Transcript
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    Massey Energy CompanyBank of America Merrill Lynch

    Global Industries ConferenceDecember 8, 2009

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    Massey Energy Overview

    #1 Coal producer inCentral Appalachia

    93 years ofcontinuous operations

    23 resource groups 62 active mines

    41.1 million tons

    produced in 2008 79% Steam Coal

    21% MetallurgicalCoal

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    Massey Operating Region

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    Growing Reserve Base

    Proven and Probable Reserves

    0

    500

    1,000

    1,500

    2,000

    2,500

    87 89 91 93 95 97 99 01 03 05 07

    M

    illionsofTon

    2.3 bil lion tons of total reserves2.3 bil lion tons of total reserves 50 years of reserves at current product ion level50 years of reserves at current production level

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    Safety Leadership - Innovations

    Massey stripes

    Roof flappers Covered man trips

    Stock car netting

    Pizza pans Submarine equipped

    dozer cabins

    Self-contained firefighting car

    Belt fire suppression

    system

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    Safety History - NFDL

    Massey vs. Industry

    0.00

    2.00

    4.00

    6.00

    8.00

    10.00

    12.00

    1988

    1989

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    2008

    Massey

    Industry

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    Tons Produced

    41.1

    0

    5

    1015

    20

    25

    30

    35

    40

    45

    (Millions)

    2004 2005 2006 2007 2008

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    Adjusted EBITDA*

    $640.7

    $0

    $100

    $200

    $300

    $400

    $500

    $600

    $700

    (M

    illions)

    2004 2005 2006 2007 2008

    *2008 adjusted EBITDA excluded $250.1 million of expense related to Wheeling Pitt Litigation

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    Cash and Liquidity

    $0

    $100

    $200

    $300

    $400

    $500

    $600

    $700$800

    (Million

    s)

    Dec. 312004

    Dec. 312005

    Dec. 312006

    Dec. 312007

    Dec. 312008

    Sept. 302009*

    Cash and Equiv. Avai lable Credit Restricted Cash

    * $72 million in restricted cash posted as appeal bond for Harman litigation will revert to cash.

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    Net Debt to Equity

    31.3%

    0%

    10%

    20%

    30%

    40%

    50%

    60%

    Dec. 31

    2004

    Dec. 31

    2005

    Dec. 31

    2006

    Dec. 31

    2007

    Dec. 31

    2008

    Sep. 30

    2009

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    2009 First Nine Months Results

    Produced coal revenue of $1.8 billion

    Net income of $80.1 million

    EBITDA of $373.8 million

    Utility coal shipments increased 8 percentcompared to first nine months of 2008

    Utility coal shipments for the CentralAppalachia industry declined 7 percent

    Reduced headcount

    Implemented cost cutting measures

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    Total Coal Production

    United StatesU.S. Coal Production by Region - 2008

    Region Tons (000) BTUs(Quadrillions) Percent ofTotal BTUs

    Powder River Basin 541,369 9,528 38%

    Central Appalachia 235,466 5,887 24%

    Northern Appalachia 133,322 3,466 14%

    West (Other than PRB) 133,000 3,112 13%

    Midwest 99,485 2,348 9%

    All Other 27,545 606 2%

    Total 1,170,187 24,947 100%

    Source: Energy Information Administration, Company estimates

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    CAPP

    Challenges and Concerns

    Permitting issues

    Regulatory issues

    Safety

    Environment

    Litigation

    Geologic challenges Railroad performance

    Fuel Switching -Natural gas prices

    Scrubber technology

    implemented PRB and Illinois basin

    market penetration

    Customers meetingcontractual obligations

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    Central App. Coal Demand

    0

    50

    100

    150

    200

    250

    ShortTons

    (Millions)

    2006 2007 2008 2009 2010

    -17.7%*

    -9.2%

    Source: Energy Ventures Analysis

    Note: Includes export steam coal

    Actual Forecast

    Thermal Coal Met. Coal* Actual production through September was down

    11.3% per EIA

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    CAPP Fragmented Production2007 (short tons, millions)

    Massey Energy Company 39.5 17%

    Patriot Coal 25.9 11%

    Alpha Natural Resources 17.3 8%

    Arch Coal 12.5 6%

    Consol Energy 10.0 4%

    TECO Coal 9.1 4%

    James River Coal 8.9 4%

    International Coal Group 8.4 4%

    Foundation Coal 6.9 3%

    Rhino Energy 5.4 2%

    Alliance Resource Partners 3.2 1%

    Arcelor Mittal 2.1 1%

    PinnOak 1.8 1%

    Sun Coal 1.2 1%

    National Coal 1.2 1%

    Subtotal 153.4 68%

    Other Producers 73.3 32%

    CAPP Total 226.7 100%

    Source: Energy Ventures Analysis, EIA reports, OpenSourceCoal.org

    More than 100private producers

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    Industry Consolidation

    Depletion remains the largest factor forcing consolidation,in Central Appalachia

    Producers are seeing the end of coal commitments pricedlast year and high cost producers are facing shut-downs

    Producers are facing permitting, capital and liquidity

    constraints Historically, distressed assets become available in weak

    markets

    Few sophisticated and capable buyers Current economic environment will benefit the stronger producers

    Massey is prepared to use a portion of cash reserves foracquisitions

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    The Truth About

    Central Appalachia

    CAPP coal is like fine art..

