Peabody Energy Corporation · NYSE:BTU
Peabody Energy — CSFB 2009 Global Steel and Mining Conference
31 slides from Peabody Energy's conference presentation, Sep 23, 2009
Slide 1: CSFB 2009 Global Steel and Mining Conference
CSFB 2009 Global Steel and Mining Conference September 23, 2009 Gregory H. Boyce Chairman and Chief Executive Officer 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 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: Peabody Energy: The Only Global Pure-Play Coal Investment
Peabody Energy: The Only Global Pure-Play Coal Investment Best access to fastest-growing global markets Major planned expansion of Australia-based met and thermal coal production Highly contracted U.S. position Unmatched size, global trading platform and portfolio diversification BTU Investment Appe
Slide 4: Coal: The World's Fastest Growing Fuel
Compound Annual Growth Rate Coal: The World's Fastest Growing Fuel Six Successive Years Change in Global Energy Consumption Source: BP Statistical Review of World Energy, June 2009. Coal Hydro Natural Gas Oil Nuclear 2002-2008 37 20 19 9 1 37% 2002 - 2008 Change 20% 9% 19% 1% Coal Natural Gas Oil Hy
Slide 5: Coal Demand Will Continue To Outpace Other Fuel Sources
Coal Demand Will Continue To Outpace Other Fuel Sources 2006 2025 Coal 3053 4719 Million Tonnes of Oil Equivalent Source: International Energy Agency, World Energy Outlook 2008. Global Coal Demand Global Coal Use Estimated to Grow 55% by 2025
Slide 6: Asia Represents More Than 85% of Long-Term Global Demand Growth
Source: World Energy Outlook 2008, International Energy Agency; Energy Information Administration Forecasts. Asia Represents More Than 85% of 3 Billion Ton Long-Term Global Demand Growth Growth in Coal Demand (Tons in Millions) Through 2030 +560 +1,930 +250 +50 +90 +160 Countries Served and Sourced
Slide 7: Asia-Pacific Region: Leading Economic Recovery and Global Coal Demand
Asia-Pacific Region: Leading Economic Recovery and Global Coal Demand
Slide 8: Pacific Met and Thermal Coal Markets Rebase at Higher Levels
2003 2004 2005 2006 2007 2008 2009 Spot 2012 27 45 53 52 56 125 70 70.3 93.09 Newcastle Thermal Coal Source: Third party broker data. Pricing as of September 16, 2009 2003 2004 2005 2006 2007 2008 2009 Spot 2010+ 47 58 125 115 98 300 129 165 High-Quality Hard Coking Coal 2009 Benchmark Pricing 2nd H
Slide 9: China Leading the Pacific Market Recovery
2003 2004 2005 2006 2007 2008 YTD Aug 2009 Imports -83.124 -67.963 -45.548 -24.988 -2.087 -4.449 59.027 China Leading the Pacific Market Recovery YTD imports up 157%, exports down 56% 59 MT net importer YTD; 140+ million tonne shift since 2003 Limited domestic met supply Opportunistic buyers Dramati
Slide 10: India Likely to be World's Fastest Growing Coal Importer
India Likely to be World's Fastest Growing Coal Importer Source: International Energy Agency, World Energy Outlook 2008; industry reports and Peabody analysis. Up to 200 MTPA importer within five years Coal generation up 7.4% YTD 54% of plants <7 days of inventories Targeting 13 GW of new coal-based
Slide 11: Global Seaborne Demand: ~300 MTPA of Growth by 2014
Global Seaborne Demand: ~300 MTPA of Growth by 2014 Source: Barlow Jonker; Peabody analysis. 100+ MTPA of new seaborne coal demand from generation under construction Pacific demand growth ~75% of total demand increases India to dominate growth in global coal imports China a solid 50+ MTPA net import
Slide 12: Global Seaborne Supply: Expected to Lag Demand Growth
30 - 40 Other Vietnam Canada China South Africa U.S. South America Russia Indonesia Australia Metallurgical 0 27 3.5 0 38.6 0 10 0 130 Thermal 20 6 42 64 35.4 75 72 180 126 2008 Total Exports Global Seaborne Supply: Expected to Lag Demand Growth Source: Barlow Jonker; Peabody analysis. Tonnes in mil
Slide 13: U.S. Markets: Long-Term Fundamentals Favor Powder River and Illinois Basins
U.S. Markets: Long-Term Fundamentals Favor Powder River and Illinois Basins
Slide 14: Market Contangos, Underinvestment Suggest Sharp Rebound
Prompt Month 2010 2011 2012 2013 69.25 80 95.3 104.47 110.02 Prompt Month 2010 2011 2012 2013 7 8.84 11.03 12.34 0 Prompt Month 2010 2011 2012 2013 3.76 5.898 6.785 6.997 7.104 Market Contangos, Underinvestment Suggest Sharp Rebound API 2 $110 $69 Source: Third party broker data. Natural gas futures
Slide 15: Who Will Supply the U.S. Market?
Who Will Supply the U.S. Market? PRB, ILB Dominate U.S. Supply Growth PRB Advantage Low end of cost curve Primary source for new plants Asia export potential ILB Advantage Lower cost than NAPP and CAPP Major source for new plants European export market PRB ILB NAPP Other CAPP 2009 57 25 12 3 -36 U.S
Slide 16: More U.S. Production Reductions Coming?
