FS Energy & Power Fund - FORM 10-Q

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TABLE OF CONTENTS

Table of Contents

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

FORM 10-Q


ý		QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
		FOR THE QUARTERLY PERIOD ENDED MARCH 31, 2016
o		TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

COMMISSION FILE NUMBER: 814-00841

FS Energy and Power Fund
(Exact name of registrant as specified in its charter)


Delaware (State or other jurisdiction of incorporation or organization)		27-6822130 (I.R.S. Employer Identification No.)
201 Rouse Boulevard Philadelphia, Pennsylvania (Address of principal executive office)		19112 (Zip Code)

Registrant's telephone number, including area code: (215) 495-1150

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ý No o.

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes o No o.

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of "large accelerated filer," "accelerated filer" and "smaller reporting company" in Rule 12b-2 of the Exchange Act. (Check one):


Large accelerated filer o		Accelerated filer o		Non-accelerated filer ý (Do not check if a smaller reporting company)		Smaller reporting company o

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes o No ý.

Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date.

The issuer had 392,438,883 common shares of beneficial interest outstanding as of April 26, 2016.

Table of Contents

TABLE OF CONTENTS



PART I—FINANCIAL INFORMATION
ITEM 1.	FINANCIAL STATEMENTS	1
	Consolidated Balance Sheets as of March 31, 2016 (Unaudited) and December 31, 2015	1
	Unaudited Consolidated Statements of Operations for the three months ended March 31, 2016 and 2015	2
	Unaudited Consolidated Statements of Changes in Net Assets for the three months ended March 31, 2016 and 2015	3
	Unaudited Consolidated Statements of Cash Flows for the three months ended March 31, 2016 and 2015	4
	Consolidated Schedules of Investments as of March 31, 2016 (Unaudited) and December 31, 2015	5
	Notes to Unaudited Consolidated Financial Statements	18
ITEM 2.	MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS	50
ITEM 3.	QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK	73
ITEM 4.	CONTROLS AND PROCEDURES	74
PART II—OTHER INFORMATION
ITEM 1.	LEGAL PROCEEDINGS	75
ITEM 1A.	RISK FACTORS	75
ITEM 2.	UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS	75
ITEM 3.	DEFAULTS UPON SENIOR SECURITIES	75
ITEM 4.	MINE SAFETY DISCLOSURES	75
ITEM 5.	OTHER INFORMATION	75
ITEM 6.	EXHIBITS	76
	SIGNATURES	81

Table of Contents

PART I—FINANCIAL INFORMATION

Item 1. Financial Statements.

FS Energy and Power Fund

Consolidated Balance Sheets
(in thousands, except share and per share amounts)

	March 31, 2016 (Unaudited)			December 31, 2015

Assets
Investments, at fair value
Non-controlled/unaffiliated investments (amortized cost—$3,233,960 and $3,267,830, respectively)	$	2,457,923		$	2,518,595
Non-controlled/affiliated investments (amortized cost—$573,047 and $356,188, respectively)		480,320			276,993
Controlled/affiliated investments (amortized cost—$0 and $270,389, respectively)		—			273,910

Total investments, at fair value (amortized cost—$3,807,007 and $3,894,407, respectively)		2,938,243			3,069,498
Cash		403,584			368,867
Receivable for investments sold and repaid		75			13,792
Interest receivable		42,457			34,921
Receivable for common shares purchased		9,274			6,915
Deferred financing costs		3,178			3,865
Deferred offering costs		1,375			—
Prepaid expenses and other assets		184			247

Total assets	$	3,398,370		$	3,498,105

Liabilities
Payable for investments purchased	$	789		$	—
Credit facilities payable (net of deferred financing costs of $1,249 and $1,094, respectively)		616,758			714,416
Repurchase agreement payable (net of deferred financing costs of $188 and $220, respectively)⁽¹⁾		324,796			324,764
Shareholder distributions payable		32			48
Management fees payable		17,241			18,338
Subordinated income incentive fees payable⁽²⁾		5,774			12,048
Administrative services expense payable		1,552			1,872
Interest payable		4,619			3,046
Trustees' fees payable		250			254
Other accrued expenses and liabilities		5,289			5,458

Total liabilities		977,100			1,080,244

Commitments and contingencies⁽³⁾
Shareholders' equity
Preferred shares, $0.001 par value, 50,000,000 shares authorized, none issued and outstanding		—			—
Common shares, $0.001 par value, 450,000,000 shares authorized, 389,470,260 and 372,210,264 shares issued and outstanding, respectively		389			372
Capital in excess of par value		3,537,244			3,428,672
Accumulated undistributed net realized gains (losses) on investments and gain/loss on foreign currency⁽⁴⁾		(257,231	)		(200,220	)
Accumulated undistributed net investment income⁽⁴⁾		9,694			14,024
Net unrealized appreciation (depreciation) on investments and unrealized gain/loss on foreign currency		(868,826	)		(824,987	)

Total shareholders' equity		2,421,270			2,417,861

Total liabilities and shareholders' equity	$	3,398,370		$	3,498,105

Net asset value per common share at period end	$	6.22		$	6.50

(1): See Note 8 for a discussion of the Company's repurchase transaction.
(2): See Note 2 and Note 4 for a discussion of the methodology employed by the Company in calculating the subordinated income incentive fees.
(3): See Note 9 for a discussion of the Company's commitments and contingencies.
(4): See Note 5 for a discussion of the sources of distributions paid by the Company.

