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Q2 2015 Earnings Call – Cloud Peak Energy Inc.

Cloud Peak Energy Inc. · Aug 7, 2015 · 49 slides

Investor presentation from the Shale Experts oil & gas presentation and slide database. Every page is imaged and its text indexed for search across operators, plays, basins and time.

Slides

  1. Q2 2015 Earnings Call – Cloud Peak Energy Inc. – slide 1
    INVESTOR PRESENTATION August 2015
  2. Q2 2015 Earnings Call – Cloud Peak Energy Inc. – slide 2
    Cloud Peak Energy 2 Company Overview One of the largest U.S. coal producers 2014 coal shipments from three Owned and Operated Mines of 85.9 million tons 2014 proven & probable reserves of 1.1 billion tons Only pure-play PRB coal…
  3. Q2 2015 Earnings Call – Cloud Peak Energy Inc. – slide 3
    Low-Risk Surface Operations Highly productive, non-unionized workforce at all of our mines One of the best safety records in the industry Proportionately low, long-term operational liabilities Surface mining reduces liabilities…
  4. Q2 2015 Earnings Call – Cloud Peak Energy Inc. – slide 4
    Increasing Workload a Function of Surface Mining Additional overburden as coal seams dip further down geologically moving west Haul distances increase as mining pits migrate further from load-out Require more equipment / personnel /…
  5. Q2 2015 Earnings Call – Cloud Peak Energy Inc. – slide 5
    Good Safety Record Indicates Well-Run Operations Top Coal Producing Companies - 2014 Incident Rates (MSHA) 7.32 6.59 6.36 5.95 5.59 4.91 4.39 4.43 4.46 4.27 3.88 3.99 3.48 2.90 2.70 1.88 1.62 1.21 1.30 1.36 0.79…
  6. Q2 2015 Earnings Call – Cloud Peak Energy Inc. – slide 6
    Extensive Coal Reserves and Significant Projects 2014 Proven & Probable Reserves 1.1B Tons Spring Creek Mine MT 2014 Tons Sold 17.4M tons 2014 Proven & Probable Reserves 274M tons Average Reserve Coal Quality 9,350 Btu/lb Average…
  7. Q2 2015 Earnings Call – Cloud Peak Energy Inc. – slide 7
    Continued Execution of Consistent Business Strategy Large reserve position Solid Domestic Business in Best No further LBA obligations Positioned Basin Low cost and low capex surface operations Our capacity at the Westshore port…
  8. Q2 2015 Earnings Call – Cloud Peak Energy Inc. – slide 8
    Strong Balance Sheet Strong liquidity and cash balance Low leverage (Debt to Adjusted EBITDA) No near-term maturities Liquidity & Obligations No Debt Maturities until 2019 (as of June 30, 2015) (in millions) (in millions) Cash and…
  9. Q2 2015 Earnings Call – Cloud Peak Energy Inc. – slide 9
    Challenging External Environment Low natural gas prices Low benchmark Newcastle prices Excessive regulations CSAPR Cross-State Air Pollution Rule MATS (1) Mercury and Air Toxics Standards CPP Clean Power Plan ONRR Office…
  10. Q2 2015 Earnings Call – Cloud Peak Energy Inc. – slide 10
    Natural Gas Storage and Pricing Storage Pricing and Rig Count Storage levels are up 27% from 2015 has been consistently below historic lows last year, but about equal 3.00/MMBtu to the 5-year range Even with low prices natural gas…
  11. Q2 2015 Earnings Call – Cloud Peak Energy Inc. – slide 11
    EPA Summary CSAPR Ruling SO2 and NOx Regulations Reinstated January 2015, customers in Group 1 and 2 states have agreed to sulfur adjustments, customers in non-CSAPR states have pushed for no sulfur adjustment Potential beneficial…
  12. Q2 2015 Earnings Call – Cloud Peak Energy Inc. – slide 12
    Responding to Market Conditions Actively managing export take-or-pay Controlling Costs exposure during current depressed Core Cash Cost (1) Royalties/Taxes/Fuel/Lubricants market conditions 12 10.23 10.19 10.34 9.57 Reducing…
