BTU Peabody Feb 2010 Presentation

8/14/2019 BTU Peabody Feb 2010 Presentation

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Morgan StanleyGlobal BasicMaterialsConferenceFebruary 25, 2010

Mike CrewsChief Financial Officer

Peabody EnergyNYSE: BTU


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Peabody Energy: The OnlyGlobal Pure-Play Coal Investment

Best access to fastest growing global markets with

expanding Australia platform, trading activitiesand Asia growth projects

Excellent U.S. contractingposition and largest producer

in fastest growing regions

Unmatched reserve base

and outstanding liquidity

to create shareholder value


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Peabody: Delivering Earnings,Expanding Financial Capacity

U.S. Mining EBITDA grew 17% to $1 billion on

higher prices and cost containment

Second-half Australia volumes ship at record

pace; nearly 75% of met shipped in second half

Operating cash flows of $1.04 billion

EBITDA of $1.3 billion

Cash of nearly $1 billion with liquidity of

$2.5 billion

2009 Results2009 Results Second Best in Company HistorySecond Best in Company History


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Peabody Capitalizing onPeabody Capitalizing on

Outstanding AsiaOutstanding Asia--Pacific DemandPacific Demand


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Coal Demand Will ContinueTo Outpace Other Fuel Sources

0

1,000

2,000

3,000

4,000

5,000

2007 2030

MillionTonnesofOilE

quivalent

Source: International Energy Agency World Energy Outlook 2009; Energy Information Administration Annual Energy Outlook and Peabody analysis.

Coals Growth RateThrough 2030

More than 1.5x combined

growth rate of naturalgas, oil, nuclear, hydro

and renewables

Global Coal DemandGlobal Coal Demand

Global Coal Use Estimated to Grow 53% by 2030Global Coal Use Estimated to Grow 53% by 2030

Asia = 90% of Nearly 3 Billion Ton Global Coal Demand GrowthAsia = 90% of Nearly 3 Billion Ton Global Coal Demand Growth


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$200

$129

$300

$98

$115$125

$0

$50

$100

$150

$200

$250

$300

2005 2006 2007 2008 2009 Spot 2010+

$100$94

$91

$70

$125

$56$52$53

$0

$20

$40

$60

$80

$100

$120

$140

2005 2006 2007 2008 2009 2010 2011 2012

Newcastle Thermal CoalNewcastle Thermal Coal

Source: Third party data. Pricing as of February 18, 2010.

High Quality Hard Coking CoalHigh Quality Hard Coking Coal

PerTonne

Pacific Met and Thermal CoalPrices on Pace for 2nd Highest Level


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-83

-68

-46

-25

-2 -4

104

-100

-50

0

50

100

2003 2004 2005 2006 2007 2008 2009

TonnesinMillio

ns

China Leading thePacific Market Recovery

104 million tonne net importer

185+ MT shift in 6 years

2009 imports triple as exportscut in half; 2010 off to astrong start

Structurally short of met coal

Securing long-term thermal andmet coal assets

Australia the largest coal supplierto China

45 million tonnes in 2009, upfrom 4 million tonnes in 2008

$30 to $50 per ton rail/shipadvantage over U.S.

Structural Shortage and Strategic Intent DriveStructural Shortage and Strategic Intent Drive Shift to Net ImportsShift to Net Imports

Data and estimates based on industry reports and Peabody analysis.

China Net Coal ImportsChina Net Coal Imports


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China: The Driving Force BehindGlobal Met Coal Demand Growth

ROW306

U.S.14

China612

India

64

2009

ROW354

China54

India6

1980U.S.44

20092009 China Met Imports SoarChina Met Imports Soar... And China Met Demand Dwarfs U.S.... And China Met Demand Dwarfs U.S.

0

5

10

15

20

25

30

35

2008 2009

China Met Coal ImportsChina Met Coal Imports Met Coal ConsumptionMet Coal Consumption

MongoliaAust ral iaIndonesiaCanadaRussia

U.S.Other

35

7

Aust ral ia

Mongolia

Indonesia

Canada

RussiaU.S. &Other

Tonnes in millions. Data and estimates based on third party data and Peabody analysis.


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0

50

100

150

200

250

2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

TonnesinM

illions

Met Thermal Forecast Range

India Likely to be WorldsFastest Growing Coal Importer

Data and estimates based on industry reports and Peabody analysis.

2009 coal generation

grew 7%

Inventories critically lowversus targets

Thermal imports grew

68% in 2009

55 GW of new coal-

based plants under

construction

Imports growing to ~200

MTPA in 4

5 years?

