in a position to sell to to any and all of them. should our you know, should we not go forward with the particular development that we're with now? So I guess what I'm saying is is, we're not going to comment as to where our particular, the location of our particular project.
We would we would probably highlight.
Speaker Change: That there are several developers and hyperscale or is out there act asking too.
Speaker Change: Take electrons off the grid for various developments.
Speaker Change: Yeah.
Speaker Change: We can't we can't speak to the which one were particularly involved with at this time, we would say we're thrilled that there are multiple.
Speaker Change:
Speaker Change: Access requests throughout the state because how it or is in a position to sell to.
Speaker Change: To any and all of them.
Speaker Change: Should or should our.
Speaker Change: Should we not go forward with the particular development that we're with now so I guess, what I'm, saying is is.
Speaker Change: As we're not going to comment as to where our particular the location of our particular project.
Brent Bilsland: But we are happy that there are multiple projects out there. should you know, our project not come to fruition. So lots of good backup opportunities out there that we see on the radar. as possibilities. Understood. No, Brent, that's helpful. Maybe just to ask in a different way. I mean, how should we think about remaining items between now and a definitive agreement? Is there further due diligence required in the case of the developer? Or have we reached a stage in the process where it really could just be down to a series of approvals? Yeah, you know, we're not we're not gonna be able to shed a ton of light.
Speaker Change:
Speaker Change: But we are we are happy.
Speaker Change: Multiple projects out there.
Speaker Change: Sure.
Speaker Change: Our project not not come to fruition so.
Speaker Change: Lots of lots of good backup opportunities out there that we see on the radar.
Speaker Change: <unk>.
Speaker Change: As possibilities.
Speaker Change: Understood No Brent that's helpful. Maybe just asking.
Asking it a different way I mean, how should we think about remaining items between now and the definitive agreement is there further due diligence required in the case of the developer or have we reached the stage in the process, where it really could it just be down to a series of approvals.
Speaker Change: Yeah, No we're not.
Speaker Change: We're not going to.
Speaker Change:
Speaker Change: Be able to shed a ton of light I apologize as to all the steps and.
Brent Bilsland: I apologize as to all the steps and where we're at in that process. We during Q1, you know, we, we signed an exclusivity agreement that runs through the first week of June. So I think that speaks, you know, to some degree to timing. And we were certainly glad to see the financial commitment from our counterparty. with that agreement, but we've also seen further commitments with our counterparty, with some of the other players. in the process. Look, we continue to be encouraged with the process that is that is made and the sincerity and commitment that we see from our counterparty, and we think we've made great progress.
Speaker Change: Where we're at in.
Speaker Change: In that process.
Speaker Change: We.
Speaker Change: During Q1.
Speaker Change: We signed an exclusivity agreement that.
Speaker Change: Runs through the.
Speaker Change: The first week of June.
Speaker Change: So I think that speaks.
Speaker Change: To some degree to timing.
Speaker Change: And we were certainly glad to see the financial commitment from our counterparty.
Speaker Change: With that agreement, but we've also seen.
Speaker Change: Further commitments with our counterparty.
Speaker Change: With with some of the other players.
Speaker Change: In the.
Speaker Change: In the process so.
Speaker Change: Look we continue to be encouraged with the process that is that is made and the.
Speaker Change: Sincerity and commitment that we see from our counterparty and we think we've made great progress.
Brent Bilsland: But a deal's not done until a deal is signed. And when that happens. We'll announce it, but we don't anticipate making a lot of announcements, you know, between today in the finish line, right, when it's signed? and we'll have a deal and it'll be announced. Understood. No, that's that's helpful.
Speaker Change: But the deals are done until a deal aside when that happens.
Speaker Change: Well announce it.
Speaker Change: But we don't anticipate making a lot of announcements between.
Speaker Change: Today in the finish line right when it's signed.
Speaker Change: And we will have a deal and it'll be announced.
Speaker Change: Yes.
Speaker Change: Understood.
Speaker Change: That's helpful maybe.
Marjorie Hargrave: Maybe just as we think about the long term agreement itself and Marum, I believe there could be a requirement to co-fire with natural gas after the turn of the decade. And so I was curious if you could speak to what's required at Marum and maybe the capital intensity of any upgrade. Yes, so the current law does state that all coal-fired power plants must co-fire. think by 2032. That allows them to run to 2039 and beyond. And so we have begun studies to review that process and what that would take. We are fortunate that we have a natural gas line in close proximity.
