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, 2013 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 o

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

On November 5, 2013 we had 28,618,000 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, 2013			December 31, 2012
ASSETS
Current assets:
Cash and cash equivalents	$	13,713		$	21,888
Accounts receivable		9,904			8,127
Prepaid income taxes		3,591
Coal inventory		4,086			2,342
Parts and supply inventory		2,645			2,264
Other		403			242
Total current assets		34,342			34,863
Coal properties, at cost:
Land and mineral rights		23,315			22,705
Buildings and equipment		144,304			131,566
Mine development		81,998			71,046
		249,617			225,317
Less - accumulated DD&A		(72,418	)		(58,479	)
		177,199			166,838
Investment in Savoy		15,401			12,230
Investment in Sunrise Energy		4,488			3,969
Other assets (Note 6)		15,191			11,307
	$	246,621		$	229,207
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable and accrued liabilities	$	10,111		$	9,386
Income taxes					1,660
Total current liabilities		10,111			11,046
Long-term liabilities:
Bank debt		11,400			11,400
Deferred income taxes		40,778			35,884
Asset retirement obligations		2,709			2,573
Other		1,926			6,295
Total long-term liabilities		56,813			56,152
Total liabilities		66,924			67,198
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; 28,618 and 28,529 shares outstanding, respectively		286			285
Additional paid-in capital		87,924			86,576
Retained earnings		91,264			75,118
Accumulated other comprehensive income		223			30
Total stockholders’ equity		179,697			162,009
	$	246,621		$	229,207

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,
	2013		2012		2013			2012
Revenue:
Coal sales	$	103,129	$	98,259	$	34,985		$	36,152
Equity income - Savoy		4,495		2,999		2,048			501
Equity income - Sunrise Energy		519		49		172			17
Liability extinguishment (Note 9)		4,300
Other (Note 6)		3,615		4,938		455			444
		116,058		106,245		37,660			37,114
Costs and expenses:
Operating costs and expenses		68,959		57,994		23,407			20,745
DD&A		13,982		11,895		4,772			4,145
Coal exploration costs		1,725		1,900		739			778
SG&A		5,586		5,607		1,936			1,947
Interest		1,131		757		308			229
		91,383		78,153		31,162			27,844
Income before income taxes		24,675		28,092		6,498			9,270
Less income taxes:
Current		1,297		5,607		(609	)		1,731
Deferred		4,915		3,684		2,277			1,349
		6,212		9,291		1,668			3,080
Net income (1) (2)	$	18,463	$	18,801	$	4,830		$	6,190
Net income per share:
Basic	$	0.65	$	0.66	$	0.17		$	0.22
Diluted	$	0.64	$	0.65	$	0.17		$	0.22
Weighted average shares outstanding:
Basic		28,580		28,316		28,607			28,324
Diluted		28,851		28,791		28,838			28,760
___________________________________
(1) There is no material difference between net income and comprehensive income. (2) See MD&A – page 19, for pro-forma amounts excluding the $4.3 million in liability extinguishment.

See accompanying notes.

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Consolidated Condensed Statement of Cash Flows
(in thousands)
	Nine months ended September 30,
	2013			2012
Operating activities:
Cash provided by operating activities	$	20,310		$	29,552
Investing activities:
Capital expenditures for coal properties		(23,558	)		(9,222	)
Ohio River Terminal		(2,866	)
Purchase of marketable securities					(1,291	)
Other		256			(423	)
Cash used in investing activities		(26,168	)		(10,936	)
Financing activities:
Payments to bank					(7,500	)
Dividends		(2,317	)		(18,721	)
Other					276
Cash used in financing activities		(2,317	)		(25,945	)
Decrease in cash and cash equivalents		(8,175	)		(7,329	)
Cash and cash equivalents, beginning of period		21,888			37,542
Cash and cash equivalents, end of period	$	13,713		$	30,213

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, 2013		28,529	$	285	$	86,576		$	75,118		$	30	$	162,009
Stock-based compensation		13				1,724								1,724
Other		76		1		(376	)					193		(182	)
Dividends									(2,317	)				(2,317	)
Net income									18,463					18,463
Balance, September 30, 2013		28,618	$	286	$	87,924		$	91,264		$	223	$	179,697

_____________________________________

*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, 2013 are not necessarily indicative of the results to be expected for future quarters or for the year ending December 31, 2013.  To maintain consistency and comparability, certain 2012 amounts have been reclassified to conform to the 2013 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 2012 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 steam coal from mines 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 natgas operations in the same vicinity as our coal mines.

(2)   Bill and Hold

Early 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. During the 2013 second quarter we increased the storage agreement by 50,000 tons for both customers. 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. During the nine months ended September 30, 2013, 145,000 tons were placed in storage for the first customer and nil for the second customer. We have recognized $7.3 million in revenue from these “bill and hold” arrangements for the nine months ended September 30, 2013. No tons were placed in storage during the 2013 third quarter. As of September 30, 2013, we have in storage 300,000 tons for the first customer and 250,000 tons for the second. There were no changes in payment terms with our customers and, as of October 31, 2013, all receivables outstanding from these two customers at September 30, 2013 had been collected.

(3)Bank Debt

During October 2012, Sunrise, 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 which were deferred and are being amortized over five years.  Outstanding debt at September 30, 2013 was $11.4 million.

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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 (which currently it is), 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 maximum that we can currently borrow is an additional $120 million due to our current covenants. 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.

(4)  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% is a condensed balance sheet at September 30, 2013, and a condensed statement of operations for the nine months ended September 30, 2013 and 2012.

Condensed Balance Sheet

	2013
Current assets	$	25,651
Oil and gas properties, net		24,156
	$	49,807
Total liabilities	$	14,354
Partners' capital		35,453
	$	49,807

Condensed Statement of Operations

	2013			2012
Revenue	$	29,444		$	24,585
Expenses		(19,471	)		(17,931	)
Net  income	$	9,973		$	6,654

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(5)  Investment in Sunrise Energy

We own a 50% interest in Sunrise Energy, LLC which owns gas reserves and gathering equipment with plans to develop and operate such reserves. 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% is a condensed balance sheet at September 30, 2013, and a condensed statement of operations for the nine months ended September 30, 2013 and 2012.

