Peabody Energy Corporation · NYSE:BTU
Peabody Energy — Investor Presentation (February 2007)
26 slides from Peabody Energy's investor presentation, Feb 21, 2007
Slide 1: 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 2: BTU: The Only Global Pure-Play Coal Investment
BTU: The Only Global Pure-Play Coal Investment Growing revenue profile and productivity initiatives lead to expanded margins Future committed sales at favorable prices offer strong revenue visibility 10+ billion ton reserve base and diverse portfolio of safe, low-cost operations Significant future c
Slide 3: Industry Overview
INDUSTRY OVERVIEW id
Slide 4: Major Market Drivers Provide Strong Outlook for Coal
DEMAND DRIVERS SUPPLY DRIVERS Global Coal Supply & Demand Major Market Drivers Provide Strong Outlook for Coal Regulatory Environment: Safety and Permitting High Cost of Competing Fuels High Steel Demand Strong U.S. Economic Growth Soaring Energy Demand in China and India Higher Utilization of Exist
Slide 5: China, U.S. and India Represent Vast Majority of Global Coal Growth
China, U.S. and India Represent Vast Majority of Global Coal Growth +763 +456 +3,114 Growth in Total Annual Coal 2003-2030 (Million Short Tons) +137 +22 Amounts in million short tons. Source: U.S. Department of Energy, Energy Information Administration, International Energy Outlook 2006. Projected A
Slide 6: International Thermal Coal Prices Well Above Prior Year in Key Markets
Australia/Newcastle China/Qinhuangdao Columbia/Bolivar into ARA Russia/Vostochniy South Africa/Richards Bay 2006 41.75 48 44 44 43.25 2007 52.65 59 51 67 51.2 Hard Coking Metallurgical 2006 115 2007 98 Jan '06 International Thermal Coal Prices Well Above Prior Year in Key Markets Index Prices for Ke
Slide 7: Turning the Page on a New Year Following Soft 2006 U.S. Coal Markets
Turning the Page on a New Year Following Soft 2006 U.S. Coal Markets 2006 markets show slightly higher production but unusual decline in coal use by electricity generators Stockpiles above "normal" five-year levels U.S. EIA now projects 59 million ton swing in 2007 supply-demand fundamentals Product
Slide 8: U.S. Market: Continued CAPP Declines as Powder River Basin Captures Share
U.S. Market: Continued CAPP Declines as Powder River Basin Captures Share 2007 begins with lower production, higher coal use Year-to-date production down 2% Year-to-date electricity generation up 8% U.S. production cutbacks occurring as higher-cost Central Appalachia mines edged off the cost curve R
Slide 9: Powder River Basin: Going East in Greater Volumes
Powder River Basin: Going East in Greater Volumes Areas With Test Burns 22 BNSF Test Burns Recently Complete; 10 in Queue
Slide 10: Company Overview
COMPANY OVERVIEW id
Slide 11: Peabody is World Leader in Sales and Reserves
Source: Most recent company reports and websites, and SEC filings. Values are on a short-ton basis. Peabody sales and reserves based on 2006 unaudited data. Peabody is World Leader in Sales and Reserves
Slide 12: Peabody Taking Decisive Near-Term Steps Within Mixed Coal Markets
Peabody Taking Decisive Near-Term Steps Within Mixed Coal Markets Expanding internationally where markets and margins are strongest Tightly managing the cost structure Matching production with demand Exercising capital discipline Optimizing sales contracting and coal trading Key Initiatives Include.
