Peabody Energy Corporation · NYSE:BTU
Peabody Energy — Jefferies 6th Annual Global Industrial and A&D Conference 2010
29 slides from Peabody Energy's conference presentation, Aug 10, 2010
Slide 1: Jefferies 6th Annual Global Industrial and A&D Conference
1 Jefferies 6th Annual Global Industrial and A&D Conference August 10, 2010 Christina A. Morrow Vice President Investor Relations
Slide 2: Statement on Forward-Looking Information
2 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 protecti
Slide 3: Peabody Energy: The Only Global Pure-Play Coal Investment
3 Peabody Energy: The Only Global Pure-Play Coal Investment Best access to fastest growing global markets with expanding Australia platform, trading activities and Asia growth projects Excellent U.S. contracting position and largest producer in fastest growing regions Unmatched reserve base and outs
Slide 4: Very Strong First Half 2010 Results and Bullish Outlook
4 Very Strong First Half 2010 Results and Bullish Outlook EBITDA increases 22% on higher Australia results, solid U.S. performance Margins per ton expand 20% in U.S., 25% in Australia Operating cash flows nearly double prior year's level Targeting 2010 results significantly above 2009 2005 2006 2007
Slide 5: Peabody Capitalizing on Outstanding Asia-Pacific Demand
Peabody Capitalizing on Outstanding Asia-Pacific Demand
Slide 6: Pricing for Key Australian Products Continues to Increase
6 2007 2008 2009 2Q 2010 3Q 2010 98 300 129 200 225 2007 2008 2009 2010 2011 2012 2013 56 125 70 91.82 98.07 102.65 105.7 Newcastle Thermal Coal Source: Forecast prices are an average of third-party industry data from multiple sources. Pricing as of Aug. 5, 2010. High Quality Hard Coking Coal Per To
Slide 7: China Creates Major Impact on Global Seaborne Markets
7 2003 2004 2005 2006 2007 2008 2009 2010 Annual. Imports -83.124 -67.963 -45.548 -24.988 -2.087 -4.449 104.196 71 71 China Creates Major Impact on Global Seaborne Markets Structural Shortage and Strategic Intent Drive Shift to Net Importer Data based on McCloskey Coal Report; 2010 reflects Jan. - J
Slide 8: India Unable to Meet Its Growing Demand
8 8 India Unable to Meet Its Growing Demand Data and estimates based on Peabody analysis and industry reports. India Coal Imports Imports growing to ~200 MTPA in 4 - 5 years? Why India can't meet internal demand: Generation growing 6% - 8% per year 88 GW of new coal- based generation under construct
Slide 9: Global Met Coal Use Likely to Increase to Track Steel Growth
9 Global Met Coal Use Likely to Increase to Track Steel Growth ROW 306 China 612 Global Steel Production Source: World Steel Association; third-party data and Peabody analysis. Global steel production expected to grow 50% by 2020 Bulk of market share growth in China and India 2009 2015 2020 World Ex
Slide 10: Generation Demand Driven by Asia and Growing Share of Electricity
10 China India Other Asia USA Others 55 13 8 7 3 Coal's Primary Customer Base - Generation - to Grow Dramatically Source: Platts Worldwide Power Plant Database; IEA World Energy Outlook 2009 and Peabody analysis. Generation Demand Driven by Asia and Growing Share of Electricity 2010 New Coal-Fueled
Slide 11: Global Seaborne Demand: ~375 MTPA of Expected Growth by 2015
11 Global Seaborne Demand: ~375 MTPA of Expected Growth by 2015 Tonnes in millions. Source: Barlow Jonker/Energy Publishing and Peabody analysis. Estimated Growth in Seaborne Imports 2009 - 2015 India China Japan South Korea Taiwan Other Pacific Atlantic 125 100 25 30 12.5 40 45 Pacific Demand Growt
Slide 12: Global Seaborne Supply: Expected to Lag Demand Growth
12 Global Seaborne Supply: Expected to Lag Demand Growth Source: Data and estimates based on Barlow Jonker/Energy Publishing and Peabody analysis. Data shown in million tonnes. Excludes land-based exports, except U.S. and Mongolia. 2009 total exports of 851 million tonnes. Australia More Than Half o
Slide 13: Australia Exports Expected to Grow ~200 Million Tonnes from 2004-2015
13 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 Abbott Point 12.533 12.971 11.207 11.756 13.685 15.242 16 20 30 35 35 35 Dalrymple Bay 47.291 50.659 50.946 44.787 47.983 54.225 65 73 78 83 85 88 Hay Point 36.193 33.517 32.152 39.068 35.972 35.008 41 41 45 45 45 45 Gladstone 42.715 42.