Condensed Balance Sheet

	2013
Current assets	$	2,849
Oil and gas properties, net		6,777
	$	9,626
Total liabilities	$	661
Members' capital		8,965
	$	9,626

Condensed Statement of Operations

	2013			2012
Revenue	$	2,551		$	1,671
Expenses		(1,513	)		(1,573	)
Net  income	$	1,038		$	98

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(6)  Other Long-Term Assets and Other Income

	September 30, 2013			December 31, 2012
Long-term assets:
Advance coal royalties		$	3,936	$	3,324
Deferred financing costs, net			1,270		1,494
Marketable equity securities available for sale, at fair value (restricted)*			3,601		3,548
Ohio River Terminal (see Note 8)			2,881
Miscellaneous			3,503		2,941
		$	15,191	$	11,307

______________________

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

	Nine months ended September 30,
		2013		2012
Other income:
MSHA reimbursements*		$	2,053	$	4,236
Coal storage fees			964		127
Miscellaneous			598		575
		$	3,615	$	4,938

______________________

*See “MSHA Reimbursements” on page 16.

(7)  Self Insurance

We continue to self-insure on about $110 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 12 miles.

(8)  Ohio River Terminal

On May 31, 2013 we purchased for $2.8 million a multi-commodity truck/barge terminal. Over 17 acres of secured area is available. The terminal is at mile point 743.8 on the Indiana bank of the Ohio River near the William Natcher Bridge between Rockport and Grandview, Indiana.  Currently the dock will handle third party commodities.  In the long term, we plan to ship coal through the dock.  The terminal is in close proximity to the NS railroad, the CSX railroad and American Electric Power's Rockport generating power plant. We do not expect revenue from this asset until late 2014.

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(9)  Liability Extinguishment

During the 2013 second quarter we concluded that an approximate $4.3 million liability we recorded during 2006 upon the purchase of Sunrise relating to a terminated coal contract was no longer required. The amount had no effect on cash flows.

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REPORT OF INDEPENDENT REGISTERD PUBLIC ACCOUNTING FIRM

To the Board of Directors and Stockholders

Hallador Energy Company

Denver, Colorado

We have reviewed the accompanying condensed consolidated balance sheet of Hallador Energy Company and subsidiaries (the “Company”) as of September 30, 2013 and the related condensed consolidated statements of comprehensive income, cash flows, and stockholders’ equity for the three and nine month periods ended September 30, 2013 and September 30, 2012.  These financial statements are the responsibility of the Company’s management.

We conducted our reviews in accordance with the standards of the Public Company Accounting Oversight Board (United States). A review of interim financial information consists principally of applying analytical procedures and making inquiries of persons responsible for financial and accounting matters.  It is substantially less in scope than an audit conducted in accordance with standards of the Public Company Accounting Oversight Board (United States), the objective of which is the expression of an opinion regarding the financial statements taken as a whole. Accordingly, we do not express such an opinion.

Based on our reviews, we are not aware of any material modifications that should be made to the accompanying condensed consolidated interim financial information for it to be in conformity with accounting principles generally accepted in the United States of America.

We have previously audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the consolidated balance sheet of the Company as of December 31, 2012, and the related consolidated statements of comprehensive income, cash flows, and stockholders’ equity for the year then ended (not presented herein); and in our report dated March 6, 2013, we expressed an unqualified opinion on those consolidated financial statements.  In our opinion, the information set forth in the accompanying condensed consolidated balance sheet as of December 31, 2012, is fairly stated, in all material respects, in relation to the balance sheet from which it has been derived.

/s/ EKS&H LLLP

November 5, 2013

Denver, Colorado

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ITEM 2.    MD&A

THE FOLLOWING DISCUSSION UPDATES THE MD&A SECTION OF OUR 2012 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 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 exploration company with operations in Michigan and a 50% interest in Sunrise Energy, LLC, a private gas exploration company with operations in Indiana. We account for our investments in Savoy and Sunrise Energy using the equity method.

Our largest contributor to revenue and earnings is the Carlisle underground coal mine located in western Indiana, about 30 miles south of Terre Haute.  Over 81% of our coal sales are to customers with large scrubbed coal-fired power plants in the state of Indiana.  Our mines and coal reserves are strategically located in close proximity to our primary customers, which reduces transportation costs and thus provides us with a competitive advantage with respect to those customers; our closest customer’s plant is 13 miles away and the farthest Indiana customer is 100 miles away.  We have access to our primary customers directly through either the CSX Corporation (NYSE: CSX) or through the Indiana Rail Road, majority owned by the CSX.

Our customers have made or announced plans to make significant investments in pollution control equipment at their plants.  Due to these large investments none of these plants are scheduled for retirement; thus we expect to be supplying these plants for many years.  It is not economical for the smaller, older, less efficient power plants to install scrubbers and other pollution control devices; accordingly, those type plants most likely will be retired in the coming years.

Headwinds and Tailwinds Affecting Our Company

Headwinds

1.	Competition from low-priced natgas/mild winters and summers
2.	The Obama’s administration dislike of burning coal to generate cheap and reliable electricity
3.	Onerous environmental regulations and overzealous mislead environmentalists
4.	Competition from new mines opening in the Illinois Basin
5.	Slow economy

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Tailwinds

1.	Major shift in utilities replacing Central Appalachia (CAAP) coal with Illinois Basin (ILB) coal
2.	More power plants are installing scrubbers enabling them to burn high-sulfur coal
3.	Our coal can compete with natgas down to $2.75/Mcf
4.	Coal is the fastest growing fuel worldwide

For 2013 we will continue to focus on maintaining our low cost structure and leasing and permitting new reserves.

