Cloud Peak Energy Inc. Announces Results for the Third Quarter and First Nine Months of 2012

Cloud Peak Energy Inc. (NYSE:CLD), one of the largest U.S. coal
producers and the only pure-play Powder River Basin (PRB) coal company,
today announced results for the third quarter and first nine months of
2012.

2012 Third Quarter and NineMonths Highlights

• 
  Record Adjusted EBITDA⁽¹⁾ of $108.4 million in the third
  quarter of 2012 compared with $87.9 million in the third quarter of
  2011; Adjusted EBITDA of $249.8 million compared with $258.8 million
  for the first nine months of 2011.
  
• 
  Net income of $85.3 million resulting in Adjusted EPS⁽¹⁾ of
  $0.80 compared to $0.61 in the third quarter of 2011; net income of
  $145.6 million resulting in Adjusted EPS of $1.62 compared to $1.78 in
  the first nine months of 2011.
  
• 
  Diluted EPS of $1.39 compared to $0.41 in the third quarter of 2011;
  diluted EPS of $2.39 compared to $2.41 in the first nine months of
  2011.
  
• 
  Generated cash from operations of $202.0 million for the first nine
  months of 2012.
  
• 
  Shipments from the three owned and operated mines in the quarter were
  24.4 million tons, level with the third quarter of 2011. For the first
  nine months, shipments were 67.0 million tons compared to 70.5 million
  tons in 2011.
  
• 
  Asian exports were up approximately 7.5% in the third quarter of 2012
  to 1.5 million tons from 1.4 million tons in 2011.
  
• 
  Improved 2012 full-year guidance including increased Adjusted EBITDA
  expectations of $310 million to $340 million.
  

(1) Defined later.

'After a slower second quarter for shipments, we were pleased that the
hot summer and rising natural gas prices led to stronger shipments to
our customers in the third quarter. Our realized average price of $13.28
per ton was well above spot prices and continues to support our strategy
of selling forward our production. In combination with good operational
cost controls at the mines, this generated a record Adjusted EBITDA for
the quarter of $108 million,? said Colin Marshall, President and Chief
Executive Officer. 'Nevertheless, current forward prices for 2013 and
2014 domestic deliveries are low, and we are managing the business
accordingly. In addition, current Newcastle prices for 2013 are below
2012 levels, which will reduce our 2013 export margins.?

For the third quarter, sales from our three company-operated mines were
24.4 million tons, level with 24.4 million tons in the third quarter of
2011, and significantly higher than second quarter 2012 shipments of
20.1 million tons. The increase in shipments was due to increased demand
as customers caught up on their committed deliveries after a strong
summer burn. We shipped 1.5 million tons to our Asian customers as the
Westshore Terminal operated well and the demand from our Asian utility
customers remains resilient. For the third quarter 2012, the average
cost of product sold was $9.14 per ton compared to $9.17 per ton in the
third quarter of 2011. Good operational performance along with an
increased realized price per ton of $13.28, compared to $12.91 in 2011,
resulted in a margin expansion to $4.14 per ton from $3.74 per ton in
the third quarter of 2011.

Health, Safety and Environment Record

During the third quarter of 2012, of our approximately 1,400 mine site
employees, three suffered minor reportable injuries resulting in a
year-to-date MSHA All Injury Frequency Rate of 0.73, a decrease over the
full year 2011 rate of 1.18. During the 75 MSHA inspector days in the
third quarter of 2012, we were issued 11 substantial and significant
(S&S) citations, of which, six have been satisfactorily resolved and
resulted in total proposed fines of $5,387. Fines for the remaining five
S&S citations have not yet been assessed.

Balance Sheet and Cash Flow

Cash flow from operations totaled $202.0 million for the first nine
months of 2012. For the nine months, cash spent on capital expenditures
was $36.4 million (excluding capitalized interest) and cash spent on LBA
installments was $129.2 million. This includes $60 million paid for
committed coal leases in the third quarter, which was the remaining
obligation for 2012. Cloud Peak Energy′s balance sheet continues to be
well positioned with total available liquidity of $766 million at
September 30, 2012 and no debt maturities before 2016.

Tax Receivable Agreement and Related Adjustments

During the third quarter, we completed our annual update of our life of
mine operating plans and calculation of the resulting estimated future
taxable income, which is used to update the undiscounted future
estimated liability to Rio Tinto under the Tax Receivable Agreement.
These updates resulted in a reduction of the future tax value expected
to be received; and therefore, there was a decrease in the third quarter
in the future estimated liability due to Rio Tinto under the Tax
Receivable Agreement. A non-cash benefit of $29.0 million to
non-operating income was recorded for the three months ended September
30, 2012. Changes to our estimated future taxable income also changed
our projections regarding our ability to fully utilize our deferred tax
assets and we have therefore made adjustments to our valuation allowance
on deferred tax assets. The deferred tax adjustments relating to the
change in the tax agreement liability and the valuation allowance
resulted in a net $6.5 million deferred tax benefit which was recorded
through income tax expense.

