[
x
]
|
ANNUAL
REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
OF 1934
|
For
the fiscal year ended: December
31, 2005
|
|
[
]
|
TRANSITION
REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
OF
1934
|
Commission
file number: 0-14731
|
|
HALLADOR
PETROLEUM COMPANY
|
COLORADO
(State
of incorporation)
|
84-1014610
(IRS
Employer Identification No.)
|
|
1660
Lincoln Street, Suite 2700, Denver, Colorado
(Address
of principal executive offices)
|
80264-2701
(Zip
Code)
|
|
Issuer's
telephone number: 303.839.5504
|
Fax:
303.832.3013
|
|
|
Gross
|
|
Net
|
|
|
|
|
|
|
|
|
Kentucky
|
66,279
|
|
65,903
|
|
|
Montana
|
34,474
|
|
28,854
|
|
|
North
Dakota
|
812
|
|
121
|
|
|
Wyoming
|
44,324
|
|
36,784
|
|
|
Other
|
238
|
|
25
|
|
|
Total
|
146,127
|
|
131,687
|
|
|
|
High
|
|
Low
|
|
2006
|
|
|
|
|
|
(January
1 through April 4, 2006)
|
$
|
4.10
|
$
|
3.10
|
|
|
|
|
|
|
|
2005
|
|
|
|
|
|
First
quarter
|
|
2.15
|
|
2.10
|
|
Second
quarter
|
|
3.40
|
|
1.75
|
|
Third
quarter
|
|
8.00
|
|
2.06
|
|
Fourth
quarter
|
|
3.99
|
|
2.00
|
|
|
|
|
|
|
|
2004
|
|
|
|
|
|
First
quarter
|
|
1.55
|
|
1.15
|
|
Second
quarter
|
|
5.15
|
|
1.35
|
|
Third
quarter
|
|
3.00
|
|
2.10
|
|
Fourth
quarter
|
|
3.05
|
|
2.10
|
|
|
|
|
|
|
|
2005
|
2004
|
||||||||||
Sales
Volume
|
Average
Price
|
Revenue
|
Sales
Volume
|
Average
Price
|
Revenue
|
||||||
Gas-mcf
|
|||||||||||
San
Juan
|
62,515
|
$
|
10.81
|
$
|
675,800
|
68,500
|
$
|
7.66
|
$
|
524,700
|
|
Other
|
41,000
|
8.20
|
336,200
|
48,480
|
6.13
|
297,200
|
|||||
Oil-barrels
|
|||||||||||
San
Juan
|
110
|
49.09
|
5,400
|
105
|
28.58
|
3,000
|
|||||
Other
|
1,565
|
54.31
|
85,000
|
2,030
|
39.41
|
80,000
|
Report
of Independent Registered Public Accounting Firm
|
15
|
|
Consolidated
Balance Sheet, December 31, 2005
|
16
|
|
Consolidated
Statement of Operations, Years ended December 31, 2005 and
2004
|
17
|
|
Consolidated
Statement of Cash Flows, Years ended December 31, 2005 and
2004
|
18
|
|
Notes
to Consolidated Financial Statements
|
19
|
ASSETS
|
|
|
|
Current
assets:
|
|
|
|
Cash
and cash equivalents
|
$
|
12,261
|
|
Accounts
receivable-
|
|
|
|
Oil
and gas sales
|
|
950
|
|
Well
operations
|
|
1,198
|
|
Total
current assets
|
|
14,409
|
|
|
|
|
|
Oil
and gas properties, at cost (successful efforts):
|
|
|
|
Unproved
properties
|
|
2,909
|
|
Proved
properties
|
|
2,388
|
|
Less
– accumulated depreciation, depletion, amortization and
impairment
|
|
(1,776)
|
|
|
|
3,521
|
|
Investment
in CELLC
|
|
223
|
|
Investment
in Savoy
|
|
4,205
|
|
Other
assets
|
|
246
|
|
|
$
|
22,604
|
|
|
|
|
|
LIABILITIES
AND STOCKHOLDERS’ EQUITY
|
|
|
|
Current
liabilities:
|
|
|
|
Accounts
payable and accrued liabilities
|
$
|
1,346
|
|
Oil
and gas sales payable
|
|
1,494
|
|
Income
tax payable
|
|
208
|
|
Total
current liabilities
|
|
3,048
|
|
|
|
||
Stockholders’ equity:
|
|
|
|
Preferred stock, $.10 par
value;
|
|
|
|
10,000,000 shares authorized;
none
issued
|
|
|
|
Common stock, $ .01 par value;
100,000,000
|
|
|
|
