Peabody Energy Corporation · NYSE:BTU
Peabody Energy — Howard Weil Energy Conference 2011
26 slides from Peabody Energy's conference presentation, Mar 28, 2011
Slide 1: Howard Weil Energy Conference
1 1 Howard Weil Energy Conference March 28, 2011 Rick Navarre President and Chief Commercial Officer
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 World Coal: Long-term supercycle in early stages BTU: Unique assets, position and prospects Significant leverage to high-growth Asian markets #1 in fastest growing U.S. regions Major catalysts for growth and increased shareholder value
Slide 4: 2010 EBITDA and Earnings Second Best in Company History
(CHART) 4 Revenues reach record $6.9 billion in 2010 EBITDA rises 41% Doubles in just 4 years EPS climbs 58% Operating cash flows total $1.1 billion $2.7 billion of liquidity to fund growth Margin expansion in every operating region $1,815 2010 EBITDA and Earnings Second Best in Company History $ in
Slide 5: BTU: Delivering Superior Margins
(CHART) 5 BTU: Delivering Superior Margins Source: Earnings release data through Dec. 31, 2010; peers comprised of ACI, ANR, CNX, ICO, MEE and PCX. Gross Margins Containing costs through structural investments and process improvement Leveraging higher prices through portfolio management and contract
Slide 6: Global Markets Outstanding for Coal
Global Markets Outstanding for Coal
Slide 7: Global Coal Supply Constrained As Demand Accelerates
Supply Supply Demand Demand Global Coal Supply Constrained As Demand Accelerates 7 Australia flood losses estimated at 25 million tonnes from December through Q1 15 million tonnes met; 10 million tonnes thermal Southern Hemisphere rains impact another 10 million tonnes Heavy cooling degree days in w
Slide 8: Japanese Earthquake Impacts Global Coal Markets
Japanese Earthquake Impacts Global Coal Markets 8 Some replacement from coal likely, offset by modest near-term disruptions of coal imports/plants 12.4 GW of nuclear plants damaged Possible increased coal plant utilization Operating at ~75% capacity in 2010 Japan and Asia steel mills to run harder t
Slide 9: Australian Met Coal Pricing Continues to Increase
(CHART) Australian Met Coal Pricing Continues to Increase Customers signing six-month and quarterly contracts at $315 and $330 per tonne Peabody levered to rising met coal prices 100% of expected sales in 2012 and beyond unpriced 9 High-Quality Hard Coking Coal April Benchmark Sets New Record Price
Slide 10: Newcastle Thermal Coal Prices Reaching New Highs
Newcastle Thermal Coal Prices Reaching New Highs BTU levered to rising thermal coal prices 6 - 7 million tons unpriced in 2011 12 - 13 million tons unpriced in 2012 10 Newcastle Thermal Coal Source: Third party pricing data as of March 15, 2011. Unpriced positions as of Jan. 25, 2011 earnings releas
Slide 11: Australia Expected to Supply Majority of Global Met Coal Increase
(CHART) Australia Expected to Supply Majority of Global Met Coal Increase Expected Increase in Seaborne Met Demand 2010 - 2015 Expected Increase in Seaborne Met Supply 2010 - 2015 Source: Peabody analysis. 65 - 75 Atlantic (CHART) Brazil India China Europe South Korea Japan 85 - 95 Australia Mongoli
Slide 12: Seaborne Thermal Coal: Demand Expected to Outpace Supply
12 12 Seaborne Thermal Coal: Demand Expected to Outpace Supply Expected to Outpace Supply Expected to Outpace Supply Expected Increase in Seaborne Thermal Demand 2010 - 2015 India China Other Pacific Atlantic Expected Increase in Seaborne Thermal Supply 2010 - 2015 2010 - 2015 2010 - 2015 2010 - 201
Slide 13: Peabody Expanding Australia Production to Serve Rising Demand
Peabody Expanding Australia Production to Serve Rising Demand Production to Serve Rising Demand Production to Serve Rising Demand 13 ~8.0 15.0 - 17.0 12.0 - 15.0 27.0 35.0 - 40.0 Tons in Millions Actual results may differ from forecast. Statement on forward-looking information detailed on slide 2. 2
Slide 14: U.S. Coal Demand Likely to See Modest Rebound in 2011
U.S. Coal Demand Likely to See Modest Rebound in 2011 Positives: Year-to-date stockpile draws twice the five-year average 5+% rise in industrial output Little additional coal-to-gas switching likely Increasing coal exports Challenges: Muted GDP growth Coal plants still running below historical capac
Slide 15: Where to Invest in the U.S.? Peabody Starts Where Demand is Rising
Where to Invest in the U.S.? Peabody Starts Where Demand is Rising Peabody Starts Where Demand is Rising Peabody Starts Where Demand is Rising 15 Expected U.S. Coal Demand Change 2010 - 2015 (Tons in Millions) 60-70 45-55 (5) - 5 (10-15) (45-55) Estimates based on Peabody analysis and industry repor
Slide 16: BTU Advancing Multiple Projects in U.S.
