Hallador Energy (HNRG) with an unusual options trade on 4/7 as 4500 December $6 puts sold to open $0.50 to buy 4500 of the $12/$20 call spreads at $1.70, net $1.20 debit for the bull spread with a $13.20 break-even and shares trading at $10.35. HNRG has quietly been strong holding at flat YTD and up 110% over the past year, so a name to take a closer look.

Hallador Energy Co. engages in the production of steam coal for the electric power generation industry in Indiana. The company owns the Oaktown Fuels Mine 1 and Oaktown Fuels Mine 2 that are underground mines located near Oaktown in Knox County, Indiana; the Freelandville surface mine located near Freelandville in Knox County, Indiana; and the Prosperity surface mine in the Illinois Basin located near Petersburg in Pike County, Indiana.

In October 2024, HNRG reached an important milestone in its transformation by signing a non-binding term sheet with a leading global datacenter developer to support their power and accredited capacity needs for over a decade.

HNRG has a $440M market cap and trades 11.7X Earnings, 23X EBITDA and 35.1X FCF with EBITDA seen rising 25-30% in FY25 and 235% in FY26. Hallador Power’s ability to generate up to 6 million megawatt hours annually at Merom continues to provide significant opportunities. The forward power price curves indicate that the margins earned on energy produced at Merom and the value of accredited capacity sales assigned to the plant continue to increase. Hallador is uniquely positioned to repurpose underperforming or retiring assets to meet rising demand from data centers and onshore industrial customers and is optimistic in its ability to sell energy at higher prices, in support of data center development or to traditional wholesale customers as indicated by the higher forward curve. For 2026, HNRG has secured 3.4 million megawatt hours of sales at an average price of $44.43 per megawatt hour.

Alliance Global started coverage in December at Buy with a $17 target calling it an underappreciated business and asset base with potential for long-term upside as the company has a non-binding term sheet to sell the majority of its power on a long-term contract to a data center developer.

HNRG is excited about its continued transformation from a commodities focused co-producer to an IPP, a strategy it believes will unlock expanding energy market margins, drive sustainable growth and enhance cash flow generation for shareholders.