The coal acquired as a part of the Youngs Creek acquisition is not
anticipated to be classified as proven and probable reserves at December
31, 2012; therefore, no adjustment was made to the tax agreement
liability for this coal asset acquisition as we are unable to make a
reasonable estimate of the expected additional taxable income resulting
from the development of these assets until definitive mine plans are
sufficiently advanced.

Exports

We continue to expect to export approximately 4.3 million tons for the
full year 2012, 4.0 million tons of which will go through the Westshore
Terminal. During the third quarter, Cloud Peak Energy shipped
approximately 1.5 million tons to our Asian customers, bringing the
nine-month total to 3.5 million tons. The Westshore Terminal is
undergoing the second phase of their current expansion, which will
increase the annual capacity from about 32 million tons to 36 million
tons. We are planning on increasing our 2013 shipments in proportion to
the expanded capacity to around 4.5 million tons through the Westshore
Terminal.

Outlook

The hot summer increased coal burn and natural gas prices, which led to
stronger shipments and reductions in stockpiles of coal held by
utilities. Stockpiles, while still high, are estimated to be within the
five-year average. Stockpiles of PRB coal as of the end of August 2012
were at approximately 90 million tons, which is around 26 million tons
above the same time last year when they were at a five-year low. The
outlook for coal demand for the rest of the year will depend on the
intensity and timing of the winter season and the price of natural gas.

Given the strong operating performance of the business year to date,
including domestic and export shipments, and effective cost controls, we
are raising our guidance for Adjusted EBITDA for 2012. We now anticipate
that Adjusted EBITDA will be between $310 million and $340 million up
from our previous range of $300 million to $330 million.

We continue to scrutinize capital expenditures. As a result of
continuing to optimize our condition monitoring maintenance programs, we
are reducing our expected capital expenditures for 2012 to between $50
million and $60 million.

For 2012, Cloud Peak Energy has committed 92.4 million tons, of which
92.0 million tons are under fixed-price agreements with a
weighted-average price of $13.23 per ton. Assuming current low OTC
prices for our committed but unpriced 2012 tons, our weighted-average
price would be $13.20 per ton for the full year 2012. We are not
expecting to make any significant additional sales for delivery in 2012
and are focusing on working with our customers to ensure delivery of
their committed tonnages. During the third quarter of 2012, our
committed position for 2013 increased by only 3.4 million tons to 84.6
million tons due to limited activity in the markets. Of this committed
2013 production, 74.6 million tons are under fixed-price commitments
with a weighted-average price of $13.58 per ton. For 2014, we currently
have 54.7 million tons committed of which 43.3 million tons are under
fixed-price commitments with a weighted-average price of $14.49. If the
current weak pricing environment persists through the balance of this
year, the expected average realized prices for 2013 are likely to be
similar to 2012.

Current Newcastle forward prices for 2013 are below 2012 levels, which
will reduce our 2013 export margins. Consequently, we have not yet
committed pricing on our export tons beyond the first quarter of 2013,
and we will expect to lock in further pricing in the coming quarters
when we are hopeful prices will rise from their current low levels. Our
Newcastle hedging is providing some protection against the current low
prices.

Marshall said, 'We are encouraged that domestic customers are now taking
their committed coal, and we are receiving fewer requests for tonnage
deferrals. The hot summer and the rebound in the price of natural gas
have resulted in utilities sending their trains and burning their
contracted coal. We are anticipating a normal winter which should
continue to draw down the stockpiles of coal and move natural gas
consumption to domestic and commercial heating. Given this scenario, it
is still likely that it will take until at least mid-2013 for the impact
of last winter on PRB prices to be worked though so we can return to a
more favorable pricing environment. However, 2012 is going well and
after a record third quarter, we are raising our guidance to reflect
these improvements.?

Updated Guidance ? 2012 Financial and Operational Estimates

The following table provides our current outlook and assumptions for
selected 2012 financial and operational metrics:

Conference Call Details

A conference call with management is scheduled at 5:00 p.m. ET on
October 25, 2012, to review the results and current business conditions.
The call will be webcast live over the Internet from our Web site at under 'Investor Relations.? Participants should follow the instructions
provided on the Web site for downloading and installing the audio
applications necessary to join the webcast. Interested individuals also
can access the live conference call via telephone at 866.730.5765
(domestic) or 857.350.1589 (international) and entering pass code
44853566.

