Peabody Energy Corporation · NYSE:BTU
Peabody Energy — Barclays CEO Energy-Power Conference 2010
36 slides from Peabody Energy's conference presentation, Sep 15, 2010
Slide 1: Barclays CEO Energy-Power Conference
1 Barclays CEO Energy-Power Conference September 15, 2010 Gregory H. Boyce Chairman and Chief Executive Officer Peabody Energy
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: Catalysts for Growth
Peabody Energy: Catalysts for Growth U.S. Largest producer in lowest cost, highest growth regions Expanding margins via strong contracting, stable costs Extending PRB reach into Eastern U.S. and Asia Australia Expanding platform via organic growth Asia Advancing projects in China, Mongolia, India an
Slide 4: Strong Results, Outstanding Outlook
2006 2007 2008 2009 2010 EBITDA 909.7 969.7 1846.9 1290.1 1700 200 First half 2010 results: Expanding margins per ton: 20% in U.S. 25% in Australia Near doubling of operating cash flows Substantial liquidity Excellent balance sheet to fund growth $1,700 - $1,900 Strong Results, Outstanding Outlook 2
Slide 5: Early Stages of Coal's Supercycle
Early Stages of Coal's Supercycle
Slide 6: ~75% of World Population Coming Up the Economic Development Curve
~75% of World Population Coming Up the Economic Development Curve GDP Per Capita Japan Brazil China Germany U.S. India Source: CIA World Factbook. Growth to Match U.S.: Brazil 5.4X China 13.7X India 43.5X World Population: 75% 25% GDP Per Capita
Slide 7: Economic Development Strongly Linked to Electricity Use
Economic Development Strongly Linked to Electricity Use Electricity Use Per Capita (kWh) Japan Brazil China Germany U.S. India Majority of Nations Use Less Electricity Than Developed Economies Source: CIA World Factbook.
Slide 8: Major Steel Growth Potential as China, India and Brazil Increase Use
Major Steel Growth Potential as China, India and Brazil Increase Use Steel Production Per Capita Acceleration Stage Stable Stage At Maturity, India, Brazil and China Would Represent ~1.2 Billion Tonnes Additional Metallurgical Coal Demand Source: Industry reports and Peabody analysis.
Slide 9: Case Study: China Just Begins to Move Up the Curve
Case Study: China Just Begins to Move Up the Curve Long Cycle Ahead... Historical 5-Year Growth Current Intensity Mature Intensity Potential Upside Length of Growth Phase Electricity Generation 10% 2.8 MWh 10.0 MWh 260% 15 - 20 Steel Use 13% 423 kg 933 kg 120% 8 - 12 Auto Sales 25% .13 .76 480% 15 -
Slide 10: Coal-Fueled Generation Expected to Grow Dramatically in Coming Years
Coal-Fueled Generation Expected to Grow Dramatically in Coming Years Source: Platts Worldwide Power Plant Database; EIA International Energy Outlook 2010 and Peabody analysis. Global coal-based generation growth based on 2007 - 2035 Generation Demand Driven by Asia and Growing Share of Electricity E
Slide 11: Global Met Coal Use May Rise
Global Met Coal Use May Rise 400 Million Tonnes by 2015 Expected Global Steel Production And Met Coal Demand Tonnes in millions. Source: World Steel Association; third party data and Peabody analysis. Global steel production expected to double by 2020 Bulk of market share growth in China and India T
Slide 12: China and India Lead Long-Term Coal Demand Growth
U.S. growth presented in short tons. Source: World Energy Outlook 2009, International Energy Agency; Annual Energy Outlook Forecasts, Energy Information Administration; Peabody analysis. China and India Lead Long-Term Coal Demand Growth +690 +2,210 +150 +50 +110 +380 Developing Asia Represents 90% o
Slide 13: Near- and Mid-Term Pacific Markets Outstanding for Coal
Near- and Mid-Term Pacific Markets Outstanding for Coal
Slide 14: Seaborne Thermal Coal Market Short Next Five Years
