Peabody Energy Corporation · NYSE:BTU
Peabody Energy — Investor Presentation (September 2007)
42 slides from Peabody Energy's investor presentation, Sep 26, 2007
Slide 1: Peabody Energy Australia Investor Visit September 2007
Peabody Energy Australia Investor Visit September 2007 Peabody Energy NYSE: BTU
Slide 2: A Lively Itinerary for the World's Largest Coal Exporting Nation
A Lively Itinerary for the World's Largest Coal Exporting Nation Tuesday Welcome and Overview Wednesday Queensland Mine Review Thursday New South Wales Mine Review Friday Trading Discussion & Port Tour Peabody's new Wilpinjong Mine capacity is expected to grow to 9 million tons per year
Slide 3: An Opportunity to Visit with Peabody Management
An Opportunity to Visit with Peabody Management from Both Sides of the Pacific Greg Boyce President & Chief Executive Officer Eric Ford Executive Vice President and Chief Operating Officer Paul Demzik President COALTRADE International Vic Svec Senior Vice President of IR and Corporate Communications
Slide 4: 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 5: Greg Boyce, President and Chief Executive Officer
Greg Boyce President and Chief Executive Officer Peabody Energy NYSE: BTU
Slide 6: Key Topics
Key Topics Investment highlights for Peabody's international activities Peabody's growing global earnings contribution Global energy and coal market overview Peabody Australia leverages growing met and thermal markets
Slide 7: Peabody is the World's Largest Private-Sector Coal Company
Peabody is the World's Largest Private-Sector Coal Company International coal markets are outstanding and BTU is the only global pure-play coal investment Australia is a cornerstone of Peabody's transformation of our operating base Peabody Australia will leverage higher volumes, rising prices and a
Slide 8: Peabody's Growing Global Presence
Peabody's Growing Global Presence 1st Qtr 2nd Qtr 1 99 2003 Excludes discontinued operations. International EBITDA Share Grows to 30% in 2006 1st Qtr 2nd Qtr 25 75 2006 United States International
Slide 9: International Activities Represent Growing Share of Peabody's EBITDA
2002 2003 2004 2005 2006 13 25.4 3.8 75.2 112.3 2002 2003 2004 2005 2006 3 2.2 50.4 202.6 278.4 International Activities Represent Growing Share of Peabody's EBITDA 2002 2003 2004 2005 2006 576.3 556.1 682.5 833.7 857.2 Trading and Brokerage Australia Operations Resource Management 2002 2003 2004 20
Slide 10: 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 Exploration of strategic alternatives for Eastern assets Expansion of U.S. coal trading activities Serving new coal plants and Btu Conversion projects Expanding global coal trading in Newcastle, Londo
Slide 11: Why International Markets are an Outstanding Fit for BTU
Strategy Background: Why International Markets are an Outstanding Fit for BTU Diversifies overall portfolio Maintains high growth trajectory Utilizes strong U.S. and Australia reserve base Hedges against single-country risk Allows participation in fast-growing regions Leverages soaring global energy
Slide 12: Energy Markets: China and India Drive Global Demand Growth
Per-Capita Electricity Use Just 1/10th (China) and 1/30th (India) the U.S. Level Source: International Energy Agency. Energy Markets: China and India Drive Global Demand Growth Electricity Usage per Capita Mbtu USA 13.1 Australia 10.7 South Korea 7 UK 6.2 Italy 5.6 Russia 5.5 Malaysia 3 China 1.4 In
Slide 13: All Energy Prices Rebase to Higher Plateaus in Recent Years
All Energy Prices Rebase to Higher Plateaus in Recent Years Oil API, Newcastle and Oil Price August 31, 2007 data.
Slide 14: Global Coal Use Soars 30% 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 15: 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.
