SEC Company Response from HALLADOR ENERGY CO (HNRG) (CIK 0000788965) (HNRG) — May 3, 2007

HALLADOR ENERGY CO (HNRG) (CIK 0000788965)
Date: May 3, 2007 · CIK: 0000788965 · Accession: 0000788965-07-000016

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Urgency

Document Type

Confidence

SEC Posture

Company Posture

Summary

Reasoning

Referenced dates: February 22, 2007, February 22, 2007

Date

February 22, 2007

Author

Chief

Form

CORRESP

Company

HALLADOR ENERGY CO (HNRG) (CIK 0000788965)

Letter

United States Securities and Exchange Commission Washington, DC 20549-7010 Engineering comments included in letter dated February 22, 2007 File No. 0-14731

Re: Hallador Petroleum Company

Dear Mr. Hiller:

This letter is in response to the engineering comments in your letter dated February 22, 2007. As I discussed with Ms. Towner on May 1, 2007, we will respond to the remaining comments at a later date. The information below corresponds to your numbered comments in your letter.

Engineering Comments

In addition, the following items should be addressed in relation to your reserve disclosure.

The coal reserves need to be stated separately as proven reserves and as probable reserves. Measured and indicated reserves are not terms recognized by Industry Guide 7 and combining the proven and probable reserve quantities is contrary to the guidance provided.

State whether these reserves are in-place quantities or the final salable product.

Disclose the criteria used to make the distinction between the proven and probable reserve classes.

State the coal reserve tonnages along with the average BTU and sulfur content.

List your mining recovery and wash plant recoveries.

Identify the utility companies that are your major customers.

State the price of coal received for your salable product for each of the last five years, and future contracted prices.

Provide general coal product specifications for your salable product.

Disclose your land ownership and leased acreage.

Clarify that structural characteristic associated with your use of the term "slope" which may also be described as a decline or inclined shaft.

Other cautionary matters and disclosure concerns that will need to be addressed in your annual filing are covered in the comments that follow. The information requested should be based on the feasibility study underlying your conclusion of having proven and probable reserves. Please submit a copy of this feasibility study for review by our mining engineer, in support of the reserve information you plan to disclose in your annual filing.

OUR RESPONSE

A hard copy of our feasibility study was mailed to you on March 30, 2007 and receipt of such was acknowledged by your staff. Except, for the contracted sale price of our coal, we have complied with the above in our 2006 Form 10-KSB filed on April 16, 2007 and will comply in all future filings. Our contracts with our purchasers require us to keep coal prices and certain other terms confidential. In future filings, we will disclose coal revenue and coal production, consequently, our investors would be able to compute average prices. As disclosed in our 2006 Form 10-KSB, coal sales did not begin until February 2007.

Coal reserves must have legal, economic and technical feasibility at the time of the reserve determination. Common problems in reserve calculations involve including coal reserves which are found under railroads, roads, buildings, power lines, or other structures protected by restrictions on mining activities. Also, non-recoverable coal, such as in the roof and in barrier pillars, sometimes has been included in reserves. Please ensure that your reporting takes all legal, economic and technical factors into account. For further details, consult the general letter to coal operators located on our website at the following address.

http://www.sec.gov/divisions/corpfin/guidance/coalmineletter.htm

On a related point, we have found that companies sometimes include in their reserve estimates small tracks of coal lands that are not owned or large enough to be mined by themselves, based on the belief that such lands, typically between the main block and smaller tracks to be mined will be acquired in the future. As Industry Guide 7 requires all reserves to meet the definition for reserves at the time of the reserve determination, this practice would be inappropriate.

OUR RESPONSE

Our engineer is aware of the above, and used such guidance in our reserve disclosures in our 2006 Form 10-KSB. We will continue to comply with this guidance in all future filings.

Insert a small-scale map showing the location and access to your property. Briefly describe the road, barge and/or railroad access to each of your properties in be text. Note that SEC's EDGAR program now accepts digital maps. Therefore, please include these in any future filings or amendments that are uploaded EDGAR. It is relatively easy to include automatic links at the appropriate locations within the document to GIF or JPEG files, which will allow figures and diagrams to appear in the right location when the document is viewed on the Internet. For more information, please consult the EDGAR manual, and if you need addition assistance, please call Filer Support at 202-942-8900. Otherwise provide the map to the engineering staff for our review.