See notes to unaudited consolidated financial statements.

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FS Energy and Power Fund

Unaudited Consolidated Statements of Operations
(in thousands, except share and per share amounts)

	Three Months Ended March 31,

	2016			2015
Investment income
From non-controlled/unaffiliated investments:
Interest income	$	77,742		$	76,202
Fee income		820			4,518
From non-controlled/affiliated investments:
Interest income		11,992			4,867
Fee income		7,356			—

Total investment income		97,910			85,587

Operating expenses
Management fees		17,241			18,745
Subordinated income incentive fees⁽¹⁾		5,774			2,879
Administrative services expenses		884			1,500
Share transfer agent fees		742			794
Accounting and administrative fees		286			360
Interest expense		9,352			7,316
Trustees' fees		250			225
Offering costs		125			—
Other general and administrative expenses		833			954

Total operating expenses		35,487			32,773
Income taxes		33			89

Total expenses		35,520			32,862

Net investment income		62,390			52,725

Realized and unrealized gain/loss
Net realized gain (loss) on investments
Non-controlled/unaffiliated		(59,276	)		(17,957	)
Non-controlled/affiliated		2,265			—
Net change in unrealized gain (loss) on foreign currency		—			(238	)
Net change in unrealized appreciation (depreciation) on investments
Non-controlled/unaffiliated		(31,337	)		16,118
Non-controlled/affiliated		(12,518	)		2,468
Net change in unrealized gain (loss) on foreign currency		16			(128	)

Total net realized and unrealized gain (loss) on investments		(100,850	)		263

Net increase (decrease) in net assets resulting from operations	$	(38,460	)	$	52,988



Per share information—basic and diluted
Net increase (decrease) in net assets resulting from operations (Earnings per Share)	$	(0.10	)	$	0.17



Weighted average shares outstanding		377,688,379			310,241,395

(1): See Note 2 and Note 4 for a discussion of the methodology employed by the Company in calculating the subordinated income incentive fees.

See notes to unaudited consolidated financial statements.

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FS Energy and Power Fund

Unaudited Consolidated Statements of Changes in Net Assets
(in thousands)

	Three Months Ended March 31,

	2016			2015
Operations
Net investment income	$	62,390		$	52,725
Net realized gain (loss) on investments and foreign currency		(57,011	)		(18,195	)
Net change in unrealized appreciation (depreciation) on investments		(43,855	)		18,586
Net change in unrealized gain (loss) on foreign currency		16			(128	)

Net increase (decrease) in net assets resulting from operations		(38,460	)		52,988

Shareholder distributions⁽¹⁾
Distributions from net investment income		(66,720	)		(41,234	)
Distributions from net realized gain on investments		—			(13,591	)

Net decrease in net assets resulting from shareholder distributions		(66,720	)		(54,825	)

Capital share transactions
Issuance of common shares⁽²⁾		84,697			167,767
Reinvestment of shareholder distributions⁽²⁾		42,231			21,167
Repurchases of common shares⁽²⁾		(18,339	)		(3,972	)
Offering costs		—			(2,500	)

Net increase in net assets resulting from capital share transactions		108,589			182,462

Total increase (decrease) in net assets		3,409			180,625
Net assets at beginning of period		2,417,861			2,565,721

Net assets at end of period	$	2,421,270		$	2,746,346



Accumulated undistributed net investment income⁽¹⁾	$	9,694		$	15,832

(1): See Note 5 for a discussion of the sources of distributions paid by the Company.
(2): See Note 3 for a discussion of transactions with respect to the Company's common shares during the three months ended March 31, 2016 and 2015.

See notes to unaudited consolidated financial statements.

