Peabody Energy Corporation · NYSE:BTU
Peabody Energy — Howard Weil Annual Energy Conference 2013
24 slides from Peabody Energy's conference presentation, Mar 18, 2013
Slide 1: Howard Weil Annual Energy Conference
Howard Weil Annual Energy Conference Gregory H. Boyce Chairman and Chief Executive Officer March 18, 2013
Slide 2: Statement on Forward-Looking Information
Statement on Forward-Looking Information The use of the words “Peabody,” “the company,” “our” and “we” relate to Peabody Energy Corporation, its subsidiaries and majority- owned affiliates. Certain statements in this presentation are forward-looking within the meaning of Section 27A of the Securitie
Slide 3: Peabody Well Positioned in Face of Improving Market Conditions
Peabody Well Positioned in Face of Improving Market Conditions ● BTU delivered record 2012 safety results, revenues, Adjusted U.S. EBITDA and Australia sales volume ● 2013 coal markets improving globally and in U.S. ● Pacific Rim markets driving significant near- and long-term met and thermal coal d
Slide 4: Peabody: The Only Global Pure-Play Coal Investment
Peabody: The Only Global Pure-Play Coal Investment The World’s Largest Private-Sector Coal Company ● 28 active mines in U.S. and Australia London Ulaanbaatar ● 9.3 billion tons of Essen Urumqi St .Louis reserves New Delhi Beijing DTA – U.S.: 8.2 billion tons – Australia: 1.1 billion tons Singapore B
Slide 5: Diverse Revenues and Strong Cost Containment Drive Superior Margins
Diverse Revenues and Strong Cost Containment Drive Superior Margins 2012 Revenue by ● Global platform provides Product diverse contributions ● Gross margins ~30% above U.S. peer group Western Australian over past three years U.S. Thermal Met – Record U.S. margins in 2012 Midwest Australian ● Leading
Slide 6: Global Coal Markets
Global Coal Markets
Slide 7: Coal Market Demand Rising in 2013 on Higher Steel Production, Generation
Coal Market Demand Rising in 2013 on Higher Steel Production, Generation ● Expect global steel production growth of ~3% driving 2013 Expected New Coal-Fueled Generation increased need for metallurgical coal Other ● >75 GW of coal generation 7 GW expected to come on line Europe 7 GW in 2013 Other Asi
Slide 8: Another Round of Global Supply Constraints Again Beginning to Emerge
Another Round of Global Supply Constraints Again Beginning to Emerge ● U.S. exports expected to decline ~30 million tons in 2013 ● Strikes hinder mine production in several countries ● Mozambique and Mongolia shipments below targets ● Chinese regulators calling for closure of ~5,000 small mines in 2
Slide 9: Metallurgical Prices Improving on Increased Demand, Supply Curtailments
Metallurgical Prices Improving on Increased Demand, Supply Curtailments ● Rising steel output in Asia Coking Coal Price Recovers 20% drives global steel from 2012 Trough; LV PCI +40% production higher in January Met Spot Price/Tonne – Key Asia importing countries see rising steel production: $240 Ch
Slide 10: PCI in Growing Demand from Global Steel Producers
PCI in Growing Demand from Global Steel Producers ● Steelmakers increasing PCI use to reduce costs, improve margins Blast Furnace ● Pulverized Coal Injection a replacement for coke made from coking coal PCI Picture – 1.1 tonnes of low-vol PCI replaces PCI coal is used as 1 tonne of coke an energy so
Slide 11: China's Economic Growth, Coal Consumption Accelerating
China’s Economic Growth, Coal Consumption Accelerating ● January coal imports of 31 million tonnes up 56% over prior year ● February PMI in expansion for fourth straight month; Steel PMI of 58.9 at two-year high – Fixed asset investment up 21% in first two months due to infrastructure spend and impr
Slide 12: China, India Coal Imports Expected to Grow 8% – 10% in 2013
China, India Coal Imports Expected to Grow 8% – 10% in 2013 China China and India India ● ~250 GW of new Coal Imports ● ~70 GW of new coal generation (Tonnes in Millions) coal generation by 2017 Thermal 640 by 2017 ● Steel and 600 Met ● Domestic coal generation build- 155 production out on coast 465
