HNRG - Earnings call transcript Q2 2018

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Operator

Good day and welcome to the Hallador Energy Second Quarter 2018 Earnings Conference Call and Webcast. All participants will be in listen-only mode. [Operator Instructions] Please note this event is being recorded. I would now like to turn the conference over to Becky Palumbo, Director of Investor Relations. Please go ahead.

Becky Palumbo

Phil. you, Thank for quarter all today discuss to Thank results. joining second XXXX our you us We quarter our filed second afternoon. Form XX-Q yesterday It website our viewed be now. can on replay our This be transcript and being call week. a is later this available along website on with the webcast will and today's CEO; with President call, CFO. our on are Brent Martin, Participating our Bilsland, me and Larry Larry Brent with by will quarter, the followed begin with of the on financial operations. overview comments we remarks, will the opening their Q&A. completes management After line open for

certain statements forward-looking uncertainties that include risks will to results materially. and could subject differ remarks actual cause Our that are to

estimates new sales our We update our Air future except otherwise, information, do to be example, Act of regulations Clean of to undertake forward-looking For events by mining or statements, costs, coal the law. may initiatives. not as and whether future and as required environmental other result relating a

to Now, to I Larry highlights. go over call turn Larry? the second quarter will over our

Lawrence Martin

everybody. afternoon Good

and operating here. review Before free deferred to our CapEx definitions and Sands. maintenance two income plus stock DD&A, as net accretion, the I equity compensation, of income effects give plus FX the define -- plus taxes, results, ARO start We flow I as accretion, few want of investments adjusted cash less compensation, define EBITDA method investments. EBITDA, the less ARO equity stock our method of We the Hourglass a

of and share. or net -- a or share net loss XX or per million year-to-date $X.X So income for of had quarter, the $XX,XXX $X.XX net we $X.XX of income

was Our and year-to-date, free million $XX.X $X.X quarter cash for million. the flow

at Bank $X.X million debt the quarter a and XXth share. share. million quarter, also year-to-date, That's was was for $X.XX our dividends million. by year-to-date. million. $XX.X $X.X was of at $X.X paid $XXX.X at debt million We our for net a XXth $X.X and June EBITDA $XXX.X Our decreased the $XX.X quarter, Year-to-date $X.XX a million we adjusted million June in debt the $X.XX We or increased million. share,

target $XXX debt of end is million for year $XXX to the the Our million.

everybody, And this quarter our million. starting Our Brent turn Hallador's quarter. debt-to-EBITDA was before. remind at is debt June to level a Bilsland that on call for our Sunrise the $X.XX will now I'll over versus I that CEO, comments on in the May we had at XXth basis the

Brent Bilsland

wisdom Larry you, today. changes joining you some an that shown thank we to announcing for Directors. with a resign. thank to last the want me. much Thank wish providing Hallador's has Sheldon his tremendous him to in of Board Hallador with enjoyed and and is and the age and for everyone guidance at I us for Sheldon X-K friendship Lubar has for Yesterday, decade best Sheldon endeavors. he decided person the I I XX future very filed working

mining Director Lubar decided Board Hallador the additionally, David the age IV sand. our Sheldon, the President of Charlie attended son his departure where XX, the Gump, that of Communications, very responsible to David a engineer Directors. operations. was Thoroughbred, be Level Milwaukee holdings and and a law Lubar Originally, each Commercial as Hallador wide as to insight so the he unique Board his as and Chief for frac operation and be to company, Wesley in and of With and -- and with coal Arkin, & over in Charlie Company, firm he's both company Lubar I Mutual and IV, Life Lubar, several of CEO mineral & with Hauer he's Lubar each add at Charlie a of investments come. Thoroughbred to Level his as the has insightful. well to to with CEO is the Through oversees advice Resources a Planning to Hallador energy Senior coal industries. have Officer found Resources, prior -- Wesley David and very Companies forward many on guest of of joining and years, is unique Ramaco X frac covering X, Board the began sincerely & his worked look David Wisconsin. operation & a career and Insurance age Charlie XX, provide BMO in coal that David in a Financial to for Price, their Hallador. mining the Feld, investments of Strauss, sand coal and of Currently, of coal Charlie will Brewers. shareholders perspective of working expert was transactions. as as and benefit focusing he bring for Northwestern Corp., At he Counsel I the Co. years XX Co., a Prior an range should of Milwaukee, served based companies international serves mining has both at mining and the both Strasburger meetings believe well-positioned