Maybe just.
Speaker Change: As we think about the long term agreement it self then.
Meera: And Meera.
Meera: I believe there could be a requirement to co fire with natural gas after the turn of the decade and so I was curious if you could speak to what's required at marrow them and maybe the capital intensity of any upgrade.
Meera: Yeah.
Meera: Yes so.
Meera: Current law does state that.
Meera: All coal fired power plants must co fire.
Meera: I think by 2032 and that allows them to run through 2039 and beyond.
Meera:
Meera: And so we have begun studies to review that process on what that would take we are fortunate that we have a natural gas line in close proximity.
Marjorie Hargrave: to the plant, and we have hired a group to study that, that has perform many. co-firing of coal-fired power plants throughout the country, including a sister unit, Tamera. So we feel that, you know, the feasibility of such a study is of such a process is very doable. You know, as we as we learn more about the cost, the timing of that, we'll share that with the market, but we're not we're not prepared to do that today. Got it. That's helpful. Maybe one more if I could. I mean, Brent, you mentioned additional opportunities to acquire generating assets beyond Marim.
Meera: To the plant and we have.
Meera: <unk> hired a group to study that that has.
Meera: Perform many.
Meera: Co firing of coal fire power plants throughout the country, including a sister unit.
Meera: Mirror so are.
We feel that the feasibility of such a study is.
Meera: Such a process is very doable.
Meera: And.
Meera: As we as we learn more about the cost the timing of that we'll share that with the market, but we're not we're not prepared to do that today.
Meera: Got it got it.
Meera: Thats helpful.
Speaker Change: Maybe one more if I could I mean, Brent you mentioned additional opportunities to acquire generating assets beyond mere them until I was curious if you could add any color around.
Brent Bilsland: And so I was curious if you could add any color around geography, scale, and how we might think about acquisition costs. I know Marim was more a transfer of ownership type of structure. And so should we think about similar opportunities where you might assume environmental liabilities and enter into some sort of forward agreement for energy? Thank you. Yes, so we certainly look at other opportunities and they're located in lots of different places. states across the country, both on the coal side and on the gas side. We think there are additional opportunities out there. We have teams that actively look at these things, and we just have to take them on a case-by-case.
Speaker Change: Geography scale and how we might think about acquisition costs I know Marin was more of a transfer of ownership type of structure and so should we think about a similar opportunities where you might assume environmental liabilities and enter into some sort of forward agreement for.
Speaker Change: <unk>.
Speaker Change: Energy.
Speaker Change: Yeah.
Speaker Change: Yes, so we certainly look at other opportunities.
Speaker Change: They're located in a lots of different states.
States across the country.
Speaker Change: Both on the coal side and on the gas side.
Speaker Change: We think there are additional opportunities out there we have teams that actively look at these things and we just have to take them on a case by case.
Brent Bilsland: basis. You know, everyone has different economics, different challenges, different opportunities. And so it'd be really hard for me to frame up, you know, hey, where is that going to be and what's that going to cost? until we're further down, further down, further committed. with those opportunities. All we are really trying to say is that we do actively have teams out there in discussion. and you know we're we're encouraged by the market. So fair enough, that's good to hear. And then it just sorry, as far as terms of any agreement, should we think about energy delivery on a contingent basis similar to some of your other agreements?
Speaker Change: <unk>.
Speaker Change: Everyone has different economics different challenges different opportunities.
Speaker Change: And so it would be really hard for me to.
Speaker Change: To frame up.
Speaker Change: Where does that going to be and what's that going to cost.
Speaker Change: And until we are.
Speaker Change: Further down further down further committed.
Speaker Change: With those opportunities are all we are really trying to say is that we do actively.
Have teams out there.
Speaker Change: In discussions.
Speaker Change: Yes.
Speaker Change: We're encouraged by the market.
Yeah.
Speaker Change: Fair enough Thats good to hear and then.
Speaker Change: Just sorry as far as.
Speaker Change: In terms of any agreement should we think about energy delivery on a contingent basis similar to some of your other agreements or would this be more of a.
