10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D. C. 20549

FORM 10-Q

[ x ]	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended: September 30, 2012 or
[  ]	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
	Commission file number: 001-3473
“COAL KEEPS YOUR LIGHTS ON”			“COAL KEEPS YOUR LIGHTS ON”
HALLADOR ENERGY COMPANY (www.halladorenergy.com)
Colorado (State of incorporation)				84-1014610 (IRS Employer Identification No.)

1660 Lincoln Street, Suite 2700, Denver, Colorado (Address of principal executive offices)	80264-2701 (Zip Code)
Issuer's telephone number: 303.839.5504

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes þ   No

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).   Yes þ No o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company.  See the definitions of "larger accelerated filer," "accelerated filer" and "smaller reporting company" in Rule 12b-2 of the Exchange Act.

o Large accelerated filer	o Accelerated filer
o Non-accelerated filer (do not check if a small reporting company)	þ Smaller reporting company

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act.) Yes o  No þ

As of November 1, 2012 we had 28,348,000 shares outstanding.

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  PART I - Financial Information

ITEM 1.  FINANCIAL STATEMENTS

Consolidated Balance Sheet
(in thousands, except per share data)
	September 30,			December 31,
	2012			2011
ASSETS
Current assets:
Cash and cash equivalents	$	30,213		$	37,542
Accounts receivable		7,492			6,689
Coal inventory		3,302			1,863
Parts and supply inventory		2,286			2,202
Other		311			580
Total current assets		43,604			48,876
Coal properties, at cost:
Land, buildings and equipment		145,027			137,707
Mine development		68,515			66,614
		213,542			204,321
Less - accumulated DD&A		(54,346	)		(42,493	)
		159,196			161,828
Investment in Savoy		13,190			12,133
Investment in Sunrise Energy		3,851			3,297
Other assets		8,767			6,294
	$	228,608		$	232,428
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Bank debt	$	10,000		$	17,500
Accounts payable and accrued liabilities		10,299			10,471
Income taxes		1,502			5,125
Total current liabilities		21,801			33,096
Long-term liabilities:
Deferred income taxes		34,812			31,128
Asset retirement obligations		2,383			2,276
Other		6,311			4,935
Total long-term liabilities		43,506			38,339
Total liabilities		65,307			71,435
Commitments and contingencies
Stockholders' equity:
Preferred Stock, $.10 par value, 10,000 shares authorized; none issued
Common stock, $.01 par value, 100,000 shares authorized; 28,341 and 28,309 shares outstanding, respectively		283			283
Additional paid-in capital		88,203			85,984
Retained earnings		74,765			74,685
Accumulated other comprehensive income		50			41
Total stockholders’ equity		163,301			160,993
	$	228,608		$	232,428

See accompanying notes.

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Consolidated Statement of Comprehensive Income
(in thousands, except per share data)
	Nine months ended				Three months ended
	September 30,				September 30,
	2012		2011		2012		2011
Revenue:
Coal sales	$	98,259	$	100,275	$	36,152	$	34,174
Gain on sale of unproved oil and gas properties				9,084				9,084
Equity income - Savoy		2,999		4,071		501		948
Equity income - Sunrise Energy		49		774		17		230
Other		4,938		1,949		444		192
		106,245		116,153		37,114		44,628
Costs and expenses:
Operating costs and expenses		57,994		55,965		20,745		19,355
DD&A		11,895		10,128		4,145		3,392
Coal exploration costs		1,900		645		778		373
SG&A		5,607		5,096		1,947		1,695
Interest		757		1,003		229		297
		78,153		72,837		27,844		25,112
Income before income taxes		28,092		43,316		9,270		19,516
Less income taxes:
Current		5,607		5,563		1,731		2,416
Deferred		3,684		10,464		1,349		4,544
		9,291		16,027		3,080		6,960
Net income*	$	18,801	$	27,289	$	6,190	$	12,556
Net income per share:
Basic	$	0.66	$	0.97	$	0.22	$	0.45
Diluted		0.65		0.95		0.22		0.44
Weighted average shares outstanding:
Basic		28,316		28,114		28,324		28,162
Diluted		28,791		28,678		28,760		28,590
*There is no material difference between net income and comprehensive income. See accompanying notes.

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Consolidated Statement of Cash Flows (in thousands)
	Nine months ended
	September 30,
	2012			2011
Operating activities:
Cash provided by operating activities	$	29,552		$	40,413
Investing activities:
Capital expenditures for coal properties		(9,222	)		(17,025	)
Proceeds from sale of unproved oil and gas properties					11,622
Purchase of  marketable securities		(1,291	)
Investment in Sunrise Energy		(506	)
Other		83			(1,284	)
Cash used in investing activities		(10,936	)		(6,687	)
Financing activities:
Payments to bank		(7,500	)		(7,500	)
Dividends		(18,721	)		(3,505	)
Other		276			552
Cash used in financing activities		(25,945	)		(10,453	)
(Decrease) increase in cash and cash equivalents		(7,329	)		23,273
Cash and cash equivalents, beginning of period		37,542			10,277
Cash and cash equivalents, end of period	$	30,213		$	33,550

See accompanying notes.

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Consolidated Statement of Stockholders' Equity
(in thousands)
	Shares		Common  Stock		Additional Paid-in Capital		Retained Earnings			AOCI*		Total
Balance, January 1, 2012		28,309	$	283		85,984	$	74,685		$	41	$	160,993
Stock-based compensation						1,895							1,895
Other		32				324					9		333
Dividends								(18,721	)				(18,721	)
Net income								18,801					18,801
Balance, September 30, 2012		28,341	$	283	$	88,203	$	74,765		$	50	$	163,301

*Accumulated Other Comprehensive Income

See accompanying notes.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(1)    General Business

The interim financial data is unaudited; however, in our opinion, it includes all adjustments, consisting only of normal recurring adjustments necessary for a fair statement of the results for the interim periods. The financial statements included herein have been prepared pursuant to the SEC’s rules and regulations; accordingly, certain information and footnote disclosures normally included in GAAP financial statements have been condensed or omitted.

The results of operations and cash flows for the nine months ended September 30, 2012 are not necessarily indicative of the results to be expected for future quarters or for the year ending December 31, 2012.  To maintain consistency and comparability, certain 2011 amounts have been reclassified to conform to the 2012 presentation.

Our organization and business, the accounting policies we follow and other information, are contained in the notes to our consolidated financial statements filed as part of our 2011 Form 10-K. This quarterly report should be read in conjunction with such 10-K.

