Notes to Condensed Consolidated Financial Statements
(unaudited)
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 condensed consolidated 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 three and nine months ended September 30, 2020, are not necessarily indicative of the results to be expected for future quarters or for the year ending December 31, 2020. To maintain consistency and comparability, certain 2019 amounts have been reclassified to conform to the 2020 presentation, with no impact to cash provided by operations activities or net income (loss).
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 2019 Annual Report on Form 10-K. This quarterly report should be read in conjunction with such Annual Report on Form 10-K.
The condensed consolidated financial statements include the accounts of Hallador Energy Company (hereinafter known as “we, us, or our”) and its wholly-owned subsidiaries Sunrise Coal, LLC (Sunrise) and Hourglass Sands, LLC (Hourglass), and Sunrise’s wholly-owned subsidiaries. All significant intercompany accounts and transactions have been eliminated. Sunrise is engaged in the production of steam coal from mines located in western Indiana.
New Accounting Standards Issued and Adopted
In August 2018, the FASB issued ASU 2018-13, Fair Value Measurement (Topic 820), Disclosure Framework-Changes to the Disclosure Requirements for Fair Value Measurement (ASU 2018-13). The amendments in this update modify the disclosure requirements for fair value measurements. For public business entities, the standard is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2019. We adopted ASU 2018-13 effective January 1, 2020. Adoption of ASU 2018-13 did not have a material impact on the Company’s condensed consolidated financial statements.
Subsequent Events
We have evaluated all subsequent events through the date the financial statements were issued. No material recognized or non-recognizable subsequent events were identified.
(2)
|
LONG-LIVED ASSET IMPAIRMENTS
|
Long-lived assets are reviewed for impairment whenever events or changes in circumstance indicate that the carrying amount of the assets may not be recoverable. The impact of COVID-19 is being monitored closely, but for the quarter ended September 30, 2020, there were no material COVID-19 related impairment charges recorded for long-lived assets.
Carlisle Mine
We recorded an impairment of $65.7 million as of December 31, 2019 due to our decision to idle the Carlisle Mine during Q4 2019. The impairment included buildings, land, rail, mine development, equipment, and advanced royalties. Buildings, land, and rail were impaired to their estimated salvage value. The remaining salvage value of land and buildings at the Carlisle Mine is estimated at $1.8 million as of September 30, 2020 and December 31, 2019.
Subsequent to year-end during late Q1 2020, we determined that it was economically prudent to permanently close the Carlisle Mine. Equipment totaling $23 million is being redeployed and will be utilized at the Oaktown mines. No additional impairment costs were recorded during Q1 2020 as a result of the decision to close the Carlisle Mine. Exit and disposal costs to close the mine were $1.1 million, which were recorded as current period costs in Q1 and Q2 of 2020.
Bulldog Reserves
As a result of the Carlisle Mine impairment, we determined that an impairment of the Bulldog Reserves was also necessary. With the closure of the Carlisle Mine, it became apparent that the likelihood of construction and opening of Bulldog was reduced. Based on our review, we recorded an impairment of $9.2 million as of December 31, 2019, which included land and advanced royalties, and was a complete impairment of all assets.
Hourglass Sands
We recorded an impairment of $2.9 million as of December 31, 2019, due to softness in the pricing of the frac sand market. The impairment included inventory, land, mine development, buildings and equipment and was determined using a market approach. The remaining fair market value of inventory, equipment, and buildings at Hourglass Sands was $1.9 million as of December 31, 2019. Due to the continued regression of the frac sand market, in August 2020 we ceased operations of the plant and recorded an impairment of $1.8 million for the quarter ended September 30, 2020, which included the remaining inventory and buildings and which was determined using a market approach.
Inventory is valued at lower of average cost or net realizable value (NRV). As of September 30, 2020, and December 31, 2019, coal inventory includes NRV adjustments of $0.5 million and $2.0 million, respectively.
(4)
|
OTHER LONG-TERM ASSETS (in thousands)
|
|
|
September 30,
|
|
|
December 31,
|
|
|
|
2020
|
|
|
2019
|
|
Advanced coal royalties
|
|
$
|
6,453
|
|
|
$
|
6,105
|
|
Marketable equity securities available for sale, at fair value (restricted)*
|
|
|
—
|
|
|
|
2,296
|
|
Other
|
|
|
1,837
|
|
|
|
1,923
|
|
Total other assets
|
|
$
|
8,290
|
|
|
$
|
10,324
|
|
* Held by Sunrise Indemnity, Inc., our wholly-owned captive insurance company.