our attention operating results. our Turning to

is million in the six first months the half year were the back with X.X tons shipped in the this second heavily of contracted the of weighted be tons shipped position to contracted to million half Our year. year. as X.X

million a the of annualized X.X pace. year, half second So, ton it's

for coal of At heating to demand, increasing Loop solid the shipments summer and a addition our the the would potential export Princeton quarter later of large explained strong that sales first Additionally, we the our call, second we in demand half inventory. and necessitate investor in this our due a new spot believe there's market year. year

of beginning the tons. since inventory XXX,XXX such, or coal million the by our $XX.X increased have year, we As

materialize. this they are should us shipments our the the reopened of by worth Mine. Carlisle in in people loading Oaktown have reopening make additional to the our capacity, Furthermore, production back made one capacity Mine X Carlisle increases of unit from the that will to Mine our Carlisle CSX the half year. we sales ensure double help putting This moving position Additionally, to on

price quarter, Looking $XX.XX. sales at was our the second

However, to ton a lower we the our the contracts higher first our -- half and half or priced $XX of shipped in $X year in the average second the on approximately sales year. of $XX.XX now expect have prices

at ton. the $X led in actual results by the in Looking quarter $XX.XX. Excellent for cost to Oaktown our for at Guidance $XX.XX. a cost quarter equation. mines cost ton, the to estimates production were all us Oaktown with the side of a beat was in $XX $XX coming Total

basis, per costs Prosperity, which Ace costs. production was is cost for for the which cost holding We cost Carlisle, separately have from the basis. included million annualized million on an plus $X annualized Oaktown's historically Total Oaktown have holding $X reported total ton mining mining on costs plus an

Prosperity Carlisle we both for cost quarter-over-quarter of Going to mine of to mining guidance $XX a Ace our to will costs will added expect costs forward, that make be and Oaktown the total as we be adding we the holding additional year to Oaktown our calculate expect and combined mine production, reported and Mine, $XX With units balance cost Carlisle and If results. ton. reopening be sales costs. Comparing total Carlisle then be production justify number the one additional reduced.

XXXX before, of quarter average decrease. as $X.XX was our of of price The $XX.XX, second stated quarter XXXX, $XX.XX I a ton, compared to second per

decrease. per ton second average the $XX.XX a quarter Our cost $X.XX for $XX.XX, was versus

versus of XXXX for improved by $XX.XX. second $X.XX $XX.XX it quarter, was margins the Our

Looking at debt.

million the had was we quarter, for and $X.X Our to The by for the four-year primary debt the increase did of facility. the end facility but is year million associated experienced debt our in compared credit of closed $X.X for down XXXX. when reason increase million fees $X quarter with

quarter the in inventory coal by our increased $XX.X we Additionally, million.

ratio versus Yet, increase our within ratio leverage covenant. the debt the Sunrise level. X.XX leverage our in remains to now increased level well due to measured leverage X.XX times being Our Hallador at the our level, times our and

Our healthy million as liquidity remained at a well. $XX

fully we've to is past Our six talked ship during in months year. XXX,XXX Princeton this became Loop, during quarter operational about and last which expected the the tons of quarters,

Loop As have abilities. previously, marketing we the our fundamentally I changed Princeton has said believe

which two calls, dwell previously we our consistency added the prior structure, one XXXX, the have customers Princeton new that discussed In earnings low have being not will serviced I We in point. Loop. via so of on cost is of

of think to strength it sales I contracted position. is important However, emphasize the do our

million to to point like contracted free and the a the XX% seven with for a operational, cash ton of five to none all coupled represents next I'd many five-year structure sales Princeton which that Thus, year close book plus contracted. for year, years positive continued new five the tons equates had cost a great years, when our to We that top the low also pace, announced Loop, abilities consistently already be out in million current plans this have of you have plan XX.X next forecasted and opportunity a it of years. with our off, flow. our plants our sales customers plants adding at look

