Ladies and gentlemen, thank you for standing by and welcome to the Peabody Energy First Quarter 2013 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. With that being said, I’ll turn the conference over to the Senior Vice President, Investor Relations and Corporate Communications, Mr. Vic Svec. Please go ahead

All right, thank you, John, and good morning everyone. Thanks very much for taking part in the conference call today for BTU. With us are Chairman and CEO, Greg Boyce; as well as 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 some additional information. And with that, I’ll now turn the call over to Mike.

Thanks, Vic and good morning, everyone. Peabody delivered first quarter performance that exhibits the strength of the platform amid challenging markets. And we continue to make progress on our key focus areas of cost containment, capital discipline and debt reduction. Overall, we exceeded the top end of a target adjusted EBITDA range, held the line on costs in the U.S., and reduced Australia cost by 10%, lowered our quarterly capital spending nearly 70% from the prior year and we were paying down another $200 million in debt, which will bring our total repayments over 12 months to more than $600 million. Let’s review the quarterly results in more detail, beginning first with the income statement. First quarter revenues totalled $1.7 billion on shipments of the 57 million tons, adjusted EBITDA of $280 million exceeds our targeted range, due to strong cost containment across the platform. Compared with the prior year, our results were impacted by market condition that led to lower customer shipments in the U.S. and price declines in Australia. Adjusted EBITDA from U.S. mining operations totaled $273 million and Australia contributions of $100 million were impacted by significantly lower pricing, partly offset by higher volumes and lower cost. Trading and brokerage and resource management results totaled $18 million. The trading business was impacted by the continued lack of volatility in seaborne thermal markets and lower realized margins on export volumes. Both diluted and adjusted diluted loss per share totaled $0.05 reflecting lower pretax contributions, as well as higher DD&A and ARO expense due to the larger volumes and operating footprint in Australia. For the year, we continue to expect DD&A levels approximately 10% higher than the prior year. So, looking at additional detail within our supplemental schedules, U.S. volumes declined 12% from the prior year, largely due to…

Thanks, Mike and good morning everyone. It’s clear that Peabody is off to a good start in 2013 and has made progress in a number of fronts. Our cost containment program is bringing real value to the bottom line. Our tight capital discipline is yielding results, and we continue to pay down debt, and we successfully completed the owner-operator conversions in Australia. All of these actions continue to strengthen Peabody. Now, let me provide a market overview before discussing Peabody’s decision. Overall, the global coal markets remain mixed as continued weakness in Europe and constrained global economic growth impacts near-term prices. Still, we’re encouraged by the build out of new coal generation, strong steel production out of China, and record import demand in China and India, and the U.S. coal fundamentals have improved from a year-ago as colder temperatures and rising natural gas prices result in utilities, increasingly returning to coal. Now, within metallurgical coal markets, second quarter benchmark prices settled higher for the first time in nine months, and the low vol PCI price spread improved to 82% as steel producers are turning more to PCI as a means to reduce input costs and improved margins. Global steel demand continues to grow as China’s production rose 9% on the first quarter, supporting increased metallurgical coal imports. Longer-term, we see a 20% increase in global steel production by 2017, requiring an additional 200 million tons of met coal. Growing populations and increased urbanization, specifically in China and India continue to raise steel intensity. In China, it’s expected that approximately 15 million to 20 million people will move into the Cities each year over the next decade driving demand for met coal use for required infrastructure. Now, in the seaborne thermal market, we also continue to see increased import demand. China’s…

Definitely (Operator Instructions) First, we’ll go to the line of Michael Dudas with Sterne, Agee. Please go ahead. Michael Dudas – Sterne, Agee & Leach Inc.: Good morning, gentlemen.

Good morning, Michael. Michael Dudas – Sterne, Agee & Leach Inc.: First one for Greg; could you – when you look at the expectations for met coal demand and imports in China and India and all the– good data points you put forth, yet pricing hasn’t really reacted. Could you maybe talk about how close we’re relative to the excess supply that we’re seeing in the thermal markets maybe from Indonesia, Columbia, and some of the outlook for Australia to start to maybe get pricing to better reflect some of these demand trends that we’ve been seeing?

