Peabody Energy Corporation · NYSE:BTU
Peabody Energy — Howard Weil 37th Annual Energy Conference (March 2009)
26 slides from Peabody Energy's conference presentation, Mar 23, 2009
Slide 1: Howard Weil 37th Annual Energy Conference
HOWARD WEIL 37th ANNUAL ENERGY CONFERENCE Rick Navarre President March 23, 2009
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: BTU: The Only Global Pure-Play Coal Investment
BTU: The Only Global Pure-Play Coal Investment Strategic actions have led to a 2008 performance that reveals the power of Peabody's global platform The ultimate market rebound may be stronger than expected due to long-term demand and lack of investment BTU is uniquely suited to benefit from industry
Slide 4: Global Coal Markets Impacted by Global Economic Downturn
4 Global Coal Markets Impacted by Global Economic Downturn YTD global steel production (excluding China) 37% lower than last year; likely 20 - 25% decline for 2009 U.S. steel production >50% below year-ago levels; potential 25 - 30% pull-back for 2009 Global generation growth cut to 2.7% in 2008; fl
Slide 5: Sharp Rebound Likely When Markets Recover
Sharp Rebound Likely When Markets Recover Significant demand from electricity use by emerging nations Geology, permitting and safety compliance challenges in certain high-cost regions Financing will be an industry challenge Lack of investment during financial crisis likely to lead to even stronger r
Slide 6: Global Coal Supply-Demand: Swift Response to Rebalance (Seaborne)
6 Global Coal Supply-Demand: Swift Response to Rebalance 2008 Seaborne Met Demand (Tonnes in Millions) Pacific 129 Atlantic 82 211 2008 Seaborne Thermal Demand (Tonnes in Millions) Pacific 381 Atlantic 224 605 2009 SEABORNE MET Potential Demand Cuts Steel Production (35 - 45) Announced Supply Cuts A
Slide 7: Global Coal Supply-Demand: Swift Response to Rebalance (U.S.)
7 Global Coal Supply-Demand: Swift Response to Rebalance 2009 U.S. COAL Potential Demand Cuts Generation/Industrial (35 - 50) Low Natural Gas (15 - 25) Reduced Exports (25 - 30) Stockpiles ( 5 - 10) Total (80 - 115) Announced Supply Cuts Announced Cuts From (55 - 60) More Than Half of U.S. Productio
Slide 8: China Continues to Reduce Exports While India Increases Imports
8 China Continues to Reduce Exports While India Increases Imports China thermal coal exports decline 21% in 2008; down 42% YTD 18% fewer export licenses issued year-to-date 2009 January-February coal production on par with year-ago levels Signs of growing coal imports India the world's fastest-growi
Slide 9: Coal Continues to be the World's Fastest Growing Fuel
Compound Annual Growth Rate 0.6% 1.7% 2.9% 2.9% 5.1% Coal Continues to be the World's Fastest Growing Fuel Six-Year Change in Global Energy Consumption Source: BP Statistical Review of World Energy, June 2008. Coal Natural Gas Hydro Oil Nuclear 2002 - 2004 35.15 19.02 18.93 10.53 3.51 35% 2001 - 200
Slide 10: IEA Projects 61% Growth in Global Coal Use by 2030
International Energy Agency Projects 61% Growth in Global Coal Use by 2030 Source: International Energy Agency, World Energy Outlook 2008.
Slide 11: Global Coal Plant Buildout
Global Coal Plant Buildout: 200 GW Under Construction; 700 MTPA of Coal Use 30 Units in U.S. Under Construction Requiring 70 MTPA of Coal The 1,600 MW Prairie State Energy Campus is under construction in Southern Illinois Includes units under construction and newly completed for 2009.