On April 15, 2020, we executed an amendment to our credit agreement with PNC, administrative agent for our lenders. The primary purpose of the amendment was to modify the allowable leverage ratio over the term of the loan to increase available liquidity. As a result of the amendment, our maximum annual capital expenditures are limited to $30 million for 2020, and our dividend is suspended until our leverage ratio falls below 2.0X.
In the first nine months of 2020, we reduced our bank debt by $33 million, which as of September 30, 2020 was $147 million. Bank debt is comprised of term debt ($77 million as of September 30, 2020) and a $120 million revolver ($70 million borrowed as of September 30, 2020). The term debt amortization concludes with the final payment in March 2023. The revolver matures September 2023. Our debt is recorded at amortized cost, which approximates fair value due to the variable interest rates in the agreement and is collateralized primarily by our assets.
Liquidity
As of September 30, 2020, we had additional borrowing capacity of $47.4 million and total liquidity of $52.7 million. Liquidity consists of our additional borrowing capacity and cash and cash equivalents.
Fees
Unamortized bank fees and other costs incurred in connection with the initial facility and subsequent amendments totaled $7.9 million as of our amendment in April 2020. These costs were deferred and are being amortized over the term of the loan. Unamortized costs as of September 30, 2020, and December 31, 2019, were $6.7 million and $6.5 million, respectively. Additional costs incurred with the April 15 amendment were $1.9 million.
Bank debt, less debt issuance costs, is presented below (in thousands):
|
|
September 30,
|
|
|
December 31,
|
|
|
|
2020
|
|
|
2019
|
|
Current bank debt
|
|
$
|
36,750
|
|
|
$
|
34,912
|
|
Less unamortized debt issuance costs
|
|
|
(2,439
|
)
|
|
|
(1,868
|
)
|
Net current portion
|
|
$
|
34,311
|
|
|
$
|
33,044
|
|
|
|
|
|
|
|
|
|
|
Long-term bank debt
|
|
$
|
110,175
|
|
|
$
|
145,238
|
|
Less unamortized debt issuance costs
|
|
|
(4,290
|
)
|
|
|
(4,644
|
)
|
Net long-term portion
|
|
$
|
105,885
|
|
|
$
|
140,594
|
|
|
|
|
|
|
|
|
|
|
Total bank debt
|
|
$
|
146,925
|
|
|
$
|
180,150
|
|
Less total unamortized debt issuance costs
|
|
|
(6,729
|
)
|
|
|
(6,512
|
)
|
Net bank debt
|
|
$
|
140,196
|
|
|
$
|
173,638
|
|
Covenants
The credit facility includes a Maximum Leverage Ratio (consolidated funded debt/trailing twelve months adjusted EBITDA), calculated as of the end of each fiscal quarter for the trailing twelve months, not to exceed the amounts below:
Fiscal Periods Ending
|
|
Ratio
|
|
September 30, 2020 and December 31, 2020
|
|
3.50 to 1.00
|
|
March 31, 2021 and June 30, 2021
|
|
3.25 to 1.00
|
|
September 30, 2021 and December 31, 2021
|
|
3.00 to 1.00
|
|
March 31, 2022 and each fiscal quarter thereafter
|
|
2.50 to 1.00
|
|
As of September 30, 2020, our Leverage Ratio of 2.46 was in compliance with the requirements of the credit agreement.
The credit facility also requires a Minimum Debt Service Coverage Ratio (consolidated adjusted EBITDA / annual debt service) calculated as of the end of each fiscal quarter for the trailing twelve months of 1.05 to 1.00 through December 31, 2021, at which time it increases to 1.25 to 1.00 through the maturity of the credit facility.
As of September 30, 2020, our Debt Service Coverage Ratio of 1.44 was in compliance with the requirements of the credit agreement.
Interest Rate
The interest rate on the facility ranges from LIBOR plus 2.75% to LIBOR plus 4.00%, depending on our Leverage Ratio, with a LIBOR floor of 0.50%. We entered into swap agreements to fix the LIBOR component of the interest rate at 2.92% on the declining term loan balance and on $53 million of the revolver. At September 30, 2020, we are paying LIBOR at the swap rate of 2.92% plus 3.50% for a total interest rate of 6.42% on the hedged amount ($130 million) and 4% on the remainder ($17 million).