We see an increasing demand for coal produced in the ILB in the future.  Demand for coal produced in the ILB is expected to grow at a rate faster than overall U.S. coal demand due to ILB coal having higher heating content than Powder River Basin (PRB) and lower cost structure than CAAP coal. Many utilities are scrubbing to meet emission requirements beyond just sulfur compliance, even utilities that burn exclusively PRB.  Once scrubbed, those utilities are usually capable of burning ILB coal.  It is this trend of new scrubber installations coupled with rising CAAP cost structure that is leading to increased switching from CAAP coal to ILB coal.  Some fuel switching will also occur from PRB to ILB in newly scrubbed utilities located near ILB coal supply.

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

Period	Contracted Tons	Average Price
Last quarter of 2013	825,000	$43.99
Year 2014	3,145,000	42.96
Year 2015	1,200,000	41.40
Year 2016	338,000	40.57

Current Projects

All of our underground coal reserves are high sulfur (4.5 - 6#) with a BTU content in the 11,500 range. As discussed below, the Ace surface mine is low sulfur (1.5#) with a BTU content of 11,400.  We have no met coal reserves, only steam (thermal) coal reserves. Below is a discussion of our current projects preceded by a table of our coal reserves.

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Reserve Table - Controlled Tons (in millions):

		Year-End Reserves
	Annual Capacity	2012			2011
		Proven	Probable	Total	Proven	Probable	Total
Carlisle (assigned)	3.4	34.2	9.3	43.5	36.0	10	46.0
Ace-in-the-Hole (assigned)	0.5	3.1		3.1
Bulldog (unassigned)		19.5	16.1	35.6	16.3	16	32.3
Russellville (unassigned)		15.5	13.9	29.4
Total	3.9	72.3	39.3	111.6	52.3	26	78.3
Assigned				46.6			46.0
Unassigned				65.0			32.3
				111.6			78.3

Active Reserve (assigned) - Carlisle Mine (underground)

Our coal reserves at December 31, 2012 assigned to the Carlisle Mine were 43.5 million tons compared to beginning of year reserves of 46 million tons.  Primarily through the execution of new leases, our reserve additions of 1.2 million tons replaced 40% of our 2012 production of 3 million tons. We reduced our reserves by 700,000 tons due to revised mining plans.  The mine is located near the town of Carlisle, Indiana in Sullivan County and became operational in January 2007. The coal is accessed with a slope to a depth of 340'. The coal is mined in the Indiana Coal V seam which is highly volatile bituminous coal and is the most economically significant coal in Indiana.  The Indiana V seam has been extensively mined by underground and surface methods in the general area. The coal thickness in the project area is 4' to 7'.

The mine has several advantages as listed below:

• SO2 - Historically, Carlisle has guaranteed a 6# SO2 product; however, with the addition of the Ace-in-the-Hole Mine we can blend lower sulfur coal with Carlisle coal and guarantee a mid-sulfur product which should command a higher price and increase our customer base.  Few mines in the ILB have the ability to offer their customers various ranges of SO2. Carlisle has supplied coal to 11 different power plants.  

•  Chlorine - Our reserves have lower chlorine (<0.10%) than average ILB reserves of 0.22%.  Much of the ILB’s new production is located in Illinois and possesses chlorine content in excess of .30%.  The relatively low chlorine content of our reserves is attractive to buyers given their desire to limit the corrosive effects of chlorine in their power plants.

•  Transportation - Carlisle has a double 100 rail car loop facility and a four-hour certified batch load-out facility connected to the CSX railroad.  The Indiana Rail Road (INRD) also has limited running rights on the CSX to our mine.  Dual rail access gives us a freight advantage to more customers.  Long term, the CSX anticipates our coal being shipped to southeast markets via their railroad.  We sell our coal FOB the mine and substantially all of our coal is transported by rail.  However, on occasion we have shipped to three power plants via truck.

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New Mine (assigned) - Ace-in-the-Hole Mine (Ace) (surface)

In November 2012 we purchased for $6 million permitted fee coal reserves, coal leases and surface properties near Clay City, Indiana in Clay County.  The Ace mine is 42 road miles northeast of the Carlisle Mine.  We control 3.1 million tons of proven coal reserves of which we own 1.2 million tons in fee.  We will mine two primary seams of low sulfur coal which make up 2.9 million of the 3.1 million tons controlled.  Both of the primary seams are low sulfur (2# SO2).  Mine development began in late December 2012 and we began shipping coal in late August 2013.  We truck low sulfur coal from Ace to Carlisle to blend with Carlisle’s high sulfur coal. Many utilities in the southeastern U.S. have scrubbers with lower sulfur limits (4# SO2) which cannot accept the higher sulfur contents of the ILB (6# SO2). Blending Carlisle coal to a lower sulfur specification will enable us to market Carlisle coal to more customers.  We currently have a contract at Carlisle which requires us to blend coal from Ace to meet sulfur specifications.  We also expect to ship low sulfur coal from Ace direct to unscrubbed customers that require low sulfur (2# SO2).  We expect the maximum capacity of Ace to be 500,000 tons annually. Ace currently has 20% of its capacity contracted for 2013 and 2014.  We have invested $18 million in minerals, land, equipment and development as of September 30, 2013 and we anticipate investing an additional $1 million in equipment and development for the remainder of 2013.

During the third quarter we sold 17,000 high sulfur and 17,000 low sulfur tons from Ace.  These sales which approximated $1.4 million were recorded as a reduction to the property accounts as the Ace mine was in the development stage.  We expect the Ace mine to transition to the production stage in November.

New Reserve (unassigned) - Bulldog Mine (underground)

We have leased roughly 19,300 acres in Vermillion County, Illinois near the village of Allerton.  Based on our reserve estimates we currently control 35.6 million tons of coal reserves. A considerable amount of our leased acres has yet to receive any exploratory drilling, thus we anticipate our controlled reserves to grow as we continue drilling in 2013.  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 currently expect to receive an approved mining permit in the first or second quarter of 2014.

Full-scale mine development will not commence until we have a sales commitment.

New Reserve (unassigned) - Russellville (underground)

We have leased roughly 11,000 acres in Lawrence County, Illinois near the village of  Russellville. Based on our reserve estimates we currently control 29.4 million tons of coal reserves. The permitting process will start this fall and we anticipate filing the formal permit with the appropriate regulators during the second quarter of 2014. This reserve is located about 20 miles southwest of the Carlisle Mine. Our initial testing indicates that this reserve’s minability and coal quality is very similar to the Carlisle reserve.

