<PAGE>
                                                                   Exhibit 10.20

                      AMENDMENT NO. 1 to CREDIT AGREEMENT
                           Dated as of April 30, 2001

          This AMENDMENT NO. 1 TO CREDIT AGREEMENT (this "Agreement") is among
                                                          ---------
PEABODY ENERGY CORPORATION (formerly known as P&L Coal Holdings Corporation), a
Delaware corporation (the "Borrower"), the Lenders (as defined below), and BANK
                           --------
ONE, NA (formerly known as The First National Bank of Chicago), as
administrative agent (in such capacity, the "Administrative Agent").
                                             --------------------

                            PRELIMINARY STATEMENTS:

        1.      The Borrower, the Lenders and the Administrative Agent have
entered into that certain Amended and Restated Credit Agreement, dated as of
June 9, 1998, by and among the Borrower, the several lenders from time to time
parties thereto (the "Lenders"), Lehman Commercial Paper Inc., as syndication
                      -------
agent, Lehman Brothers Inc., as arranger, the Administrative Agent, and Bank of
America National Trust & Savings Association and The Fuji Bank, Limited, as
documentation agents (the "Credit Agreement"; capitalized terms used and not
                           ----------------
otherwise defined herein have the meanings assigned to such terms in the Credit
Agreement).

        2.      The Borrower has informed the Lenders that it wishes to amend
certain provisions of the Credit Agreement, as more particularly described
below, in connection with the Borrower's recently announced initial public
offering of common stock (the "IPO").
                               ---

        3.      Subject to the terms and conditions set forth below, and in
consideration of certain agreements of the Borrower and the other Credit Parties
set forth herein, the Required Lenders are willing to agree to the amendments
described below.

          NOW, THEREFORE, in consideration of the premises and for other good
and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:

        1.      Amendments to Credit Agreement.  Upon the terms and subject to
                ------------------------------
the conditions set forth in this Agreement and in reliance on the
representations and warranties of the Borrower set forth in this Agreement, the
Borrower and the Required Lenders hereby agree to the following amendments to
the Credit Agreement:

                a.      Section 1.1 of the Credit Agreement is hereby amended by
adding the following definitions in proper alphabetical order:

                        1.      ""Amendment No. 1" means that certain Amendment
        No. 1 to Credit Agreement, dated as of April 30, 2001, among the
        Borrower, the Lenders, and the Administrative Agent."

                        2.      ""Amendment No.1 Effective Date" means the date
        on which all of the conditions precedent to the effectiveness of
        Amendment No. 1 have been satisfied."
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                        3.      ""IPO" means the initial public offering of
        common stock by the Borrower."

                b.      Section 1.1 of the Credit Agreement is hereby further
        amended as follows:

                        1.      The definition of "Consolidated Cash Interest
        Expense" is hereby amended by adding the following to the end thereof:
        "; provided, further, that for purposes of determining compliance with
        Section 7.1(b), Consolidated Cash Interest Expense shall be calculated
        after giving pro forma effect to any repayments of Indebtedness made
        with proceeds of the IPO."

                        2.      The definition of "Revolving Loan Sublimit" is
        hereby amended by deleting the figure "$200,000,000" and replacing it
        with the figure "$350,000,000" on the second line thereof.

                c.      Section 6.10(d) of the Credit Agreement is hereby
        amended by adding the following proviso to the end thereof: "; provided,
        further, that from and after the Amendment No. 1 Effective Date, Title
        Policies and Title Opinions not yet delivered to the Administrative
        Agent as of the Amendment No. 1 Effective Date will no longer be
        required to be delivered to the Administrative Agent in connection with
        Mortgages required to be delivered pursuant to Sections 6.10(c)(i),
        (ii), (iii) and (iv), it being understood that existing Title Policies
        must remain in full force and effect."

                d.      Section 7.1(a) of the Credit Agreement is hereby amended
        by replacing the chart contained therein with the following chart:

          Fiscal Quarter Ending                 Ratio
          ---------------------                 -----

