MEE Massey Energy Dec 2009 Presentation

Download MEE Massey Energy Dec 2009 Presentation

Post on 30-May-2018

213 views

Category:

Documents

0 download

Embed Size (px)

TRANSCRIPT

<ul><li><p>8/14/2019 MEE Massey Energy Dec 2009 Presentation</p><p> 1/35</p><p>Massey Energy CompanyBank of America Merrill Lynch</p><p>Global Industries ConferenceDecember 8, 2009</p></li><li><p>8/14/2019 MEE Massey Energy Dec 2009 Presentation</p><p> 2/35</p><p>2</p><p>Massey Energy Overview</p><p> #1 Coal producer inCentral Appalachia</p><p> 93 years ofcontinuous operations</p><p> 23 resource groups 62 active mines</p><p> 41.1 million tons</p><p>produced in 2008 79% Steam Coal</p><p> 21% MetallurgicalCoal</p></li><li><p>8/14/2019 MEE Massey Energy Dec 2009 Presentation</p><p> 3/35</p><p>3</p><p>Massey Operating Region</p></li><li><p>8/14/2019 MEE Massey Energy Dec 2009 Presentation</p><p> 4/35</p><p>4</p><p>Growing Reserve Base</p><p>Proven and Probable Reserves</p><p>0</p><p>500</p><p>1,000</p><p>1,500</p><p>2,000</p><p>2,500</p><p>87 89 91 93 95 97 99 01 03 05 07</p><p>M</p><p>illionsofTon</p><p> 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</p></li><li><p>8/14/2019 MEE Massey Energy Dec 2009 Presentation</p><p> 5/35</p><p>5</p><p>Safety Leadership - Innovations</p><p> Massey stripes</p><p> Roof flappers Covered man trips</p><p> Stock car netting</p><p> Pizza pans Submarine equipped</p><p>dozer cabins</p><p> Self-contained firefighting car</p><p> Belt fire suppression</p><p>system</p></li><li><p>8/14/2019 MEE Massey Energy Dec 2009 Presentation</p><p> 6/356</p><p>Safety History - NFDL</p><p>Massey vs. Industry</p><p>0.00</p><p>2.00</p><p>4.00</p><p>6.00</p><p>8.00</p><p>10.00</p><p>12.00</p><p>1988</p><p>1989</p><p>1990</p><p>1991</p><p>1992</p><p>1993</p><p>1994</p><p>1995</p><p>1996</p><p>1997</p><p>1998</p><p>1999</p><p>2000</p><p>2001</p><p>2002</p><p>2003</p><p>2004</p><p>2005</p><p>2006</p><p>2007</p><p>2008</p><p>Massey</p><p>Industry</p></li><li><p>8/14/2019 MEE Massey Energy Dec 2009 Presentation</p><p> 7/357</p><p>Tons Produced</p><p>41.1</p><p>0</p><p>5</p><p>1015</p><p>20</p><p>25</p><p>30</p><p>35</p><p>40</p><p>45</p><p>(Millions)</p><p>2004 2005 2006 2007 2008</p></li><li><p>8/14/2019 MEE Massey Energy Dec 2009 Presentation</p><p> 8/358</p><p>Adjusted EBITDA*</p><p>$640.7</p><p>$0</p><p>$100</p><p>$200</p><p>$300</p><p>$400</p><p>$500</p><p>$600</p><p>$700</p><p>(M</p><p>illions)</p><p>2004 2005 2006 2007 2008</p><p>*2008 adjusted EBITDA excluded $250.1 million of expense related to Wheeling Pitt Litigation</p></li><li><p>8/14/2019 MEE Massey Energy Dec 2009 Presentation</p><p> 9/359</p><p>Cash and Liquidity</p><p>$0</p><p>$100</p><p>$200</p><p>$300</p><p>$400</p><p>$500</p><p>$600</p><p>$700$800</p><p>(Million</p><p>s)</p><p>Dec. 312004</p><p>Dec. 312005</p><p>Dec. 312006</p><p>Dec. 312007</p><p>Dec. 312008</p><p>Sept. 302009*</p><p>Cash and Equiv. Avai lable Credit Restricted Cash</p><p>* $72 million in restricted cash posted as appeal bond for Harman litigation will revert to cash.