Peabody Energy Corporation · NYSE:BTU
Peabody Energy — UBS Houston Energy Bus Tour (August 2007)
33 slides from Peabody Energy's conference presentation, Aug 7, 2007
Slide 1: UBS Houston Energy Bus Tour
UBS Houston Energy Bus Tour August 7, 2007 Peabody Energy NYSE: BTU Exhibit 99.1
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 Excellent leverage to rising prices Global expansion into growing, high-margin markets Levered to China/India growth Industry-best 10+ billion ton reserve base Transforming global operating platform and earnings base Secure and growing demand from new g
Slide 4: Global Markets and Peabody Position
GLOBAL MARKETS AND PEABODY POSITION
Slide 5: Global Coal Use Soars 30%, or 1.4 Billion Tons, in Five Years
Global Coal Use Soars 30%, or 1.4 Billion Tons, in Five Years Five-Year Change in Global Energy Consumption Source: BP Statistical Review of World Energy, June 2007. Coal Natural Gas Hydro Oil Nuclear 2002 - 2004 29.57 16.37 15.39 8.97 4.03 30% 2001 - 2006 Change 16% 9% 15% 4% Coal Natural Gas Oil H
Slide 6: China, U.S. and India Represent Vast Majority of Global Coal Growth
China, U.S. and India Represent Vast Majority of Global Coal Growth Amounts in million short tons. Source: U.S. Department of Energy, Energy Information Administration, International Energy Outlook 2006. Projected Australia export flow for 2004-2030. +763 +456 +3,114 +137 +22 Long-Term Coal Demand F
Slide 7: Per-Capita Electricity Use Just 1/10th (China) and 1/30th (India) the U.S. Level
Per-Capita Electricity Use Just 1/10th (China) and 1/30th (India) the U.S. Level Source: International Energy Agency. China and India Driving Global Demand Growth for Energy Electricity Usage per Capita Mbtu USA 13.1 Australia 10.7 South Korea 7 UK 6.2 Italy 5.6 Russia 5.5 Malaysia 3 China 1.4 India
Slide 8: China's New Net Importer Status Creates Fundamental Shift in Seaborne Markets
China's New Net Importer Status Creates Fundamental Shift in Seaborne Markets 2003 2004 2005 2006 2007 YTD Thermal Coal 72 68 46 25 -5 Metallurgical Coal 11 0 0 0 China and India continue to increase coal imports Indonesia's thermal exports dampened by extended rainy season Russia now predicting dec
Slide 9: Australia Ports Rebounding from High Second Quarter Queues
Australia Ports Rebounding from High Second Quarter Queues Congestion due to strong demand had created long waits Demurrage costs up to $100,000/ vessel per day; $80 million for BTU in 2007 Newcastle Quotas imposed to bring down queues June storm and 36-year flooding sent queue up to 79 Dalrymple Ba
Slide 10: International Coal Prices Show Increases Across the Board
Australia/Newcastle China/Qinhuangdao Columbia/Bolivar into ARA Russia/Vostochniy South Africa/Richards Bay PCI 2006 41.75 48 44 44 43.25 65 2007 67 74 55 72 57.85 67.5 International Coal Prices Show Increases Across the Board Source: McCloskey's Coal Report; Industry Reports. Hard Coking Metallurgi
Slide 11: Peabody a Major and Growing Producer in World's Largest Export Nation
Peabody a Major and Growing Producer in World's Largest Export Nation 2004 2005 2006 2007 Thermal 1.5 2 3 11.5 Met 4.6 6.3 8 9.5 Peabody's Australia Production Rises From 6 to >20 Million Tons 6.1 20-22 2004 2005 2006 2007 Est. Legend Peabody Pacific mines Queensland basins New South Wales coalfield
Slide 12: World's Largest Coal Company: Peabody's Base Portfolio of Operations
World's Largest Coal Company: Peabody's Base Portfolio of Operations Dominion Dalrymple Bay Newcastle Brisbane Venezuela Santa Cruz Kembla * Market position and sales pro forma for Excel mines under development. 2006 sales volumes in millions of short tons. Venezuela sales volume for Paso Diablo Min
Slide 13: U.S. Markets and Peabody Position
U.S. MARKETS AND PEABODY POSITION
Slide 14: EIA: Coal Generation to Outpace All Other Forms Three to One Through 2030
EIA: Coal Generation to Outpace All Other Forms Three to One Through 2030 Coal Natural Gas Nuclear Renewables Petroleum 1343 129 109 134 44 Growth in Billions of Kilowatt-hours Projected U.S. Electricity Generation Growth Through 2030 Source: Energy Information Administration 2007 Annual Energy Outl
Slide 15: High Price of Power & Competing Fuels Spurs New U.S. Coal-Fueled Generation
High Price of Power & Competing Fuels Spurs New U.S. Coal-Fueled Generation As in the 1970s and 1980s... many states developing coal plants and some opposing As with "dash for gas," more plants announced than built Most deferred plants (excluding TXU) always viewed as low-probability Nine units have
Slide 16: New U.S. Coal-Fired Power Plants by Start Year
Basin Electric Dry Fork 385 MW KCP&L Iatan 2 850 MW GenPower Longview 695 MW Hastings Whelan 2 220 MW Prairie State Unit 1 800 MW TXU Oak Grove 1 860 MW Prairie State Unit 2 800 MW CU Springfield Southwest 2 300 MW TXU Oak Grove 2 860 MW Springfield CWLP Dallman 200 MW TXU Sandow 5 630 MW WE Energie
Slide 17: Coal's Future is Secure With Advanced Technologies
Coal's Future is Secure With Advanced Technologies Building New, Efficient Supercritical & IGCC Coal Plants 15% Lower CO2 Emissions Demonstrating FutureGen and Developing Coal-to-Liquids with CCS Up to 90% Lower CO2 Emissions Retrofitting Existing Coal-Based Generation with Carbon Capture/Sequestrat