  13. Q2 2015 Earnings Call – Cloud Peak Energy Inc. – slide 13
    2015 Adjusted EBITDA Offsets Lower WTI Prices Result in Operational Savings in Diesel Expenditures For 2015, have locked in WTI/bbl of 64 with approximate savings of 24M from 2014: 55% of our diesel fuel usage hedged with a collar…
  14. Q2 2015 Earnings Call – Cloud Peak Energy Inc. – slide 14
    Domestic Strategy Optimize Disciplined Focus on Operational Focus Capital Consistent Matching on Cost Control Expenditures and Forward Selling Production to and Improvement Significant Strategy Market Demand Programs Reserve…
  15. Q2 2015 Earnings Call – Cloud Peak Energy Inc. – slide 15
    High Quality Customer Base Cloud Peak Energy Deliveries to Power Plants in 2013 Coal Region / Type NORTHEAST WECC MIDWEST RFC-PJM SPP SERC ERCOT Thousands of Tons 7,500 - 15,000 0 - 1,500 FRCC Appalachia Powder…
  16. Q2 2015 Earnings Call – Cloud Peak Energy Inc. – slide 16
    PRB 5-Year Forecast Relatively Stable Overall U.S. coal burn is expected to decline 18% or 175 million tons from 2007 to 2020 PRB burn is expected to remain relatively stable as it substitutes for declines in other basins 2007 2014…
  17. Q2 2015 Earnings Call – Cloud Peak Energy Inc. – slide 17
    Continued Forward Sales Strategy Total Committed Tons (as of 7/20/15) (tons in millions) 79 3 61 Committed tons with 10 variable pricing 76 51 Committed tons with fixed pricing 2015E 2016E 2015 has 76 million tons…
  18. Q2 2015 Earnings Call – Cloud Peak Energy Inc. – slide 18
    Export Strategy Secured Options Over Spring Creek Crow Strong Existing Port Potential Geographic Youngs Creek Exploration International Capacity at Future Port and Quality Project and Option Demand Westshore Capacity of up…
  19. Q2 2015 Earnings Call – Cloud Peak Energy Inc. – slide 19
    Increasing International Demand Should Support PRB Exports 2007 2014 2020E Other Other CAPP 15% 13% PRB 9% CAPP Thermal Other 36% CAPP 31% 32% 24% ILB Exports ILB 22% PRB 5% ILB PRB 28% Total 27Mt 35% Total 34Mt 50% Total…
  20. Q2 2015 Earnings Call – Cloud Peak Energy Inc. – slide 20
    Global Coal Production World Coal Production Totaled 8 Billion Tonnes in 2012 800Mt 144 354 88 196 116 922 3,650 200Mt 605 89 386 400 million tonnes 400-999 million tonnes 431 260 1,000+ million tonnes 12.5% of world…
  21. Q2 2015 Earnings Call – Cloud Peak Energy Inc. – slide 21
    U.S. And Asia Power Generation Growth 9000 8000 7000 6000 (terawatt hours) 5000 4000 3000 2000 1000 0 US Total Generation US Coal Fired Generation Asia Total Generation Asia Fossil Fuel Generation Source:…
  22. Q2 2015 Earnings Call – Cloud Peak Energy Inc. – slide 22
    Asias Strong Demand Should Support Increasing Thermal Imports Coal fuels 41% of global electricity Estimated World Energy Consumption Quotes generation 750 CAGR 700 3% 650 (quadrillion btu) Coal reserves total 861 billion…
  23. Q2 2015 Earnings Call – Cloud Peak Energy Inc. – slide 23
    Total Asian Coal Generation Additions and Estimated Incremental Import Coal Demand Japan Approximately 150 GWs of 6.5 GW / new generation planned to S. Korea 15 MT come online by 2020 22 GW / 53 MT China projects 250 GWs of new…
  24. Q2 2015 Earnings Call – Cloud Peak Energy Inc. – slide 24
    South Korea Is Increasing Coal Use Coal consumption increased by 55% between 2005 and 2012, driven by growing electricity demand By 2018, an additional 10 GWs of coal-fired generation is estimated to increase coal imports from…
