By Chelsea Stevenson Peabody Energy Corp. (BTU) said it entered an agreement with Kinder Morgan Energy Partners L.P. (KMP) to expand the Gulf Coast coal-export platform for Peabody's Colorado, Powder River Basin and Illinois Basin coal products. The deal gives Peabody more access to export coal at Kinder Morgan's Deepwater Terminal and Houston Bulk Terminal and its International Marine Terminal. To access the Houston terminals, Peabody formed an agreement with Union Pacific Corp.'s (UNP) railroad. The additional access could increase Peabody's export capacity in the Gulf Coast by roughly five million to seven million tons of coal a year starting in 2014 and ending in 2020. Further flexibility comes with the agreement and allows Peabody to increase its service to its international customer base as it supports Kinder Morgan's Gulf Coast coal handling facilities. "Export-coal demand continues to grow around the country and Kinder Morgan is well positioned with our network of terminals to serve our customers' needs in multiple locations," said Jeff Armstrong, Kinder Morgan Terminals president. Kinder Morgan plans to invest a total of roughly $400 million to expand its network. At the end of the expansion it will have a capacity of about 27 million short tons per year. Peabody will begin exporting Colorado and Power River Basin coal products in 2014. In Illinois, an agreement to facilitate exports and domestic sales will be extended into 2018. Last quarter, Peabody beat analysts expectations, though its earnings slid. The company had said it expected international demand to increase, particularly in China and India. Kinder Morgan's most recent earnings also fell amid fair-value remeasurements of assets the company was required to sell from a pending acquisition. Though it had said it benefited from a rush into U.S. alternative shale fields and increasing demand in Asia for coal, which supported performance at its export terminals. Earlier this year it unveiled plans to also enter an agreement with Arch Coal Inc. (ACI) to increase its Gulf Coast operations. Peabody shares remain flat in premarket trading at $22.50, the stock has dropped 62% in the past 12 months, while Kinder Morgan shares have slid 0.7% to $85. Kinder Morgan's stock is up 16% in the past 12 months. Write to Chelsea Stevenson at chelsea.stevenson@dowjones.com
