Foresight Energy LP Investor Presentation May 2017 FORESIGHT - - PowerPoint PPT Presentation

Foresight Energy LP

Investor Presentation

May 2017

FORESIGHT ENERGY

It is understood and acknowledged that any person’s access to, and use of, any of the attached materials constitutes their overall acceptance of the following: (i) the information contained in this presentation has not been independently verified and no representation or warranty, express or implied, is made as to, and no reliance should be placed on, the information or opinions contained herein; (ii) the information set out herein may be subject to revision and may change materially before closing; (iii) no person should rely on statements or representations made within these materials nor should any person rely on the statements or representations made by any other source based on these materials; and (iv) neither Foresight Energy LP (“Foresight” or the “Company”) nor any other party involved in the preparation of the attached materials shall have any duty or liability to any person in connection with the attached materials. This presentation and the information contained herein have been prepared to assist interested parties in making their own evaluation of the Company and the facilities and does not purport to be all-inclusive. Each recipient of the information and data contained herein should take such steps as it deems necessary to assure that it has the information it considers material or desirable in making its decision to become a lender and should perform its own independent investigation and analysis of the facilities or the transactions contemplated thereby and the creditworthiness of the Company. The recipient represents that it is sophisticated and experienced in extending credit to entities similar to the

• Company. The information and data contained herein are not a substitute for the recipient's independent evaluation and analysis and should not be considered as a

recommendation that any recipient enter into the facilities. The contents of this presentation are not to be construed as legal, regulatory, business, accounting or tax advice. You should consult your own attorney, business advisor, accountant and tax advisor as to legal, regulatory, business, accounting and tax advice. Under no circumstances is this presentation or the information contained herein to be construed as a prospectus, offering memorandum or advertisement, and neither any part of this presentation nor any information or statement contained herein shall form the basis of or be relied upon in connection with any contract or commitment whatsoever. This presentation is not, and is not intended to be, an offer to sell, or a solicitation of an

• ffer to purchase, any securities or any other interest in the Company.

This presentation is confidential. Any reproduction or distribution of this presentation, in whole or in part, or the disclosure of the contents hereof, without the prior written consent of the Company, is prohibited. The Company and its affiliates, officers, directors, employees, professional advisors and agents do not accept responsibility or liability for this presentation or its contents. Cautionary Note Regarding Forward-Looking Statements. This presentation contains, and oral statements made from time to time by our representatives may contain, forward- looking statements about our business, operations, and industry, as well as the proposed transactions described herein, which involve risks and uncertainties, such as statements regarding our plans, objectives, expectations and intentions. You can identify these forward-looking statements by the use of forward-looking words such as “outlook,” “intends,” “plans,” “estimates,” “believes,” “expects,” “potential,” “continues,” “may,” “will,” “should,” “seeks,” “approximately,” “predicts,” “anticipates,” “foresees,” or the negative version of these words or other comparable words and phrases. Any forward-looking statements contained in this presentation speak only as of the date on which we make it and are based upon our historical performance and on current plans, estimates and expectations. While management believes that these forward-looking statements are reasonable as and when made, there can be no assurance that the future developments affecting us will be those that we anticipate. Our future results and financial condition may differ materially from those we currently anticipate as a result of the various factors, many of which are outside our control. Furthermore, the successful consummation of the transactions described herein on the terms described herein, or at all, is subject to, among other things, agreement on principal terms between the parties, successful negotiation of definitive documentation and any conditions contained therein, all of which is not solely within our control. Factors that could affect the foregoing include, but are not limited to, the market price for coal, the supply of, and demand for, domestic and foreign coal, competition from other coal suppliers, the cost of using, and the availability of, other fuels, the effects of technological developments, advances in power technologies, the efficiency of our mines, the amount of coal we are able to produce from our properties, operating difficulties and unfavorable geologic conditions and other uncertainties. These factors should be read in conjunction with the risk factors included in Part I. "Item 1A. Risk Factors" in our Annual Report on Form 10-K for the year ending December 31, 2016. You are cautioned not to place undue reliance on forward-looking statements, which are made only as of the date hereof. We undertake no obligation to publicly update or revise any forward-looking statements after the date they are made, whether as a result of new information, future events or otherwise, except as required by law.

