Good afternoon. Thank you for attending Halidor Energy's second quarter 2026 earnings conference call. At this time, all participants are in listen-only mode. Following our prepared remarks, there will be a question-and-answer session, and instructions will follow at that time. As a reminder, this call is being recorded. And now I'd like to turn the call over to Sean Mansuri, the company's investor relations advisor with Elevate IR. Please go ahead, Sean.

Thank you and good afternoon, everyone. We appreciate you joining us to discuss our second quarter 2026 results. With me today are Chairman and CEO Brent Bilsland and CFO Todd Telesz. This afternoon, we released our second quarter 2026 financial and operating results in a press release that is now on the Halador Investor Relations website. Today, we will discuss those results as well as our perspective on current market conditions and our outlook. Following prepared remarks, we will open the call to answer your questions. Before we begin, a reminder that some of our remarks today may include forward-looking statements subject to a variety of risks, uncertainties, and assumptions contained in our filings from time to time with the SEC and are also reflected in today's press release. While these forward-looking statements are based on information currently available to us, if one or more of these risks or uncertainties materialize or if our underlying assumptions prove incorrect, actual results may vary materially from those we projected or expected. In providing these remarks, Halidora has no obligation to publicly update or revise any forward-looking statements, whether as a result of new information Thank you, Sean, and thank you everyone for joining us this afternoon. We are now halfway through 2026, and I would describe our year so far as two stories running side by side.

