Peabody Energy Corporation · NYSE:BTU
Peabody Energy — Howard Weil 36th Annual Energy Conference 2008
31 slides from Peabody Energy's conference presentation, Apr 7, 2008
Slide 1: Howard Weil 36th Annual Energy Conference
HOWARD WEIL 36th ANNUAL ENERGY CONFERENCE April 7, 2008 Gregory H. Boyce Chairman and Chief Executive Officer Peabody Energy
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: The New BTU: The Only Global Pure-Play Coal Investment
The New BTU: The Only Global Pure-Play Coal Investment Excellent leverage to rising prices Global expansion into high-growth, high-margin markets Levered to ongoing China and India expansion Long-term demand from new generation and Btu Conversion Optimizing portfolio of safe, low-cost operations Ind
Slide 4: Robust Markets and Peabody's Position
ROBUST MARKETS AND PEABODY'S POSITION
Slide 5: Coal Continues to Be Fastest Growing Fuel, Straining Supplies & Raising Pricing
Coal Continues to Be Fastest Growing Fuel, Straining Supplies & Raising Pricing 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 5.76 30% 2001 - 2006 Change 16% 9% 15% 6% Coal
Slide 6: Roaring Demand And Straining Supply... Where Will the Coal Come From?
Roaring Demand And Straining Supply... Where Will the Coal Come From? Source: Barlow Jonker, 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 Colombia C
Slide 7: Coal Prices Reaching Record Highs in Current Markets
PRB 2007 7.25 14.75 Coal Prices Reaching Record Highs in Current Markets Source: Global Coal Newcastle Index; McCloskey's Coal Report; Industry Reports. Cal'09 pricing except Hard Coking Metallurgical, Australia/Newcastle and Russia/Vostochniy. Updated Apr. 3, 2008. Australia/Newcastle CAPP China/Qi
Slide 8: Peabody: Outstanding Position to Serve Growth Markets
Peabody: Outstanding Position to Serve Growth Markets #1 in Powder River Basin #1 in Colorado #1 in Illinois Basin #1 Exporter of U.S.-based companies #1 U.S. coal trader Tripling Australian presence Leading global coal trader
Slide 9: Australia: Outstanding Conditions as 2008-2009 Contract Season Proceeds
Australia: Outstanding Conditions as 2008-2009 Contract Season Proceeds Source: Global Coal Newcastle Index; McCloskey's Coal Report; Industry Reports; Updated Apr. 3, 2008. * Represents prior-year price. High Quality Hard Coking Coal Newcastle Thermal Coal U.S. Dollars Per Tonne ? ? * *
Slide 10: Significant Leverage to Strong Seaborne Thermal and Metallurgical Coal Markets
Significant Leverage to Strong Seaborne Thermal and Metallurgical Coal Markets 2009 2008 Met 9.8 6 Thermal 8.8 3.5 Priced Thermal - Domestic Priced Thermal - Legacy Export Priced Thermal - Other Export Unpriced Thermal Export Unpriced Met Priced Met 2007 5 3 4 3.5 6 3.5 Unpriced Australia Volumes 9-
Slide 11: Peabody Has Most Metallurgical Coal Volumes of Any U.S.-Based Producer
Data based on company reports or analyst reports where not provided by company. Massey Patriot Arch CONSOL Alpha Peabody Peabody Has Most Metallurgical Coal Volumes of Any U.S.-Based Producer Foundation 2008 Estimated Met Coal Sales
Slide 12: PRB Markets Strengthen from Pull of Exports and Domestic Growth
OTC PRB 8800 1/3/2007 7.25 0 2/13/2008 14.75 PRB Markets Strengthen from Pull of Exports and Domestic Growth OTC PRB 8800 Prices PRB pricing doubles in one year Best U.S. volume leverage over next several years Unpriced U.S. volumes: 80 - 90 Million for 2009 140 - 150 Million for 2010 Peabody's 2007
Slide 13: U.S. Net Exports Expected to More Than Triple Over Two Years
2006 2007 2008 Export 49300 59300 80000 Import 36000 36350 31000 U.S. Net Exports Expected to More Than Triple Over Two Years Net exports grow due to global coal shortages, European demand, weak dollar and reduced U.S. imports Q1 sees inventories decline; normally stockpiles build in Q1 Creates pull
Slide 14: Strong Asian Coal Markets Flowing Around to Atlantic Markets
PRB South America Pitt Seam US Emissions Markets ATLANTIC U.S. European Emissions Markets PACIFIC Indonesia Australia Transportation Russia Poland South Africa CAPP NYMEX API #2 and #4 Newcastle Index Strong Asian Coal Markets Flowing Around to Atlantic Markets IL Basin Physical Financial
Slide 15: International Markets Create Major Flow-Back Opportunities
API 2 (Implied Delivered to Europe, per tonne): $121.25 Implied CAPP Price at East Coast Port (ton): $92.00 CAPP NAPP Netback $65.60 $72.50 Market $79.50 $80.00 Lower/Upper Ohio River Plant Netback to... PRB Illinois Netback FOB $/Ton $18.90 $66.15 Current Price $14.75 $56.00 OPPORTUNITY $ 4.15 $10.