Disclaimer

2

Use of Non-GAAP Financial Measures. Management provides financial measures and terms not calculated in accordance with accounting principles generally accepted in the United States (GAAP). Presentation of non-GAAP measures such as, but not limited to “Adjusted EBITDA” provides investors with an alternative method for assessing our

• perating results in a manner that, when coupled with the GAAP results and the reconciliation to GAAP results, enables them to more thoroughly evaluate our performance.

These non-GAAP measures provide a baseline for assessing the our future earnings expectations. Our management uses these non-GAAP measures for the same purpose. The non-GAAP measures included in this presentation are provided to give investors access to the types of measures that we use in analyzing our results. The calculation of non- GAAP financial measures herein is not necessarily comparable to similarly titled measures reported by other companies. These non-GAAP measures may be considered in addition to results prepared in accordance with GAAP, but should not be considered a substitute for or superior to GAAP results, and they may exclude financial information that some consider important in evaluating our performance. Schedules that reconcile non-GAAP financial measures used in this presentation to GAAP financial measures are included with this presentation. We define Adjusted EBITDA as net income (loss) attributable to controlling interests before interest, income taxes, depreciation, depletion, amortization and accretion. Adjusted EBITDA is also adjusted for equity-based compensation, losses/gains on commodity derivative contracts, settlements of derivative contracts, changes in the fair value of the warrants and material nonrecurring or other items which may not reflect the trend of future results. As it relates to derivatives, the Adjusted EBITDA calculation removes the total impact of derivative gains/losses on net income (loss) during the period and then adds/deducts to Adjusted EBITDA the aggregate settlements during the period.

Non-GAAP Financial Measures

3

Overview of Foresight Energy LP

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 Foresight Energy LP (“Foresight” or the “Company”) is a thermal coal producer that controls approximately 2.1 billion tons of proven and probable coal reserves in the Illinois Basin (“ILB”) — Major supplier of thermal coal to domestic power plants, industrial users and international customers — Four state-of-the-art longwall mines1 and one continuous miner operation across four mining complexes — Operations represent some of the most productive and lowest cost mines in the U.S. — Produce high-heat content coal with ability to ship domestically and internationally — Mines are strategically located near multiple rail and river access points to provide transportation

• ptionality

 Well-positioned to remain profitable throughout the cycle due to its low cost structure and high heat content — For LTM ended March 31, 2017, Foresight sold 20.8 million tons (“Mst”) of coal, generating total revenues and Adjusted EBITDA of $940.1 million and $322.5 million, respectively  $1.4bn investment by Murray Energy Corporation (“Murray Energy”) in 2015 has generated significant synergies and created the dominant U.S. coal producer focused on high high-heat content thermal coal  Recently completed refinancing that removed potential dilution from the Convertible PIK Note and allows Foresight to resume distributions on common units, subject to the discretion of management and terms of financing documents  Favorable outlook with evolving U.S. political landscape, stabilization of domestic and seaborne thermal prices, improved capital structure, and clear path to resume distributions

1 Includes Hillsboro which is currently idled.

What’s Happened Over the Past Year?

5

Strengthened Capital Structure Enhanced by Coal Industry Tailwinds

Industry Business / Ownership Capital Structure

 Consolidated ownership with Murray Energy owning 80% GP interest, 77.5% IDRs and 51% LP interest — Recent refinancing consolidated

• wnership under Murray Energy,

which solidifies benefits of Murray Energy-Foresight combination — Murray Energy is the largest domestic private owner /