Hourglass Sands, the $X For sand company currently sand near reserve Colorado quarter, a State mining Hourglass first in of a Hallador frac Springs. million in Colorado. controls Hourglass the permitted Sands in invested Sands LLC,

of wash in the this six preparation begun We $XXX,XXX to for quarter a product the customers in plant expensed months to We XXXX. have shipping year. sand first raw third-party shipping in fourth

in versus of meaningfully frac core part future We We industry the to be expect call exceeds to profitable only produced to we sand frac We can criteria. the like competency, questions. do To locally outside expect analysis, higher. roughly switching expenses miles State frac I'd in produced our contribute XXXX, our Colorado. slightly that the be of open it sand within Hallador be to the feel to said, investment our last mining up the sand well mine believe in earnings With months we to the Hourglass it's permitted not in that though six years. X,XXX trend hope sand basin. is to And of

Operator

Okay.

begin question-and-answer Okay. now will Instructions] [Operator We the session.

Please with The FBR. first from Lucas Pipes B. Riley comes ahead. question go

Lucas Pipes

good a really Carlisle? then job we all -- or opened? those incremental reopening this this more is on those customer do you wanted maybe we to would have is little the follow about little volumes. the like to feel think start volumes this is a Is production existing should maybe plan performance to multiyear about to of you everybody. put more the I a Or importantly, think a of up And mine there Hey, bit kind cost And demand? keep switch how to as side. afternoon Carlisle. I what to on of bit temporary Nice should

Brent Bilsland

we did think Carlisle. I Well, moved we people from Oaktown of a -- to unit that

I than as unit unit little side, a in they're far a tonnage things smaller as they're set the up. to at in On how Carlisle, be, expect capacity-wise, just Oaktown one

as We many not run days. will

like. the holidays depending our We wanted to just less year was the as is of half to at we on not Our we looks current remarkably weekends, sales plan what Oaktown as due our good. said year run probably second build would. days this to many production Quite position inventory in and frankly,

look level And so inventory year will the on. to as down goes that we draw

of lot year. bit because gone part of tons were to on the like our going this that's to had quite market and up has a export So, not balance a sales what tightened think We year. the we've good depend heating that for this look have anticipated a of season

things, successful bids, winds as coal. on we we purchase those we the those market How will down, be that all customers that So, have will think be looking year we the to tell. in will several time think spot

we Princeton to year, that than the past. have the think But it's to we're think in we going buying we've next more as said season. of because come talking before, to customers we Loop, down to Looking

this, think the And to of half in going be greater is potential scheduled shipping X.X we're year, running pace. be contractually, in to if potentially it XXXX over ship sales, so sales The XXXX. that's -- at pace tons. our we're us you at more is going at for look back we -- million we a X.X million to excuse make up a me, And if X pace million push ton additional ton to than

hit bumping able would against So, -- Oaktown's bumping we we're run to to be shipments that Carlisle be because those to capacity. need would up

to us opportunity but it's little is ultimately, to a But and and keep to Oaktown the to the units we needs needs running what -- get there. we next do to we think less year, be of X, to little market qualities Carlisle is sulfur. market us adding So, down to similar Carlisle an -- have quality We've we out hope and very it what come lower X do. a the going

So, markets, or mill those when what that coal come typically, we of of Carlisle customer Southeast desires. ship come it will the to -- if can that's out out

Lucas Pipes

a topic ask of on to going I'm Carlisle. follow-up helpful. the very That's question

movement costs the a like, of about thinking little I a the be short-term? well. the kind larger maybe of be we a revenue seems point there bit Or of should strategic production motivation? maximizing in to marginal So, a as Oaktown to Plus, as Carlisle Is kind you unit your here? component from missing am that of

Brent Bilsland

half Well, near -- the is with Oaktown its I back the additional year, in if we're be would of point successful be the we the think shipments we in would limit. pushing making larger sales,

we And it Carlisle, to unit so capacity. running, gives get a up move us down if more that and

So, we the loops the CSX two had Oaktown, Carlisle. had loops two at CSX on we on at

more sucked ability lasted able and customers a more longer little If in market. respond trains. little quickly be say, see high in the or a So, the we to -- load to hot us year. puts potential it a summer position, for to call we to of think, And our just us market this opportunities we than out then thought than exports we doubles more market the opportunities hey, later to thought, in be it

it's think capacity of we So, kind getting ready. more

Lucas Pipes

Got it. it. Got

Now, that's--

Lawrence Martin

and add it's more anticipating we're not something we sales, too, a and so want add Brent's can't because, I'll this -- I what Yes, switch. turn mean, Lucas, saying, -- there, I -- to

opening So, Carlisle to ready we by be have that for now.

