Peabody Energy Corporation · NYSE:BTU
Peabody Energy — Merrill Lynch Global Metals, Mining & Steel Conference 2008
28 slides from Peabody Energy's conference presentation, May 14, 2008
Slide 1: Merrill Lynch Global Metals, Mining & Steel Conference
MERRILL LYNCH GLOBAL METALS, MINING & STEEL CONFERENCE May 14, 2008 Gregory H. Boyce Chairman and Chief Executive Officer
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: The New BTU: The Only Global Pure-Play Coal Investment
The New BTU: The Only Global Pure-Play Coal Investment Excellent leverage to rising prices Global expansion into high-growth, high-margin markets Levered to ongoing China and India expansion Long-term demand from new generation and Btu Conversion Optimizing portfolio of safe, low-cost operations Ind
Slide 4: The New BTU: Accelerating to New Heights
2003 2004 2005 2006 2007 2008 EBITDA 422 496 708 901 956 1800 EBITDA (in Millions) Growing Global Platform = Enormous Financial Strength Reflects results from continuing operations (Unaudited). 2008 Targets per April 22, 2008 earnings release. The New BTU: Accelerating to New Heights $422 2008 Targe
Slide 5: Australia Platform Dramatically Raises Earnings from International Activities
Australia Platform Dramatically Raises Earnings from International Activities 1st Qtr 2nd Qtr 1 99 2003 2003, 2007actual and 2008 targets reflect continuing operations. International EBITDA Share Grows to 50% in 2008 1st Qtr 2nd Qtr 50 50 2008 United States International 1st Qtr 2nd Qtr 21 79 2007 $
Slide 6: Robust Markets and Peabody's Position
ROBUST MARKETS AND PEABODY'S POSITION
Slide 7: Coal Continues to Be Fastest Growing Fuel, Straining Supplies & Raising Pricing
Coal Continues to Be Fastest Growing Fuel, Straining Supplies & Raising Pricing 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 5.76 30% 2001 - 2006 Change 16% 9% 15% 6% Coal
Slide 8: Roaring Demand and Straining Supply... Where Will the Coal Come From?
Roaring Demand And Straining Supply... Where Will the Coal Come From? Source: Barlow Jonker, Peabody Analysis. Venezuela Poland Kazakhstan Canada Vietnam China U.S. Colombia South Africa Russia Indonesia Australia 2002 - 2004 7 10 24 25 29 50 51 65 68 98 161 251 Indonesia S. Africa Russia Colombia C
Slide 9: Peabody's Australia Platform: A Breakout Year in 2008
Peabody's Australia Platform: A Breakout Year in 2008 2008 targeted EBITDA from Australia could reach BTU's total 2007 EBITDA Peabody's strong Australian cash flows offer rapid payback of recent investments One of largest U.S.-based met producers ~10 million tons of metallurgical coal shipments 15 t
Slide 10: Benchmark Australia Coal Prices: Significant Leverage to Seaborne Markets
Benchmark Australia Coal Prices Significant Leverage to Strong Seaborne Thermal and Metallurgical Coal Markets 2010 2009 2008 Met 10.5 9.25 4.75 Thermal 12 7.5 2.25 Australia Volumes Subject to New Pricing 6.5-7.5 15-18 Recently priced and unpriced Australia volumes as of April 22, 2008 earnings rel
Slide 11: Strong Asian Coal Markets Flowing Around to Atlantic Markets
PRB South America Pitt Seam US Emissions Markets ATLANTIC U.S. European Emissions Markets PACIFIC Indonesia Australia Transportation Russia Poland South Africa CAPP NYMEX API #2 and #4 Newcastle Index Strong Asian Coal Markets Flowing Around to Atlantic Markets IL Basin Physical Financial
Slide 12: Peabody's Global Operations and Trading Leverage Record-Setting Markets
Peabody's Global Operations and Trading Leverage Record-Setting Markets Operations Trading & Local Offices Countries Served Ports BTU Clean Coal Projects Coal Exports Domestic Sales St. Louis London Beijing Sydney
Slide 13: U.S. Net Exports Expected to Quadruple Over Two Years
2006 2007 2008 Export 49300 59300 83000 Import 36000 36350 31000 U.S. Net Exports Expected to Quadruple Over Two Years Net exports grow due to global coal shortages, European demand, weak dollar and reduced U.S. imports Q1 sees inventories decline; normally stockpiles build in Q1 Creates pull to PRB
Slide 14: International Markets Create Major Flow-Back Opportunities
API 2 (Implied Delivered to Europe, per tonne): $140.00 Implied CAPP Price at East Coast Port (ton): $108.50 CAPP NAPP Netback $82.00 $88.10 Market $93.63 $99.00 Lower/Upper Ohio River Plant Netback to... PRB Illinois Netback FOB $/Ton $26.95 $84.95 Current Price $15.10 $66.00 OPPORTUNITY $11.85 $18
Slide 15: PRB Markets Strengthen from Pull of Exports and Domestic Growth
OTC PRB 8800 1/3/2007 7.25 0 2/13/2008 15.1 PRB Markets Strengthen from Pull of Exports and Domestic Growth OTC PRB 8800 Prices PRB pricing more than doubles in one year Peabody has the best U.S. volume leverage over next several years Unpriced U.S. volumes: 60 - 70 Million for 2009 120 - 130 Millio
Slide 16: Long-Term Coal Demand Forecasts Continue to Rise
Robust Long-Term Demand As All Regions Pursue New Coal-Fueled Generation Growth through 2030. Amounts in million short tons. Source: U.S. Department of Energy, Energy Information Administration, International Energy Outlook 2006. International Energy Agency. Projected Australia export flow for 2004-
Slide 17: Coal Use Expected to Accelerate Over Next Several Decades
Coal Use Expected to Accelerate Over Next Several Decades U.S. Electric Power Generation by Fuel Type Source: Energy Information Administration, Annual Energy Outlook 2008.