Seaborne Thermal Coal Market Short Next Five Years; Implies Strong Pricing Driver 2010 2011 2012 2013 2014 2015 Atlantic 0 6 19 29 35 37 Other Pacific 0 5 17 30 50 60 China 0 2 4 6 8 13 India 0 20 40 60 80 90 Expected Increase in Seaborne Thermal Demand 2010 - 2015 India 125%-175% China 5%-25% Other
Slide 15: Seaborne Met Coal Market Fundamentally Short
Seaborne Met Coal Market Fundamentally Short 2015 Brazil 20 India 14 China 15 Europe 4 South Korea 6 Japan 4 Other 2 Expected Increase in Seaborne Met Demand 2010 - 2015 Expected Increase in Seaborne Met Supply 2010 - 2015 2015 Australia 37 Mongolia 14 Other Pacific 15 Russia 5 Atlantic -23 30-40 ~1
Slide 16: China Coal Demand Expected to Grow ~1 Billion Tonnes by 2015
China Coal Demand Expected to Grow ~1 Billion Tonnes by 2015 Data and estimates based on industry analysis and Peabody estimates. 2010 Coal Demand Electricity Generation Metallurgical Cement Other 2015 Coal Demand 3300 3300 3300 3300 3300 3300 750 750 750 750 750 750 150 150 150 150 150 150 80 80 80
Slide 17: China's Coal Supply Expected to Grow ~1 Billion Tonnes by 2015
China's Coal Supply Expected to Grow ~1 Billion Tonnes by 2015 Top Regional Production for 2009 and 2015 in Tonnes (Millions) Growth Driven by Xinjiang and Inner Mongolia Regions Data and estimates based on industry estimates and Peabody analysis. Shanghai Hong Kong Guangdong Guangxi Hainan Taiwan Z
Slide 18: China Dependent on Imports to Balance Supply / Demand
China Dependent on Imports to Balance Supply / Demand Shortfall Driving Net Imports Reliance Dramatic, sustained demand growth Consolidation, rising domestic costs Lack of premier coking coal Supply growth distant from load Growing coastal steel mills and power plants ~600 MTPA of coastal coal movem
Slide 19: The Result: Ongoing Reliance on Coal Imports by China
2003 2004 2005 2006 2007 2008 2009 2010 Est. 2011 Est. Imports -83.124 -67.963 -45.548 -24.988 -2.087 -4.449 49 83 115 55 59 0 Data based on industry reports; 2010 reflects Jan. - July annualized and Aug. - Dec. Peabody estimate. China Net Coal Imports 125 - 135 The Result: Ongoing Reliance on Coal
Slide 20: India Likely to be World's Fastest Growing Coal Importer
2009 2010 2011 2012 2013 2014 2015 Met 28 36 38 43 45 47 52 Met Thermal Range 5 8 12 18 20 25 Thermal 50 68 88 100 120 140 150 Forecast Thermal Range 15 20 25 30 45 50 India Likely to be World's Fastest Growing Coal Importer Data and estimates based on industry reports and Peabody analysis. Projecte
Slide 21: Expanding Australia Platform: Targeting Sales Up to 40 MTPA by 2014
2009 2010 2014-15 Seaborne Thermal 9.6 11.5 15 0.5 2 Expanding Australia Platform: Targeting Sales Up to 40 MTPA by 2014 Tons in Millions 2009 2010 2014-15 Seaborne Met 7 9.5 12 1 3 11.5 - 12.0 15.0 - 17.0 9.6 9.5 - 10.5 12.0 - 15.0 6.9 Met Coal Sales Estimates Seaborne Thermal Coal Sales Estimates
Slide 22: Significant Progress in Peabody's Australia Project Pipeline
Metropolitan 1 MT HCC, $70 million Wambo 3 - 4 MT Thermal/PCI, $50 - $70/ton Millennium 2 - 3 MT SHCC/PCI, $50 - $70/ton Sufficient Rail/Port Access to Accommodate Growth Significant Progress in Peabody's Australia Project Pipeline Short tons in millions. Dollars represent projected capital expendit
Slide 23: Leading Trading Operations Add Significant Value
Leading Trading Operations Add Significant Value Growing, profitable global trading and brokerage operations Continued expansion with new offices Best use of financial products and physical asset base Pipeline of market intelligence 2003 2004 2005 2006 2007 2008 2009 Domestic EBITDA 45.828 34.781 38
Slide 24: Peabody Advancing Robust China Project Pipeline
20 MTPA Open-Cut JV Project 15 MTPA Open-Cut JV Project 12 MTPA Open-Cut JV Fueling Coal-to- Chemicals Project 15 MTPA Open- Cut JV Fueling Clean Coal Project Beijing Tianjin Shanghai Xinjiang Inner Mongolia Guangdong Hong Kong Fujian Zhejiang 15 MTPA Open-Cut JV Project Long-term Initiative Mid-ter