    As CAPP depletion, over-regulationand consolidation continue, causingregional production to decline,

    Masseys reserves and productionbecome increasingly more valuable,

    not less.

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    Global Coal Demand

    Oil Nat. Gas Coal Nuclear Hydro

    Coal represented 29%of global primaryenergy consumption

    in 2008

    Coal was the fastest

    growing energysource for the 6th

    consecutive year

    Global Primary Energy

    Consumption(Million tonnes oil equivalent)

    3,928

    2,726

    3,304

    718620

    Source: BP Statistical Review of World Energy 2009

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    Global Coal Demand

    Coal Oil Nat. Gas Nuclear Hydro Other

    Total World Electricity Generation

    By Fuel (2006)

    41%

    6%20%

    15%

    16%

    Source: World Coal Institute

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    Global Steel Production

    Nearly 70% of totalglobal steel productionis dependent on Coal

    Chinas steelproduction increased10.5% in the first tenmonths of 2009

    U.S. steel productionremains at approx.50% of capacity

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    U.S. Metallurgical Coal

    Demand Domestic and export met demand are expected to decline by 24

    mm tons in 2009 and then begin increasing in 2010.

    Source: Energy Ventures Analysis, Company Estimates

    Note: The numbers exclude imported met tons.

    0

    10

    20

    30

    40

    50

    60

    70

    2006 2007 2008 2009 2010

    Export Domestic

    Actual Forecast

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    Blast Furnaces Restarting

    A few examples:

    Corus South Wales

    US Steel Serbia

    US Steel Ontario

    Arcelor Mittal Belgium

    Arcelor Mittal Indiana Harbor

    China Steel Corp. - Taiwan

    Over 40 blast furnaces restarting representing over 60million tons of annual production capacity

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    Metallurgical Coal Exports

    0

    1,000

    2,000

    3,000

    4,000

    5,000

    6,000

    ShortTons(000

    )

    9 mos YTD 08 9 mos YTD 09

    Met Exports from

    SE Atlantic Ports

    South Am. Asia

    Industry exportsfrom SE Atlanticports to South

    America and Asiawere up nearly

    54% in first eightmonths of 2009

    Source: Energy Ventures Analysis, Company Estimates

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    New Opportunities

    Atlantic Basin will continue to be natural

    home for our exports

    Emerging markets are driving global

    growth As developed nations recover, emerging

    markets become attractive destination forour products

    BRIC

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    - Positioned to Win -

    CAPP Reserve Share Massey could have ~40% of CAPP reserves

    by 2015

    Notes:(1) Assumes that each year after 2009 Massey acquires reserves equal to the production for that year. CAPP production based on EVA estimates(2) CAPP reserves based on internal and JT Boyd estimates

    0

    2,000

    4,000

    6,000

    8,000

    10,000

    12,000

    1991 1993 1995 1997 1999 2001 2003 2005 2007 2009 2011 2013 2015

    Reserves(MillionsofTons

    0%

    5%

    10%

    15%

    20%

    25%

    30%

    35%

    40%

    45%

    M

    EEas%o

    fCAPPRe

    serve

    MEE CAPP MEE/CAPP

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    - Positioned to Win -

    Product Diversity

    High-VolMet Coal

    Low-VolMet Coal

    Mid-VolMet Coal

    Low SO2Steam Coal

    Hi-SO2Steam Coal

    Custom BlendIndustrial Coal

    Mid-BtuSteam Coal

    High-BtuSteam Coal

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    - Positioned to Win -

    Metallurgical Coal ReservesMassey Reserves

    2.3 bill ion tons total

    Met Coal Steam Coal

    1 billion tons ofMasseys reserveshave met coal

    quality andcharacteristics

    Believed to be the

    largest met coalreserves in US

    1.0 billiontons

    1.3 billiontons

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    - Positioned to Win -

    Metallurgical Coal Capacity Over 12 million tons of current

    metallurgical coal production capacity 2.5 million tons of capacity comes back on

    line with new Bandmill plant

    Development of Rowland property to beginin 2010

    Low vol metallurgical coal

    Approximately 2 million tons of annualproduction capacity

    Produced coal to be available for 2011 exportseason

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    - Positioned to Win -

    2008 Operational Expansion Opened 19 new mines

    Added 10 new sections inexisting mines

    Several new spreads ofsurface mine equipment

    New Inman resourcegroup

    Re-opened Martin Countyand Coalgood resourcegroups

    Capacity will be available

    for immediate productionwhen the market rebounds

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    - Positioned to Win -

    Cost AdvantagesHigh quality reserves

    Economies of scale

    Highly productive processing plants

    Transportation advantages

    Belt lines reduce trucking

    Diverse transport options

    Efficient, well maintained equipment

    S1+P2+M3

    Membership

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    Company Guidance*

    (In millions exceptper ton amounts)

    2009 2010 2011Shipped Tons 37.5 to 38.5 37.0 to 41.0 37.0 to 44.0

    Average Price Per

    Ton

    $63.00 to

    $63.50

    $64.00 to

    $67.00

    $64.00 to

    $71.50.00

    Cash Cost/Ton $50.50 to$51.00

    $48.00 to$51.00

    $46.00 to$52.00

    CAPEX (Approx.) $275 $100 to $200** $150 to $225

    Other Income $80 to $100 $50 to $100 $20 to $100

    * As of October 28, 2009** Excludes cost of rebuilding the Bandmill preparation plant

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    Massey Energy CompanyDoing the Right Thing

    with Energy


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