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<SEC-DOCUMENT>0000788965-01-000003.txt : 20010409
<SEC-HEADER>0000788965-01-000003.hdr.sgml : 20010409
ACCESSION NUMBER:		0000788965-01-000003
CONFORMED SUBMISSION TYPE:	10KSB40
PUBLIC DOCUMENT COUNT:		3
CONFORMED PERIOD OF REPORT:	20001231
FILED AS OF DATE:		20010402

FILER:

	COMPANY DATA:	
		COMPANY CONFORMED NAME:			HALLADOR PETROLEUM CO
		CENTRAL INDEX KEY:			0000788965
		STANDARD INDUSTRIAL CLASSIFICATION:	CRUDE PETROLEUM & NATURAL GAS [1311]
		IRS NUMBER:				841014610
		STATE OF INCORPORATION:			CO
		FISCAL YEAR END:			1231

	FILING VALUES:
		FORM TYPE:		10KSB40
		SEC ACT:		
		SEC FILE NUMBER:	000-14731
		FILM NUMBER:		1591520

	BUSINESS ADDRESS:	
		STREET 1:		1660 LINCOLN ST STE 2700
		CITY:			DENVER
		STATE:			CO
		ZIP:			80264
		BUSINESS PHONE:		3038395505

	MAIL ADDRESS:	
		STREET 1:		1660 LINCOLN STREET
		STREET 2:		SUITE 2700
		CITY:			DENVER
		STATE:			CO
		ZIP:			80264

	FORMER COMPANY:	
		FORMER CONFORMED NAME:	KIMBARK OIL & GAS CO /CO/
		DATE OF NAME CHANGE:	19900102

	FORMER COMPANY:	
		FORMER CONFORMED NAME:	KIMBARK INC
		DATE OF NAME CHANGE:	19860624
</SEC-HEADER>
<DOCUMENT>
<TYPE>10KSB40
<SEQUENCE>1
<FILENAME>0001.txt
<TEXT>

                            UNITED STATES
                 SECURITIES AND EXCHANGE COMMISSION
                      Washington, D. C.  20549

                             FORM 10-KSB

[x]  ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
     ACT OF 1934

     For the fiscal year ended December 31, 2000

[ ]  TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES
     EXCHANGE ACT OF 1934

                    Commission file number: 0-14731

                       HALLADOR PETROLEUM COMPANY

          COLORADO                               84-1014610
  (State of incorporation)            (IRS Employer Identification No.)


   1660 Lincoln Street, Suite 2700, Denver, Colorado      80264-2701
      (Address of principal executive offices)            (Zip Code)

Issuer's telephone number: 303.839.5504            Fax: 303.832.3013

Securities registered under Section 12(b) of the Exchange Act:  NONE

Securities registered under Section 12(g) of the Exchange Act: Common
Stock,$.01 par value

Check whether the issuer (1) filed all reports required to be filed by
Section 13 or 15(d) of he Exchange Act during the past 12 months (or for
such shorter period that the registrant was required to file such
reports), and (2) has been subject to the filing requirements for the
past 90 days. Yes x No

Indicate by check mark if disclosure of delinquent filers pursuant to
Item 405 of Regulation S-B is not contained in this form, and no
disclosure will be contained, to the best of registrant's knowledge, in
definitive proxy or information statements incorporated by reference in
Part III of this Form 10-KSB or any amendment to this Form 10-KSB. [x]

Our revenue for the year ended December 31, 2000 was $8,272,000.

At March 30, 2001, we had 7,093,150 shares outstanding and the aggregate
market value of such shares held by non-affiliates was about $3.3
million based on a price of $4.19, which was the last reported trade on
that date.


DOCUMENTS INCORPORATED BY REFERENCE: NONE


ITEM 1.  DESCRIPTION OF BUSINESS

General Development of Business
- -------------------------------

Hallador Petroleum Company, a Colorado corporation, was organized by our
predecessor in 1949.

About four years ago, Yorktown Energy Partners II and affiliates
(Yorktown) invested $5,025,000 in Hallador Petroleum, LLP, a newly
formed limited liability limited partnership.  We are the general
partner and received a 70% interest in the partnership in return for
contributing our net assets, and Yorktown represents the limited
partners and received a 30% interest for its $5,025,000 cash
contribution.  As general partner, we consolidate the activity of the
partnership and present the 30% limited partners' interest as a minority
interest.

We and our principal operating subsidiaries, Hallador Production Company
and Hallador Petroleum, LLP, are engaged in the exploration, development
and production of oil and natural gas.  Our principal and administrative
offices are located at 1660 Lincoln Street, Suite 2700, Denver, Colorado
80264, phone 303.839.5504, fax 303.832.3013.  The South Cuyama field
office is located in New Cuyama, California.  We have no website.

88% of our oil and gas revenue is attributable to the South Cuyama
field  (the "SC Field") located in Santa Barbara County, California,
approximately 75 miles southwest from Bakersfield, California.  We own
92% of Santa Barbara Partners (SBP), an Oklahoma general partnership,
which has a 93% working interest (78% net revenue interest) in the SC
Field.  The SC Field's oil reserves consist of light oil at 29 degree
gravity.

We operate oil and natural gas properties for our own account and for
the account of others.  We also review and evaluate producing oil and
natural gas properties, companies, or other entities, which meet certain
guidelines for acquisition purposes.  In addition, we engage in the
trading and acquisition of non-producing oil and gas mineral leases and
fee-simple minerals.

Markets
- -------

Our products are sold to various purchasers in the geographic area of
the properties.  Natural gas, after processing, is distributed through
pipelines.  Oil and natural gas liquids (NGLs) are distributed through
pipelines or hauled by trucks.  The principal uses for oil and natural
gas are heating, manufacturing, power, and transportation.

At March 30, 2001, we were receiving $22.93 per barrel for our
California oil production, which is $4.81 less than the average price
received during 2000 and $1.80 above the December 31, 2000 price.
The SC Field's oil is sold to EOTT Energy Corp. pursuant to a "spot
market" contract, which can be cancelled by either party with 30 days
notice.  The contract pays a $.20 per barrel premium to "spot market"
postings.

The SC Field's natural gas is sold to Aera Energy, L.L.C., a joint
venture between Exxon Mobil and Shell, pursuant to a "spot market"
contract, which can be cancelled by either party with 60 days notice.

NGLs are sold to EOTT Energy Corp. pursuant to a "spot market"
contract, which can be cancelled by either party with 30 days notice.

Competition
- -----------

The oil and gas industry is highly competitive.  We encounter
competition from major and independent oil companies in acquiring
economically desirable producing properties, drilling prospects, and
even the equipment and labor needed to drill, operate and maintain our
properties.  Competition is intense with respect to the acquisition of
producing and partially developed properties.  We compete with companies
having financial resources and technical staffs significantly larger
than our own. We do not own any refining or retail outlets and have
minimal control over the prices of our products.  Generally, higher
costs, fees and taxes assessed at the producer level cannot be passed
on to our customers.

We also face competition from imported products as well as alternative
sources of energy such as coal, nuclear, hydro-electric power, and a
growing trend toward solar. We could incur delays or curtailments of the
purchase of our available production.  We may also encounter increasing
costs of production and transportation while sale prices remain stable
or decline.  Any of these competitive factors could have an adverse
effect on our operating results.

Environmental and Other Regulations
- -----------------------------------

Our operations are affected in varying degrees by federal, state,
regional and local laws and regulations, including, but not limited to,
laws governing allowable rates of production, well spacing, air
emissions, water discharges, endangered species, marketing, prices and
taxes.  We are further affected by changes in such laws and by
constantly changing administrative regulations.

Most natural gas pricing is presently deregulated and the remaining
regulation has no material impact on our prices.  We cannot predict the
long-term impact of future natural gas price regulation or deregulation.

We are subject to various federal, state, regional and local laws and
regulations relating to discharge of materials into, and protection of,
the environment.  These laws and regulations may, among other things,
impose liability on the owner or the lessee for the cost of pollution
clean-up resulting from operations, subject the owner or lessee to
liability for pollution damages, require suspension or cessation of
operations in affected areas or impose restrictions on injection into
subsurface aquifers that may contaminate groundwater.  Such regulation
has increased the resources required in, and costs associated with,
planning, designing, drilling, installing, operating and abandoning our
oil and natural gas wells and other facilities.  We spend a significant
amount of technical and managerial time to comply with environmental
regulations and permitting requirements.