The first is operational. We spent the second quarter putting money and downtime into Merrim. Most of it planned, some of it not, and the results show it. The second story, and in our view, by far the more important one, is the continued transformation of the company into a multi-fuel independent power producer. I want to start there because we have made real progress on our natural gas generation project at Merrim. We have now formally named that project Turtle Creek Gas or Turtle Creek for short. Turtle Creek is a proposed 460 megawatt simple cycle natural gas fired plant project that would meaningfully expand and diversify our dispatchable generation platform. Let me walk you through where things stand. First, the equipment. I along with other members of our management team recently inspected the turbine equipment and disassembly process with the owner's engineer and personnel from Siemens. We were pleased with what we saw. The equipment is in good condition and disassembly and packing are well underway with a substantial Siemens workforce on site. We continue to expect shipment of the equipment in September. Second, the interconnection. Turtle Creek's interconnection application entered MISO's expedited resource addition study, known as ERAS, on June 2nd. We expect to receive the results of that process, including the required system upgrade costs, in mid-August, and indications to date from the study have been constructive. Following our review, we are targeting a final investment decision and execution of a generator interconnection agreement in September. Third, project economics and financing. In our experience, project budgets tend to move in one direction as scopes firm up higher. Ours has moved the other way. As the equipment restoration and construction scopes have become better defined, we now expect total project costs to be below $800 million, or in the $1,700 per KW range. And we have moved our targeted commercial operations timeframe forward to the second half of 2028. In construction, low cost and fast rarely travel together. We believe Turtle Creek offers a credible pathway to both. One of the lowest capital cost peaking plants currently being developed on a timeline years ahead of many comparable projects. In parallel, we are finalizing the construction scope and advancing financing discussions as we evaluate the appropriate capital structure with the objective of financing the project with little to no equity dilution. Interconnection, construction, and financing are the principal remaining steps to get us there. None of this progress is an accident. It is the product of the same patient step-by-step approach that has carried our transformation from the beginning. Six years ago, we were an underground coal mining company. We acquired a one gigawatt interconnection, then the plant that utilizes it. We began marketing its long-term output. This year, our patience paid off in two landmark capacity agreements. First, the three-year agreement we executed in March with an investment-grade counterparty. at approximately 2X our historical contracted capacity pricing. And second, the 12-year agreement behind it that together total approximately $1.1 billion of contracted revenue. These agreements increased our forward sales position, which now sits at $2.4 billion, placing Halidor in a substantially sold forward position on accredited capacity for approximately the next 14 consecutive years. with commitments extending through 2040. Turtle Creek is the next step in that transformation and it is advancing on schedule. I also want to remind everyone how we think about this market because it explains how we have built our contract book. In our view, capacity and energy run on different clocks. For large load customers, particularly data centers, Access to accredited capacity is the gating factor. Without it, projects cannot move forward. That is why capacity markets have tightened and repriced ahead of the physical around-the-clock energy demand these developments will ultimately bring. As these projects are built and begin drawing power from the grid, we believe energy demand will accelerate and energy pricing will follow. We have constructed our portfolio to participate in both phases. Our long-dated commitments are anchored in accredited capacity where repricing has already arrived and where we have contracted through 2040. Our energy commitments by design are shorter dated beyond the next few years. Our energy position is largely open. Preserve for the repricing we believe is beginning now. As it arrives, we intend to monetize that open position with the same discipline and patience we brought to capacity. And a 460 megawatt peaking asset at Turtle Creek would give us even more dispatchable capacity and energy to bring to the market. At the same time, the market keeps confirming our thesis. We are seeing robust demand for accredited capacity and energy from a growing and increasingly diverse set of counterparties and are working towards making additional forward sales before the end of the year. With $2.4 billion of revenue already contracted at the segment level and more sales on the way, we believe Halidor offers investors a degree of revenue visibility that is among the strongest in the sector. We are speaking with meaningfully more counterparties today than we were in the past, and the demand signals are increasingly visible right outside our windows. A large data center project has broken ground adjacent to our property, and another project is in the early stages of development on the other side of the plant. You do not need a consultant's report to see where power demand in our region is headed. You can see it from the parking lot. Now turning to the second quarter, operationally the second quarter is traditionally our lightest period of the year as we take one of Merrim's two units offline each spring for an approximately 60-day scheduled maintenance outage. This year's outage at Unit 1, we completed major reliability upgrades designed to address the unplanned downtime the unit had experienced in recent quarters. Unit 2 performed well over the course of the quarter. However, the limited unplanned downtime it did experience coincided with periods of elevated market prices, which magnified the financial impact by requiring us to purchase power at high prices to meet our delivery obligations. Together, these factors weighed on our second quarter results, but do not, in our view, reflect the earnings power of the plan. With the scheduled outage behind us and the reliability investments in place, we believe Merrim is positioned to run more reliably going forward, and we expect generation volumes to improve sequentially in the third quarter. I want to be clear about what the planned maintenance expenditures will bring. We invested substantially in the plant during the outage, and the condition of the plant is better for it. We expect that improved conditions to show up where it counts in reliability, availability, and operating performance over time. Money spent keeping a productive asset sound is not money lost. It earns us a return every hour the plant runs when the grid needs it most. Reliability at Merum matters more than ever, both because MISO increasingly depends on dispatchable resources during peak demand and because Merum sets at the center of our vertically integrated platform. When the plant runs efficiently, it supports electric sales, creates consistent internal demand for coal, improves mine productivity at sunrise, and enhances operating efficiency across the business. When performance at Mirum falls below planned levels, those effects extend throughout the platform. With the outage behind us and both units running more effectively, we expect generation volumes to improve sequentially in the third quarter. I would note that power pricing remains uncertain, and the third quarter of last year benefited from particularly favorable power market conditions, creating a more challenging year-over-year comparison. So we are focused on sequential operational improvement, and on carrying that improved availability into the balance of the year and beyond. In summary, quarters like this one are the price of owning and improving a durable asset. Q2 reflected the important reliability and efficiency work we completed at Merrim along with the temporary challenges that came from it. The more important story is the progress we are making on selling out remainder of Merrim's capacity and energy, the advancement of our Total Creek gas project, its improving economics, and the accelerating demand we are seeing from an expanding set of counterparties. The fundamental signals across our market remain constructive, and we believe Halidor is well positioned to compound shareholder value over a multi-year horizon. With that, I'll turn the call over to Todd to take you through our financial results.