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.

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Ohio River Terminal

On May 31, 2013 we purchased for $2.8 million a multi-commodity truck/barge terminal. Over 17 acres of secured area is available. The terminal is at mile point 743.8 on the Indiana bank of the Ohio River near the William Natcher Bridge between Rockport and Grandview, Indiana.  Currently the dock will handle third party commodities.  In the long term, we plan to ship coal through the dock.  The terminal is in close proximity to the NS railroad, the CSX railroad and American Electric Power's Rockport generating power plant. We do not expect revenue from this asset until late 2014.

MSHA Reimbursements

Some of our coal 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. We do not recognize any revenue until customers have notified us that they accept the charges.  

We submitted our incurred costs for 2010 in September 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 in May 2012. 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 2012 for $4.2 million. One of the customers agreed with our analysis, paid $2 million in February 2013 and was recorded in the first quarter. We are in discussions with the other customer.  We expect to submit our 2012 costs by December 31, 2013.

Liquidity and Capital Resources

We do not anticipate any liquidity issues in the foreseeable future. We plan to fund future projects through a combination of draws from our revolver and cash from operations.

We have no material off-balance sheet arrangements.

Capital Expenditures (capex)

For the first nine months of 2013 our capex was about $23.5 million allocated as follows:

	in 000’s
Carlisle - maintenance capex	$	11,881
Carlisle - expansion/improvements		2,782
Carlisle - land and minerals		333
Ace - mine development		4,262
Ace - surface equipment		4,733
Ace - land and minerals		102
Other projects		208
Items accrued for but not paid		(743	)
Capex per the Cash Flow Statement	$	23,558

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For the remainder of the year we expect maintenance capex for Carlisle to be $2.5 million.  For the Ace surface mine we expect capex to be $1 million and we expect maintenance capex to be $100 thousand. Capex for the Ohio River Terminal is expected to be $100 thousand.

Inauguration of Regular Dividends

On April 5, 2013 our Board of Directors approved the adoption of a regular quarterly dividend policy and authorized a dividend of $.04, paid on May 15, 2013.  In addition to the August $.04 dividend, on October 15, our Board authorized a $.04 dividend payable November 15, 2013. In the past we only declared special dividends.

Results of Operations

Quarterly coal sales, cost and margin data (in 000’s):

	4th 2012		1st 2013		2nd 2013		3rd 2013		T4Qs*
Tons sold		752		840		774		817		3,183
Coal sales	$	33,111	$	33,995	$	34,149	$	34,985	$	136,240
Average price/ton		44.03		40.47		44.12		42.82		42.80
Operating costs		21,745		23,290		22,262		23,407		90,704
Average cost/ton		28.92		27.73		28.76		28.65		28.50
Margin		11,366		10,705		11,887		11,578		45,536
Margin/ton		15.11		12.74		15.36		14.17		14.31
Capex		16,987		8,604		6,174		8,780		40,545

	4th 2011		1st 2012		2nd 2012		3rd 2012		T4Qs*
Tons sold		921		701		743		810		3,175
Coal sales	$	37,723	$	29,620	$	32,487	$	36,152	$	135,982
Average price/ton		40.96		42.25		43.72		44.63		42.83
Operating costs		21,129		18,433		18,816		20,745		79,123
Average cost/ton		22.94		26.30		25.32		25.61		24.92
Margin		16,594		11,187		13,671		15,407		56,859
Margin/ton		18.02		15.96		18.40		19.02		17.91
Capex		15,970		2,372		1,857		4,993		25,192

__________________________

*T4Qs= trailing four quarters.

Capex in the fourth quarter of 2012 includes $9 million for the purchase of the Ace surface mine and another $4 million for land at Bulldog and Carlisle.  Capex in the fourth quarter of 2011 includes $9 million for the purchase of land for Bulldog.

First Nine Months 2013 vs. 2012

For the first nine months of 2013, we sold 2,431,000 tons at an average price of $42.42/ton.  For the first nine months of 2012, we sold 2,255,000 tons at an average price of $43.57/ton. The lower average price is due to the mix of our various contracts. We expect our coal sales for the last quarter of 2013 to be circa 825 thousand tons with an average price of $43.99/ton as set forth in the table on page 13.

17

Operating costs and expenses averaged $28.37/ton in 2013 compared to $25.72 in 2012.  The increase was due primarily to poor mining conditions in the months of January, February, April and May. Additionally, costs increased due to below normal wash plant recovery (60-63%) in the months of May and August.  We anticipate wash plant recovery’s remaining in the upper 60s in the 4th quarter 2013, before returning to our historical recovery of 72%.  Thus, we expect costs to average $27-$28/ton for the remainder of 2013.

Our Indiana employees totaled 374 at September 30, 2013 compared to 327 at September 30, 2012.  Part of the employee increase (19) was due to the opening of the new Ace-in-the-Hole Mine in January of this year.

Three Months Ended September 30, 2013 vs. 2012

For the third quarter of 2013, we sold 817,000 tons at an average price of $42.82/ton.  For the third quarter of 2012, we sold 810,000 tons at an average price of $44.63/ton.

Operating costs and expenses averaged $28.65/ton in 2013 compared to $25.61 in 2012.  The higher costs are discussed above.

We expect our margins for the remainder of the year to be in the $16-$17/ton range.

Other Analyses of Results of Operations

Savoy’s activity is discussed below.

The increase in equity income from Sunrise Energy was due to higher natgas prices.

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

Income Taxes

For the remainder of 2013 we expect our effective tax rate to be 25%. We estimate that 25% of such rate will be for taxes currently due. The decrease in the 2013 effective rate compared to the 2012 rate was due to percentage depletion for income tax purposes in excess of basis.  We anticipate our effective tax rate going forward to remain in the mid-20s.

Net Income

During the 2013 second quarter we concluded that an approximate $4.3 million liability we recorded during 2006 upon the purchase of Sunrise relating to a terminated coal contract was no longer required. The amount had no effect on cash flows.