Lucas Pipes

add there And Got build producing to half it. where expect year? you cost be about is simplistically, mine, half, Carlisle. higher little demand impact side be back kind on move? inventories. want layer, there for the we strong the kind cost now of that we the you a say? perspective, should of of Oaktown about so a to cost you're back tell So, how so in it lower us why in to some modeling Very Can this thought from a you was of, Is a I additional the helpful. cost that's everything So, instead that, the production cost bit to

Brent Bilsland

I Well, mean--

Lawrence Martin

Brent. Go ahead,

Brent Bilsland

a this drag, that had But last number. looked you was at speak. point production at time, million it $X.XX really think if in I cost to Yes, good the same quarter, Carlisle Oaktown so

you to cost, when our the be the at going So, same. headcount's roughly look

better we $X.XX think in would those And giving you I as a we're we anticipate of no guidance given we $XX the be few again, our We it and open, us to of that having combined same the the if expect there. has We units. -- a and if the there'll And is. tonnage and by down a be number it this some is cost guidance puts think roughly Oaktown for of, $XX less from days, past. that arise, of running costs, depending, But take drawing have a ran ton. units days same. inventory, in think If Carlisle perspective, million potential see to some market been drag market we'll If there have opportunities how add much position -- we the add it, run or sales sales, the demand how impressive in term additional to that harder. see we we'll there we additional it

for we to have in, still still Now those Prosperity holding have and Ace add mining smaller are but costs cost numbers. we at

that So, do. total significant would be a total less will spread we less Prosperity and just would Carlisle mine what are and of think Oaktown of because to our Ace the cost

Lucas Pipes

Would you production add unit When additional in or capital If, or described you in. knock on add capital? an so or one want summer additional looking going one you'll you one three? helpful. to position stays of have accommodate coal, to last customers two have squeeze if unit you're Very scenarios to more the a I'm kind would of the add hot and to be where wood, prevails, to more. an

Brent Bilsland

I think -- we we add to So, lot would don't have a of capital.

batteries primarily to be mean, we online the that And to adding cars? being units would what some significant that quality bring on just would debate via or some I unit to Probably. online have us. then there. have Oaktown? Carlisle bring have XX be be the I really at would employees don't we We the buy at It made. on the battery just depending see tells have market would to bring we'll XX online. what see for But would capital And that was, investment

Lucas Pipes

pure perspective, it. Got on? it. it -- bring Got you From cost where a would

Brent Bilsland

cost Oaktown pure structure than is perspective, cost of should the too. From quality more scale be But -- slightly matters, has economy Carlisle, so there better.

more probably It If and half So of out Carlisle. more come a Oaktown. we of we would six X.XX-pound pound would it sell sell coal, coal. probably six, come out

Lucas Pipes

luck. very I and Well, right. leave of is it helpful here. will All sense. best Make This

Brent Bilsland

you, Thank Lucas.

Lawrence Martin

you, Lucas. Thank

Operator

Okay. from ahead. Capital. with Please [Operator Instructions] ANC Calavritinos go question comes The next Arthur

Arthur Calavritinos

Thank you. afternoon Good guys.

have On Q&A wondering, might mentioned you what last and opportunities. -- be of of may the industry methodically are take Lucas' to you there And the I'm look some what little it. And out then term you year the half more I the as sounds year? I'm guys back just upside And bit I or on you color. -- you wondering, quarter. as guys constructive the this and at that's I there the on half every financial go going side, earlier, a surprised it back mentioned business, than that forward down like last And assume for thought. there, seeing the are question you more loan Just bullish the