Slide 16: Peabody's Unpriced Position Provides Substantial Upside Opportunities
Peabody's Unpriced Position Provides Substantial Upside Opportunities Assumptions: 30% in production taxes and royalties in PRB, 5% for production taxes and royalties for other U.S. regions, 8% for Australia. Based on unpriced volumes reported Jan. 31, 2008. Actual volumes to be priced are subject t
Slide 17: Peabody's Global Operations and Trading Leverage Record-Setting Markets
Peabody's Global Operations and Trading Leverage Record-Setting Markets Operations Trading & Local Offices Countries Served Ports BTU Clean Coal Projects Coal Exports Domestic Sales St. Louis London Beijing Sydney
Slide 18: Long-Term Coal Demand Forecasts Continue to Rise
China, India and U.S. 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 19: High Price of Power Spurs New U.S. Coal-Fueled Generation
High Price of Power and Competing Fuels Spurs New U.S. Coal-Fueled Generation Source: U.S. Department of Energy's National Energy Technology Laboratory. Nearly 17 GW of Coal Generation Under Construction or Recently On Line Capacity Additions (GW) Largest New Coal Plant Build-out in Decades
Slide 20: Coal Use Expected to Accelerate Over Next Several Decades
Coal Use Expected to Accelerate Over Next Several Decades Million Kilowatt Hours Coal Nuclear Natural Gas Renewables Petroleum U.S. Electric Power Generation by Fuel Type Source: Energy Information Administration, Annual Energy Outlook 2008.
Slide 21: Peabody's Key Focus Areas
PEABODY’S KEY FOCUS AREAS if
Slide 22: Peabody Taking Decisive Steps To Benefit From Accelerating Global Coal Markets
Peabody Taking Decisive Steps To Benefit From Accelerating Global Coal Markets Improving productivity and costs Expanding access to high- growth, high-margin markets Improving capital efficiency Pursuing long-term operating, trading and joint-venture opportunities Advancing clean coal projects inclu
Slide 23: Significant Capital Investments Delivering Productivity And Cost Improvements
Significant Capital Investments Delivering Productivity And Cost Improvements 2007 full-year data per Platts Energy Advantage. Source: U.S. Department of Labor Mine Safety & Health Administration. Peabody's North Antelope Rochelle Most Productive U.S. Coal Mine Peabody U.S. Industry 3Q07 4Q07 Surfac
Slide 24: New Capital Projects Raise Productivity and Boost Production
New Capital Projects Raise Productivity and Boost Production Examples: PRB Conveyor, North Wambo, El Segundo
Slide 25: Peabody's Australian Portfolio Provides Major Product and Port Diversity
Peabody's Australian Portfolio Provides Major Product and Port Diversity 21.4 million tons in 2007 More than triple output in 3 years 2008 target: 23 - 25 million tons Growing to 30 - 35 million tons in several years
Slide 26: Pipeline of Projects Targets High-Growth Regions & Cost Improvements
Burton Pipeline of Projects Targets High-Growth Regions & Cost Improvements Cost / Quality Acquisitions / Exploration Organic Growth Eaglefield Gateway North Goonyella Longwall Caballo Truck/ Shovel NARM Dragline NARM Conveyor NARM Blending & Loadout Wambo Metropolitan Chain Valley Wilpinjong Millen
Slide 27: Peabody is the Global Leader in Clean Coal Solutions
Peabody is the Global Leader in Clean Coal Solutions BTU is the only non-Chinese equity partner in GreenGen, China's centerpiece commercial climate initiative BTU is a long- standing supporter of the Vision 21 and FutureGen clean coal projects BTU is a member of Australia's Coal21 Fund to advance ne
Slide 28: In an Energy-Short World, BTU's Energy Reserves Are Unmatched
Continental U.S. Proven Oil Reserves 119 185 Peabody's Proven and Probable Coal Reserves Continental U.S. Natural Gas Reserves Largest U.S. Oil Company 179 128 Source: Annual reports for selected energy companies, Energy Information Administration's U.S. Crude Oil, Natural Gas, and Natural Gas Liqui
Slide 29: Btu Conversion = Value Conversion as We Narrow the Energy Valuation Gap
Source: Company filings and reports. Market capitalization as of April 3, 2008. Btu Conversion = Value Conversion as We Narrow the Energy Valuation Gap Market Capitalization on Btu-Equivalent Basis ConocoPhillips Anadarko Chevron Apache BP ExxonMobil Peabody Shell
Slide 30: Peabody Has an Outstanding Outlook
2004 2005 2006 2007 2008 2009 2010 EBITDA 496 708 901 956 Revenue growth from higher- priced sales commitments Global expansion in high- demand, high-margin regions Significant leverage to rising global markets Unmatched, diversified reserve base Emerging markets from Btu Conversion $496 $708 $901 E
Slide 31: Howard Weil 36th Annual Energy Conference
HOWARD WEIL 36th ANNUAL ENERGY CONFERENCE April 7, 2008 Gregory H. Boyce Chairman and Chief Executive Officer Peabody Energy
Peabody Energy — Howard Weil 36th Annual Energy Conference 2008 on 6ix