Slide 13: Annual World Coal Demand Expected to Grow ~1.4 Billion Tonnes in Five Years
Annual World Coal Demand Expected to Grow ~1.4 Billion Tonnes in Five Years Expected Global Coal Demand ● New coal-fueled (Tonnes in Millions) 10,000 generation of ~450 GW 9,050 expected by 2017 7,950 875 8,000 7,665 ● Steel production expected 690 720 to grow 20%, requiring 6,000 5,000 additional 2
Slide 14: U.S. Coal Supply Demand Fundamentals Rebounding Well in 2013
U.S. Coal Supply Demand Fundamentals Rebounding Well in 2013 ● U.S. coal generation expected to U.S. Gas-to-Coal Switching Takes Hold in 2013 rise 40 – 60 million tons in 2013 Coal and Natural Gas YOY – Gas-to-coal switching in play Generation Changes – PRB and Illinois Basin coal 40% 37% competitiv
Slide 15: PRB and Illinois Basin Expected to Serve U.S. and Global Markets
PRB and Illinois Basin Expected to Serve U.S. and Global Markets ● U.S. basins expected to see significant demand shift ● Lower-cost PRB and ILB generation expected to grow 20%+ by 2017 from new plants, basin switching and higher capacity utilization – Current fleet only running at ~55% utilization
Slide 16: Coal Expected to Overtake Oil as World's Largest Energy Source in 2013
Coal Expected to Overtake Oil as World’s Largest Energy Source in 2013 Primary World Energy Demand by Fuel Coal Million Tonne of Oil Equivalent 2013 Oil Natural Gas Nuclear Hydro Renewables 2000 2005 2010 2015 2020 2025 2030 Source: Wood Mackenzie Energy Service. 16
Slide 17: Peabody Energy Outlook
Peabody Energy Outlook
Slide 18: Peabody Targeting Four Primary Focus Areas
Peabody Targeting Four Primary Focus Areas ● Achieve operational excellence in safety, productivity and production ● Reduce costs and improve capital efficiency at all levels of the organization ● Maximize cash flow to continue debt reduction ● Position Peabody to benefit during market recovery 18
Slide 19: U.S. Platform Well Positioned in Current Market
U.S. Platform Well Positioned in Current Market ● Targeting 180 – 190 million tons of production in 2013 – 90% – 95% priced for 2013; 50% – 60% priced for 2014 – Revenues per ton expected to be 5% – 10% below 2012 levels ● Intense focus on cost containment and capital discipline – Expect stable cost
Slide 20: Australia Platform Targets Higher Volumes and Productivity Gains
Australia Platform Targets Higher Volumes and Productivity Gains ● Targeting 7% – 14% increase of Targeted Australia Volumes (Tonnes in Millions) metallurgical coal volumes 40 in 2013 Domestic Thermal Seaborne Thermal 33 - 36 ● Focus on costs and productivity Met 33 improvements 30 – Target 2013 cos
Slide 21: Significant Australian Assets Provide Earnings Platform and Growth
Significant Australian Assets Provide Earnings Platform and Growth Peabody Australia Platform ● $9.6 billion of investments over past decade – Acquisition of RAG, Excel and Macarthur – Greatly expanded capacity of thermal and met coal for The 2011 seaborne market Macarthur acquisition ● Australia se
Slide 22: Capital Discipline, Debt Reduction a Top Priority
Capital Discipline, Debt Reduction a Top Priority ● Targeting significant debt Debt-to-Capitalization Ratio reduction – Cash flow generation, 60 56% capital discipline and asset monetization 50 40% – 45% ● Debt-to-cap ratio goal of 40 40% – 45% over time ● Targeting 2013 capital 30 spend of $450 – $
Slide 23: Peabody Platform Shaped to Meet Needs of Changing Markets
Peabody Platform Shaped to Meet Needs of Changing Markets ● Rising coal exports from Australia ● Leading position in low-cost SPRB and Illinois Basin ● Aggressive focus on cost control across platform ● Solid operating cash flows, low maintenance capex needs and focus on debt reduction ● Managing ne
Slide 24: Howard Weil Annual Energy Conference
Howard Weil Annual Energy Conference Gregory H. Boyce Chairman and Chief Executive Officer March 18, 2013
Peabody Energy — Howard Weil Annual Energy Conference 2013 on 6ix