Yeah, good question, Michael. I mean, I think, our interpretation of all of this is, we’re seeing slower ramp-up of economic activity across the globe than we originally would have anticipated. We are seeing production volumes come out of the market. The other side of that equation is those reductions are probably coming out slower than we might have anticipated, you know part of that is, I guess, to be expected with the structure of take-or-pays out of Australia and for folks to be generating cash. But the positive signs are – as we are seeing volumes come down and we are seeing increasing imports into China and India, albeit at a slightly lower pace on both sides than we would have anticipated. So, we’re still expecting that we will continue to see progressive improvement through the back end of the year. Michael Dudas – Sterne, Agee & Leach Inc.: My follow-up for Michael, could you remind us where Peabody stands on the Australian dollar, your hedging philosophy, and how much has been taken care of in 2013 and 2014, and what that variability might be as we try to model going forward? Thank you.

Sure, our hedging program, we do it on a rolling basis with a primary objective to limit volatility, and based upon that, we have been able to limit the volatility against the operating variability by about 50% over the past several years. So, it’s been successful for us. As it relates to our existing position, we are 77% hedged for the rest of the year at an average rate of about $0.90. And then looking into 2014, we are about 50% hedged based upon our current estimated operating requirements. Michael Dudas – Sterne, Agee & Leach Inc.: They are similar numbers?

To traditional program? Michael Dudas – Sterne, Agee & Leach Inc.: No, I mean the value…

Oh, the rate, I’m sorry. Yeah, it’s right inline with that. It’s been pretty consistent over the past several periods even with the movement in $8. Michael Dudas – Sterne, Agee & Leach Inc.: Great, I appreciate, thank you gentlemen.

You’re welcome.

Our next question is from Shneur Gershuni with UBS. Please go ahead. Shneur Gershuni – UBS Securities LLC: Hi, good morning guys.

Good morning, Shneur. Shneur Gershuni – UBS Securities LLC: My first question, I was wondering if I can sort of build on Mike’s question a little bit and just sort of talk about the coal markets. You’d brought up some interesting stats about the Chinese imports. I was wondering if you kind of had some timing as to when you thought things are going to pick up a little bit in the met market, is it a quarter or two from now or a little further? And then, I was also wondering if you can touch on the U.S. as well too, some pretty interesting commentary in your prepared remarks today about where you expect coal burn to be in the U.S.? When would you expect PRB pricing, for example, to potentially start to move up, let’s say as we think about 2014 and so forth?

Okay. Well, let me talk maybe a bit about the met markets first. As we indicated, China had a very strong quarter, and their steel production is up very storng from last year. And where we’ve seen more chronic weakness than we would have anticipated, continued to be out of the European sector. And if you will, ex-China production of steel, we see out of Japan, out of Korea, out of Taiwan, we see that our view is that they will begin to accelerate through the last three quarters of the year, China will remain strong. Europe, I think our anticipation is they will be mostly flat through the back half of the year. So, it’s really the Pacific Rim that’s going to drive the metallurgical coal markets. And as I said, we see strengthening through the back end of the year in the met coal markets. On the flip side of that, I think now that we’ve got a lot of legacy contracts from last year that have rolled off at the end of the first quarter, we will see some additional volumes come out of the seaborne market through similar high-cost regions in the U.S., Canada, and even some out of Australia. So the market dynamics we think look favorable for met coal. On the seaborne thermal side, again we’re seeing a new demand through the course of the year. China has had slightly lower coal generation increase, because they’ve had strong hydro, that can easily switch to normalized rates for the next three quarters of the year. And we’re starting to see supply as well, both out of the East Coast of the U.S. and out of Australia from the high-cost producers now that we have the new thermal settlements at $95 a metric ton. So, again,…

Yeah. With the changes that we’ve seen around variability and on EBITDA that has raised the debt-to-EBITDA ratio, first and foremost, we look at the credit agreement and what the limitations are there, and we have had those relaxed through the end of 2014. I can’t put a hard number on it, what I can say is that, the debt reduction is our primary focus here. And what you’ve seen us do here at the end of the first quarter and going into the second quarter is the first of two-pronged approach, which is really cost containment, margin improvement, capital discipline, take that excess cash, continually pay down debt. So, I don’t have a hard and fast target. I mean, we’ve had some pretty healthy or very good debt-to-EBITDA ratios traditionally that we would be looking to try and get back to over time, and some of that is a function of what we can do on the debt repayment side, some of it is the function of market condition, but we’re pleased with the progress that we’re making, and we hope to continue that as well. Shneur Gershuni – UBS Securities LLC: Great. Thank you very much guys.

Our next question is from Jim Rollyson with Raymond James. Please go ahead. James Rollyson – Raymond James & Associates: Good morning, Greg. Hi, everybody.