The consolidated financial statements include the accounts of Hallador Energy Company (the Company) and its wholly-owned subsidiary Sunrise Coal, LLC (Sunrise).  All significant intercompany accounts and transactions have been eliminated.  We are engaged in the production of thermal coal from an underground mine located in western Indiana.  We own a 45% equity interest in Savoy Energy L.P., a private oil and gas company which has operations in Michigan and a 50% interest in Sunrise Energy, LLC, a private entity engaged in natural gas operations in the same vicinity as our coal mine.

(2)    Bank Debt

In December 2008, we entered into a credit agreement with a bank consortium headed by PNC Bank that provides for a $40 million term loan and a $30 million revolving credit facility.  At September 30, 2012, we owed $10 million on the term loan and nil on the revolver. The current interest rate is LIBOR-one month (0.25%) plus 2.50% or 2.75%.

On October 18, 2012, Sunrise Coal, our wholly-owned subsidiary, entered into a new credit agreement (the “Credit Agreement”) with PNC Bank, as administrative agent, and the lenders named therein. The Credit Agreement replaces the previous credit agreement we had with PNC. Closing costs on this new facility were about $1.5 million and initially will be deferred and amortized over five years.  Outstanding debt as of October 31, 2012 is the same as of September 30, 2012.

The Credit Agreement provides for a $165 million senior secured revolving credit facility. The facility matures in five years.The facility is collateralized by substantially all of Sunrise’s assets and we are the guarantor. We will draw on the facility as needed for development of our new projects in Illinois and Indiana.

All borrowings under the Credit Agreement bear interest, at LIBOR plus 2% if the leverage ratio is less than 1.5X, LIBOR plus 2.5% if the leverage ratio is over 1.5 but less than 2X and at LIBOR  plus 3% if the leverage ratio is over 2X. The maximum leverage ratio is 2.75X.  The leverage ratio is equal to funded debt/EBITDA.The annual commitment fee is 50 BPS but falls to 37.5 BPS if we borrow more than 33% of the facility.

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The Credit Agreement also imposes certain other customary restrictions and covenants as well as certain milestones we must meet in order to draw down the full amount.

(3)           Investment in Savoy

We own a 45% interest in Savoy Energy L.P., a private company engaged in the oil and gas business primarily in the State of Michigan. Savoy uses the successful efforts method of accounting.  We account for our interest using the equity method of accounting.

Below (in thousands) to the 100% are a condensed balance sheet at September 30, 2012 and a condensed statement of operations for the nine months ended September 30, 2012 and 2011.

Condensed Balance Sheet

	2012
Current assets	$	16,610
Oil and gas properties, net		21,887
	$	38,497
Total liabilities	$	9,396
Partners' capital		29,101
	$	38,497

Condensed Statement of Operations

	2012			2011
Revenue	$	24,585		$	22,802
Expenses		(17,931	)		(13,755	)
Net  income	$	6,654		$	9,047

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(4)            Investment in Sunrise Energy

In late December 2010, we invested $2.375 million for a 50% interest in Sunrise Energy, LLC which then purchased existing gas reserves and gathering equipment from an unrelated third party with plans to develop and operate such reserves. During January 2012 we invested an additional $506 thousand. Sunrise Energy also plans to develop and explore for coal-bed methane gas reserves on or near our underground coal reserves. They use the successful efforts method of accounting. We account for our interest using the equity method of accounting.

Below (in thousands) to the 100% are a condensed balance sheet at September 30, 2012 and a condensed statement of operations for the nine months ended September 30, 2012 and 2011.

Condensed Balance Sheet

	2012
Current assets	$	2,390
Oil and gas properties, net		6,731
	$	9,121
Total liabilities	$	1,430
Members' capital		7,691
	$	9,121

Condensed Statement of Operations

	2012			2011
Revenue	$	1,671		$	3,112
Expenses		(1,573	)		(1,564	)
Net  income	$	98		$	1,548

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(5)      Other Assets and Other Income (in thousands)

	September 30,  2012		December 31, 2011
Other assets:
Advance coal royalties	$	3,241	$	3,205
Marketable equity securities available for sale at fair value (restricted)*		3,633		2,326
Miscellaneous		1,893		763
	$	8,767	$	6,294

-------------------------------------

*Held by Sunrise Indemnity, Inc., our wholly-owned captive insurance company.

	Nine months ended September 30,
	2012		2011
Other income:
MSHA reimbursements	$	4,236	$	1,900
Other		702		49
	$	4,938	$	1,949

See “MSHA Reimbursements” below for a discussion of the $4.2 and $1.9 million.

(6)   Self Insurance

We continue to self-insure on about $100 million (historical cost) of our underground mining equipment.  We feel comfortable with this decision as such equipment is allocated among four mining units spread over fifteen miles.

(7)  Bill and Hold

Earlier in 2012 two of our customers advised us that their coal stockpiles were increasing and asked us to consider storing their coal on our property. In April 2012 we entered into a storage agreement with one customer to store 250,000 tons for a minimum of one year and up to a maximum of two years. In June 2012 we entered into a similar storage agreement with the second customer. We continue to sell the coal as contracted to these customers.  The risks and rewards of ownership pass from us to them as coal is placed into segregated storage. We are paid a nominal storage fee in addition to our contracted price at the time the coal is placed in storage. As of September 30, 2012, we have stored 250,000 tons for the first customer and 70,000 tons for the second. We have recognized about $14.5 million in revenue from these “bill and hold” arrangements.  There were no change in payment terms with our customers and, as of October 31, 2012, all receivables outstanding at September 30 have been collected.

(8)  Subsequent Event

In early October 2012 we sold some land that we bought several years ago and recognized a gain of about $2.75 million.

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ITEM 2.    MD&A

THE FOLLOWING DISCUSSION UPDATES THE MD&A SECTION OF OUR 2011 FORM 10-K AND SHOULD BE READ IN CONJUNCTION THEREWITH.

Our consolidated financial statements should be read in conjunction with this discussion. 

Overview

The largest portion of our business is devoted to underground coal mining in the state of Indiana through Sunrise Coal, LLC (a wholly-owned subsidiary) serving the electric power generation industry.  We also own a 45% equity interest in Savoy Energy L.P., a private oil and gas company with operations in Michigan. In late December 2010 we invested $2.4 million for a 50% interest in Sunrise Energy, LLC which then purchased existing gas reserves and gathering equipment from an unrelated third party with plans to develop and operate such reserves. During January 2012 we made an additional investment of $506 thousand. Sunrise Energy also plans to develop and explore for coal-bed methane gas reserves on or near our underground coal reserves. Development is pending an increase in nat gas prices. The primary reason we consummated this purchase was to protect our coal reserves from unwanted fracking by unrelated third parties. We account for our investments in Savoy and Sunrise Energy using the equity method. Historically, through our Denver operations, we also lease oil and gas mineral rights with the intent to sell the prospects to third parties and retain an overriding royalty interest (ORRI) or carried interest. In mid July 2012 we decided to substantially curtail these activities and our geologist who developed these prospects now works for us on a part-time basis.  Occasionally, we participate in the drilling of oil and gas wells.  Further below is a discussion of Savoy’s operations.