Brent Bilsland: Or would this be more of a long term firm commitment? Just any any additional color around structure? Yeah, we typically sell the majority of our power on a unit contingent or plant contingent basis, and we would look to do that going forward in the future. Got it, got it. Well, Brent, congrats on all the progress so far. I appreciate all the color and continued best of luck. Yeah, thank you. Thanks for your question. Thank you.
Speaker Change: Our long term firm commitment just any any additional color around structure.
Speaker Change: Yes, we typically sell the majority of our power on a on a unit contingent or plant contingent basis, and we will look to do that.
Speaker Change: Going forward in the future.
Speaker Change: Got it got it.
Speaker Change: Brent Congrats on all the progress so far I appreciate all the color and continued best of luck.
Speaker Change: Yes. Thank you thanks for your question.
Jeff Gramm: Thank you. Our next question comes from Jeff Gramm with Alliance Global Partners. Your line is open.
Brent Bilsland: Good afternoon, guys. Good afternoon. At the risk of beating a dead horse, I'll try to ask the... Data Center question a little different way. What would you guys say are the major risks from your perspective with respect to locking something down over the next few months? Is there a way to kind of assess that on the outside at a high level? Well, look, I mean, you know, we We always want to try to under-promise and over-deliver. We feel that all the trends are moving our direction, right? I mean, we have Increasing demand for power, both with data centers and onshoring of industry and EV adoption.
Jeff Gramm: Good afternoon guys.
Speaker Change: At the risk of beating a dead horse I'll try to ask.
Speaker Change: Data Center question, a little different way what would you guys say are the major risks from your perspective with respect to locking something down over the next few months is there a way to kind of set that on the outside it at a high level.
Speaker Change: Well look I mean.
Speaker Change: We.
Speaker Change: We always want to try to under promise over deliver.
Speaker Change: We feel that all the trends are all moving our direction right I mean that we have.
Increasing demand for power, both with data centers and onshoring of industry and EV adoption.
Brent Bilsland: And if you want to access the grid in MISO, you have to supply accredited capacity. And, you know, we have that and you can't, you know, MISO and other grid operators have stripped the accredited capacity. from. renewables essentially, right? I mean, it used to be wind got 50% of nameplate roughly and and Solar got 50% and now they get, you know, 15 and 5% effectively. And MISO has said they're going to cut that in half again in a handful of years. So... So you've got to get accredited capacity from something that has an on switch.
Speaker Change: And at the same and if you want to access the grid you have it.
Speaker Change: MISO you'd have to supply accredited capacity.
Speaker Change: And.
Speaker Change: We have that.
Speaker Change: And you can't.
Speaker Change: MISO and other grid operators have stripped the accredited capacity.
Speaker Change: From.
Speaker Change: Renewables essentially right I mean, it used to be when got 50% of nameplate roughly.
Speaker Change: And solar got 50% and now they get 15 and 5% effectively in MISO has said, they're going to cut that in half again.
Speaker Change: And a handful of years so.
Speaker Change: So you've got to get accredited capacity from something that has an on switch that's coal gas new.
Brent Bilsland: That's coal, gas, nuke, and there are no nukes in the state of Indiana. So, you know, if you want to build something in MISO Zone 6, which is essentially. the state of Indiana and the northern third of Kentucky. You've got to get accredited capacity, and we think the only practical place to get that today is coal and gas generation. and so that's that's why we feel very encouraged about being able to eventually get something done. Timing is always a question mark. Again, I think we put an exclusivity period that ends, you know, in the first week of June and that's the best.
Speaker Change: There are no nukes in the state of Indiana. So.
Speaker Change: If you want to build something and MISO zone, six which is essentially.
Speaker Change: The state of Indiana, and the northern third of Kentucky.
Speaker Change: You've got to you've got to get a credit capacity and we think the only practical place to get that today is coal and gas generation.
Speaker Change: And so that's why we feel.
Speaker Change: Very encouraged about being able.
Speaker Change: So eventually get something done timing is always always a question Mark again I.
Speaker Change: I think we've put an exclusivity period that that is in the first week of June.
Speaker Change: The best.
Brent Bilsland: signal we have for timing at this time. Understood. I appreciate those details. That's helpful.
Speaker Change: Signal, we have for timing at this time.
Speaker Change: Understood I appreciate that those detailed thats helpful and on the the.