We have and will continue to make expenditures to comply with these
requirements, which we believe are necessary business costs.  Although
environmental requirements do have a substantial impact upon the energy
industry, generally these requirements do not appear to affect us any
differently or to any greater or lesser extent than other companies in
California.

Although we are not fully insured against all environmental and other
risks, we maintain insurance coverage, which we believe, is customary in
the industry.

During 2000, we incurred about $64,000 to comply with these recurring
environmental regulations.  We estimate that such expenditures for 2001
and for each year thereafter, in the foreseeable future, will
approximate $67,000.  We will continue to use our best efforts to comply
with all applicable environmental laws and regulations.  See Item 6 -
Management's Discussion and Analysis (MD&A) for a discussion regarding
idle wells in the SC Field.

To the extent these environmental expenditures reduce funds available
for increasing our reserves of oil and natural gas, future operations
could be adversely impacted.  Despite the fact that all of our
competitors have to comply with similar regulations, many are much
larger and have greater resources with which to deal with these
regulations.

Other
- -----

We have no significant patents, trademarks, licenses, franchises or
concessions.

The oil business is not generally seasonal in nature; although unusual
weather extremes for extended periods may increase or decrease demand.
Natural gas prices tend to increase in the fall and winter months and to
decrease in the spring and summer.

We have 29 employees; seven are located at our executive office in
Denver and 22 are located at the SC Field.  When needed we also engage
consulting petroleum engineers, environmental professionals, geologists,
geophysicists, landmen, accountants and attorneys on a fee basis.

ITEM 2.  DESCRIPTION OF PROPERTY

Location and General Character
- ------------------------------

Our various operating areas consist of (i) the SC Field located 75 miles
southwest from Bakersfield, California, (ii) the Sac Basin located 70
miles north of Sacramento, (iii) "South Texas", located 75 miles west of
Houston, and (iv) the San Juan Basin, located in the northwest corner of
New Mexico.  Revenue from the SC Field accounted for 88% of 2000 oil and
gas revenue, South Texas accounted for 3%, the Sac Basin accounted for
5%, and San Juan accounted for 4%.

We hold our working interests in oil and natural gas properties either
through recordable assignments, leases, or contractual arrangements such
as operating agreements.  Consistent with industry practices, we do not
make a detailed examination of title when we acquire undeveloped acreage.
Title to such properties is examined by legal counsel prior to
commencement of drilling operations.  This method of title examination
is consistent with industry practices.

In the acquisition and operation of oil and natural gas properties,
burdens such as royalty, overriding royalty, liens incident to operating
agreements, liens by taxing authorities, as well as other burdens and
minor encumbrances are customarily created. We believe that no such
burdens materially affect the value or use of our properties.

Proved Oil and Gas Reserves
- ---------------------------

Information concerning our reserve estimates is set forth in Note 7 to
the financial statements.  The reserve estimates were prepared by a
consulting petroleum engineer.  All of our oil and gas reserves are
located onshore.

The South Cuyama Field
- ----------------------

Discovered in 1949 in the Cuyama Valley, Santa Barbara County,
California, the SC Field became the largest oil field found to date in
the valley and is located approximately 75 miles southwest from
Bakersfield.  By 1951, the SC Field contained 200 wells producing
approximately 40,000 barrels of oil per day.

Since inception, the SC Field is estimated to have produced over 222
million barrels of crude oil.  Current oil production to the 100% is
about 800 barrels per day.  Currently, there are 66 producing wells.
The wells produce from a depth range of 3,400 to 4,800 feet.

Sales and Price Data for all Properties
- ---------------------------------------

See Item 6 - MD&A

Producing Wells
- ---------------

As of March 30, 2001, we had a working interest in 61 gross (54 net) oil
wells and 29 gross (7 net) gas wells.

Leasehold Interests
- -------------------

The following table sets forth our gross and net acres of undeveloped
oil and gas leases as of March 30, 2001:

<TABLE>
<CAPTION>

                                         Gross            Net
                                         -----           -----
          <S>                            <C>             <C>
          South Cuyama, California       3,375           2,797
            Option acreage               6,706           4,828
          Sac Basin, California            968             290
          North Dakota                  46,492           7,566
          Texas                          1,660             307
          Utah                           5,777           5,777
          Wyoming                       48,486          37,095
                                       -------          ------
                                       113,464          58,660
                                       =======          ======
</TABLE>

We have an interest in 3,777 gross (2,707 net) developed acres in the
SC Field.

Drilling Activity
- -----------------

From January 1, through March 30, 2001, we drilled one development oil
well and one exploratory gas well in SC Field and one exploratory gas
well (25% WI) in East Texas.  All three wells were successful.  Another
SC Field development oil well was recently abandoned during the drilling
phase.

During 2000, we drilled one successful development oil well in the SC
Field.  In the Sac Basin, we drilled two exploratory gas wells that were
dry.  In South Texas we drilled an exploratory gas well which was dry.
In the San Juan Basin, we drilled three successful development gas
wells.  We also participated in one exploratory oil well in Noble
County, Oklahoma that was dry in which we had a 10% WI.

During 1999, we drilled six development oil wells in the SC Field.
Four were successful and two were dry. In the Sac Basin we drilled
three exploratory gas wells.  One was successful and the other two
were dry.  In South Texas we drilled four exploratory gas wells.
Three were successful and one experienced mechanical problems after
producing for several months and was P & A.

We have an 88% WI in the SC Field, a 30% WI in the Sac Basin, a 14%
WI in South Texas, and a 6% WI in the San Juan wells.

ITEM 3.  LEGAL PROCEEDINGS: None

ITEM 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS: None


                                  PART II

ITEM 5.  MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

Our common stock is traded on the OTC Bulletin Board under the symbol
"HPCO".  The following table sets forth the high and low sales price
for the periods indicated:

<TABLE>
<CAPTION>
                                                     High         Low
                                                     ----        ----
       <S>                                           <C>         <C>
       2001
          First quarter (through March 30, 2001)     $4.19       $1.75

       2000
          First quarter                               1.38         .66
          Second quarter                              3.75        1.38
          Third quarter                               3.00        2.38
          Fourth quarter                              2.50        2.06

       1999
          First quarter                                .75         .75
          Second quarter                              1.00         .75
          Third quarter                               1.06         .88
          Fourth quarter                                75         .66

</TABLE>

During the last two years no dividends were paid.  We have no present
intention to pay any dividends in the foreseeable future.

As of March 30, 2001 there were 429 holders of record of our common
stock and the last recorded sales price was $4.19.

ITEM 6.  MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION

Overview
- --------

Our financial statements should be read in conjunction with this
discussion.  Our various operating areas consist of (i) the South Cuyama
field (SC Field) located 75 miles southwest from Bakersfield,
California, (ii) the Sac Basin located 70 miles north of Sacramento,
(iii) "South Texas" located 75 miles west of Houston and (iv) the San
Juan Basin located in the northwest corner of New Mexico.  Due to its
significance, our value depends on the estimated future cash flows from
the SC Field.  We intend to maximize cash flow by continuing to
increase oil and gas production and keeping operating expenses low.
Future operations will also be affected by the results of the development
and exploration activity discussed below.

About four years ago, Yorktown Energy Partners II and affiliates
(Yorktown) invested $5,025,000 in Hallador Petroleum, LLP, a newly
formed limited liability limited partnership.  We are the general
partner and received a 70% interest in the partnership in return for
contributing our net assets and Yorktown represents the limited partners
and received a 30% interest for its $5,025,000 cash contribution.  As
general partner, we consolidate the activity of the partnership and
present the 30% limited partners' interest as a minority interest.

Our profitability in any particular accounting period will be directly
related to:  (i) prices, (ii) production, (iii) lifting costs, and (iv)
exploration activities.  Accordingly, operating results will fluctuate
from period to period based on these factors, among others.

What follows is a discussion of our various operating areas.