The table below illustrates the status of our current coal contracts:

Year	Contracted Tons	Average Price
4th Qtr, 2012	760,000	$43.60
2013	2,900,000	40.01
2014	1,100,000	46.64

Nat gas prices have nearly doubled from their yearly lows to more than $3.50 per MCF. We believe our coal is competitive at these gas prices. Fortunately we are fully contracted for the remainder of 2012 and 90% for 2013. These higher gas prices should work to our advantage in future negotiations with our customers. As mentioned below we are storing coal for two of our customers. With these higher gas prices and cooling weather we are hopeful these customers’ stockpiles will decrease.

The upcoming presidential election, varying winter forecasts and vacillating views of future nat gas prices makes it difficult to plan for the future with certainty. In addition, regulatory uncertainties, particularly surrounding the recently delayed Cross-state Air Pollution Rule (CSAPR) and Maximum Achievable Control Technology (MACT), are causing utilities to defer coal purchasing decisions and in some cases to retire coal-fired generating facilities.

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Earlier in 2012 two of our customers advised us that their coal stockpiles were increasing and asked us to consider storing their coal on our property. In April 2012 we entered into a storage agreement with one customer to store 250,000 tons for a minimum of one year and up to a maximum of two years. In June 2012 we entered into a similar storage agreement with the second customer. We continue to sell the coal as contracted to these customers.  The risks and rewards of ownership pass from us to them as coal is placed into segregated storage. We are paid a nominal storage fee in addition to our contracted price at the time the coal is placed in storage. As of September 30, 2012, we have stored 250,000 tons for the first customer and 70,000 tons for the second. We have recognized about $14.5 million in revenue from these “bill and hold” arrangements.  There were no change in payment terms with our customers and, as of October 31, 2012, all receivables outstanding at September 30 have been collected.

Project Update

New Reserve (unassigned) – Allerton/Bulldog

The paragraph below comes primarily from our 2011 Form 10-K.  We have no additional substantive comments regarding the Allerton reserve at this time.

We have leased roughly 19,500 acres in Vermillion County, Illinois near the village of Allerton. Based on our reserve estimates we currently control 32.3 million tons of recoverable coal reserves; 16.3 million which are proven and 16 million which are probable. A considerable amount of our 19,500 acres of leases has yet to receive any exploratory drilling, thus we anticipate our controlled reserves to grow as we continue drilling in 2012. The permitting process was started in the summer of 2011 and we filed the formal permit with the state of Illinois and the appropriate Federal regulators during June 2012. We are calling the new reserve the Bulldog mine. If the process proceeds smoothly, we could receive a mining permit as early as the last half of 2013.  Unassigned reserves represent coal reserves that would require new mineshafts, mining equipment and plant facilities before operations could begin on the property. The primary reason for this distinction is to inform investors which coal reserves will require substantial capital expenditures before production can begin. Sunrise personnel have opened coal mines in this area in the past.

Full-scale mine development will not commence until there is proven market demand.

MSHA Reimbursements

Two of our contracts allow us to pass on certain costs incurred resulting from changes in costs to comply with mandates issued by MSHA or other government agencies.  In late December 2010, we submitted an analysis of such costs which was reviewed by an outside consulting firm engaged by our customers.  In January 2011 the two customers agreed to reimburse us about $1.9 million for costs incurred by us during 2008 and 2009.  During those years we were not able to accurately estimate what the ultimate outcome of these reimbursable costs would be so we did not record them until we were certain of the amounts and certain of collection.  Such amounts were recorded during the first quarter of 2011.

We submitted our incurred costs for 2010 in September of 2011 for $4.2 million.  One of the customers agreed with our analysis and paid $2.3 million in February 2012 and the other agreed with our analysis during the second quarter. Accordingly, $2.3 million was recorded in the first quarter and the other $1.9 million was recorded in the second quarter of 2012.

We submitted our incurred costs for 2011 in October of 2012 for $4.2 million, coincidentally the same amount for last year. We will not recognize any revenue until the customers have notified us that they accept the charges.  We don’t expect to receive such notification until January or February of 2013; accordingly the revenue will not be recorded in the fourth quarter of 2012.

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Gain on Sale

In early October 2012 we sold some land that we bought several years ago and recognized a gain of about $2.75 million.

45% Ownership in Savoy

Savoy operates almost exclusively in Michigan.  They have an interest in the Trenton-Black River Play in southern Michigan.  They hold 200,000 gross acres (about 100,000 net) in Hillsdale and Lenawee counties.   Drilling locations in this play are identified based on the evaluation of extensive 3-D seismic shoots. Savoy operates their own wells and their working interest averages between 40 and 50% and their net revenue interest averages between 34 and 42%. Savoy’s net daily oil production currently averages about 756 barrels of oil. Oil and liquids make up about 99% of their oil and gas revenue.

The first nine months 2012 may not be indicative for all of 2012 due to (i) the uncertainty of the outcome of Savoy’s drilling activity; (ii) the extent of their seismic activity (G&G costs) and (iii) the sustainability of these high oil prices.  Current oil prices are about $80/barrel. Savoy does not have any oil price hedges in place.

The table below illustrates the revenue growth in Savoy (to the 100%) comparing the first nine months of 2012 to 2011 (financial statement data in thousands):

	2012		2011
Revenue:
Oil	$	19,730	$	18,816
NGLs (natural gas liquids)		679		490
Nat gas		267		437
Contract drilling		3,552		2,573
Other		357		486
Total revenue		24,585		22,802
Expenses:
LOE (lease operating expenses)		3,451		2,920
Contract drilling costs		2,578		1,985
DD&A (depreciation, depletion & amortization)		2,843		2,692
G&G (geological and geophysical) costs		2,689		1,326
Dry hole costs		2,527		1,358
Impairment of unproved properties		2,950		2,507
Other exploration costs		195		255
G&A (general & administrative)		698		712
Total expenses		17,931		13,755
Net income	$	6,654	$	9,047
The information below is not in thousands:
Oil production - barrels		218,350		206,875
NGLs production – barrels		13,995		8,045
Nat gas production - Mcf		97,240		98,600
Average oil prices/barrel for the period	$	90.36	$	90.95
Average NGL prices/barrel for the period	$	48.52	$	60.91
Average nat gas prices/Mcf for the period	$	2.75	$	4.43

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Liquidity and Capital Resources

For the first nine months 2012, we generated about $30 million in cash from operations.  This amount was less than the 2011 period due primarily to the reduction in coal sales, payment of income taxes, increases in accounts receivable and increases in our coal inventory.  We do not anticipate any liquidity issues in the foreseeable future. We plan to fund future capital expenditures through a combination of draws from our new credit facility and cash from operations.  Our capital expenditures budget for the remainder of 2012 is less than $3 million.