Brent Bilsland

the strong the export may on that been coal and Yes, for export I actually question side, think ship The first. ever. first ourselves we some answering market market has time

strong. has market export the So, been

sucked tons of out. lot a think I it's

year. this execs, and exports think to industry going were said sales that their came XX% out other seen of Alliance You've be I

they and of they a to you've had quite bit coal Foresight their Energy, out came said release, that export. seen done think I saw I

demand good. very tightened been just And then up the had that in market. coal Midwest, So, has in the We've of substantially the U.S. has somewhere hot I think a most

anticipated. so but of decent. are stayed coal is Not decent, fantastic, harder running gas. And generators but prices I think dispatched they Indiana have than that in enough front in Gas good

beginning the the XX% seeing and those of think burn I the in year. year, between the for typically in filling with we're is the -- of think their the what they're summer buying and reasons, spot at half and I So, needs of back buyers, then are somewhere XX%

many how But summer And how so customers our have we say going that year, thought to we've to aren't solicitation kind of we at in this when interest just market get we looked when on late a Carlisle arise. those. expressed or up book see and had was and and later getting customers advantage there's several can we we that we'll buying it are and in position, of be successful and appropriate opportunities if running take they so see

Arthur Calavritinos

when you on me your slow have talk international and to Okay. you at color like a a any And Because shipping, markets it sales everybody's everybody, that. very and you going to surprised. you Do may it's think then what do secular, you is? like everybody's other talking it and me, blip? Just it's you rise when How the forward? talked been do about think to -- side the you more seems that pleasantly has do think -- you're international or about right, customers, look permanency

Brent Bilsland

I the that's same on. Well, think going

capacity, new have construction, under power the you at If those world coal-fired capacity tons. XXX that burn plants power are right the now, additional that the world to plants, an in million when you plants currently look nameplate around look

million XXX market. of up that's that's new going show in the to So, demand coal-fired tons

Arthur Calavritinos

burn, U.S. About XX% the of basically.

Brent Bilsland

or is U.S. or million, -- somewhere XXX around give Yes, produces take.

coal. so XXX got is and million tons coal the burn India. countries XXX high-sulfur us, of Illinois -- of tons. XXX got Basin think and in burn you've demand all have of who said, other higher-sulfur Basin, traditionally doesn't XXX And that they capable is coal buying producing million, well, of Illinois shown come Turkey, we tons from And buy demand capable low-sulfur They the like out mean I had suddenly, Illinois tons. they'll burned is out Basin now So will they're million suddenly and out a new that will you've it come but million

new of are more that Illinois being and the for tons there because the country. weren't So, out opening before in markets up shipped that, there export Basin of world the are

market. demand, Illinois your risk tariffs the Now, is more But other-- is so and is that it at tonnage you when the it's significant, there's Basin always new the when look definitely especially demand you and new how sort to to thing, answer of The demand. fundamentally of consider relative there there that a volatile small

Arthur Calavritinos

the when I shipping sorry, was for the company's is remarks you first like I'm get internationally. -- interesting what said you're what in right, that in but said this Did that was, Yes, history, time earlier? you

Brent Bilsland

are we we not to export deals yet the future. do near have in the We but signed certainly any potential deals, export -- see

Arthur Calavritinos

Got you. Got Okay. you. Interesting.

Okay.

second Okay, on was then just the deck. just the on the question, finance

Brent Bilsland

Yes, the just is, with side, about facility. pay -- fees we with finance really little was associated unusual a or -- our on -- four-year our quarter And finance a our always our extending this what goal debt, associated signing bank was new that down and to it credit increased a is is debt. that

Arthur Calavritinos

said-- so, the or or what, million You something guys fee's that? Yes, $X $X like million like,

Brent Bilsland

$X million.