          6/30/01                                4.00
          9/30/01                                4.00
          12/31/01                               4.00
          3/31/02                                4.00
          6/30/02                                4.00
          9/30/02                                4.00
          12/31/02                               4.00
          3/31/03                                3.75
          6/30/03                                3.75
          9/30/03                                3.75
          12/31/03                               3.75
          3/31/04                                3.50
          Thereafter                             3.50

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                e.      Section 7.1(b) of the Credit Agreement is hereby amended
by replacing the chart therein with the following chart:

          Fiscal Quarter Ending     Ratio
          ---------------------     -----

          6/30/01                    2.25
          9/30/01                    2.25
          12/31/01                   2.25
          3/31/02                    2.25
          6/30/02                    2.25
          9/30/02                    2.25
          12/31/02                   2.25
          3/31/03                    2.50
          Thereafter                 2.50


                f.      Section 7.7(a) of the Credit Agreement is hereby amended
and restated in its entirety as follows:

                        "(a)  Declare or pay, directly or indirectly, any
        dividend or make any other distribution (by reduction of capital or
        otherwise), whether in cash, property, securities or a combination
        thereof, with respect to any shares of its Capital Stock or directly or
        indirectly redeem, purchase, retire or otherwise acquire for value (or
        permit any Subsidiary to purchase or acquire) any shares of any class of
        its Capital Stock or set aside any amount for any such purpose, except
        that, following consummation of the IPO, so long as no Default or Event
        of Default has occurred and is continuing, the Borrower may pay
        dividends on its common stock in an amount not to exceed (i) $25,000,000
        during fiscal year 2002 and (ii) for each fiscal year thereafter, the
        greater of (x) 10% of Consolidated EBITDA for such fiscal year and (y)
        $25,000,000; provided, however, that any Restricted Subsidiary may
        declare and pay dividends or make other distributions to the Borrower or
        another Subsidiary that is a Credit Party."

                g.      Section 7.9(k) of the Credit Agreement is hereby amended
by adding the clause "(i) Investments in Joint Ventures in existence on the
Amendment No. 1 Effective Date and set forth on Schedule 1(f) to Amendment No.1
and (ii) in addition to the Investments permitted under clause (i) hereof," at
the beginning thereof.

                h.      Section 7.9 of the Credit Agreement is hereby further
amended by deleting the "and" at the end of clause (p) thereof and adding at the
end of such Section, immediately after the figure "$50,000,000" in clause (q),
the following: "; and (r) so long as no Event of Default has occurred and is
continuing, Investments consisting of purchases of Senior Notes and Subordinated
Notes pursuant to the provisions of Section 7.10(a)"

                i.      Section 7.10(a) of the Credit Agreement is hereby
amended and restated in its entirety as follows:

                        "(a)  Make any optional payment or prepayment on or
        redemption or purchase of, or deliver any funds to any trustee for the
        prepayment, redemption or

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<PAGE>

  defeasance of, the Senior Notes or the Subordinated Notes (whether upon
  acceleration of the maturity thereof, upon a "Change of Control" (as defined
  in the Senior Notes Indenture or the Subordinated Notes Indenture) or
  otherwise), provided, however, that proceeds from the IPO in excess of an
  amount necessary to repay in full all Term Loans then outstanding may be used
  to prepay, redeem, purchase, repurchase, defease or discharge the Senior Notes
  and/or the Subordinated Notes; provided that the Term Loans are previously or
  simultaneously repaid in full in cash, or (b) amend, modify or change, or
  consent or agree to any amendment, modification or change to any of the
  material terms of any Senior Notes Documents or Subordinated Notes Documents
  (other than any such amendment, modification or change which would extend the
  maturity or reduce the amount of any payment of principal thereof or which
  would reduce the rate or extend the date for payment of interest thereon)."