We have no material off-balance sheet arrangements.

Second Special Dividend

During July 2012 our Board of Directors declared a second special cash dividend of $0.50 per share which was paid in August. The cash payment was about $14.6 million. The 2012 first special cash dividend of $0.14 per share was paid in April 2012 and totaled about $4.1 million. We also paid special dividends in 2011 and 2010 of $0.12 and $0.10 per share, respectively. All these special dividends also applied to our outstanding restricted stock units and options.

Results of Operations 

Nine Months Ended September 30, 2012 vs. 2011

For the first nine months of 2012, we sold 2,255,000 tons at an average price of $43.57/ton. For the comparable 2011 period, we sold 2,386,000 tons at an average price of $42.02/ton. The higher average price for 2012 is due to the mix of our various contracts. We expect our coal sales for the remainder of 2012 to be in the 760 thousand ton range with an average price of $43.60/ton.

Operating costs and expenses averaged $25.72/ton in 2012 compared to $23.46 in 2011. The increase was due primarily to poor mining conditions in the month of March. These poor conditions persisted into part of April, but conditions have since improved. We are also operating the mine on reduced hours due to lower customer demand, which has a negative effect on productivity which translates to higher costs.  Our Indiana employees totaled 327 at September 30, 2012 compared to 320 at September 30, 2011. We expect such costs to average $25-27/ton for the remainder of 2012.

The increase in coal exploration costs relates to the new Bulldog mine near Allerton, Illinois.

Savoy’s activity is discussed above. The reduction in the equity earnings is due primarily to higher dry hole and G&G costs.

The decrease in net income was due primarily to the $9 million non-recurring gain on sale of undeveloped oil and gas properties during the 3rd quarter of 2011.

Three Months Ended September 30, 2012 vs. 2011

For the third quarter of 2012, we sold 810,000 tons of coal at an average price of $44.63/ton. For the comparable 2011 period, we sold 805,000 tons at an average price of $42.45/ton.

Cost of coal sales averaged $25.61/ton for the third quarter of 2012 compared to $24.04 in 2011. As stated for the year to date results, the increase was due primarily to lower productivity.

The increase in DD&A was due primarily to additions to our coal properties.

The decrease in net income is discussed above.

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Income Taxes

Our 2012 effective tax rate was about 33% and we expect such rate to be in the 33-35% range for the remainder of the year. We estimate that about 60% of such rate will be for taxes currently due.

New Accounting Pronouncements

None of the recent FASB pronouncements will have any material effect on us.

Political Contributions

During the nine months of 2012 we donated $75,000 to the NMA (National Mining Association) Coal Values program which is to help elect pro-coal mining candidates in 2012 and to promote the use of coal. In April we made a $100,000 contribution to the Super PAC, Restore our Future (ROF) and in September we made another $50,000 contribution to ROF.

In the upcoming elections, we encourage all of our shareholders and employees to support those candidates who unequivocally promote legislation and regulations that are favorable to the coal industry.

ITEM 3.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

Smaller reporting companies are not required to provide the information required by this item.

ITEM 4T.  CONTROLS AND PROCEDURES

Disclosure Controls

We maintain a system of disclosure controls and procedures that are designed for the purposes of ensuring that information required to be disclosed in our SEC reports is recorded, processed, summarized and reported within the time periods specified in the SEC's rules and forms, and that such information is accumulated and communicated to our CEO and CFO as appropriate to allow timely decisions regarding required disclosure.

As of the end of the period covered by this report, we carried out an evaluation, under the supervision and with the participation of our CEO and CFO, of the effectiveness of the design and operation of our disclosure controls and procedures. Based upon that evaluation, our CEO and CFO concluded that our disclosure controls and procedures are effective for the purposes discussed above.

There has been no change in our internal control over financial reporting during the quarter ended September 30, 2012 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

PART II - Other Information

ITEM 4.  MINE SAFETY DISCLOSURE

See Exhibit 95 to this Form 10-Q for a listing of our mine safety violations.

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ITEM 5.  OTHER INFORMATION

2013 Annual Meeting

Our annual shareholders’ meeting is scheduled for Thursday, April 18, 2013 in New York City at a yet to be determined location in upper Manhattan.

Yorktown Distribution

As previously disclosed, each time after we filed our 2011 Form 10-Qs for the first, second and third quarters and for the 2011 annual report on Form 10-K, we were advised by Yorktown Energy Partners VI, L.P., an investor for the last six years, that it had distributed 750,000 shares (3,000,000 in total) of Hallador common stock to its limited and general partners.

Yorktown did not make a distribution after we filed the first quarter Form 10-Q for 2012 but did make a 750,000 share distribution on August 21, 2012. After such distribution, Yorktown Energy Partners VI, L.P. along with Yorktown Energy Partners VII, L.P. and Yorktown Energy Partners VIII, L.P. collectively hold about 12 million shares of Hallador common stock representing about 42% of total shares outstanding. 

Since May 2011, Yorktown has distributed a total of 3,750,000 shares.  While we do not know Yorktown’s ultimate strategy to realize the value of their Hallador investment for their partners, we expect that over time distributions such as these will improve our liquidity and float.  

If and when we are advised of another Yorktown distribution after this Form 10-Q is filed, we will timely report such on a Form 8-K.

31	SOX 302 Certifications (1)
32	SOX 906 Certification (1)
10.1	Credit agreement IBR to Form 8K dated October 18, 2012
95	Mine Safety Disclosure (1)
101.INS	XBRL Instance Document (1)
101.SCH	XBRL Schema Document (1)
101.CAL	XBRL Calculation Linkbase Document (1)
101.DEF	XBRL Definition Linkbase Document (1)
101.LAB	XBRL Label Linkbase Document (1)
101.PRE	XBRL Presentation Linkbase Document (1)

(1) Filed herewith.

15

SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

	HALLADOR ENERGY COMPANY
Date: November 1 , 2012	/s/W. Anderson Bishop
	W. Anderson Bishop, CFO and CAO

16

EX-95

Exhibit 95 

Mine Safety Disclosure

Our principles are safety, honesty, and compliance. We firmly believe that these values compose a dedicated workforce and with that, come high production. The core to this is our strong training programs that include accident prevention, workplace inspection and examination, emergency response, and compliance. We work with the Federal and State regulatory agencies to help eliminate safety and health hazards from our workplace and increase safety and compliance awareness throughout the mining industry.  Sunrise has not had a fatality since its establishment in 2005.