Paycheck Protection Program
On April 16, 2020, we entered into an unsecured promissory note in the amount of $10 million under the Paycheck Protection Program (the “PPP Note”). The Paycheck Protection Program was established under the Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”) and is administered by the U.S. Small Business Administration. The PPP note was funded through First Financial Bank, N.A. (the “Lender”).
The annual interest rate on the PPP Note is 1.00%. Monthly principal and interest payments were originally deferred for six months after the date of the loan, but the deferral has been extended to 2021. The PPP Note contains customary events of default relating to, among other things, payment defaults, making materially false and misleading representations to the SBA or Lender, or breaching the terms of the Loan Documents. The occurrence of an event of default may result in the repayment of all amounts outstanding, collection of all amounts owing from the Company, or filing suit and obtaining a judgment against the Company.
Under the terms of the CARES Act, PPP loan recipients can apply for and be granted forgiveness for all or a portion of the loan granted under the PPP. Such forgiveness will be determined, subject to limitations, based on the use of loan proceeds for payment of payroll costs and any covered payments of mortgage interest, rent, and utilities. In the event the PPP Loan, or any portion thereof, is forgiven pursuant to the PPP, the amount forgiven is applied to outstanding principal. The Company used all proceeds from the PPP Loan to maintain payroll and utility payments.
At September 30, 2020, the PPP loan totaling $10 million is presented as current and long-term liabilities on the condensed consolidated balance sheets based upon the schedule of repayments and excluding any possible forgiveness of the loan. See Part II Item 1A.Risk Factors of this Quarterly Report on Form 10-Q for discussion of significant risk factors related to our participation in the Paycheck Protection Program.
(6)
|
ACCOUNTS PAYABLE AND ACCRUED LIABILITIES (in thousands)
|
|
|
September 30,
|
|
|
December 31,
|
|
|
|
2020
|
|
|
2019
|
|
Accounts payable
|
|
$
|
14,223
|
|
|
$
|
16,115
|
|
Accrued property taxes
|
|
|
2,898
|
|
|
|
2,835
|
|
Accrued payroll
|
|
|
3,030
|
|
|
|
2,151
|
|
Workers' compensation reserve
|
|
|
3,824
|
|
|
|
3,446
|
|
Group health insurance
|
|
|
1,800
|
|
|
|
2,500
|
|
Fair value of interest rate swaps
|
|
|
3,021
|
|
|
|
1,714
|
|
Other
|
|
|
4,730
|
|
|
|
3,039
|
|
Total accounts payable and accrued liabilities
|
|
$
|
33,526
|
|
|
$
|
31,800
|
|
Revenue from Contracts with Customers
We account for a contract with a customer when the parties have approved the contract and are committed to performing their respective obligations, the rights of each party are identified, payment terms are identified, the contract has commercial substance, and collectability of consideration is probable. We recognize revenue when we satisfy a performance obligation by transferring control of a good or service to a customer.
Our revenue is derived from sales to customers of coal produced at our facilities. Our customers typically purchase coal directly from our mine sites or our Princeton Loop, where the sale occurs and where title, risk of loss, and control pass to the customer at that point. Our customers arrange for and bear the costs of transporting their coal from our mines to their plants or other specified discharge points. Nearly all our customers are domestic utility companies. Our coal sales agreements with our customers are fixed-priced, or include price re-openers, fixed-volume supply contracts. Price re-opener and index provisions may allow either party to commence a renegotiation of the contract price at a pre-determined time. Price re-opener provisions require us to negotiate a new price, sometimes within specified ranges of prices. The terms of our coal sales agreements result from competitive bidding and extensive negotiations with customers. Consequently, the terms of these contracts vary by customer.
Coal sales agreements will typically contain coal quality specifications, including BTUs, ash, moisture, and sulfur content among other qualities. Price adjustments are made and billed in the month the coal sale was recognized based on quality standards that are specified in the coal sales agreement and can result in either increases or decreases in the value of the coal shipped.
Disaggregation of Revenue
Revenue is disaggregated by primary geographic markets, as we believe this best depicts how the nature, amount, timing, and uncertainty of our revenue and cash flows are affected by economic factors. 75% of our coal revenue for the three and nine months ended September 30, 2020, and 67% and 69% for three and nine months ended September 30, 2019, respectively, was sold to customers in the State of Indiana with the remainder sold to customers in Florida, Georgia, North Carolina, Kentucky, Tennessee, and South Carolina.