     South Cuyama Field
     ------------------

During October 2000, we completed a 3-D project on adjoining acreage
east of the SC Field.  The cost of this project was $350,000 to the
100%.   We have an 80% WI in this project.  The data was evaluated during
January 2001 and several drillable prospects were identified.  The first
exploratory gas well was drilled during March 2001.  This well, the Cox
Federal 41-5, is producing 1,000 MCF per day.  Perforations were between
3,454 feet and 3,472 feet in the Santa Margarita formation.  Two additional
pay zones totaling fifty feet were also encountered in the formation.
Because it is too early to judge the success of this well, we have not
booked any new gas reserves.  We are the operator and own a 70%
working interest and a 60% revenue interest.  The cost to drill and
complete this well was about $260,000 to the 100%.  This well is an
important step in validating our 3-D seismic project.  We are reviewing
our 3-D seismic data to identify other locations to drill.

Two development oil wells were drilled during March 2001, one is
producing about 20 barrels per day and the other was abandoned during
the drilling phase.  Two more wells are planned for April 2001.  One
development oil well was drilled during October 2000 and is currently
producing 11 barrels per day.

We had a significant downward revision in the oil reserves of 693,000
barrels due primarily to lower actual production rates experienced
during 2000 compared to those estimated at December 31, 1999.

In January 2001, our monthly electricity costs increased by about
$12,000 due to the California electrical crisis.  We have been told
by PG&E that our April electricity costs will increase by another
$43,000 per month due to the crisis.  Last year our average monthly
electricity cost in the field was $73,000; we estimate that starting
in April our average monthly electricity cost will be $128,000.
With all of the current uncertainty and turmoil that exists in the
California electrical marketplace, we can provide no assurance as to
the timing and nature of the resolution of the electrical crisis.
If electrical costs continue to increase, we will have to shut in
certain oil wells. As this crisis continues, future cash flow will
decrease and so will reserve estimates.

PV10 for the SC Field using December 31, 2000 prices is $7,135,000.
Using current prices of $22.93 for oil and $4.89 for gas and anticipated
LOE, which reflects higher electricity prices which may or may not
continue in the future, a rough estimate of the PV10 would be in the
$5,000,000 range.  During the next several months we will perform a
study to develop the proper strategy to optimize the cash flow from
the SC Field considering these higher electricity costs.

     The Merlin Prospect of the Sac Basin  - Northern California
     ----------------------------------------------------------

This field is located about 70 miles north of Sacramento, California.
Equity Oil Company (Equity) of Salt Lake City, Utah is the operator.
Presently we have two producing gas wells.  We are currently consulting
with Equity regarding the possibility of drilling an exploratory gas
well during 2001.  We have a 30% WI (24% NRI) in this field.  These
wells have an estimated remaining life of four years.  Our PV10 for
this field is $1,047,000 at December 31, 2000 based on prices of $13.95
per mcf.  Using current lower gas prices of $11.04 our PV10 is $781,000.

     Davis Ranch Prospect of the Sac Basin
     --------------------------------------

This prospect, which is approximately 20 miles south of the Merlin
prospect, was brought to us by Equity. During the second quarter we
participated in the drilling of two exploratory dry holes at a cost to
us of $259,000.  No further drilling is planned for this prospect.

     South Texas
     -----------

This gas field is located about 75 miles west of Houston in Colorado
County.  Marquee Corporation of Corpus Christi, Texas is the operator
of these gas wells.  We have a 14% WI (11% NRI) in this field.
Presently, we have two producing gas wells.  These wells have an
estimated remaining life of three years.

During June, we participated in the drilling of one exploratory gas
well, which was dry.  Our cost was about $26,000.  During March 2001,
we recompleted an existing well and it is producing 450 mcfpd. Because
it is too early to judge the success of this recompletion, we have not
booked any new reserves for this well.

Our PV10 for this field is $250,000 at December 31, 2000 based on prices
of $5.83.  Using current lower gas prices of $4.86 our PV10 is $188,000.

Due to rig shortages, an exploratory gas well that was to be drilled in
the fourth quarter of 2000 is now scheduled for the second quarter 2001
at a cost of $210,000 to the 100% to drill and complete.

     San Juan Basin
     --------------

This gas field is located in the NW corner of New Mexico in San Juan
County.  Three development gas wells were drilled in early spring 2000.
We have an interest in twenty wells and are the operator.  These wells
have and estimated remaining life of twenty years.  The PV10 for this
field at December 31, 2000 was $3,381,000 based on prices of $6.99.
Using lower current gas prices of $5.66 the PV10 is $2,660,000. Our WI
in this field ranges from 5%-10% with NRI between 4%-8%.

Nine additional development wells have been identified and we plan to
drill two or three of them in the third and fourth quarter of 2001.  The
cost to the 100% to drill and complete these wells are about $400,000
each.

     East Texas
     ----------

This is a new prospect for us located about 150 miles southeast of
Dallas in Nacogdoches County.  We participated in an exploratory gas
well, which hit total depth in early March 2001.  Based on the
preliminary results, we're cautiously optimistic.  We are currently
waiting on a completion rig; sales are expected to commence sometime in
April 2001.  The well was drilled vertically to about 7,500 feet then
drilled laterally at two different depths extending each lateral about
5,000 feet.  These types of wells are very expensive to drill.  Our
investment will be about $510,000.  We have a 25% WI (20% NRI).
Hallwood Energy of Denver is the operator.

A second exploratory gas well is planned to be drilled in the summer of
2001 in Shelby County, Texas, about 20 miles east from the Nacogdoches
County well.  El Paso Energy will be the operator. We have a 7% WI (6%
NRI).  The cost to drill and complete this well to the 100% is about
$2,000,000, our share would be about $150,000.

     Paradox Basin - Utah
     --------------------

During June 1998, we leased about 5,800 acres in the Paradox Basin, Utah
(about 25 miles from the Four Corners area).  The leases are with the
Federal government and the State of Utah and expire between 2003 and
2008. We invested about $200,000.  We are evaluating the sale of this
prospect or possibly shooting some 3-D seismic.


Catalytic Solutions Investment
- ------------------------------

During 1998, we invested $62,000 for a half percent (.005) ownership in
Catalytic Solutions, Inc. (CSI) located in Oxnard, California (a Los
Angeles suburb).  CSI manufactures catalytic converters that reduce
toxic emissions from internal combustion engines. Honda Motor Company
uses the product and during 2000 purchased a 10% interest in CSI.
During 2000, we invested another $113,000 in CSI.  Our current ownership
is about 1%.

Marketable Securities
- ---------------------

In June 1998 and through November 1999, we invested in several publicly
traded drilling and services companies.  We sold all of our interest in
these companies in late November 1999 and have no plans to make a
similar investment in the future.  During this 18-month period, we
recognized a net gain of about $161,000 from these investments.

Environmental and Regulation
- ----------------------------

We are directly affected by changing environmental rules and
regulations. Although we believe our operations and facilities
are in compliance with applicable environmental regulations, risk of
substantial cost and liabilities resulting from an unintentional breach
of environmental regulations are inherent to oil and gas operations.
It is possible that other developments, such as increasingly strict
environmental laws, regulations, and enforcement policies or claims for
damages could result in significant costs and liability in the future.

In January 1999, the California legislature passed a bill, which
increased our operator's bond from $100,000 to $250,000 over a five-year
period.  In addition, an idle well bill was passed to ensure that funds
would be available to properly plug and abandon (P&A) California wells
upon their depletion. Over the next ten years, we as the SC Field's
operator, are required to place in an interest-bearing escrow account
$500 per year for each idle well in the SC Field until such well is
plugged and abandoned or until $5,000 has been deposited.  Installments
of $60,000 and $68,000 were paid in June 1999 and 2000, respectively.
We estimate that after ten annual installments we will have met the
current funding obligation of $700,000 considering the interest to be
earned.  As the SC Field depletes, and more wells move from the
producing category to the idle-well category we will have to make
additional annual payments.  Presently, there are 280 wells in the SC
Field, 140 of which are classified as "idle".

During 1999, we began amortizing, using the units-of-production method,
our share of the estimated future costs ($1,207,000) to P&A the SC
Field's 280 wells.  Included in the DD&A expense for 1999 and 2000 was
$85,000 and $113,000, respectively, associated with these estimated
future costs.