18

The table below reflects net income and net income per share excluding the $4.3 million for the nine months ended September 30, 2013:

Net income excluding the $4.3 million liability extinguishment	$	15,281
Net income per share excluding the $4.3 million liability extinguishment
Basic and diluted	$	0.53

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 1,100 barrels of oil. Oil and liquids make up 98% of their oil and gas revenue.

The first nine months of 2013 may or may not be indicative for all of 2013 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 in excess of $95/barrel. Savoy does not have any oil price hedges in place.

The table below illustrates the growth in Savoy (to the 100%) comparing the first nine months of 2013 to 2012 (financial statement data in thousands):

19

	2013		2012
Revenue:
Oil	$	24,081	$	19,730
NGLs (natural gas liquids)		658		679
Natgas		549		267
Contract drilling		3,168		3,552
Other		988		357
Total revenue		29,444		24,585
Costs and expenses:
LOE (lease operating expenses)		4,060		3,451
Contract drilling costs		2,296		2,578
DD&A (depreciation, depletion & amortization)		4,634		2,843
G&G (geological and geophysical) costs		2,278		2,689
Dry hole costs		1,408		2,527
Impairment of unproved properties		3,472		2,950
Other exploration costs		275		195
G&A (general & administrative)		1,048		698
Total expenses		19,471		17,931
Net income	$	9,973	$	6,654
The information below is not in thousands:
Oil production – barrels		253,070		218,350
NGLs production – barrels		17,357		13,995
Natgas production – Mcf		156,328		97,240
Average oil prices/barrel for the nine months	$	95.18	$	90.36
Average NGL prices/barrel for the nine months	$	37.90	$	48.52
Average natgas prices/Mcf for the nine months	$	3.52	$	2.75

New Accounting Pronouncements

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

ITEM 3.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

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

20

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, 2013 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.

ITEM 5.  OTHER INFORMATION

2014 Annual Meeting

Our annual shareholders’ meeting is scheduled for Thursday morning, April 24, 2014 in New York City at a yet to be determined location near mid-town Manhattan.

Yorktown Distribution

As previously disclosed, Yorktown Energy Partners and its affiliated partnerships (Yorktown) have made eight distributions to their numerous partners totaling 6 million (750,000 per distribution) shares since May 2011.  In the past these distributions were made soon after we filed our Form 10-Qs and Form 10-Ks.  Currently they own 9.7 million shares of our stock representing about 34% of total shares outstanding.

We have been informed by Yorktown that they have not made any determination as to the disposition of their remaining Hallador stock. 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 such distributions will improve our liquidity and float.

If and when we are advised of another Yorktown distribution, we will timely report such on a Form 8-K.

21

ITEM 6.  EXHIBITS

15	Letter Regarding Unaudited Interim Financial Information
31	SOX 302 Certifications
32	SOX 906 Certification
101	Interactive Files

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 5, 2013	/s/W. Anderson Bishop
	W. Anderson Bishop, CFO and CAO

22

EX-15

Exhibit 15    Letter Regarding Unaudited Interim Financial Information

Hallador Energy Company

We have reviewed, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the unaudited interim financial information of Hallador Energy Company for the periods ended September 30, 2013, and 2012, as indicated in our report dated November 5, 2013; because we did not perform an audit, we expressed no opinion on that information.

We are aware that our report referred to above, which is included in your Form 10-Q for the quarter ended September 30, 2013, is incorporated by reference in Registration Statement Nos. 333-163431 and 333-171778 of Hallador Energy Company on Form S-8.

We also are aware that the aforementioned report, pursuant to Rule 436(c) under the Securities Act of 1933, is not considered a part of the Registration Statement prepared or certified by an accountant or a report prepared or certified by an accountant within the meaning of Sections 7 and 11 of that Act.

/s/ EKS&H LLLP

November 5, 2013

Denver, Colorado

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 5, 2013		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 5, 2013		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, 2013, 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 5, 2013	By:	/s/ Victor P. Stabio Victor  P. Stabio, CEO
		/s/ W. Anderson Bishop W. Anderson Bishop, CFO

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 no MSHA citations.

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 2013. 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.

Carlisle Mine

	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	2	0	0	0	0	$6.0
February	5	0	0	0	0	10.4
March	2	0	0	0	0	3.5
April	0	0	0	0	0	2.2
May	2	0	0	0	0	4.5
June	1	0	0	0	0	3.5
July	3	0	0	0	0	5.4
August	7	0	0	0	0	11.5
September	1	0	0	0	0	1.7

Ace-in-the-Hole Mine

	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	0
February	0	0	0	0	0	0
March	0	0	0	0	0	0
April	0	0	0	0	0	0
May	1	0	1	0	0	$2.6
June	0	0	0	0	0	0
July	0	0	0	0	0	0
August	0	0	0	0	0	0
September	0	0	0	0	0	0

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(5) Investment in Sunrise Energy (Tables)

9 Months Ended

Sep. 30, 2013

Equity Investment In SELLC [Abstract]

Sunrise Condensed Balance Sheet

	2013
Current assets	$	2,849
Oil and gas properties, net		6,777
	$	9,626
Total liabilities	$	661
Members' capital		8,965
	$	9,626

Sunrise Condensed Statement of Operations

	2013			2012
Revenue	$	2,551		$	1,671
Expenses		(1,513	)		(1,573	)
Net  income	$	1,038		$	98