shares authorized, 8,986,319
shares issued
|
|
90
|
|
Additional paid-in
capital
|
|
22,207
|
|
Accumulated deficit
|
|
(2,741)
|
|
|
|
19,556
|
|
|
$
|
22,604
|
|
|
|
Years
ended December 31,
|
|||
|
|
2005
|
|
2004
|
|
Revenue:
|
|
|
|||
Gas
|
$
|
1,012
|
$
|
822
|
|
Oil
|
|
90
|
|
83
|
|
Interest
|
|
544
|
|
167
|
|
|
|
1,646
|
|
1,072
|
|
Costs and expenses:
|
|
|
|
|
|
Lease operating
|
|
227
|
|
149
|
|
Delay rentals
|
|
57
|
|
102
|
|
Impairment – unproved
properties
|
|
183
|
|
144
|
|
Equity loss in CELLC
|
|
103
|
|
|
|
Depreciation, depletion and
amortization
|
|
43
|
|
42
|
|
General and
administrative
|
|
612
|
|
852
|
|
|
|
1,225
|
|
1,289
|
|
|
|
|
|
|
|
Income (loss) from continuing
operations before minority interest
|
|
421
|
|
(217)
|
|
Minority interest
|
|
(84)
|
|
65
|
|
Income (loss) from continuing operations
before taxes
|
|
337
|
|
(152)
|
|
Income tax-current
|
|
(145)
|
|
|
|
Income (loss) from continuing
operations
|
|
192
|
|
(152)
|
|
|
|
|
|
|
|
Income
(loss) from discontinued operations net of minority interest of
$(18) and $592
|
|
(30)
|
|
1,380
|
|
|
|
|
|
|
|
Gain on sale of discontinued operations,
net of taxes of $1,085 and minority interest of $4,168
|
|
|
|
8,642
|
|
|
|
|
|
|
|
Net income
|
$
|
162
|
$
|
9,870
|
|
Net Income (loss) per share –
basic
|
|
|
|
|
|
Continuing operations
|
$
|
.027
|
$
|
(.02)
|
|
Discontinued operations
|
|
(.004)
|
|
.19
|
|
Gain on sale of discontinued
operations
|
|
|
|
1.22
|
|
Net earnings per share
|
$
|
.023
|
$
|
1.39
|
|
|
|
|
|
|
|
Weighted average shares
outstanding-basic
|
|
7,155
|
|
7,093
|
|
|
Years
ended December 31,
|
||||
|
2005
|
|
2004
|
||
Cash flows from operating
activities:
|
|
|
|
|
|
Net income
|
$
|
162
|
|
$
|
9,870
|
Equity loss in CELLC
|
|
103
|
|
|
|
Depreciation, depletion, and
amortization
|
|
43
|
|
|
721
|
Minority interest
|
|
66
|
|
|
4,695
|
Impairment of undeveloped
properties
|
|
183
|
|
|
144
|
Change in accounts
receivable
|
|
(1,197)
|
|
|
812
|
Gain on
sale
of discontinued operations exclusive of $1,705 of bonuses paid in
connection with sale
|
|
|
|
|
(15,600)
|
Change in payables and accrued
liabilities
|
|
1,235
|
|
|
(623)
|
Income taxes payable
|
|
(92)
|
|
|
300
|
Key employee bonus plan
|
|
|
|
|
(253)
|
Other
|
|
10
|
|
|
90
|
Net cash provided by operating
activities
|
|
513
|
|
|
156
|
|
|
|
|
|
|
Cash flows from investing
activities:
|
|
|
|
|
|
Proceeds from property sale
(Cuyama)*
|
|
3,538
|
|
|
18,110
|
Investment in COALition
|
|
(326)
|
|
|
|
Investment in Savoy
|
|
(4,205)
|
|
|
|
Decrease in bonds
|
|
252
|
|
|
|
Properties
|
|
(4,696)
|
|
|
(253)
|
Prospect sale
|
|
1,616
|
|
|
|
Other assets
|
|
(35)
|
|
|
(100)
|
Net cash (used in) provided
by investing activities
|
|
(3,856)
|
|
|
17,757
|
|
|
|
|
|
|
Cash flows from financing
activities:
|
|
|
|
|
|
Repurchase of employee stock
options
|
|
(407)
|
|
|
(1,305)
|
Distributions to limited
partners
|
|
(8,081)
|
|
|
|
Stock sale to Yorktown Energy
VI,
L.P.