  25. Q2 2015 Earnings Call – Cloud Peak Energy Inc. – slide 25
    Commodity Pricing Environment Is Cyclical Newcastle Price Curve International markets still 200 oversupplied 180 Newcastle prices remain muted 160 140 Reduced 2015 exported tons from initially 6.3MT to 4.3MT 120 100 Negotiated…
  26. Q2 2015 Earnings Call – Cloud Peak Energy Inc. – slide 26
    Executing on our Export Strategy Secured Options Spring Creek Crow Over Potential Strong Existing Port Geographic and Youngs Creek Exploration and Future Port International Capacity at Quality Project Option Capacity of up Demand…
  27. Q2 2015 Earnings Call – Cloud Peak Energy Inc. – slide 27
    Spring Creek Complex Quality Advantage and Export Distance Higher Quality Product Location NPRB 4770-4850 Spring Creek Complex is closer to export terminals than SPRB mines SPRB 4544 Average Fewer bottlenecks in NPRB Indonesian…
  28. Q2 2015 Earnings Call – Cloud Peak Energy Inc. – slide 28
    Key Projects Youngs Creek Project 287 million tons of non-reserve coal deposits at December 31, 2014(1) Royalty payments of 8% vs. 12.5% federal rate 38,800 owned acres of surface land connecting Youngs Creek, Spring Creek, and…
  29. Q2 2015 Earnings Call – Cloud Peak Energy Inc. – slide 29
    Spring Creek Complex Potential Development Options Tonnage Opportunities Youngs Creek Project 287M tons non-reserve coal deposits(1) Crow Project 1.4B in-place tons(2) subject to exercise of options (1) Non-reserve…
  30. Q2 2015 Earnings Call – Cloud Peak Energy Inc. – slide 30
    Cloud Peak Energy Terminal Position Westshore Terminal Existing lowest cost, cape-size port Capesize vessels deep-water port 2012 expanded to 33 million tonnes total annual capacity In 2014, we increased the term and capacity of our…
  31. Q2 2015 Earnings Call – Cloud Peak Energy Inc. – slide 31
    Exports Seen as Way of Life in the Pacific-Northwest Asia widely recognized as important strategic economic partner Asian-market realities (needs) resonate Asia will electrifyrapidly and robustly Non-coal energy sources are…
  32. Q2 2015 Earnings Call – Cloud Peak Energy Inc. – slide 32
    Appendix 32
  33. Q2 2015 Earnings Call – Cloud Peak Energy Inc. – slide 33
    2015 Updated Guidance (as of July 29, 2015) Coal shipments for our three operated mines(1) 74 78 million tons Committed sales with fixed prices Approximately 76 million tons Anticipated realized price of produced coal with fixed…
  34. Q2 2015 Earnings Call – Cloud Peak Energy Inc. – slide 34
    Average Cost of Produced Coal 2014 2013 2012 2011 2010 4% 5% 4% 6% 4% 5% 4% 5% 4% 4% 6% 6% 5% 6% 6% 37% 36% 12% 12% 40% 12% 41% 9% 13% 44% 14% 15% 14% 14% 15% 21% 20% 20% 18% 19% 10.19/ton 10.23/ton 9.57/ton 9.12/ton…
  35. Q2 2015 Earnings Call – Cloud Peak Energy Inc. – slide 35
    Major Mine Equipment 2 draglines(1) 2 draglines 2 draglines Cordero Rojo Mine Spring Creek Mine Antelope Mine 8 shovels 7 shovels 4 shovels 22 830E haul 32 830E haul 12 830E haul trucks trucks trucks 15 930E haul 20…
  36. Q2 2015 Earnings Call – Cloud Peak Energy Inc. – slide 36
    Operating Segments Owned and Operated Mines - mine site sales from our three owned and operated mines Key metrics: Tons sold Realized price per ton Cost of product sold per ton Logistics and Related Activities delivered sales from…
  37. Q2 2015 Earnings Call – Cloud Peak Energy Inc. – slide 37
    Owned and Operated Mines Our Owned and Operated Mines segment comprises the results of mine site sales from our three owned and operated mines primarily to our domestic utility customers and also to our Logistics and Related Activities…
