Peabody Energy Corporation · NYSE:BTU
Peabody Energy — UBS Energy Conference 2006
32 slides from Peabody Energy's conference presentation, Aug 9, 2006
Slide 1: UBS Energy Conference Houston August 9, 2006 Peabody Energy
UBS Energy Conference Houston August 9, 2006 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 the Securities Act of 1933 and Securities Exchange Act of 1934 and is intended to come within the safe-harbor protection provided by those sections. Our forward-lookin
Slide 3: BTU: Premier Investment in Sector
BTU: Premier Investment in Sector Best leverage to rising markets from diverse portfolio Aggressive focus on safety and costs Future growth from new contracts at higher prices Unmatched reserve base feeds significant organic pipeline Global expansion into high-growth markets Major generation and Btu
Slide 4: BTU in Early Stages of Strong Growth from Higher Base
2001 2002 2003 2004 2005 2006 16 105.5 95 178 423 530 125 2001 2002 2003 2004 2005 2006 378 406.1 410.3 559 870 1050 100 BTU in Early Stages of Strong Growth from Higher Base 2001 2002 2003 2004 2005 2006 2577 2717 2829 3632 4664 4664 EBITDA In millions. Excludes discontinued operations and charges
Slide 5: World Events Drive Coal to Displace Oil & Gas
"Morales ordered soldiers to secure Bolivia's natural gas fields and installations..." - - Los Angeles Times 5/2/06 World Events Drive Coal to Displace Oil & Gas "In Nigeria, a quarter of oil production remained shut down due to militant violence." - - FX Street.com 5/5/06 "BP said it will replace 1
Slide 6: Satisfying the World's Increased Energy Demand
Source: World Energy Outlook 2004, International Energy Agency. BP Statistical Review of World Energy, 2005. Global Energy Demand Million Tonnes of Oil Equivalent Satisfying the World's Increased Energy Demand Coal Growing Far Faster Than Expected +52% +70% +146% +2,286% +57% +51% +89% +10% Actual *
Slide 7: Global Coal Use Soars 23% in Four Years
Global Coal Use Soars 23%, or 1 Billion Tons, in 4 Years Four-Year Percent Change in Global Energy Consumption Source: BP Statistical Review of World Energy, 2006 edition. Coal Natural Gas Hydro Oil Nuclear 2002 - 2004 23 12 12 8 4 23% 2001 - 2005 Change 12% 8% 12% 4% Coal Natural Gas Oil Hydro Nucl
Slide 8: Global Coal Consumption to Nearly Double by 2030
Global Coal Consumption to Nearly Double by 2030 Countries Served by BTU Customer Plants Served Peabody Mines Export Terminals +689 +456 +3,114 Growth in Total Annual Coal 2002-2030 (Million Short Tons) +137 +22 Amounts in million short tons. Source: U.S. Department of Energy, Energy Information Adm
Slide 9: New U.S. Coal-Based Power Plants Add 100+ Million Tons of Coal Use by 2010
Based on U.S. DOE NETL; Estimates from air permits / press releases; and Peabody analysis. Other Western includes Montana, Alaska and Utah. New U.S. Coal-Based Power Plants Add 100+ Million Tons of Coal Use by 2010 2006 2007 2008 2009 2010 PRB 1.5 4.6 7.6 14.6 55 Illinois Basin 0.6 5.9 13.4 Appalach
Slide 10: Coal price versus competing fuels chart
1/1/1998 2/1/1998 3/1/1998 4/1/1998 5/1/1998 6/1/1998 7/1/1998 8/1/1998 9/1/1998 10/1/1998 11/1/1998 12/1/1998 1/1/1999 2/1/1999 3/1/1999 4/1/1999 5/1/1999 6/1/1999 7/1/1999 8/1/1999 9/1/1999 10/1/1999 11/1/1999 12/1/1999 1/1/2000 2/1/2000 3/1/2000 4/1/2000 5/1/2000 6/1/2000 7/1/2000 8/1/2000 9/1/20
Slide 11: Btu Conversion Technologies Expand Markets for Coal
Btu Conversion Technologies Expand Markets for Coal MITTAL PRAIRIE STATE EPIC CARDINAL EASTMAN GATEWAY RENTECH RENTECH FUTUREGEN
Slide 12: Robust Long-Term U.S. Coal Outlook Enhanced by Btu Conversion Demand
Robust Long-Term U.S. Coal Outlook Enhanced by Btu Conversion Demand 2005 U.S. Coal Demand 2030 Coal Demand (EIA) 2030 Coal Demand (NCC) 2030 Coal Demand (EIA / SSEB) 1.1 billion 1.7 billion 2.4 billion 2.5 billion Source: U.S. Energy Information Agency 2030 projections include 190 million tons per
Slide 13: Supply/Demand Balance For Coal is Increasingly Bullish
DEMAND DRIVERS SUPPLY DRIVERS Global Coal Supply & Demand Supply/Demand Balance For Coal is Increasingly Bullish Escalating Cost Structures High Cost of Competing Fuels Higher Utilization of Existing Coal Fleet Coal-to-Liquids Plants and Btu Conversion Scarcity of Equipment and Labor High Steel Pric
Slide 14: Company Overview
COMPANY OVERVIEW id
Slide 15: World Leader in Sales and Reserves
Source: Company reports and websites and SEC filings. 2005 values are on a short-ton basis. Reserves (tons in billions) Sales (tons in millions) World Leader in Sales and Reserves Peabody Best Positioned to Meet Demand Growth
Slide 16: Peabody's Strategies Target Margin Expansion and Growth
Peabody's Strategies Target Margin Expansion and Growth Executing the basics: best-in-class safety, operations and marketing Capitalizing on organic growth opportunities Expanding into high-growth global markets Participating in new generation and Btu Conversion projects
Slide 17: Executing the Basics: Safety is the Key