  2.    Conditions to Effectiveness.  The effectiveness of this Agreement is
        ---------------------------
conditioned upon satisfaction of the following conditions precedent:

        a.      the Administrative Agent shall have received signed written
authorization from the Required Lenders to execute this Agreement, and shall
have received counterparts of this Agreement signed by the Borrower and of the
Consent of Credit Parties attached hereto (the "Consent") signed by the Credit
Parties;

        b.      each of the representations and warranties in Section 3 below
shall be true and correct in all material respects;

        c.      after giving effect to the amendments set forth in Section 1
hereof, no Default or Event of Default shall have occurred and be continuing
under the Credit Agreement or any other Credit Document;

        d.      the Administrative Agent shall have received payment in
immediately available funds of all expenses incurred by the Administrative Agent
(including, without limitation, legal fees) for which invoices have been
presented, on or before the Amendment No. 1 Effective Date;

        e.      the Administrative Agent shall have received legal opinions from
the general counsel to the Borrower and Simpson Thacher & Bartlett, New York
counsel to the Borrower, in form and substance reasonably satisfactory to the
Administrative Agent, dated as of the Amendment No. 1 Effective Date and
addressed to each of the Administrative Agent, the Syndication Agent, the
Arranger, the Documentation Agents and the Lenders, as to the enforceability of
this Agreement and the Credit Agreement (as amended hereby) and related
corporate matters;

        f.      the Administrative Agent shall have received satisfactory
evidence that the execution, delivery and performance of this Agreement
(including, without limitation, the amendments to the Credit Agreement contained
herein) have been duly approved by all necessary corporate action of the
Borrower;

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<PAGE>

        g.      the Administrative Agent shall have received written
confirmation from the Persons issuing the existing Title Policies that such
Title Policies shall remain in full force and effect after giving effect to this
Agreement;

        h.      the Borrower shall have received at least $250,000,000 in gross
cash proceeds from the IPO; and

        i.      the Administrative Agent shall have received, for the account of
each Lender who consents to this Agreement in writing on or prior to April 30,
2001, a consent fee equal to 0.25% of the sum of the Revolving Credit
Commitments and Term Loans of such Lender outstanding on such date.

  3.    Representations and Warranties.  The Borrower represents and warrants
        ------------------------------
to the Administrative Agent and the Lenders as follows:

        a.      Authority.  Each of the Credit Parties has the requisite
                ---------
corporate power and authority to execute and deliver this Agreement and the
Consent, as applicable, and to perform its obligations hereunder and under the
Credit Agreement (as modified hereby). The execution, delivery and performance
by the Borrower and each other Credit Party of this Agreement, the Consent (as
applicable), the Credit Agreement (as modified hereby) and the transactions
contemplated hereby and thereby have been duly approved by all necessary
corporate action of such Person and no other corporate proceedings on the part
of each such Person are necessary to consummate such transactions (except as
expressly contemplated hereby and thereby).

        b.      Enforceability.  This Agreement has been duly executed and
                --------------
delivered by the Borrower. The Consent has been duly executed and delivered by
each Credit Party. This Agreement, the Consent and each Credit Document (as
modified hereby) is the legal, valid and binding obligation of each Credit Party
hereto and thereto, enforceable against such Credit Party in accordance with its
terms, subject to the effects of bankruptcy, insolvency, fraudulent conveyance,
reorganization, moratorium and other similar laws relating to or affecting
creditors' rights generally, general equitable principles (whether considered in
a proceeding in equity or at law) and an implied covenant of good faith and fair
dealing, and is in full force and effect.

        c.      Representations and Warranties.  The representations and
                ------------------------------
warranties contained in each Credit Document (other than any such
representations and warranties that, by their terms, are specifically made as of
a date other than the date hereof) are true and correct in all material respects
on and as of the date hereof as though made on and as of the date hereof.

        d.      No Default.  After giving effect to the amendments set forth in
                ----------
Section 1 hereof, no event has occurred and is continuing that constitutes a
Default or Event of Default.

  4.    Reference to and Effect on Credit Agreement.
        -------------------------------------------

        a.      Upon and after the effectiveness of this Agreement, each
reference in the Credit Agreement to "this Agreement", "hereunder", "hereof" or
words of like import referring to the Credit Agreement, and each reference in
the other Credit Documents to "the Credit

                                       5
<PAGE>

Agreement", "thereunder", "thereof" or words of like import referring to the
Credit Agreement, shall mean and be a reference to the Credit Agreement as
modified hereby.

        b.      Except as specifically modified above, the Credit Agreement and
the other Credit Documents are and shall continue to be in full force and effect
and are hereby in all respects ratified and confirmed. Without limiting the
generality of the foregoing, the Security Documents and all of the Collateral
described therein do and shall continue to secure the payment of all Obligations
under and as defined therein, in each case as modified hereby.

        c.      The execution, delivery and effectiveness of this Agreement
shall not, except as expressly provided herein, operate as a waiver of any
right, power or remedy of the Administrative Agent or any Lender under any of
the Credit Documents, nor, except as expressly provided herein, constitute a
waiver or amendment of any provision of any of the Credit Documents.