Thank you, Brent, and good afternoon, everyone. Jumping into our second quarter results, electric sales for the second quarter were $59.5 million compared to $60 million in the prior year period, while third party coal sales increased to $40.6 million compared to $38.1 million in the prior year period. Electric sales in the second quarter benefited from higher accredited capacity revenue, which increased 70% year over year to $18.6 million. Total energy sales volume increased 17% compared to the prior year period, while the average price per megawatt hour for delivered energy declined to $41.69 from $52.66. The increase in third-party coal sales during the second quarter was driven primarily by improved pricing. as a 9% increase in our average third-party price per ton, more than offset a 2% decrease in tons sold to third parties. Sunrise also sold 59,000 incremental tons to Merrim during the quarter as the plant prepared for summer demand. On a consolidated basis, total operating revenue decreased to $101.5 million for the second quarter of 2026, compared to $102.8 million in the prior year period. Net loss for Q2 2026 was $15.2 million compared to net income of $8.2 million in the prior year period. Cash flow used in operations in the second quarter of 2026 was $23.9 million compared to cash flow provided from operations of $11.4 million in the prior year period, with the decrease primarily reflecting the outage-related decline in profitability, higher purchase power costs, and Working Capital Investment, including cash invested in inventory and parts and supplies. Adjusted EBITDA, a non-GAAP measure that is reconciled under earnings press release issued earlier today, was negative $2.9 million for Q2, 2026, compared to $3.4 million in the prior year period. We invested $26.3 million in capital expenditures in the second quarter of 2026, compared to $13.1 million in the year-ago period, primarily reflecting the reliability upgrades completed during the planned outage at Merham, as well as development spending associated with Turtle Creek. With the planned outage complete, we expect the pace of maintenance capital spending to moderate through the balance of the year, with full-year 2026 capital expenditures expected to remain consistent with 2025 levels, excluding investments related to Turtle Creek. As of June 30th, 2026, our forward energy and capacity sales position was approximately $1.6 billion compared to $571.2 million at March 31st, 2026 and $619.7 million at June 30th, 2025. When combined with our third party forward coal sales of $236.5 million, total contracted revenue on a consolidated basis was approximately $1.8 billion. including intercompany sales to Merrim, our total forward sales book on a segment basis was approximately $2.4 billion. These figures now include the 12-year capacity agreement signed in May 2026. During the quarter, we took additional steps to maintain flexibility under our capital structure. On May 15th, we drew the $45 million available under our delayed drop term loan and used a portion of the proceeds to repay $8 million outstanding under our revolving credit facility. however had $45 million of total bank debt at June 30th, 2026 compared to no outstanding bank debt at March 31st, 2026 and $30 million at December 31st, 2025. Total equity at June 30th, 2026 was $84.2 million compared to $97.5 million at March 31st, 2026 and $42 million at June 30th, 2025. The sequential decrease reflects cash deployed during the planned outage, capital investment, and the associated working capital build. At quarter end, total liquidity consisted of $29 million of unrestricted cash and cash equivalents and $55.2 million of additional borrowing capacity under our revolving credit facility. We believe our credit facility, together with our current liquidity position, provides the flexibility to manage working capital and fund our ongoing operations and investments at Merrim. As we mentioned in June, our financing strategy for Turtle Creek is considering a combination of project level and structural alternatives, including equipment financing, structured debt and similar instruments designed deliberately to preserve flexibility with low to no equity solution while retaining our focus on balance sheet integrity. We're well underway in financial planning and look forward to providing updates as we make progress in the third quarter. With that, operator, we can now open the line for questions.

Certainly. Ladies and gentlemen, if you do have a question at this time, please press star 1-1 on your telephone. If your question has been answered and you'd like to remove yourself from the queue, simply press star 1 again. Our first question comes from the line of Julian Dumoulin-Smith from Jefferies. Your question, please.

Hey, guys. on for Julian. Thanks for taking my question. Congrats on the quarter. Just wanted to ask you a little bit more on the gas project. Seems like you're making a lot of progress there. Costs coming in below expectations. One, can you give us some color on what's driving costs to be a little bit below expectations? Is it mostly interconnection costs like you guys had thought of or are there other factors? And then separately, could you share more color on how the off-take agreements and conversations are trending? What kind of customer interest are you seeing for the gas project? Thanks.