OUR RESPONSE

Because we have only one coal mile, and the location was adequately described in our 2006 Form 10-KSB, we do not believe that a map would enhance an investor's understanding of the location of our mine. If, and when, we develop additional mines, a map may prove beneficial and will be considered in future filings.

For all of your coal properties that have reserves included in your reserve disclosure, provide us with an analysis that compares the length of your leases, including assured renewals, with the scheduled production of currently designated reserves, and advise us whether you believe all designated reserves will be mined during the tenure of your leases, according to your current plans.

OUR RESPONSE

Our 2006 Form 10-KSB complied with the above, and we will comply in all future filings.

For each of your mines, provide the disclosures required by Industry Guide 7(b). In particular, provide a brief discussion of:

The coal beds of interest, including minable coal thickness.

The description and capacities of the mine, mining equipment used, anti other infrastructure facilities present.

A list of your coal processing and/or handling facilities.

The road, barge and/or railroad access to each of your properties.

The present condition of the mine.

Material events of interest concerning the mine, adverse or otherwise within the last three years.

Any mine expansions, contractions or decommissioning within the last three years.

Any planned expansions or reductions in raining.

Any joint ownership.

Any use of mining contractors.

OUR RESPONSE

Our 2006 Form 10-KSB complied with the above, and we will comply in all future filings.

In a table, disclose proven and probable reserves, as defined in Industry Guide 7, for each mine. Provide a separate table that lists "unassigned" reserves with their particular location, tonnage, Btu, sulfur and ownership/lease characteristics. In addition, please address the following points.

Indicate tonnages that are "assigned" to an existing facility and those that have not been "assigned."

Disclose if the coal is steam or metallurgical, if it is leased or owned, and the Btu estimate per pound and sulfur content. Do not report Btu content as "dry," but include natural moisture in the calculation.

If coal is reported as tonnes in the ground, disclose in another column the average mining and wash plant recoveries in percentages; indicate whether these losses have been reflected in the total recoverable reserves reported.

In either case, clearly disclose whether the reserves reported are "in the ground" or "recoverable."

Provide totals in all tabular presentations, where appropriate.

Disclose your percentage of compliance and non-compliance coal.

OUR RESPONSE

Our 2006 Form 10-KSB complied with the above, and we will comply in all future filings.

Proven and probable reserves are disclosed in your filing. With a minimal transfer of paper, forward to our engineer as supplemental information, not as part of the filing, information that establishes the legal, technical and economic feasibility of the materials designated as reserves, as required under paragraph (c) of Industry Guide 7. This should include the following data:

Maps showing property, mine permit and reserve boundaries and geology, and recent and historic production areas, and seams mined and any cultural restrictions to mining.

Drill-hole maps showing drill intercepts.

Justifications for the drill hole spacing's used at various classification levels.

General cross-sections that indicate the relationship between coal seams, geology and topography.

A detailed description of your procedures for estimating "reserves."

An indication of how many years are left in your longest-term mining plan for each reserve block.

Site specific economic justification for the criteria you used to estimate reserves.

Mining plans or feasibility studies, including production schedules, cost estimates and cash flow projections needed to establish the existence of reserves, as defined in Industry Guide 7.

Third party reviews of your reserves that were developed within the last three years.

Any other information needed to establish legal, technical and economic feasibility.

Provide the name and phone number for a technical person our engineer may call, if he has technical questions about your reserves. If there are any questions concerning the above request, please phone Mr. G. K. Schuler, Mining Engineer at (202) 551-3718.

OUR RESPONSE

A hard copy of our reserve report was mailed to you on March 30, 2007 and receipt of such was acknowledged by your staff. Our mining engineer is Sam Elder and you may reach him at (812) 894-3480.

For each operating region or major property, provide us with an analysis of the economic and technical evaluation criteria used for establishing and classifying your coal reserves. For example, please address the following points, and any other evaluation criteria that were significant.