India Coal ImportsIndia Coal Imports


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Major New Global Coal-FueledGeneration Build-Out Under Way

Data and estimates based on Platts Worldwide Power Plant Database and Peabody analysis.

80+% of New 2010 Coal Plants in China, India and Other Asia80+% of New 2010 Coal Plants in China, India and Other Asia

2010 New Coal2010 New Coal--FueledFueled

Generation (GW)Generation (GW)New Coal Plants for 2010

Tonnes inGW Millions

China 35 132

India 17 80

Other Asia 8 34

USA 7 25

Europe 2 4

South America 2 8

Others 1 2

Total 72 285

China35

India17

OtherAsia

8

USA 7

Europe 2

South America 2Others 1


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Global Seaborne Demand:~300 MTPA of Growth by 2014

Data and estimates based on Barlow Jonker and Peabody analysis.

100+ MTPA of new

seaborne coal demand

from generation underconstruction

Pacific demand growth

75+% of totaldemand increases

India to dominate

growth in global coal

imports Atlantic40 - 50

India

100 - 150

China

20 - 70

Japan20 - 30

South

Korea

15 - 25

Taiwan

5 - 15Other

Pacific

20 - 40

Growth in Seaborne ImportsGrowth in Seaborne Imports20092009 20142014

(Tonnes in Millions)(Tonnes in Millions)


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0 50 100 150 200 250 300

2009 Total Exports2009 Total Exports

Global Seaborne Supply:Expected to Lag Demand Growth

Data and estimates based on Barlow Jonker and Peabody analysis. Tonnes in millions, except U.S. Excludes land-based exports, except U.S.

Metallurgical Thermal

U.S.

South Afr ica

South America

Russia

Australia

Indonesia

Canada

China

Vietnam

Seaborne markets

expected to beup to 100 MTPA

short of coal

Australia to supply

vast majority of

met growth

India asks Indonesia

not to stop

exporting coal

China exports to

continue to decline

Australia More Than Half of Global Seaborne GrowthAustralia More Than Half of Global Seaborne Growth

110 140

20092009 20142014GrowthGrowth

30 40

5 10

10 15

5 15

15 20

(0 10)

0 5

(0 10)

175 225


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Location and Cost Advantage Over Other Seaborne SupplyLocation and Cost Advantage Over Other Seaborne Supply

Peabody Competitively Positioned toServe Growth Markets of Asia

Optimal location to

serve Asian demand

Premium met and

thermal coal products

Lower costseaborne supply

Significant organic

growth potential

Expanding export

capability with

rail/port access

BurtonNorth Goonyella

EaglefieldMillennium

Metropolitan

Dalrymple Bay

Abbot Point

Port Kembla

Queensland

New South Wales

Conarco

Exploration Area

Wilkie Creek

Brisbane

Wilpinjong

North Wambo

Wambo

NCIGNewcastle

Met Coal MineThermal Coal MinePort

Gladstone


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Peabodys 2010 Australian ThermalExports, Met Coal Expanding 20 30%

(Short Tons i n M i l l i ons) 2009 2010

Priced 3.0

Unpriced 4.5 - 5.5

Total Met 6.9 7.5 - 8.5

Priced 6.0

Unpriced 6.5 - 7.0

Total Seaborne Thermal 9.6 12.5 - 13.0

Domestic Thermal* 5.8 6.0 - 6.5

TOTAL 22.3 26.0 - 28.0

Peabody's Australian Sales Profile

* Domestic thermal volumes priced under long-term contracts.Unpriced volumes as of Jan. 26, 2010. Actual results may differ from forecast. Statement on forward-looking information detailed on slide 2.

HighQualityHard

30 35%

Hard

20 25%

Semi-Hard15 25%

PCI15 25%

Expected 2010 Met Coal MixExpected 2010 Met Coal MixBTU Australian Sales ProfileBTU Australian Sales Profile


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0

5

10

15

20

25

30

35

40

2009 2010 5-Yr

Forward

6.0 6.5

12.5 13.0

7.5 8.5

8.0 8.5

15.0 17.0

12.0 15.026.0

28.0

35.0

40.0+

Peabodys Australian Exports:Potential to Nearly Double in Five Years

Met:Up to 117%

SeaborneThermal:

Up to 77%

5-YearGrowth

TonsinM

illions

Matching Port Capacity Through NCIG and Dalrymple Bay IncreasesMatching Port Capacity Through NCIG and Dalrymple Bay IncreasesActual results may differ from forecast. Statement on forward-looking information detailed on slide 2.

