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UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
Date of report (Date of earliest event reported): June 12, 2007 (June 12, 2007)
Arch Coal, Inc.
(Exact name of registrant as specified in its charter)
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Delaware
(State or other jurisdiction of
incorporation)
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1-13105
(Commission File Number)
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43-0921172
(I.R.S. Employer Identification No.) |
CityPlace One
One CityPlace Drive, Suite 300
St. Louis, Missouri 63141
(Address, including zip code, of principal executive offices)
Registrant’s telephone number, including area code: (314) 994-2700
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy
the filing obligation of the registrant under any of the following provisions:
o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange
Act (17 CFR 240.14d-2(b))
o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange
Act (17 CFR 240.13e-4(c))
TABLE OF CONTENTS
Item 7.01 Regulation FD Disclosure.
On June 12, 2007, Steven F. Leer, Chairman and Chief Executive Officer of Arch Coal, Inc.,
will deliver a presentation at the JP Morgan 2007 Basics & Industrial Conference that will include
written communication comprised of slides. The slides from the presentation are attached hereto as
Exhibit 99.1 and are hereby incorporated by reference.
A copy of the slides will be available at www.shareholder.com/archcoal/events.cfm for 30 days.
Item 9.01 Financial Statements and Exhibits.
The following exhibits are attached hereto and furnished herewith.
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| Exhibit |
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Description |
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99.1
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Slides from the presentation at the JP Morgan 2007 Basics & Industrial Conference. |
1
Signatures
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly
caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
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| Dated: June 12, 2007 |
Arch Coal, Inc.
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By: |
/s/ Robert J. Messey
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Robert J. Messey |
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Senior Vice President and Chief Financial
Officer |
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2
Exhibit Index
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| Exhibit |
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Description |
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99.1
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Slides from the presentation at the JP Morgan 2007 Basics & Industrial Conference. |
exv99w1
EXHIBIT-99.1
| JP Morgan 2007 Basics & Industrial Conference |
| Steve Leer, Chairman and CEO |
| Forward-looking information |
| This presentation contains “forward-looking statements” – that is, statements related to
future, not past, events. In this context, forward-looking statements often address our expected
future business and financial performance, and often contain words such as “expects,”
“anticipates,” “intends,” “plans,” “believes,” “seeks,” or “will.” Forward-looking statements by
their nature address matters that are, to different degrees, uncertain. For us, particular
uncertainties arise from changes in the demand for our coal by the domestic electric generation
industry; from legislation and regulations relating to the Clean Air Act and other environmental
initiatives; from operational, geological, permit, labor and weather-related factors; from
fluctuations in the amount of |
| cash we generate from operations; from future integration of acquired businesses; and from numerous
other matters of national, regional and global scale, including those of a political, economic,
business, competitive or regulatory nature. These uncertainties may cause our actual future results
to be materially different than those expressed in our forward-looking statements. We do not
undertake to update our forward-looking statements, whether as a result of new information, future
events or otherwise, except as may be required by law. For a description of some of the risks and
uncertainties that may affect our future results, you should see the risk factors described from
time to time in the reports we file with the Securities and Exchange Commission. |
| Unearthing Value Arch Coal, Inc. |
| Developing nations will increase energy use, putting pressure on global supply |
| Electricity Usage Passenger Vehicles per Capita per Capita |
| 12,000 Australia Australia 450
9,000 U.K. |
| 300
Russia Italy -hours per capita 6,000 kilowatt cars per capita S. Korea 150 Russia
3,000 Malaysia Malaysia Mexico Mexico
China 0 |
| 0 $ 0000 $ ,000 ,000 ,000,000,0,0
10 2030,000 40,000
10 203040$ $$ $$ $$ $
GDP per capita (in U.S. $) GDP per capita (in U.S. $) |
| Source: United Nations’ Human Development Report 2005, Slide 4 2005 World Development
Indicators (World Bank) |
| IEA projects significant continued growth in coal use over the next 25 years |
| (millions of tons of oil equivalent) 2004 2030 |
| Fossil fuels (oil, gas & coal) are expected to remain dominant global
5000 energy sources through 2030 Growth in coal demand will be |
4000 primarily driven by consumption in China, India and the U.S.