Yeah, certainly. You know, I think as we think about the gas project, Turtle Creek, what's changed to lower that budget? I think last quarter we said it would be less than $900 million. Now we're saying it's less than $800 million. And then coupled with that, we've accelerated the COD to the second half of 2028. And when we announced this in June, I mean, we had ranges for what things would cost. And now, you know, those scopes are more defined. and the owner's engineer and I were over looking at the equipment. It's an excellent condition. We were happy with what we saw. Disassembly is underway. There was a substantial Siemens workforce on site. Shipment still remains on schedule for September. So as the equipment, the restoration, the construction scopes have firmed up, The numbers have come in better than we initially assumed. And, you know, the other driver is this is not a greenfield project. You know, we're building at Miro. We already own the site, the water, the infrastructure. And so that's how, you know, this project gets down to, you know, roughly $1,700 a KW when we're seeing other projects, you know, priced well above that and, you know, coming in a year or two behind us. So I think that's just what makes this project special in our mind is that we have a cost advantage. We have a speed to market advantage. And in AI, it's all about speed to market. When you talk about marketing, of course, we point to our sales table. We've added more definition there as to some of the work that we've done earlier in the year. So that speaks to pricing. I think that will perhaps be at numbers higher than what some of the analysts in market thought. And we just continue to see more and more interest. As we alluded to in our prepared remarks, we really think that we will add to the contracts that we've already put in place this year before the year is out. That is our goal. And I think today we feel really good about that. If you look at what we've been doing, we've been pricing a coal asset. And a list of buyers who are interested in buying output from a coal asset output is smaller than that of gas. So we think the market from what we're experiencing there's a much greater Rolodex that you can call up to talk to about the gas plant and we're seeing that interest level. Particularly as other states are putting more and more restrictions on new data center builds. We think that's funneling more of that capex spin towards the state of Indiana. And we're seeing that in our backyard. We said in our prepared remarks, we've got a pretty significant project that's broken ground. Anybody who gets Google Earth Live can see photos of that. It's pretty impressive to see a thousand acre development contiguous to our property pouring foundations and moving right along. We've had a second project developer buy property on the other side of our plant contiguous to us. So, you know, that said, I mean, we sell in front of the meter so we can sell to any place in MISO Zone 6, which is the state of Indiana and the northern third of Kentucky. So we feel really good about the demand perspective at this time. And, you know, we look forward to delivering on that. before the year is out, particularly on Miro. It'll probably take a little longer to market Turtle Creek just because, you know, we've been working on Miro a little bit longer. But we're excited about what we see. I hope that resonates. And, you know, I think this plant, we're excited about it. We think it's a big deal for our company and expect to make more announcements before the year is out.

Awesome. Thank you.

Thank you, and our next question comes to the line of Nick Giles from B. Reilly Securities. Your question, please.

Thank you, operator, and good afternoon, everyone. This is Henry Hurl on for Nick. So in your prepared remarks, you mentioned the turbine disassembly is underway and there's a substantial workforce on that site there. Do you guys have any contingencies if the disassembly or logistics slip? and the shipment is pushed to September. Just any color there would be helpful. Or pushed out from September, sorry.

Yeah, look, we're not too, you know, concerned about the timing of the shipment. We've got plenty of wiggle room there. You know, always like to get the asset sooner rather than later. Always like to get it online sooner rather than later. So... we're pushing to get that done as quickly as possible. That said, I don't think that getting the equipment to ship is the long pole of the tent. We're on a pretty short time frame. We're saying COD roughly two years. Last half of 2028. We think that's a very marketable time for that project. And today as we look about where we're at, I think we're excited about the potential success of that project. So not too concerned about the shipping date.