Washington County, Colorado Gas Plant
- -------------------------------------

In late February 2001, we were notified by the Colorado Oil and Gas
Conservation Commission that we must conduct a site investigation of a
gas plant that our predecessor operated forty years ago.   It is our
understanding that the plant has not been in operation for at least
thirty years and that the plant was dismantled in 1961.  At this time we
are unable to estimate the ultimate liability that will be incurred to
clean up this site.  We have not made a site visit due to winter
conditions.  We have until May 31, 2001 to submit a soil testing
and remediation plan to the State of Colorado.

Liquidity and Capital Resources
- --------------------------------

Cash and cash to be provided from operations are expected to enable us
to meet our obligations as they become due during the next several
years.

The SC Field, our principal asset, is pledged to U. S. Bank
National Association under a $3,500,000 revolving line of credit.
Presently, we owe $231,000 under this line.

RESULTS OF OPERATIONS

YEAR-TO-DATE COMPARISON
- -----------------------

The table below (in thousands) provides sales data and average prices
for the period.

<TABLE>
<CAPTION>
                               2000                       1999
                     ------------------------    ----------------------
                      Sales   Average            Sales  Average
                      Volume   Price  Revenue    Volume  Price  Revenue
                     -------  -------  ------    ------  -----  -------
<S>                   <C>     <C>      <C>       <C>    <C>      <C>

Oil - barrels
  South Cuyama field   233    $27.74   $6,464     195   $16.83   $3,282
  Other                  *         *       30       *        *       21

Gas - mcf
  South Cuyama field    41      3.90      160      35     2.48       87
  Northern California  111      3.89      432     120     2.30      276
  South Texas           70      3.29      230      27     2.33       63
  New Mexico            56      3.45      193      60     1.85      111
  Other                  *         *       11       *        *        5

NGLs - barrels
  South Cuyama field    16     21.50      344      16    12.25      196
  New Mexico             5     19.60       98       4    10.25       41
  Other                  *         *        4       *        *        2

- ------------------------
* Not meaningful

</TABLE>

The table below (in thousands) shows lease operating expenses (LOE) by field.

<TABLE>
<CAPTION>
                                                 2000          1999
                                                 ----          ----
<S>                                              <C>           <C>
LOE
  South Cuyama field                           $3,258        $2,511
  Northern California                              41            34
  South Texas                                      33            16
  New Mexico                                      117            63
  Other                                            28            15

</TABLE>

LOE per equivalent barrel was $11.59 for 2000 and $10.33 for 1999.

Oil, gas and NGL revenue almost doubled compared to last year due to
higher prices and volumes as indicated in the table above.

LOE increased due to higher workover costs in New Mexico and South
Cuyama.

The increase in G&G costs was due to the 3-D seismic project in the
South Cuyama field.

Hedging Activities
- ------------------

We have never entered into such transactions and at this time do not
expect to.


New Accounting Pronouncements
- -----------------------------

None of the new accounting pronouncements that have been released will
have a significant impact on our financial position or results of
operations.

2001 Outlook
- ------------

Assuming current oil prices remain in the $23 range and we drill no dry
holes, we estimate to book a profit for the year 2001.  This is a
"forward-looking" statement and actual results will differ due to
changing oil and gas prices, changes in California electricity prices,
dry holes, lifting costs and the five issues listed below.

Risk Factors
- ------------

The five issues that cause us worry are:

1.  OPEC deciding to significantly increase production, which would
    result in a free-fall of oil prices.

2.  Although the SC Field has a 50-year operating history, the reserve
    estimates could be overstated.  The December 31, 2000 reserve
    estimates reduced the oil reserves by 693,000 barrels compared to
    the December 31, 1999 estimates.

3.  We never know what adverse rules or regulations could be passed by
    our regulatory agencies such as the EPA (Environment Protection
    Agency), BLM (Bureau of Land Management), DOG (California Division
    of Oil & Gas), the SBAPCD (Santa Barbara County Air Pollution
    Control District), and the Colorado Oil and Gas Conservation
    Commission.

4.  The SC Field is a high-water-cut oil field meaning that we move
    about 30,000 barrels of water per day in order to produce about 800
    barrels of oil per day.  Such fields have a high break-even point
    and consequently depend on a relatively high oil price to make
    money. Higher electricity costs will make it difficult to continue
    to operate the SC Field profitably.

5.  California is prone to earthquakes.  Certain types of earthquakes
    could shear the casing heads resulting in catastrophic damage to
    the SC Field.  Earthquake insurance is cost prohibitive.

 ITEM 7.  FINANCIAL STATEMENTS



                     REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS



To Hallador Petroleum Company:

We have audited the accompanying consolidated balance sheet of Hallador
Petroleum Company (a Colorado corporation) and subsidiaries as of
December 31, 2000 and the related consolidated statements of operations
and cash flows for each of the two years in the period ended December
31, 2000.  These financial statements are the responsibility of the
Company's management.  Our responsibility is to express an opinion on
these financial statements based on our audits.

We conducted our audits in accordance with auditing standards generally
accepted in the United States.  Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the
financial statements are free of material misstatement.  An audit
includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements.  An audit also includes
assessing the accounting principles used and significant estimates made
by management, as well as evaluating the overall financial statement
presentation.  We believe that our audits provide a reasonable basis for
our opinion.

In our opinion, the financial statements referred to above present
fairly, in all material respects, the financial position of Hallador
Petroleum Company and subsidiaries as of December 31, 2000 and the
results of their operations and their cash flows for each of the two
years in the period ended December 31, 2000, in conformity with
accounting principles generally accepted in the United States.


ARTHUR ANDERSEN LLP

/s/ARTHUR ANDERSEN LLP

Denver, Colorado
March 23, 2001

<PAGE>


                         Consolidated Balance Sheet
                             December 31, 2000
                              (in thousands)

<TABLE>
<CAPTION>
<S>                                                           <C>
ASSETS
Current assets:
  Cash and cash equivalents                                   $  2,489
  Accounts receivable-
    Oil and gas sales                                              716
    Well operations                                                583
                                                               -------
      Total current assets                                       3,788
                                                               -------
Oil and gas properties at cost (successful efforts):
  Unproved properties                                              313
  Prepaid drilling cost-East Texas well                            477
  Proved properties                                             21,597
  Less - accumulated depreciation,
     depletion, amortization and impairment                    (15,123)
                                                               -------
                                                                 7,264
                                                               -------
Oil and gas operator bonds                                         312
Investment in Catalytic Solutions                                  175
Other assets                                                        51
                                                               -------
                                                              $ 11,590
                                                               =======
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
  Accounts payable and accrued liabilities                    $    626
  Oil and gas sales payable                                        440
                                                               -------
      Total current liabilities                                  1,066
                                                               -------
Bank debt                                                          231
                                                               -------
Key employee bonus plan                                            295
                                                               -------
Minority interest                                                5,441
                                                               -------
Commitments and contingent liabilities (Note 6)
Stockholders' equity:
  Preferred stock, $.10 par value;
    10,000,000 shares authorized; none issued
  Common stock, $.01 par value; 100,000,000
    shares authorized; 7,093,150 shares issued                      71
Additional paid-in capital                                      18,061
Accumulated deficit                                            (13,575)
                                                               -------
                                                                 4,557
                                                               -------
                                                              $ 11,590
                                                               =======

</TABLE>


                            See accompanying notes.


                      Consolidated Statement of Operations
                                 (in thousands)


<TABLE>
<CAPTION>
                                                Year ended December 31,
                                                   2000         1999
                                                  ------       ------
<S>                                              <C>          <C>
Revenue:
  Oil                                            $6,494       $3,303
  Gas                                             1,026          542
  NGLs                                              446          239
  Gain (loss) prospect sale                         147          (26)
  Interest and other                                159           87
  Non-recurring water disposal fee, net                          208
  Gain on stock sales                                            571
                                                  -----        -----
                                                  8,272        4,924
                                                  -----        -----
Costs and expenses:
  Lease operating                                 3,477        2,639
  Exploration costs
    Geological and geophysical                      296           21
    Dry hole expense                                319          213
    Delay rentals                                    55           73
    Other                                            17           37
  Depreciation, depletion and amortization          976          638
  General and administrative                        777          662
  Interest                                           94          143
                                                  -----        -----
                                                  6,011        4,426
                                                  -----        -----
Income before minority interest                   2,261          498

Minority interest                                  (678)        (149)
                                                  -----        -----
Net income                                       $1,583       $  349
                                                  =====        =====
Basic and diluted income per share               $ 0.22       $ 0.05
                                                  =====        =====
Weighted average shares outstanding-basic         7,093        7,093
                                                  =====        =====
Weighted average shares outstanding-diluted       7,318        7,093
                                                  =====        =====

</TABLE>


                              See accompanying notes.