3000 |
| Coal was
the fastest-growing fuel
source over the last 5
years |
2000 BP Statistical Review of World Energy 2006
1000 |
| Oil Coal Nat. Gas Nuclear Hydro Biomass |
| Slide 5 Source: International Energy Agency’s World Energy Outlook 2006 |
| Coal’s advantage: abundant, secure and widely dispersed |
| billions of tons of oil equivalent Based on current production levels 300 and
proven reserves, coal should outlast gas supplies and oil reserves 200 by more than 2x
and 4x, respectively |
| India
Africa Other Asia Central and South Pacific America |
| Slide 6 Source: Bank of America, BP Statistical Review and Blackwell Energy Research |
| Coal is a vital part of America’s energy future |
| U.S. Energy Reserves U.S. Petroleum Supply U.S. Fuel Prices
(in trillion Btu) (million bbls per day) ($/mm Btu, at 6/1/07) |
| %$ 0.54
PRB 8800 Nat. Gas Crude Oil
Coal Natural Gas Oil Non-OPEC OPEC Domestic
FOB mine Wellhead (4Q07) (Dec. 2007) |
| Source: EIA, Platts and NYMEX |
| EIA expects coal supply to continue shifting from East to West |
| Long-Term Coal Production Forecast |
| ( in million tons, per EIA ) |
| 1,200 Powder River Basin will continue to supply most 1,000 growth over
next 5 years 800 Illinois should play a 600 larger role in future
400 Western coal is expected to grow market share to 200 more than 60% by
2030 despite scrubber |
| 2006 2010 2020 2030 West Interior Appalachia |
| Slide 8 Source: EIA and ACI |
| Bullish market drivers are helping to strengthen coal markets in 2007 |
| Demand +5.4mm Ju’06 A’06 O’06 Ja’07 Ju’07 $200
$0$ 0 |
| Electric generation up 3.5% YTD Higher natural gas prices
Production cuts/supply pressures (CAPP) Increasing SO2 allowance
prices |
| Strong seaborne markets New coal plants on the horizon
Increased met / export opportunities |
| Slide 10 Source: ACI, EIA. MSHA, Coal Daily, NYMEX |
| Construction is now underway on more than 10 GW of new coal-fueled capacity |
| WPS Weston #4 (Wisc.) Cleco Rodemacher #3 (La.) OPP Nebraska City #2 (Neb.) 500 MW / June 2008 600 MW / June 2008 663 MW / May 2009
T.S. Power Boulder Valley (Nev.) Dallman IV (Illinois) Elm Road Generating (Wis.) 200 MW / Jan. 2010 250 MW / Jan. 2010 600 MW / July 2009
Slide 11 Source: ACI |
| Arch’s PRB operations may prove advantageous for sourcing new coal plants |
| Under Construction Advanced Development Early Development
10.4 10.0 21.4 GWGWGW
PRBCAPP WBIT PRBCAPPIllinois PRBCAPP Illinois IllinoisNAPP LigniteOtherNAPPLignite
3 Total coal demand 3 Total coal demand of 3 Total coal demand of of 40 million tons34 million tons79 million tons
3 Powder River Basin 3 Powder River Basin 3 Powder River Basin expected to capture expected to capture expected to capture 35 million tons 12 million tons 34 million tons |
| Net new coal-fueled generating capacity announcements total close to 80 GW |
| Slide 12 Source: Platts and ACI |
| While future prospects are bright, near-term challenges persist |
| Argus Coal Daily Pricing $70 |
| $40 ` WBIT prices fallen from peak WBIT but remain relatively
strong |
| $0 May generator stockpile levels |
| 80
1/3/2000 1/3/2003 1/3/2006 (in days of supply) |
| Stockpile levels at generators |
| ` Current estimate is above the 50
5-year average |
| 40
` Levels are relatively high |
| heading into summer season |
| 97
98 99 00 01 02
03 04 05 06 07E |
| Slide 13 Source: ACI, EIA and Coal Daily |
| Climate concerns also present a challenge, yet support for clean-coal technologies is growing |
| “The Strategic Energy Fund wou |
| ld provide $3.5B in incentives and grants to speed |
| the development of more clean coal plants acro |
| Senator Hillary Clinton ( |
| “...we’ll need to invest more in the clean technology that will
allow us to burn more coal, our country’s most abundant fossil fuel.” |
| Senator Barack Obama (D-IL) |
| Nancy Pelosi, Speaker of the House (D-CA, 8th
District) |
| “We have a coal industry in our country that cannot be ignored. We want technology to be the
answer ... My view is that we must move in a very strong, forceful and generous way in investing in
the research for sequestration...” |
| Slide 14 Source: Google, Congressional websites |
| Over the long-term, clean-coal technologies can create new markets for coal |
| A plug-in hybrid is one Coal can be converted Gasification
can reduce entry for coal into the into ultra-low-sulfur emissions & transform transportation
market diesel fuel coal into pipeline-quality natural gas |
| ` Likely to create ` At current oil prices, significant coal-to-liquids
` IGCC & CCS should off-peak demand facilities appear enable coal to for
electricity economically prosper in a carbon feasible constrained world |
| Public policy initiatives aimed at domestic energy security are leading to energy legislation
and financial incentives for clean-coal-technology development |
| About ACoal
Unearthing Value Arch Coal, Inc. |
| One of the largest coal producers in the U.S. |
| Core business is providing U.S. power generators with clean-burning, low-sulfur
coal for electric generation |
| ` Supplies roughly 11% of U.S. coal needs |
| ` Provides source fuel for roughly 6% of U.S. electricity |
Talented workforce operates large, modern mines
Industry leader in mine safety, productivity and reclamation |
1. Coal Creek
2. Black Thunder |
| 12 4 Knight Hawk 21
3 3
45 C |
| Western Bituminous 3. Mingo Logan |
| 1. Skyline 5. Lone Mountain
2. Dugout
3. Sufco |
| Leading operating position in all three major low-sulfur basins
Equity interest in an Illinois Basin producer, Knight Hawk |
| Arch has an extensive reserve base that is predominately low-sulfur |
| Reserve
base of 2.9 billion tons
Reserve life
that exceeds 20 years |
| Approximately 80%
of reserve base is
compliance quality |
| Compliance Low Sulfur High Sulfur |
| Reserves by region (in million tons)
PRBWBIT* ILB CAPP
(1,829)(464) (220) (402)
Slide 19 *Includes southern Wyoming Source: ACI |
| Arch’s long-term success depends on three pillars of performance |
| Achieving industry-leading productivity rates |
| ` Three of top eight most productive longwall mines
` Sufco most productive underground mine in 2006
` Surface mines produced 167% more tons than industry average |
| Operating the world’s safest coal mines |
| ` Sentinels of Safety — safest underground coal mine |
| ` Second-best year on record for lost-time incidents |
| ` Outperformed the industry safety average by three times |
| Acting as responsible citizens and environmental stewards |
` National Good Neighbor Award
` Greenlands Award — best reclamation in West Virginia |
| Slide 20 Source: ACI and Public Sources |
| Arch has the cleanest balance sheet among major U.S. coal producers |
| Legacy Liabilities of Largest U.S. Coal Companies 12/31/06 (in millions) |
| Pension Reclamation $3,357 Postretirement Medical Workers’ Comp |
| $2,267
$771 $397 $337
Competitor #1 Competitor #2 Competitor #3 Competitor #4 Arch Coal |
| Slide 21 Source: SEC filings compiled by ACI |
| Arch is expanding coal markets through investment in coal-conversion technologies |
| Medicine Bow Mine End Products |
| 13,000 bpd diesel fuel CTL
Facility* |
| gasificationtechnology chemical Arch as mine operator feedstock |
| FT liquefaction
technology |
| Arch owns an equity stake in DKRW Advanced Fuels |
| Long-term contract in place with Sinclair Oil Corporation to sell
ultra-low-sulfur diesel fuel from planned CTL facility |
| Arch has reduced production levels and is containing costs in a weak market cycle |
| Reduce production targets Guidance (charts in millions)
` Preserve value of reserves 2006 $502 |
| 2007E
Lower capital spending $260 |
| ` Align spending with market 127 133 demand and reduced
production levels |
| Volume midpoint* Capex midpoint** |
| Maintain upside exposure 110 — 120
` Unpriced position translates 70 — 80 into more upside potential as market rebounds |
| ` Creates long-term value for 10-15 shareholders |
| *Volume excludes pass-through tons associated with Magnum transaction |
| Slide 23 **Capex excludes reserve additions Source: ACI |
| Arch’s future strategic growth possibilities are compelling |
| Invest in core businesses to enhance profit growth and return on capital as
well as evaluate opportunities to further upgrade and |
| expand reserve base Consider acquisitions or investments that strategically fit and
create shareholder value |
| Expand market for coal (and perception of coal’s value) through |
| Btu conversion technologies that provide significant upside |