Good morning, Jim. James Rollyson – Raymond James & Associates: Just actually following up a little bit on Shneur’s questions, on the debt reduction and CapEx side, it looks like you’re kind of spending a little bit below your full year CapEx rate this quarter, just maybe walk through kind of how you see CapEx over the next three quarters, if I’m not mistaken you’ve got fairly decent amount of the LBA payments in the second quarter, and the third quarter trials off, but and also how you’re thinking about debt repayment in the second half, just with what you guys see today?

Yeah, so we were at $74 million on capital expenditures in the first quarter, we’re guiding to $450 million to $550 million, so obviously that’s back end weighted with some of the major projects. There’s a bit of that carry-on on the owner-operator transition, we’ve got some ancillary equipments, some facilities to complete, the monetization in Metropolitan. So that’s why you see us taking the opportunity now for the debt repayment. We’ll look to see how much of that gets spend in the back half of the year that will influence what our debt reduction targets are. But those are probably the big drivers there in terms of the timing on CapEx. We do have the LBAs in the second half of the year as well, so as you noted. Again, all I can do is, say that we’ll continue to look at the timing of that, we’ll look at whether our CapEx get pushed into 2014 from 2013, look at our earnings outlook, and then that will drive our debt reduction targets for the second half of the year. James Rollyson – Raymond James & Associates: And beyond this year, just given the challenging market conditions, if things were to stay soft into 2014, how long can you stay down here at these depressed CapEx levels before you have to start picking back up to maintain production?

We’ve still got some run rate on that Jim into 2014. I mean, obviously, the project capital which is always a big component and has been a big component in the past, if the market remains soft and we continue to defer project capital and we continue to scrub our sustaining capital going forward. James Rollyson – Raymond James & Associates: Okay. And just one quick follow-up on PRB, you talked some positive things obviously with demand for the winter with gas prices being double where they were and hopefully things normalize in inventory especially for PRB, if and when prices start going back up, and back into that mid to low 50 days kind of inventory ratio you’re looking for. With gas at four plus, where do you think the upside is on PRB prices if things materialize in a good fashion and how do you think the industry respond? Do you think people stay discipline or do you think production kind of chases that price back up to kind of cap it maybe?

Well, I think, I think, once we get our inventory back down to normal run rates and how quicker that occurs remain to be seen, we expect a very nice rebound in PRB pricing. If you just go back and look through history and see where there – I mean on equivalent basis up to $4 to $4.50 gas, there is significant headroom for PRB pricing to go up. In terms of the response, I think, we talked this last time, our sense is people will have a bit of ability to increase over time and run their existing equipment a bit harder. I don’t think, it’s my own sense that there is a fair bit of equipment is parked, I would not say that 100% of that is in operable condition. It’s going to take time for repairs to that equipment, to bring it back up in to an operating condition. So, you might see this will increase based on employee over time, running the existing equipment a bit harder. But then it’s going to take some investment to bring back another tranche of rolling stock, it’s there. And then, because people have not been buying equipment to offset the natural stripping ratio increases that occur in the Powder River Basin. To get much higher than – even if you ran all the equipment that was repaired and available from a year-ago, you wouldn’t be able to get to a year ago’s production levels until you got brand new equipment gearing that natural increase and stripping ratio that you have to move. So, it’s going to take some time to where people could fully get up and then so that, I think bodes well for not getting a spike, all of the sudden getting a flood of production and then prices tapering off. James Rollyson – Raymond James & Associates: Appreciate it.

It supplements a little bit on that, you recall that we’ve noted that the vast majority of plants that use PRB coal are competitive in that 250 to 275 range for natural gas prices so, obviously the $4 plus range is very supportive of additional PRB burn as exactly what we’re seeing out there. The price has moved 60% up from its drop on a spot level but obviously not back to the levels that would be viewed more reasonable and competitive with that $4 plus gas level. That’s something that once the shock absorber of additional inventories are burn down; you would expect to see result in that price movement. And we have seen so far year-to-date a draw of about 8 million to 10 million tons on the stockpiles that’s versus a normal build of about $2 million tons during that time. So clearly the combination of weather and the competitiveness of PRB coal in particular versus natural gas has been very supportive of that and we would see that trend continue. James Rollyson – Raymond James & Associates: Very helpful, guys. Thanks.

Our next question is from Mitesh Thakkar with FBR. Please go ahead. Mitesh Thakkar – Friedman Billings Ramsey & Co: Good morning, guys, and congratulations on the quarter.