Brent Bilsland: And on the potential acquisition of other, you know, power assets, understanding, you know, you can't talk without the specific transaction, but just kind of curious to dig in, like, what does the buy box look like for you guys? Are there things that absolutely make sense a la Cole versus things that maybe don't make And also curious, you know, how important is control over fuel supply for, you know, whatever potential power generation asset? How important is that aspect for anything in the future relative to what you have now? Thanks. So, you know, we've mentioned before that we have looked at both coal and gas generation, and we've mentioned that we've looked at other markets besides just MISO.
Speaker Change: Potential acquisition of other power assets understanding you cant talk without the specific transaction, but just kind of curious to dig in like what does the buy box look like for you guys are there things that absolutely makes sense all of our coal versus things that maybe don't make sense and also curious.
Speaker Change: How important is control over fuel supply for whatever potential power generation asset how important is that aspect for anything in the future relative to what you have now thanks.
Speaker Change: So we've mentioned before that we have we have looked at both coal and gas generation.
Speaker Change: And we've mentioned that we've looked at other markets. Besides just MISO.
Brent Bilsland: And so. in the U.S. As far as coal supply to a coal plant, I think it's an advantage. It provides us with a lot of flexibility. But it isn't necessarily a have-to-have, it certainly is a... is a nice to have because we do see times where the economic risk does make its way down to the fuel supply versus to the power generator. The nice thing about the setup we have now is we're were vertically integrated. and so we feel we capture that economic rent regardless of which side of the ledger, the power side or the fuel side, that it falls to.
Speaker Change: And so.
Speaker Change:
Speaker Change: In the U S.
Speaker Change: As far as coal supply to a coal plant I think it is.
Speaker Change: Think it's an advantage it provides us with a lot of flexibility.
Speaker Change: But it isn't necessarily a has to have it certainly is a.
Speaker Change: As a nice to have because we do see times, where the economic rent.
Speaker Change: It does make its way down to the fuel supply versus to the power generator.
Speaker Change: The nice thing about the setup, we have now as it were.
Speaker Change: We're vertically integrated.
Speaker Change: And so we feel we capture that economic rent.
Speaker Change: Regardless of which side of the ledger, the power side or the fuel side that it falls too so we like our position.
Brent Bilsland: So we like our position. We certainly wouldn't be afraid of a plant in the future that we don't own the coal or the fuel supply to. But again, you just kind of have to evaluate all of these plants on a case-by-case basis. They all have, you know, pros and cons and but we certainly think we understand. how to unlock the value of the asset that we have. We're looking to see if we can find situations that are similar to what we have today. Great. That's really helpful, Brent. Appreciate the time.
Speaker Change: We certainly wouldn't be afraid of a plant in the future that we don't own the coal or the fuel supply too.
Speaker Change: But again, you just kind of have to evaluate all of these plans on a case by case basis. They all have.
Speaker Change: Frozen cards and.
Speaker Change:
Speaker Change: But we certainly think we understand.
Speaker Change: How to unlock the value of the asset that we have that we're looking to see if we can find situations that are that are similar to what we have today.
Brian: Great that's really helpful. Brian appreciate the time.
Speaker Change: Yes.
Brent Bilsland: Thank you.
Jae Yoon: Our next question comes from Jae Yoon. Summit Ridge Capital Management, your line is open. Hey guys, thanks for taking my question. My first question is... Sure. So in terms of pricing on a deal, have your views changed at all? Or do you still expect a premium to the forward curve? No, we still expect a premium to the forward curve. Um, you know, nothing in that regard has has changed, we feel that. The data center developers and hyperscalers, you know, continue to be Very aggressive in the space and you know, we think that the addition of open AI and their Stargate project, you know, continues to add to that competition.
Speaker Change: Thank you. Our next question comes from Jay <unk> with Summit Ridge Capital Management. Your line is open.
Jay: Hey, guys. Thanks for taking my questions.
Jay: My first question is.
Speaker Change: Sure. So in terms of pricing on a deal have your views changed at all or do you still expect a premium to the forward curves.
Speaker Change: No we still we still.
Speaker Change: Expect a premium to the forward curve.
Speaker Change:
Speaker Change: Nothing in that regard us as change we feel that.
Speaker Change: The data center developers and hyper scaler.
Speaker Change: <unk> to be.
Speaker Change: A very aggressive in the space and we think that the addition of open AI in their star Gate.