Minimum economic tonnage

Mine dilution

Maximum and minimum mining heights for each type of mining

Maximum depth

Mining recoveries by mine type

Wash plant recoveries

Maximum

Show Raw Text

CORRESP
1
filename1.htm

Unassociated Document

May
3,
2007

Mr.
Karl
Hiller

Branch
Chief

United
States

Securities
and
Exchange Commission

Washington,
DC
20549-7010

Re: Hallador
Petroleum
Company

Engineering
comments
included in letter dated February 22, 2007

File
No. 0-14731

Dear
Mr.
Hiller:

This
letter is in
response to the engineering comments in your letter dated February 22,
2007. As I discussed with Ms. Towner on May 1, 2007, we will
respond to the remaining comments at a later date. The
information below corresponds to your numbered comments in your letter.

Engineering
Comments

In
addition,
the following items should be addressed in relation to your reserve
disclosure.

The
coal
reserves need to be stated separately as proven reserves and
as probable
reserves. Measured and indicated reserves are not terms recognized
by
Industry Guide 7 and combining the proven and probable reserve quantities
is contrary to the guidance
provided.

State
whether
these reserves are in-place quantities or the final salable
product.

Disclose
the
criteria used to make the distinction between the proven and probable
reserve classes.

State
the
coal reserve tonnages along with the average BTU and sulfur
content.

List
your
mining recovery and wash plant
recoveries.

Identify
the
utility companies that are your major
customers.

State
the
price of coal received for your salable product for each of the last
five
years, and future contracted
prices.

Provide
general coal product specifications for your salable
product.

Disclose
your
land ownership and leased acreage.

Clarify
that
structural characteristic associated with your use of the term "slope"
which may also be described as a decline or inclined shaft.

Other
cautionary
matters and disclosure concerns that will need to be addressed in your annual
filing are covered in the comments that follow. The information requested should
be based on the feasibility study underlying your conclusion of having proven
and probable reserves. Please submit a copy of this feasibility study for review
by our mining engineer, in support of the reserve information you plan to
disclose in your annual filing.

OUR
RESPONSE

A
hard copy of our feasibility study was mailed to you on March 30, 2007 and
receipt of such was acknowledged by your staff. Except, for the contracted
sale price of our coal, we have complied with the above in our 2006 Form
10-KSB
filed on April 16, 2007 and will comply in all future filings. Our
contracts with our purchasers require us to keep coal prices and certain
other terms confidential. In future filings, we will disclose coal revenue
and coal production, consequently, our investors would be able to compute
average prices. As disclosed in our 2006 Form 10-KSB, coal
sales did not begin until February
2007.

Coal
reserves
must have legal, economic and technical feasibility at the time of
the
reserve
determination. Common problems in reserve calculations involve including
coal reserves which are found under railroads, roads, buildings,
power
lines, or other structures protected by restrictions on mining activities.
Also, non-recoverable coal, such as in the roof and in barrier pillars,
sometimes has been included
in
reserves. Please ensure that your reporting takes all legal, economic
and
technical factors into account. For further details, consult the
general
letter to coal
operators located on our website at the following
address.

http://www.sec.gov/divisions/corpfin/guidance/coalmineletter.htm

On
a related point,
we have found that companies sometimes include in their reserve
estimates
small tracks of coal lands that are not owned or large enough to be
mined by
themselves, based on the belief that such lands, typically between the main
block and smaller tracks to be mined will be acquired in the future. As
Industry
Guide 7
requires all reserves to meet the definition for reserves at the time
of the reserve
determination, this practice would be inappropriate.

OUR
RESPONSE

Our
engineer is
aware of the above, and used such guidance in our reserve disclosures in our
2006 Form 10-KSB. We will continue to comply with this guidance in
all future filings.

Insert
a
small-scale map showing the location and access to your property.
Briefly
describe
the
road, barge and/or railroad access to each of your properties in
be
text.
Note
that SEC's EDGAR program now accepts digital maps. Therefore, please
include these in any future filings or amendments that are uploaded
EDGAR.
It is
relatively easy to include automatic links at the appropriate locations
within the document to GIF or JPEG files, which will allow figures
and
diagrams to appear in the right location when the document is viewed
on
the Internet. For more information, please consult the EDGAR manual,
and
if you need addition assistance, please call Filer Support at
202-942-8900. Otherwise provide the map to the engineering staff
for our
review.

OUR
RESPONSE

Because
we have
only one coal mile, and the location was adequately described in our 2006
Form
10-KSB, we do not believe that a map would enhance an investor's understanding
of the location of our mine. If, and when, we develop additional mines, a
map may prove beneficial and will be considered in future filings.

