It’s an unusual career arc that brings a CFO back to a company for a second go-round, especially when the two tenures are separated widely in time. Such is the case with W. Anderson “Andy” Bishop, who first served as finance chief of Hallador Petroleum from 1990 to 1993, then returned to the post in September.
But although the job is the same, the company has changed — dramatically. The first time Bishop was CFO, Hallador was an oil and gas exploration and production company. Today it is primarily a coal-mining enterprise. Although both natural resources are used to generate energy, some aspects of oil and coal operations are very different from one another, such as the way costs are allocated.
Bishop, however, never completely disassociated himself from Hallador. Following his first stint with the company, he became CFO and one-third owner of the SEC Institute, a private firm that provides training on Securities and Exchange Commission filing and reporting requirements. For the ensuing 16 years, under contract, he continued to help Hallador make its regulatory filings.
Hallador, which knows with a fair degree of precision that its revenue this year will be about $115 million, is traded — thinly — on the OTC Bulletin Board. The stock recently traded at $7.50, giving the company a market capitalization of $208 million. But Bishop has his eye on a jump to the Nasdaq Stock Market, so that company insiders, who own more than 90% of the stock, will have a better market in which to sell their shares. Following is an edited version of CFO‘s interview with Bishop.
What was behind the change in Hallador’s business?
We had an oil field in California, in Santa Barbara County. It was funny — when people heard that they always said, “Oh, it must be pretty there.” It wasn’t. The field was on the other side of the mountains in a desert-type area. Anyway, when oil prices started going up, people got interested in buying it. [The field was sold in October 2004, followed by most of Hallador's unproved oil and gas properties. The company still owns a 45% equity interest in Savoy Energy, an oil and gas company with operations in Michigan.]
“It is dumb to have to spend a lot of money [auditing internal controls]. The costs outweigh the benefits.” — Hallador Petroleum CFO Andy Bishop
Hallador’s majority shareholder, a private-equity firm called Yorktown, asked the company to poke around and check out the coal business, especially in the Illinois Basin, which is actually in Indiana. So it got involved in Sunrise Coal, which currently operates one underground mine. By July 2008, Hallador owned 80% of Sunrise, and this September we bought the remaining 20%.
How’s the business doing?
Last year coal prices shot up, and the company signed some long-term contracts with utilities at very good prices. We’re making good money. We plan to sell about 2.7 million tons of coal a year, and our average price is about $40 per ton. That makes about $110 million. [Hallador's net income was $14.4 million for the three quarters ended September 30, up from $6.3 million in the first nine months of 2008.]