EX-99.1 2 c26679exv99w1.htm WRITTEN PRESENTATION exv99w1
Exhibit 99.1
MERRILL LYNCH GLOBAL METALS, MINING & STEEL CONFERENCE May 14, 2008 Gregory H. Boyce Chairman and Chief Executive Officer


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 provided by those sections. Forward-looking company data is as of the April 22, 2008 earnings announcement. Our forward-looking statements are based on numerous assumptions that we believe are reasonable, but they are open to a wide range of uncertainties and business risks that may cause actual results to differ materially from expectations as of April 22, 2008. These factors are difficult to accurately predict and may be beyond the control of the company. These risks include, but are not limited to: the outcome of commercial negotiations involving sales contracts or other transactions; credit and performance risk associated with customers, suppliers, trading and financial counterparties; the availability, timing of delivery and cost of key equipment and commodities; transportation availability, performance and costs including demurrage; geologic, equipment and operational risks associated with mining; our ability to replace coal reserves; labor availability and relations; the effects of mergers, acquisitions and divestitures; legislative and regulatory developments, including mercury and carbon dioxide-related limitations; the outcome of pending or future litigation; coal and power market conditions; impact of weather on demand, production and transportation; availability and costs of competing energy resources; risks associated with our Btu Conversion initiatives; worldwide economic and political conditions; global currency exchange and interest rate fluctuation; wars and acts of terrorism or sabotage; political risks, including expropriation; and other risks detailed in the company's reports filed with the Securities and Exchange Commission. The use of "Peabody," "the company," and "our" relate to Peabody, its subsidiaries and majority-owned affiliates. EBITDA or Adjusted EBITDA is defined as income from continuing operations before deducting net interest expense, early debt extinguishment costs, income taxes, minority interests, asset retirement obligation expense & depletion, depreciation & amortization. For a reconciliation of EBITDA (or Adjusted EBITDA), a non-GAAP measure, to income from operations, the most comparable GAAP measure, please see PeabodyEnergy.com and the company's documents filed with the SEC. 4/22/08


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 Industry-best 9.3 billion ton reserve base BTU Positioned For Sustained Long-Term Growth


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 Target $1,500- $1,800 $274 $300- $400 2Q08 1Q08


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 $422 Million $956 Million $1,500 - $1,800 Million




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 Natural Gas Oil Hydro Nuclear Compound Annual Growth Rate 1.1% 1.7% 2.9% 3.1% 5.3% Seaborne Coal Demand Growing 7% Annually


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 China U.S. Vietnam 2007 Total Exports (million tonnes) Australia Canada Kazakhstan Poland Venezuela Coal chain recovering, expanding Threat of contract cancellations due to price Keeping more coal at home; "Will not fill void" Massive 45 MT inventory rebuild needed Exports increased 6 MT to 65 MT for Europe Raised export tax 50%, limiting exports for home needs Opportunities to increase exports 20 to 30 MT in 2008 24% lower export licenses, preserving domestic supply Limited met coal exports due to rail and geology Declining exports in 2007 for fifth successive year Increasing production to satisfy domestic demand Government renegotiating customer agreements Export Growth Potential


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 to 18 million tons of Australia met and thermal available for 2009 pricing Performance Expected to Ramp in 2008


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 release. Met comprises a range of metallurgical coal qualities. Million Short Tons 21-24 Thermal/ Newcastle High Quality Hard Coking 1/07 5/08 1/07 5/08 $52 $125 $300 $98 U.S. Dollars Per Tonne +206% +142%


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


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


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 and Colorado markets Peabody exports coal from CAPP, NAPP, Illinois Basin, Colorado and PRB U.S. Exports (Est.) Source: National Mining Association, International Coal Review Monthly, January 2008 and Peabody estimates. 13 23 52 U.S. Net Exports 59 83 49


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 $18.95 (Unscrubbed) (Scrubbed) Source: Index prices for Cal'09 and Peabody analysis. Assumes PRB 8,800 0.8 lb. SO2; Illinois 12,000 Btu 5.0 lb. SO2; transportation to Upper Ohio River of $42/ton, $10/ton and $6/ton for PRB, Illinois and CAPP, respectively. Updated May 7, 2008. International Markets Create Major Flow-Back Opportunities


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 Million for 2010 Signing new premium PRB business 37% above 2007 realized prices Source: Industry estimates for PRB 8,800 2009 delivery. Updated May 2, 2008. Unpriced U.S. volumes as of April 22, 2008 earnings release. 2007 Market 2008 Market +108% 04/03/08 01/02/07


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 2004-2030. Long-Term Coal Demand Forecasts Continue to Rise


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.




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


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 including Btu Conversion Key 2008 Focus Areas


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 Surface Underground 2Q07 1Q07 +10% Productivity in 2nd Half 120.7 133.3


New Capital Projects Raise Productivity and Boost Production Examples: PRB Conveyor, North Wambo, El Segundo


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


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 near-zero emissions through technologies such as oxyfuel Advancing Signature Climate Projects in U.S., China and Australia


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 Liquids Reserves. Continental U.S. Oil and Natural Gas Reserves exclude Federal Offshore. In an Energy-Short World, BTU's Energy Reserves Are Unmatched Energy Value in Quadrillion Btus BTU Has Multiple 100+ Million-Ton Sites to Fuel Btu Conversion Largest U.S. Natural Gas Company 17


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


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 Target $1,500- $1,800 $274 $300- $400 2Q08 1Q08 Revenue growth from higher-priced sales commitments Global expansion in high-demand, high-margin regions Unmatched, diversified reserve base Emerging markets from Btu Conversion


MERRILL LYNCH GLOBAL METALS, MINING & STEEL CONFERENCE May 14, 2008 Gregory H. Boyce Chairman and Chief Executive Officer