  5.    Counterparts.  This Agreement may be executed in any number of
        ------------
counterparts and by different parties hereto in separate counterparts, each of
which when so executed and delivered shall be deemed to be an original and all
of which taken together shall constitute one and the same agreement.  Delivery
of an executed counterpart of a signature page to this Agreement by facsimile
shall be effective as delivery of a manually executed counterpart of this
Agreement.

  6.    Severability.  Any provision of this Agreement that is prohibited or
        ------------
unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective
to the extent of such prohibition or unenforceability without invalidating the
remaining provisions hereof, and any such prohibition or unenforceability in any
jurisdiction shall not invalidate or render unenforceable such provision in any
other jurisdiction.

  7.    Governing Law.  This Agreement shall be governed by, and construed in
        -------------
accordance with, the laws of the State of New York.

                           [Signature Pages Follow]

                                       6
<PAGE>

          IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed by their respective officers thereunto duly authorized, as of the
date first written above.


                                 PEABODY ENERGY CORPORATION (f/k/a P&L Coal
                                 Holdings Corporation),
                                 a Delaware corporation


                                 By:
                                    ------------------------------
                                    Name:
                                    Title:


                                 BANK ONE, NA (f/k/a The First National Bank of
                                 Chicago),
                                 as Administrative Agent, on behalf of the
                                 Required Lenders


                                 By:
                                    ------------------------------
                                    Name:
                                    Title:
<PAGE>

                                                                   Schedule 1(f)
                                                                   -------------

                            JOINT VENTURES EXISTING
                      AS OF AMENDMENT NO. 1 EFFECTIVE DATE

Black Beauty Coal Company and Affiliates (see note below):
 .  Black Beauty Coal Company
     [ ]  Black Beauty Underground, Inc.
     [ ]  Black Beauty Mining, Inc.
     [ ]  GIBCO Motor Express, Inc.
     [ ]  GIBCO Motor Express, LLC
     [ ]  United Minerals Company, LLC
          [_]  Kentucky United, LLC (Lanham)
     [ ]  Enterprise Mine, LLC
     [ ]  SCC Holding LLC
     [ ]  Sugar Camp Coal, LLC
          [_]  Black Beauty Illinois, LLC
          [_]  Arclar Company, LLC
 .  Black Beauty Equipment Company
     [ ]  Sugar Camp Properties
 .  Eagle Coal Company
 .  Falcon Coal Company

Kanawha Eagle Coal, LLC



Note: Black Beauty Coal Company and affiliates were treated as joint venture
investments for purposes of Section 7.9(k) pursuant to the Consent and Waiver
dated as of March 2, 1999.
<PAGE>

                           CONSENT OF CREDIT PARTIES
                           Dated as of April 30, 2001

         The undersigned, as Guarantors and as Grantors under the "Guarantee and
Collateral Agreement" and as Grantors under the "Trademark Security Agreement"
and each "Patent Security Agreement" (as such terms are defined in and under the
Credit Agreement referred to in the foregoing Amendment No. 1), each hereby
consents and agrees to the foregoing Amendment No. 1 and hereby confirms and
agrees that (i) each of the Guarantee and Collateral Agreement, Trademark
Security Agreement and each Patent Security Agreement is, and shall continue to
be, in full force and effect and is hereby ratified and confirmed in all
respects except that, upon the effectiveness of, and on and after the date of,
said Amendment No. 1, each reference in the Guarantee and Collateral Agreement,
the Trademark Security Agreement and each Patent Security Agreement to the
"Credit Agreement", "thereunder", "thereof" and words of like import referring
to the Credit Agreement, shall mean and be a reference to the Credit Agreement
as modified by said Amendment No. 1, (ii) the Guarantee and Collateral Agreement
and all of the Collateral described therein does, and shall continue to, secure
the payment of all of the Obligations as defined in the Guarantee and Collateral
Agreement, (iii) the Trademark Security Agreement and all of the Collateral
described therein does, and shall continue to, secure the payment of all of the
Obligations as defined in the Guarantee and Collateral Agreement and (iv) each
Patent Security Agreement and all of the Collateral described therein does, and
shall continue to, secure the payment of all of the Obligations as defined in
the Guarantee and Collateral Agreement.