More U.S. Production Reductions Coming? Dollar per ton values FOB mine. Source: Industry reports and Peabody analysis. ~100 Million Tons of CAPP Uneconomic at 2010 Prices CAPP Thermal Supply Curve Breakeven 0 25 0 50 75 100 125 142 2009 Cash Production Cost Per Ton
Slide 17: PRB, ILB to Serve Nearly 2/3 of New Coal-Based Generation
29 Units in U.S. Under Construction Requiring ~70 MTPA of Coal Includes units under construction and newly completed for 2009. PRB, ILB to Serve Nearly 2/3 of New Coal-Based Generation The 1,600 MW Prairie State Energy Campus under construction in Southern Illinois; startup in 2011 Coal-Fueled Plant
Slide 18: Low-Carbon Future: Development and Deployment of Clean Coal Technologies Key
Low-Carbon Future: Development and Deployment of Clean Coal Technologies Key
Slide 19: Coal Recognized as Low-Cost, Low-Carbon Option
Coal Recognized as Low-Cost, Low-Carbon Option European Union Costs of achieving climate goals would be 40% higher without carbon capture and storage International Energy Agency Without CCS, cost to meet climate goal is $1.3 trillion more by 2050 71% higher than if coal with CCS is included Carnegie
Slide 20: Carbon Capture and Storage Projects Accelerating Around the World
Carbon Capture and Storage Projects Accelerating Around the World Current CO2 Capture Projects Gasification Synfuels Plant Major Pilot Plants (Post-Combustion) CO2 Separation from Natural Gas for CCS Food-grade CO2/Carbonation of Brine/ Urea (Post-Combustion) Current CO2 Storage Demonstration Projec
Slide 21: Peabody: The Only Global Pure-Play Coal Investment
Peabody: The Only Global Pure-Play Coal Investment; Best Access to Fastest-Growing Global Markets
Slide 22: Peabody Well Positioned in the U.S. Market
Peabody Well Positioned in the U.S. Market 2008 2008 Position Sales Reserves Wyoming PRB #1 147 3,199 Midwest #1 31 3,652 Colorado #1 9 203 Southwest #2 14 1,011 Sold out for 2009, 90% priced for 2010 Largest producer and reserve holder in the PRB and ILB PRB and ILB will serve more than 80% of U.S.
Slide 23: Peabody Competitively Positioned to Serve Growth Markets of Asia
23 Location and Cost Advantage Over Other Seaborne Supply Peabody Competitively Positioned to Serve Growth Markets of Asia Optimal location to serve Asian demand Premium met and thermal coal products Lower cost seaborne supply Significant organic growth potential Expanding export capability Burton N
Slide 24: Peabody Has Significant Leverage to Strong Seaborne Markets
Peabody Has Significant Leverage to Strong Seaborne Markets Targeting ~15% Growth in 2010 Australian Sales (Short Tons in Millions) * All domestic thermal volumes priced under long-term contracts. Unpriced volumes as of July 21, 2009. Actual results may differ from forecast. Statement on forward-loo
Slide 25: Peabody's Australian Exports Have Potential to Double in Five Years
2004 2005 2006 2007 2008 2009 2010 5-Yr Forward Domestic Thermal 0 0 0.6 3.3 5.1 6 6.5 8 Seaborne Thermal 1.5 2.5 3.6 9.5 10.6 9.5 12 16 Seaborne Met 4.6 5.8 6.6 8.7 8.16 6 7 13.5 1.5 2.5 2.5 6.0 - 6.5 11.0 - 12.5 6.0 - 8.0 5.5 - 6.5 9.0 - 10.0 5.5 - 6.5 8.0 - 8.5 15.0 - 17.0 12.0 - 15.0 20.0 - 23.0
Slide 26: Australia 5-Year Project Pipeline
Australia 5-Year Project Pipeline Peabody's Australian Growth Projects Target Exports Growth in BTU Australia Platform Export Met S/UG MTPA Quality Denham Development S 3 - 5 Premium HQHCC Burton Extension S 2 - 3 HQHCC / HCC Metropolitan Expansion UG 1 HCC Millennium Expansion S 2 - 3 Semi-Hard / P
Slide 27: Peabody Expanding Highly Successful Global Model
Operations Global Trading Offices Peabody Expanding Highly Successful Global Model The Power of the Global BTU Platform Ports Coal Flows 27 SINGAPORE
Slide 28: Global Expansion Drives Higher Trading & Brokerage Results
2003 2004 2005 2006 2007 2008 2009 / 2010 Domestic EBITDA 45.828 34.781 38.745 81.604 87.781 123.683 International EBITDA 0 6.258 4.313 11 28.819 95.217 St. Louis Newcastle London Beijing SINGAPORE Peabody's Global Expansion Drives Higher Trading & Brokerage Results 2003 2004 2005 2006 2007 2008 Dom
Slide 29: Peabody Uniquely Positioned for Success Within Coal Industry
Peabody Uniquely Positioned for Success Within Coal Industry Broad global diversity Serving long-term growth in emerging nations Low exposure to geology, permitting, compliance issues in high-cost regions Global trading & brokerage activities Ample liquidity and access to capital Opportunistic acqui
Slide 30: Recent Transactions Reveal BTU Undervalued
Recent Transactions Reveal BTU Undervalued Comps: ~$18 Billion for Australia & PRB Platform Alone? Peabody Australia Peabody PRB Peabody's Current Enterprise Value VALUATION GAP? Mongolia China Australia Growth Midwest SW & CO COALTRADE 30 Peabody Australia based on Yanzhou's Felix bid of $540 per t
Slide 31: For Further Information
For Further Information: Christina Morrow Director Investor Relations 1.314.342.7651 Vic Svec Senior Vice President Investor Relations and Corporate Communications 1.314.342.7768
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