Slide 16: China, U.S. and India Represent Vast Majority of Global Coal Growth
China, U.S. and India Represent Vast Majority of Global Coal Growth Amounts in million short tons. Source: U.S. Department of Energy, Energy Information Administration, International Energy Outlook 2006. Projected Australia export flow for 2004-2030. Long-Term Coal Demand Forecasts Continue to Rise
Slide 17: China's New Net Importer Status Creates Fundamental Shift in Seaborne Markets
China's New Net Importer Status Creates Fundamental Shift in Seaborne Markets 2003 2004 2005 2006 2007 YTD Thermal Coal 72 68 46 25 -5 Metallurgical Coal 11 0 0 0 Amounts in million short tons. Source: Industry reports and Peabody analysis. Reduction of ~25% of Pacific Thermal Seaborne Coal Supply i
Slide 18: International Coal Prices Show Increases Across the Board
Australia/Newcastle China/Qinhuangdao Columbia/Bolivar into ARA Russia/Vostochniy South Africa/Richards Bay 2006 41.75 48 44 44 43.25 2007 71.85 74.5 57.5 73 60.35 International Coal Prices Show Increases Across the Board Source: McCloskey's Coal Report; Industry Reports. Hard Coking Metallurgical 2
Slide 19: Peabody a Major and Growing Producer in World's Largest Export Nation
Peabody a Major and Growing Producer in World's Largest Export Nation Subject to transportation entitlements. Peabody's Unpriced Tons 2008: 13 - 15 Million 2009: 18 - 20 Million Peabody's Australia Sales Grow from 6 to 20+ Million Tons 2004 2005 2006 2007 Thermal 1.5 2 3 11.5 Met 4.6 6.3 8 9.5 Peabo
Slide 20: Peabody Levered to Improving Seaborne Met Prices
Peabody Levered to Improving Seaborne Met Prices 2008 2009 2008 8 10 Peabody's Unpriced Met Volumes - Australia 7 - 9 million tons 9 - 11 million tons Note: Met classification includes all qualities of coking coal and PCI. Short Tons in Millions
Slide 21: Australia a Key to Implementing Peabody's Long-Term Strategies
Australia a Key to Implementing Peabody's Long-Term Strategies 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 22: Eric Ford, Executive Vice President and Chief Operating Officer
Eric Ford Executive Vice President and Chief Operating Officer Peabody Energy NYSE: BTU
Slide 23: Key Topics
Key Topics Peabody's portfolio of operations Major opportunities from growing seaborne markets Product and port capacity from Peabody's Australia operations Australia: Central to implementing Peabody's core strategies
Slide 24: Peabody's Base Portfolio of Operations
Peabody's Base Portfolio of Operations Dominion Dalrymple Bay Newcastle Brisbane Venezuela Santa Cruz Kembla * Market position and sales pro forma 2007 including Excel mines under development. 2006 sales volumes in millions of short tons. Venezuela sales volume for Paso Diablo Mine, of which Peabody
Slide 25: Seaborne Market Represents Major Portion of Global Coal Market
Seaborne Market Represents Major Portion of Global Coal Market Sources: IEA 2006 and ABARE. Tonnes in Millions 5,780 4,870 910 829 910 4,041 3,511 530 65 910 11 54 333 Pacific 205 Atlantic Seaborne 214 31 PCI 178 Coking Thermal 3,511 Metallurgical 530 Domestic 4,041 Thermal 538 209 Thermal 59 Metall
Slide 26: Cost Structure Sets High Ceiling for Seaborne Thermal Coal Prices
South America S. Africa, Indonesia, China Australia, China (marginal) Russia USA International Cost Curve (FOB Port) Cost Structure Sets High Ceiling for Seaborne Thermal Coal Prices Source: AME, McCloskey, Credit Suisse and Peabody analysis.
Slide 27: Peabody is the Largest Private-Sector Coal Company
Peabody is the Largest Private-Sector Coal Company Shenhua Rio Tinto BHP-Billiton Arch China Coal Anglo-American Consol Xstrata Foundation Massey Yanzhou Alpha Natural Resources International Coal Source: Most recent company reports and websites, and SEC filings.