• perator of coal assets with

significant expertise in longwall mining and marketing high heat content coal  Cash costs decreased by ~$1/ton, in 2016 despite our mine operating below capacity due to market conditions  Increased cash balance by over $85mm during 2016 despite most challenging coal market in last 15 years  Following out-of-court restructuring and recent refinancing, Foresight has simplified capital structure with greater operational and financial flexibility  Extended debt maturity profile and reduced debt and total annual interest expense  Murray Energy backstopped $61mm common equity issuance as part of refinancing  Refinancing removed overhang related to potential dilution from Convertible PIK Notes  Refinancing allows Foresight to resume distributions on common units, subject to the discretion of management and terms of financing documents  ILB continues to take market share from high-cost Central Appalachian (“CAPP”) and low-Btu Powder River Basin (“PRB”) coals  Prices rose significantly during the second half of 2016 and early 2017, after reaching historic lows in the first half of 2016 — Domestic: Hot summer in 2016 saw increased natural gas prices and significant destocking of coal inventories — Seaborne: Chinese policies restricting production combined with increasing Chinese and Indian imports to lead seaborne price recovery  Favorable outlook for domestic coal market supported by evolving U.S. political landscape and resilient natural gas prices despite mild winter  Seaborne pricing expected to remain near current levels on-the-back of Chinese coal supply restrictions

Foresight Overview

Williamson Energy

Reserves:  376 Mst Mine Method:  Longwall Total Longwall Capacity:  1 Current Longwalls Operating:  1 Productive Capacity per Longwall  7.5 Mst/yr

Macoupin Energy

Reserves:  64 Mst Mine Method:  FCT1 with CM Unit Productive Capacity  2.5 Mst/yr

Sugar Camp Complex

Reserves:  1,337 Mst Mine Method:  Longwall Total Longwall Capacity:  4 Current Longwalls Operating  2 Productive Capacity per Longwall  7.5 Mst/yr

Hillsboro Energy (Currently Idle)

Reserves:  322 Mst Mine Method:  Longwall Total Longwall Capacity:  1 Current Longwalls Operating  Idle Productive Capacity per Longwall  7.0 Mst/yr

Location of Assets

Headquarters St Louis, Missouri

Southern Illinois

25 miles

Macoupin Energy Williamson Energy Sugar Camp Energy Hillsboro Energy Viking Energy

Portfolio of Tier 1 Assets in the Illinois Basin with Large Reserve Base

7

Blue shaded areas denote reserves

1 Flexible Conveyor Train.

Illinois Basin is the Most Attractive U.S. Coal Basin

8

Pre-MATS (2009 – 2012) MATS Regulation Current Environment (since 2012)

 Installation of “scrubbers” not mandatory  Preference for low sulfur coal  High demand for PRB and CAPP coal, even if relatively lower heat content and higher cost  Mercury and Air Toxics Standard (“MATS”) required all power plants to install scrubbers to reduce SO2 and NO2 emissions or retire  Resulted in significant closures due to costs  ~35 GW of domestic electricity generation expected to be retired between 2016 – 2020, to be partially offset by remaining plants running at higher utilization rates

Overview of Basins Industry Dynamics Over Time

ILB NAPP CAPP PRB Cost

 Low Cost  Longwall  Low Cost  Longwall 

Highest Cost



Surface / LW / CM

 Low Cost  Surface

Mining

Value

 High Btu  Sulfur

Neutral

 High Btu  Sulfur

Neutral

 High Btu  Low Sulfur 

Low Btu

 Low Sulfur

Transport

 River  Railroads  Truck  River  Railroads 

Limited Use of Barges



Long Distance



Railroads (Captive)

Demand

 Growing 

Declining



Declining  Declining

 Neutral to sulfur content  Preference for lower cost, high Btu coal, irrespective of sulfur content  Shift in demand toward ILB and Northern Appalachian (“NAPP”) coals  Increase in capacity factors of scrubbed plants to replace retiring capacity

Source: Company filings, EIA

13.8 13.5 9.4 Williamson Sugar Camp¹ Macoupin²

$22.65 $14.30 $14.23 $1.74 Foresight NAPP Average ILB Average PRB Average

Industry Leading Productivity Drives Low Cash Costs & Attractive Margins

9 Source: Company filings, MSHA and Wood Mackenzie Note: Excludes U.S. underground coal mines with production of less than 100,000 tons per annum. 1 M-Class and Viking LW mine aggregated. 2 CM mine. 3 Shown before transportation costs given significant differences in export tonnage profiles between producers. NAPP margin does not include metallurgical coal mines. CAPP excluded due to negative margin in 2016. (Clean tons per man-hour) Top 35 U.S. Underground Coal Average: 7.7 TPMH Foresight Energy All Other Coal Producers

