Hallador Energy has approximately $2.4 billion in contracted segment-level revenue extending through 2040, while reducing the expected cost of its proposed 460MW Turtle Creek Gas project to below $800 million, strengthening both forward revenue visibility and the projected capital economics of its generation platform.
The contracted book totaled approximately $2.366 billion as of June 30. Of that amount, roughly $1.843 billion represents consolidated third-party contracted revenue, while an additional $523.3 million consists of intercompany coal commitments between Hallador’s operating segments.
Accredited capacity is the largest component of the forward book. Hallador had approximately $1.216 billion of contracted accredited-capacity revenue, including commitments extending through 2040. Contracted energy revenue totaled another $390.1 million, while third-party coal contracts represented approximately $236.5 million.
The forward sales provide a long-duration revenue base as Hallador evaluates whether to proceed with Turtle Creek. The company now expects the 460MW peaking plant to cost less than $800 million, or approximately $1,700 per kilowatt, after further definition of equipment, restoration and construction scopes.
Hallador has also accelerated its targeted commercial operation date to the second half of 2028. Turbine-equipment disassembly was underway with Siemens personnel on site, and shipment of the equipment remained scheduled for September at the time of the Q2 update.
The project’s MISO interconnection application entered the Expedited Resource Addition Study process on June 2. Hallador expected system-upgrade cost results in mid-August and was targeting a final investment decision and generator interconnection agreement in September, subject to review of the study and completion of the remaining construction and financing work.
Financing is another major component of that decision. Hallador is evaluating the appropriate capital structure with the stated objective of minimizing equity dilution, while finalizing construction scope and interconnection requirements.
The project is being advanced during a difficult quarter for Hallador’s existing Merom generation operation. Q2 revenue declined modestly to $101.5 million from $102.8 million, but net results swung to a $15.2 million loss from $8.2 million of income, while adjusted EBITDA moved to negative $2.9 million from positive $3.4 million.
Management attributed the weaker quarter to a planned maintenance outage and reliability upgrades at Merom Unit 1, combined with limited unplanned downtime at Unit 2 that occurred during periods of high electricity prices. Hallador was required to purchase power at elevated prices to meet contractual delivery obligations.
Capital spending increased to $26.3 million from $13.1 million, reflecting both Merom reliability investments and Turtle Creek spending. Hallador also drew $45 million under a delayed-draw term loan during Q2, taking total bank debt to $45 million from zero at March 31.
Total liquidity stood at $84.2 million at June 30, compared with $97.5 million at March 31 and $42 million a year earlier. The combination of higher capital spending, new debt and an upcoming project financing decision makes the structure of Turtle Creek funding an important consideration alongside the project’s improved estimated cost.
Some forward contracted sales remain subject to operating contingencies, price adjustments, volume provisions and regulatory approvals. Hallador specifically noted that certain forward positions require Indiana Utility Regulatory Commission approval, which it expected on or before November 15, 2026.
If Hallador proceeds with Turtle Creek, the project would add 460MW of gas-fired peaking capacity to a business that already has contracted revenue extending into the next decade. The central question now is whether the company can translate the sub-$800 million project estimate into a financing structure that preserves the expected economics without requiring substantial equity issuance.
KEY QUOTES:
“Since our strategic update in June, we have made significant progress across key elements of the Turtle Creek project. We recently completed a site visit to get a firsthand update of the disassembly of the turbine equipment, which is underway with a substantial Siemens workforce on site, and we continue to be pleased with both the progress of the disassembly efforts and the condition of the turbine equipment. Shipment of the equipment remains on schedule for September, and the generator interconnection process is also advancing. As the equipment, restoration and construction scopes become more defined, the project economics have become even more compelling, and we now expect total project cost to be below $800 million, or approximately $1,700/kW — which we believe is a significant cost advantage relative to competing new-build capacity — while moving forward our targeted commercial operation timeframe to the second half of 2028, a timeline we believe is materially ahead of comparable projects. This progress moves us closer to a final investment decision on a 460 MW peaking project that would meaningfully expand and diversify our dispatchable generation platform. At the same time, the market backdrop continues to validate the strategic rationale for that investment. We are seeing robust demand for accredited capacity and energy from a growing and increasingly diverse set of counterparties, and are working towards additional forward sales before the end of the year. With $2.4 billion of revenue already contracted through 2040, and potentially more sales on the way, we believe Hallador offers investors a degree of revenue visibility that we believe is among the strongest in the sector.”
Brent Bilsland, Chairman and Chief Executive Officer of Hallador Energy
