HALLADOR ENERGY CO Leases Disclosure
(10) LEASES
The Company determines if an arrangement is an operating or finance lease at the inception of each contract. If the contract is classified as an operating lease, we record a right-of-use (“ROU”) asset and corresponding liability reflecting the total remaining present value of fixed lease payments over the expected term of the lease agreement. The expected term of the lease may include options to extend or terminate the lease when it is reasonably certain that we will exercise that option. If our lease does not provide an implicit rate in the contract, we use our incremental borrowing rate when calculating the present value.
We have operating leases for office space with remaining lease terms ranging from one month to approximately seven years. As most of the leases do not provide an implicit rate, we calculate the ROU assets and lease liabilities using our secured incremental borrowing rate at the lease commencement date. At December 31, 2025 and 2024, we had approximately $0.6 million and $0.7 million, respectively, of ROU operating lease assets recorded within buildings and equipment on the consolidated balance sheets. Operating lease expense associated with ROU assets is recognized on a monthly basis over the lease term in operating costs on the consolidated statements of operation.
We previously entered into finance lease arrangements that are accounted for as failed sale-leaseback transactions. Finance lease assets are included in finance lease right-of-use assets on the consolidated balance sheets and the associated finance lease liabilities are reflected within current portion of lease financing and long-term lease financing on the consolidated balance sheets as applicable. Depreciation on our finance lease assets was $2.0 million and $5.2 million for the years ended December 31, 2025 and 2024, respectively. Interest expense on our finance lease liability was $0.1 million during the year ended December 31, 2025. Imputed interest expense on our future remaining finance lease liability was $0.5 million for the year ended December 31, 2025. We had deferred financing fees of $0.1 million and $0.2 million at December 31, 2025 and 2024, respectively, in connection with entry into the finance leases.
Information related to leases was as follows as of December 31 (in thousands):
| December 31, |
| |||||
2025 | 2024 |
| |||||
Operating lease information: |
| |
| | |||
Operating cash outflows from operating leases | $ | 207 | $ | 169 | |||
Weighted average remaining lease term in years |
| 6.6 |
| 8.0 | |||
Weighted average discount rate |
| 8.2 | % |
| 9.5 | % | |
Finance lease information: |
| |
| | |||
Financing cash outflows from finance leases | $ | 6,994 | $ | 5,633 | |||
Proceeds from sale and leaseback arrangement |
| — |
| 5,134 | |||
Weighted average remaining lease term in years |
| 1.22 |
| 2.18 | |||
Weighted average discount rate |
| 9.0 | % |
| 9.0 | % | |
We recognized the following costs related to our leases in our consolidated balance sheets:
For the Year Ended December 31, | For the Year Ended December 31, | |||||||
| | 2025 | | 2024 | ||||
(In thousands) | ||||||||
Operating lease assets |
| $ | 646 | $ | 664 | |||
Operating lease liabilities: | |
|
| |
| | ||
Current operating lease liabilities |
| $ | 112 | $ | 99 | |||
Non-current operating lease liabilities |
| 534 | 565 | |||||
Total operating lease liability | $ | 646 | $ | 664 | ||||
Finance lease assets | Finance lease right-of-use assets | $ | 12,591 | $ | 13,034 | |||
Finance lease liabilities: | |
| |
| | |||
Current finance lease liabilities | Current portion of lease financing | $ | 7,411 | $ | 6,912 | |||
Non-current finance lease liabilities | Long-term lease financing | 1,338 | 8,749 | |||||
Total finance lease liabilities | $ | 8,749 | $ | 15,661 | ||||
Future minimum lease payments under non-cancellable leases as of December 31, 2025, were as follows:
| Operating Leases | | Finance Leases | |||
(In thousands) | ||||||
2026 | $ | 121 | $ | 7,972 | ||
2027 |
| 125 |
| 1,391 | ||
2028 |
| 129 |
| — | ||
2029 |
| 133 |
| — | ||
2030 |
| 137 |
| — | ||
Thereafter |
| 224 |
| — | ||
Total minimum lease payments | $ | 869 | $ | 9,363 | ||
Less imputed interest and deferred finance fees |
| (223) |
| (614) | ||
Total lease liability | $ | 646 | $ | 8,749 | ||
Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2025 | Mar 12, 2026 | Showing above |
| 2024 | Mar 17, 2025 | |
| 2023 | Mar 14, 2024 | |
About Leases Disclosures
Lease disclosures under ASC 842 provide a comprehensive view of a company's leased asset portfolio, including the split between operating and finance leases, discount rates used to present-value future payments, and the maturity schedule of lease obligations. This section reveals a significant source of off-balance-sheet commitments that were largely hidden before the current standard.
Key signals: the weighted-average discount rate affects the size of recorded lease liabilities — a higher rate reduces the reported obligation, so compare the chosen rate against the company's incremental borrowing rate. The operating versus finance lease mix affects both EBITDA and operating income presentation. Watch the maturity table for concentration risk: large payment cliffs in specific years may create cash flow pressure. Variable lease payments excluded from the liability measurement represent real obligations that do not appear on the balance sheet. Compare total lease costs against prior-year operating lease expense to assess the true economic burden.