Organization

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Hallador Energy Company (“Hallador” or the “Company”) is a vertically-integrated, independent power producer (“IPP”) and fuel company with operations primarily in Indiana. The Company operates across multiple stages of the energy supply chain, from accredited capacity and electricity to coal. The Company’s condensed consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles (“GAAP”). The condensed consolidated financial statements include the accounts of Hallador and our wholly owned subsidiaries, including our main operating subsidiaries, Hallador Power Company, LLC (“Hallador Power”) and Sunrise Coal, LLC (“Sunrise”) and their respective subsidiaries, as well as Hourglass Sands, LLC. Additionally, we hold 50% interests in Sunrise Energy, LLC (“Sunrise Energy”), a private gas exploration company with operations in Indiana and Oaktown Gas, LLC (“Oaktown Gas”), which we account for using the equity method. Our operations include Hallador Power which provides accredited capacity and energy to utilities and other energy market participants through the MISO interconnection, and Sunrise which mines bituminous coal in Indiana to serve various power plants in the Midwest and Southeast United States.

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Reclassifications

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It was determined that electric sales and utilities expenses were each understated by $2.7 million in the unaudited condensed consolidated statements of operations for the three months ended March 31, 2026. The understatements had no impact on net loss for the period. These amounts have been properly reflected in our unaudited condensed consolidated statements of operations for the six months ended June 30, 2026 and are excluded from the accompanying condensed consolidated statements of operations for the three months ended June 30, 2026. As the impacts are not considered material to the previously reported amounts, they will be corrected when we present the three months ended March 31, 2026 in our March 31, 2027 Quarterly Report on Form 10-Q. This correction did not impact previously reported amounts of assets, liabilities, equity, net loss, or cash flows.

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Certain other reclassifications have been made to the Company’s prior period condensed consolidated financial information to conform to the current period presentation. These presentation changes did not impact the Company’s condensed consolidated net loss, consolidated cash flows, total assets, total liabilities or total stockholders’ equity.

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Basis of Presentation

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Our unaudited condensed consolidated financial statements have been prepared in accordance with GAAP and with the instructions to Form 10-Q and Article 10 of Regulation S-X for interim financial information. Accordingly, these financial statements do not include all of the information required by GAAP or Securities and Exchange Commission (“SEC”) rules and regulations for complete financial statements. In the opinion of management, these financial statements reflect all adjustments (consisting of normal recurring adjustments) necessary for a fair presentation of the results of operations for the interim periods presented. The results of operations for any interim period are not necessarily indicative of results for the full year. These unaudited condensed consolidated financial statements should be read in conjunction with our 2025 consolidated financial statements and notes thereto included in our 2025 Annual Report on Form 10-K (our “2025 10-K”). All significant intercompany accounts and transactions have been eliminated.

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Use of Estimates

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Estimates and assumptions are used in accounting for, among other things, deferred income tax accounts, coal reserves, depreciation, depletion, and

amortization, impairment analyses, and calculation of asset retirement obligations (“ARO”). Actual results could differ from those estimates.

Change in Accounting Estimate

On May 1, 2026, the Company entered into a 12-year capacity agreement with a subsidiary of a utility for planning years 2028 through 2040, as previously reported on the Company's Current Report on Form 8-K filed May 6, 2026. As a result of this agreement, together with the Company's other long-term contracted commitments and future maintenance plans, the Company reevaluated the estimated remaining useful life of the Merom Generating Station and determined that the plant's estimated operating life should also be extended through 2040, compared to the previous estimate of 2032. Accordingly, effective June 1, 2026, the Company extended the estimated useful lives of the plant and related assets to align with the revised remaining life of the facility. This change was accounted for prospectively as a change in accounting estimate; depreciation expense recorded in prior periods was not adjusted, and the remaining net book value of the affected assets is being depreciated over the revised remaining useful lives. The effect of this change for both the three and six months ended June 30, 2026 was a decrease in depreciation expense of $1.2 million and a decrease in net loss of $1.2 million, or approximately $0.03 per basic and diluted share, which impacted our Electric Operations segment.