XML

Consolidated Statement of Comprehensive Income (USD $) In Thousands, except Per Share data, unless otherwise specified	3 Months Ended				9 Months Ended
	Sep. 30, 2013		Sep. 30, 2012		Sep. 30, 2013		Sep. 30, 2012
Revenue:
Coal sales	$ 34,985		$ 36,152		$ 103,129		$ 98,259
Equity income - Savoy	2,048		501		4,495		2,999
Equity income - Sunrise Energy	172		17		519		49
Liability extinguishment (Note 9)					4,300
Other (Note 6)	455		444		3,615		4,938
	37,660		37,114		116,058		106,245
Costs and expenses:
Operating costs and expenses	23,407		20,745		68,959		57,994
DD&A	4,772		4,145		13,982		11,895
Coal exploration costs	739		778		1,725		1,900
SG&A	1,936		1,947		5,586		5,607
Interest	308		229		1,131		757
	31,162		27,844		91,383		78,153
Income before income taxes	6,498		9,270		24,675		28,092
Less income taxes:
Current	(609)		1,731		1,297		5,607
Deferred	2,277		1,349		4,915		3,684
	1,668		3,080		6,212		9,291
Net income (1) (2)	$ 4,830	[1],[2]	$ 6,190	[1],[2]	$ 18,463	[1],[2]	$ 18,801	[1],[2]
Net income per share:
Basic (in Dollars per share)	$ 0.17		$ 0.22		$ 0.65		$ 0.66
Diluted (in Dollars per share)	$ 0.17		$ 0.22		$ 0.64		$ 0.65
Weighted average shares outstanding:
Basic (in Shares)	28,607		28,324		28,580		28,316
Diluted (in Shares)	28,838		28,760		28,851		28,791

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

[2] (2) See MD&A - page 19, for pro-forma amounts excluding the $4.3 million in liability extinguishment.

XML

(4) Investment in Savoy (Savoy Energy)

9 Months Ended

Sep. 30, 2013

Savoy Energy

(4) Investment in Savoy [Line Items]

Equity Investment In SELLP

(4)  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% is a condensed balance sheet at September 30, 2013, and a condensed statement of operations for the nine months ended September 30, 2013 and 2012.

Condensed Balance Sheet

	2013
Current assets	$	25,651
Oil and gas properties, net		24,156
	$	49,807
Total liabilities	$	14,354
Partners' capital		35,453
	$	49,807

Condensed Statement of Operations

	2013			2012
Revenue	$	29,444		$	24,585
Expenses		(19,471	)		(17,931	)
Net  income	$	9,973		$	6,654

XML

(4) Investment in Savoy (Details) - Condensed Statement of Operations (Equity Investment in Savoy, USD $) In Thousands, unless otherwise specified	9 Months Ended
	Sep. 30, 2013	Sep. 30, 2012
Equity Investment in Savoy
(4) Investment in Savoy (Details) - Condensed Statement of Operations [Line Items]
Revenue	$ 29,444	$ 24,585
Expenses	(19,471)	(17,931)
Net income	$ 9,973	$ 6,654

XML

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

9 Months Ended

Sep. 30, 2013

Disclosure Text Block Supplement [Abstract]

Schedule of Other Assets, Noncurrent [Table Text Block]

	September 30, 2013			December 31, 2012
Long-term assets:
Advance coal royalties		$	3,936	$	3,324
Deferred financing costs, net			1,270		1,494
Marketable equity securities available for sale, at fair value (restricted)*			3,601		3,548
Ohio River Terminal (see Note 8)			2,881
Miscellaneous			3,503		2,941
		$	15,191	$	11,307

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

	Nine months ended September 30,
		2013		2012
Other income:
MSHA reimbursements*		$	2,053	$	4,236
Coal storage fees			964		127
Miscellaneous			598		575
		$	3,615	$	4,938

XML

(5) Investment in Sunrise Energy (Details) - Condensed Statement of Operations (Sunrise Energy, USD $) In Thousands, unless otherwise specified	9 Months Ended
	Sep. 30, 2013	Sep. 30, 2012
Sunrise Energy
(5) Investment in Sunrise Energy (Details) - Condensed Statement of Operations [Line Items]
Revenue	$ 2,551	$ 1,671
Expenses	(1,513)	(1,573)
Net income	$ 1,038	$ 98

XML

(5) Investment in Sunrise Energy (Details) - Condensed Balance Sheet (Sunrise Energy, USD $) In Thousands, unless otherwise specified	Sep. 30, 2013
Sunrise Energy
(5) Investment in Sunrise Energy (Details) - Condensed Balance Sheet [Line Items]
Current assets	$ 2,849
Oil and gas properties, net	6,777
	9,626
Total liabilities	661
Members' capital	8,965
	$ 9,626

XML

(8) Ohio River Terminal (Details) (USD $) In Thousands, unless otherwise specified	Sep. 30, 2013	May 31, 2013 acre mi
Ohio River Terminal [Abstract]
Real Estate Investment Property, at Cost (in Dollars)	$ 2,881	$ 2,800
Area of Real Estate Property (in Acres)		17
Ohio River Terminal Mile Point Location		743.8

XML

(5) Investment in Sunrise Energy (Details)	Sep. 30, 2013	Dec. 31, 2010
Equity Investment In SELLC [Abstract]
Equity Method Investment, Ownership Percentage	50.00%	50.00%
Percentage Condensed Balance Sheet Sunrise Energy	100.00%

XML

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, 2013 at Dec. 31, 2012	$ 285	$ 86,576	$ 75,118	$ 30	$ 162,009
Balance, January 1, 2013 (in Shares) at Dec. 31, 2012	28,529
Stock-based compensation		1,724			1,724
Stock-based compensation (in Shares)	13
Other	1	(376)		193	(182)
Other (in Shares)	76
Dividends			(2,317)		(2,317)
Net income			18,463		18,463	[1],[2]
Balance, September 30, 2013 at Sep. 30, 2013	$ 286	$ 87,924	$ 91,264	$ 223	$ 179,697
Balance, September 30, 2013 (in Shares) at Sep. 30, 2013	28,618

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

[2] (2) See MD&A - page 19, for pro-forma amounts excluding the $4.3 million in liability extinguishment.

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(2) Bill and Hold

9 Months Ended

Sep. 30, 2013

Policy Text Block [Abstract]

Revenue Recognition, Bill and Hold Arrangements [Policy Text Block]

(2)   Bill and Hold

Early 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. During the 2013 second quarter we increased the storage agreement by 50,000 tons for both customers. 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. During the nine months ended September 30, 2013, 145,000 tons were placed in storage for the first customer and nil for the second customer. We have recognized $7.3 million in revenue from these “bill and hold” arrangements for the nine months ended September 30, 2013. No tons were placed in storage during the 2013 third quarter. As of September 30, 2013, we have in storage 300,000 tons for the first customer and 250,000 tons for the second. There were no changes in payment terms with our customers and, as of October 31, 2013, all receivables outstanding from these two customers at September 30, 2013 had been collected.