Reported 2016 Cash Margin per Ton ($/ton)3 Productivity for the Top 35 U.S. Underground Coal Mines in 2016

Transportation Optionality Map of Assets and Logistics Network

Multiple Competing Transportation Options Enhance Cash Cost Position

Leverage Transportation Carriers Arbitrage Opportunities Complex Rail River/Barge Truck CN UP NS CSX BNSF OH MS Williamson  – – – –    Sugar Camp  –       Hillsboro    – –    Macoupin    – –   

Market Diversity

Source: Management and Ventyx Velocity Suite 10 Coal Terminal Foresight Customers Foresight Operations CN NS CSX Key Rail Lines Scrubbed Plants

United Bulk Terminal Mississippi River Ohio River Convent Marine Terminal

36% 42% 51% 52% 31% 28% 25% 31% 33% 30% 24% 17%

2013 2014 2015 2016 Rail / Truck Barge Export

Contracted Volumes Provide Stable and Predictable Cash Flows

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2017E Coal Sales and Contracted Position

 Well-established, blue-chip customer base committed to multi- year contracts  Customers diversified across the U.S. and seaborne markets, with majority of customers being U.S. domestic utilities  Foresight benefits from 18.6Mt of contracted and priced volume in 2017, providing stable and predictable cash flows going into 2018 — Uncontracted tons provide flexibility to opportunistically move tonnage between domestic and seaborne markets with changes in price outlook — In Q1 2017, coal sales volumes increased by 1.5mm tons compared to Q1 2016, principally driven by increased shipments into export markets

Contract Position

91% 84% 9% 16% Low High Priced / Contracted Uncontracted 20.5mm tons 22.0mm tons

2017E Guidance Range

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2017E Capital Expenditure ($mm) 2017E Adjusted EBITDA ($mm)

$68 $73 Low High $285 $315 Low High

A reconciliation of estimated 2017 Adjusted EBITDA to U.S. GAAP net income is not provided because U.S. GAAP net income for the projection period is not

• assessable. The Partnership’s net income in future periods will be impacted by the effects of pushdown accounting. The amount of such gains and losses from the effects
• f pushdown accounting could be significant, such that the amount of additional net income would vary substantially from the amount of projected Adjusted EBITDA.

Coal Expected to Benefit from Evolving U.S. Political Landscape

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Rolling Back Existing EPA Regulations  On March 28, 2017 President Trump signed the Executive Order on Energy Independence, which calls for a review of the Clean Power Plan (“CPP”) — Domestic energy regulators can submit plans to the White House to revise or rescind “regulatory barriers that impede progress towards energy independence”  Trump Administration may repeal the EPA’s “endangerment finding”, thereby removing legal support for much of the EPA’s previous action on climate change, including the CPP — The “endangerment finding” was issued in 2009 after the U.S. Supreme Court ruled that greenhouse gases must be regulated under the Clean Air Act if they endanger health  Trump Administration may also end government-sponsored legal defense of the CPP, which is presently subject to judicial challenges  The Republican-controlled Congress could lower federal tax and royalty rates on coal  Various changes could alleviate regulatory burdens on industries that burn coal and result in increased demand — On February 16, 2017 Trump signed legislation under the Congressional Review Act revoking the Stream Protection Rule which imposed new requirements to avoid damage to waterways outside mine boundaries Transferring Environmental Policy Back to the States  The EPA could transfer or delegate regulatory power to states, including allowing states more latitude to set environmental policy — Limiting “sue and settle” practice, where the EPA negotiates directly with regulated businesses and excludes state regulators — New EPA administrator could also aim for more industry representation on the EPA’s Science Advisory Board Phasing Out Subsidies for Renewables  Trump has indicated that the Administration would work to remove subsidies so that all fuels can compete on a level basis

Foresight-Murray Energy Partnership

Transaction With Murray Created the Dominant U.S. Coal Producer

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 Best Positioned Coal Producer  Perfect Strategic Fit  Leadership Position in Premier Coal Basins  Significant Synergies  Enhanced Transportation Optionality

2.1 Billion Tons of Reserves Pure-Play ILB Producer Operational Expertise 2.1 Billion Tons of Reserves Exposure to ILB and NAPP Operational and Manufacturing Expertise

Murray is the Largest Privately Owned Coal Company in U.S.