Arthur Calavritinos

unbelievable. That's, right. All yes,

Brent Bilsland

quite bit. a increased And then inventory our we

that's So, part we But had materially, excellent trying -- were we production. what also, that of was to do.

bit was but up, So, just some of surprise little was it. a because so we'll recovery was that take good, production of

Arthur Calavritinos

really like, than heating QX the they because are have been days, QX, degree talking of any should great where over industry very it nat tighter the Okay. the October And for seems Normal are, last it's gas flow. was year, about and international Normal then one color? be the market market inventories industry, like guys me you weather, past one Because to year, just like last it just in bearish. it. is,

they but think. guys United think in inventory, have States, they with may enough the they maybe it's So, than tighter

have may you that. Just any on color

Brent Bilsland

their mean, North Mine. capacity you're Alliance Gibson think I has County started Well, come utilization seeing up. I definitely

We Mine. restarted Carlisle have our

large get out a exported flown or of seen amount of country. get the coal -- we've So,

coal, was a ago exports; burned around of market the more the Prosperity need could back if summer. not We closed of frankly, a of got year closed. market So, lot lot I handful come does our coal idle Indiana of tighter have is And definitely other of mines quite there's can permanently of Mine. than this a because lot the up it because just of mines A closed. the and in sitting State name been idle permanently that a that on. mines of elsewhere have been the

So, from a Basin trending it capacity a of than today a standpoint, ago. Illinois I think at capacity was the year percentage higher is much

So, ability prices pressuring that certainly higher. has start the to

Arthur Calavritinos

Okay. All right, beautiful. All you. right. Thank

Operator

next from Southpaw. ahead. The Please with question comes Ajay go Lele

Ajay Lele

and in I if Thanks your the quarter. foresight please plants could very wondering that done not five help are next retiring. us regard years, much to just the you with on was well

that in get to a how typically sense they to understand do that Is down the about their -- a how you're are. Or how more decisions? are factors wanted bit I around in -- like, And what assessment you a going just -- jurisdictions. of what burn? -- regulated of some Just -- step think they make you assessment. to and it come color what

Brent Bilsland

of do, XXXX, will as announced assets. return Then utilities what utilities, you stating to We're guaranteed on are are. that what rate look think know as industry we the announcements any customers don't if make far of at money by announcements Well, through that I getting are close.

something. utility grow be it for needs its to constructing so earnings, to And

rules lot that invested new created compliance years, issues, comply. to During -- and a were the there of utilities to Obama

of or So, bit a either into gas they smaller and a capital they their put little power of larger plants closed renewables. plants coal-fired lot and their built

trend. has been So, that the

unwinding the EPA Trump a Trump, Climate for been big has one rules. Paris era of effluent spring, limitations. our opinion, a Accord, out he quickly, Obama That's my asked of industry. enter got to In re-review has guideline in lot Now, he the

WOTUS of Some the changed. rules have

these see few are rules but this closing rules are they back out viable online to and that with administration a slowly, had thought. plants a will will that period, the what assumption out that and customers saying, they're the even standard of, the how then studying will and We'll have we go think wait be see Take what are I -- stay And mean, unwinding try rule I a announcements ELG lot proposed will example. is under we of they there were won't. coal That definitely longer yet going justify rules to one will I will think, I to rule and bodies out. this power looking that comply rule rush But people think come at the plants. hey, used that direction governing here determine all the that quite year. So, originally a with. stated moved current the EPA come I to in the to you'll change. all think that to and as to look right these that year that next a that the going ELGs, and our lot final in in frankly, get methodically, know plants can think are have comes before has But I change. currently rule for make than future comment what And the has tide be

Ajay Lele

Thank you.

Brent Bilsland

welcome. You're

Operator

is Lucas B. Pipes Please next Riley ahead. a The with follow-up go FBR. question from

Lucas Pipes

a question broadly. to it of being within not the plants, side, the market, about I a retired -- be the industry more being your taking follow-up. had you tons about demand say similar guess? as million very but And wondered XXX you three Illinois would like one, previous I years, over -- kind on for your would demand are tons XXX side thanks of What described years? million, the my -- five U.S. output. And many I the Basin similar actually How U.S. very Yes, have next

Brent Bilsland

for answer, That's Lucas, question multiple a to reasons. hard

of power have retirements Some proposed. that been that plant

First Basin Illinois of Basin all, they're not burning burning River Powder coal, they're coal.

