Cloud Peak Energy and the Crow Tribe of Indians Sign Option and Exploration Agreements

Cloud Peak Energy Inc. (NYSE:CLD), one of the largest U.S. coal
producers, and the Crow Tribe of Indians today announced that they have
signed the option and exploration agreements covering an estimated 1.4
billion tons of in-place coal in the Northern Powder River Basin (NPRB).
The agreements will now be submitted to the U.S. Department of the
Interior for review with a request for approval within 180 days.
Department of the Interior approval is required in order to consummate
the transactions contemplated by the agreements. Cloud Peak Energy made
a $2.25 million payment to the Crow Tribe at signing and, if approved by
the Department of the Interior, will make an additional $1.5 million
payment, followed by annual option payments over an initial five-year
term. Total payments through the initial five-year option period could
amount to $10 million.

The option and exploration agreements provide for exploration and
exclusive options to lease three separate coal deposits containing
approximately 1.4 billion tons of Northern Powder River Basin ('NPRB?)
coal on the Crow Indian Reservation in Montana over an initial five-year
term, with two extension periods through 2035 if certain conditions are
met. The three deposits are in the vicinity of Cloud Peak Energy′s
Spring Creek mine and Youngs Creek project in Montana and Wyoming,
respectively, and would potentially be developed as part of a larger
mining complex with these properties. Subsequent to approval by the
Department of Interior, if obtained, and subject to customary regulatory
approvals, Cloud Peak Energy will conduct exploration activities to
complete delineation of the potentially economic coal tonnages that are
subject to the options.

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 specific lease and coal deposit and subject to adjustment for
inflation. The agreements also set forth adjustable royalty rates,
ranging from 7.5% to 15%, and coal production taxes amounting to a
nominal 20% of FOB mine gross proceeds payable to the Tribe. Cloud Peak
Energy would provide preferential hiring, training, and promotion for
qualified Indians for work on the Reservation, funding of Crow
scholarships at an initial amount of $75,000 per year under the option
agreement and $150,000 per year upon the exercise and approval of a
lease(s), subject to adjustment for inflation, and support for
Indian-certified contractors, among other things.

'Cloud Peak Energy is pleased to have signed the agreements with the
Crow Tribe and is hopeful that Department of Interior approval will
follow in good order. The exploration and other work to get to a
decision on exercising an option(s) and, ultimately to production, is a
multi-year process. Ideally, the development of the Crow Tribe coal
resources and our larger Spring Creek complex would coincide with the
development of new West Coast export terminal capacity. We also see the
potential to expand NPRB domestic customers with high Btu, lower sodium
content coal from certain Crow Tribe coal deposits,? said Colin
Marshall, Cloud Peak Energy′s President and CEO. 'We are embarking on
what we see as a long-term partnership with the Crow Tribe that will
hopefully provide revenue and jobs and economic development on the
Reservation.?

'I am pleased to sign the Cloud Peak Energy agreements on behalf of the
Crow Tribe,? said Darrin Old Coyote, Chairman of the Crow Tribal
Executive Branch. 'Our new Executive team assumed office a little more
than a month ago. By prioritizing this set of agreements, and with the
recent approval of the Crow Legislative Branch, we have reaffirmed our
collective commitment to responsibly develop our natural resources for
the long-term benefit of our Tribal citizens. We believe that the Cloud
Peak Energy agreements offer the best potential for near-term
development of the Tribe′s large coal resources in the southeastern part
of the Reservation. This development would diversify our revenue sources
to fund essential Tribal Government services, provide substantial
educational and training opportunities for our youth, and generate many
new good-paying jobs.?

'Montana jobs rely on working together to create new opportunities. The
Crow Tribe is blessed with rich natural resources along with decades of
experience in responsibly developing them. I′m proud to see this
historic agreement between the Crow Tribe and Cloud Peak Energy come
together for the jobs Crow tribal members and Montanans need today and
in the long-run,' said Montana's senior U.S. Senator Max Baucus. 'I look
forward to continuing to work with all parties to foster even more
opportunities for all Montana families.?

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 complementary 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.

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 DOI and other
approvals, (4) business development and growth initiatives and
strategies; (5) potential synergies of this anticipated transaction, (6)
the potential development of the Youngs Creek project and (7) 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 DOI
and other approvals and permits are not obtained in a timely manner or
at all, (ii) economic tons are substantially less than the currently
estimated in-place tons, (iii) sufficient additional West Coast terminal
capacity is not developed at all or in a timely manner, (iv) Asian
export demand and domestic demand for PRB coal weakens, (v) future
development and operating costs significantly exceed our expectations,
or (vi) 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, 720-566-2932

Vice
President, Investor Relations