For
all of
your coal properties that have reserves included in your reserve
disclosure, provide us with an analysis that compares the length
of your
leases, including assured renewals, with the scheduled production
of
currently designated reserves, and advise us whether you believe
all
designated reserves will be mined during the tenure of your leases,
according to your current plans.

OUR
RESPONSE

Our
2006 Form
10-KSB complied with the above, and we will comply in all future
filings.

For
each of
your mines, provide the disclosures required by Industry Guide 7(b).
In
particular, provide a brief discussion of:

The
coal beds
of interest, including minable coal
thickness.

The
description and capacities of the mine, mining equipment used, anti
other
infrastructure facilities present.

A
list of
your coal processing and/or handling
facilities.

The
road,
barge and/or railroad access to each of your
properties.

The
present
condition of the mine.

Material
events of interest concerning the mine, adverse or otherwise within
the
last three years.

Any
mine
expansions, contractions or decommissioning within the last three
years.

Any
planned
expansions or reductions in raining.

Any
joint
ownership.

Any
use of
mining contractors.

OUR
RESPONSE

Our
2006 Form
10-KSB complied with the above, and we will comply in all future
filings.

In
a table,
disclose proven and probable reserves, as defined in Industry Guide
7, for
each
mine. Provide a separate table that lists "unassigned" reserves with
their
particular location, tonnage, Btu, sulfur and ownership/lease
characteristics. In addition, please address the following
points.

Indicate
tonnages that are "assigned" to an existing facility and those that
have
not been "assigned."

Disclose
if
the coal is steam or metallurgical, if it is leased or owned, and
the
Btu
estimate per pound and sulfur content. Do not report Btu content
as
"dry," but
include natural moisture in the
calculation.

If
coal is
reported as tonnes in the ground, disclose in another column the
average
mining and wash plant recoveries in percentages; indicate whether
these
losses have been reflected in the total recoverable reserves
reported.

In
either
case, clearly disclose whether the reserves reported are "in the
ground"
or "recoverable."

Provide
totals in all tabular presentations, where appropriate.

Disclose
your
percentage of compliance and non-compliance
coal.

OUR
RESPONSE

Our
2006 Form
10-KSB complied with the above, and we will comply in all future
filings.

Proven
and
probable reserves are disclosed in your filing. With a minimal transfer
of
paper, forward to our engineer as supplemental information, not as
part of
the filing, information that establishes the legal, technical and
economic
feasibility
of the materials designated as reserves, as required under paragraph
(c)
of
Industry
Guide 7. This should include the following
data:

Maps
showing
property, mine
permit
and reserve boundaries and geology, and recent and historic production
areas, and seams mined and any cultural restrictions to
mining.

Drill-hole
maps showing drill intercepts.

Justifications
for the drill hole spacing's used at various classification
levels.

General
cross-sections that indicate the relationship between coal seams,
geology
and topography.

A
detailed
description of your procedures for estimating
"reserves."

An
indication
of how many years are left in your longest-term mining plan for each
reserve block.

Site
specific
economic justification for the criteria you used to estimate
reserves.

Mining
plans
or feasibility studies, including production schedules, cost estimates
and
cash flow projections needed to establish the existence of reserves,
as
defined in Industry Guide 7.

Third
party
reviews of your reserves that were developed within the last three
years.

Any
other
information needed to establish legal, technical and economic
feasibility.

Provide
the name
and phone number for a technical person our engineer may call, if
he has technical
questions about your reserves. If there are any questions concerning
the
above request, please phone Mr. G. K. Schuler, Mining Engineer at
(202)
551-3718.

OUR
RESPONSE

A
hard copy of our reserve report was mailed to you on March 30, 2007 and receipt
of such was acknowledged by your staff. Our
mining engineer
is Sam Elder and you may reach him at (812) 894-3480.

For
each
operating region or major property, provide us with an analysis of
the
economic
and
technical evaluation criteria used for establishing and classifying
your
coal reserves. For example, please address the following points,
and any
other evaluation criteria that were
significant.

Minimum
economic tonnage

Mine
dilution

Maximum
and
minimum mining heights for each type of
mining

Maximum
depth

Mining
recoveries by mine type

Wash
plant
recoveries

Maximum

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