Sunrise is regulated by the MSHA under the Federal Mine Safety and Health Act of 1977 (“Mine Act”). MSHA inspects our mine on a regular basis and issues various citations and orders when it believes a violation has occurred under the Mine Act. We present information below regarding certain violations which MSHA has issued with respect to our mine. While assessing this information please consider that the number and cost of violations will vary depending on the MSHA inspector and can be contested and appealed, and in that process, are often reduced in severity and amount, and are sometimes dismissed. We are currently contesting 26 citations with MSHA; some involve the amount of the assessments and some involve the citation itself.

Sunrise has not been issued written notice from MSHA of a pattern of, or the potential to have a pattern of, violations of mandatory health or safety standards that are of such a nature as could significantly and substantially cause and effect health or safety standards under section 104(e) of the Mine Act.

The table that follows outlines citations and orders issued to us by MSHA during the first nine months of 2012. The citations and orders outlined below may differ from MSHA`s data retrieval system due to timing, special assessed citations, and other factors.

Definitions:

Section 104(a) Significant and Substantial Citations “S&S”: An alleged violation of a mining safety or health standard or regulation where there exists a reasonable likelihood that the hazard outlined will result in an injury or illness of a serious nature.

Section 104(b) Orders: Failure to abate a 104(a) citation within the period of time prescribed by MSHA. The result of which is an order of immediate withdraw of non-essential persons from the affected area until MSHA determines the violation has been corrected.

Section 104(d) Citations and Orders: An alleged unwarrantable failure to comply with mandatory health and safety standards.

Section 107(a) Orders: An order of withdraw for situations where MSHA has determined that an imminent danger exists.

Section 110(b)(2) Violations: An alleged flagrant violation issued by MSHA under section 110(b)(2) of the Mine Act.

Pattern or Potential Pattern of Violations: A pattern of violations of mandatory health or safety standards that are of such a nature as could have significantly and substantially contributed to the cause and effect of coal mine health or safety hazards under section 104(e) of the Mine Act or a potential to have such a pattern.

Contest of Citations, Orders, or Proposed Penalties: A contest proceeding may be filed with the Commission by the operator or miners/miners representative to challenge the issuance or penalty of a citation or order issued by MSHA.

	Section	Section	Section	Section	Section	Proposed
	104(a)	104(b)	104(d)	107(a)	110(b)(2)	MSHA
Month	Citations	Orders	Citation/Orders	Orders	Violations	Assessments
						(in thousands)
January	0	0	0	0	0	$6.6
February	2	0	0	0	0	7.0
March	0	0	0	0	0	3.6
April	4	0	0	0	0	9.8
May	2	0	0	0	0	4.2
June	2	0	0	0	0	8.9
July	0	0	0	0	0	2.5
August	1	0	0	0	0	4.7
September	4	0	0	0	0	5.5

EX-31.1

Exhibit 31.1

CERTIFICATION

I, Victor P. Stabio, certify that:

1.   I have reviewed this quarterly report on Form 10-Q of Hallador Energy Company;

2.   Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.   Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.   The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a)   Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b)   Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c)   Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d)   Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

5.   The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent function):

a)   All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

b)	Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.
		/S/VICTOR P. STABIO
November 1, 2012		Victor P. Stabio, CEO

EX-31.2

Exhibit 31.2

CERTIFICATION

I, W. Anderson Bishop, certify that:

1.   I have reviewed this quarterly report on Form 10-Q of Hallador Energy Company;

2.   Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.   Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.   The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a)   Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b)   Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c)   Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d)   Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

5.   The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent function):

a)   All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

b)	Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.
		/S/W. Anderson Bishop
November 1, 2012		W. Anderson Bishop, CFO

EX-32

EXHIBIT 32

CERTIFICATION PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with this Quarterly Report (the "Report"), of Hallador Energy Company (the "Company"), on Form 10-Q for the period ended September 30, 2012, as filed with the Securities and Exchange Commission on the date hereof the undersigned, in the capacities and date indicated below, each hereby certifies pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to his knowledge:

(1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

November 1, 2012	By:	/S/Victor P. Stabio Victor  P. Stabio, CEO
		/S/W. Anderson Bishop W. Anderson Bishop, CFO

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(4) Investment in Sunrise Energy (Detail) - Condensed Statement of Operations (USD $) In Thousands, unless otherwise specified	3 Months Ended				9 Months Ended
	Sep. 30, 2012		Sep. 30, 2011		Sep. 30, 2012		Sep. 30, 2011
Revenue	$ 37,114		$ 44,628		$ 106,245		$ 116,153
Expenses	(27,844)		(25,112)		(78,153)		(72,837)
Net income	6,190	[1]	12,556	[1]	18,801	[1]	27,289	[1]
Sunrise Energy
Revenue					1,671		3,112
Expenses					(1,573)		(1,564)
Net income					$ 98		$ 1,548

[1] *There is no material difference between net income and comprehensive income.

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(3) Investment in Savoy (Savoy Energy)

9 Months Ended

Sep. 30, 2012

Savoy Energy

Equity Investment In Savoy

(3)           Investment in Savoy

We own a 45% interest in Savoy Energy L.P., a private company engaged in the oil and gas business primarily in the State of Michigan. Savoy uses the successful efforts method of accounting.  We account for our interest using the equity method of accounting.

Below (in thousands) to the 100% are a condensed balance sheet at September 30, 2012 and a condensed statement of operations for the nine months ended September 30, 2012 and 2011.