Following the live webcast, a replay will be available at the same URL
on our Web site for seven days. A telephonic replay will also be
available approximately two hours after the call and can be accessed by
dialing 888.286.8010 (domestic) or 617.801.6888 (international) and
entering pass code 57713356. The telephonic replay will be available for
seven days.

About Cloud Peak Energy ^?

Cloud Peak Energy Inc. (NYSE:CLD) is headquartered in Wyoming and
is one of the largest U.S. coal producers and the only pure-play PRB
coal company. As one of the safest coal producers in the nation, Cloud
Peak Energy specializes in the production of low sulfur, subbituminous
coal. The company owns and operates three surface coal mines in the PRB,
the lowest cost major coal producing region in the nation. The Antelope
and Cordero Rojo mines are located in Wyoming and the Spring Creek mine
is located near Decker, Montana. Cloud Peak Energy also owns rights to
substantial undeveloped coal and complimentary surface assets in the
Northern PRB, further building the company′s long-term position to serve
Asian export and domestic customers. With approximately 1,600 employees,
the company is widely recognized for its exemplary performance in its
safety and environmental programs. Cloud Peak Energy is a sustainable
fuel supplier for approximately 4% of the nation′s electricity.

Cautionary Note Regarding Forward-Looking Statements

This release and our related presentation contain 'forward-looking
statements? within the meaning of the safe harbor provisions of Section
27A of the Securities Act of 1933 and Section 21E of the Securities
Exchange Act of 1934. Forward-looking statements are not statements of
historical facts and often contain words such as 'may,? 'will,?
'expect,? 'believe,? 'anticipate,? 'plan,? 'estimate,? 'seek,? 'could,?
'should,? 'intend,? 'potential,? or words of similar meaning.
Forward-looking statements are based on management′s current
expectations, beliefs, assumptions and estimates regarding our company,
industry, economic conditions, government regulations and energy
policies and other factors. Forward-looking statements may include, for
example, (1) our outlook for 2012 and future periods for our company,
the PRB and the industry in general, and our operational, financial and
export guidance, including any development of future terminal capacity
or increased access to existing capacity; (2) anticipated economic
conditions and demand by domestic and foreign utilities, including the
anticipated impact on demand driven by regulatory developments and
uncertainties; (3) the impact of competition from natural gas and other
alternative sources of energy used to generate electricity; (4) coal
stockpile levels and the impacts on future demand; (5) our plans to
replace and/or grow our coal tons; (6) business development and growth
initiatives, including estimates, plans and potential future development
and synergies of our recently acquired Youngs Creek assets and potential
transaction with the Crow Tribe of Indians; (7) operational plans for
our mines; (8) our cost management efforts; (9) industry estimates of
the EIA and other third party sources; (10) estimated Tax Receivable
Agreement liabilities; and (11) other statements regarding our plans,
strategies, prospects and expectations concerning our business,
operating results, financial condition and other matters that do not
relate strictly to historical facts. These statements are subject to
significant risks, uncertainties, and assumptions that are difficult to
predict and could cause actual results to differ materially and
adversely from those expressed or implied in the forward-looking
statements. Factors that could adversely affect our future results
include, for example, (a) future economic and weather conditions; (b)
coal-fired power plant capacity and utilization, demand for our coal by
the domestic electric generation industry, export demand and terminal
capacity and the prices we receive for our coal; (c) reductions or
deferrals of contracted tons or future purchases by major customers and
our ability to renew sales contracts; (d) competition from other coal
producers, natural gas producers and other sources of energy,
domestically and internationally, (e) environmental, health, safety,
endangered species or other legislation, regulations, treaties, court
decisions or government actions, or related third-party legal challenges
or changes in interpretations, including new requirements or
uncertainties affecting the use, demand or price for coal or imposing
additional costs, liabilities or restrictions on our mining operations
or the utility industry; (f) public perceptions, third-party legal
challenges or governmental actions and energy policies relating to
concerns about climate change, air quality or other environmental
considerations, including emissions restrictions and governmental
subsidies or mandates that make wind, solar or other alternative fuel
sources more cost-effective and competitive with coal; (g) operational,
geological, equipment, permit, labor, weather-related and other risks
inherent in surface coal mining; (h) our ability to efficiently and
safely conduct our mining operations, (i) transportation and export
terminal availability, performance and costs; (j) availability, timing
of delivery and costs of key supplies, capital equipment or commodities
such as diesel fuel, steel, explosives and tires; (k) our ability to
acquire future coal tons through the federal LBA process and necessary
surface rights and permits in a timely and cost-effective manner and the
impact of third-party legal challenges, (l) access to capital and credit
markets and availability and costs of credit, surety bonds, letters of
credit, and insurance; (m) litigation and other contingent liabilities;
(n) risks associated with acquisitions, including not achieving
anticipated synergies, increased development and operating costs,
failure to develop acquired assets, termination of the coal leases from
Chevron and CONSOL in the Youngs Creek transaction if we fail to meet
minimum future production requirements, and our failure to enter into
the potential transaction with the Crow Tribe of Indians, and (o) other
risk factors described from time to time in the reports and registration
statements we file with the Securities and Exchange Commission ('SEC?),
including those in Item 1A - Risk Factors in our most recent Form 10-K
and any updates thereto in our Forms 10-Q and current reports on Forms
8-K. There may be other risks and uncertainties that are not currently
known to us or that we currently believe are not material. We make
forward-looking statements based on currently available information, and
we assume no obligation to, and expressly disclaim any obligation to,
update or revise publicly any forward-looking statements made in this
release or our related presentation, whether as a result of new
information, future events or otherwise, except as required by law.