Slide 18: Democratic Support for Clean Coal, Technology Solutions
Democratic Support for Clean Coal, Technology Solutions "Coal is to us what oil is to Saudi Arabia. And part of our domestic strategy must involve coal." Clinton calls for a $50 billion "Strategic Energy Fund" "We'll need to invest more in the clean technology that will allow us to burn more coal, o
Slide 19: U.S. Markets Continue to Show Improvement in 2007
U.S. Markets Continue to Show Improvement in 2007 OTC PRB 8800 1Q07 Delivery 7.4 2009 Delivery 11.95 Published Prices OTC NYMEX 1Q07 Delivery 40.15 2009 Delivery 54 Peabody's realized PRB prices 25% higher than second quarter 2006 38 million tons of PRB product priced 49% above average 2006 realized
Slide 20: Peabody Reduces Production Targets to Rebalance Inventories
Peabody Reduces Production Targets to Rebalance Inventories Peabody 2007 reduction in production: 7 million tons (9/06); 5 million (4/07); 5 million (7/07) Generation up 1.8% and industry shipments down 2.6% Appalachia: -6.5%; Wyoming -1.0% Supply demand now in balance Current production levels and
Slide 21: Btu Conversion Technologies Expand Markets for Coal
Btu Conversion Technologies Expand Markets for Coal Peabody Participating in Clean Generation, CTG and CTL PRAIRIE STATE EPIC CONOCO- PHILLIPS RENTECH FUTUREGEN
Slide 22: New Markets Create Enormous Potential for Coal
New Markets Create Enormous Potential for Coal Hydrogen FutureGen and other projects would use coal to fuel a hydrogen economy Current Base 1.15 billion tons per year for generation and steel Coal-to-Liquids U.S. Southern States Energy Board calls for 1 billion tons/year by 2030 Ethanol President's
Slide 23: Peabody Partnering with ConocoPhillips on New Coal-to-Natural Gas Facility
Peabody Partnering with ConocoPhillips on New Coal-to-Natural Gas Facility Mine-mouth facility located on one of Peabody's large reserve holdings Production of 50 to 70 billion cubic feet of pipeline quality synthetic natural gas ~1.6 TCF in the first 30 years of production Implies revenues of up to
Slide 24: Peabody's Energy Reserves Are Unmatched
Continental U.S. Proven Oil Reserves 126 205 Peabody's Proven and Probable Coal Reserves Continental U.S. Natural Gas Reserves Largest U.S. Oil Company 181 117 Source: Annual reports for selected energy companies, Energy Information Administration's U.S. Crude Oil, Natural Gas, and Natural Gas Liqui
Slide 25: Peabody's Approach to Long-Term Value Creation
PEABODY'S APPROACH TO LONG-TERM VALUE CREATION
Slide 26: Peabody's Long-Term Strategies Target Margin Expansion and Growth
Peabody's Long-Term Strategies Target Margin Expansion and Growth Execute the basics: best-in-class safety, operations and marketing Capitalize on pipeline of projects Expand in high-growth global markets Participate in new generation and Btu Conversion projects
Slide 27: Executing the Basics: Leading Productivity
Executing the Basics: Leading Productivity Rawhide North Antelope Rochelle U.S. Industry (Underground) U.S. Industry (Surface) 2006 data. Source: U.S. Department of Labor Mine Safety & Health Administration. Peabody Operates the Most Productive Coal Mines #1 #2 Industry Average (SPRB) Peabody Others
Slide 28: Capital Projects Improve Productivity and Lower Cost Structure
Capital Projects Improve Productivity and Lower Cost Structure North Antelope Rochelle Dragline Dragline costs 75% lower than truck/shovel fleet Frees up equipment for deployment elsewhere Saves 2 million gallons of diesel per year North Antelope Rochelle Conveyor Reduces truck costs by $2.2 million
Slide 29: Peabody Dramatically Reshaping Operating Platform and Earnings Base
Peabody Dramatically Reshaping Operating Platform and Earnings Base Installation of $165 million in productivity and cost improvement projects at flagship PRB operations Completion of build-out of new Australian growth platform, tripling long-term capacity Expansion of global trading locations to fo
Slide 30: Btu Conversion = Value Conversion as We Narrow the Energy Valuation Gap
Source: Company filings and reports. Btu Conversion = Value Conversion as We Narrow the Energy Valuation Gap Market Capitalization on Btu-Equivalent Basis
Slide 31: Major Market Drivers Provide Outstanding Outlook for Coal
DEMAND DRIVERS SUPPLY DRIVERS Global Coal Supply & Demand Major Market Drivers Provide Outstanding Outlook for Coal Regulatory Environment: Safety and Permitting High Cost of Competing Fuels High Steel Demand Soaring Energy Demand in China and India Higher Utilization of Existing Coal Fleet Major Bu
Slide 32: Peabody Has an Outstanding Outlook
2003 2004 2005 2006 2007 2008 2009 2010 EBITDA 410 559 870 1080 1325 Revenue growth from higher-priced sales commitments Global expansion focused on high-margin, high-demand regions Market-focused U.S. production Unmatched, diversified reserve base Emerging Btu Conversion markets $410 $559 $870 $1,0
Slide 33: Peabody Energy UBS Houston Energy Bus Tour
August 7, 2007 Peabody Energy NYSE: BTU UBS Houston Energy Bus Tour
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