Got it. That's helpful. Thank you. And then just on financing, obviously, the goal is to minimize equity dilution. And you kind of went through a couple different financing structures in the prepared remarks. What are you leaning most towards at this time and when do you expect to disclose that? Thanks.

Thanks, Henry. It's Todd Telesz. I think as Brent alluded to during the course of the call, I think Turtle Creek has three primary advantages when you're talking to financing counterparties. one is the capital cost, two is the speed to market, and ultimately those drive long-term affordability, which makes it a very attractive asset to contract with. As a former, as Quadrat's question was really around the offtake agreements. So I think when you look at those three factors combined with what we view as a very robust financing market, in particular for equipment financings, that's extremely helpful for us. As you know, we also have the benefit of having the MARAM Coal Fired Assets that has substantial contracts put in place and working hard at contracting even further on the Merrim assets. I think those are very financeable contracts. So a couple different pockets of debt capital. So those between those things, I think then when you look out into the future, you look at where we think the financial performance of the businesses in the latter part of this decade all those should be supportive of bringing on leverage onto this project and minimizing the amount of dilution for our current shareholders.

Thank you, Todd. That's very helpful. And then just on that same point, is there any possibility for government support from the DOE and the likes in financing the Turtle Creek project? Is that something that you're exploring currently?

Our DOE financing has really been focused on some of the things we're doing in Merham. We don't see any DOE financing for the Turtle Creek gas asset at this point in time.

Got it. All right, I'll turn it over. Thanks, guys, and continue to best of luck.

Thanks. Thank you. And our next question comes from the line of Matthew Key from Texas Capital. Your question, please.

Hey, good afternoon, everyone, and thanks for taking my questions. In regarding the DOE, in June you announced the $27 million in DOE funding to help modernize Mirum. I was just wondering, when would you want to complete those upgrades? I'm just trying to get a sense of timing for that specific project.

Yeah. So we announced a month or two ago that we were selected to negotiate for $27.2 million of grants from the DOE that were to be used for our ELG compliance. That document is rounding third. So we anticipate some of that work will get done yet this year. So we should see some dollars matched in that probably in the fourth quarter. and then continuing on into 27 and 28.

Got it. That's helpful. And I guess you mentioned you being relatively comfortable being open in your Florida Energy book over the medium term, just given the expectations for rewriting and pricing. I was wondering if there were any specific price signals or increase in the curve you'd want to see before facilitating a more aggressive stance in forward energy sales?

Well, I think we have seen some upward movement in the curve this year. And so some of the conversations are advancing along those levels. I wouldn't be surprised if you saw some energy sales from us yet this year. But we'll probably take more of a layered approach with some sales made this year and some in future years. Certainly not afraid to contract if the pricing signals are right for us, but we certainly don't feel any urgency. Capacity is more illiquid market. Energy is a very liquid market. There's a lot of ways to sell energy. There's a few ways to sell capacity. That said, where we're really seeing the most pinch point is in the capacity markets. which is why we've been aggressive at Mirim. The coal units, two-thirds of that is roughly sold through 2040. Our goal is to sell the balance of that out yet this year on multi-year contracts. The market seems to be supportive of that which is why we're feeling confident about the demand and the robustness of that for Turtle Creek. We think this is an asset, right? It's a peaker plant, right? It primarily provides accredited capacity and it does so at a price point and a timing that we think is just right up the fairway of what this market wants. And so that's kind of where our head's at on energy and capacity, Matthew.

Got it. That's helpful. Thank you for the time.

Yeah, thank you.

Thank you. And our next question comes from the line of Jeff Grant from Northland Capital Markets. Your question, please. Jeff Grant, guys.

Brent, I wanted to circle back on the contracting kind of process or decision tree, if you will. When we think about incremental capacity contracts on coal versus gas project, it sounds like, you know, to your comment of a deeper Rolodex on the gas side, should we think about that project being more executable, if you will, over coal over the coming months? Or is there a I guess path of least resistance between those two that suggests one is further along versus another that we should expect.