DomesticThermal

6.9

9.6

5.8

22.3


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Australia 5Australia 5--Year Project PipelineYear Project Pipeline

Peabodys Australian GrowthProjects Target Exports

Export Met S/UG MTPA Quality

Denham Development S

3 -

6

HQHCC

Burton Extension S

2 -

3

HCC

Metropoli tan Expansion UG 1 HCC

Millennium Expansion S

2 -

3 Semi-Hard / PCI

88 -- 1313

Export Thermal

Wambo Expansion S/UG

3 -

4

High Quality, Low Ash

Wilpinjong Expansion S

2 -

3

Low Cost Complex

55 -- 77

Short tons in millions. S for surface, UG for underground.


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$0

$50

$100

$150

$200

$250

$300

2003 2004 2005 2006 2007 2008 2009

St. LouisNewcastle

London

BeijingSingapore

Jakarta

Strong Trading & Brokerage Resultsfrom Virtual Coal Mine

Trading & Brokerage EBITDATrading & Brokerage EBITDA

U.S.

Non-U.S.

Peabody Trading & Brokerage Offices

$193

InMillions

Growing, profitable global

trading and brokerage

operations

Continued expansion;

opening of Singapore

Southeast Asia tradinghub in 2009

Arbitrage opportunities;

financial or physical

settlements with

asset base; pipeline of

market intelligence


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Peabody WellPeabody Well--Positioned inPositioned in

Fastest Growing U.S. MarketsFastest Growing U.S. Markets


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PRB, Midwest Volumes Likely to GrowWhile Eastern Production Contracts

PRB advantage

Low end of cost curve

Primary source fornew plants

Asian export potential

Illinois Basin advantage

Lower cost than NAPPand CAPP

Major source for

new plants

Central Appalachia declines

Significant production with

costs above current prices

-60

-30

0

30

60

PRB ILB NAPP Other CAPP

U.S. Production ChangeU.S. Production Change

20092009 20142014

50-60

20-30

10-150-5

(30-40)

Estimates based on industry reports and Peabody analysis.

TonsinMillion

s


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Peabody Well Positioned in the U.S.

Largest producer and

reserve holder in the

PRB and ILB

PRB and ILB expected to

serve more than 80% of

U.S. demand growth

through 2014

Fully committed/priced

in U.S. for 2010

185

195 million tonsof expected production

Patient in 2011 contracting

Major leverage in 2012+

Short tons in millions. Sales based on 2009 data, reserves based on 2008 filed data.

Peabody Energy OperationsDominion Terminal Associates

MarketPosition Sales Reserves

Wyoming PRB #1 137 3,199

Midwest #1 32 3,652Colorado #1 8 203

Southwest #2 15 1,011

MarketPosition Sales Reserves

Wyoming PRB #1 137 3,199

Midwest #1 32 3,652Colorado #1 8 203

Southwest #2 15 1,011


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U.S. Coal Demand Set to Recover60 80 Million Tons in 2010

Data and estimates based on industry analysis and Peabody estimates.

1,000

1,020

1,040

1,060

1,080

1,100

1,120

1,140

2009 CoalDemand ElectricityGeneration Gas Back toCoal U.S.Exports 2010 CoalDemand

TonsinMillions

2009 vs. 2010 Expected Demand2009 vs. 2010 Expected Demand

Weather spurs

record inventorydraws; 30 million tons

in less than 2 months

Expected 60

80 MTdemand growth

in 2010

20

25 MT ofadditional production

cuts likely

Follows 105 MT in2009 production cuts

WinterWinter--Driven Inventory Draw Accelerates RecoveryDriven Inventory Draw Accelerates Recovery


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$0

$5

$10

$15

Prompt

Month

2010 2011 2012

During Early Recovery,PRB Prices Rise Fastest

Data and estimates based on third party data and Peabody analysis. Pricing as of February 18, 2010.

PRB 8800PRB 8800

Price Per TonPrice Per Ton

$10

$14

Prompt PRB prices have risen60% since Oct. 1, 2009, while CAPPprices have been flat/down

The traditional lag of PRB prices toCAPP increases has not occurred

Likely causes:

~25% higher Eastern stockpilesversus PRB stockpiles

Greater competitiveness of naturalgas to higher-cost Eastern coal

Difficulty in CAPP producers torespond given permitting and

cost issues


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BTU: Targeting ContinuedGrowth in Shareholder Value

Unmatched size and global diversity

Excellent access to high-growth markets

Outstanding U.S. and Australia platform

Global trading & brokerage activities

Substantial liquidity to fuel growth

Bargain P/E ratio given growth potential


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For Further Information:

Vic SvecSenior Vice PresidentInvestor Relations andCorporate Communications

1.314.342.7768

Christina MorrowVice PresidentInvestor Relations1.314.342.7651

Documents

BTU Peabody Feb 2010 Presentation