|
|
4,165
|
|
|
|
Net cash used in financing
activities
|
|
(4,323)
|
|
|
(1,305)
|
|
|
|
|
|
|
Net (decrease) increase in cash and
cash
equivalents
|
|
(7,666)
|
|
|
16,608
|
Cash and cash equivalents, beginning
of
year
|
|
19,927
|
|
|
3,319
|
Cash and cash equivalents, end of
year
|
$
|
12,261
|
|
$
|
19,927
|
|
|
|
|
|
|
Taxes paid
|
$
|
225
|
|
$
|
785
|
000's
|
|||
Stockholders'
Equity December 31, 2004
|
$
|
13,507
|
|
Proceeds
from stock sale (1,893,169 shares)
|
4,165
|
||
Minority
interest balance
|
1,722
|
||
Net
income
|
162
|
||
Stockholders'
Equity December 31, 2005
|
$
|
19,556
|
2005
|
2004
|
|||||
Current
:
|
||||||
Federal
|
$
|
415
|
$
|
265
|
||
State
|
189
|
361
|
||||
604
|
626
|
|||||
Deferred:
|
||||||
Federal
|
(297)
|
297
|
||||
State
|
(162)
|
162
|
||||
(459)
|
459
|
|||||
$
|
145
|
$
|
1,085
|
2005
|
2004
|
||||
Expected
amount
|
$
|
115
|
$
|
4,864
|
|
Utilization
of tax net operating losses
|
--
|
(2,174)
|
|||
Utilization
of statutory depletion carry forwards
|
--
|
(974)
|
|||
State
income taxes, net of federal benefit
|
16
|
(340)
|
|||
Change
in valuation allowance and other
|
14
|
(291)
|
|||
$
|
145
|
$
|
1,085
|
Current
assets
|
$
|
12,393
|
||
PP&E,
net
|
8,306
|
|||
$
|
20,699
|
|||
Total liabilities
|
$
|
5,450
|
||
Partners
capital
|
15,249
|
|||
$
|
20,699
|
Revenue
|
$
|
6,038
|
||
Gain
on sale
|
3,133
|
|||
9,171
|
||||
Expenses
|
(4,364)
|
|||
Net
income
|
$
|
4,807
|
Analysis of Changes in Proved Developed
Reserves *
(in
thousands)
|
|
||||
|
|
|
|
|
|
|
Oil
|
|
Gas
|
|
|
|
(BBLs)
|
|
(MCF)
|
|
|
Balance at December 31, 2003
|
1,557
|
|
2,384
|
|
|
|
Revisions of previous estimates
|
--
|
|
(266)
|
|
|
Discoveries
|
--
|
|
141
|
|
|
Production
|
(162)
|
|
(280)
|
|
|
Cuyama sale
|
(1,392)
|
|
(546)
|
|
Balance at December 31, 2004
|
3
|
|
1,433
|
|
|
|
Revisions of previous estimates
|
(1)
|
|
(41)
|
|
|
Discoveries
|
|
|
112
|
|
|
Production
|
(2)
|
|
(104)
|
|
Balance at December 31, 2005
(1)
|
0
|
|
1,400
|
|
|
|
|
|
|
|
|
*We have no significant proved
undeveloped reserves.
|
|
|
|
|
|
|
|
|
|
|
|
Equity interest (32%) in Savoy's
Reserves:
|
|
|
|
|
|
|
|
|
|
|
|
Proved developed
|
22
|
|
634
|
|
|
|
|
|
|
|
|
Proved undeveloped
|
43
|
|
712
|
|
|
|
|
|
2005
|
|
|
2004
|
|
|
|
|
|
|
|
|
Future gas revenue
|
$
|
12,350
|
|
$
|
8,200
|
|
Future cash outflows – production
and abandonment costs
|
|
(3,600)
|
|
|
(2,800)
|
|
Future income taxes
|
|
(3,500)
|
|
|
(2,100)
|
|
Future net cash flows
|
|
5,250
|
|
|
3,300
|
|
10% discount factor
|
|
(2,450)
|
|
|
(1,500)
|
SMOG
|
$
|
2,800
|
|
$
|
1,800
|
|
|
|
|
|
|
|
|
Equity interest (32%) in Savoy
(About 50% relates to proved undeveloped
reserves)
|
$
|
4,400
|
|
|
|
|
|
|
|
2005
|
|
|
2004
|
|
|
|
|
|
|
|
|
|
|
SMOG, beginning of year
|
$
|
1,800
|
|
$
|
11,500
|
|
|
Sales of oil and gas, net of production
costs
|
|
(875)
|
|
|
(3,600)
|
|
|
Net changes in prices and production
costs
|
|
2,160
|
|
|
(350)
|
|
|
Revisions
|
|
(165)
|
|
|
(300)
|
|
|
Discoveries
|
|
450
|
|
|
100
|
|
|
Change in income taxes
|
|
(750)
|
|
|
(1,200)
|
|
|
Accretion of discount
|
|
180
|
|
|
1,150
|
|
|
Cuyama sale
|
|
--
|
|
|
(5,500)
|
|
SMOG, end of year
|
$
|
2,800
|
|
$
|
1,800
|
||
SUMMARY
COMPENSATION TABLE
|
|||||||
Annual
Compensation
|
|||||||
Name
and Principal Position
|
Year
|
Salary
|
Bonus
|
Other
Annual Compensation
|
Stock
Options
|
||
Victor
P. Stabio, CEO
|
2005
|
$100,000
|
$
3,846
|
|
$
0
|
400,000
|
|
2004
|
137,000
|
632,000
|
(1)
|
1,251,900
|
(3)
|
||
2003
|
146,000
|
73,500
|
(1)
|
6,000
|
(2)
|
(1)
|
Relates to the
Key
Employee Bonus Plan.
