Peabody Energy Corporation · NYSE:BTU
Peabody Energy — Barclays Energy Conference 2012
34 slides from Peabody Energy's conference presentation, Sep 6, 2012
Slide 1: Energizing The World One BTU At A Time
Energizing The World One BTU At A Time Barclays Energy Conference Gregory H. Boyce Chairman and Chief Executive Officer September 6, 2012 Peabody Energy
Slide 2: Statement on Forward-Looking Information
Statement on Forward-Looking Information Peabody Energy 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-ha
Slide 3: Peabody Positioned for Success in Challenging Market Conditions
Peabody Positioned for Success in Challenging Market Conditions Peabody Energy Peabody's long-term coal market view remains favorable Strong growth for global met and thermal coal Solid growth for PRB and Illinois Basin regions Near-term view is cautious given decline in global commodity demand and
Slide 4: Peabody Responding to Near-Term Market Conditions
Peabody Responding to Near-Term Market Conditions Peabody Energy Completing late-stage development projects Deferring future growth projects until economy strengthens Reducing 2012 capital to $1.0 billion - $1.1 billion Capex midpoint $250 million below original 2012 target Expect 2013 capital at or
Slide 5: Global Coal Markets
Global Coal Markets
Slide 6: Global Seaborne Demand Increasing, Multiple Countries Growing Imports
Global Seaborne Demand Increasing, Multiple Countries Growing Imports Peabody Energy China Coal Imports Tonnes in Millions Thermal Met 0 20 40 60 80 100 120 140 160 2011 2012 +65% India Coal Imports 0 10 20 30 40 50 60 70 80 2011 2012 +7% Europe Coal Imports 0 10 20 30 40 50 60 2011 2012 +17% Source
Slide 7: Seaborne Thermal Markets Improving, Prices Showing Strength
Seaborne Thermal Markets Improving, Prices Showing Strength Peabody Energy Seaborne thermal prices improving on global supply reduction Indonesia supply started year strong without rainy season; Multiple recent producer cutbacks have reduced exports Additional supply cutbacks in U.S., Australia and
Slide 8: Annual World Coal Demand Expected to Grow ~1.3 Billion Tonnes in Five Years
Annual World Coal Demand Expected to Grow ~1.3 Billion Tonnes in Five Years Peabody Energy Expected Global Coal Demand (Million Tonnes) 0 2,000 4,000 6,000 8,000 10,000 2011 7,600 ROW 3,175 China 3,845 India 600 2012P 7,900 ROW 3,140 China 4,090 India 640 2016P 8,900 ROW 3,290 China 4,795 India 840
Slide 9: China, India and Brazil Have Large Upside to Steel Intensity Potential
China, India and Brazil Have Large Upside to Steel Intensity Potential Peabody Energy Emerging countries driving met coal demand through greater urbanization and higher steel consumption Significant steel increases required to reach levels of developed Asia economies Stable stage intensity may take
Slide 10: China Demand Expected to Grow ~1.0 Billion Tonnes by 2016
China Demand Expected to Grow ~1.0 Billion Tonnes by 2016 Peabody Energy Imports Expected to Double From 2011 to 2016 240 GW of coal-fueled generation coming on line by 2016 Much of buildout occurring in coastal areas Represents >800 MTPY of thermal coal use over time China NDRC seeks coking coal pr
Slide 11: India Likely to be World's Fastest Growing Coal Importer