Thank you, Mitesh. Mitesh Thakkar – Friedman Billings Ramsey & Co.: My first question is just on the exports, you mentioned that you will see some pullback in the exports from high cost 0base and how do you think U.S. exports play out for the industry and for you on the steam coal side on year-over-year?

Well, currently our view is, we’ll probably see about 25 million ton reductions in exports out of the U.S. maybe 15 million of that would be metallurgical coal, 10 million of that would be the thermal coals. That’s our best estimate at this point based on the first quarter performance. Obviously, the first quarter benefited from folks having sales and contracts in place. I think if you look at what’s occurring right now of the East Coast in particular, we’re starting to see a dramatic fall off in shipments. Mitesh Thakkar – Friedman Billings Ramsey & Co.: Okay, great. And just a follow-up, when you look at your Australian portfolio, obviously you have some of the low-cost assets. How do you think the recent pullback in PCI prices affect the overall economics in terms of just your PCI part of equation? Are there opportunities where you can think about expanding your margins by maybe moving production from one mine to another or something like that?

Well, couple of things. While overall met coal pricing had come down, come back up a bit this quarter. The spread between hard coking coal and PCI has narrowed. So the PCI has now had the same percentage reduction. But we’re focused on whether it’s Millennium, whether it’s Coppabella, Moorvale, our big PCI producers, we’re getting significant traction on these productivity improvement and cost reduction programs. These are big low cost operations and so really moving production between them doesn’t really make a lot of sense, because they’re kind of in the same league if you will. So, our focus is to continue to look at the entire platform in Australia, as well as here and what can we do to continue to drive our operations lower on the cost curve. But the opportunities on margin differentials between those Australian PCI operations, they’re all pretty similar and they’re all starting to run very, very well. Mitesh Thakkar – Friedman Billings Ramsey & Co: Okay, great. Thank you very much guys.

Our next question is from Justine Fisher with Goldman Sachs. Please go ahead. Justine Fisher – Goldman Sachs & Co.: Good morning.

Good morning.

Good morning. Justine Fisher – Goldman Sachs & Co.: My first question is on the outlook for U.S. coal consumption this year, so you guys are expecting 60 million to 80 million of coal consumption to come back in the U.S.? I mean I know you were commenting previously about the fact that we need to draw down inventories before we see U.S. producers start to increase their production in response. But it’s interesting to me that we haven’t seen higher production guidance from Peabody or from any of the other coal companies in the U.S., meaningful increased thermal production guidance and we’re almost halfway through the year now. I know you guys can’t comment other producers, but 60 million to 80 million tons of demand; I guess inventories are way below where they are now on a total tonnage basis? So why is there that disconnect between forecast for increased consumption, but not a higher production forecast in the U.S.?

Well, I think part of that $60 million to $80 million, that’s an annual number, and the first quarter has already delivered a big component of that in terms of coming out of inventories. It’s our estimate that, given that $60 million to $80 million number, given what we see for the run rate for the rest of the year, that gets inventories into that normalized range, as far as the late part of the year. So I’m not sure you would have expected to see folks jumping off today. Certainly, we’re not going to jump out today and begin to make changes in our PRB production forecast. That may occur in middle of the year, it may occur in the third quarter, but we’re not quite ready to do that. Given how we see the dynamic currently playing out in the later part of the year. Justine Fisher – Goldman Sachs & Co.: Okay. And then my follow-up question is on the 2014 contracting period, I know that you had mentioned earlier that, the drive down of inventories this year could create good conditions for contracting into 2014. With the recent spike in gas, have you guys started having conversations with utilities about 2014 sales? Are they starting to commit, or are they having a wait-and-see approach? And do you think that the utilities’ approach to the market is going to be similar to what it was in the previous years, where they’ll be willing to sign call in three to five year contracts somewhere above where spot is, or are they going to be left willing to sign higher price with longer-term contracts, because of the interplay between coal and gas?

Yeah. The only real dynamic I think we’re seeing with the utilities is, last of the three to five year contracts, they are starting to shorn up a little bit, two to three may be four year contacts. That’s really the only change in the dynamics. I think that we’re probably still going to see the normal contracting season for sort of – for the subsequent year, it’s not really going to get started until, May, June, July, August timeframe. We think there is going to be some additional volumes that are going to be needed in the back half of the year that will be the first focus here in the next, over the next month six weeks. And then for 2014, we’re looking at a summer time event. I still think the utilities we look at what the summer burn looks like and how that may impact their view of where inventories will be going into 2014. Justine Fisher – Goldman Sachs & Co.: Okay. And if I may, just one more question on Patriot Coal, I know there have been some headlines recently about the potential liability for Peabody from Patriot. Can you guys just give us an update on what your expected potential liability could be from the Patriot bankruptcy, I know that there you put out the numbers in your 10-K before as to what that total liability could be, has that changed a lot or what’s the update or status that we can get a good idea of what you guys might be responsible for?