Performance Obligations
A performance obligation is a promise in a contract with a customer to provide distinct goods or services. Performance obligations are the unit of account for purposes of applying the revenue recognition standard and therefore determine when and how revenue is recognized. In most of our contracts, the customer contracts with us to provide coal that meets certain quality criteria. We consider each ton of coal a separate performance obligation and allocate the transaction price based on the base price per the contract, increased or decreased for quality adjustments.
We recognize revenue at a point in time, as the customer does not have control over the asset at any point during the fulfillment of the contract. For substantially all of our customers, this is supported by the fact that title and risk of loss transfer to the customer upon loading of the truck or railcar at the mine. This is also the point at which physical possession of the coal transfers to the customer, as well as the right to receive substantially all benefits and the risk of loss in ownership of the coal.
We have remaining performance obligations relating to fixed priced contracts of approximately $494 million, which represent the average fixed prices on our committed contracts as of September 30, 2020. We expect to recognize approximately 57% of this revenue through 2021, with the remainder recognized thereafter.
We have remaining performance obligations relating to contracts with price reopeners of approximately $237 million, which represents our estimate of the expected re-opener price on committed contracts as of September 30, 2020. We expect to recognize all of this revenue from 2022-2027.
The tons used to determine the remaining performance obligations are subject to adjustment in instances of force majeure and exercise of customer options to either take additional tons or reduce tonnage if such option exists in the customer contract.
Contract Balances
Under ASC 606, the timing of when a performance obligation is satisfied can affect the presentation of accounts receivable, contract assets, and contract liabilities. The main distinction between accounts receivable and contract assets is whether consideration is conditional on something other than the passage of time. A receivable is an entity’s right to consideration that is unconditional. Under the typical payment terms of our contracts with customers, the customer pays us a base price for the coal, increased or decreased for any quality adjustments. Amounts billed and due are recorded as trade accounts receivable and included in accounts receivable in our condensed consolidated balance sheets. We do not currently have any contracts in place where we would transfer coal in advance of knowing the final price of the coal sold, and thus do not have any contract assets recorded. Contract liabilities arise when consideration is received in advance of performance. This deferred revenue is included in accounts payable and accrued liabilities in our condensed consolidated balance sheets when consideration is received, and revenue is not recognized until the performance obligation is satisfied. We are rarely paid in advance of performance, but we currently are carrying $0.4 million in deferred revenue recorded in our condensed consolidated balance sheets as of September 30, 2020.
(8)
|
OTHER OPERATING INCOME (in thousands)
|
|
|
Three Months Ended September 30,
|
|
|
Nine Months Ended September 30,
|
|
|
|
2020
|
|
|
2019
|
|
|
2020
|
|
|
2019
|
|
Equity income (loss) - Sunrise Energy
|
|
$
|
(119
|
)
|
|
$
|
(184
|
)
|
|
$
|
1,167
|
|
|
$
|
(350
|
)
|
Government imposition reimbursements
|
|
|
100
|
|
|
|
150
|
|
|
|
300
|
|
|
|
450
|
|
Gain on sale of royalty interests in oil properties
|
|
|
|
|
|
|
—
|
|
|
|
—
|
|
|
|
2,949
|
|
Coal storage
|
|
|
127
|
|
|
|
—
|
|
|
|
211
|
|
|
|
—
|
|
Miscellaneous
|
|
|
266
|
|
|
|
247
|
|
|
|
910
|
|
|
|
2,439
|
|
|
|
$
|
374
|
|
|
$
|
213
|
|
|
$
|
2,588
|
|
|
$
|
5,488
|
|
For the three and nine months ended September 30, 2020, the Company utilized a discrete period method to calculate taxes, as it does not believe the annual effective tax rate method represents a reliable estimate given the current uncertainty surrounding COVID-19. Our effective tax rate for the three and nine months ended September 30, 2020 and 2019 was ~69% and ~98%, respectively. Historically, our actual effective tax rates have differed from the statutory effective rate primarily due to the benefit received from statutory percentage depletion in excess of tax basis. The deduction for statutory percentage depletion does not necessarily change proportionately to changes in income (loss) before income taxes.