                      CONSOLIDATED STATEMENT OF CASH FLOWS
                                  (in thousands)

<TABLE>
<CAPTION>
                                                 Year ended December 31,
                                                    2000         1999
                                                   ------       ------
<S>                                                  <C>          <C>
Cash flows from operating activities:
  Net income                                    $  1,583       $  349
  Depreciation, depletion, and amortization          976          638
  Minority interest                                  678          149
  Change in accounts receivable	                (469)         (18)
  Change in payables and accrued liabilities         695          140
  Gain on marketable securities                                  (571)
  Other                                                            26
                                                   -----        -----
    Net cash provided by operating activities      3,463          713
                                                   -----        -----
Cash flows from investing activities:
  Marketable securities                                         2,100
  Properties                                      (1,715)      (1,571)
  Other assets                                      (216)         (74)
                                                   -----        -----
    Net cash provided by (used in)
      investing activities                        (1,931)         455
                                                   -----        -----
Cash flows from financing activities:
  Repayment of debt                               (1,000)      (2,000)
  Brokerage account                                              (284)
                                                   -----        -----
    Net cash used in financing activities         (1,000)      (2,284)
                                                   -----        -----
Net increase (decrease) in cash and
  cash equivalents                                   532       (1,116)

Cash and cash equivalents, beginning of year       1,957        3,073
                                                   -----        -----
Cash and cash equivalents, end of year            $2,489       $1,957
                                                   =====        =====
Supplemental disclosure of cash flow information:
  Cash paid out for interest                      $   84       $  143
                                                   =====        =====

</TABLE>

                             See accompanying notes.


                          NOTES TO FINANCIAL STATEMENTS


(1)  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
     ------------------------------------------

Basis of Presentation and Consolidation
- ---------------------------------------

The accompanying consolidated financial statements include the accounts
of Hallador Petroleum Company and its wholly owned subsidiaries.  All
significant intercompany accounts and transactions have been eliminated.
We are engaged in the exploration, development, and production of oil and
natural gas primarily in California.

On July 21, 1997, Yorktown Energy Partners II and affiliates (Yorktown)
invested $5,025,000 in Hallador Petroleum, LLP, a newly formed limited
liability limited partnership.  We are the general partner and received
a 70% interest in the partnership in return for contributing our net
assets, and Yorktown represents the limited partners and received a 30%
interest for its $5,025,000 cash contribution.  As general partner, we
consolidate the activity of the partnership and present the 30% limited
partners' interest as a minority interest.

We are a 92% partner in Santa Barbara Partners (SBP), a general
partnership, and account for our investment using the proportionate
consolidation method.  SBP has a 93% working interest in the South
Cuyama field.

Oil and Gas Properties
- ----------------------

We account for our oil and gas activities using the successful efforts
method of accounting.  Under the successful efforts method, the costs of
successful wells, development dry holes and productive leases are
capitalized and amortized on a units-of-production basis over the
remaining life of the related reserves.  Exploratory dry hole costs and
other exploratory costs, including geological and geophysical costs, are
expensed as incurred.  Delay rentals are also expensed as incurred.
Cost centers for amortization purposes are determined on a field-by-
field basis.  Estimated future abandonment and site restoration costs,
net of anticipated salvage values, are accrued based on units-of-
production.  Unproved properties with significant acquisition costs are
periodically assessed for impairment in value, with any impairment
charged to expense.

The carrying value of each field is assessed for impairment on a
quarterly basis.  If estimated future undiscounted net revenues are less
than the recorded amounts, an impairment charge is recorded.

Statement of Cash Flows
- -----------------------

Cash equivalents include investments (primarily commercial paper) with
maturities of three months or less from the date of purchase.

Income Taxes
- ------------

Income taxes are provided based on the liability method of accounting
pursuant to FAS 109, Accounting for Income Taxes.  The provision for
income taxes is based on pretax financial taxable income.  Deferred tax
assets and liabilities are recognized for the future expected tax
consequences of temporary differences between income tax and financial
reporting and principally relate to differences in the tax basis of
assets and liabilities and their reported amounts, using enacted tax
rates in effect for the year in which differences are expected to
reverse.  If it is more likely than not that some portion or all of a
deferred tax asset will not be realized, a valuation allowance is
recognized.

Earnings (Loss) per Common Share
- --------------------------------

We follow the provisions of FAS 128, Earnings Per Share.  Basic earnings
per share are computed based on the weighted average number of common
shares outstanding.  Diluted earnings per share are computed based on
the weighted average number of common shares outstanding adjusted for
the incremental shares attributed to outstanding stock options.  Under
the treasury stock method, options to purchase 225,000 shares of common
stock were included in the calculation of diluted earnings per share for
the year ended December 31, 2000.  In 1999 all options were excluded
from the calculation of diluted earnings per share because the option
exercise prices were greater than the average market price of the
Company's common stock.

Use of Estimates in the Preparation of Financial Statements
- -----------------------------------------------------------

The preparation of financial statements in conformity with generally
accepted accounting principles requires us to make estimates and
assumptions that affect the reported amounts of assets and liabilities
and disclosure of contingent assets and liabilities at the date of the
financial statements, and the reported amounts of revenue and expenses
during the reporting period.  Actual amounts could differ from those
estimates.

Reclassifications
- -----------------

Certain reclassifications have been made to the 1999 financial
statements to conform to the 2000 presentation.

(2)   BANK DEBT
      ---------

The South Cuyama field, our principal asset, is pledged to U. S. Bank
National Association under a $3,500,000 revolving line of credit.  The
loan is interest only, payable quarterly, at LIBOR + 1.75%.  The LIBOR
rate at December 31, 2000 was 6.76%.  The principal is due on March 31,
2002.

(3)  INCOME TAXES
     ------------
We have the following tax carryforwards at December 31, 2000 (in
thousands):

     Statutory depletion                                     $ 3,500
     Tax net operating losses (NOLs), utilization limited
      (expires in 2001-2003)                                   1,500
     Tax NOLs, utilization not limited (expires in 2005-2018)  4,060

We have fully reserved our net deferred tax asset account of about
$2,100,000.

(4)  STOCK OPTIONS AND BONUS PLANS
    ------------------------------

Stock Option Plan
- -----------------

In December 1995, we granted to our CEO 620,000 options and another
62,000 options to other employees at an exercise price of $1.00.  These
options are fully vested.  During 1999, we issued 68,000 options with an
exercise price of $1.00, which vested one-third upon grant date with the
remainder over the next two years. At December 31, 2000, there were
750,000 options outstanding of which 728,335 were exercisable.  All
options were granted at fair value.

On January 19, 2001, we purchased from certain employees 177,777
options at a cost of $1.6875 per option (about $300,000), which was
recorded as compensation expense in January 2001. Since December 1995
no options have been exercised.

Options to purchase a 3% partnership interest in Hallador Petroleum, LLP
are outstanding as of December 31, 2000.  The exercise price for these
options was based on the fair market value on the date of grant.

We account for our option plans under APB 25, Accounting for Stock
Issued to Employees.  Had compensation costs for the plans been
determined consistent with FAS 123, Accounting for Stock-Based
Compensation, the effect on 1999 and 2000 operations would have been
immaterial.

401-(k) Plan
- ------------

We maintain a 401-(k) Plan, which all full-time employees are able to
participate after six months of service.  We match dollar-for-dollar up
to 4% of all employee contributions when oil prices are $13.00 or
greater per barrel; vesting occurs immediately.  Our contributions for
2000 and 1999 were $37,000 and $27,000, respectively.