                           [Signature page follows]
<PAGE>

          IN WITNESS WHEREOF, the parties hereto have caused this Consent of
Credit Parties to be executed by their respective officers thereunto duly
authorized, as of the date first written above.


                         PEABODY ENERGY CORPORATION (f/k/a P&L Coal Holdings
                         Corporation)
                         AFFINITY MINING COMPANY
                         ARID OPERATIONS, INC.
                         BIG SKY COAL COMPANY
                         BLUEGRASS COAL COMPANY
                         CABALLO COAL COMPANY
                         CHARLES COAL COMPANY
                         CLEATON COAL COMPANY
                         COAL PROPERTIES CORP.
                         COLONY BAY COAL COMPANY
                         COOK MOUNTAIN COAL COMPANY
                         COTTONWOOD LAND COMPANY
                         DARIUS GOLD MINE, INC.
                         EACC CAMPS, INC.
                         EASTERN ASSOCIATED COAL CORP.
                         EASTERN ROYALTY CORP.
                         GALLO FINANCE COMPANY
                         GOLD FIELDS CHILE, S.A.
                         GOLD FIELDS MINING CORPORATION
                         GOLD FIELDS OPERATING COMPANY ORITZ
                         GRAND EAGLE MINING, INC.
                         HAYDEN GULCH TERMINAL, INC.
                         HIGHLAND MINING COMPANY
                         HILLSIDE MINING COMPANY
                         INDEPENDENCE MATERIAL HANDLING
                            COMPANY
                         INTERIOR HOLDINGS CORP.
                         JAMES RIVER COAL TERMINAL COMPANY
                         JUNIPER COAL COMPANY
                         KAYENTA MOBILE HOME PARK, INC.
                         MARTINKA COAL COMPANY
                         MIDCO SUPPLY AND EQUIPMENT
                            CORPORATION
                         MIDWEST COAL RESOURCES, INC.
                         MOUNTAIN VIEW COAL COMPANY
                         NORTH PAGE COAL CORPORATION

                         By:______________________________________
                            Name:
<PAGE>

                            Title:
                         OHIO COUNTY COAL COMPANY
                         PATRIOT COAL COMPANY, L.P.
                         PEABODY AMERICA, INC.
                         PEABODY COAL COMPANY
                         PEABODY COAL SALES COMPANY
                         PEABODY COALTRADE, INC.
                         PEABODY DEVELOPMENT COMPANY
                         PEABODY DEVELOPMENT LAND HOLDINGS,
                            LLC
                         PEABODY ENERGY SOLUTIONS, INC
                         PEABODY HOLDING COMPANY, INC.
                         PEABODY NATURAL GAS, LLC
                         PEABODY NATURAL RESOURCES COMPANY
                         PEABODY SOUTHWESTERN COAL COMPANY
                         PEABODY TERMINALS, INC.
                         PEABODY WESTERN COAL COMPANY
                         PEABODY VENEZUELA COAL CORP.
                         PINE RIDGE COAL COMPANY
                         PORCUPINE PRODUCTION, LLC
                         PORCUPINE TRANSPORTATION, LLC
                         POWDER RIVER COAL COMPANY
                         RIO ESCONDIDO COAL CORP.
                         RIVERS EDGE MINING, INC.
                         SENECA COAL COMPANY
                         SENTRY MINING COMPANY
                         SNOWBERRY LAND COMPANY
                         STERLING SMOKELESS COAL COMPANY

                         By:______________________________________
                            Name:
                            Title:


                         THOROUGHBRED, L.L.C.

                         By: Peabody Holding Company, its Manager

                         By:______________________________________
                            Name:
                            Title: