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Conference Edition 2013Conference Edition 2013Conference Edition 2013Conference Edition 2013
Holly StewartHolly StewartHolly StewartHolly Stewart
(713) 393(713) 393(713) 393(713) [email protected]@[email protected]@howardweil.com
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Alphabetical by CompanyArch Coal, Inc. (ACI) .............................................. 3
Alpha Natural Resources (ANR) ............................ 4
Cloud Peak Energy (CLX) ...................................... 5
CONSOL Energy Inc. (CNX) ................................. 6Peabody Energy Corporation (BTU) .................... 7
Company Statistics
Trading Valuation / Free Cash Flow ...................... 9
Production / Contracted Volumes ........................ 10
Production Matrix ................................................. 11
Performance Summary ........................................ 12
Market Stats / Valuation ....................................... 13
Basic Definitions .................................................... 14
Table of Contents
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Ticker ACIPrice ($/sh, as of 3/13/13) $5.1452-week high ($/sh) $12.75
52-week low ($/sh) $4.89Market Cap ($mm) $1,090Enterprise Value ($mm) $5,424
Shares Out (mm) 212Net debt ($mm) $4,334Net debt-to-cap 60%
Management
John W. Eaves, President and CEOPaul A. Lang, COO
John T. Drexler, CFO
Investor Relations ContactJennifer Beatty 314-994-2781
Short-term Debt $33
Long-term Debt $5,086
Shareholder Equity $2,855
LT Debt / Capital 64%
Total Debt / Capital 64%
Net Debt / Capital 60%
Cash $785
Revolver Capacity $600
Available Capacity $333
COMPANY PROFILE
Picture Source: Arch Coal
PERFORMANCE & CAPEX BREAKDOWN
CAPITAL BREAKDOWN
Surface vs. Underground Production by Region Metallurgical vs. Steam
PRODUCTION BREAKDOWN (2012A)
Arch Coal Inc
OPERATING DETAIL
as of 12/31/12 ($mm)
www.archcoal.com
Arch Coal sold approximately 141 mm tons of coal in 2012, representing ~14% of the nation's coal supply. Archoperates or contracts out the operation of 32 active mines in four different regions: the Powder River Basin, WesternBituminous, Central Appalachia and Illinois Basin. With 2.2 b tons of recovered reserves, Arch supplies coal to bothdomestic utilities and domestic and international steel producers.
Surface79%
Underground21%
PRB74%
Western Bit11%
East13%
ILB2%
Steam95%
Met5%
2011A 2012A 2013E
Total Expenditures $541 $395 $355 % Change 72% -27% -10%
Capital Expenditures ($mm)
2012A 2013E 2014E 2015E
EPSE ($0.38) ($1.22) ($0.28) $0.13
% Change -135% -221% 77% 148%
Consensus ($1.15) ($0.43) ($0.11)
EBITDA $3.16 $2.29 $3.71 $4.00
% Change -35% -27% 62% 8%CFPSE $1.57 $1.31 $2.15 $2.39
% Change -53% -17% 63% 11%
Trading metrics
P/E nm nm nm 38.7 x
EV/EBITDA 8.1 x 11.1 x 6.8 x 6.2 x
P/CF 3.3 x 3.9 x 2.4 x 2.2 x