  38. Q2 2015 Earnings Call – Cloud Peak Energy Inc. – slide 38
    Logistics and Related Activities Our Logistics and Related Activities segment comprises the results of our logistics and transportation services to our domestic and international customers. Q2 Q2 YTD YTD (in millions) 2015 2014 2015…
  39. Q2 2015 Earnings Call – Cloud Peak Energy Inc. – slide 39
    Statement of Operations Data (in millions, except per share amounts) Three Months Ended June 30, 2015 2014 Revenue 244.1 320.9 Operating income (50.8) 7.4 Net income (loss) (52.9) (2.1) Earnings per common share Basic…
  40. Q2 2015 Earnings Call – Cloud Peak Energy Inc. – slide 40
    Statement of Operations Data (in millions, except per share amounts) Year Ended December 31, 2014 2013 2012 2011 2010 Revenue 1,324.0 1,396.1 1,516.8 1,553.7 1,370.8 Operating income 131.8 112.4 241.9 250.5 211.9 Net income 79.0…
  41. Q2 2015 Earnings Call – Cloud Peak Energy Inc. – slide 41
    Balance Sheet Data (in millions) June 30, December 31, 2015 2014 2013 2012 2011 2010 Cash, cash equivalents and investments 95.5 168.7 312.3 278.0 479.4 340.1 Restricted cash 8.5 2.0 71.2 182.1 Property, plant and equipment,…
  42. Q2 2015 Earnings Call – Cloud Peak Energy Inc. – slide 42
    Reconciliation of Non-GAAP Measures Adjusted EBITDA (in millions) Three Months Ended Trailing Twelve June 30, Months Ended 2015 2014 June 30, 2015 Net income (loss) (52.9) (2.1) 39.2 Interest income (0.1) (0.2) Interest expense…
  43. Q2 2015 Earnings Call – Cloud Peak Energy Inc. – slide 43
    Reconciliation of Non-GAAP Measures Adjusted EBITDA (in millions) Year Ended December 31, 2014 2013 2012 2011 2010 Net income 79.0 52.0 173.7 189.8 117.2 Interest income (0.3) (0.4) (1.1) (0.6) (0.6) Interest expense 77.2 41.7 36.3…
  44. Q2 2015 Earnings Call – Cloud Peak Energy Inc. – slide 44
    Reconciliation of Non-GAAP Measures Adjusted EPS Three Months Ended Six Months Ended June 30, June 30, 2015 2014 2015 2014 Diluted earnings per common share (0.87) (0.04) (0.94) (0.29) Derivative financial instruments Exclusion of…
  45. Q2 2015 Earnings Call – Cloud Peak Energy Inc. – slide 45
    Reconciliation of Non-GAAP Measures Adjusted EPS Year Ended December 31, 2014 2013 2012 2011 2010 Diluted earnings per common share attributable to controlling interest 1.29 0.85 2.85 3.13 1.06 Tax agreement (benefit) expense…
  46. Q2 2015 Earnings Call – Cloud Peak Energy Inc. – slide 46
    Adjusted EBITDA by Segment Three Months Ended Six Months Ended June 30, June 30, 2015 2014 2015 2014 Owned and Operated Mines Adjusted EBITDA 17.1 42.0 61.4 83.2 Depreciation and depletion (18.7) (28.4) (42.5) (54.8) Accretion (3.2)…
  47. Q2 2015 Earnings Call – Cloud Peak Energy Inc. – slide 47
    Other Data (in thousands) Q2 Q1 Q4 Q3 Q2 Q1 Year Year Year Year 2015 2015 2014 2014 2014 2014 2014 2013 2012 2011 Tons sold Antelope Mine 7,660 9,003 9,035 8,239 8,085 8,288 33,647 31,354 34,316 37,075 Cordero Rojo Mine 4,515…
  48. Q2 2015 Earnings Call – Cloud Peak Energy Inc. – slide 48
    Sulfur Content by Basin Region/ Average lbs SO2 U.S. Coal Consumption by Region Avg Btu PRB/ 0.5 1.0/MMBtu 8,600 Rocky Mountain 0.9 1.4/MMBtu 11,500 Illinois Basin 2.5 6.0/MMBtu 11,500 Appalachia 1.2 7.0/MMBtu 12,000…
  49. Q2 2015 Earnings Call – Cloud Peak Energy Inc. – slide 49
    Lease by Application and Modification Antelope Mine (8875 Btu) Cordero Rojo Mine (8425 Btu) Spring Creek Mine (9350 Btu) LBM ll LBA II LBM Maysdorf II South Tract LBA II estimated 198 million minable LBM - estimated 15.8…

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