Project continues to add to that competition.
Brent Bilsland: I mean, essentially by them joining in the race, we've gone from four hyperscalers to five. and so that continues to put. upward pressure on right on the economics, which is good for us. Right. And that was my next question was, it seems like the environment has shifted in your favor. The last few months, you mentioned, there's more competition for, you know, demand for power. But it also seems like the the co-location deals being held up by the regulators also helps you guys. So is there potentially upward pressure on pricing that you guys could could realize?
Speaker Change: Essentially by them joining in the race, we've gone from four hyperscale or survive.
Speaker Change: And so that continues to put.
Speaker Change: Upward pressure on <unk>.
Speaker Change: Right on the economics, which is good for us.
Speaker Change: Right that was my next question was.
Speaker Change: It seems like the environment has shifted in your favor. The last few months you mentioned theres more competition for demand for power, but it also seems like the.
Speaker Change: The co location deals being held up by the regulators also helps you guys. So.
Speaker Change: Is there potentially upward pressure on pricing that you guys could could realize.
Speaker Change: Okay.
Brent Bilsland: Well, again, I mean, a deal is not done until it's signed. And, you know, but we are Like I said, we feel we've made good progress on our. negotiations. And we're happy with the economics that we've negotiated to date. And, you know, at this point, we're just trying to, you know, get that deal across the finish line. Okay and my last question I know there's only so much you can talk about but as we sit here today do you feel better about getting a deal done than you did maybe two or three months ago? How do you feel about the progress you've made?
Speaker Change: Well again, a deal is not done until it's signed.
Speaker Change: But what we are.
Speaker Change: Like I said, we feel we've made good progress on our.
Speaker Change: Negotiations and we're happy with the economics that we negotiated to date.
Speaker Change: And at this point, we're just trying to.
Speaker Change: Get that get that deal across the finish line.
Speaker Change: Got you.
Speaker Change: Yes.
Speaker Change: And my.
Speaker Change: My last question I know, there's only so much you can talk about but as we sit here today do you feel better about getting a deal done than you did maybe two or three months ago. How do you feel about the progress you've made.
Brent Bilsland: Yeah, I do. I do think that we've made material steps again, the financial commitment that we've seen not just to us, but to other counterparties involved in the transaction is encouraging. And so from that perspective, I feel like our odds of success have continued to improve, particularly with the progress that we've made with our counterparty. Right. And when you say financial commitment, do you mean CapEx for GPUs and things like that? I don't want to get too far down into where the money is going, but yes, we've seen significant financial commitment. from the parties involved and you know that.
Speaker Change: Yes, I do think that we've made material steps again the financial commitment.
Speaker Change: That we've seen not just to us but to other counterparties involved in the transaction is encouraging.
Speaker Change: So from that perspective, I feel like.
Speaker Change: Our odds of success have continued to improve particularly with the progress that we've made with our counterparties.
Speaker Change: Right and when you say financial commitment do you mean, capex for Gpus and things like that.
Speaker Change: I don't want to I don't want to get too far down into where the money is going but yes, we've seen significant financial commitments.
Speaker Change: From the parties involved in.
Speaker Change: You know that.
Brent Bilsland: we think. they wouldn't do that if they didn't feel that there was a high probability of success. Okay, thanks a lot guys. Appreciate it. Thank you for your interest. Thank you.
We think.
Speaker Change: They wouldn't do that if they didn't feel that there was a high probability of success.
Alright understood. Okay. Thanks, a lot guys I appreciate it.
Speaker Change: Thank you for your interest.
Nick Giles: Our next question comes from Nick Giles with B Riley Securities. Your line is open. Thanks for taking my follow-up. I just wanted to go back to the CAPEX guidance you outlined earlier in the call. If you could maybe break that down between what's allocated to maintenance and what might be allocated to, you know, provisions like the ELG rule. I might have misheard that, but that's my first follow-up. Thank you. Yeah, we actually did out we did say what was allocated to the ELG rules because we said about 20% and so we have $66 million forecasted and budgeted for 2025.
Speaker Change: Thank you. Our next question comes from Nick Giles.
Speaker Change: B Riley Securities Your line is open.
Speaker Change: Okay.
Speaker Change: Thanks for taking my follow up I just wanted to go back to the Capex guidance you outlined earlier in the call. If you could maybe break that down between what's allocated to maintenance and what might be allocated to.