</p></li><li><p>8/14/2019 MEE Massey Energy Dec 2009 Presentation</p><p> 10/3510</p><p>Net Debt to Equity</p><p>31.3%</p><p>0%</p><p>10%</p><p>20%</p><p>30%</p><p>40%</p><p>50%</p><p>60%</p><p>Dec. 31</p><p>2004</p><p>Dec. 31</p><p>2005</p><p>Dec. 31</p><p>2006</p><p>Dec. 31</p><p>2007</p><p>Dec. 31</p><p>2008</p><p>Sep. 30</p><p>2009</p></li><li><p>8/14/2019 MEE Massey Energy Dec 2009 Presentation</p><p> 11/3511</p><p>2009 First Nine Months Results</p><p> Produced coal revenue of $1.8 billion</p><p> Net income of $80.1 million</p><p> EBITDA of $373.8 million</p><p> Utility coal shipments increased 8 percentcompared to first nine months of 2008</p><p> Utility coal shipments for the CentralAppalachia industry declined 7 percent</p><p> Reduced headcount</p><p> Implemented cost cutting measures</p></li><li><p>8/14/2019 MEE Massey Energy Dec 2009 Presentation</p><p> 12/3512</p><p>Total Coal Production</p><p>United StatesU.S. Coal Production by Region - 2008</p><p>Region Tons (000) BTUs(Quadrillions) Percent ofTotal BTUs</p><p>Powder River Basin 541,369 9,528 38%</p><p>Central Appalachia 235,466 5,887 24%</p><p>Northern Appalachia 133,322 3,466 14%</p><p>West (Other than PRB) 133,000 3,112 13%</p><p>Midwest 99,485 2,348 9%</p><p>All Other 27,545 606 2%</p><p>Total 1,170,187 24,947 100%</p><p>Source: Energy Information Administration, Company estimates </p></li><li><p>8/14/2019 MEE Massey Energy Dec 2009 Presentation</p><p> 13/35</p><p>13</p><p>CAPP</p><p>Challenges and Concerns</p><p> Permitting issues</p><p> Regulatory issues</p><p> Safety</p><p> Environment</p><p> Litigation</p><p> Geologic challenges Railroad performance</p><p> Fuel Switching -Natural gas prices</p><p> Scrubber technology</p><p>implemented PRB and Illinois basin</p><p>market penetration</p><p> Customers meetingcontractual obligations</p></li><li><p>8/14/2019 MEE Massey Energy Dec 2009 Presentation</p><p> 14/35</p><p>14</p><p>Central App. Coal Demand</p><p>0</p><p>50</p><p>100</p><p>150</p><p>200</p><p>250</p><p>ShortTons</p><p>(Millions)</p><p>2006 2007 2008 2009 2010</p><p>-17.7%*</p><p>-9.2%</p><p>Source: Energy Ventures Analysis</p><p>Note: Includes export steam coal</p><p>Actual Forecast</p><p>Thermal Coal Met. Coal* Actual production through September was down</p><p>11.3% per EIA</p></li><li><p>8/14/2019 MEE Massey Energy Dec 2009 Presentation</p><p> 15/35</p><p>15</p><p>CAPP Fragmented Production2007 (short tons, millions)</p><p>Massey Energy Company 39.5 17%</p><p>Patriot Coal 25.9 11%</p><p>Alpha Natural Resources 17.3 8%</p><p>Arch Coal 12.5 6%</p><p>Consol Energy 10.0 4%</p><p>TECO Coal 9.1 4%</p><p>James River Coal 8.9 4%</p><p>International Coal Group 8.4 4%</p><p>Foundation Coal 6.9 3%</p><p>Rhino Energy 5.4 2%</p><p>Alliance Resource Partners 3.2 1%</p><p>Arcelor Mittal 2.1 1%</p><p>PinnOak 1.8 1%</p><p>Sun Coal 1.2 1%</p><p>National Coal 1.2 1%</p><p>Subtotal 153.4 68%</p><p>Other Producers 73.3 32%</p><p>CAPP Total 226.7 100%</p><p>Source: Energy Ventures Analysis, EIA reports, OpenSourceCoal.org</p><p>More than 100private producers</p></li><li><p>8/14/2019 MEE Massey Energy Dec 2009 Presentation</p><p> 16/35</p><p>16</p><p>Industry Consolidation</p><p> Depletion remains the largest factor forcing consolidation,in Central Appalachia</p><p> Producers are seeing the end of coal commitments pricedlast year and high cost producers are facing shut-downs</p><p> Producers are facing permitting, capital and liquidity</p><p>constraints Historically, distressed assets become available in weak</p><p>markets</p><p> Few sophisticated and capable buyers Current economic environment will benefit the stronger producers</p><p> Massey is prepared to use a portion of cash reserves foracquisitions</p></li><li><p>8/14/2019 MEE Massey Energy Dec 2009 Presentation</p><p> 17/35</p><p>17</p><p>The Truth About</p><p>Central Appalachia</p><p>CAPP coal is like fine art..