Peabody Energy Corporation · NYSE:BTU
Peabody Energy — 2007 FBR Capital Markets Investor Conference
34 slides from Peabody Energy's conference presentation, Nov 28, 2007
Slide 1: 2007 FBR Capital Markets Investor Conference
2007 FBR Capital Markets Investor Conference November 28, 2007 Peabody Energy NYSE: BTU
Slide 2: Statement on Forward-Looking Information
Statement on Forward-Looking Information Some of the following information contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934, as amended, and is intended to come within the safe-harbor protection
Slide 3: BTU: The Only Global Pure-Play Coal Investment
BTU: The Only Global Pure-Play Coal Investment Excellent leverage to rising prices Global expansion into high-growth, high-margin markets Levered to China and India expansion Industry-best 9 billion ton reserve base Long-term demand from new generation and Btu Conversion World's Largest Private-Sect
Slide 4: Peabody's Transformation of the Global Portfolio and Earnings Base
Peabody's Transformation of the Global Portfolio and Earnings Base New productivity projects in PRB Expansion of U.S. coal trading activities Developing Prairie State and advancing Btu Conversion projects Completed spin- off of Patriot Coal Completing major thermal and metallurgical coal build-out i
Slide 5: Spin-off Creates Multiple Benefits for Peabody
Spin-off Creates Multiple Benefits for Peabody Improves operating and geologic risk Enhances management and capital focus on large, long-lived surface mines Reduces per-ton capital requirements Reduces legacy liabilities by nearly half Hones asset base toward high-growth, high-margin markets worldwi
Slide 6: World's Largest Coal Company: Peabody's Global Portfolio
World's Largest Coal Company: Peabody's Global Portfolio * Market position and sales pro forma 2007 including Australia mines under development. 2006 sales volumes and reserves in millions of short tons. Reserves are 2006 proven and probable. Sales and reserves adjusted for October 2007 spin-off of
Slide 7: Global Markets and Peabody Position
GLOBAL MARKETS AND PEABODY POSITION
Slide 8: Global Coal Use Soars 30%, or 1.4 Billion Tons, in Five Years
Global Coal Use Soars 30%, or 1.4 Billion Tons, in Five Years Five-Year Change in Global Energy Consumption Source: BP Statistical Review of World Energy, June 2007. Coal Natural Gas Hydro Oil Nuclear 2002 - 2004 29.57 16.37 15.39 8.97 4.03 30% 2001 - 2006 Change 16% 9% 15% 4% Coal Natural Gas Oil H
Slide 9: China and India = 70% of global energy growth in past years
China and India = 70% of global energy growth in past 2 years China expected to overtake U.S. in energy consumption soon after 2010 Last year's Global Energy Outlook oil price forecast of $97/barrel by 2030 missed... by 23 years By the Numbers: Startling News This Week from IEA's World Energy Outloo
Slide 10: China, U.S. and India Represent Vast Majority of Global Coal Growth
China, U.S. and India Represent Vast Majority of Global Coal Growth Growth through 2030. Amounts in million short tons. Source: U.S. Department of Energy, Energy Information Administration, International Energy Outlook 2006. International Energy Agency. Projected Australia export flow for 2004-2030.
Slide 11: Asia Represents 80% of Long-Term Growth of Global Coal Industry
Asia Represents 80% of Long-Term Growth of Global Coal Industry Source: Industry reports and Peabody analysis. Seaborne Coal Realizes 7% CAGR Over 5 Years
Slide 12: International Coal Prices Setting Record Highs in Spot Markets
International Coal Prices Setting Record Highs in Spot Markets Source: Global Coal Newcastle Index; McCloskey's Coal Report; Industry Reports. 1/06 1/07 High Quality Hard Coking Coal Strong Conditions as 2008 Contract Season Begins 1/06 5/07 Spot Newcastle Thermal Coal U.S. Dollars Per Tonne
Slide 13: Significant Leverage to Strong Seaborne Thermal and Metallurgical Coal Markets
Significant Leverage to Strong Seaborne Thermal and Metallurgical Coal Markets 2008 2009 Thermal 4 9 Met 7 9 High Quality Hard Coking Coal Hard Coking Coal Semi-Hard Coking Coal Semi-Soft Coking Coal PCI Thermal Export Thermal Domestic 2007 2447 2289 3509 2446 420 6957 3346 Unpriced Australia Volume
Slide 14: Review: Australia Coal Chain Logistics
Review: Australia Coal Chain Logistics Newcastle (PWCS) Rail and port capacity expected to expand from 89 million tonnes in 2007 to 100 million tonnes by 2009 Allocation for 2008 tonnage unresolved Newcastle (NCIG) Potential of 30 MTPY capacity in 2010 and doubling over time Represents 5+ MTPY dedic
Slide 15: Peabody's Australia Coal Capacity Growing to 30-Plus Million Tons
Peabody's Australia Coal Capacity Growing to 30-Plus Million Tons 2007 Potential Queensland Burton 3.0 At Capacity North Goonyella / Eaglefield 2.1 Up to 4 - 5 MT Millennium 1.2 3 MT by 2010 Baralaba 0.5 At Capacity Wilkie Creek 2.2 Near Capacity 9.0 New South Wales Wilpinjong 5.0 9 MT Over 5 Years
Slide 16: U.S. Markets and Peabody Position
U.S. MARKETS AND PEABODY POSITION
Slide 17: EIA: Coal Generation to Outpace All Other Forms Three to One Through 2030
EIA: Coal Generation to Outpace All Other Forms Three to One Through 2030 Coal Natural Gas Nuclear Renewables Petroleum 1343 129 109 134 44 Growth in Billions of Kilowatt-hours Projected U.S. Electricity Generation Growth Through 2030 Source: U.S. Department of Energy, Energy Information Administrat
