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.

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