Source: Howard Weil & Arch Coal
ACI Financial Snapshot
2012A 2013E 2014E 2015E
Production (mm)
PRB 104.4 101.3 106.3 117.0
Western Bit 15.6 15.8 16.2 16.8
Eastern - Thermal 11.1 8.9 8.7 8.4
Eastern - Met 7.5 8.5 9.3 11.2
Total Tons Sold 138.6 134.5 140.5 153.4
% Change -10% -3% 4% 9%
Contract Detail
Percent Contracted- Met 96% 46% 0% 0%
Percent Contracted- Thermal 93% 75% 42% 0%
Pricing Detail (per ton)
PRB Realized Price $13.61 $12.91 $12.83 $12.98
Western Bit Realized Price $35.67 $39.34 $54.68 $44.00
Eastern Thermal Realized Price $64.73 $62.84 $71.00
Eastern Met Realized Price $113.00 $87.49 $98.13 $109.73
Overall Realized Price $25.90 $23.77 $25.99 $26.25
Costs Detail (per ton) Avg Operation Cost $20.49 $20.06 $20.37 $20.63
SG&A $0.95 $0.94 $0.96 $0.98 DD&A $3.73 $3.66 $3.39 $3.10
Gross Op Margin 21% 16% 22% 21%
Operating Stats
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Ticker CNX
Price ($/sh, as of 3/13/13) $32.4452-week high ($/sh) $37.3952-week low ($/sh) $26.41Market Cap ($mm) $7,459Enterpri se Value ($mm) $10,650Shares Out (mm) 230Net debt ($mm) $3,191Net debt-to-cap 45%
Management
J. Brett Harvey, Chairman and CEONicholas J. DeIuliis, President
David M. Khani, CFO Investor Relations Contact
Dan Zajdel 724-485-4169
Tyler Lewis 724-485-3157
Short-term Debt $39
Long-term Debt $3,175
Shareholder Equity $3,954
LT Debt / Capital 45%
Total Debt / Capital 45%
Net Debt / Capital 45%
Cash $22
Revolver Capacity $2,500
Available Capacity $2,329
COMPANY PROFILE
Picture Source: CONSOL Energy
Metallurgical vs. Steam
PRODUCTION BREAKDOWN (2012A)
Production by Region
OPERATING DETAIL PERFORMANCE & CAPEX BREAKDOWN
CONSOL Energy Inc
as of 12/31/12 ($mm)Surface vs. Underground
CAPITAL BREAKDOWN
www.consolenergy.com
Underground96%
Surface4%
CONSOL Energy is an integrated energy company, with reserves both in coal and natural gas. CONSOL had 4.2 btons of proven and probable coal reserves at the end of 2012. The Company produced 56 mm tons of coal in '12 from11 U.S. mining complexes, of which 13% was met production. CNX also has 4 tcf of natural gas reserves, all in the Appalachian region, and produced 156 net Bcfe in 2012, 36.5 bcfe in the Marcellus Shale.
CAPP13%
NAPP87%
Steam87%
Met13%
2011A 2012A 2013E
Coal Operations $558 $1,043 $465
Gas Operations $662 $533 $885
Total $1,220 $1,575 $1,350
% Change 6% 29% -14%
Capital Expenditures ($mm)
2012A 2013E 2014E 2015E
EPSE $1.11 $0.76 $1.49 $2.37
% Change -60% -31% 96% 59%
Consensus $1.05 $2.17 $2.38
EBITDA $4.99 $4.75 $5.94 $7.31
% Change -31% -5% 25% 23%CFPSE $3.18 $3.50 $4.46 $5.57
% Change -52% 10% 27% 25%
Trading metrics
P/E 29.3 x 42.6 x 21.7 x 13.7 x
EV/EBITDA 9.3 x 9.7 x 7.7 x 6.3 x
P/CF 10.2 x 9.3 x 7.3 x 5.8 x
Source: Howard Weil & CONSOL
CNX Financial Snapshot2012A 2013E 2014E 2015E
Production (mm tons)
NAPP - Thermal 45.7 46.8 49.7 51.1
NAPP - Met 3.6 2.8 3.3 3.9
Total NAPP 49.3 49.7 52.9 55.0