16 Source: Company disclosures

1 Includes Uintah Basin in the U.S. and the La Francia mine in Colombia, South America. 2 Proven and Probable Reserves as of December 31, 2016 of 2.1 billion tons, excluding Foresight.

Asset Map Commentary

 Founded in 1988 by Mr. Robert E. Murray  11 active coal mines across 10 mining complexes in NAPP, ILB, Uintah Basin and Colombia, South America  Tier I assets across premier coal basins with 2.1bn tons of high Btu coal  Low cost producer, driven by longwall mining and low transportation costs  Multiple transportation options at each complex for wide market access  Strong customer relationships with long term off-take agreements  Best-in-class management team

Reserves Production

2016 Reserves and Production by Basin

Total Reserves2: 2.1bn tons Total Production: 49.3mm tons

NAPP 80% ILB 10% Other¹ 10% ​NAPP 71% ​ILB 25% ​Other¹ 4%

Ownership Structure Incentivizes Sponsors to Grow Distributions

17 Source: Company disclosures; market data as of May 08, 2017

Foresight GP Public Unitholders Cline & Affiliates Murray

80% Voting Interest 77.5% IDRs 20% Voting Interest 22.5% IDRs 30% Common LP 58% Common LP 12% Common LP 100% Subordinated LP

Foresight LP

Organizational Structure History of Sponsors’ Ownership

 In 2006, the Cline Group formed Foresight Energy to develop and

• perate Illinois mining assets and completed the IPO in 2014

 In 2015, Murray acquired an economic interest in FEGP and FELP for $1.4bn cash consideration, including: — 34% voting interest in FEGP with 77.5% of the IDRs — 50% interest in FELP, representing all subordinated units — Option to acquire an additional 46% of the voting interest in Foresight GP  In 2017, as part of a refinancing, Murray consolidated its ownership in Foresight: — Additional $61mm investment for common LP units — Exercised the option to increase its GP stake to 80% for $15mm — Murray now owns 51% of the LP units (12% common / 100% subordinated), 80% of the GP interest and 77.5% of the IDRs of Foresight  With ownership of IDRs, Cline and Murray are economically incentivized to grow distributions — Ownership of subordinated units further incentivizes Murray to support growth and distributions above MQD

Distribution Strategy & Outlook

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 In March 2017, Foresight executed a comprehensive refinancing of its capital structure — Existing Revolver, 1st Lien Term Loan, 2nd Lien Notes and 2nd Lien Convertible PIK Notes repaid with cash

• n balance sheet, equity investment from Murray Energy, new Revolving Credit Facility, 1st Lien Term

Loan and 2nd Lien Notes  The refinancing transaction provides significant benefits to Foresight and its common LP units, including:

 A simplified capital structure with greater operational and financial flexibility  Extends maturity profile and removes potential dilution from Convertible PIK Notes  Provides ability to resume distributions on common LP units, subject to the discretion of management and

terms of financing documents Capitalization Maturity Profile

($ in millions)

FY 2016 Capitalization Maturity Profile

($ in millions)

Note: Maturity profiles exclude Foresight’s Trade A/R Securitization Facility, Longwall Financing Arrangements and Capital Lease Obligations.