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(5) Investment in Sunrise Energy (Sunrise Energy)

9 Months Ended

Sep. 30, 2013

Sunrise Energy

(5) Investment in Sunrise Energy [Line Items]

Equity Investment In SELLC

(5)  Investment in Sunrise Energy

We own a 50% interest in Sunrise Energy, LLC which owns gas reserves in gathering equipment with plans to develop and operate such reserves. 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% is a condensed balance sheet at September 30, 2013, and a condensed statement of operations for the nine months ended September 30, 2013 and 2012.

Condensed Balance Sheet

	2013
Current assets	$	2,849
Oil and gas properties, net		6,777
	$	9,626
Total liabilities	$	661
Members' capital		8,965
	$	9,626

Condensed Statement of Operations

	2013			2012
Revenue	$	2,551		$	1,671
Expenses		(1,513	)		(1,573	)
Net  income	$	1,038		$	98

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(3) Bank Debt

9 Months Ended

Sep. 30, 2013

Debt Disclosure [Abstract]

Debt Disclosure [Text Block]

(3) Bank Debt

During October 2012, Sunrise, 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 which were deferred and are being amortized over five years.  Outstanding debt at September 30, 2013 was $11.4 million.

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 (which currently it is), 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 maximum that we can currently borrow is an additional $120 million due to our current covenants. 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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(6) Other Long-Term Assets and Other Income (Details) - Other Long-Term Assets (USD $) In Thousands, unless otherwise specified	Sep. 30, 2013		May 31, 2013	Dec. 31, 2012
Long-term assets:
Advance coal royalties	$ 3,936			$ 3,324
Deferred financing costs, net	1,270			1,494
Marketable equity securities available for sale, at fair value (restricted)*	3,601	[1]		3,548	[1]
Ohio River Terminal (see Note 8)	2,881		2,800
Miscellaneous	3,503			2,941
	$ 15,191			$ 11,307

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

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(9) Liability Extinguishment (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended	9 Months Ended
	Jun. 30, 2013	Sep. 30, 2013
Schedule Extinguishment Debt Text [Abstract]
Extinguishment of Debt, Amount	$ 4,300	$ (4,300)

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Consolidated Balance Sheet (Parentheticals) (USD $) In Thousands, except Per Share data, unless otherwise specified	Sep. 30, 2013	Dec. 31, 2012
Preferred Stock, authorized	10,000	10,000
Preferred Stock, issued	0	0
Preferred Stock,par value (in Dollars per share)	$ 0.10	$ 0.10
Common stock, authorized	100,000	100,000
Common stock par value (in Dollars per share)	$ 0.01	$ 0.01
Common stock, shares outstanding	28,618	28,529

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(8) Ohio River Terminal

9 Months Ended

Sep. 30, 2013

Ohio River Terminal [Abstract]

Ohio River Terminal [Text Block]

(8)  Ohio River Terminal

On May 31, 2013 we purchased for $2.8 million a multi-commodity truck/barge terminal. Over 17 acres of secured area is available. The terminal is at mile point 743.8 on the Indiana bank of the Ohio River near the William Natcher Bridge between Rockport and Grandview, Indiana.  Currently the dock will handle third party commodities.  In the long term, we plan to ship coal through the dock.  The terminal is in close proximity to the NS railroad, the CSX railroad and American Electric Power's Rockport generating power plant. We do not expect revenue from this asset until late 2014.

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Consolidated Statement of Cash Flows (USD $) In Thousands, unless otherwise specified	9 Months Ended
	Sep. 30, 2013	Sep. 30, 2012
Operating activities:
Cash provided by operating activities	$ 20,310	$ 29,552
Investing activities:
Capital expenditures for coal properties	(23,558)	(9,222)
Ohio River Terminal	(2,866)
Purchase of marketable securities		(1,291)
Other	256	(423)
Cash used in investing activities	(26,168)	(10,936)
Financing activities:
Payments to bank		(7,500)
Dividends	(2,317)	(18,721)
Other		276
Cash used in financing activities	(2,317)	(25,945)
Decrease in cash and cash equivalents	(8,175)	(7,329)
Cash and cash equivalents, beginning of period	21,888	37,542
Cash and cash equivalents, end of period	$ 13,713	$ 30,213

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Consolidated Balance Sheet (USD $) In Thousands, unless otherwise specified	Sep. 30, 2013	Dec. 31, 2012
Current assets:
Cash and cash equivalents	$ 13,713	$ 21,888
Accounts receivable	9,904	8,127
Prepaid income taxes	3,591
Coal inventory	4,086	2,342
Parts and supply inventory	2,645	2,264
Other	403	242
Total current assets	34,342	34,863
Coal properties, at cost:
Land and mineral rights	23,315	22,705
Buildings and equipment	144,304	131,566
Mine development	81,998	71,046
	249,617	225,317
Less - accumulated DD&A	(72,418)	(58,479)
	177,199	166,838
Investment in Savoy	15,401	12,230
Investment in Sunrise Energy	4,488	3,969
Other assets (Note 6)	15,191	11,307
	246,621	229,207
Current liabilities:
Accounts payable and accrued liabilities	10,111	9,386
Income taxes		1,660
Total current liabilities	10,111	11,046
Long-term liabilities:
Bank debt	11,400	11,400
Deferred income taxes	40,778	35,884
Asset retirement obligations	2,709	2,573
Other	1,926	6,295
Total long-term liabilities	56,813	56,152
Total liabilities	66,924	67,198
Stockholders' equity:
Preferred Stock, $.10 par value, 10,000 shares authorized; none issued
Common stock, $.01 par value, 100,000 shares authorized; 28,618 and 28,529 shares outstanding, respectively	286	285
Additional paid-in capital	87,924	86,576
Retained earnings	91,264	75,118
Accumulated other comprehensive income	223	30
Total stockholders’ equity	179,697	162,009
	$ 246,621	$ 229,207

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(6) Other Long-Term Assets and Other Income (Details) - Other Long-Term Income (USD $) In Thousands, unless otherwise specified	9 Months Ended
	Sep. 30, 2013		Sep. 30, 2012
Other income:
MSHA reimbursements*	$ 2,053	[1]	$ 4,236	[1]
Coal storage fees	964		127
Miscellaneous	598		575
	$ 3,615		$ 4,938

[1] *See "MSHA Reimbursements" on page 13.