Speaker Change: Provisions like the EOG rule I might have I might have.
Speaker Change: Misheard that but Thats my first follow up thank you.
Speaker Change: Yes, we actually did we did say what was allocated to.
Speaker Change: The ELT rules, because we said about 20% and so we have $66 million.
Speaker Change: Forecasted and budgeted for 2025.
Marjorie Hargrave: which is about. It's $14.8 million for the ELG rule. Got it. Thanks, Marjorie. And maybe just how should we think about, you know, so that would imply, would that imply upwards of $40 million for sustaining CapEx? Or how should we think about, you know, kind of a good sustaining CapEx figure to work with in the long term? Oh, okay. I would, honestly, we normally have about $50 to $60 million. So if we took out the $15 million, we'd be at $51. We were at $53.4 million this year, 2024. So I always think between $50 and $60 million.
Speaker Change: Which is about.
Speaker Change: It's $14 8 million for the ELT walls.
Speaker Change: Got it thanks Mark.
Speaker Change: Maybe just how should we think about that.
Speaker Change: That would imply.
Speaker Change: Would that imply upwards of $40 million for sustaining capex or how should we think about.
Speaker Change: Kind of a good sustaining capex figure to work within the long term.
Speaker Change: I would honestly, we normally have about $50 million to $60 million. So if we took out the $15 million and we'd be at 51.
Speaker Change: <unk> three <unk> 4 million this year 2024.
Speaker Change: I always think between 50 and $60 million.
Marjorie Hargrave: Got it. That's very helpful. And maybe just Along those lines, I was curious to get an updated view of how you're thinking about capacity payments in any long-term agreement. I think previous guidance was that capacity payments could cover fixed costs of the plant, so is that still a reasonable bogey? Yes. Yeah, it's normally about 69. Okay. And then, I promise it'll be my last one. Could you just speak to progress on the optimization of the operating footprint on the coal side? I mean, where do cash costs stand today? And then as we think about fuel needs at Merrim, does your internal supply cover full capacity, or would you likely need to purchase some third-party coal as well?
Speaker Change: Got it that's very helpful and maybe just.
Speaker Change: Along those lines.
Speaker Change: I'm just curious to get an updated view of how you're thinking about capacity payments in any long term agreement I think.
Speaker Change: Previous guidance was the capacity payments could cover fixed costs at the plant. So is that still a reasonable bogey.
Speaker Change: Yes.
Speaker Change: Yes.
Speaker Change: Normally about $60 million.
Speaker Change: Okay.
Speaker Change: And.
Then my promise that will be my last one could you just speak to <unk>.
Speaker Change: Greg on the optimization.
Speaker Change: Of the operating footprint on the coal side, I mean, where do your cash costs stand today, and then as we think about fuel needs at Marin does your internal supply cover full capacity or would you likely need to purchase some third party coal as well.
Marjorie Hargrave: Yeah, so we made progress in the fourth quarter, our cash costs were down into the low 40s, which was significantly better than being in the low 50s of where we were. earlier in the year. As far as fuel supply goes, you know, we do purchase fuel for the plant from other suppliers throughout the state. and, you know, it's, it's which kind of helps us from a diversity of supply and Yeah, so we buy from multiple vendors for the plant. Got it. Guys, thanks again. I really appreciate all the color. Yeah, thank you, Nick. Thank you.
Speaker Change: Yes, so we've made progress in the fourth quarter, our cash costs were down into the low forties, which was significantly better than being in the low fifties we were.
Speaker Change: Earlier in the year.
Speaker Change: As far as fuel supply goes we do purchase fuel for the plant from other suppliers throughout the state.
Speaker Change: And that's.
Speaker Change: Just kind of helps us from a diversity of supply.
Speaker Change: Yes, so we buy from multiple vendors for the plan.
Speaker Change: Got it.
Speaker Change: Got it thanks again I really appreciate all the color this evening.
Nick Joseph: Yeah. Thank you Nick.
Operator: This concludes our question and answer session and today's conference. Thank you for participating. You may now disconnect.
Speaker Change: Thank you.
Speaker Change: This concludes our question and answer session and today's conference call.
Speaker Change: Thank you for participating you may now disconnect.
Speaker Change: Okay.
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