Peabody Energy Corporation · NYSE:BTU
Peabody Energy — Macquarie Global Metals & Mining Conference 2009
30 slides from Peabody Energy's conference presentation, Nov 30, 2009
Slide 1: Macquarie Global Metals & Mining Conference 2009
Macquarie Global Metals & Mining Conference 2009 November 30, 2009 Vic Svec Senior Vice President Investor Relations and Corporate Communications 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: Peabody Energy: The Only Global Pure-Play Coal Investment
Peabody Energy: The Only Global Pure-Play Coal Investment Best access to fastest-growing global markets Major planned expansion of Australia-based met and thermal coal production Highly contracted U.S. position Unmatched size, global trading platform and portfolio diversification BTU Investment Appe
Slide 4: Peabody: Delivering Earnings, Expanding Financial Capacity
Peabody: Delivering Earnings, Expanding Financial Capacity Record met shipments to serve growing Pacific demand U.S. margins per ton expand 15% over second quarter 2009 on lower costs Operating cash flows of $429 million on EBITDA of $341 million Tight management of capital spending Lowered 2009 cap
Slide 5: Coal: The World's Fastest Growing Fuel
Compound Annual Growth Rate Coal: The World's Fastest Growing Fuel Six Successive Years Change in Global Energy Consumption Source: BP Statistical Review of World Energy, June 2009. Coal Hydro Natural Gas Oil Nuclear 2002-2008 37 20 19 9 1 37% 2002 - 2008 Change 20% 9% 19% 1% Coal Natural Gas Oil Hy
Slide 6: Coal Demand Will Continue To Outpace Other Fuel Sources
Coal Demand Will Continue To Outpace Other Fuel Sources 2007 2030 Coal 3184 4887 Million Tonnes of Oil Equivalent Source: International Energy Agency, World Energy Outlook 2009. Global Coal Demand Global Coal Use Estimated to Grow 53% by 2030
Slide 7: Asia Represents 90% of Nearly 3 Billion Ton Long-Term Global Demand Growth
7 Source: World Energy Outlook 2009, International Energy Agency; Annual Energy Outlook Forecasts. Asia Represents 90% of Nearly 3 Billion Ton Long-Term Global Demand Growth Growth in Coal Demand (Tons in Millions) Through 2030 +540 +1,740 +230 +40 +90 +300 Countries Served and Sourced by Peabody Gr
Slide 8: Asia-Pacific Region: Leading Economic Recovery and Global Coal Demand
Asia-Pacific Region: Leading Economic Recovery and Global Coal Demand
Slide 9: Pacific Met and Thermal Coal Prices Rebase at Higher Levels
2003 2004 2005 2006 2007 2008 2009 Prompt Month 2012 27 45 53 52 56 125 70 79.57 97.31 Newcastle Thermal Coal Source: Third party broker data. Pricing as of November 10, 2009. 2003 2004 2005 2006 2007 2008 2009 Spot 2010+ 47 58 125 115 98 300 129 165 High-Quality Hard Coking Coal Current Spot Higher
Slide 10: China Leading the Pacific Market Recovery
2003 2004 2005 2006 2007 2008 YTD Oct 2009 Imports -83.124 -67.963 -45.548 -24.988 -2.087 -4.449 78.651 China Leading the Pacific Market Recovery YTD imports up 171%, exports down 50% 79 MT net importer YTD; 160+ million tonne shift since 2003 Structurally short of met coal Securing long-term therma
Slide 11: India Likely to be World's Fastest Growing Coal Importer
India Likely to be World's Fastest Growing Coal Importer Source: International Energy Agency, World Energy Outlook 2008; industry reports and Peabody analysis. Up to 200 MTPA importer within five years Coal generation up 6.8% YTD Inventories less than 50% of target levels Targeting 13 GW of new coal
Slide 12: Global Seaborne Demand: ~300 MTPA of Growth by 2014
Global Seaborne Demand: ~300 MTPA of Growth by 2014 Source: Barlow Jonker; Peabody analysis. 100+ MTPA of new seaborne coal demand from generation under construction Pacific demand growth ~75% of total demand increases India to dominate growth in global coal imports India China Japan South Korea Oth
Slide 13: Global Seaborne Supply: Expected to Lag Demand Growth
30 - 40 Other Vietnam Canada China South Africa South America U.S. Russia Indonesia Australia Metallurgical 0 27 3.5 0 0 42.5 10 0 130 Thermal 20 6 42 64 75 39 72 180 126 2008 Total Exports Global Seaborne Supply: Expected to Lag Demand Growth Source: Barlow Jonker; Peabody analysis. Tonnes in milli
Slide 14: Australia and Appalachia: Divergent Mining and Markets
Australia and Appalachia: Divergent Mining and Markets Higher quality coal products Favorable geology Up to $50 per tonne rail/freight advantage Access to highest growth markets Met coal to China and India: Australia: ~45 million tonnes Appalachia: ~2 million tonnes Major Advantages of Australian Co
Slide 15: U.S. Markets: Long-Term Fundamentals Favor Powder River and Illinois Basins
U.S. Markets: Long-Term Fundamentals Favor Powder River and Illinois Basins
Slide 16: Market Contangos, Underinvestment Suggest Sharp Rebound
Prompt Month 2010 2011 2012 2013 78 83.75 98.37 106.08 111.25 Prompt Month 2010 2011 2012 2013 7.92 8.74 11.03 12.41 0 Prompt Month 2010 2011 2012 2013 4.47 5.31 6.32 6.64 6.87 Market Contangos, Underinvestment Suggest Sharp Rebound API 2 $111 $78 Source: Third party broker data. Natural gas futures
Slide 17: Who Will Supply the U.S. Market?
