Peabody Energy Corporation · NYSE:BTU
Peabody Energy — Bank of America 2008 Energy Conference
23 slides from Peabody Energy's conference presentation, Nov 14, 2008
Slide 1: Peabody Energy Bank of America 2008 Energy Conference
Peabody Energy Bank of America 2008 Energy Conference November 14, 2008
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 Unique Industry Near- and long-term global coal supply/ demand balance remains tight Coal markets stronger than other commodities Baseload nature of coal buffers industry from economic slowdown Supplies showing recent signs of cutbacks BTU: Positioned t
Slide 4: Macro Trends: Economy Eases Demand; Credit Challenges Supplies
China growing at ~8%, India 6 - 7%, other Asian countries 4 - 5%; Coal fueling electricity growth Coal consumption stable to soft amid weak U.S. economy Lower rates extend economic reach of Australian and U.S. coals; Long-term PRB-to-Asia opportunity Export demand to counter impacts of softer U.S. e
Slide 5: Multiplier Effect: Fast Growth Nations Have High Energy Intensity and Strong Coal Use
Multiplier Effect: Fast Growth Nations Have High Energy Intensity and Strong Coal Use China: 8% GDP = 11% Electricity Generation Growth Source: Peabody analysis based on 2009 GDP estimates.
Slide 6: New Coal Plants to Grow Global Coal Consumption by 2+ Billion Tons
New Coal Plants to Grow Global Coal Consumption by 2+ Billion Tons More Than 660 GW Planned or Under Construction Source: National Coal Council, The Urgency of Sustainable Coal, May 2008. China India Other Asia Europe USA Rest of World 37 20 15 10 8 10 China India Other Asia Europe USA Rest of World
Slide 7: China and India Drive Structural Shift in Seaborne Markets
China and India Drive Structural Shift in Seaborne Markets Ongoing supply problems reduce exports 2008 export licenses lower than expected and below last year Taxes raised to discourage exports 40% coke (from 25%) 10% met coal (from 5%) 10% thermal coal (previously none) India Source: Industry repor
Slide 8: Operating Challenges and Growing Credit Concerns Strain Global Supplies
Operating Challenges and Growing Credit Concerns Strain Global Supplies Source: Industry reports. Key exporting countries falling short of targets Nations with two-thirds of exports unable to raise 2008 output Multiple Appalachian producers lower production targets in September/October Australian pr
Slide 9: Top Coal Exporting Nations Not Keeping Pace With Demand
Top Coal Exporting Nations Not Keeping Pace With Demand Source: Barlow Jonker, industry reports, Peabody analysis. Venezuela Poland Kazakhstan Canada Vietnam China U.S. Colombia South Africa Russia Indonesia Australia 2002 - 2004 7 10 24 25 29 50 51 65 68 98 161 251 Indonesia S. Africa Russia Colomb
Slide 10: The "Coal Standard"? Coal Prices Show Strength Against Other Commodities
The "Coal Standard"? Coal Prices Show Strength Against Other Commodities Safe Haven: 1-Year Coal Prices Up; Other Commodities Down Source: Coal prices LTM as of Oct. 17, 2008 based on published index prices (PRB, Colorado and Illinois Basin 1-year forward delivery, Newcastle prompt delivery). Oil, c
Slide 11: BTU: The Only Global Pure-Play Coal Investment
BTU: The Only Global Pure-Play Coal Investment Unique Industry Near- and long-term global coal supply/ demand balance remains tight Coal markets stronger than other commodities Baseload nature of coal buffers industry from economic slowdown Supplies showing recent signs of cutbacks Unique Company Wo
Slide 12: BTU Advantage: Global Platform Offers Growing and Diverse Earnings
BTU Advantage: Global Platform Offers Growing and Diverse Earnings 1st Qtr 2nd Qtr 1 99 2003 2003 and 2007 reflect actual results from continuing operations. 2008 share estimated. International EBITDA Share Grows to 50% in 2008 1st Qtr 2nd Qtr 50 50 2008 United States International 1st Qtr 2nd Qtr 2