Yeah, I’ll just tell you that absolutely nothing has changed in terms of our view of what those liabilities are as we continue to report. It’s about $150 million that we talk about which is a possible Black Lung liability. Patriot still has primary liability for that. There is still as long as their mining a ton of coal, they are still paying it. Everything else that you read everything else that you hear going on is all maneuvering and blustering around, their Patriot issues where how they find their benefit plans for the union. And so, we’ve been consistent, we’ve got this Black Lung liability on the books and that’s our only expected liability at this point in time. Justine Fisher – Goldman Sachs & Co.: Great. Thanks very much.

Our next question is from Brandon Blossman with Tudor, Pickering, Holt. Please go ahead. Brandon Blossman – Tudor, Pickering, Holt & Co.: Good morning, guys.

Good morning. Brandon Blossman – Tudor, Pickering, Holt & Co.: Let’s try to see if there is any incremental information from you guys on Australian cost and what I’m looking for here is just kind of quarter-over-quarter congressional indicators with the drivers being, what I’ve heard earlier is, the longwall moves where the owner-operator expenses hit and what quarter either it’s Q1 or whether it’s Q2 and the benefits of those owner-operator upgrades or changes? And then where are we on the Wilpinjong overburden extra incremental overburden removal process?

Sure Bran, this is Mike. So you’re looking specifically as to our first quarter performance relative to where we think we’re going to be for the second quarter, is that correct? Brandon Blossman – Tudor, Pickering, Holt & Co.: Just directionally throughout the year, I mean we look at the – on the Q4 call about a strong decrease in cost throughout the year and you guys set a very attractive number on cost in Australia Q1 here?

Okay, yeah, so our original guidance as we thought would be in the lower 80s per ton, we came in at $77 for the first quarter. The biggest driver there as we had these costs containment efforts that we’ve really tried to expand, and it’s the function of the team really taking that charge on board and they’ve delivered some better cost improvements earlier in the process. So that led us some benefit in the first quarter. We talked about owner-operator transition costs, which you see in the first quarter that offset that somewhat. We also discussed the overburden removal that we needed to do with the two properties that you mentioned. We were able to do some mine planning changes that’s moved some of that out of this in the first quarter to the second quarter. So then you look at, we came out at $77, how do you end up at $80 per ton for a target for the rest of the year? We do still have some longwall moves that are going come through, and some of that hits in the second quarter, we have a move at Wambo and then also, when you look at what our met mix was in the first quarter relative to the – what our expectations are for the back half of the year, the mix effect of a higher component of met coal will have an impact on that cost projection as well. Brandon Blossman – Tudor, Pickering, Holt & Co.: Though, arguably that’s good news, right?

It is. Yeah. On that particular line item, yeah, it’s going to cause some increasing cost overall, yeah, we’re pleased to be able to have a higher mix in that coal and the portfolio for the rest of the year. Brandon Blossman – Tudor, Pickering, Holt & Co.: All right, I mean from all of that, the met sounds like about $80 a ton is definitely achievable and not necessarily a stretch target so, that all sounds very positive and then just real quick, taking the cost to the U.S., I heard a mention of mix shift in the U.S. helping costs is the 2% or 3% down year-over-year solely due to mix shift or just some cost improvement on a dollar per ton per quality?

We will have some, you know the dynamics in the U.S. used to be impacts of lower volume, which typically would have a negative impact on cost; we’ve had cost containment efforts there as well. We have seen some mix shift to lower cost operations both in the Midwest and the West that helps us. So, it’s a combination of that along with the cost containment programs that we have and then talking about full year relative to second quarter, we do has a long wall move at 20 mile, so that going to negatively impact cost somewhat in the second quarter, but we still feel good about updating our targets that have a 2% to 3% reduction for the rest of the year. Brandon Blossman – Tudor, Pickering, Holt & Co.: Great. Good news and thank you Michael that’s helpful.

Okay, you’re welcome.