Slide 25: Peabody Positioning to Serve Fastest Growing Import Nation
Peabody Positioning to Serve Fastest Growing Import Nation Peabody Positioning Met coal from Australia operations Thermal coal via COALTRADE Exploring long-term coal supplies and other strategic ventures with Coal India Source: Platts. Major Coastal Plant Buildout to Access Import Coal
Slide 26: Peabody Best Positioned in Fastest Growing U.S. Regions
Peabody Best Positioned in Fastest Growing U.S. Regions
Slide 27: U.S. Coal Demand On Pace for Recovery in 2010
U.S. Coal Demand On Pace for 60 - 80 Million Ton Recovery in 2010 Source: Energy Information Administration; MSHA; National Mining Association and other third-party sources. 2009 vs. 2010 Expected Demand 2010 Highlights Demand up on economic growth, weather and higher gas prices than 2009 Coal produ
Slide 28: U.S. Inventory Levels Rapidly Declining, On Path to Near Normal Levels
U.S. Inventory Levels Rapidly Declining, On Path to Near Normal Levels 13.5 - 14.0 11.5 - 12.0 15.0 - 17.0 9.6 9.5 - 10.0 12.0 - 15.0 7.0 9.5 - 10.0 Up To 42% Declining Stockpiles Create Pricing Upside U.S. Inventories Tons in Millions 2009 EOY: 188 Million Tons 2010 EOY: 150 - 155 Million Tons 40+
Slide 29: SPRB and Illinois Basin: Majority of U.S. Coal Demand Growth
SPRB and Illinois Basin: Majority of U.S. Coal Demand Growth PRB Advantage Low end of cost curve Primary source for new plants Asian export potential Illinois Basin Advantage Lower cost than Appalachia Major source for new plants CAPP to Experience Significant Decline Constraints driven by safety, p
Slide 30: Multiple Drivers Lead PRB Demand Growth for Peabody
Multiple Drivers Lead PRB Demand Growth for Peabody PRB prompt prices increase nearly 55% with heavy demand and 23% reduction in stockpiles year to date Significant additional pricing lift to reach parity with current natural gas or Appalachia coal Nearly two-thirds of new coal plant demand going to
Slide 31: U.S. Contracting Strategy Matches Shape of Economic Recovery
31 U.S. Contracting Strategy Matches Shape of Economic Recovery U.S. Contracting Strategy Guarded approach near-term 2010 sold out at 185 - 195 million tons 85% - 90% priced for 2011 Significant leverage to market upside long-term 2012: 100 - 110 million tons available to price 2013: 190 - 200 milli
Slide 32: Peabody's Catalysts for Growth & Shareholder Value Upside
Peabody's Catalysts for Growth & Shareholder Value Upside
Slide 33: Peabody Energy's Catalysts for Growth
Peabody Energy's Catalysts for Growth Bear Run Mine Expanding Production Multiple PRB Export Opportunities in Development Expanding Australia Seaborne Met, Thermal Volumes Metropolitan and Wilpinjong Construction Commenced Multiple JVs and Large Project Pipeline in China New Mongolia Partnership wit
Slide 34: Case For BTU Shareholder Value Appreciation
Case For BTU Shareholder Value Appreciation Upside From Both Rising Earnings and Multiples Opportunity for significant valuation creation as Peabody returns to historical 2 - 3x multiple premium over U.S. peers Given long-term Pacific demand growth, coal and BTU in early cycle mode Rerating of coal
Slide 35: Peabody Energy: The Only Global Pure-Play Coal Investment
Peabody Energy: The Only Global Pure-Play Coal Investment Coal long-term supercycle is in the early stages BTU: Unique assets, market position and prospects Best access to fastest growing global markets #1 in lowest cost and fastest growing U.S. regions Significant catalysts for growth and increased
Slide 36: Barclays CEO Energy-Power Conference
Barclays CEO Energy-Power Conference September 15, 2010 Gregory H. Boyce Chairman and Chief Executive Officer Peabody Energy
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