Slide 28: Peabody One of the Largest and Fastest Growing Australian Coal Companies
Peabody One of the Largest and Fastest Growing Australian Coal Companies BHP Billiton / BMA Xstrata Rio Tinto Anglo-American PEABODY* Centennial Wesfarmers Macarthur Felix New Hope Gloucester Met 66.6 12 8.4 10.1 8.6 1.8 7.2 0.8 2.5 0 0.7 Thermal 11.1 39.4 32.5 17.7 12.7 16.2 8.8 4 1.7 4 1.5 * Peabo
Slide 29: Peabody's Australian Portfolio Provides Major Product and Port Diversity
Peabody's Australian Portfolio Provides Major Product and Port Diversity
Slide 30: Peabody's Diversified Product Mix Allows Optimization of Production and Markets
Peabody's Diversified Product Mix Allows Optimization of Production and Markets 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 2007 Estimated Products
Slide 31: Long-Term Australia Coal Capacity Grows to 30-Plus Million Tons
Long-Term Australia Coal Capacity Grows to 30-Plus Million Tons Short Tons in Millions 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
Slide 32: Australia Coal Chain Logistics Improving With More Capacity Planned
Australia Coal Chain Logistics Improving With More Capacity Planned 2008+ Improvements Quotas likely through 2008 Newcastle Added throughput planned for 2008 and 2009 Dalrymple Bay Port expansions planned in first and fourth quarter 2008 Queensland Rail to add new train sets over the next year NCIG
Slide 33: Spotlight: Port Entitlement Allocation Process
Spotlight: Port Entitlement Allocation Process Peabody: 7.0 - 7.5 Million Tons Through Newcastle in 2007 Port and rail throughput likely to grow in 2008... ....But so will total shipper requests Entitlements not currently related to rail contracts Few penalties for producers nominating in excess of
Slide 34: New NCIG Port Would Increase Throughput for Peabody and Others
New NCIG Port Would Increase Throughput for Peabody and Others Six stakeholders BHP Billiton (36%) Peabody Energy (18%) Felix Resources (15%) Donaldson Coal (12%) Whitehaven Coal (11%) Centennial Coal (9%) 30+ million tonnes initial capacity; 60 over time Open access regime for shareholder-members D
Slide 35: Strategy One: Execute the Basics
Australia a Key to Implementing Peabody's Long-Term Strategies Australia operations improve safety performance 35% since 2004 Cost containment through PI initiatives and structural improvements (new mines) Marketing excellence leveraging strong met / thermal pricing and leading global trading activi
Slide 36: Strategy Two: Capitalize on Pipeline of Growth Projects
Australia a Key to Implementing Peabody's Long-Term Strategies Strategy Two: Capitalize on Pipeline of Growth Projects Expansion Completing Millennium Mine and prep plant Finalizing Wambo Underground and prep plant Increasing Wilpinjong production Infrastructure Planning for long-term expansion Expl
Slide 37: Strategy Three: Expand in High-Growth Markets
Australia a Key to Implementing Peabody's Long-Term Strategies Strategy Three: Expand in High-Growth Markets Metallurgical Coal Additional Millennium production Thermal Coal New South Wales expansion at Wilpinjong and Wambo Traded Markets Leading Newcastle and U.S. presence; growing Europe and China
Slide 38: Strategy Four: Participate in New Generation and Btu Conversion Markets
Australia a Key to Implementing Peabody's Long-Term Strategies Strategy Four: Participate in New Generation and Btu Conversion Markets Participate in high-growth Asia markets Asia the main driver of 115 GW of new global generation under construction Serve Australian domestic generation customers Eva
Slide 39: Peabody's Australian Safety Performance Consistently Outperforms Industry Average
2004 2005 2006 2007 YTD 2007 YTD 2006 2005 2004 Peabody's Australian Safety Performance Consistently Outperforms Industry Average Source: Australia industry reports. Lost Time Incidents per 200,000 Hours Peabody Australia Australia Industry Purchase of RAG Australia Purchase of Excel Coal
Slide 40: Peabody Australia Contributing Heavily to Safety and Environmental Initiatives
Peabody Australia Contributing Heavily to Safety and Environmental Initiatives Establishing single, integrated philosophies in areas of reclamation, safety and health Taking active role in sustainability initiatives Greenhouse Gas Challenge Plus: business and government partner to improve energy eff
Slide 41: Peabody's Mission and Ethics: The Same High Standards Around the World
Peabody's Mission and Ethics: The Same High Standards Around the World
Slide 42: Peabody Energy Australia Investor Visit September 2007
Peabody Energy Australia Investor Visit September 2007 Peabody Energy NYSE: BTU
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