</p><p>As CAPP depletion, over-regulationand consolidation continue, causingregional production to decline,</p><p>Masseys reserves and productionbecome increasingly more valuable,</p><p>not less.</p></li><li><p>8/14/2019 MEE Massey Energy Dec 2009 Presentation</p><p> 18/35</p><p>18</p><p>Global Coal Demand</p><p>Oil Nat. Gas Coal Nuclear Hydro</p><p> Coal represented 29%of global primaryenergy consumption</p><p>in 2008</p><p> Coal was the fastest</p><p>growing energysource for the 6th</p><p>consecutive year</p><p>Global Primary Energy</p><p>Consumption(Million tonnes oil equivalent)</p><p>3,928</p><p>2,726</p><p>3,304</p><p>718620</p><p>Source: BP Statistical Review of World Energy 2009 </p></li><li><p>8/14/2019 MEE Massey Energy Dec 2009 Presentation</p><p> 19/35</p><p>19</p><p>Global Coal Demand</p><p>Coal Oil Nat. Gas Nuclear Hydro Other </p><p>Total World Electricity Generation</p><p>By Fuel (2006)</p><p>41%</p><p>6%20%</p><p>15%</p><p>16%</p><p>Source: World Coal Institute </p></li><li><p>8/14/2019 MEE Massey Energy Dec 2009 Presentation</p><p> 20/35</p><p>20</p><p>Global Steel Production</p><p> Nearly 70% of totalglobal steel productionis dependent on Coal</p><p> Chinas steelproduction increased10.5% in the first tenmonths of 2009</p><p> U.S. steel productionremains at approx.50% of capacity</p></li><li><p>8/14/2019 MEE Massey Energy Dec 2009 Presentation</p><p> 21/35</p><p>21</p><p>U.S. Metallurgical Coal</p><p>Demand Domestic and export met demand are expected to decline by 24</p><p>mm tons in 2009 and then begin increasing in 2010.</p><p>Source: Energy Ventures Analysis, Company Estimates</p><p>Note: The numbers exclude imported met tons.</p><p>0</p><p>10</p><p>20</p><p>30</p><p>40</p><p>50</p><p>60</p><p>70</p><p>2006 2007 2008 2009 2010</p><p>Export Domestic</p><p>Actual Forecast</p></li><li><p>8/14/2019 MEE Massey Energy Dec 2009 Presentation</p><p> 22/35</p><p>22</p><p>Blast Furnaces Restarting</p><p>A few examples:</p><p> Corus South Wales</p><p> US Steel Serbia</p><p> US Steel Ontario</p><p> Arcelor Mittal Belgium</p><p> Arcelor Mittal Indiana Harbor</p><p> China Steel Corp. - Taiwan</p><p>Over 40 blast furnaces restarting representing over 60million tons of annual production capacity</p></li><li><p>8/14/2019 MEE Massey Energy Dec 2009 Presentation</p><p> 23/35</p><p>23</p><p>Metallurgical Coal Exports</p><p>0</p><p>1,000</p><p>2,000</p><p>3,000</p><p>4,000</p><p>5,000</p><p>6,000</p><p>ShortTons(000</p><p>)</p><p>9 mos YTD 08 9 mos YTD 09</p><p>Met Exports from</p><p>SE Atlantic Ports</p><p>South Am. Asia</p><p> Industry exportsfrom SE Atlanticports to South</p><p>America and Asiawere up nearly</p><p>54% in first eightmonths of 2009</p><p>Source: Energy Ventures Analysis, Company Estimates</p></li><li><p>8/14/2019 MEE Massey Energy Dec 2009 Presentation</p><p> 24/35</p><p>24</p><p>New Opportunities</p><p> Atlantic Basin will continue to be natural</p><p>home for our exports</p><p> Emerging markets are driving global</p><p>growth As developed nations recover, emerging</p><p>markets become attractive destination forour products</p><p> BRIC</p></li><li><p>8/14/2019 MEE Massey Energy Dec 2009 Presentation</p><p> 25/35</p><p>25</p><p>- Positioned to Win -</p><p>CAPP Reserve Share Massey could have ~40% of CAPP reserves</p><p>by 2015</p><p>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</p><p>0</p><p>2,000</p><p>4,000</p><p>6,000</p><p>8,000</p><p>10,000</p><p>12,000</p><p>1991 