On March 27, 2020, President Trump signed into U.S. federal law the CARES Act, which is aimed at providing emergency assistance and health care for individuals, families, and businesses affected by the COVID-19 pandemic and generally supporting the U.S. economy. The CARES Act, among other things, includes provisions relating to refundable payroll tax credits, deferment of employer-side social security payments, net operating loss carryback periods, alternative minimum tax credit (“AMT”) refunds, modifications to the net interest deduction limitations and technical corrections to tax depreciation methods for qualified improvement property. In particular, the CARES Act, (i) eliminates the 80% of taxable income limitation by allowing corporate entities to fully utilize NOLs to offset taxable income in 2018, 2019, or 2020, (ii) increases the net interest expense deduction limit to 50% of adjusted taxable income from 30% for tax years beginning January 1, 2019 and 2020 and (iv) allows taxpayers with AMT credits to claim a refund in 2020 for the entire amount of the credit instead of recovering the credit through refunds over a period of years, as originally enacted by the Tax Cuts and Jobs Act in 2017.
(10)
|
STOCK COMPENSATION PLANS
|
Non-vested grants at December 31, 2019
|
|
|
488,500
|
|
Granted – average weighted share price on grant date was $0.90
|
|
|
40,000
|
|
Vested – average weighted share price on vesting date was $0.68
|
|
|
(72,000
|
)
|
Forfeited
|
|
|
(9,500
|
)
|
Non-vested grants at September 30, 2020
|
|
|
447,000
|
|
For the three and nine months ended September 30, 2020, our stock compensation was $0.3 million and $0.9 million, respectively. For the three and nine months ended September 30, 2019, our stock-based compensation was $0.4 million and $1.4 million, respectively.
Non-vested RSU grants will vest as follows:
Vesting Year
|
|
RSUs Vesting
|
|
2020
|
|
|
106,250
|
|
2021
|
|
|
306,750
|
|
2022
|
|
|
24,000
|
|
2023
|
|
|
10,000
|
|
|
|
|
447,000
|
|
The outstanding RSUs have a value of $0.3 million based on the September 30, 2020, closing stock price of $0.65.
At September 30, 2020 we had 1,379,650 RSUs available for future issuance.
We have operating leases for office space and processing facilities with remaining lease terms ranging from less than one year to approximately five years. As most of the leases do not provide an implicit rate, we calculated the right-of-use assets and lease liabilities using our secured incremental borrowing rate at the lease commencement date. We currently do not have any finance leases outstanding.
Information related to leases was as follows (in thousands):
|
|
Three Months Ended September 30,
|
|
|
Nine Months Ended September 30,
|
|
|
|
2020
|
|
|
2019
|
|
|
2020
|
|
|
2019
|
|
Operating lease information:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating cash outflows from operating leases
|
|
$
|
50
|
|
|
$
|
77
|
|
|
$
|
184
|
|
|
$
|
234
|
|
Weighted average remaining lease term in years
|
|
|
3.43
|
|
|
|
4.11
|
|
|
|
3.43
|
|
|
|
4.11
|
|
Weighted average discount rate
|
|
|
6.0
|
%
|
|
|
6.0
|
%
|
|
|
6.0
|
%
|
|
|
6.0
|
%
|
Future minimum lease payments under non-cancellable leases as of September 30, 2020 were as follows:
Year
|
|
Amount
|
|
|
|
(In thousands)
|
|
2020
|
|
$
|
50
|
|
2021
|
|
|
203
|
|
2022
|
|
|
206
|
|
2023
|
|
|
174
|
|
2024
|
|
|
60
|
|
Total minimum lease payments
|
|
$
|
693
|
|
Less imputed interest
|
|
|
(48
|
)
|
|
|
|
|
|
Total operating lease liabilities
|
|
$
|
645
|
|
|
|
|
|
|
As reflected on balance sheet:
|
|
|
|
|
Other long-term liabilities
|
|
$
|
645
|
|
At September 30, 2020, and December 31, 2019, we had approximately $645,000 and $800,000, respectively, of right-of-use operating lease assets recorded within “buildings and equipment” on the condensed consolidated balance sheets.
We self-insure our underground mining equipment. Such equipment is allocated among seven mining units dispersed over ten miles. The historical cost of such equipment was approximately $273 million as of September 30, 2020, and December 31, 2019.
Restricted cash of $4.2 million and $4.5 million as of September 30, 2020, and December 31, 2019, respectively, represents cash held and controlled by a third party and is restricted for future workers’ compensation claim payments.