$353 $ 98 $ 349 $300 $450 $296 2017 2018 2019 2020 2021 2022 2023+ 2nd Lien Notes 1st Lien Term Loan 2nd Lien Convertible PIK Notes Undrawn Revolver Drawn Revolver

Refinancing has Improved Foresight’s Capital Structure

$170 $825 $425 2017 2018 2019 2020 2021 2022 2023+ New Revolver New 1st Lien Term Loan New 2nd Lien Notes

Sponsors Focused on Generating Cash Flow and Growing Distributions

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 Long-term sales contracts provide revenue visibility and stable cash flows  Industry leading low-cost position generates positive cash flow through commodity cycle  Broad market access through transportation optionality; diversified customer base  Favorable coal industry outlook under the Trump Administration with upside through exports  Multiple options to grow distributions available to sponsors: — Large reserve base provides ability to increase production in response to demand — Flexibility to increase export sales if seaborne markets continue to show strength — Opportunistic M&A following coal industry transformation over last 24 months  Focus on maximizing unitholder return through generating cash flow and growing distributions  Continue to control costs and seek highest netback prices in domestic and seaborne markets  Intend to reinstate distributions to common unitholders  Seek to pay distributions utilizing percentage of excess cash flow  Continue to evaluate potential for drop-down acquisitions or opportunistic M&A

Cash Flow Generation Unitholder Returns Multiple Growth Drivers

 Strong, flexible capital structure designed for growth  Clean balance sheet with no legacy pension and OPEB liabilities  Recently completed refinancing allows Foresight to resume distributions on common units, subject to the discretion of management and terms of financing documents  Under new capital structure, cash flow available for distributions will increase as Foresight delevers

Capital Structure

Clear Roadmap to Unitholder Returns

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Low Cost Operations Allow for Significant Cash Flow Through the Cycle Sponsors Strategically Aligned with Unitholders and Incentivized to Reinstate and Grow Distributions Leading Thermal Coal Producer with Exposure to Most Attractive U.S. Coal Basin Strengthened Capital Structure Enhanced by Improving Industry Dynamics Expected Near-Term Deleveraging will Increase Cash Flow Available for Distributions

Appendix

Adjusted EBITDA Reconciliation

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1 Included in net loss attributable to controlling interests are insurance recoveries for the reimbursement of mitigation costs and business interruption proceeds related to the combustion

event at our Hillsboro operation for the year ended December 31,2016.

2 Equity-based compensation of $4.3 million was recorded in transition and reorganization costs in the consolidated statement of operations for the years ended December 31, 2015 and

2016.

3 Capex is defined as investment in property, plant, equipment and development.

For the Year Ended December 31, Three Months Ended March 31, ($ in Thousands) 2012 2013 2014 2015 2016 2016 2017 Net (Loss) Income Attributable to Controlling Interests1 $125,831 $8,517 $137,567 $(39,454) $(178,789) $(41,704) $(111,184) Interest Expense, Net 82,580 115,897 113,030 117,311 149,201 32,995 43,380 Depreciation, Depletion and Amortization 124,552 162,177 169,767 195,415 164,212 36,417 39,298 Accretion on Asset Retirement Obligations 1,368 1,527 1,621 2,267 3,376 844 710 Transition and Reorganization Costs (Excluding Equity-Based Compensation)2 – – – 17,111 2,574 2,241 – Equity-Based Compensation 4,632 – 5,024 13,704 5,106 3,992 318 Long-Lived Asset Impairments – – 34,700 12,592 74,575 – – Loss (Gain) on Commodity Derivative Contracts (534) (2,392) (76,330) (45,691) 23,752 523 1,492 Settlements of Commodity Derivative Contracts – (61) 19,204 61,223 12,644 5,119 3,724 Debt Restructuring Costs – – – 3,930 21,821 9,710 – Change in Fair Value of Warrants – – – – 17,124 – (9,278) Loss on Early Extinguishment of Debt – 77,773 4,979 – 13,203 107 95,510 Adjusted EBITDA $338,429 $363,438 $409,562 $338,408 $308,799 $50,244 $63,970 Capex3 209,937 210,726 229,725 85,026 54,584 5,040 19,908 Adjusted EBITDA - Capex $128,492 $152,712 $179,837 $253,382 $254,215 $45,204 $44,062 Total Revenues 845,886 957,412 1,109,404 984,853 875,832 166,085 230,394 Adjusted EBITDA 338,429 363,438 409,562 338,408 308,799 50,244 63,970 Adjusted EBITDA Margin 40.0 % 38.0 % 36.9 % 34.4 % 35.3 % 30.3 % 27.8 %