Condensed Balance Sheet

	2012
Current assets	$	16,610
Oil and gas properties, net		21,887
	$	38,497
Total liabilities	$	9,396
Partners' capital		29,101
	$	38,497

Condensed Statement of Operations

	2012			2011
Revenue	$	24,585		$	22,802
Expenses		(17,931	)		(13,755	)
Net  income	$	6,654		$	9,047

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(6) Self Insurance (Detail) (USD $) In Millions, unless otherwise specified	Sep. 30, 2012
Mining equipment at historical cost (in Dollars)	$ 100
Number of Mining Units	4
Georgraphic Spread of Mining Units	15

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(5) Other Long-Term Assets and Other Income (Detail) - Other income (USD $) In Thousands, unless otherwise specified	9 Months Ended
	Sep. 30, 2012	Sep. 30, 2011
Other income:
MSHA reimbursements	$ 4,236	$ 1,900
Other	702	49
	$ 4,938	$ 1,949

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(7) Bill and Hold (Detail) (USD $) In Millions, unless otherwise specified	19 Months Ended	24 Months Ended
	Apr. 01, 2014 T	Apr. 01, 2014 T	Sep. 30, 2012
Tons of Coal Agreed to Store Per Customer		250,000
Tons of Coal Stored	250,000
Tons of Coals Stored Second Customer	70,000
Revenue from Bill and Hold (in Dollars)			$ 14.5

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(8) Subsequent Event (Detail) (USD $) In Millions, unless otherwise specified	0 Months Ended
	Oct. 15, 2012
Gain (Loss) on Sale of Property	$ 2.75

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(2) Notes Payable

9 Months Ended

Sep. 30, 2012

Debt Disclosure [Text Block]

(2)    Bank Debt

In December 2008, we entered into a credit agreement with a bank consortium headed by PNC Bank that provides for a $40 million term loan and a $30 million revolving credit facility.  At September 30, 2012, we owed $10 million on the term loan and nil on the revolver. The current interest rate is LIBOR-one month (0.25%) plus 2.50% or 2.75%.

On October 18, 2012, Sunrise Coal, our wholly-owned subsidiary, entered into a new credit agreement (the “Credit Agreement”) with PNC Bank, as administrative agent, and the lenders named therein. The Credit Agreement replaces the previous credit agreement we had with PNC. Closing costs on this new facility were about $1.5 million and initially will be deferred and amortized over five years.  Outstanding debt as of October 31, 2012 is the same as of September 30, 2012.

The Credit Agreement provides for a $165 million senior secured revolving credit facility. The facility matures in five years.The facility is collateralized by substantially all of Sunrise’s assets and we are the guarantor. We will draw on the facility as needed for development of our new projects in Illinois and Indiana.

All borrowings under the Credit Agreement bear interest, at LIBOR plus 2% if the leverage ratio is less than 1.5X, LIBOR plus 2.5% if the leverage ratio is over 1.5 but less than 2X and at LIBOR  plus 3% if the leverage ratio is over 2X. The maximum leverage ratio is 2.75X.  The leverage ratio is equal to funded debt/EBITDA.The annual commitment fee is 50 BPS but falls to 37.5 BPS if we borrow more than 33% of the facility.

The Credit Agreement also imposes certain other customary restrictions and covenants as well as certain milestones we must meet in order to draw down the full amount.

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Consolidated Balance Sheet (USD $) In Thousands, unless otherwise specified	Sep. 30, 2012	Dec. 31, 2011
Current assets:
Cash and cash equivalents	$ 30,213	$ 37,542
Accounts receivable	7,492	6,689
Coal inventory	3,302	1,863
Parts and supply inventory	2,286	2,202
Other	311	580
Total current assets	43,604	48,876
Coal properties, at cost:
Land, buildings and equipment	145,027	137,707
Mine development	68,515	66,614
	213,542	204,321
Less - accumulated DD&A	(54,346)	(42,493)
	159,196	161,828
Investment in Savoy	13,190	12,133
Investment in Sunrise Energy	3,851	3,297
Other assets	8,767	6,294
	228,608	232,428
Current liabilities:
Bank debt	10,000	17,500
Accounts payable and accrued liabilities	10,299	10,471
Income taxes	1,502	5,125
Total current liabilities	21,801	33,096
Long-term liabilities:
Deferred income taxes	34,812	31,128
Asset retirement obligations	2,383	2,276
Other	6,311	4,935
Total long-term liabilities	43,506	38,339
Total liabilities	65,307	71,435
Stockholders' equity:
Preferred Stock, $.10 par value, 10,000 shares authorized; none issued
Common stock, $.01 par value, 100,000 shares authorized; 28,341 and 28,309 shares outstanding, respectively	283	283
Additional paid-in capital	88,203	85,984
Retained earnings	74,765	74,685
Accumulated other comprehensive income	50	41
Total stockholders’ equity	163,301	160,993
	$ 228,608	$ 232,428

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Consolidated Statement of Stockholders’ Equity (USD $) In Thousands	Common Stock [Member]	Additional Paid-in Capital [Member]	Retained Earnings [Member]	Accumulated Other Comprehensive Income (Loss) [Member]	Total
Balance, January 1, 2012 at Dec. 31, 2011	$ 283	$ 85,984	$ 74,685	$ 41	$ 160,993
Balance, January 1, 2012 (in Shares) at Dec. 31, 2011	28,309
Stock-based compensation		1,895			1,895
Other		324		9	333
Other (in Shares)	32
Dividends			(18,721)		(18,721)
Net income			18,801		18,801	[1]
Balance, September 30, 2012 at Sep. 30, 2012	$ 283	$ 88,203	$ 74,765	$ 50	$ 163,301
Balance, September 30, 2012 (in Shares) at Sep. 30, 2012	28,341

[1] *There is no material difference between net income and comprehensive income.

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(3) Investment in Savoy (Detail) - Condensed Statement of Operations (USD $) In Thousands, unless otherwise specified	3 Months Ended				9 Months Ended
	Sep. 30, 2012		Sep. 30, 2011		Sep. 30, 2012		Sep. 30, 2011
Revenue	$ 37,114		$ 44,628		$ 106,245		$ 116,153
Expenses	(27,844)		(25,112)		(78,153)		(72,837)
Net income	6,190	[1]	12,556	[1]	18,801	[1]	27,289	[1]
Equity Investment in Savoy
Revenue					24,585		22,802
Expenses					(17,931)		(13,755)
Net income					$ 6,654		$ 9,047

[1] *There is no material difference between net income and comprehensive income.

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(4) Investment in Sunrise Energy (Detail) - Condensed Balance Sheet (USD $) In Thousands, unless otherwise specified	Sep. 30, 2012	Dec. 31, 2011
Current assets	$ 43,604	$ 48,876
	228,608	232,428
Total liabilities	65,307	71,435
	228,608	232,428
Sunrise Energy
Current assets	2,390
Oil and gas properties, net	6,731
	9,121
Total liabilities	1,430
Members' capital	7,691
	$ 9,121

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(1) General Business

9 Months Ended

Sep. 30, 2012

Business Description and Basis of Presentation [Text Block]

(1)    General Business

The interim financial data is unaudited; however, in our opinion, it includes all adjustments, consisting only of normal recurring adjustments necessary for a fair statement of the results for the interim periods. The financial statements included herein have been prepared pursuant to the SEC’s rules and regulations; accordingly, certain information and footnote disclosures normally included in GAAP financial statements have been condensed or omitted.