Slide 13: BTU Advantage: 10+ MTPA of Australia Met Coal
2008 2009 2010 East 3 3 10.5 West 5.5 6.5 High-Quality Hard Coking Coal Expected to Remain in Tight Supply BTU Advantage: 10+ MTPA of Australia Met Coal Recently Priced Unpriced Peabody's Met Coal Leverage 2007 Benchmark $98 $300 2008 Benchmark $ / Tonne High-Quality Hard Coking Coal Prices PLACEHOL
Slide 14: BTU Advantage: Large, Growing Volumes of Australia Export Thermal Coal
2008 2009 2010 Previously Priced 6 2.5 1 Recently Priced 2.5 1.5 0 Unpriced 6 12 1/1/2007 1Q07 2Q07 3Q07 4Q07 4/1/2008 Oct. 2008 East 51.95 53.93 70.03 78 89.75 125 138 BTU Advantage: Large, Growing Volumes of Australia Export Thermal Coal Previously Priced Recently Priced Recently Priced Unpriced U
Slide 15: Peabody Australia Capacity Potential
2007 2008 RESERVES POTENTIAL Queensland N. Goonyella / Eaglefield 2.4 2.5 - 3.0 45 4 - 6 MT Burton 3.2 2.5 - 3.0 33 4 MT Millennium 1.0 1.0 - 1.5 23 3.5 MT Wilkie Creek 2.4 2.3 - 2.6 344 3+ MT 9.0 9 - 10 New South Wales Wilpinjong 5.1 6.5 - 7.0 190 9 - 11 MT Wambo Complex 4.7 4.5 - 5.0 121 7 - 8 MT
Slide 16: U.S. Net Exports Grow to 50 - 60 Million Tons
2006 2007 2008 2009 Export 49300 59300 85000 90000 Import 36000 36400 31000 29000 U.S. Net Exports Grow to 50 - 60 Million Tons; Benefits Illinois Basin and PRB U.S. net exports growing ~40 million tons between 2007 and 2009 Peabody YTD transactions: 7 million tons of term U.S. exports through 2011
Slide 17: BTU Advantage: Strong Contracting Discipline; U.S. 90+% Priced For 2009
BTU Advantage: Strong Contracting Discipline; U.S. 90+% Priced For 2009 PRB moving as slack taken out of other markets; consumption up >3% YTD Third quarter premium PRB priced commitments 49% above 2007 realized prices Reduced 2009 PRB growth plans by 5 million tons PRB to supply ~40 - 45% of new pl
Slide 18: BTU Advantage: Number-One Producer in Very Tight Illinois Basin Market
BTU Advantage: Number-One Producer in Very Tight Illinois Basin Market Low inventories YTD Illinois Basin prices more than double Benchmarks move from $30s to $60s - $70s Traded prices less impacted with fewer financial players Peabody: 32 MTPA of Illinois Basin production 3.7 billion tons of reserv
Slide 19: Cost Containment Actions Enable Margin Expansion
Cost Containment Actions Enable Margin Expansion Process Improvement Projects New Mine Efficiencies Newer surface mines (Wilpinjong, El Segundo) lower cost than existing mines Major Cost and Productivity Initiatives Safety U.S. record 1.74 rate YTD Commodity Management Use of consumption teams YTD c
Slide 20: Peabody: A Leader in Btu Conversion and Clean Coal Solutions
Peabody: A Leader in Btu Conversion and Clean Coal Solutions Only non-Chinese equity partner in GreenGen, China's centerpiece coal / climate initiative Partnering with ConocoPhillips on new coal- to-natural gas facility in Kentucky Investing in GreatPoint Energy to develop coal-to-gas plants * Inner
Slide 21: BTU: Ongoing Track Record of Financial Performance
Revenue 40% EBITDA 86% Operating Profit 128% EPS 188% Cash Flow 48% BTU: Ongoing Track Record of Financial Performance YTD Performance Sets Records in All Financial Metrics Record Third Quarter; Full Year EBITDA and EPS Targets Raised; Share Repurchase Program Doubled to $1 Billion Dollars in millio
Slide 22: BTU's Approach: Making Good Money in All Market Conditions
2003 2004 2005 2006 2007 2008 EBITDA 422 496 709 909 963 1850 EBITDA (in Millions) Reflects results from continuing operations (unaudited). 2008 targets per Oct. 16, 2008 earnings release. BTU's Approach: Making Good Money in All Market Conditions $422 2008 Target $1,750- $1,850 Excellent leverage a
Slide 23: Peabody Energy Bank of America 2008 Energy Conference
Peabody Energy Bank of America 2008 Energy Conference November 14, 2008
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