Yeah, look, I mean, I think we have shown we are executing on coal. You know, we're buyers of the gas that, you know, think of it this way. If there's There's probably three to four times the number we can talk to potential buyers for a gas asset than there is of a coal asset. And we're having great success on the coal side. So we're just further along on the coal side because that plant exists and is running today. Whereas Turtle Creek, we still have yet to make the final investment decisions. and so buyers want to see that project, you know, take a couple steps forward. Quite frankly, we want it to take a couple steps forward. We're waiting to hear what the system upgrade costs are for Turtle Creek. We think we may learn that yet this week. You know, we have a high degree of confidence there because we use the same, you know, vendors that MISO uses to do their studies. So we've already done those studies. Now, it doesn't matter what we think, it matters what MISO thinks. So we think this is a check the box exercise, but we still have to hear the number before we can make that final decision. We also make, I think, good advancements on the financing side with those discussions. So as we put those two things together, we think we're close to moving forward with that project. and we have great confidence in that because we think we'll have Mirum essentially sold out and Mirum, you know, the company really doesn't have a lot of debt. So when you look at what's the value of that asset, it doesn't have a lot of debt and now we're adding, you know, Siemens, turbines to the mix. I think it's a very financeable project and quite frankly, the response from the market is justifying our opinion. And again, the other thing that's different about this project is we actually have physical equipment So many of the other projects have queues, right? And queue positions get pushed out. You know, we've got to load something on the boat and ship it across the sea. I've been over to review that personally. You know, I don't want to jinx ourselves, but quite frankly, it's going quite well and it's a pretty simple process. So, you know, we'll know more on that in a month. We expect it to be on a boat.

Sounds good. OK, I appreciate those details. For my follow up on the energy side of things, is it fair to think that that market is more, I guess, prone to at least relatively shorter term contracts versus a 10 or 15 year capacity contract? Or are those opportunities still out there where we could see a longer term energy contract as well? And do you guys have interest in that on your side as well?

There is interest in buying longer-term energy, and we have interest in doing that, and we'll see if we can deliver on that before the year's out.

All right. We'll stay tuned. Thanks, Brent.

All right.

Thank you, Jim. Thank you. And our next question comes from the line of Jake Sikelski from Alliance Global. Your question, please. Hi, Brent and Todd.

Thanks for taking my questions. So just going back to Turtle Creek, you mentioned CapEx initially came in below $900 million, and now we're below $800 million. I'm just curious, are there any other levers you feel you might be able to pull that could drive this even lower as we get through FID, or do you feel you've kind of flushed all that out?

Well, we certainly are dialing in more levers. I think there's a chance that project costs could go down yet again, but we want to make sure we don't have any surprises. As things get loaded on the boat, get delivered to Siemens, we'll know more about that front, but we think we've got enough contingencies in there. We feel we're in pretty good shape. Again, we already think this project is Magnitudes, Lower Costs, and some of the other projects that we've seen that are competing against it. And we have a time advantage. And so that's where the market seems to be paying up is the speed to market play. Talk to me about electrons today and compute today, not years from now. So we think we've got something special. I hope that resonates.

Fair enough. OK. and then just from a financing perspective there, I'm just curious, are there any strategic avenues that you're exploring or are you thinking more along the traditional lines for the broader financing package?

Yeah, I think right now, Jake, I think we're very focused on more traditional financing packages, whether it be strictly equipment financing, quasi project financing, and or even corporate financing. So I think more traditional efforts focused on what we can do ourselves here at Halidor.

Got it. Okay. That's all for me. Thanks again.

Thank you, Jake.

Thank you. This does conclude the question and answer session of today's program. I'd like to hand the program back to Brent for any further remarks.

Yeah, I want to thank everybody for taking the time to join us today and your interest in Halidor. And we're excited about our company, the work that we've put into Merrill, the work that we're putting into Turtle Creek. And we just think pound for pound, this is going to create exciting opportunities for the investor in Halidor. Thank you for your time.

Thank you, ladies and gentlemen, for your participation at today's conference. This does conclude the program. You may now disconnect. Good day.