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(4) Investment in Savoy (Details) - Condensed Balance Sheet (Equity Investment in Savoy, USD $) In Thousands, unless otherwise specified	Sep. 30, 2013
Equity Investment in Savoy
(4) Investment in Savoy (Details) - Condensed Balance Sheet [Line Items]
Current assets	$ 25,651
Oil and gas properties, net	24,156
	49,807
Total liabilities	14,354
Partners' capital	35,453
	$ 49,807

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(7) Self Insurance

9 Months Ended

Sep. 30, 2013

Self Insurance [Abstract]

Self Insurance

(7)  Self Insurance

We continue to self-insure on about $110 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 12 miles.

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(7) Self Insurance (Details) (USD $) In Millions, unless otherwise specified	Sep. 30, 2013
Self Insurance [Abstract]
Mining equipment at historical cost (in Dollars)	$ 110
Number of Mining Units	4
Georgraphic Spread of Mining Units	12

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(4) Investment in Savoy (Tables)

9 Months Ended

Sep. 30, 2013

Equity Investment In SELLP [Abstract]

Savoy Condensed Balance Sheet

	2013
Current assets	$	25,651
Oil and gas properties, net		24,156
	$	49,807
Total liabilities	$	14,354
Partners' capital		35,453
	$	49,807

Savoy Condensed Statement of Operations

	2013			2012
Revenue	$	29,444		$	24,585
Expenses		(19,471	)		(17,931	)
Net  income	$	9,973		$	6,654

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(6) Other Long-Term Assets and Other Income

9 Months Ended

Sep. 30, 2013

Disclosure Text Block Supplement [Abstract]

Investments and Other Noncurrent Assets [Text Block]

(6)  Other Long-Term Assets and Other Income

	September 30, 2013			December 31, 2012
Long-term assets:
Advance coal royalties		$	3,936	$	3,324
Deferred financing costs, net			1,270		1,494
Marketable equity securities available for sale, at fair value (restricted)*			3,601		3,548
Ohio River Terminal (see Note 8)			2,881
Miscellaneous			3,503		2,941
		$	15,191	$	11,307

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

	Nine months ended September 30,
		2013		2012
Other income:
MSHA reimbursements*		$	2,053	$	4,236
Coal storage fees			964		127
Miscellaneous			598		575
		$	3,615	$	4,938

*See “MSHA Reimbursements” on page 13.

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(1) General Business

9 Months Ended

Sep. 30, 2013

Disclosure Text Block [Abstract]

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, 2013 are not necessarily indicative of the results to be expected for future quarters or for the year ending December 31, 2013.  To maintain consistency and comparability, certain 2012 amounts have been reclassified to conform to the 2013 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 2012 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 steam coal from mines 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 natgas operations in the same vicinity as our coal mines.

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(1) General Business (Details)	Sep. 30, 2013	Dec. 31, 2010
Disclosure Text Block [Abstract]
Equity Interest in Savoy Energy LP	45.00%
Equity Method Investment, Ownership Percentage	50.00%	50.00%

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(9) Liability Extinguishment

9 Months Ended

Sep. 30, 2013

Schedule Extinguishment Debt Text [Abstract]

Schedule Extinguishment Debt Text

(9)  Liability Extinguishment

During the 2013 second quarter we concluded that an approximate $4.3 million liability we recorded during 2006 upon the purchase of Sunrise relating to a terminated coal contract was no longer required. The amount had no effect on cash flows.

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(4) Investment in Savoy (Details)	Sep. 30, 2013
Equity Investment In SELLP [Abstract]
Equity Interest in Savoy Energy LP	45.00%
Percentage of condensed balance sheet - Savoy Energy	100.00%

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(2) Bill and Hold (Details) (USD $) In Millions, unless otherwise specified	3 Months Ended	9 Months Ended	12 Months Ended		24 Months Ended
	Jun. 30, 2013 T	Sep. 30, 2013 T	Jun. 01, 2013	Apr. 02, 2013	Jun. 01, 2014 T	Apr. 01, 2014 T
Policy Text Block [Abstract]
Tons of Coal Agreed to Store Per Customer						250,000
Tons of Coal Agreed to Store Per Customer - Second Customer					250,000
Minimum Storage Period			1 year	1 year
Maximum Storage Period					2 years	2 years
Increase Decrease In Coal In Storage	50,000
Increase Decrease In Coal Stored - First Customer		145,000
Revenue from Bill and Hold (in Dollars)		$ 7.3
Tons of Coal Stored for First Customer at Reporting Date		300,000
Tons of Coal Stored for Second Customer at Reporting Date		250,000

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Document And Entity Information (USD $)	9 Months Ended
	Sep. 30, 2013	Jun. 30, 2013
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	28,618,150
Entity Public Float		$ 74,422,866
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, 2013
Document Fiscal Year Focus	2013
Document Fiscal Period Focus	Q3

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(3) Bank Debt (Details) (USD $) In Millions, unless otherwise specified	60 Months Ended
	Oct. 17, 2017	Oct. 17, 2017	Sep. 30, 2013
Debt Disclosure [Abstract]
Amortization of Deferred Loan Origination Fees, Net (in Dollars)		$ 1.5
Line of Credit Facility, Amount Outstanding (in Dollars)			11.4
Line of Credit Facility, Maximum Borrowing Capacity (in Dollars)	165	165
Leverage Ration Hurdle	2.00%
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%
Line of Credit Facility, Remaining Borrowing Capacity (in Dollars)			$ 120