that time have or they I have quite it the that, frankly, think to on And by regulators plants blamed been proposed, we're three that power new rule. going hear ELG. there's a think Secondly, but two I

think than at So, comfortable number you might out of some analysts my might be say read really there. number some But would I less coal things putting feel conference. the don't what or I the my

Lucas Pipes

it. Got

fair Thank Okay. That Well, it for follow-up was question. that's enough. you. my

Brent Bilsland

general, the is, to the good in next a make make for really -- think, I we point the is Lucas, to have at want we years, point trying we keep runway. five least Again,

we new the two picking up We have up our business. of year. in customers. up foresee We we don't We next have frankly, picked three don't we have potential pick a new the this We or two next closing good customers are more book five -- to quite customers year. think And years.

think so I that's headlines reads trying to Everybody So, we're about plant the make. closures. much point overall

I we're ones of think think to there think over. fewer And good book support that I I the we've got nearly the I that a mines left, that are is biggest wave mean of business. has in covered are And one a that Basin. of outlets, we've that cost the we've the Loop. for been have shown XX% next structure the Illinois five the historically And years. added lowest Princeton like we transportation and

continue that flow. think we positive will to we cash create So,

seeing and pay sand to we we're And secondly, down us is of world as for enormous number we the continue potential. we're then -- priority mindful our very far what has frac that, one. We that think bank will debt, as expansion in

a in nutshell. Hallador of kind that's So,

Lucas Pipes

in mention response. your sand progress And able Anything over front to three terms helpful. of on past the add were that in there you months? frac appreciate Very, very that I to

Brent Bilsland

call, we're raw shipping we're like it I -- a Well, on producing to third-party. sand the said now,

quarter. the plant. make to getting starting we customers And will And then some this are fourth what level, then be for We've we the in modifications us XXXX. in shipping that we We to -- something prepared. this figuring got profitable to anticipate we to out go. think business. is that as But we that sand can But we're good that feel about

a are when the that do step so, right to the of are out a oil of -- and I the that probably meet operators think quality of you is sand local bit can the more that little that is it's producers. volume sands than the figuring down need them in quality. allowing there now sand trend the is And important

we is that can trend on And so the trend. edge this at least front this of think that we be accelerating. Colorado, in well-established that, and think And we

Lucas Pipes

sand? All frac would Very how helpful. you In right. sense much produce XXXX, any

Brent Bilsland

No, this new makes are sense. sand it's And trying good that. our we market -- to a exactly secondary market if to thing. continue going that's investments. and through we'll means capacities additional then the we saw out make build level would with That a and initial a trying still to enough That at figure like. look plant smaller, to somewhat volume if If investment stage, that looks stays producing very be demands the be we're we're term limited, -- the demand something may what to a third-party little

the is phase kind understand that's it. trying right we're quite of So, now, But excited in about this business. frankly, to better we're

Lucas Pipes

Yes. Yes. good. Very

first, built I or that I assume that. with go in so whole know if Thank what secondly, The confirm you correct? is capacity now, were would would the new different the be ahead cost then And would you site, And keep capital? mine plant, how we're you. And on terms -- to the constructed plant, of if that if be much could near a Sorry, topic then approximately? going. it I'll but

Brent Bilsland

question? was What part first sorry. I'm Lucas, the of your

Lucas Pipes

would afield? further or be the constructed, Where mine plant new site at the

Brent Bilsland

are it tell And that we're you big It's dramatically we would exactly that X like. build. where I can support is, to built for it's going something the is at think But a evaluating. we're looking capital and contract where look be I depending would be requirements this, for would as would that. working a that on day and Phase every what still capital what on to how affect that that

Lucas Pipes

Got it. Make sense.

Okay, well, I leave appreciate here. will that. it I

Brent Bilsland

All right. Lucas. Thank you,

Operator

our to Bilsland [Operator Instructions] I over like closing question-and-answer to session. the back for conference any turn remarks. Brent This would concludes

Brent Bilsland

next want And time I we to quarter. everyone their to to Thank look you interest you. thank and talking for Hallador in forward Energy.

Operator

The concluded. presentation. now today's Thank conference has for you attending

You disconnect. may now

Hallador Energy (HNRG) 7 Aug 182018 Q2 Earnings call transcript