Our next question is from Andre Benjamin with Goldman Sachs. Please go ahead. Andre Benjamin – Goldman Sachs: Hi, good morning

Good morning Andre. Andre Benjamin – Goldman Sachs: First question is there a lot of focus on the call, on the 2013 cost. I know you can never be probably sure, but given these are long-term investments and productivity, how are you initially thinking about what this could ultimately mean for your Australia cost, once all the benefits are fully realized?

Well, you just have to look at the kind of costs that we’re driving out of the platform by making these conversions maybe just go through some of those. I mean obviously every contractor have their own embedded profit margin that they were getting on these contracts which no longer exists. All of these contractors were essentially were using smaller and less productive equipment than we are now running, now that we’ve converted to owner-operated, so you are going to get a productivity cost reduction all the way through whether it’s labor reduction cost per unit or fuel or transportation. Then in addition, we’re now doing all of the mine planning, so that allows us to optimize the mine plan actually deliver against the mine plan and reduce variability and variability in any of these operations drive huge swings in the cost structure. So, when you look at those three major components, we’re expecting to continue to have improvements now. Tell me what’s going to happen to fuel and all other external components, and I might be able to give you an actual estimate on what the cost reduction is versus today, but I really can’t do that, all I can tell you is for those things that we were paying before and being penalized before, we will no longer have.

And we made significant investments in the rehabilitation of the PCI mines that we acquired and A) you’re starting to see those costs come down, and B) you’re seeing the productivity improvements that we would expect to have going forward. Andre Benjamin – Goldman Sachs: That’s fair and definitely very helpful. As on the met side of business; you’ve walk through, why you think essential improvement in the second half of the year, perhaps just thinking through some of the sensitivities, I’m sure you guys have to plan for some other scenarios. What do you think your production responsibility if met prices stayed flat versus the second quarter or give bearish outcome closer to current spot levels are around 150?

Well, we’ve got, we’re running our platform right now that’s competitive at today’s pricing and as we continue to drive down our cost base, we’re giving ourselves some additional margin room. So, we’re not anticipating that we’re going to be having to look at that, if there is a major discontinuity that occurs, we may have to look differently at our strategy, but right now, the strategy is to continue to drive down cost, optimize and become more productive and that expands our margin at today’s environment and gives us headroom if we see the unforeseen right now in terms of softening. Andre Benjamin – Goldman Sachs: And just one small clarification today’s pricing, you mean the second quarter benchmark of 170 not the spot price right?

Correct, yeah I mean the spot price is going to move around a lot, thinly traded market and not a lot of volume and no real commitment between the buyer and the seller, so, yeah I’m talking about the benchmark. Andre Benjamin – Goldman Sachs: Thank you.

Our next question from Dave Gagliano with Barclays, please go ahead. David Gagliano – Barclays Capital Inc.: Hi thanks for taking my questions. My first question is actually related to the last one, I was wondering if you could talk a little bit more about what’s behind the class in the spot price, I realize that the liquid, but it has actually mattered a bit more recently. So, I was wondering if you could just touch on what you think is happening there, why it’s down to 150. How real is that number and what do think it means for the third-party negotiations, that’s my first question?

Well, I don’t think you could find anybody around the world that would say that that number is sustainable. So, what it appears has happened is you just have some volumes out there that folks are wanting to move on a stock basis and there’s not really any buyers right now, I mean the folks that have contracted are in pretty good shape until we start to see the Japan’s, the Korea’s, additional potential growth out of China, some firming in Europe, we are probably going to have a lot of, might be a lot of variability and lot of noise in that spot pricing on a periodic basis. When it gets down to negotiating quarterly pricing, it’s more about what are the market fundamentals, what’s it going to take to sustain supply and what’s it going to take to have a secure supply and that number is always historically different than what the spot price is on a particular day. David Gagliano – Barclays Capital Inc.: Okay, that’s helpful, thanks. My follow up, it looks like you priced somewhere around 9 million ton just comparing the press releases of 2014 U.S. volumes during the quarter and I am wondering if you gave us little more color on what the prices were, where those foreign sales in the (inaudible) and the midwest?

Yes, the vast majority of that was reprised under contracts that had reprising mechanisms in them and they are – we have a mix of reprising mechanisms, some have caps in callers, some have baskets of indices that are unrelated to spot pricing, some are related to a basket of other sales so, and I’m really not in a position to give you pricing on those contracts other than say that the current spot markets are not indicative of where those contracts would have been settled because of the pricing mechanisms in those real pressure. David Gagliano – Barclays Capital Inc.: Okay. Just to clarify meaning that the current spot markets, meaning that those contracts are signed above in spot markets or below spot markets?

