Ladies and gentlemen, thank you for standing by. And welcome to the Peabody Energy Fourth Quarter 2012 Earnings Call. For the conference all the participants are in a listen-only mode, there will be an opportunity for your questions, instructions will be given at that time. (Operator Instructions) As a reminder, today’s call is being recorded. I’ll now turn the conference over to the Senior Vice President, Investor Relations and Corporate Communications, Mr. Vic Svec.

Great. Thank you, John, and good morning, everyone. Thanks very much for taking part in the conference call for BTU. And with us today are Chairman and CEO, Greg Boyce; and Executive Vice President and Chief Financial Officer, Mike Crews. We do have some forward-looking statements. They should be considered along with the risk factors that we note at the end of our release, as well as the MD&A section of our filed documents. And we also refer you to peabodyenergy.com for additional information. With that, I’ll now turn the call over to Mike.

Thanks, Vic, and good morning, everyone. Peabody delivered record safety results in global revenues in 2012 and achieved other notable accomplishments including record adjusted EBITDA in the U.S. and our highest Australia volumes to date. This solid operating performance reflects the strength of our platform in the face of significant decline in pricing and U.S. coal demand. I’ll begin by discussing our 2012 results and then provide a review of our outlook. Revenues grew 2% in 2012 to reach a new high of $8.1 billion. This was driven by sharply higher volumes in Australia that more than offset seaborne price decline, as well as an increase in U.S. realization that overcame a 10 million ton decline in shipments. Total shipments of 248.5 million tons were in line with prior year volumes. 2012 adjusted EBITDA totaled $1.84 billion, contribution from U.S. mining operations rose 8% to $1.26 billion, due to margin expansion despite challenging markets. Australia contributions of $939 million were impacted by more than $430 million in price decline compared to the prior year. Trading and brokerage results totaled $120 million for the year, declining on lower realization on export volumes, reduced mark-to-market earnings and a roll-off of structured transaction. So looking at additional detail within our supplemental schedule, U.S. volumes declined 5% from the prior year, due to lower customer demand and contract deferral. U.S. revenues per ton rose 7% on higher realization in both region, where we benefitted from entering the year fully contracted, cost per ton increased less than 4% and were primarily due to low shipments and higher royalties. These results led to a 13% increase in average U.S. margins per ton. In Australia, volumes increased 30% to 33 million ton, benefitting from a full year of production from acquired operations as well as the expanded…

Thanks, Mike, and good morning, everyone. It’s clear that 2012 was a year that saw solid achievements by Peabody in the face of extraordinary industry pressures. It’s a credit to the team that we’re able to set new marks 0for safety, deliver record U.S. results, reach another new high for Australia volumes, integrate our newly acquired assets, and achieve strong cost containment across the U.S. and Australia platforms. I’d like to start with a market overview and then focus on Peabody’s top priorities for 2013. Global coal markets were heavily impacted in 2012 by a slowdown in China’s growth, persistent weakness in European economies, record low natural gas prices in the U.S. and increase supply from number of coal exporting countries. The weakness in global economies is still evident. But we have seen good indications recently that the China economy is accelerating, U.S. gas prices have improved and production responses are helping to rebalance global market fundamentals. Now looking closer at metallurgical coal markets, spot prices for high quality hard coking coal have risen nearly 20% after low seen in September and are now trading higher than quarterly contract settlement prices for the first time in six months. Also low-vol PCI prices continued to show strength relative to the high quality product. Following 2012’s modest 1% growth in global steel production, the World Steel Association is forecasting a 3% increase this year, resulting growth in seaborne metallurgical demand. This would be led by China, where recent data indicate the economy has again accelerated. Fourth quarter GDP grew from the third quarter and again approached 8%. December steel production grew 8% and PMI data rose to a two-year high. China’s net metallurgical coal import rose 27% in 2012 to a record 52 million ton, and we expect China to continue to…

(Operator Instructions) And first from the line of Shneur Gershuni with UBS. Please go ahead.