Key Employee Bonus Plan
- -----------------------

At present, Mr. Stabio, CEO, is the only participant in the key employee
bonus plan.  Bonuses are computed based on cash flow attributed to the
SC Field plus accrued interest on the bonus plan liability at 30-day
risk free rates.  Amounts accrued for 2000 and 1999 were $61,000 and
$16,000, respectively.  As of December 31, 2000, the liability to
Mr. Stabio was $295,000.  This liability will not be paid until the
earliest of the following events occur; (i) voluntary or involuntary
termination of the participant's employment; (ii) our merger or sale
or a sale of substantially all of our assets, or (iii) the exercise by
a participant of any of our stock options which requires a payment by
the participant of more than $100,000.  The amounts accrued are unfunded
and unsecured.

Catalytic Solutions Investment
- -------------------------------

During 1998, we invested $62,000 for a half percent (.005) ownership in
Catalytic Solutions, Inc. (CSI), a private company, located in Oxnard,
California (a Los Angeles suburb).  CSI manufactures catalytic
converters that reduce toxic emissions from internal combustion engines.
During 2000, we invested another $113,000 resulting in a total ownership
of about 1%.  This investment is accounted for under the cost method.
Mr. Stabio and other employees own less than a quarter percent (.0025)
in CSI.

(5)  MAJOR CUSTOMERS
     ---------------

The SC Field's oil production is purchased by EOTT Energy Corp.

(6)  COMMITMENTS AND CONTINGENT LIABILITIES
     --------------------------------------

South Cuyama Field
- ------------------

In January 1999, the California legislature passed a bill, which
increased our operator's bond from $100,000 to $250,000 to be phased in
over a five-year period.  In addition, an idle well bill was passed to
ensure that funds would be available to properly plug and abandon (P&A)
California wells upon their depletion. Over the next ten years, we as
the SC Field's operator, are required to place in an interest-bearing
escrow account $500 per year for each idle well in the SC Field until
such well is plugged and abandoned or until $5,000 has been deposited.
Installments of $60,000 and $68,000 were paid in June 1999 and 2000,
respectively.  We estimate that after 10 annual installments  we will
have met the current funding obligation of $700,000 considering the
interest to be earned.  As the SC Field depletes, and more wells move
from the producing category to the idle-well category we will have to
make additional annual payments.  Presently, there are 280 wells in the
SC Field, 140 of which are classified as "idle".

During 1999, we began amortizing, using the units-of-production method,
our share of the estimated future costs ($1,207,000) to P&A the SC
Field's 280 wells.  Included in the DD&A expense for 1999 and 2000 was
$85,000 and $113,000, respectively, associated with these estimated
future costs.

Washington County, Colorado Gas Plant
- -------------------------------------

In late February 2001, we were notified by the Colorado Oil and Gas
Conservation Commission that we must conduct a site investigation of a
gas plant that our predecessor operated forty years ago.   It is our
understanding that the plant has not been in operation for at least
thirty years and that the plant was dismantled in 1961.  At this time
we are unable to estimate the ultimate liability that will be incurred
to clean up this site.  We have not made a site visit due to winter
conditions.  We have until May 31, 2001 to submit a soil testing
and remediation plan to the State of Colorado.

(7)  OIL AND GAS RESERVE DATA (UNAUDITED)
     ------------------------------------

The following reserve estimates for the years ended December 31, 1999
and 2000 were prepared by one of our consulting petroleum engineers
based on data we supplied.  Be cautious that there are many
uncertainties inherent in estimating proved reserve quantities and in
projecting future production rates.

Proved oil and gas reserves are the estimated quantities of crude oil,
natural gas and NGLs which geological and engineering data demonstrate
with reasonable certainty to be recoverable in future years from known
reservoirs under existing economic and operating conditions.  Proved
developed oil and gas reserves are those reserves expected to be
recovered through existing wells with existing equipment and operating
methods.


                       Analysis of Changes in Proved Developed Reserves
                                       (in thousands)

<TABLE>
<CAPTION>
                                      Oil         Gas       NGLs
                                     (BBLs)      (MCF)     (BBLs)
                                     -------    -------    -------
<S>                                  <C>         <C>         <C>
Balance at December 31, 1998             0 (1)   1,935         0(1)
  Revisions of previous estimates    2,705 (2)     (62)      214(2)
  Discoveries                          271         337
  Purchases                            260          57        18
  Production                          (197)       (245)      (20)
                                     -----       -----      ----
Balance at December 31, 1999         3,039       2,022       212
  Revisions of previous estimates     (693)        (77)       75
  Discoveries                                      223        13
  Production                          (234)      ( 287)      (22)
                                     -----       -----      ----
Balance at December 31, 2000         2,112       1,881       278
                                     =====       =====      ====
Net of 30% minority interest         1,478       1,317       195
                                     =====       =====      ====
</TABLE>

(1) Due to low oil prices at December 31, 1998, no reserves could be
    assigned to the SC Field.
(2) Represents the reinstatement of the SC Field.

There are no significant proved undeveloped reserves.

The following table (in thousands) sets forth a standardized measure of
the discounted future net cash flows attributable to our proved
developed oil and gas reserves (hereinafter referred to as "SMOG").
Future cash inflows were computed using December 31, 1999 and 2000
product prices of $23.45 and $21.13 for oil, $19.07 and $28.73 for NGLs
and $2.46 and $7.19 for gas, respectively.  Future production costs
represent the estimated future expenditures to be incurred in producing
the reserves, assuming continuation of economic conditions existing at
year-end.  Discounting the annual net cash inflows at 10% illustrates
the impact of timing on these future cash inflows.

<TABLE>
<CAPTION>
                                                     1999         2000
                                                    ------       ------
<S>                                                  <C>          <C>


Future Revenue
  Oil                                              $71,000      $45,000
  Gas                                                4,000       13,000
  NGLs                                               4,000        8,000
                                                    ------       ------
Future cash inflows                                 79,000       66,000

Future cash outflows - production costs            (45,000)     (47,000)

Future income taxes                                 (6,000)      (1,000)
                                                    ------       ------
Future net cash flows                               28,000       18,000

10% discount factor                                 (9,000)      (6,400)
                                                    ------       ------
SMOG                                               $19,000      $11,600
                                                    ======       ======
Net of 30% minority interest                       $13,300      $ 8,120
                                                    ======       ======

</TABLE>

The following table (in thousands) summarizes the principal factors
comprising the changes in SMOG:

<TABLE>
<CAPTION>

                                                     1999         2000
                                                    ------       ------
 <S>                                                  <C>          <C>

 SMOG, beginning of year                          $   800     $ 19,000
   Sales of oil and gas, net of production costs   (1,500)      (4,500)
   Net changes in prices and production costs      15,591          500
   Revisions                                                   (10,400)
   Discoveries                                      4,400          900
   Change in income taxes                          (2,000)       1,800
   Purchases                                        1,709
   Changes in production rates and other                         2,200
   Acceleration of discount                                      2,100
                                                   ------       ------
SMOG, end of year                                 $19,000      $11,600
                                                   ======       ======


ITEM 8.  CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
         FINANCIAL DISCLOSURE:  None

                              PART III

ITEM 9.  DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS;
         COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT

CORTLANDT S. DIETLER, 79, has been one of our directors since November
1995.  From April 1995 to October 1999 he was CEO of TransMontaigne Inc.
and is currently Chairman of the Board.  He also serves as a director of
Carbon Energy Corporation, Forest Oil Corporation and Key Production
Company.

DAVID HARDIE, 50, is the Chairman of the Board and has served as a
director since July 1989.  He is a General Partner of Hallador Venture
Partners LLC, the General Partner of Hallador Venture Fund II & III.
Mr. Hardie is also a director of Freedom Communications Company based in
Irvine, California and serves as a director and partner of other private
entities that are owned by members of his family.

STEVEN HARDIE, 46, has been a director since 1994.  He and David Hardie
are brothers.  For the last 15 years he has been a self-employed film
producer.  He also serves as a director and partner of other private
entities that are owned by members of his family.