Well, we’ve got the big marketing organization and I don’t typically left and signed contracts lower than spot. David Gagliano – Barclays Capital Inc.: Okay, good. As well as opening, all right, thanks.

Our next question is from Brian Yu with Citi. Please go ahead. Brian Yu – Citigroup: Great. Thanks and good morning. Greg, I’ve got – I guess this is bit of a sales possible question on PRB pricing still fall on to what David is asking. When you are looking at the PRB equal relative natural gas, it suddenly increased, but then there is the compared dynamic of what the market will bare based on what appears to you versus your decision to participate. So, if you look at this year’s average contracted price for PRB, it suddenly appears that disclosure contracted a little bit over $13 a ton and throughout last year we are seeing people try contracts at $12 maybe down to even $11. So, all that are still better than where spots are and what is the improvement demand that you’re expecting and how do you guys think about your decision that are participating PRB like today, do they have get back up $13, $14 before it makes sense or is this situation with the increased demand you have to maintain your market share or there is a desire to maintain the market share?

Well, you’re asking questions about when we would, if you will begin to expand by hence to meet a rising market. At the end of the day when the volume demand is there, it’s going to get met. So to a certain degree you want to make sure that you are not losing market share and blocking yourself out of the market. But having said that, at some point, the market is going to need additional volume, and I think, the most recent history would tell us that we need higher prices than we’ve got today even on a contract basis before people are going to start making the capital investments or the cash investments in rehabilitation of equipment to start raising that volume up to meet that demand. So, it’s interesting. When you talk about this differential between gas, you can look at the same thing in Europe and when you look at the disparity between API 2 pricing and the equivalent price of coal to equivalent natural gas in Europe, and coal is at a run rate on the API 2 while we are up to $150 a ton, but we are not seeing the supply response necessary to capture that. At $4, $4.50 natural gas in the U.S., there is significant run room for PRB pricing. I mean, I don’t have the exact number here, but my guess would it’s probably pushing $20 a ton or higher, so there is run room. And somewhere in-between where we are at today and that number, obviously, people are going to make decisions as to when they are going to start spending capital to the extent that they’ve got the ability to do so to bring production online or they are going to use that additional pricing to tie up themselves to get a bit healthy in the near-term. Brian Yu – Citigroup: So you are giving your sense of that we try uptake (inaudible) flat capacity in the PRB first, before and we see our convenience of moving and the prices as to the major players as you comment, there’s lot more than I give up market share because it’s tough to get that back. So it’s actually – as demand improve, the pricing lag will have to wait until lead through the supply capacity?

Yeah, I think what you’re going to see is a bit of a step function. I think as prices begin to move, people will start to run some overtime, work their existing equipment harder to try and meet the demand. Then prices are going to have to take another notch up before people are going to start spending money for new equipment, to recapture loss productive capacity due to this strip ratio changes. And then ultimately, for any large-scale investments in the Powder River basin, you’re going to have to have yet another third level of price increases. And I don’t know exactly what those breakpoints are, but you can certainly envision that it’s going to be that step function as you go though time. Brian Yu – Citigroup: We appreciate the insight. Thanks.

Our Next question is from Curt Woodworth with Nomura. Please go ahead. Curt Woodworth – Nomura Equity Research: Hi, good morning.

Good morning. Curt Woodworth – Nomura Equity Research: Yeah. Greg with the PCI market certainly outperforming on a relative basis as you mentioned and it seems like from the productivity metrics, as the legacy McArthur assets have been improving pretty significantly. You seem to suggest that there could be a meaningful profit improvement potential at those low-volatile PCI operations this year. I was wondering if you could help us quantify the potential, magnitude of that improvement, what kind of targets you think are achievable on a profitability basis or per ton cost basis?

Yeah, we’ve given what we’ve tried to do is give the building blocks we could, we are giving guidance for the second quarter, we’re not giving guidance for the full year. So, for the reasons that you mentioned on a qualitative basis around, completing the rehabilitation and getting those productivity improvements in place that’s what you’re seeing it helps us get to that $80 per ton cost target for the year. Curt Woodworth – Nomura Equity Research: Right, but specifically around Macarthur assets, it seems like a lot of the optimization efforts has been completed. So, given the size of the investment, I think $5 billion is there anyway for us to try to better understand what the upside is this year relative for last year for those specific yields?