Slide 18: Peabody's Key Focus Areas
PEABODY’S KEY FOCUS AREAS df
Slide 19: Peabody: Outstanding Position to Serve Growth Markets
Peabody: Outstanding Position to Serve Growth Markets #1 in Powder River Basin #1 in Colorado #1 in Illinois Basin #1 Exporter of U.S.-based companies #1 U.S. Coal Trader Expanding Australian Volumes Leading Global Coal Trader
Slide 20: Peabody Taking Decisive Steps To Benefit From Accelerating Global Coal Markets
Peabody Taking Decisive Steps To Benefit From Accelerating Global Coal Markets Improving productivity and costs Expanding access to high- growth, high-margin markets Improving capital efficiency Pursuing long-term operating, trading and joint-venture opportunities Advancing clean coal projects inclu
Slide 21: Significant Capital Investments Delivering Productivity and Cost Improvements
Significant Capital Investments Delivering Productivity And Cost Improvements 2007 full-year data per Platts Energy Advantage. Source: U.S. Department of Labor Mine Safety & Health Administration. Peabody's North Antelope Rochelle Most Productive U.S. Coal Mine Peabody U.S. Industry 3Q07 4Q07 Surfac
Slide 22: New Capital Projects Raise Productivity and Boost Production
New Capital Projects Raise Productivity and Boost Production Examples: PRB Conveyor, North Wambo, El Segundo
Slide 23: Peabody's Australian Portfolio Provides Major Product and Port Diversity
Peabody's Australian Portfolio Provides Major Product and Port Diversity 21.4 million tons in 2007, up from 6.1 million in 2004 2008 target: 22 - 24 million tons Growing to 30 - 35 million tons with rail/port increases
Slide 24: Peabody is the Global Leader in Clean Coal Solutions
Peabody is the Global Leader in Clean Coal Solutions BTU is the only non-Chinese equity partner in GreenGen, China's centerpiece commercial climate initiative BTU is a long- standing supporter of the Vision 21 and FutureGen clean coal projects BTU is a member of Australia's Coal21 Fund to advance ne
Slide 25: In an Energy-Short World, BTU's Energy Reserves Are Unmatched
Continental U.S. Proven Oil Reserves 119 185 Peabody's Proven and Probable Coal Reserves Continental U.S. Natural Gas Reserves Largest U.S. Oil Company 179 128 Source: Annual reports for selected energy companies, Energy Information Administration's U.S. Crude Oil, Natural Gas, and Natural Gas Liqui
Slide 26: Btu Conversion = Value Conversion as We Narrow the Energy Valuation Gap
Source: Company filings and reports. Market capitalization as of May 9, 2008. Btu Conversion = Value Conversion as We Narrow the Energy Valuation Gap Market Capitalization on Btu-Equivalent Basis
Slide 27: The New BTU: Accelerating to New Heights
2003 2004 2005 2006 2007 2008 EBITDA 422 496 708 901 956 1800 EBITDA (in Millions) Growing Global Platform = Enormous Financial Strength Reflects results from continuing operations (Unaudited). 2008 Targets per April 22, 2008 earnings release. The New BTU: Accelerating to New Heights $422 2008 Targe
Slide 28: Merrill Lynch Global Metals, Mining & Steel Conference
MERRILL LYNCH GLOBAL METALS, MINING & STEEL CONFERENCE May 14, 2008 Gregory H. Boyce Chairman and Chief Executive Officer
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