(13)
|
INCOME (LOSS) PER SHARE
|
We compute income (loss) per share using the two-class method, which is an allocation formula that determines income (loss) per share for common stock and participating securities, consisting of outstanding RSUs.
The following table sets forth the computation of net income (loss) allocated to common shareholders (in thousands):
|
|
Three Months Ended September 30,
|
|
|
Nine Months Ended September 30,
|
|
|
|
2020
|
|
|
2019
|
|
|
2020
|
|
|
2019
|
|
Numerator:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss)
|
|
$
|
1,923
|
|
|
$
|
(3,723
|
)
|
|
$
|
(1,483
|
)
|
|
$
|
(67
|
)
|
Less loss (income) allocated to RSUs
|
|
|
(28
|
)
|
|
|
93
|
|
|
|
23
|
|
|
|
—
|
|
Net income (loss) allocated to common shareholders
|
|
$
|
1,895
|
|
|
$
|
(3,630
|
)
|
|
$
|
(1,460
|
)
|
|
$
|
(67
|
)
|
(14)
|
FAIR VALUE MEASUREMENTS
|
We account for certain assets and liabilities at fair value. The hierarchy below lists three levels of fair value based on the extent to which inputs used in measuring fair value are observable in the market. We categorize each of our fair value measurements in one of these three levels based on the lowest level input that is significant to the fair value measurement in its entirety. These levels are:
Level 1: Unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities. We consider active markets as those in which transactions for the assets or liabilities occur in sufficient frequency and volume to provide pricing information on an ongoing basis. Our marketable securities are Level 1 instruments.
Level 2: Quoted prices in markets that are not active, or inputs which are observable, either directly or indirectly, for substantially the full term of the asset or liability. We have no Level 2 instruments.
Level 3: Measured based on prices or valuation models that require inputs that are both significant to the fair value measurement and less observable from objective sources (i.e., supported by little or no market activity). Our Level 3 instruments are comprised of fuel hedges and interest rate swaps. The fair values of our hedges and swaps were estimated using discounted cash flow calculations based upon forward fuel prices and interest-rate yield curves. The notional values of our two interest rate swaps were $53 million and $86 million as of September 30, 2020, both with maturities of May 2022. Fuel hedges include 1.4 million gallons of diesel fuel that are subject to pricing fluctuations with a minimum of $1.79/gallon and a maximum of $2.00/gallon through December 2021. Although we utilize third-party broker quotes to assess the reasonableness of our prices and valuation, we do not have sufficient corroborating market evidence to support classifying these assets and liabilities as Level 2.
The following table summarizes our financial assets and liabilities measured on a recurring basis at fair value at September 30, 2020 and December 31, 2019 by the respective level of the fair value hierarchy (in thousands):
|
|
Level 1
|
|
|
Level 2
|
|
|
Level 3
|
|
|
Total
|
|
December 31, 2019
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fuel hedge
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
25
|
|
|
$
|
25
|
|
Marketable securities - restricted
|
|
|
2,296
|
|
|
|
—
|
|
|
|
—
|
|
|
|
2,296
|
|
|
|
$
|
2,296
|
|
|
$
|
—
|
|
|
$
|
25
|
|
|
$
|
2,321
|
|
Liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest rate swaps
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
3,825
|
|
|
$
|
3,825
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
September 30, 2020
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fuel hedge
|
|
|
—
|
|
|
|
—
|
|
|
|
750
|
|
|
|
750
|
|
Interest rate swaps
|
|
|
—
|
|
|
|
—
|
|
|
|
4,806
|
|
|
|
4,806
|
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
5,556
|
|
|
$
|
5,556
|
|
The table below highlights the change in fair value of the fuel hedges and interest rate swaps which are based on a discounted future cash flow model (in thousands):
Ending balance, December 31, 2019*
|
|
$
|
(3,800
|
)
|
Change in estimated fair value
|
|
|
(1,756
|
)
|
Ending balance, September 30, 2020*
|
|
$
|
(5,556
|
)
|
*Recorded in accounts payable and accrued liabilities and other liabilities in the Condensed Consolidated Balance Sheets.
(15)
|
EQUITY METHOD INVESTMENTS
|
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 oil, gas, and coal-bed methane gas reserves on or near our underground coal reserves. The carrying value of the investment included in our condensed consolidated balance sheets as of September 30, 2020, and December 31, 2019, was $3.3 million and $3.1 million, respectively.