Slide 12: Obama Administration: Coal is "A Great Resource"
Obama Administration: Coal is "A Great Resource"; More Funding Proposed "Coal is a vital resource in our country. It provides about 50% of our electricity." Recent Poll: 72% of Opinion Leaders Support Use of Coal "The coal resources in the United States are immense. I am hopeful and optimistic we ca
Slide 13: Economic Stimulus Provides Unprecedented Clean Coal Support
13 Economic Stimulus Provides Unprecedented Clean Coal Support $3.4 billion for fossil fuel $1.0 billion for R&D (potentially FutureGen) $800 million for Clean Power Initiative $1.5 billion for industrial CCS demo projects Carbon storage tax credits $20/tonne CO2 credit for deep permanent storage $1
Slide 14: Coal Markets Summary
14 Coal Markets Summary Coal Remains World's Largest and Fastest-Growing Fuel Coal Markets Impacted by Global Economic Downturn but Global Supply Cuts Significant Markets Showing Some Early Positive Signs Lack of Investment Likely to Drive Sharp Rebound Clean Coal Technologies Pave the Way for Lower
Slide 15: Peabody is the Largest Private-Sector Coal Company
15 Peabody is the Largest Private-Sector Coal Company Rio Tinto BHP Arch Anglo-American Consol Xstrata Foundation Massey Alpha Natural Resources International Coal Source: Company reports and websites, SEC filings and Peabody analysis. Values are on a short-ton basis. Annual Sales (Tons in Millions)
Slide 16: Peabody: Strong Track Record of Results
16 2004 2005 2006 2007 2008 2763 3597.9 4050.9 4545.1 6593.4 2004 2005 2006 2007 2008 490.1 696.4 911 968.6 1847.3 Peabody: Strong Track Record of Results 2004 2005 2006 2007 2008 200.3 213.7 221.4 236.1 255.5 EBITDA In millions. Reflects results from continuing operations. Sales volumes unaudited.
Slide 17: BTU: Performance Sets Records in All Financial Metrics
17 Revenue 45% EBITDA 91% Operating Profit 135% EPS 122% Operating Cash Flow 209% BTU: Performance Sets Records in All Financial Metrics Available Liquidity of ~$2 Billion Operating Cash Flow of $1.41 Billion Dollars in millions except EPS. Values represent continuing operations.
Slide 18: Peabody's EBITDA and Share Price Sharply Diverge in 2008
18 2003 2004 2005 2006 2007 2008 EBITDA ($ in Millions) 422 490 696 911 969 1847 Peabody's EBITDA and Share Price Sharply Diverge in 2008 Share Price ($) Peabody values reflect 30-day moving average, the March 2005 and February 2006 2-for-1 stock splits and discontinued operations including the 2007
Slide 19: BTU Advantage: Global Platform Offers Growing and Diverse Earnings
1st Qtr 2nd Qtr 52 48 19 BTU Advantage: Global Platform Offers Growing and Diverse Earnings 1st Qtr 2nd Qtr 1 99 2003 International EBITDA Share Grows to +50% in 2008 2008 United States International 1st Qtr 2nd Qtr 21 79 2007 $422 Million $969 Million $1.85 Billion Values represent continuing opera
Slide 20: BTU's Australia Platform Well-Positioned to Serve Strongest Growth Markets
20 BTU's Australia Platform Well-Positioned to Serve Strongest Growth Markets Lower average production costs Significant mine-to-port rail advantage Expanded reach to Atlantic markets due to low freight rates Higher geologic predictability Larger reserve base of high-quality hard coking coals Longer
Slide 21: BTU Australia: Location Advantage, Earnings Diversity, Growth Capability
21 Short tons in millions. Updated Jan. 27, 2009. BTU Australia: Location Advantage, Earnings Diversity, Growth Capability Peabody's 2009 Australian Sales: 22 - 24 Million Tons Seaborne Thermal Domestic Seaborne Met Australia 10 6 7 ~ 6 MT Domestic ~10 MT Seaborne Thermal 6 - 8 MT Seaborne Met 3.0 -
Slide 22: BTU Focus Areas for 2009
22 BTU Focus Areas for 2009 Continue focus on strong cost control and productivity Record safety year in 2008 Stable U.S. costs for last three quarters Increase contributions from high-margin operations Exercise tight capital discipline Evaluate opportunistic acquisitions amid distressed markets Pur
Slide 23: Developing Largest Eastern U.S. Surface Mine
23 Developing Largest Eastern U.S. Surface Mine to Serve Customer Commitments Revenues of nearly $6 billion over time 90 million tons of production secured by long-term customer agreements Production begins mid-year 2009 Capital investment of $350 - $400 million Exploring similar transactions to sec
Slide 24: Peabody: A Global Leader in Btu Conversion and Clean Coal Solutions
Peabody: A Global Leader in Btu Conversion and Clean Coal Solutions Only non-Chinese equity partner in GreenGen, China's centerpiece coal / climate initiative Partnering with ConocoPhillips on new coal- to-natural gas facility in Kentucky GreatPoint Energy to develop coal-to-gas plants * Shengli 3 A
Slide 25: Peabody Uniquely Positioned Within Coal Industry for Success
Peabody Uniquely Positioned Within Coal Industry for Success Broad global diversity Serving major long-term demand growth in emerging nations Able to avoid geology, permitting and compliance issues in high-cost regions Leading trading position Not challenged by liquidity or inability to access capit
Slide 26: Howard Weil 37th Annual Energy Conference
HOWARD WEIL 37th ANNUAL ENERGY CONFERENCE Rick Navarre President March 23, 2009
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