BRYAN H. LAWRENCE, 58, has been one of our directors since November
1995.  He is a founder and senior manager of Yorktown Partners LLC that
manages investment partnerships formerly affiliated with Dillon, Read &
Co. Inc., an investment-banking firm (Dillon Read.)  He had been
employed with Dillon, Read since 1966, serving most recently as a
Managing Director until the merger of Dillon Read with SBC Warburg in
September 1997.  He also serves as a Director of Carbon Energy
Corporation, D&K Healthcare Resources, Inc., TransMontaigne, Inc., and
Vintage Petroleum, Inc. (each a United States public company), and
Cavell Energy Corp. (a Canadian public company) and certain non-public
companies in the energy industry in which Yorktown partnership holds
equity interests including Meenan Oil Co., Inc., PetroSantander Inc.,
Savoy Energy, L.P., Concho Resources Inc., Ricks Exploration, Inc.,
Athanor Resources Inc., Camden Resources, Inc., and Crosstex Energy
Holdings, Inc.  He is a graduate of Hamilton College and also has a MBA
from Columbia University.

VICTOR P. STABIO, 53, is our President, CEO, CFO and a director.  He
joined us in March 1991 as our President and CEO and has been active in
the oil and gas business for the past 28 years.


ITEM 10.   EXECUTIVE COMPENSATION



</TABLE>
<TABLE>
<CAPTION>
                                  SUMMARY COMPENSATION TABLE

                                     Annual Compensation
                          ---------------------------------------------
<S>                      <C>     <C>       <C>         <C>
Name and Principal                                       Other Annual
Position                  Year   Salary    Bonus (1)   Compensation (2)
- ---------------------     ----  ---------  ----------  ----------------
Victor P. Stabio, CEO     2000   $110,500   $94,700         $5,900
                          1999    105,000    48,000          4,400
                          1998    103,000    15,000          3,107

</TABLE>

(1)  Includes amounts, payment of, which is deferred, pursuant to the
     Key Employee Bonus Plan.

(2)  Our contribution to the 401(k) Plan.

During 1997, Mr. Stabio was granted an option to purchase 1.75% of
Hallador Petroleum, LLP for $294,000 that expires December 31, 2010.

No options were exercised during the last three years.  At December 31,
2000 Mr. Stabio had 620,000 exercisable options and the in-the-money
vakye was $620,000.  On January 19, 2001 we purchased 75,000 options
from Mr. Stabio at a cost of $1.6875 per option or $126,500.

Change in Control Arrangements
- ------------------------------

As of December 31, 2000, we have accrued $295,000 payable to Mr. Stabio
pursuant to the key employee bonus plan.  The $295,000 will become
payable upon our merger/sale or sale of substantially all of our assets
or his voluntary or involuntary termination.

ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

The following table is as of March 30, 2001.

<TABLE>
<CAPTION>

      Name                            No. Shares (1)    % of Class (1)
- ------------------------------------  ---------------   -------------
<S>                                     <C>                  <C>
David Hardie and Steven Hardie as       3,791,259             53
Nominee for Hardie Family Members (2)

Victor P. Stabio (3)                      609,937              8

Cortlandt S. Dietler (4)                  100,000              1

Bryan H. Lawrence (5)                   2,328,500             33

SBC Warburg Dillion Read Inc. (6)         421,500              6

All directors and executive officer
 as a group (3)                         6,829,696             96

</TABLE>

(1)  Based on total outstanding shares of 7,093,150 if no options are
     held by the named directors, or based on a pro forma calculation of
     the total outstanding shares including shares issued upon exercise
     of options held by the named director or by members of the named
     group.  Beneficial ownership of certain shares have been, or is
     being, specifically disclaimed by certain directors in ownership
     reports filed with the SEC.

(2)  The Hardie family business address is 740 University Avenue, Suite
     110, Sacramento, California 95825.

(3)  Includes 545,000 shares issuable upon the exercise of options by
     Mr. Stabio.

(4)  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.

(5)  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 II, L.P., an
     affiliate.

(6)  SBC Warburg Dillon Read Inc.'s address is 535 Madison Avenue, New
     York, NY 10022.


ITEM 12.   CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

None.
                                PART IV

ITEM 13. EXHIBITS AND REPORTS ON FORM 8-K

  (a) Exhibits

      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  Not used

     10.4  Not used

     10.5  Hallador Petroleum Company Key Employee Bonus Compensation
           Plan *(3)

     10.6  Not used

     10.7  EOTT ENERGY NGL Contract (10)

     10.8  EOTT ENERGY OIL Contract (10)

     10.9  First Amendment to the 1993 Stock Option Plan *(6)

     10.10 First Amendment to Key Employee Bonus Compensation Plan *(6)

     10.11 Stock Purchase Agreement with Yorktown dated
           November 15, 1995 (6)

     10.12 Second Amendment to Key Employee Bonus Compensation Plan *(7)

     10.13 Hallador Petroleum, LLP Agreement (9)

     10.14 Hallador Petroleum, LLP Stock Option Agreement *(9)

      21.1 List of Subsidiaries (2)

     -------------------

    (1)  Incorporated by reference (IBR) to the 1989 Form 10-K.
    (2)  IBR to the 1990 Form 10-K.
    (3)  IBR to the 1992 Form 10-KSB.
    (4)  IBR to the 1993 Form 10-KSB.
    (5)  Not used.
    (6)  IBR to the 1995 Form 10-KSB.
    (7)  IBR to the September 30, 1996 Form 10-QSB.
    (8)  IBR to the September 30, 1997 Form 10-QSB.
    (9)  IBR to the December 31, 1997 Form 10-KSB.
   (10)  Filed herewith.
     *   Management contracts or compensatory plans.


  (b) No reports on Form 8-K were filed during the 1999 fourth quarter.


                               SIGNATURES


In accordance with Section 13 or 15(d) of the Exchange Act, the
Registrant caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.

                            HALLADOR PETROLEUM COMPANY

                             BY:/S/VICTOR P. STABIO
                                   VICTOR P. STABIO, CEO


Dated:  March 30, 2001

In accordance with the Exchange Act, this report has been signed below
by the following persons on behalf of the registrant and in the
capacities and on the dates indicated.



/S/ DAVID HARDIE          Chairman                       March 30, 2001
    DAVID HARDIE


/S/ VICTOR P. STABIO      CEO, Principal Financial       March 30, 2001
    VICTOR P. STABIO      and Accounting Officer
                          and Director


/S/ BRYAN LAWRENCE        Director                       March 30, 2001
    BRYAN LAWRENCE


</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-99
<SEQUENCE>2
<FILENAME>0002.txt
<TEXT>

                                                               Exhibit 10.7

             EOTT ENERGY Operating Limited Liability Partnership
                       111 W. OCEAN BLVD., SUITE 1700
                         LONG BEACH CA 90802-4632
                    (562) 437-3577  FAX (562) 437-4935

                           PURCHASE AGREEMENT


This agreement is made and entered into this lst day of February 2001, by and
between EOTT ENERGY Operating Limited Partnership ("EOTT") and Hallador
Production Company (Seller).

1.  Background and Purpose: EOTT has been advised that Seller desires EOTT
    to purchase certain liquid hydrocarbon mixtures produced at the South
    Cuyama gas processing facility ("LHM").  EOTT is willing to purchase such
    LHM from Seller subject to the terms and conditions of this Agreement.

2.  Term: The term of this Agreement shall be effective as of 12:01 A.M.,
    February 1, 2001, and shall continue until 11:59 P.M., March 31, 2001.
    It shall continue month to month thereafter until cancelled my either
    party by giving thirty (30) days written notice to the other party.

3.  Location: The sales and custody transfer point shall be at EOTT's North
    Coles Levee Plant 8 Fractionation Facility ("Facility").

4.  Delivery: Seller shall deliver to EOTT, at the Facility, the LHM
    production pursuant to any limitations 6-f Paragraph 5. of this
    Agreement.  EOTT shall take delivery of such LHM at the Facility.

5.  Limitation of Volumes: Volumes of LHM processed hereunder shall be
    limited to the fractionation capacity in the, Facility which exceeds the
    capacity required for fulfilling other EOTT processing requirements and
    commitments as of the effective date of this Agreement.