Source: Peabody 2006; U.S. Department of Labor, Occupational Safety & Health Administration, 2004 Peabody 2005 2.8 Peabody 2004 4.15 Wholesale 4.5 Leisure & Hospitality 4.7 Utilities 5.2 Retail 5.3 Coal Mining 5.6 Education & Health Services 5.8 Agriculture/Forestry/Fishing/Hunting 6.4 Construction
Slide 18: Executing the Basics: Leading Productivity
Executing the Basics: Leading Productivity Rawhide Caballo North Antelope Rochelle Industry Average (Underground) Industry Average (Surface) First quarter 2006 data. Source: U.S. Department of Labor Mine Safety & Health Administration. Peabody Operates the Three Most Productive U.S. Mines #1 #2 #3 I
Slide 19: Executing the Basics: Benefiting from Strong Global Coal Markets
Executing the Basics: Benefiting from Strong Global Coal Markets Published PRB prices double in past two years Colorado and Illinois Basin prices up 50% to 100% in past two years Coal prices, like natural gas, show sharp rise in forward years Australia thermal and met prices settle at high levels Re
Slide 20: Executing the Basics: Meeting Plants Needs for Best Delivered-Cost Fuel
Executing the Basics: Meeting Plants Needs for Best Delivered-Cost Fuel 8800 PRB Coal CAPP Coal South American Import Natural Gas Fuel 0.76 2.06 2.86 9.725 Delivery 1.42 0.56 0.88 0.25 Delivered Cost Per mmBtu to ECAR/Cinergy U.S. Plant Imported South American coal based on fourth quarter 2007 coal
Slide 21: Executing the Basics: Contracts Repriced at Higher Levels
Executing the Basics: Contracts Repriced at Higher Levels 2006 2007 2008 Uncommitted 3.4 41.1 88.1 Committed & Unpriced 0.8 26 46.7 0 - 5 60 - 70 130 - 140 Unpriced Peabody Production (Tons in Millions) Unpriced tons of expected production at June 30, 2006.
Slide 22: Organic Growth Pipeline from 9.8 Billion Ton Reserve Base
COMPLETED UNDER CONSTRUCTION IN PERMITTING IN PLANNING 75 MTPY of Developments and Expansions by 2010 Organic Growth Pipeline from 9.8 Billion Ton Reserve Base
Slide 23: Peabody Energy to Acquire Excel Coal
Peabody Energy to Acquire Excel Coal Peabody Energy (NYSE: BTU) agreement on track to acquire Excel Coal Limited (ASX: EXL) Peabody will pay A$8.50 per share for all outstanding shares of Excel Total acquisition price of approximately US$1.33 billion plus assumed debt of US$170 million* Cash offer i
Slide 24: Peabody Acquisition of Excel: Transaction Highlights
Peabody Acquisition of Excel: Transaction Highlights Accretive to earnings and cash flows in 2007 Offer represents 4.6x FY2008 EV/EBITDA* estimates Triples Peabody presence in largest exporting nation Diverse products serve fastest growing coal markets Significant growth platform from major expansio
Slide 25: Peabody and Excel Operations
Peabody and Excel Operations Australia Operations Serve Growth Markets
Slide 26: Australia Serves Long-Standing, High-Demand Global Coal Markets
Australia Serves Long-Standing, High-Demand Global Coal Markets Australian metallurgical and thermal coal serves the fast-growing Asian markets Nearly one-third of the world's coal exports come from Australia U.S. Energy Information Administration projects Australian coal exports will increase 55% b
Slide 27: Peabody Developing Btu Conversion and Advanced Generation Plants
Peabody Developing Btu Conversion and Advanced Generation Plants Agreement with Rentech to evaluate CTL sites in Montana and Midwest for coal-to-liquids facilities 10,000 to 30,000 BPD plants using 3 to 9 MTPY of coal Agreement with Arclight to explore CTG site using Conoco-Phillips E-Gas technology
Slide 28: Peabody's Energy Reserves Are Unmatched
Continental U.S. Proven Oil Reserves 125.5 194.4 Peabody's Proven and Probable Coal Reserves Continental U.S. Natural Gas Reserves Largest U.S. Oil Company 167.2 110.5 Source: Annual reports for selected energy companies, Energy Information Administration's U.S. Crude Oil, Natural Gas, and Natural G
Slide 29: Value Conversion as We Narrow the Energy Valuation Gap
Source: Company filings and reports. Market capitalization values per YahooFinance on August 7, 2006. Btu Conversion = Value Conversion as We Narrow the Energy Valuation Gap Market Capitalization on Btu-Equivalent Basis Williams Anadarko ChevronTexaco Apache Devon Chesapeake ExxonMobil Peabody
Slide 30: Supply/Demand Balance For Coal is Increasingly Bullish
DEMAND DRIVERS SUPPLY DRIVERS Global Coal Supply & Demand Supply/Demand Balance For Coal is Increasingly Bullish Escalating Cost Structures High Cost of Competing Fuels Higher Utilization of Existing Coal Fleet Coal-to-Liquids Plants and Btu Conversion Scarcity of Equipment and Labor High Steel Pric
Slide 31: BTU has Outstanding Outlook
BTU has Outstanding Outlook Best record of results Most leverage to rising markets Expanding margins from safe, low-cost operations Major organic growth using leading reserves Global expansion Btu Conversion markets Early stages of significant growth $381 $1,050 - $1,150 $2.00 - $2.43 Excludes disco
Slide 32: UBS Energy Conference Houston August 9, 2006 Peabody Energy
UBS Energy Conference Houston August 9, 2006 Peabody Energy NYSE: BTU