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FS Energy and Power Fund

Unaudited Consolidated Statements of Cash Flows
(in thousands)

	Three Months Ended March 31,

	2016			2015
Cash flows from operating activities
Net increase (decrease) in net assets resulting from operations	$	(38,460	)	$	52,988
Adjustments to reconcile net increase (decrease) in net assets resulting from operations to net cash provided by (used in) operating activities:
Purchases of investments		(108,640	)		(211,629	)
Paid-in-kind interest		(8,071	)		(7,453	)
Proceeds from sales and repayments of investments		151,330			194,530
Net realized (gain) loss on investments		57,011			17,957
Net change in unrealized (appreciation) depreciation on investments		43,855			(18,586	)
Accretion of discount		(4,230	)		(2,283	)
Amortization of deferred financing costs		785			613
Amortization of deferred offering costs		125			—
(Increase) decrease in receivable for investments sold and repaid		13,717			37,599
(Increase) decrease in interest receivable		(7,536	)		(2,850	)
(Increase) decrease in prepaid expenses and other assets		63			(232	)
Increase (decrease) in payable for investments purchased		789			(245	)
Increase (decrease) in management fees payable		(1,097	)		833
Increase (decrease) in subordinated income incentive fees payable		(6,274	)		(9,263	)
Increase (decrease) in administrative services expense payable		(320	)		127
Increase (decrease) in interest payable⁽¹⁾		1,573			1,313
Increase (decrease) in trustees' fees payable		(4	)		(4	)
Increase (decrease) in other accrued expenses and liabilities		(169	)		(664	)

Net cash provided by (used in) operating activities		94,447			52,751

Cash flows from financing activities
Issuance of common shares		82,338			177,673
Reinvestment of shareholder distributions		42,231			21,167
Repurchases of common shares		(18,339	)		(3,972	)
Offering costs incurred		(1,500	)		(2,500	)
Shareholder distributions		(66,736	)		(33,177	)
Borrowings under credit facilities		—			5,000
Repayments under credit facilities		(97,503	)		(130,086	)
Deferred financing costs paid		(221	)		—

Net cash provided by financing activities		(59,730	)		34,105

Total increase (decrease) in cash		34,717			86,856
Cash at beginning of period		368,867			225,130

Cash at end of period	$	403,584		$	311,986



Supplemental disclosure
Excise and state taxes paid	$	400		$	310



Non-cash purchase of investment	$	(25,026	)	$	—



Non-cash sale of investment	$	25,026		$	—

(1): See Note 8 for a discussion of the Company's credit facilities and repurchase transaction. During the three months ended March 31, 2016 and 2015, the Company paid $4,314 and $5,390, respectively, in interest expense on the credit facilities. During the three months ended March 31, 2016 and 2015, the Company paid $2,680 and $0, respectively, in interest expense pursuant to the repurchase agreement.

See notes to unaudited consolidated financial statements.

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FS Energy and Power Fund

Unaudited Consolidated Schedule of Investments
As of March 31, 2016
(in thousands, except share amounts)



Portfolio Company^(a)	Footnotes	Industry	Rate^(b)	Floor			Maturity	Principal Amount^(c)		Amortized Cost			Fair Value^(d)
Senior Secured Loans—First Lien—32.8%
Abaco Energy Technologies LLC	(g)(i)(j)	Service & Equipment	L+700, 2.5% PIK (2.5% Max PIK)		1.0	%	11/20/20	$	60,559	$	57,687		$	36,335
Allied Wireline Services, LLC	(g)(i)(k)	Service & Equipment	L+400, 5.5% PIK (5.5% Max PIK)		1.5	%	2/28/19		104,468		103,412			92,062
Alon USA Partners, L.P.	(g)(i)(l)	Downstream	L+800		1.3	%	11/26/18		7,139		7,309			7,121
Altus Power America, Inc.	(j)	Power	L+750		1.5	%	10/10/21		53,305		53,305			52,772
Altus Power America, Inc.	(e)	Power	L+750		1.5	%	10/10/21		31,070		31,070			30,759
AP Exhaust Acquisition, LLC	(g)	Service & Equipment	L+775		1.5	%	1/16/21		15,811		15,811			14,585
BL Sand Hills Unit, L.P.		Upstream	Prime+650		3.5	%	12/17/17		39,959		34,702			34,115
BL Sand Hills Unit, L.P.	(e)	Upstream	Prime+650		3.5	%	12/17/17		15,922		13,827			13,593
Cactus Wellhead, LLC	(g)(i)(j)	Service & Equipment	L+600		1.0	%	7/31/20		51,713		50,920			19,392
Cimarron Energy Inc.	(g)	Service & Equipment	L+775, 3.8% PIK (3.8% Max PIK)		1.0	%	12/15/19		24,105		24,105			22,779
Crestwood Holdings LLC	(g)(j)	Midstream	L+800				6/19/19		30,153		30,267			15,478
EnergySolutions, LLC	(i)(j)	Service & Equipment	L+575		1.0	%	5/29/20		20,462		20,164			19,030
EP Acquisition LLC	(q)(y)	Upstream	Prime+500 PIK (8.3% Max PIK)		3.3	%	2/26/16		525		525			—
Industrial Group Intermediate Holdings, LLC	(i)	Service & Equipment	L+800		1.3	%	5/31/20		14,926		14,926			14,777
Lusk Operating LLC	(q)(y)	Upstream	Prime+500 PIK (8.3% Max PIK)		3.3	%	9/30/16		25,172		24,989			7,803
Lusk Operating LLC	(e)(q)(y)	Upstream	Prime+500 PIK (8.3% Max PIK)		3.3	%	9/30/16		4,828		5,011			1,497
MB Precision Holdings LLC	(g)	Service & Equipment	L+725		1.3	%	1/23/20		12,821		12,821			12,308
Moxie Liberty LLC	(g)(j)	Power	L+650		1.0	%	8/21/20		32,432		32,534			29,676
Panda Sherman Power, LLC	(g)(j)	Power	L+750		1.5	%	9/14/18		22,586		22,855			19,537
Panda Temple Power, LLC	(j)	Power	L+625		1.0	%	3/6/22		9,900		9,730			7,475
Panda Temple Power II, LLC	(g)(j)	Power	L+600		1.3	%	4/3/19		27,740		28,039			23,440
ProPetro Services, Inc.	(i)	Service & Equipment	L+625		1.0	%	9/30/19		11,449		11,437			6,583
Stallion Oilfield Holdings, Inc.	(g)(i)(j)(q)(y)	Service & Equipment	L+675		1.3	%	6/19/18		45,025		45,042			24,426
Stonewall Gas Gathering LLC	(j)	Midstream	L+775		1.0	%	1/28/22		23,293		22,488			23,060
Sunnova Asset Portfolio 5 Holdings, LLC	(j)(o)	Power	12.0% PIK (12.0% Max PIK)				11/14/21		147,827		145,322			147,827
Swift Worldwide Resources US Holdings Corp.	(g)(j)	Service & Equipment	L+1100		1.0	%	7/20/21		59,057		59,057			59,057
UTEX Industries, Inc.	(f)	Service & Equipment	L+400		1.0	%	5/21/21		4,473		3,467			2,801
Warren Resources, Inc.	(k)(y)	Upstream	L+850		1.0	%	5/22/20		131,175		131,175			105,596