India Likely to be World's Fastest Growing Coal Importer Peabody Energy 70 GW of new coal generation expected to start over five years Requires additional ~250 MTPY of thermal coal use over time Thermal demand expected to outpace production by >150 MTPY within five years Coal India ordered to increa
Slide 12: Global Seaborne Supply: Australia and Indonesia Expected to Lead Growth
Global Seaborne Supply: Australia and Indonesia Expected to Lead Growth Peabody Energy 2011 Total Exports Metallurgical Thermal 0 50 100 150 200 250 300 350 Indonesia 319 Australia 281 U.S. 93 Russia 88 Colombia 77 South Africa 67 Canada 33 Mongolia 24 China 14 Other 46 Total 2011 Exports: 1,040 Mil
Slide 13: Australia Coal: Multiple Advantages Over Other Regions
Australia Coal: Multiple Advantages Over Other Regions Peabody Energy Supplies 60% of world's seaborne metallurgical coal Major competitive advantage with mines close to port; Ports close to high-growth markets Largest exporter of high-CV thermal coal Peabody's Australian margins greater than averag
Slide 14: U.S. Markets: Rising Gas Prices and Strong Burn Driving Recovery
U.S. Markets: Rising Gas Prices and Strong Burn Driving Recovery Peabody Energy Natural Gas Prices Favorable for PRB and ILB U.S. stockpile decline greater than average Coal inventories lowest for PRB generators Expect rebound in 2013 coal use U.S. Natural Gas Prices ($/mmBtu) $1 $2 $3 $4 $5 2011 20
Slide 15: U.S. Coal Plant Retirements Largely Offset by New Plants, Capacity Utilization
U.S. Coal Plant Retirements Largely Offset by New Plants, Capacity Utilization Peabody Energy GW of Coal Capacity & Related Coal Burn Retiring 2011 - 2016 1 GW 3 MT 2 GW 3 MT 3 GW 8 MT 2 GW 5 MT 5 GW 9 MT 10 GW 11 MT 5 GW 5 MT 11 GW 13 MT 1 GW 1 MT Cumulative Generation Changes Million Tons New Gene
Slide 16: Significant Demand Shift Towards PRB and Illinois Basin
Significant Demand Shift Towards PRB and Illinois Basin Peabody Energy PRB advantage Low end of cost curve Primary source for new plants Benefits from basin switching Asian export potential Illinois Basin advantage Major source for new plants Benefits from new scrubbers and basin switching Transport
Slide 17: Coal: The World's Fastest Growing Major Fuel
Coal: The World's Fastest Growing Major Fuel Peabody Energy Growth 2001 - 2011 0% 10% 20% 30% 40% 50% 60% Coal 56% Hydro 35% Natural Gas 31% Oil 13% Nuclear 0% Largest Share of Global Energy Since 1969 Growth to 2035 Million Tonnes of Oil Equivalent 0 1,000 2,000 3,000 4,000 5,000 Coal 2009 2020 203
Slide 18: Peabody's Global Platform
Peabody's Global Platform
Slide 19: Peabody's Global Platform Provides Growth and Earnings Diversification
Peabody's Global Platform Provides Growth and Earnings Diversification Peabody Energy World's Only Global Pure-Play Coal Investment London Essen New Delhi Urumqi Ulaanbaatar Beijing Singapore Jakarta Balikpapan NCIG St. Louis DTA International Offices Brisbane Newcastle London Ulaanbaatar Essen New
Slide 20: Peabody Delivering Strong Results Amid Market Challenges
Peabody Delivering Strong Results Amid Market Challenges Peabody Energy Rising U.S. Adjusted EBITDA YTD and increasing Australia volumes Operating cash flows increase 10% YTD to $676 million Q3 Adjusted EBITDA targets of $350 - $450 million Targeting 2012 volumes of: 185 - 195 million tons from U.S.