Who Will Supply the U.S. Market? PRB, ILB Dominate U.S. Supply Growth PRB Advantage Low end of cost curve Primary source for new plants Asia export potential ILB Advantage Lower cost than NAPP and CAPP Major source for new plants European export market PRB ILB NAPP Other CAPP 2009 57 25 12 3 -36 U.S
Slide 18: More U.S. Production Reductions Coming?
More U.S. Production Reductions Coming? Dollar per ton values FOB mine for NYMEX product, pricing as of November 13, 2009. Source: Industry reports and Peabody analysis. ~90 Million Tons of CAPP Uneconomic at 2010 Prices CAPP Steam Coal Cost Curve Breakeven 0 25 0 50 75 100 125 142 Cash Production C
Slide 19: PRB, ILB to Serve Nearly 2/3 of New Coal-Based Generation
29 Units in U.S. Under Construction Requiring 65 - 70 MTPA of Coal Includes units under construction and newly completed during 2009. PRB, ILB to Serve Nearly 2/3 of New Coal-Based Generation The 1,600 MW Prairie State Energy Campus under construction in Southern Illinois; startup in 2011 Coal-Fuele
Slide 20: Peabody: The Only Global Pure-Play Coal Investment
Peabody: The Only Global Pure-Play Coal Investment; Best Access to Fastest Growing Global Markets
Slide 21: Peabody Well Positioned in the U.S. Market
Peabody Well Positioned in the U.S. Market 2008 2008 Position Sales Reserves Wyoming PRB #1 147 3,199 Midwest #1 31 3,652 Colorado #1 9 203 Southwest #2 14 1,011 2010: 185 - 195 MT of production committed and priced Largest producer and reserve holder in the PRB and ILB PRB and ILB to serve more tha
Slide 22: Location and Cost Advantage Over Other Seaborne Supply
22 Location and Cost Advantage Over Other Seaborne Supply Peabody Competitively Positioned to Serve Growth Markets of Asia Optimal location to serve Asian demand Premium met and thermal coal products Lower cost seaborne supply Significant organic growth potential Expanding export capability with rai
Slide 23: Peabody Has Significant Leverage to Strong Seaborne Markets
Peabody Has Significant Leverage to Strong Seaborne Markets Targeting ~15% Growth in 2010 Australian Sales (Short Tons in Millions) * All domestic thermal volumes priced under long-term contracts. Unpriced volumes as of Oct. 20, 2009. Actual results may differ from forecast. Statement on forward-loo
Slide 24: Peabody's Australian Exports: Potential to Double in Five Years
2004 2005 2006 2007 2008 2009 2010 5-Yr Forward Domestic Thermal 0 0 0.6 3.3 5.1 6 6.5 8 Seaborne Thermal 1.5 2.5 3.6 9.5 10.6 9.5 12 16 Seaborne Met 4.6 5.8 6.6 8.7 8.16 6 7 13.5 1.5 2.5 2.5 6.0 - 6.5 11.5 - 12.5 6.5 - 8.0 5.5 - 6.5 9.5 - 10.0 6.0 - 6.5 8.0 - 8.5 15.0 - 17.0 12.0 - 15.0 21.0 - 23.0
Slide 25: Australia 5-Year Project Pipeline
Australia 5-Year Project Pipeline Peabody's Australian Growth Projects Target Exports Growth in BTU Australia Platform Export Met S/UG MTPA Quality Denham Development S 3 - 6 Premium HQHCC Burton Extension S 2 - 3 HQHCC / HCC Metropolitan Expansion UG 1 HCC Millennium Expansion S 2 - 3 Semi-Hard / P
Slide 26: Peabody Expanding Highly Successful Global Model
26 26 Operations Global Trading Offices Peabody Expanding Highly Successful Global Model The Power of the Global BTU Platform Ports Coal Flows
Slide 27: Peabody's Global Expansion Drives Higher Trading & Brokerage Results
2003 2004 2005 2006 2007 2008 2009 / 2010 Domestic EBITDA 45.828 34.781 38.745 81.604 87.781 123.683 International EBITDA 0 6.258 4.313 11 28.819 95.217 St. Louis Newcastle London Beijing SINGAPORE Peabody's Global Expansion Drives Higher Trading & Brokerage Results 2003 2004 2005 2006 2007 2008 Dom
Slide 28: Peabody Uniquely Positioned for Success Within Coal Industry
Peabody Uniquely Positioned for Success Within Coal Industry Broad global diversity Serving long-term growth in emerging nations Low exposure to geology, permitting, compliance issues in high-cost regions Global trading & brokerage activities Ample liquidity and access to capital Opportunistic acqui
Slide 29: Recent Transactions Reveal BTU Undervalued
Recent Transactions Reveal BTU Undervalued Comps: ~$18 Billion for Australia & PRB Platform Alone? Peabody Australia Peabody PRB Peabody's Market Capitalization VALUATION GAP? Mongolia China Australia Growth Midwest, SW, Colo., COALTRADE, Reserves Peabody Australia based on Yanzhou's Felix bid of $5
Slide 30: For Further Information
For Further Information: Christina Morrow Director Investor Relations 1.314.342.7651 Vic Svec Senior Vice President Investor Relations and Corporate Communications 1.314.342.7768
Peabody Energy — Macquarie Global Metals & Mining Conference 2009 on 6ix