Well you have to remember that prices are lower than they were last year even though the gap between PCI and hard coking coal has been reduced. We just aggregate PCI as part of that platform down there, we’re not going forward, it’s going to be breaking those assets out and saying those couple of mines have a certain amount of burnings power. But as I said, if you look year-over-year, we’ve got much stronger productivity, the team has done a fabulous job at the rehabilitation program, but we have also had revenue erosion because of price. Curt Woodworth – Nomura Equity Research: Okay. And then on the PRB side, when you look at sort of spare capacity in the industry, what is the amount of spare capacity you guys have that is, the first cost that’s relatively easy to bring back online, and then maybe what is the second level of capacity would you estimate, more significant capital investments and that would be more cumbersome?

Well, that’s a million dollar question that everybody would love to know the answer too. But I think we’ll keep that into ourselves if that’s okay.

And our next question is from Paul Forward with Stifel. Please go ahead. Paul Forward – Stifel, Nicolaus & Co. Inc.: Thanks. Good morning.

Good morning, Paul. Paul Forward – Stifel, Nicolaus & Co. Inc.: On your Illinois basin results in the first quarter $17 per ton margins, I think that’s, because I’ve seen from Peabody and the pricing was about even with the year ago. I was wondering if you could talk a little bit about your overall guidance of 5% to 10% down pricing in the U.S. in 2013, I think what that all implies, is that fairly significant stepping down a price realizations as older higher price contracts roll off and you have to reprise to the market. Are we right in saying that, that first quarter pricing might be high watermark for that region? And then maybe secondly, what is the prospect as you look to signing the remaining 40% of the U.S. business that’s on price for 2014? What’s the prospects for holding up those margins that those outstanding levels we saw in the first quarter through either the fact that you cut cost, you’re rotating out of some of your higher cost operations, or a price improvement if you’re correct about the inventory is coming down?

Yeah, Paul, you have several moving parts in there, and then you captured many of the amount of the elements. So as it relates to revenues and the outlook for the latter part of the year, we did have a couple of mines that we have shutdown out of the prior year that were higher price, that were a little higher quality, but that’s going to have an impact on the revenue. When you look at the margin per ton we had, some of that was the function of the cost reduction we were able to obtain, so you’ve got – when you get a mine like there around, its coming with sufficient volume; it’s got good contracted prices that’s the lower cost operation so that’s benefiting us on the Midwest side. As you look forward into the back half of the year, we said on a U.S. basis, we’re going to be down some 3% to 5% so it’s a function as you know that you’re going to have some contracts over time that roll off, and you’re going to have lower average realizations as a result. Paul Forward – Stifel, Nicolaus & Co. Inc.: But as you looking into 2014 and is it likely that will be able to succeed that kind of margin again or is that if we moved into an area of rolling off the old contracts and generally lower prices than what you’re seeing in the realized number for the quarter then we could expect…

Yeah. Paul Forward – Stifel, Nicolaus & Co. Inc.: As we get into 2014, it will be quite so positive?

Yeah, it’s, I mean, clearly on a revenue side, you’re going to see contract or reprice are going to come in at lower levels, then it’s a function of once we get into the contracting season, what the market firm is this for future revenue increases and then what we’ve attempted to do is shift the portfolio, move our production of lower cost operations, to try and preserve that margin and it will be a balancing act between our cost containment efforts and the ultimate realization on the open position. Paul Forward – Stifel, Nicolaus & Co. Inc.: Okay, thanks.

You’re welcome.

And then we have time for one more question, with the line of Richard Garchitorena with Credit Suisse. Please go ahead. Richard Garchitorena – Credit Suisse: Great. Thanks for taking my question up. Just one quick one, I know it’s early, but can you give us any color in terms of ballpark how much tons you have committed already in the U.S. for 2015 and when that may be in price probably before 2012?

We’ve got, when you look at the bulk of our PRB business, it grows off every three years. By the time, we get to 2015, you’re going to have that much more, we’re going to open position. I don’t know exactly what is the numbers?

Yeah, I mean on an overall U.S. basis, we’re about 35% to 45% price… Richard Garchitorena – Credit Suisse: Priced for 2015?

For 2015. Richard Garchitorena – Credit Suisse: Great, okay. Thank you.

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

Well, thanks everyone for their interest. I once again like to express my appreciation to the Peabody team. We delivered extremely well during the quarter, when you look at our ability to average level of cost reductions, safety, debt repayment and operations that we did. But I also want to thank all of you for your interest and we look forward to updating you at our next call.

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