The results of operations and cash flows for the nine months ended September 30, 2012 are not necessarily indicative of the results to be expected for future quarters or for the year ending December 31, 2012.  To maintain consistency and comparability, certain 2011 amounts have been reclassified to conform to the 2012 presentation.

Our organization and business, the accounting policies we follow and other information, are contained in the notes to our consolidated financial statements filed as part of our 2011 Form 10-K. This quarterly report should be read in conjunction with such 10-K.

The consolidated financial statements include the accounts of Hallador Energy Company (the Company) and its wholly-owned subsidiary Sunrise Coal, LLC (Sunrise).  All significant intercompany accounts and transactions have been eliminated.  We are engaged in the production of thermal coal from an underground mine located in western Indiana.  We own a 45% equity interest in Savoy Energy L.P., a private oil and gas company which has operations in Michigan and a 50% interest in Sunrise Energy, LLC, a private entity engaged in natural gas operations in the same vicinity as our coal mine.

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Consolidated Balance Sheet (Parentheticals) (USD $) In Thousands, except Per Share data, unless otherwise specified	Sep. 30, 2012	Dec. 31, 2011
Preferred stock, par value (in Dollars per share)	$ 0.10	$ 0.10
Preferred stock, authorized	10,000	10,000
Preferred stock, issued
Common stock, authorized	100,000	100,000
Common stock par value (in Dollars per share)	$ 0.01	$ 0.01
Common stock shares outstanding	28,341	28,309

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(5) Other Long-Term Assets and Other Income (Tables)

9 Months Ended

Sep. 30, 2012

Schedule of Other Assets, Noncurrent [Table Text Block]

	September 30,  2012		December 31, 2011
Other assets:
Advance coal royalties	$	3,241	$	3,205
Marketable equity securities available for sale at fair value (restricted)*		3,633		2,326
Miscellaneous		1,893		763
	$	8,767	$	6,294

Schedule of Other Nonoperating Income (Expense) [Table Text Block]

	Nine months ended September 30,
	2012		2011
Other income:
MSHA reimbursements	$	4,236	$	1,900
Other		702		49
	$	4,938	$	1,949

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Document And Entity Information (USD $)	9 Months Ended
	Sep. 30, 2012	Nov. 01, 2012	Jun. 30, 2012
Document and Entity Information [Abstract]
Entity Registrant Name	HALLADOR ENERGY COMPANY
Document Type	10-Q
Current Fiscal Year End Date	--12-31
Entity Common Stock, Shares Outstanding		28,348,000
Entity Public Float			$ 64,143,157
Amendment Flag	false
Entity Central Index Key	0000788965
Entity Current Reporting Status	Yes
Entity Voluntary Filers	No
Entity Filer Category	Smaller Reporting Company
Entity Well-known Seasoned Issuer	No
Document Period End Date	Sep. 30, 2012
Document Fiscal Year Focus	2012
Document Fiscal Period Focus	Q3

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(1) General Business (Detail)	Sep. 30, 2012	Dec. 31, 2010
Equity Interest in Savoy Energy LP	45.00%
Equity Method Investment, Ownership Percentage	50.00%	50.00%

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Consolidated Statement of Comprehensive Income (USD $) In Thousands, except Per Share data, unless otherwise specified	3 Months Ended				9 Months Ended
	Sep. 30, 2012		Sep. 30, 2011		Sep. 30, 2012		Sep. 30, 2011
Revenue:
Coal sales	$ 36,152		$ 34,174		$ 98,259		$ 100,275
Gain on sale of unproved oil and gas properties			9,084				9,084
Equity income - Savoy	501		948		2,999		4,071
Equity income - Sunrise Energy	17		230		49		774
Other	444		192		4,938		1,949
	37,114		44,628		106,245		116,153
Costs and expenses:
Operating costs and expenses	20,745		19,355		57,994		55,965
DD&A	4,145		3,392		11,895		10,128
Coal exploration costs	778		373		1,900		645
SG&A	1,947		1,695		5,607		5,096
Interest	229		297		757		1,003
	27,844		25,112		78,153		72,837
Income before income taxes	9,270		19,516		28,092		43,316
Less income taxes:
Current	1,731		2,416		5,607		5,563
Deferred	1,349		4,544		3,684		10,464
	3,080		6,960		9,291		16,027
Net income*	$ 6,190	[1]	$ 12,556	[1]	$ 18,801	[1]	$ 27,289	[1]
Net income per share:
Basic (in Dollars per share)	$ 0.22		$ 0.45		$ 0.66		$ 0.97
Diluted (in Dollars per share)	$ 0.22		$ 0.44		$ 0.65		$ 0.95
Weighted average shares outstanding:
Basic (in Shares)	28,324		28,162		28,316		28,114
Diluted (in Shares)	28,760		28,590		28,791		28,678

[1] *There is no material difference between net income and comprehensive income.

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(6) Self Insurance

9 Months Ended

Sep. 30, 2012

Self Insurance

(6)   Self Insurance

We continue to self-insure on about $100 million (historical cost) of our underground mining equipment.  We feel comfortable with this decision as such equipment is allocated among four mining units spread over fifteen miles.

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(5) Other Long-Term Assets and Other Income

9 Months Ended

Sep. 30, 2012

Other Long Term Assets And Other Income

(5)      Other Assets and Other Income (in thousands)

	September 30,  2012		December 31, 2011
Other assets:
Advance coal royalties	$	3,241	$	3,205
Marketable equity securities available for sale at fair value (restricted)*		3,633		2,326
Miscellaneous		1,893		763
	$	8,767	$	6,294

-------------------------------------

*Held by Sunrise Indemnity, Inc., our wholly-owned captive insurance company.

	Nine months ended September 30,
	2012		2011
Other income:
MSHA reimbursements	$	4,236	$	1,900
Other		702		49
	$	4,938	$	1,949

See “MSHA Reimbursements” below for a discussion of the $4.2 and $1.9 million.