Hi. Good morning guys.

Good morning, Shneur.

Good morning.

Just before I start my questions, I was just hoping to get one clarification. There are lot of moving parts in today’s press release. And I understand you got to report on a GAAP basis and so forth. But when we think about it from an apples-to-apples basis, on an operating EPS basis, Q3 versus Q4 and then you have the $48 impact, that kind of end up with about $0.36 estimate for 4Q kind of an apples-to-apples basis for ongoing EPS. Is that a fair way to think about this quarter?

Yeah. I think that’s a fair way to look at it based on the way you would have been modeling. You would not have included any of these asset impairment or mine closure costs or these valuation allowance adjustments. So that math seems reasonable.

Great.

On an ongoing basis.

And just two quick questions here, overall you’re guiding into the lower 80s for cost for 2013 in Australia and kind of the shape of the curve is that you’re expecting costs to improve throughout the year as you shift from -- to owner-operator so forth. Is there kind of a target, a year end target or zip code kind of where you expect to end up by the end of the year? Is it still in the 80s, is it in high 70s and so forth? I was wondering if you can give us a little bit more color on the cost shape for this year for Australia.

Yeah, well, it’s in the release where we talked about and for our guidance we are targeting at low $80 per ton range for the year. I recognize there is a bit of range there around what low 80s constitute. As you think about the first quarter, some of the guidance we gave in December and some of the color that we’ve talked about are, the additional overburden removal that we need to do. And some of that is just a timing of overburden removal at Wilpinjong and in the case of Eaglefield that we’ve talked about, the summer is actually moving to a new mining area. So when you look at some of that, you look at where we think volumes are going to be, that’s going to drive a portion of the cost and the first quarter is a bit higher but then we expect that to improve over time. So by the time you get to the full-year basis, you could be lower in that lower low 80s range.

Great. And just one follow-up question, Greg you had mentioned an interest in disposing of some asset and so forth and a focus on the balance sheet. You did purchase some debt shares in 2012. It’s got a fairly low CapEx or cash for ‘13. And if you’re kind of expecting things to improve in 2Q and 3Q and 4Q, I would expect you to have some free cash flow and so forth. Do you need asset sales to execute reduction in debt or do you see - or forecasting are you able to use some of your free cash flow to purchase some debt and may be even consider some shares as well too?

Well, I think right now we’re pursuing a combination of both tracks, Shneur. Obviously, any excess cash flow that we generate and we believe we will, we’ll use that for focus more on debt reduction in the current timeframe. But we also believe that we do have a suite of selected assets that could be monetized and we would use those proceeds initially for debt reduction and then depending on how much progress we make on our debt reduction, we would look at other uses for that cash.

Great. Thank you very much. I’ll jump back in the queue.

Our next question is from Michael Dudas with Sterne Agee. Please go ahead.

Good morning, gentlemen.

Good morning, Michael.

Good morning, Michael.

Greg, you mentioned in your prepared remarks, you expect to see the balance in the U.S. improve as we see further production cut backs. Could you share maybe a little bit more detail on how you’re seeing on the global thermal and met side production decisions by competitors out of Australia, Indonesia, Mongolia on the met side and add Colombia for on the thermal side?

Sure. Well, I mean, obviously, I can’t really talk to what goes on behind their decision-making process but just the observations that we would have in the market place, you can certainly see that when met coal prices got to the point where they are in the first quarter, whether it was disputes in Mongolia, whether it was reduced production out of Australia, whether it was U.S. exports coming down significantly out of the east coast. We started to see increased supply response based on that level of pricing which obviously we think is a good indicator of -- that pricing will need to go up in order to sustain things. And that’s on the met side. On the thermal side, again you saw a reduction in the East Coast exports. We saw a fairly large number of Australian reductions particular from the higher cost section of the Australian framework and even to a certain degree some of the Indonesian producers struggling a bit. So again when you start looking at what price it got down to in the seaborne market in the fourth quarter on a spot basis and that we’re starting to take production off. Again that gives us some confidence going forward that we’ll see the type of price recovery through the year that we would like to see.