Slide 18: High Price of Power & Competing Fuels Spurs New U.S. Coal-Fueled Generation
High Price of Power & Competing Fuels Spurs New U.S. Coal-Fueled Generation 11 units have begun construction in 2007 16,890 MW under construction or recently on line 6,630 MW likely to begin construction in next two years Majority of plants to be sourced from PRB and Illinois Basin Largest New Coal
Slide 19: Units in States Represent MTPY of Coal Use
45 Units in 21 States Represent 100 MTPY of Coal Use CLECO Rodemacher 600 MW Holcim Cement St. Genevieve OPPD NC2 660 MW Santee Cooper Cross Unit 4 580 MW SRP Springerville 4 400 MW WE Energies Oak Creek 1 615 MW EKPC Spurlock 4 278 MW Xcel Comanche 3 750 MW AR River Power Lamar 40 MW Black Hills Wy
Slide 20: U.S. Markets Strengthening Since Start of 2007
OTC PRB 8800 1Q07 Delivery 7.4 2008 Delivery 11.35 2009 Delivery 12.25 U.S. Markets Strengthening Since Start of 2007 Published Prices 15-20 million tons unpriced for 2008; 80-90 for 2009 Peabody's realized PRB prices 27% higher than third quarter 2006 66 million tons of premium PRB product priced 4
Slide 21: U.S. Net Exports Could Nearly Triple Between 2006 and 2008
2006 2007 2008 Export 49314 60625 66486 Import 36000 34000 30000 U.S. Net Exports Could Nearly Triple Between 2006 and 2008 Net exports grow due to European demand, weak dollar and reduced U.S. imports Net export increase would further reduce stockpiles Creates pull to PRB and Colorado markets Peabo
Slide 22: Peabody Has Nearly Million Tons of Expected Export Coal in 2007
Peabody Has Nearly 30 Million Tons of Expected Export Coal in 2007 2007 Expected Export Coal Sales Source: Company releases and Peabody estimates. Peabody Company A Company B Company C Company D Company E
Slide 23: Near-Term U.S. Markets: Supply / Demand Indicators to Watch Entering 2008
Item Effects Implication Challenging Geology Permitting Issues New Safety Regulations Loss of Synfuels Credit Economic Growth Growing Net Exports Natural Gas Pricing Inventory Levels Inventory Improvement Near-Term U.S. Markets: Supply / Demand Indicators to Watch Entering 2008 Thinning Eastern seam
Slide 24: Btu Conversion Technologies Expand Markets for Coal
Btu Conversion Technologies Expand Markets for Coal Peabody Participating in Clean Generation, CTG and CTL
Slide 25: Peabody Partnering with ConocoPhillips on New Coal-to-Natural Gas Facility
Peabody Partnering with ConocoPhillips on New Coal-to-Natural Gas Facility Feasibility study for mine-mouth facility under way $250 million in incentives available from Kentucky Production of 50 to 70 billion cubic feet of pipeline-quality synthetic natural gas ~1.5 tcf in the first 30 years of prod
Slide 26: Peabody's Energy Reserves Are Unmatched
Continental U.S. Proven Oil Reserves 117 176 Peabody's Proven and Probable Coal Reserves Continental U.S. Natural Gas Reserves Largest U.S. Oil Company 172 128 Reflects Oct. 31, 2007 spin-off. Source: Annual reports for selected energy companies, Energy Information Administration's U.S. Crude Oil, N
Slide 27: Peabody's Approach to Long-Term Value Creation
PEABODY'S APPROACH TO LONG-TERM VALUE CREATION
Slide 28: Peabody's Long-Term Strategies Target Margin Expansion and Growth
Peabody's Long-Term Strategies Target Margin Expansion and Growth Execute the basics: best-in-class safety, operations and marketing Capitalize on pipeline of projects Expand in high-growth global markets Participate in new generation and Btu Conversion projects
Slide 29: Executing the Basics: Leading Productivity
Executing the Basics: Leading Productivity Rawhide North Antelope Rochelle U.S. Industry (Underground) U.S. Industry (Surface) 2006 data. Source: U.S. Department of Labor Mine Safety & Health Administration. Peabody Operates the Most Productive Coal Mines #1 #2 Industry Average (SPRB) Peabody Others
Slide 30: Pipeline of Projects Targets High-Growth Regions & Cost Improvements
Pipeline of Projects Targets High-Growth Regions & Cost Improvements
Slide 31: Btu Conversion = Value Conversion as We Narrow the Energy Valuation Gap
Source: Company filings and reports. Btu Conversion = Value Conversion as We Narrow the Energy Valuation Gap Market Capitalization on Btu-Equivalent Basis
Slide 32: Major Market Drivers Provide Outstanding Outlook for Coal
DEMAND DRIVERS SUPPLY DRIVERS Global Coal Supply & Demand Major Market Drivers Provide Outstanding Outlook for Coal Regulatory Environment: Safety and Permitting High Cost of Competing Fuels High Steel Demand Soaring Energy Demand in China and India Higher Utilization of Existing Coal Plants Major B
Slide 33: Focus on Long-Term Shareholder Value: Peabody Has an Outstanding Outlook
2004 2005 2006 2007 2008 2009 2010 EBITDA 435 639 856 1000 Revenue growth from higher- priced sales commitments Global expansion in high- margin, high-demand regions Market-focused U.S. production Unmatched, diversified reserve base Emerging markets from Btu Conversion $435 $639 $856 EBITDA ($ in Mi
Slide 34: 2007 FBR Capital Markets Investor Conference
2007 FBR Capital Markets Investor Conference November 28, 2007 Peabody Energy NYSE: BTU
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