Slide 21: Peabody Consistently Delivers Superior Margins
Peabody Consistently Delivers Superior Margins Peabody Energy Peabody's Gross Margins Average Nearly 30% Above NYSE Peers Gross Margins 2010 33% 25% 2011 32% 25% YTD 2012 29% 23% Peabody Mining Operations U.S. Peer Average Leading producer in low-cost regions in the U.S. with high-margin operations
Slide 22: Peabody U.S. Platform: Continued Focus on Success at Low End of Cost Curve
Peabody U.S. Platform: Continued Focus on Success at Low End of Cost Curve Peabody Energy Current-year U.S. position fully priced since late 2011 70% - 75% priced for 2012 based on 2012 production levels Continued operational focus on cost containment: reducing overtime, use of contractors, discreti
Slide 23: U.S. Exports Bright Spot for Market and Peabody Growth
U.S. Exports Bright Spot for Market and Peabody Growth Peabody Energy Peabody exporting PRB, Illinois Basin and Colorado coals through Canada, Gulf and East coasts Targeting 10 million tons of 2012 exports following ~6 million tons in 2011 38% ownership of DTA Terminal on East Coast Secured long-ter
Slide 24: Peabody's Australia Platform Expanding to Meet Rising Asian Market Demand
Peabody's Australia Platform Expanding to Meet Rising Asian Market Demand Met Thermal Port Queensland Burton North Goonyella Eaglefield Coppabella Moorvale Millennium Middlemount Abbot Point Dalrymple Bay Gladstone Brisbane New South Wales Wambo Underground Wilpinjong Wambo Open Cut Metropolitan PWC
Slide 25: Conversion to Owner Operator on Target at Millennium and Wilpinjong Mines
Conversion to Owner Operator on Target at Millennium and Wilpinjong Mines Peabody Energy Moving Additional ~40% of Australia Production to Owner-Operator 15% - 20% cost improvement overcomes other cost pressures Increased control over mining Sharing best practices from other Peabody operations ~75%
Slide 26: Peabody Advancing Late-Stage Projects to Completion
Peabody Advancing Late-Stage Projects to Completion Peabody Energy Wilpinjong expansion completed on time and on budget Expanded BTU's lowest-cost Australia thermal mine capacity by 30% to ~13 MTPY Millennium expansion near completion Doubling mine capacity to ~3 - 4 MTPY Includes SHCC/PCI and addin
Slide 27: Re-Evaluating Future Project Portfolio to Match Market Demand
Re-Evaluating Future Project Portfolio to Match Market Demand Peabody Energy Metropolitan modernization under way; expansion targeted for 2014 - 15 at higher volumes Codrilla Mine development deferred Mine to add 2 - 3 MTPY (attributable ownership) to LV PCI platformUndergoing drilling and added val
Slide 28: Acquisition Integration Remains on Track
Acquisition Integration Remains on Track Peabody Energy Upgrading operations to Peabody standards Increasing equipment utilization, efficiencies and prep plant yields Significant improvement in monthly overburden removal rates at Coppabella, Moorvale Synergies on track: marketing, blending, logistic
Slide 29: Acquisition Significantly Strengthens Bowen Basin Position
Acquisition Significantly Strengthens Bowen Basin Position Peabody Energy Peabody Energy Australia Bowen Basin Positioning Before Acquisition Existing Mines: North Goonyella Eaglefield Burton Millennium North Goonyella Mine Eaglefield Mine Burton Mine Coppabella Nebo Millenium Mine Saraji Norwich Pa
Slide 30: Acquisition Significantly Strengthens Bowen Basin Position
Acquisition Significantly Strengthens Bowen Basin Position Peabody Energy New Bowen Basin Portfolio New mines include: Coppabella Moorvale Middlemount Synergies between Moorvale and Millennium Developmental complex with potential for centralized infrastructure Additional projects with coking coal an
Slide 31: Peabody Focused on Strengthening the Balance Sheet
Peabody Focused on Strengthening the Balance Sheet Peabody Energy Continued focus on deleveraging Debt-to-capital at 52% Repurchased $242 million of bonds in second quarter No significant maturities until 2015 Best coal company credit rating Significant liquidity of $1.9 billion at June 30 Capital s
Slide 32: Peabody Positioned for Success in All Market Conditions
Peabody Positioned for Success in All Market Conditions Peabody Energy Rising metallurgical and thermal coal exports from Australia Leading position in low-cost PRB and Illinois Basin Managing through near-term headwinds and tempering growth projects Aggressive focus on cost control across platform
Slide 33: Energizing The World One BTU At A Time
Energizing The World One BTU At A Time Barclays Energy Conference Gregory H. Boyce Chairman and Chief Executive Officer September 6, 2012 Peabody Energy
Slide 34: Appendix: Reconciliation of Non-GAAP Measures
Appendix: Reconciliation of Non-GAAP Measures Peabody Energy Reconciliation of Adjusted EBITDA to Income from Continuing Operations, Net of Income Taxes (Unaudited) Quarter Ended June 30, 2012 Year ended December 31, 2011 2010 2009 2008 2007 (Dollars in Millions) Adjusted EBITDA $453.4 $2,128.7 $1,8