Slide 14: Peabody Competitively Positioned to Serve Growth Markets of Asia
Burton North Goonyella Eaglefield Millennium Metropolitan Dalrymple Bay Abbot Point Port Kembla Queensland New South Wales Conarco Exploration Area Wilkie Creek Brisbane Wilpinjong North Wambo Wambo NCIG Newcastle Gladstone Met Coal Mine Thermal Coal Mine Port Denham Development Optimal location to
Slide 15: Peabody Raising Australia Platform To 35 to 40 Million Tons by 2014
15 2009 2010 5-Yr Forward Domestic Thermal 5.8 6.25 8 Seaborne Thermal 9.6 12.25 16 Seaborne Met 6.9 8.5 13.5 1.5 2.5 2.5 6.0 - 6.5 11.5 - 12.0 9.5 - 10.5 8.0 15.0 - 17.0 12.0 - 15.0 27.0 - 29.0 35.0 - 40.0+ Peabody Raising Australia Platform To 35 to 40 Million Tons by 2014 Met: Up to 117% Seaborne
Slide 16: Australia 5-Year Project Pipeline
16 Australia 5-Year Project Pipeline Peabody's Australian Growth Projects Target Exports Short tons in millions. 'S' for surface, 'UG' for underground. Cap-ex per ton range excludes Denham development. Average Cap-Ex Per Ton: $50 to $70 for Thermal and Most Met Projects Likely Several Times That for
Slide 17: Peabody Advancing China and India Opportunities
17 Peabody Advancing China and India Opportunities Long-term met customer from Australia COALTRADE brokering thermal coal Peabody selected as strategic partner by Coal India Discussions ongoing re: long-term coal supplies or other strategic ventures India: Peabody Accessing Fastest Growing Importing
Slide 18: Solid Trading & Brokerage Results from Virtual Coal Mine
18 Solid Trading & Brokerage Results from "Virtual Coal Mine" Growing, profitable global trading and brokerage operations Continued expansion; opening of Singapore Southeast Asia trading hub in 2009 Arbitrage opportunities; financial or physical settlements with asset base; pipeline of market intell
Slide 19: Peabody Well Positioned in Fastest Growing U.S. Regions
19 Peabody Well Positioned in Fastest Growing U.S. Regions
Slide 20: U.S. Coal Demand Expected to Recover
U.S. Coal Demand Expected to Recover 60 - 80 Million Tons in 2010 Source: Energy Information Administration; MSHA; National Mining Association and other third-party sources. 2009 vs. 2010 Expected Demand Coal consumption for electricity up more than 6% year to date Production running 3% below 2009 l
Slide 21: PRB Prices Rise Fastest Since Onset of Recovery
21 PRB Prices Rise Fastest Since Onset of Recovery Data and estimates based on third-party data and Peabody analysis. Forecast prices are an average of third-party industry data from multiple sources. Pricing as of Aug. 5, 2010. Start of U.S. recovery estimated at Sept. 30, 2009. PRB 8800 Price Per
Slide 22: SPRB and Illinois Basin: Majority of U.S. Coal Demand Growth
22 SPRB and Illinois Basin: Majority of U.S. Coal Demand Growth PRB advantage Low end of cost curve Primary source for new plants Asian export potential Illinois Basin advantage Lower cost than Appalachia Major source for new plants CAPP to experience significant decline Constraints driven by safety
Slide 23: Lack of Stable Supply, Strong Parity Price Support Shift to PRB and Illinois Basin
23 2 Lack of Stable Supply, Strong Parity Price Support Shift to PRB and Illinois Basin 2011 ? 2014 CAPP Price Supports . . . $29 - $36/ton PRB Prices $63 ? $71/ton Illinois Basin Prices 55.6 63.28 72.25 73.65 73.85 74.35 75.5 76.8 78.1 79.55 80.8 82 83.86 83.86 83.86 83.86 43.0600000000049 55.16 62
Slide 24: Peabody Well Positioned in the U.S.
24 Peabody Well Positioned in the U.S. Largest producer and reserve holder in the PRB and ILB PRB and ILB expected to serve >80% of U.S. growth through 2014 Operating 9 of the nation's 20 safest mines, including 3 with zero incidents in 2009 Unpriced position 2010 fully committed/priced at 185 - 195
Slide 25: BTU Consistently Delivers Margins Higher than U.S. Peer Average
25 BTU Consistently Delivers Margins Higher than U.S. Peer Average U.S. Peers include ACI, CNX, MEE, CLD, ANR, ICO and PCX. Cost Control and Reinvestments Drive Higher Margins Consolidated U.S. % Margin Per Ton 2007 - 2009 Peabody U.S. Peers 0.25 0.22 3-Year Average % Margin Per Ton
Slide 26: Peabody's Shareholder Value Upside
26 Peabody's Shareholder Value Upside
Slide 27: BTU: Significant Upside to Shareholder Value
27 27 BTU: Significant Upside to Shareholder Value BTU's longstanding EV/EBITDA multiple and premium have contracted, providing significant upside when markets correct Valuation ignores ongoing supercycle and prices BTU at late-cycle multiples BTU's Australia assets alone exceed company's market cap
Slide 28: Wind at Our Backs to Create Value in Fastest Growing Markets
28 Peabody's assets and sales target the highest-growth regions in U.S. and Asia/Pacific region Access to high-growth regions offers Peabody greater opportunities to increase volumes, pricing and margins BTU's unique profile enables earnings growth and warrants significant premium to peers Wind at O
Slide 29: Jefferies 6th Annual Global Industrial and A&D Conference
29 Jefferies 6th Annual Global Industrial and A&D Conference August 10, 2010 Christina A. Morrow Vice President Investor Relations
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