My follow-up, Greg, would be in the news recently we’ve seen a major mining company reassess their opportunities for mining coal in Mozambique. And we’re hearing some issues that you talked about, disputes in Mongolia et cetera. Could you address those on where new or expanded opportunities in those countries may be in the stage, has it been delayed a few years because of what’s been happening in the marketplace and also on the government side, is there any more thoughts on your participation in Tavan and how that process is moving forth throughout 2013?

Okay. Well maybe just talk about Mongolia for a minute in terms of our involvement there. Obviously we still are involved in Mongolia; we’re still involved in discussions around Tavan Tolgoi. We’re still involved in discussions with the government as they begin to look at their mining laws to try and come up with a framework that makes sense on a go forward basis. When the market -- the full steam came out of the market it give everybody an opportunity to step back and look at these new projects and say what’s the timing, what’s the way to generate value, when is the right point in time when you start developing and bringing new product into the marketplace. And in the case of Mongolia it gave that much chance to step back and say, we want to take a look at the right mining law framework. We’re still positive in the long-term. We always tried to indicate cautiousness in the near term in terms of any timing expectations. I think when you add up Mozambique, when you add up Mongolia, when you look at some of these other frontier areas, it just points to the inherent value of the operation and the Australian platform that we have because we know we can mine those coals and get on to market, and the concept that all of a sudden the market is going to be oversupplied with high-quality hard met coal from all these frontier areas, I think we’re seeing it’s just not the case. It’s not easy to turn the step on and produce it. Therefore it bodes well for those that have it in their portfolio and can produce it and bring it to market. Even if you have to pay a little higher royalty or tax out of Australia, it’s still the right zip code to be producing high quality met coal.

Our next question is from Meredith Bandy with BMO Capital Markets.

I wanted to ask, first if we should just -- this is maybe for Greg, pull back and look at the long-term growth projects. I know a lot of these projects are deferred but what is the current sort of priority among the growth projects? And also what are you thinking about for the former Macarthur assets now?

Yeah, I think if you look at -- you always have to look at our portfolio of projects and say that the priority is when the markets return would be in reverse order of ones that we took off. So obviously the Codrilla project in Australia would be very high on our list to look at what we could do to advance that project. That’s obviously a PCI coal and in addition we’ve got -- in the U.S. we’ve got one or two projects, Gateway North and our Sage Creek project in Colorado that at the right time when the market requires it both would come forward. So it’s almost in reverse order. Now following on that, if you are looking at our, particularly our Australian platform with the Macarthur assets. We’ve picked up a very large reserve and resource base there. We’ve continued to do drilling during these periods of time, we’re firming up and following that we’ve got a much better set of assets then we originally anticipated. So over the longer term you will see more and more projects out of the Queensland area for us as the market continue to demand more coal.

And as a follow up to that on the Macarthur assets, there is a report out that there has been some flooding in the former Macarthur mine, is that correct? And do you know the exact I know it’s probably not as bad as we’ve seen in the last few times?