1993 1995 1997 1999 2001 2003 2005 2007 2009 2011 2013 2015</p><p>Reserves(MillionsofTons</p><p>0%</p><p>5%</p><p>10%</p><p>15%</p><p>20%</p><p>25%</p><p>30%</p><p>35%</p><p>40%</p><p>45%</p><p>M</p><p>EEas%o</p><p>fCAPPRe</p><p>serve</p><p>MEE CAPP MEE/CAPP</p></li><li><p>8/14/2019 MEE Massey Energy Dec 2009 Presentation</p><p> 26/35</p><p>26</p><p>- Positioned to Win -</p><p>Product Diversity</p><p>High-VolMet Coal</p><p>Low-VolMet Coal</p><p>Mid-VolMet Coal</p><p>Low SO2Steam Coal</p><p>Hi-SO2Steam Coal</p><p>Custom BlendIndustrial Coal</p><p>Mid-BtuSteam Coal</p><p>High-BtuSteam Coal</p></li><li><p>8/14/2019 MEE Massey Energy Dec 2009 Presentation</p><p> 27/35</p><p>27</p><p>- Positioned to Win -</p><p>Metallurgical Coal ReservesMassey Reserves</p><p>2.3 bill ion tons total</p><p>Met Coal Steam Coal</p><p> 1 billion tons ofMasseys reserveshave met coal</p><p>quality andcharacteristics</p><p> Believed to be the</p><p>largest met coalreserves in US</p><p>1.0 billiontons</p><p>1.3 billiontons</p></li><li><p>8/14/2019 MEE Massey Energy Dec 2009 Presentation</p><p> 28/35</p><p>28</p><p>- Positioned to Win -</p><p>Metallurgical Coal Capacity Over 12 million tons of current</p><p>metallurgical coal production capacity 2.5 million tons of capacity comes back on</p><p>line with new Bandmill plant</p><p> Development of Rowland property to beginin 2010</p><p> Low vol metallurgical coal</p><p>Approximately 2 million tons of annualproduction capacity</p><p> Produced coal to be available for 2011 exportseason</p></li><li><p>8/14/2019 MEE Massey Energy Dec 2009 Presentation</p><p> 29/35</p><p>29</p><p>- Positioned to Win -</p><p>2008 Operational Expansion Opened 19 new mines</p><p> Added 10 new sections inexisting mines</p><p> Several new spreads ofsurface mine equipment</p><p> New Inman resourcegroup</p><p> Re-opened Martin Countyand Coalgood resourcegroups</p><p> Capacity will be available</p><p>for immediate productionwhen the market rebounds</p></li><li><p>8/14/2019 MEE Massey Energy Dec 2009 Presentation</p><p> 30/35</p><p>30</p><p>- Positioned to Win -</p><p>Cost AdvantagesHigh quality reserves</p><p>Economies of scale</p><p>Highly productive processing plants</p><p>Transportation advantages</p><p>Belt lines reduce trucking</p><p>Diverse transport options</p><p>Efficient, well maintained equipment</p><p>S1+P2+M3</p><p>Membership</p></li><li><p>8/14/2019 MEE Massey Energy Dec 2009 Presentation</p><p> 31/35 </p></li><li><p>8/14/2019 MEE Massey Energy Dec 2009 Presentation</p><p> 32/35</p><p>32</p><p>Company Guidance*</p><p>(In millions exceptper ton amounts)</p><p>2009 2010 2011Shipped Tons 37.5 to 38.5 37.0 to 41.0 37.0 to 44.0</p><p>Average Price Per</p><p>Ton</p><p>$63.00 to</p><p>$63.50</p><p>$64.00 to</p><p>$67.00</p><p>$64.00 to</p><p>$71.50.00</p><p>Cash Cost/Ton $50.50 to$51.00</p><p>$48.00 to$51.00</p><p>$46.00 to$52.00</p><p>CAPEX (Approx.) $275 $100 to $200** $150 to $225</p><p>Other Income $80 to $100 $50 to $100 $20 to $100</p><p>* As of October 28, 2009** Excludes cost of rebuilding the Bandmill preparation plant</p></li><li><p>8/14/2019 MEE Massey Energy Dec 2009 Presentation</p><p> 33/35</p></li><li><p>8/14/2019 MEE Massey Energy Dec 2009 Presentation</p><p> 34/35 </p></li><li><p>8/14/2019 MEE Massey Energy Dec 2009 Presentation</p><p> 35/35</p><p>Massey Energy CompanyDoing the Right Thing</p><p>with Energy</p></li></ul>