BTU Advancing Multiple Projects in U.S. Bear Run Growing to ~8 MT in 2012 Wild Boar In production, rising to ~2 MT in 2011 Gateway North Expanding ~40% to 4.5 million tons in several years El Segundo Adding 1+ MT in 2011 PRB Adding ultra-class trucks; Modest volume growth in 2011 School Creek pendin
Slide 17: Peabody Secures Major Long-Term Agreement for PRB Exports to Asia
Peabody Secures Major Long-Term Agreement for PRB Exports to Asia 17 Peabody access: Up to 24 MTPY Ultimate port capacity of 48 MTPY of coal Permitting under way by SSA for deep-draft site in Cherry Point, Wash. Estimated cost of $500 million Projected 2015 startup Favorable local business and labor
Slide 18: Early Stages of Coal Supercycle
Early Stages of Coal Supercycle
Slide 19: Coal: Entering the Early Stages of a Long-Term Supercycle
Coal: Entering the Early Stages of a Long-Term Supercycle 19 Coal: The World's Fastest Growing Fuel for Past Decade Source: BP Statistical Review of World Energy, June 2010. Coal +46% Growth in Major Energy Forms (1999 - 2009) Natural Gas +27% Oil +10% Hydro +25% Nuclear +7%
Slide 20: Future Coal Generation Growth: More Than Double That of Any Other Source
Future Coal Generation Growth: More Than Double That of Any Other Source Than Double That of Any Other Source Than Double That of Any Other Source 20 Electricity Generation (TWh) Source: International Energy Agency, World Energy Outlook 2010. Exceeds Growth in Gas, Oil, Nuclear, Hydro, Biomass, Geo
Slide 21: Global Met Coal Use Forecast to Rise ~600 Million Tonnes by 2020
21 21 Global Met Coal Use Forecast to Rise ~600 Million Tonnes by 2020 Expected Global Steel Production And Met Coal Demand Source: World Steel Association; third party data and Peabody analysis. Global steel production expected to rise nearly two-thirds by 2020 Bulk of market share growth in China
Slide 22: Peabody Energy: Multiple Growth Catalysts to Serve Asian Demand
Country Country Project Pipeline Australia Organic expansion program to lift production to 35 - 40 million tons by 2014-2015 China GreenGen partner; Projects with Huaneng/Calera (Inner Mongolia) and Yankuang (Xinjiang) and others Indonesia Executed long-term sourcing agreement; Pursuing greenfield d
Slide 23: 2011 Peabody Key Focus Areas
23 2011 Peabody Key Focus Areas Capture value from upward coal price movements within our significant open position Advance expansion of Australian metallurgical and thermal export mines, work to recapture value lost from the recent flooding Advance emerging growth projects and commercial transactio
Slide 24: Peabody The Leader Among U.S. Peers
Peabody The Leader Among U.S. Peers #1 Tons Sold #1 Net Income #1 Market Cap #1 Reserves #1 PRB & ILB #1 Exports #1 Credit Rating 24 Fuels 10% of U.S. Generation and 2% of World's Power Greater than the Next Eight Largest U.S. Peers Combined Nearly One-Third of U.S. Coal Market Cap 9 Billion Tons; >
Slide 25: BTU: Significant Upside to Shareholder Value
25 A return to historical multiples represents significant upside Valuation growth driven by: Global expansion to serve fastest growing markets High-quality asset base Earnings leverage to rising seaborne prices Strong track record for delivering results Current valuation ignores supercyle and price
Slide 26: For Further Information
26 For Further Information: Vic Svec Senior Vice President Investor Relations and Corporate Communications 1.314.342.7768 Katie Fink Senior Manager Investor Relations 1.314.342.7728