CAPP - Thermal 3.4 0.9 0.8 0.8 CAPP - Met 3.7 4.1 4.5 4.9
Total CAPP 7.1 4.9 5.3 5.7
Total Production 56.4 54.6 58.2 60.8
% change -10% -3% 7% 4%
Contract Detail
Percent Contracted - Met 48% 4% 0% 0%
Percent Cont rac ted - Thermal 100% 98% 45% 27%
Pricing Detail (per ton)
Thermal Realized Price $61.99 $59.11 $63.83 $66.24
Met Realized Price $102.46 $100.67 $115.46 $123.68
Overall Realized Price $69.10 $63.58 $66.96 $72.03
Costs Detail (per ton)
Avg Operating Cost $32.69 $33.46 $34.06 $34.96 SG&A $2.63 $2.53 $2.56 $2.59
DD&A $6.42 $6.59 $6.82 $7.06
Gross Op Margin 30% 22% 25% 29%
Operating Stats
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Trading Valuation...Current vs. Historical
Free Cash Flow
Companies P/E P/CF EV/EBITDA P/E P/CF EV/EBITDA
ACI 13.6x 5.8x 7.7x nm 2.4x 6.8x
ANR 14.5x 6.3x 5.6x nm 2.6x 4.9x
BTU 15.1x 7.9x 9.3x 10.4x 4.4x 6.2x
CLD* 11.0x 4.6x 4.8x 11.9x 5.3x 4.9x
CNX 15.3x 8.6x 7.2x 21.7x 7.3x 7.7x
Group Avg 13.9 x 6.6 x 6.9 x 14.7 x 4.4 x 6.1 x
*Historicals date back to December 2009 as the Company went public in Novemb er 2009
Source: Howard Weil & Thomson One
Historical Valuations Current Valuations(assuming last 5-yrs of trading) (on 2014 estimates)
Companies Tickers FFO Cap-ex Free-CF
Free CF
Yield
Debt-to-
Cap Cash
Arch Coal ACI $279 ($355) ($76) -6.9% 64% $785
Alpha Natural Resources ANR $260 ($325) ($65) -3.7% 41% $731
Peabody Energy BTU $855 ($500) $355 6.2% 56% $559
Cloud Peak Energy* CLD $187 ($174) $13 1.1% 46% $198
CONSOL Energy CNX $1,189 ($1,398) ($208) -2.8% 45% $22
Group Average -1.2%
*Deb t includes LBA payments
Source: Howard Weil & Companies
2013E ($mm)
Coal Producers - 2013E Free Cash Flow4Q'12 ($mm)
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Production Contracted Volumes
Company 2011A 2012A 2013E
'13 vs. '12 %
Change
Arch Coal ACI
Thermal Production 146.1 131.1 126.0 -3.9%
Met Coal Production 8.0 7.5 8.5 13.0%
Alpha Natural Resources ANR
Thermal Production 87.1 88.5 68.5 -22.7%
Met Coal Production 19.2 20.3 20.1 -1.0%
Peabody Energy BTU
Total U.S. Production 203.9 192.6 186.6 -3.1%
Met Coal Production 9.3 14.1 15.4 9.0%Cloud Peak Energy CLD
Thermal Production 97.2 92.2 91.2 -1.0%
Met Coal Production na na na na
CONSOL Energy CNX
Thermal Production 52.1 49.1 47.7 -2.9%
Met Coal Production 10.5 7.3 6.9 -5.8%
Total Production 633.4 602.7 570.7 -5.3%
Total Met Production 47.0 49.2 50.8 3.3%
Source: Howard Weil & Com panies
Annual Coal Production (mm tons)
Companies % Price % Price
Arch Coal
Thermal Contracted 85% $13.37 48% $14.22
Met Contracted 46% $93.37 0% $0.00
Alpha Natural Resources
Thermal Contracted - West 97% $12.84 30% $12.75
Thermal Contracted - East 94% $62.71 15% $65.00
Met Contracted 47% $113.25 0% $130.00
Peabody Energy
Contracted - U.S. 93% $21.51 55% $21.63
Contracted - Australia 10% $94.75 0% $0.00
Met Contracted 0% $0.00 0% $0.00
Cloud Peak Energy