Non-GAAP Financial Measures

This release and our related presentation include the non-GAAP financial
measures of (1) Adjusted EBITDA and (2) Adjusted Earnings Per Share
(Adjusted EPS). Adjusted EBITDA and Adjusted EPS are intended to provide
additional information only and do not have any standard meaning
prescribed by generally accepted accounting principles in the U.S., or
GAAP. A quantitative reconciliation of historical net income to Adjusted
EBITDA and EPS (as defined below) to Adjusted EPS is found in the tables
accompanying this release.

EBITDA represents net income, or income from continuing operations, as
applicable, before (1) interest income (expense) net, (2) income tax
provision, (3) depreciation and depletion, (4) amortization, and (5)
accretion. Adjusted EBITDA represents EBITDA as further adjusted for
specifically identified items that management believes do not directly
reflect our core operations. The specifically identified items are the
impacts, as applicable, of: (1) the Tax Receivable Agreement including
tax impacts of our 2009 initial public offering and 2010 secondary
offering, (2) adjustments for derivative financial instruments including
unrealized marked-to-market amounts and cash settlements realized, and
(3) our significant broker contract that expired in the first quarter of
2010. Because of the inherent uncertainty related to the items
identified above, management does not believe it is able to provide a
meaningful forecast of the comparable GAAP measures or a reconciliation
to any forecasted GAAP measures.

Adjusted EPS represents diluted earnings (loss) per common share
attributable to controlling interest, or diluted earnings (loss) per
common share attributable to controlling interest from continuing
operations, as applicable ('EPS?), adjusted to exclude the estimated per
share impact of the same specifically identified items used to calculate
Adjusted EBITDA and described above, adjusted at the statutory tax rate
of 36%.

Adjusted EBITDA is an additional tool intended to assist our management
in comparing our performance on a consistent basis for purposes of
business decision-making by removing the impact of certain items that
management believes do not directly reflect our core operations.
Adjusted EBITDA is a metric intended to assist management in evaluating
operating performance, comparing performance across periods, planning
and forecasting future business operations and helping determine levels
of operating and capital investments. Period-to-period comparisons of
Adjusted EBITDA are intended to help our management identify and assess
additional trends potentially impacting our company that may not be
shown solely by period-to-period comparisons of net income or income
from continuing operations. Adjusted EBITDA is also used as part of our
incentive compensation program for our executive officers and others.

We believe Adjusted EBITDA and Adjusted EPS are also useful to
investors, analysts and other external users of our consolidated
financial statements in evaluating our operating performance from period
to period and comparing our performance to similar operating results of
other relevant companies. Adjusted EBITDA allows investors to measure a
company′s operating performance without regard to items such as interest
expense, taxes, depreciation and depletion, amortization and accretion
and other specifically identified items that are not considered to
directly reflect our core operations. Similarly, we believe our use of
Adjusted EPS provides an appropriate measure to use in assessing our
performance across periods given that this measure provides an
adjustment for certain specifically identified significant items that
are not considered to directly reflect our core operations, the
magnitude of which may vary drastically from period to period and,
thereby, have a disproportionate effect on the earnings per share
reported for a given period.

Our management recognizes that using Adjusted EBITDA and Adjusted EPS as
performance measures has inherent limitations as compared to net income,
income from continuing operations, EPS or other GAAP financial measures,
as these non-GAAP measures exclude certain items, including items that
are recurring in nature, which may be meaningful to investors. Adjusted
EBITDA and Adjusted EPS should not be considered in isolation and do not
purport to be alternatives to net income, income from continuing
operations, EPS or other GAAP financial measures as a measure of our
operating performance. Because not all companies use identical
calculations, our presentations of Adjusted EBITDA and Adjusted EPS may
not be comparable to other similarly titled measures of other companies.
Moreover, our presentation of Adjusted EBITDA is different than EBITDA
as defined in our debt financing agreements.