Sure. Well, I will tell everybody that news on flooding impact is coming in in real time out of Australia. I’ll try and give you a bit of summary of what I know as of now. Middlemount which was a Macarthur asset which is jointly owned by ourselves and Yancoal, Yancoal put out an announcement day before yesterday -- yesterday indicating that the Middlemount mine did -- was impacted by flooding from the recent cyclone. And they are still assessing how long it will take to get that mine back into production. They are talking several weeks or more for that to occur. But, again, that number is moving around because they are still evaluating on-site. In terms of our legacy operations, we’ve got -- all of them receive rainfall, the cyclone moved from Queensland all the way down through New South Wales. We are assessing impacts we may have at Burton and The Wilkie Creek which of course we account for in disc ops because of the sale process. The rail systems that were most impacted were the rail systems in Queensland that flow through the Gladstone Port. Good news for us is we don’t ship through the Gladstone Port, so that most of our rail network is essentially open as a matter of assessing now any of those two particular operations and then working with the folks at Middlemount in terms of that timing. So all of that said is there has been impact across Queensland and New South Wales. We don’t have a full answer at this point in time. We are still assessing the impacts. The numbers that we’ve given for the quarter don’t assume unusual impacts from rain events. We always build in a few days of rain but to the extent that there is a material impact or any material change we’ll have to notify everybody once we get a full assessment of the impact.

All right. Thank you. Very helpful.

And we’ll go to David Gagliano with Barclays. Please go ahead.

Hi. Couple of quick question, first, the $200 million to $270 million EBITDA range for Q1. That’s a pretty wide range. I’m wondering what’s behind such a wide range, given I’m assuming that you’ve got Q1 that locked in at this point?

Well, I think, it’s a couple of things. I mean, obviously, the shipping variability in every quarter. So we always provide in that particular range and that is just normal operating variability. I mean, that, I don’t think that ranges particularly wider than historical range, Dave, for any particular quarter and so, I think, that’s pretty much extends.

Okay. I guess, to clarify the question, is the main metric between the low and the high then cost, volume or price assumptions?

Well, most of it would be on volume and then toward certain degree on cost, which flows out of whatever the final body of numbers are, very little on price given that, we’ve got a high sales position in the U.S. -- price position in the U.S. and price for the Australian met and thermal coal are priced for the quarter. So it’s less on price and more on operating variability and volume variability, and shipping variability.

Thanks for that one…

Due to low extend we are targeting lower volume on the U.S. platform too, so there could be some volume component with the U.S. as well.

Okay. Just to move on, I was wondering, if you just give us quick update on the permitting process for the export facility on Washington?

Well, essentially that’s in the public commentary is for the EIS that’s going to run its course and probably has at least close to another 12 months timeframe for that. And then that is going to be what comes through the EIS in terms of permitting requirements prior to the time that any construction begins. So it’s essentially on the same kind of schedule we’ve talked about before. There is nothing really new to add and no changes to that timeframe.

And just the last question real quick, longer term obviously quite a bit of talk out of the administration recently regarding carbon again. And I was wondering it seems that the numbers are fairly high on some of the targeted emission reductions, fairly high in terms of the incremental impact on coal demand by 2020, it seems the numbers are as high as 200 million tons of incremental demand structure in coal. Seems pretty high. I was wondering if you could comment on the recent talk out of Washington and if 200 million tons seems a bit aggressive by 2020.

Well, no surprise, my view is I think that’s unrealistically aggressive in terms of the ability to scale back coal generation here in the U.S. I mean in all of our longer-term forecast we’ve always had natural retirements and environmental regulatory required requirements within the coal fleet. The concept that plants are going to be closed prematurely in order to meet artificial carbon targets, I think we don’t think that, that’s going to be the future because we don’t see how you make up for that volume of coal generation loss in that short period of time. So I think in summary is we are comparable with the forecast that we have for retirements within the generation fleet. And post 2020 I think there’s going to have to be a reasonable [gly-path] that anybody is really going to look at hard carbon numbers which I am not convinced that we’re going to see at this point in time.

One of the things that are lost in a lot of these analyses are the fact that the U.S. coal fleet only was running about 55% utilization last year. So upside to that is significant over time. So you will continue to see some of the smaller plants retire but the larger plants are receiving those major capital investments for all of the latest control technologies and once they do, we will run at good utilization rate.

(Operator Instructions) We’ll go to Paul Forward with Stifel. Paul Forward - Stifel, Nicolaus & Co.: I wanted to ask on your Australia volume guidance for 2013, 33 million to 36 million tons. You just had a quarter in which your sales run rate was around 39 million ton rate if you were to annualize that fourth quarter number and obviously there are weather issues that they were mining, so you can’t annualize one quarter. But the capacity is definitely there. I was just wondering if you’d look at the 39 million ton run rate for sales that you had in the fourth quarter and compare that to your expected run rate of 33 million to 36 million for the full year 2013, what changes to the mix or whatever else is going to drive a lower rate of sales in ‘13 compared to what you just did?

Thanks Paul. Just a couple of things I guess. We moved a lot of material that was in stockpile in the fourth quarter of last year. So our sales run rate was higher than our production run rate, number one. Number two, when you start looking at -- you’ve got a certain amount of physical mining capacity and we’ve already talked about in the first quarter of this year, we’ve got to move Wilpinjong to some higher level of over burden, that will reduce the capacity at Wilpinjong through the year which was one of our big generators. And then we have a couple of longwall moves during the course of the year here in Australia at our underground -- big underground operation which will impact our production capacity a little bit as well. So when you look at it, you really can’t take fourth quarter and fully analyze it. I think the range that we have in there is the range that we see going forward. Obviously, we always look to do better than that if the market were taken. But I think hopefully those have given you some data points as to why we think the range is reasonable vis-à-vis what we did in the second half of last year. Paul Forward - Stifel, Nicolaus & Co.: Thanks. And also as far as your guidance goes for U.S. average pricing down 5% to 10% in 2013, could you give us a little sense of when looking at that range how much of that as a result of the mix shift back towards PRB sales from ‘12 to end of ‘13 and how much of that is within each region you’ve got contract expirations at higher prices and so you’ll have within each region a price decline and so mixed versus region specific price declines?

This is Mike. On a revenue perspective, it’s really more of the roll-off of some of these contracts that we’ve seen in prior period, that’s driving it more than mix. Paul Forward - Stifel, Nicolaus & Co.: Okay. Thanks.

Our next question is from Mitesh Thakkar with FBR. Please go ahead.

Good morning, gentlemen.

Good morning.

Good morning.

First of all congratulations on the quarter. And my first question is can you update us a little bit about the Wilkie Creek sale process or any other non-core asset sales which you are looking at?

Sure. I mean, we still have an active steel process for Wilkie Creek. We have a number of interested parties that we’re working through negotiations. It’s a process. It’s taken a bit longer than we would have expected. I think some of that people are just trying to get their head around some uncertainty in the market but we still have good interest in those assets. We have some additional information but we’ll be able to provide that at the time. And then at the same time, we continue to look at other items within the portfolio that may make sense for us to look, try and monetize for debt reduction. And then again on that one, if something comes up that’s significant, we would provide some additional information or we’d provide it on the next quarter call.

Okay. Great. And just a little clarification, can you give us a sense of kind of a cost spreads because your fourth quarter, Australian cost looks like it’s in the low-to-mid 70s range and for the first quarter, given your full-year target, it looks like it’s going to be in the high 80s kind of a range. If I look at the carbon tax and other sort of royalty increases and those kind of things, those should remain similar, I think. So can you give us some sense of various buckets or connected bridge for us a little bit?

Sure. So we had good performance in the fourth quarter. When you look at the first quarter and some of the ends that are going to impact that and recall that we said for the full year low 80s cost per ton not high and then we’d maybe more heavily weighted towards that range in the first quarter, what’s impacting that some of these overburden removal cost, some transition cost associated with owner operator. But then one of the bigger items as it relates to both the quarter and a year is just a higher mix of met coal in the portfolio shipments relative to thermal coal.

But that item would be full-year item. To your right, you will see the higher met coal in the full year as well?

That’s right. So on a full-year basis, the big drivers of the rising cost are going to be the mix impact of more met coal and then some of that more focused on some of the higher cost production within the met portfolio. And then also we have the impact of carbon tax which we estimate it at $1 to $2 per ton for the year.

And Mitesh, this is Greg. For the first quarter, it’s a mix issue as well because Wilpinjong is where we’ve got our mind through this high stiff ratio area that lowers their production volume, increase their cost. Given that that’s our largest lowest cost operation, any changes there reduced the low cost average in tonnage and -- to offset the higher cost met coal mix that we’re going to get. So it’s both a cost and a volume mix issue for the first quarter as well for the year.

Great. Thank you. This is great color, guys.

Our next question is from Andre Benjamin with Goldman Sachs. Please go ahead.

Thank you. Good morning.

Good morning, Andre.

Good morning.

First question, you’ve got around 180 million to 190 million tons in the U.S. versus 193 million this year and flat cost. I am wondering if you could provide little more color on how you are seeing about volumes across the different regions, particularly the PRB versus the Illinois Basin, try to think through coal to gas reversal impact and more normal weather on the PRB versus closure of some of the higher cost operation in Illinois basin.

Well, I think just starting in the Illinois basin, obviously we’ve closed the Willow Lake mine and their quality which had a little bit of tonnage in the early part of last year. So you’re going to see a natural reduction from the closure of those two operations in Illinois basin. In our Colorado operations the export business has not been quite as strong as it has been. So we will see a slight reduction in our Colorado platform, and the rest of it is out of the Power River Basin, although we continue to see -- we continue to optimize our production out of the PRB between (inaudible) Rawhide but I think those are generally the three areas that account for that slight reduction in 2013.

And then (inaudible) on the Australian cost question follow up, almost touched this question, I wanted to know given the over burden of start-up costs seem to be having a pretty big impact on the first quarter, will you argue that may be too aggressive especially model something below that $80 a ton by the end of the year as more of a normalized starting point to get to the low 80s for the -- average for the year or you’ve shown what the right starting point to get to this in the first half of the year?

I mean we said it was going to be, whether it’s going to be in the low 80s for the year and we see it at the higher end of that low 80s number for the first quarter.

Remember, part of the costs we are absorbing here in the first half of the year is the impacts of the Queensland royalties which went in effect in the second half of last year as well as a full year of the carbon tax. So all of those need to be layered in, and again when you look at the differential between the fourth quarter of last year and the first quarter of this year, they are really operational and mix driven and to the extent that whether we’re going to be above that average for the year and the first quarter and by the end of the year slightly below it to make up for it. So that’s a reasonable way to model it, exact numbers we don’t normally provide.

Our next question is from Brian Yu with Citi.

Greg, just on the mark you said that -- are you expecting to a thermal coal mandate to build up by (inaudible) million tons 450. How do you see that being split out in various regions and is that baked into your volume guidance for this year?

It’s a factor in our volume guidance for the year. Of course you have to remember that we’re taking the burden to go up to 40 to 60, that doesn’t mean supplies to our production are going to go up that much. We’re still working off inventories through the course of the year. But most of that is going to be obviously Powder River and Illinois basin burn based on where you will look at the fuller view on gas pricing, very little of it probably is going to help the Eastern markets because of their higher hurdle rate in terms of gas pricing to be competitive. So it’s going to be Illinois basin and Power River basin coal that will be more rebalanced as the inventories come down as those burns increase.

And the second question is the Australian domestic thermal sales of 600 million tons, while costs going up, how pricing on those long term contracts looking, are you going to recover your cost escalation, when does the fire work, maybe the economy starts to improve for you guys?

All I can tell you on the domestic contracts is we don’t have any concerns that we will be able to maintaining margins in those contracts.

We’ll go to David Martin with Deutsche Bank.

I had a quick follow ups, so the first comes back to the outlook statement on the first quarter. So if I were to assume that a Australian volumes were somewhere between 6 million and 8 million tons in the first quarter with much of the sequential decline coming from the thermal markets, is that about right?

Well, we’re going to be -- we are going to be down a little bit on met and thermal coal in the first quarter.

Okay. And then secondly on costs, I know you’ve given some directional movement in each of your major region. But, Mike, I think in your prepared remarks you added a comment about cost containment and lower SG&A, which I believe would be outside of your operating cost comments. What should we expect for SG&A savings in the year?

Yeah. We’ve undertook that cost containment exercise across the Board at the end of last year. At that point, we said we were targeting $100 million, 30% of which related to SG&A and the SG&A component, that’s still the target that we’re going into this year as well. So with the rest reflected, the other 70% reflected in the operating costs, which is why we feel like we can hold the line on cost domestically even on top of escalations, lower volume, mix changes of that nature. So those are the activities we’ve undertaken to reduce costs both on the operating and on the SG&A side.

Okay. Thank you.

You’re welcome.

Our next question is from Timna Tanners with Bank of America Merrill Lynch. Please go ahead.

Yeah. Thanks for taking my questions. Just two things I want to follow-up on. One was if you could give us any further detail on the rationale behind the write-down, obviously, you point out that it’s just 7% of the Macarthur acquisition. But it’s a pretty recent acquisition. So I was just wondering how much was the acquisition? How much was the coal price, perhaps you could talk us through a little bit of that, please?

Yeah. So the -- and some of this I alluded to in my remarks, but when you...

Right.

… for this and obvious of accounting driven, but as you look at this -- as you look at your existing operations, what your performance has been for the year, what your outlook is as you undertake the budgetary process also your life of mine reviews. You have to take into account of that, your near-term outlook and your long-term outlook. While, we all know what has happened with the near-term outlook, you’ve seen what’s happened with met coal pricing. At the same time, traditionally what you’ve seen is as the coal pricing came down, the $8, you got a bit of a relief on the cost side that has not taken place. If you start to have some indicators and prepared under the accounting rules, you need to undertake this exercise which is what we needed to do this year. So it’s not really an elective process. It is an update of your portfolio analysis, your projected margins, your projected cash flows and your market outlook. And that’s what led us to take the impairment charges that we had on the operating assets.

Okay. So, I guess, I’ll use my follow-up just to clarify that, because it seems to me like if coal prices continue here the Aussie dollar strengthened. Is it possible you take more impairments as you conduct this exercise as you say a mandatory exercise next year or if you think this is a final point or how do you look at this going forward?

Well, it’s something that’s subject to market conditions at any point in time. What we have said is that, the impairment analysis that we did, reflects our market outlook. But the other thing is that that we’ve said at the same time is, we think we’re hopefully in a trough in terms of where we are on market pricing, we’re expected increasing earnings going forward. I mean, you think about the economic conditions you have, whether it’s in Europe, what we saw previously in Asia, in the domestic markets, there’s been a significant confluence of events that are depressing the outlooks that you’re required to use for the recoverability of these assets and frankly, from an accounting standpoint, it’s a one way street. So if you see a significant depression in pricing and these near -- these models that you do this on are really impacted by the first few years. So, while we do expect improvements, if you drop the front-end of that curve, particularly as it relates to met coal that’s puts a lot of pressure on your asset recoverability.

Certainly. Our next question is from Lucas Pipes with Brean Capital. Please go ahead.

Good morning, gentlemen.

Good morning, Lucas.

Hi. You previously outlined up to like 45 million, 50 million tons in Australia in 2015, assuming the markets come back. We are at a trough right now. Where could you get in Australia by 2015 and what amount of CapEx would be necessary?

I think based on our current plans for capital this year, early look although we haven’t fixed plans for ‘14 fully yet. For ‘14, we would indicate in ‘15, we’ll probably be in that 40 million ton range. Obviously if we see a much stronger market response, we’ve got the ability to accelerate some things but that’s kind of where we are at right now in terms of our thinking.