Slide 13: Peabody Targets Superior Returns in All Market Conditions
BASE PLAN Relentlessly control costs "Bring home" the plan Execute core strategies Carefully invest in high-return projects STRONG MARKET ENVIRONMENT Generate strong cash flows Pursue organic growth to meet high demand SOFT MARKET ENVIRONMENT Generate strong cash flows Match production with demand E
Slide 14: Peabody Achieves Improving Performance in All Market Conditions
2001 2002 2003 2004 2005 2006 16 105.5 95 178 423 601 2001 2002 2003 2004 2005 2006 378 406.1 410.3 559 870 1080 Peabody Achieves Improving Performance in All Market Conditions 2001 2002 2003 2004 2005 2006 2577 2717 2815 3632 4644 5256 EBITDA In millions. Excludes discontinued operations, charges r
Slide 15: Peabody Continues to Grow EBITDA Across All Business Operations
2002 2003 2004 2005 2006 13 25.4 3.8 75.2 112.3 2002 2003 2004 2005 2006 3 2.2 50.4 202.6 278.4 Peabody Continues to Grow EBITDA Across All Business Operations 2002 2003 2004 2005 2006 576.3 556.1 682.5 833.7 857.2 Trading and Brokerage Australia Operations Resource Management 2002 2003 2004 2005 20
Slide 16: Peabody's Long-Term Strategies Target Margin Expansion and Growth
Peabody's Long-Term Strategies Target Margin Expansion and Growth Executing the basics: best-in-class safety, operations and marketing Capitalizing on organic growth opportunities Expanding in high-growth global markets Participating in new generation and Btu Conversion projects
Slide 17: Peabody Safety Performance Better Than U.S. Industries
Source: Peabody 2006 data; U.S. Department of Labor, Occupational Safety & Health Administration, 2005 data. Peabody 2006 3.05 Wholesale 4.5 Utilities 4.6 Leisure & Hospitality 4.7 Retail 5 Coal Mining 5.1 Education & Health Services 5.5 Agriculture/Forestry/Fishing/Hunting 6.1 Construction 6.3 Manu
Slide 18: Peabody Operates the Most Productive Coal Mines in the World
Executing the Basics: Leading Productivity Rawhide Caballo North Antelope Rochelle Industry Average (Underground) Industry Average (Surface) Nine months 2006 data. Source: U.S. Department of Labor Mine Safety & Health Administration. Peabody Operates the Most Productive Coal Mines in the World #1 #2
Slide 19: World's Largest Coal Company: Peabody's Base Portfolio of Operations
Market 2006 2006 Position Sales Reserves Wyoming PRB #1 138 3,500 Midwest #1 39 4,170 Colorado #1 9 230 Southwest #2 13 980 Appalachia #5 15 560 Australia* #5 11 800 Venezuela #1 7 205 Millions of short tons World's Largest Coal Company: Peabody's Base Portfolio of Operations St. Louis Dominion Quee
Slide 20: Excel Triples Peabody's Australia Production
International Expansion Increases Peabody Presence in High-Growth, High-Margin Markets Significant growth platform from major expansion projects at three mines Excel: 500+ million tons of reserves for growth 1 billion tons of coal resources 1.5 million acres of exploration rights 2007 EBITDA from Ex
Slide 21: Excel Triples Peabody's Presence in Largest Export Nation
Excel Triples Peabody's Presence in Largest Export Nation Targeting 30 Million Tons in 2008
Slide 22: New Markets Will Include CTG and CTL
Btu Conversion Technologies Expand Markets for Coal Bipartisan support from Senators Obama & Bunning, others for CTL President Bush alternative fuel initiative supportive of CTL Ethanol is also a major coal consumer Air Force sees half of Defense needs from CTL by 2020 China developing 27 new CTL pl
Slide 23: New Uses Could More Than Double U.S. Coal Market
New Uses Could More Than Double U.S. Coal Market Hydrogen FutureGen and other projects would use coal to fuel a hydrogen economy Current Base 1.1 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 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 167 111 Source: Annual reports for selected energy companies, Energy Information Administration's U.S. Crude Oil, Natural Gas, and Natural Gas Liqui
Slide 25: 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 26: Peabody Has an Outstanding Outlook
2003 2004 2005 2006 2007 2008 2009 2010 EBITDA 410 559 870 1080 1325 Revenue growth from strong sales contracts Global expansion in high-margin, high- demand regions Capital discipline and controlled production growth Leading reserves for long mine lives Btu Conversion markets $410 $559 $870 $1,080
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