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(4) Investment in Sunrise Energy (Detail) (USD $) In Thousands, unless otherwise specified	Sep. 30, 2012	Jan. 02, 2012	Dec. 31, 2010
Investment in Sunrise Energy (in Dollars)		$ 506	$ 2,375
Equity Method Investment, Ownership Percentage	50.00%		50.00%
Percentage Condensed Balance Sheet Sunrise Energy	100.00%

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(2) Notes Payable (Detail) (USD $) In Millions, unless otherwise specified	45 Months Ended	60 Months Ended
	Sep. 30, 2012	Oct. 17, 2017	Oct. 17, 2012	Dec. 30, 2008
Other Long-term Debt (in Dollars)			$ 165	$ 40
Line of Credit Facility (in Dollars)	30
Other Long-term Debt, Current (in Dollars)	10
Debt Instrument, Interest Rate, Stated Percentage Rate Range, Minimum	0.25%
Debt Instrument, Interest Rate, Stated Percentage Rate Range, Maximum	2.50%
Debt Instrument, Interest Rate, Effective Percentage Rate Range, Maximum	2.75%
Loan Closing Costs (in Dollars)			$ 1.5
Leverage Ration Hurdle		0.02
Leverage Ratio LT 1.5		1.5
LIBOR plus rate if Ratio LT 1.5		2.50%
Leverage Ratio 1.5-2		2
LIBOR plus rate if Ratio 1.5 - 2		3.00%
Leverage Ratio GT 2		2
Maximum Leverage Ratio		2.75
Line of Credit Commitment Fee Basis Points		50
Line of Credit Commitment Fee Basis Point Minimum		37.5
LOC Percentage Borrowed for Lower Commitment fee		33.00%

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(3) Investment in Savoy (Tables)

9 Months Ended

Sep. 30, 2012

Savoy Consolidated Balance Sheet

	2012
Current assets	$	16,610
Oil and gas properties, net		21,887
	$	38,497
Total liabilities	$	9,396
Partners' capital		29,101
	$	38,497

Savoy Consolidated Statement of Operations

	2012			2011
Revenue	$	24,585		$	22,802
Expenses		(17,931	)		(13,755	)
Net  income	$	6,654		$	9,047

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(7) Bill and Hold

9 Months Ended

Sep. 30, 2012

Bill And Hold Inventory

(7)  Bill and Hold

Earlier in 2012 two of our customers advised us that their coal stockpiles were increasing and asked us to consider storing their coal on our property. In April 2012 we entered into a storage agreement with one customer to store 250,000 tons for a minimum of one year and up to a maximum of two years. In June 2012 we entered into a similar storage agreement with the second customer. We continue to sell the coal as contracted to these customers.  The risks and rewards of ownership pass from us to them as coal is placed into segregated storage. We are paid a nominal storage fee in addition to our contracted price at the time the coal is placed in storage. As of September 30, 2012, we have stored 250,000 tons for the first customer and 70,000 tons for the second. We have recognized about $14.5 million in revenue from these “bill and hold” arrangements.  There were no change in payment terms with our customers and, as of October 31, 2012, all receivables outstanding at September 30 have been collected.

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(8) Subsequent Event

9 Months Ended

Sep. 30, 2012

Subsequent Events [Text Block]

(8)  Subsequent Event

In early October 2012 we sold some land that we bought several years ago and recognized a gain of about $2.75 million.

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(4) Investment in Sunrise Energy (Tables)

9 Months Ended

Sep. 30, 2012

Sunrise Consolidated Balance Sheet

	2012
Current assets	$	2,390
Oil and gas properties, net		6,731
	$	9,121
Total liabilities	$	1,430
Members' capital		7,691
	$	9,121

Sunrise Consolidated Statement of Operations

	2012			2011
Revenue	$	1,671		$	3,112
Expenses		(1,573	)		(1,564	)
Net  income	$	98		$	1,548

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(3) Investment in Savoy (Detail) - Condensed Balance Sheet (USD $) In Thousands, unless otherwise specified	Sep. 30, 2012	Dec. 31, 2011
Current assets	$ 43,604	$ 48,876
	228,608	232,428
Total liabilities	65,307	71,435
Equity Investment in Savoy
Current assets	16,610
Oil and gas properties, net	21,887
	38,497
Total liabilities	9,396
Partners' capital	29,101
	$ 38,497

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(5) Other Long-Term Assets and Other Income (Detail) (USD $) In Millions, unless otherwise specified	9 Months Ended
	Sep. 30, 2012	Sep. 30, 2011
MSHA Reimbursements footnote	$ 4.2	$ 1.9

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Consolidated Statement of Cash Flows (USD $) In Thousands, unless otherwise specified	9 Months Ended
	Sep. 30, 2012	Sep. 30, 2011
Operating activities:
Cash provided by operating activities	$ 29,552	$ 40,413
Investing activities:
Capital expenditures for coal properties	(9,222)	(17,025)
Proceeds from sale of unproved oil and gas properties		11,622
Purchase of marketable securities	(1,291)
Investment in Sunrise Energy	(506)
Other	83	(1,284)
Cash used in investing activities	(10,936)	(6,687)
Financing activities:
Payments to bank	(7,500)	(7,500)
Dividends	(18,721)	(3,505)
Other	276	552
Cash used in financing activities	(25,945)	(10,453)
(Decrease) increase in cash and cash equivalents	(7,329)	23,273
Cash and cash equivalents, beginning of period	37,542	10,277
Cash and cash equivalents, end of period	$ 30,213	$ 33,550

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(4) Investment in Sunrise Energy (Sunrise Energy)

9 Months Ended

Sep. 30, 2012

Sunrise Energy

Equity Investment In Sunrise Energy

(4)            Investment in Sunrise Energy

In late December 2010, we invested $2.375 million for a 50% interest in Sunrise Energy, LLC which then purchased existing gas reserves and gathering equipment from an unrelated third party with plans to develop and operate such reserves. During January 2012 we invested an additional $506 thousand. Sunrise Energy also plans to develop and explore for coal-bed methane gas reserves on or near our underground coal reserves. They use the successful efforts method of accounting. We account for our interest using the equity method of accounting.

Below (in thousands) to the 100% are a condensed balance sheet at September 30, 2012 and a condensed statement of operations for the nine months ended September 30, 2012 and 2011.

Condensed Balance Sheet

	2012
Current assets	$	2,390
Oil and gas properties, net		6,731
	$	9,121
Total liabilities	$	1,430
Members' capital		7,691
	$	9,121

Condensed Statement of Operations

	2012			2011
Revenue	$	1,671		$	3,112
Expenses		(1,573	)		(1,564	)
Net  income	$	98		$	1,548

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(5) Other Long-Term Assets and Other Income (Detail) - Other Assets (Assets [Member], USD $) In Thousands, unless otherwise specified	Sep. 30, 2012		Dec. 31, 2011
Assets [Member]
Other assets:
Advance coal royalties	$ 3,241		$ 3,205
Marketable equity securities available for sale at fair value (restricted)*	3,633	[1]	2,326	[1]
Miscellaneous	1,893		763
	$ 8,767		$ 6,294

[1] *Held by Sunrise Indemnity, Inc., our wholly-owned captive insurance company.

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(3) Investment in Savoy (Detail)	Sep. 30, 2012
Equity Interest in Savoy Energy LP	45.00%
Percentage of condensed balance sheet - Savoy Energy	100.00%