Thermal Contracted 89% $13.40 47% $14.49
CONSOL Energy
Thermal Contracted 102% $59.05 47% $59.92 Met Contracted 42% $90.21 3% $75.53
Gas Hedges 40% $4.66 29% $4.87
Source: Howard Weil & Companies
Coal Producers - Contract Detail
2013 2014
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Production Matrix
HW Coal Group - Production Matrix
C o m p
a n i e s
C e n t r
a l A p
p
N o r t h
e r n A p p
I l l i n o i s B a
s i n
P R B
W e s t e r
n B i t
A u s t r
a l i a
M e t
S t e a
m S u
r f a c e
U n d e
r g r o u
n d
ACI 13% - 1% 74% 11% - 5% 95% 79% 21%
ANR 38% 19% - 43% - - 19% 81% 31% 69%
BTU - - 12% 73% - 15% 6% 94% 90% 10%
CLD - - - 100% - - - 100% 100% -
CNX 13% 87% - - - - 13% 87% 4% 96%
Source: Companies
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Market Stats (as of 3/13/13)
Valuation (as of 3/13/13)
Target Current % Upside Avg Vol Shares MC EV Net Debt Net
Companies Ticker Action Price Price to Target (daily) Out (mm) (mm) (mm) to Cap % Debt Dividend Yield
Arch Coal ACI SP $15 $5.14 192% 12,916,543 212.0 $1,090 $5,424 60.3% $4,334 $0.12 2.3%
Alpha Natural Resources ANR SO $13 $8.01 62% 16,973,344 220.5 $1,767 $4,422 34.8% $2,655 $0.00 0.0%
Peabody Energy BTU SO $40 $21.37 87% 7,503,929 266.3 $5,691 $11,385 53.9% $5,694 $0.34 1.6%
Cloud Peak Energy CLD SP $21 $17.74 18% 920,656 61.3 $1,087 $1,493 39.4% $407 $0.00 0.0%
CONSOL Energy CNX SO $40 $32.44 23% 2,823,229 229.9 $7,459 $10,650 44.7% $3,191 $0.50 1.5%
Companies Ticker 2013E 2014E 2015E 1Q'12E 2013E 2014E 2015E 2013E 2014E 2015E 2013E 2014E 2015E
Arch Coal ACI ($1.22) ($0.28) $0.13 ($0.39) nm nm 38.7x $2.30 $3.77 $4.13 11.1x 6.8x 6.2x
Alpha Natural Resources ANR ($2.89) ($1.04) $1.19 ($0.85) nm nm 6.7x $2.19 $4.13 $6.77 9.2x 4.9x 3.0x
Peabody Energy BTU $0.46 $2.05 $3.53 ($0.16) 46.7x 10.4x 6.1x $4.74 $6.86 $8.83 9.0x 6.2x 4.8x
Cloud Peak Energy CLD $1.18 $1.50 $1.28 $0.30 15.1x 11.9x 13.9x $4.34 $4.96 $4.61 5.6x 4.9x 5.3x
CONSOL Energy CNX $0.76 $1.49 $2.37 $0.14 42.6x 21.7x 13.7x $4.76 $5.98 $7.40 9.7x 7.7x 6.3x
Group Average 34.8x 14.7x 15.8x 8.9x 6.1x 5.1x
Quarterly
Companies Ticker 2013E 2014E 2015E 1Q'12E 2013E 2014E 2015E 2013E 2014E 2015E 2013E 2014E 2015E
Arch Coal ACI ($1.15) ($0.43) ($0.11) ($0.33) $1.31 $2.15 $2.39 3.9x 2.4x 2.2x -0.3% 2.5% 3.4%
Alpha Natural Resources ANR ($2.16) ($1.22) ($0.99) ($0.60) $1.17 $3.11 $5.44 6.8x 2.6x 1.5x -6.1% -1.1% 5.5%Peabody Energy BTU $0.40 $1.91 $2.08 ($0.14) $3.20 $4.82 $2.82 6.7x 4.4x 7.6x 3.3% 6.8% 9.7%
Cloud Peak Energy CLD $1.22 $1.52 $1.30 $0.28 $3.04 $3.36 $3.15 5.8x 5.3x 5.6x 5.8% 7.0% 5.9%
CONSOL Energy CNX $1.05 $2.17 $2.38 $0.18 $3.50 $4.46 $5.57 9.3x 7.3x 5.8x 4.2% 6.2% 8.5%
Group Average 6.5x 4.4x 4.5x 1.4% 4.3% 6.6%
EV/EBITDA
Consensus Estimates
Full Year HW CF Estimates P/CF based on HW Estimates ROCE
HW EPS Estimates P/E based on HW Estimates HW EBITDA/sh Estimates
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