Cloud Peak Energy and the Crow Tribe of Indians Announce Pending Crow Tribal Authorization on Option Agreement for up to 1.4 Billion Tons of In-Place Coal Near Cloud Peak Energy′s Northern Powder River Basin Properties

Cloud Peak Energy Inc. (NYSE:CLD), one of the largest U.S. coal
producers, and the Crow Tribe of Indians today announced they have
reached tentative agreements regarding exploration rights and exclusive
options to lease and develop up to an estimated 1.4 billion tons of
in-place Northern Powder River Basin coal on the Crow Indian Reservation
in southeast Montana, near Cloud Peak Energy′s Spring Creek mine and
recently acquired Youngs Creek Mining Company, LLC and CX Ranch
properties. The agreements are being submitted to the Crow Tribal
Legislature for review, which is anticipated during August. If approved
by the Legislature, the agreements would be executed by the Tribal
Chairman and Cloud Peak Energy and then submitted to the U.S. Department
of the Interior for review and requested approval.

Cloud Peak Energy would pay the Tribe $2.25 million upon Tribal approval
and execution of the agreements, $1.5 million upon approval by the
Department of the Interior, and additional annual payments thereafter
through the initial option period, to a cumulative total of up to $10
million. Additional option payments would be made through any extension
periods. If the agreements are approved, Cloud Peak Energy anticipates
conducting exploration during the initial option period to complete
delineation of the potentially economic coal tonnages subject to the
options.

The tentative agreements provide for exploration and three exclusive
options to lease three separate coal deposits on the Crow Indian
Reservation over an initial five-year term, with two extension periods
through 2035 if certain conditions are met. Upon exercise of an
option(s) to lease, Cloud Peak Energy would pay the Tribe an amount
equal to $0.08 per ton to $0.15 per ton, depending on the lease and coal
deposit and subject to adjustment for inflation. The proposed agreements
also set forth adjustable royalty rates, ranging from 7.5% to 15%, and
contain standard coal production taxes amounting to a nominal 20% of FOB
mine gross proceeds to be paid to the Tribe. Cloud Peak Energy would
also provide preferential hiring, training, and promotion for qualified
Indians, funding of $50,000 per year for scholarships for qualified Crow
Tribal members, and support for Indian-certified contractors, among
other things.

'If approved, these exploration and option agreements with the Crow
Tribe would allow us to access up to 1.4 billion tons of coal to further
build our Northern Powder River Basin position. The location of the coal
next to our Spring Creek mine and the recently acquired Youngs Creek
project and CX Ranch lands will let us optimize our mine development. We
are comfortable that the option structure, and variable royalty rates,
will enhance the potential development of mining operations on the Crow
Reservation,? said Colin Marshall, Cloud Peak Energy′s President and
CEO. 'We look forward to working with the Crow Tribe in what we see as a
long-term partnership that will hopefully bring jobs and economic
development on the Reservation.?

Cedric Black Eagle, Chairman of the Crow Tribal Executive Branch, said,
'The Cloud Peak Energy agreements we are presenting to the Tribal
Legislature for approval are the result of extensive negotiations, and
we believe that they offer the best potential for developing the Crow
Tribe′s coal resources in the southeastern part of the Reservation.
Partnering with Cloud Peak Energy will help diversify the Tribe′s
long-term coal revenue, provide good jobs and potential access to export
markets for Tribal coal, and Cloud Peak Energy′s recent acquisition of
the CX Ranch lands provides surface access for mining and shipping Crow
coal through the existing Spring Creek mine train load-out facilities.?

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. 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.

About the Crow Tribe of Indians

The Crow Tribe of Indians (Apsáalooke Nation) is a federally-recognized
Indian tribe, whose 13,000 members occupy a 2.2 million acre Reservation
in southeastern Montana. Under the Tribe′s 2001 Constitution, the Tribal
Government consists of an Executive Branch, a Legislative Branch, and an
independent Judicial Branch.

Cautionary Note Regarding Forward Looking Statements

This release contains '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 or beliefs as well as 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 current estimates of the
quantity and quality of the Tribal coal, (2) any future exercise of the
options and development, production and marketing of the coal, (3) the
anticipated timing and ability to obtain required Tribal, BIA and other
approvals, (4) the future execution and delivery of definitive
agreements, (5) business development and growth initiatives and
strategies; (6) potential synergies of this anticipated transaction, (7)
the potential development of the Youngs Creek Mine and (8) other
statements regarding this anticipated transaction and our plans,
strategies, prospects and expectations concerning our business,
industry, economic conditions, 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 from those expressed or implied in the
forward-looking statements, including the risks that (i) required Crow
Tribe, BIA and other approvals and permits are not obtained in a timely
manner or at all, (ii) definitive agreements are not entered into and
the potential transaction with the Crow Tribe is not consummated, (iii)
economic tons are substantially less than the currently estimated
in-place tons, (iv) sufficient additional West Coast terminal capacity
is not developed at all or in a timely manner, (v) Asian export demand
and domestic demand for PRB coal weakens, (vi) future development and
operating costs significantly exceed our expectations, or (vii)
anticipated synergies of the potential transaction are not achieved. For
a discussion of some of the additional factors that could adversely
affect our future results or the anticipated benefits of this potential
transaction, refer to the 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, whether as a result of
new information, future events or otherwise, except as required by law.

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Cloud Peak Energy Inc.

Karla Kimrey

Vice President, Investor
Relations

720-566-2932