|
|
|
(2)
|
Our contribution
to
the 401(k) Plan.
|
|
|
(3)
|
Includes the
purchase of 545,000 stock options at a cost of $1.80 per option or
$981,000 in October 2004 and $265,000 for the options to purchase
1.75% of
Hallador Petroleum, LLP paid in January
2005.
|
|
|
|
|
|
|||
Plan
Category
|
Number
of Securities to be issued upon exercise of outstanding options,
warrants
and rights
(a)
|
Weighted-average
exercise price of outstanding options, warrants
and rights
(b)
|
Number
of securities remaining available for future issuance under equity
compensation plans (excluding securities reflected in column
(a))
(c)
|
|
|||
Equity
compensation plans approved by security
holders
|
750,000
|
$2.25
|
0
|
|
|||
Equity
compensation plans not approved by security holders
|
0
|
0
|
0
|
|
|||
Name
|
No.
Shares
(1)
|
%
of Class
(1)
|
|
|
|
David
Hardie and Steven Hardie as Nominee for Hardie Family Members
(2)
|
3,573,341
|
29
|
|
|
|
Victor P.
Stabio(6)
|
208,270
|
2
|
|
|
|
Cortlandt S.
Dietler
(3)
|
100,000
|
1
|
|
|
|
Bryan H.
Lawrence (4)
|
6,607,166
|
54
|
|
|
|
Lubar &
Associates (5)
|
823,276
|
7
|
|
|
|
All directors
and
executive officer as a group
|
10,488,777
|
86
|
|
|
|
(1)
|
Based
on total outstanding shares of 12,168,135. Beneficial
ownership of certain shares has been, or is being, specifically disclaimed
by certain directors in ownership reports filed with the
SEC.
|
|
|
(2)
|
The
Hardie family business address is 3000 S Street, Suite 200,
Sacramento, California, 95816.
|
|
|
(3)
|
Mr.
Dietler’s address is P. O. Box 5660, Denver, Colorado
80217. All shares are held by Pinnacle Engine Company LLC, wholly
owned by Mr. Dietler.
|
|
|
(4)
|
Mr.
Lawrence’s address is 410 Park Avenue, 19th Floor,
New York, NY 10022. Mr. Lawrence owns 50,000 shares directly, and
the remainder is held by Yorktown Energy Partners VI, L.P., an
affiliate.
|
|
|
(5)
|
Lubar
&
Associates address
is 700 North Water Street,
Suite 1200, Milwaukee, WI 53202.
|
|
|
(6)
|
Includes
133,333 options exercisable within sixty days of April 4,
2006.
