OREANDA-NEWS. Hallador Energy today said it will lay off 175 employees and modify some of its coal sales contracts to allow buyers to take less coal this year.

Hallador is letting go the 175 workers as it transfers resources from its Carlisle mine in Indiana to its neighboring Oaktown complex.

Hallador has agreed to modify customer coal contracts to allow buyers to take less coal this year, as a result of mild weather and "a glut of low-priced" natural gas.

"Most of our customers were surprised by these conditions and purchased too much coal for 2015," Hallador said. "In an effort to assist our customers to balance their current needs and to secure long-term fuel supply, we agreed to modify several of our contracts."

Hallador has 3.3mn short tons (2mn metric tonnes) contracted for the second half of the year. On 11 May, it said it had 6.98mn st priced and under contract for the remainder of the year, implying total volumes of just over 9.12mn st for 2015.

The contract modifications pushed more volumes into 2016 and 2017, at 6.1mn st and 4.2mn st, respectively. In May, the company's coal sales commitments for 2016 and 2017 were 4.37mn st and 2.93mn st, respectively.

As the company ramps up operation at its Oaktown complex to 90pc of its total production, it will reduce output at Carlisle. Currently, the two Oaktown mines makes up about 70pc of production, while Carlisle makes up the remainder.

The three mines produced 3.95mn st in the first half of this year and 8.48mn st all of last year.

Hallador subsidiary Sunrise Coal employs about 1,000 people on the site. On 26 June, it laid off 18 employees at Carlisle and another 20 contractors at Oaktown.

The company bought the Oaktown 1 and 2 mines from Vectren Energy in August 2014 and has been trying to operate those properties and Carlisle as one large complex.

But the pricing and demand environment do not support expanding operations. The company has encountered difficult mining conditions at the Carlisle mine that have made it more expensive to operate and pushed the company to restructure its plans for the property.