And my follow up you previously mentioned that that would be up to 150 million tons of production coming off line in China, have you seen further support for this thesis and if you could provide some update on kind of what’s happening internally in China, that would be very helpful.

This is Vic. Keep in -- you can see a number of announcements that have been out there cutbacks that have been occurring and that 150 number was an industry number that was reported in country China, that was relating to a variety of cutbacks on the basis of safety activities at some of the smaller operations there. And you continue to see that kind of trends of occurring over time. So they’ve recently come out with the numbers that looks like their overall production was up about 4% in 2012 in China to about $3.7 billion numbers still a big number obviously. So they are running at a very high run rate and a very fast burn rate as well. So it remains our view that the cost inflation is high there, that there will continue to be pairing back up operations based on safety and a consolidation toward larger mines that are more distant from the Eastern heavy use consumption territories.

Next we’ll go to Chris Haberlin with Davenport & Co. Chris Haberlin - Davenport & Co.: The recent report suggesting that PCI prices had shown some surprising trend and Greg, I think you alluded to as much as in your comment. Can you just talk about what the trend is there and pricing spreads for PCI and what’s driving that pricing trend, maybe relative to some of the lower end closure, we haven’t seen much price movement?

Well, a couple of things, obviously with the PCI coals you have to look at where the predominant demand is for the PCI coals. Korea is the largest installed base of plastic that PCI, you’ve got Japan, you’ve got China, a growing base although it’s still emerging. And those are the areas where the field production recovers quickest. And so as you look at the resumption or the increase in spot pricing that we have seen in met coal coupled with the growth in steel production in the areas that have the ability to use PCI coal, we’re seeing a strength in the PCI coals certainly in the spot market now, right now that spread is I would say 5% into the premium but historically it’s been in the 70s and we set out along that we thought that would tighten, I don’t think a 5 is probably near term full stream but terming out on a spot basis that’s what we are seeing, we do expect the PCI coals will continue to strengthen vis-à-vis the hard coking coal preference and over time as we see more and more new plants get built that can use the PCI coals. Chris Haberlin - Davenport & Co.: And that gives a segway into my next question, you mentioned strength in kind of the Pacific basin, can you talk about what you’re seeing in terms of met demand from the Atlantic basin particularly in Europe?

Well, Europe is still pretty definite both in terms of economic activity as well as in terms of their steel plant run rate. So our focus right now continues to be on the Pacific Rim and the only strength that’s really in the Atlantic is coming out of Brazil.

And we have time for one more question and that will be from the line of Richard Garchitorena from Credit Suisse.

In the release you highlighted you expect declining U.S. exports this year both on met and thermal. I was wondering if you could quantify how much you think that exports will decline and also what’s going to drive that decline? Is Australia taking back market share or is it average prices this year being lower than first half last year, what’s driving that view?

Yeah. I think, just to give you roughly our estimate, we think met may be down 20 million tons this year, thermal 10 million tons, total of about 30 million tons out of 2012’s 120 million ton level, taking it down to around the 90 million ton mark. And quite frankly, it’s just a matter of certainly East Coast met is at the high end of the cost curve, so when prices rolled back they came out of the market and the same thing for thermal coal with where the API pricing had gotten into European market. We saw -- we’re seeing those bookings come down in terms of export volumes. So, that’s our current estimate, our current view based on what we see in the marketplace.

Great. Thanks. If I could ask a follow-up, does that mainly expect for the production cuts in the east as a result?

That’s a question for the eastern producers.

Okay. Thank you.

And Mr. Boyce, I’ll turn it back to you for any closing comments.

Okay. Well, thank you very much. I’d like to obviously express my thanks both Peabody -- to the Peabody team on continues to perform at a very high level against a number of market headwinds. But also I want to thank all of you for your interest in BTU. We look forward to implementing our plans for this year and keeping you apprised of our progress on our next call. So thank you very much.

Ladies and gentlemen, that does conclude your conference for today. Thank you for your participation. You may now disconnect.