|
|
|
3.1
|
Restated
Articles of Incorporation of Kimbark Oil and Gas Company, effective
September 24, 1987 (1)
|
3.2
|
Articles
of Amendment to Restated Articles of Incorporation of Kimbark Oil
&
Gas Company, effective December 14, 1989, to effect change of name
to
Hallador Petroleum Company and to change the par value and number
of
authorized shares of common stock (1)
|
3.3
|
Amendment
to Articles of Incorporation dated December 31, 1990 to effect the
one-for-ten reverse stock split (2)
|
3.4
|
By-laws
of Hallador Petroleum Company, effective November 9, 1993
(4)
|
10.1
|
Composite
Agreement and Plan of Merger dated as of July 17, 1989, as amended
as
of August 24, 1989, among Kimbark Oil & Gas Company, KOG
Acquisition, Inc., Hallador Exploration Company and Harco Investors,
with
Exhibits A, B, C and D (1)
|
10.2
|
Hallador
Petroleum Company 1993 Stock Option Plan *(3)
|
10.3
|
Hallador
Petroleum Company Key Employee Bonus Compensation Plan
*(3)
|
10.4
|
First
Amendment to the 1993 Stock Option Plan *(6)
|
10.5
|
First
Amendment to Key Employee Bonus Compensation Plan
*(6)
|
10.6
|
Stock
Purchase Agreement with Yorktown dated November 15, 1995
(6)
|
10.7
|
Second
Amendment to Key Employee Bonus Compensation Plan
*(7)
|
10.8
|
Hallador
Petroleum, LLP Agreement (9)
|
10.9
|
Hallador
Petroleum, LLP Stock Option Agreement *(9)
|
10.10
|
Purchase
And Sale Agreement Among Hallador Petroleum Company, Hallador Production
Company, Hallador Petroleum, LLP, Santa Barbara Partners, Trio Petroleum
Inc., Cuyama Drilling and Production Company And South Cuyama Limited
Partnership ("Sellers") And E&B Natural Resources Management
Corporation and WRBD II, LP ("Buyers") (11)
|
10.11
|
Subscription
Agreement - by and between Hallador Petroleum Company and Yorktown
Energy
Partners VI, L.P, dated December 20, 2005.(12)
|
10.12
|
Purchase
and Sale Agreement dated December 31, 2005 between Hallador Petroleum
Company, as Purchase and Yorktown Energy Partners II, L.P., as Seller
relating to the purchase and sale of limited partnership interests
in
Savoy Energy Limited Partnership (13)
|
10.13
|
Letter
of Intent dated January 5, 2006 between Hallador Petroleum Company
and
Sunrise Coal, LLC (14)
|
10.14
|
Subscription
Agreement - by and between Hallador Petroleum Company and Yorktown
Energy
Partners VI, L.P., et al dated February 22, 2006.
(15)
|
10.15
|
Subscription
Agreement - by and between Hallador Petroleum Company and Hallador
Alternative Assets Fund LLC dated February 14, 2006.
(16)
|
10.16
|
Subscription
Agreement - by and between Hallador Petroleum Company and Tecovas
Partners
V LP dated February 14, 2006. (16)
|
10.17
|
Subscription
Agreement - by and between Hallador Petroleum Company and Lubar
Equity Fund LLC dated February 14, 2006. (16)
|
10.18
|
Subscription
Agreement - by and between Hallador Petroleum Company and Murchison
Capital Partners LP dated February 14, 2006. (16)
|
14.
|
Code
Of Ethics For Senior Financial Officers. (16)
|
21.1
|
List
of Subsidiaries (2)
|
31
|
SOX
302 Certification (16)
|
32
|
SOX
906 Certification (16)
|
(1)
Incorporated
by reference (IBR) to the 1989 Form 10-K.
|
(9)
IBR to the 1997 Form 10-KSB.
|
(2)
IBR to the 1990 Form 10-K.
|
(10)
Not used.
|
(3)
IBR to the 1992 Form 10-KSB.
|
(11)
IBR to June 30, 2004 Form 10-QSB.
|
(4)
IBR to the 1993 Form 10-KSB.
|
(12)
IBR to Form 8-K dated December 31, 2005
|
(5)
Not used.
|
(13)
IBR to Form 8-K dated January 3, 2006
|
(6)
IBR to the 1995 Form 10-KSB.
|
(14)
IBR to Form 8-K dated January 6, 2006
|
(7)
IBR to the September 30, 1996 Form 10-QSB.
|
(15)
IBR to Form 8-K dated February 27, 2006
|
(8)
Not
used.
|
(16)
Filed herewith.
|
*
Management
contracts or compensatory plans.
|
|
|
2005
|
|
|
2004
|
|
|
|
|
|
|
|
|
Audit
Fees
|
$
|
64,500
|
|
$
|
56,000
|
|
Audit-related
fees
|
|
|
|
|
|
|
Tax
fees
|
|
15,000
|
|
|
31,000
|
|
All
other fees
|
|
|
|
|
|
|
Total
fees
|
$
|
79,500
|
|
$
|
87,000
|
|
|
|
HALLADOR
PETROLEUM COMPANY
|
|
|
|
|
|
|
|
|
|
Dated:
April 14, 2006
|
|
BY:/S/
VICTOR P. STABIO
VICTOR
P. STABIO, CEO
|
|
|
|
/S/
DAVID HARDIE
DAVID
HARDIE
|
Chairman
|
April
14, 2006
|
|
|
|
/S/
VICTOR P. STABIO
VICTOR
P. STABIO
|
CEO,
CFO, CAO and Director
|
April
14, 2006
|
|
|
|
/S/
BRYAN LAWRENCE
BRYAN
LAWRENCE
|
Director
|
April
14, 2006
|
|
|
|