6.  Determination of Volumes: EOTT shall gauge the incoming volume of
    Seller's LHM to EOTT's satisfaction, and will notify Seller of any
    discrepancy with the bill of lading provided by Seller.  In the event of
    any discrepancy, EOTT's measurement shall control.  EOTT's analysis of the
    incoming LHM shall determine the volume of methane, ethane, propane,
    butanes and gasoline delivered to the Facility.

7.  Prices: EOTT shall pay Seller the following Base Prices for the LHM
    delivered to the Facility:

                              OPIS

      Component          Reference        Price ($/Gal)
      ---------         -------------     -------------------------
      Propane            Bakersfield      OPIS average minus $0.075

      Normal Butane      Bakersfield      OPIS average minus $0.075

      ISO Butane         L.A.             OPIS average minus $0.115

      C5+                Bakersfield      OPIS average minus $0.075

      Ethane                              $0.10 per gallon

Seller agrees to pay for transporting such LHM to Facility, currently
$0.02614/gallon.

OPIS average posted price shall be the price published by Oil Price
Information Service, Inc. on the first calendar day of the month of delivery
or on the last Thursday of the month preceding the month of delivery,
whichever is closest to the first workday of the month of delivery.

The base price in this Agreement assumes a monthly fuel cost of $14.00/mmbtu.
In the event that the Southern California Border Index Price ("Border") at
Topock, as published by Natural Gas Weekly and Natural Gas Intelligence,
exceeds $14.00/mmbtu, a fuel surcharge shall apply equal to an accumulative
7.1 % for each $1.00/mmbtu increase in Border.  For example, fuel surcharges
shall be assessed as follows:


          BORDER        Cumulative Fuel
      (Price per mmbtu)    Surcharge

          $15.00             7.1%
          $16.00            14.2%
          $17.00            21.3%
          $18.00            28.4%
          $19.00            35.5%
          $20.00            42.6%
           etc.

If Border price ceases to be available from Natural Gas Weekly and Natural
Gas Intelligence, the parties agree to negotiate an acceptable substitute to
measure.  Any fuel surcharge will be removed or reduced when monthly Border
price remains below the price that triggers a specific surcharge.  In no case
will the price be reduced below the Base Price.  Reductions will become
effective as they become applicable.  In no case will the application or
removal of the fuel surcharge be retroactive.

8.  Statements/Audits: Seller shall render EOTT a monthly statement showing
    the value of the component parts of the LHM stream.  EOTT shall render
    Seller a statement showing the total LHM received in each transport load
    hereunder.  Statements shall be sent to Seller at the following address:

                    Hallador Production Company
                    1660 Lincoln Street, Suite 2700
                    Denver, CO 80264
                    FAX (303) 832-3013

Monthly statements/invoices shall be sent to EOTT at the following address:

                    EOTT Energy Corp.
                    111 W. Ocean Blvd. Suite 1700
                    Long Beach, California 90802-4632
                    Attention:  Dwight Simpson

9.  Contaminants: EOTT may at its sole discretion refuse to accept delivery
    of any mixture that contains contaminants that, in EOTT's sole judgment,
    may be injurious to EOTT's Facilities or be undesirable in finished
    products.  Seller shall reimburse EOTT for all charges associated with
    undesirable LHM, including, but not limited to, transportation charges to
    and from the Facility, disposal charges, and additional marketing fees.

10. No Dedication: Seller agrees and acknowledges that this Agreement is as
    accommodation by EOTT and not a dedication of any EOTT facility or assets
    to a public use.  Seller shall never assert in any action or proceeding
    that the services provided by EOTT hereunder constitute a dedication for
    a public use or a common carriage of any kind whatsoever.

11.  Force Majeure: The obligations hereunder of each party shall be
     suspended while and to the extent that such party is prevented from
     complying therewith in whole or in part by force majeure including
     without limitation strikes, lockouts, labor and civil disturbances, acts
     of GOD, unavoidable accidents, mechanical breakdown or failure, breakdown
     of plant equipment, including lack of storage capacity which is a result
     of any such breakdown or failures, laws, rules, regulations, orders or
     any other act or failure to act of any government or agent or
     instrumentality thereof(whether domestic of foreign) having at any time
     de facto or de jure control over any of the parties, the project area or
     the agreement, acts of war or conditions arising out of or attributable
     to war whether declared or undeclared, shortage of essential equipment,
     materials or labor or restrictions thereon or limitations upon the use
     thereof, unavoidable delays in transportation or communication, adverse
     weather conditions, or causes reasonably beyond the control of any party
     claiming force majeure hereunder.  Where such condition results in
     suspension of performance of any of the obligations of any party
     hereunder, such party shall give the other party notice in writing of
     such suspension of performance as soon as reasonably possible, stating
     therein the date and extent of such suspension, whether in whole or in
     part, and specifying in reasonable detail the nature of the force
     majeure causing such suspension.  Any party, the performance of whose
     obligations has been suspended as aforesaid, shall resume performance
     thereof as soon as reasonably possible after the circumstance
     preventing such performance as provided above shall have terminated
     or ceases to have such effect and shall so notify the other party.
     The provisions of this Paragraph shall not suspend the obligation of
     a party to make timely payment of any money due hereunder.

12.  No Waiver: The failure of either party at any time to require performance
     by the other of any provision hereof shall not constitute a waiver of
     performance of the provision or any other provision at any time.

13.  Governing Law: This Agreement shall be governed by and construed
     according to the law of the State of California.

14.  Notices: All notices, demands, or requests from one party to the other
     may be personally delivered, sent via facsimile, sent by recognized
     overnight delivery service, or sent via United States mail, certified or
     registered, postage prepaid, to the addresses stated in this paragraph
     and shall be effective upon receipt thereof, or as mutually agreed.

                 EOTT:  EOTT Energy Corporation
                 111 West Ocean Blvd., Suite 1700
                 Long Beach, California 90802
                 Attention:  Manager, NGL & Feedstock Acquisition

                 Hallador:  Hallador Production Company
                 1660 Lincoln Street, Suite 2700
                 Denver, CO 80264
                 Attention:  Victor Stabio

15.  Successors and as each and all of the covenants, condition, and
     restriction contained in the Agreement shall be binding on and inure
     to the benefit of the parties and their successors, assignees, and
     transferees.

16.  Entire Agreement: This Agreement contains the entire agreement of the
     parties with respect to the matters covered by this Agreement, and no
     other agreement, statement, or promise made by any party, or to any
     employee, officer, or agent of any party, which is not contained in this
     Agreement shall be binding.

Executed as of the date first written.

EOTT Energy Operating Limited Partnership
By:	EOTT Energy Corp., its General Partner


By:/s/Larry J. Garrett
Title: Manager NGL & Feedstock Acquisition

Hallador Production Company


By:/s/VICTOR P. STABIO
Name: VICTOR P. STABIO
Title:  PRESIDENT



</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-99
<SEQUENCE>3
<FILENAME>0003.txt
<TEXT>

                                                         Exhibit 10.8

               EOTT ENERGY OPERATING LIMITED PARTNERSHIP
                 EOTT ENERGY PIPELINE LIMITED PARTNERSHIP
                            5400 Aldrin Court
                          Bakersfield, CA 93313


December 7, 2000



Hallador Production Company
1600 Lincoln St., Suite 2700
Denver, CO 80264

Attn:  Victor P. Stabio

Re:  Contract Price Change


Dear Vic:

Per our conversation, EOTT Energy corp. proposes that our contract price
will change to the following effective January 1, 2001:THE AVERAGE OF
CHEVRON, EXXONMOBIL, UNION, & EQUIVA'S POSTING FOR BUENA VISTA PLUS $.02
PER BBL. GRAVITY ADJUSTED, EDQ.

I need this confirmed by you by 1:00 p.m., Pacific Time, Friday December
8, 2000.  I look forward to our continu9ing business relationship.

Sincerely,


/s/ Ted McCurdy
Ted McCurdy
EOTT Energy Corp.
Crude Oil Acquisitions

The above proposed price change is hereby agreed to and accepted this 8th
day of December, 2000.

Hallador Production Company

By:/s/ Victor P. Stabio
   Victor P. Stabio, President





                               EOTT ENERGY CORP.
                                General Partner




</TEXT>
</DOCUMENT>
</SEC-DOCUMENT>
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