Total Senior Secured Loans—First Lien											1,011,997			843,884
Unfunded Loan Commitments											(49,908	)		(49,908	)

Net Senior Secured Loans—First Lien											962,089			793,976

See notes to unaudited consolidated financial statements.

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FS Energy and Power Fund

Unaudited Consolidated Schedule of Investments (Continued)
As of March 31, 2016
(in thousands, except share amounts)



Portfolio Company^(a)	Footnotes	Industry	Rate^(b)	Floor			Maturity	Principal Amount^(c)		Amortized Cost		Fair Value^(d)
Senior Secured Loans—Second Lien—37.8%
Alison US LLC	(j)(l)	Service & Equipment	L+850		1.0	%	8/29/22	$	17,222	$	16,660	$	14,007
American Energy—Marcellus, LLC		Upstream	L+750		1.0	%	8/4/21		10,000		9,874		391
Ameriforge Group Inc.	(g)	Service & Equipment	L+750		1.3	%	12/21/20		35,950		36,414		7,130
AP Exhaust Acquisition, LLC		Service & Equipment	12.0% PIK (12.0% Max PIK)				9/28/21		3,444		3,444		3,074
Arena Energy, LP	(i)(k)	Upstream	L+1000		1.0	%	1/24/21		65,000		65,000		57,363
Ascent Resources—Utica, LLC	(g)(j)(k)	Upstream	L+950, 2.0% PIK (2.0% Max PIK)		1.5	%	9/30/18		282,157		281,090		266,638
Atlas Resource Partners, L.P.	(i)(k)	Upstream	L+900		1.0	%	2/23/20		100,000		97,623		80,750
BlackBrush Oil & Gas, L.P.	(f)(i)	Upstream	L+650		1.0	%	7/30/21		31,519		30,743		24,401
Brock Holdings III, Inc.	(g)(j)	Service & Equipment	L+825		1.8	%	3/16/18		29,605		29,750		21,612
Chief Exploration & Development LLC	(f)(i)	Upstream	L+650		1.0	%	5/16/21		19,576		19,506		11,787
Consolidated Precision Products Corp.	(g)(j)	Service & Equipment	L+775		1.0	%	4/30/21		11,574		11,531		10,031
Emerald Performance Materials, LLC	(j)	Downstream	L+675		1.0	%	8/1/22		5,319		5,297		4,867
Extraction Oil & Gas Holdings, LLC	(i)(j)	Upstream	11.0%				5/29/19		74,186		74,186		75,206
Extraction Oil & Gas Holdings, LLC	(i)(j)	Upstream	10.0%				5/29/19		32,462		32,462		32,868
Fieldwood Energy LLC	(i)	Upstream	L+713		1.3	%	9/30/20		41,047		41,911		7,594
Granite Intermediate Holdings, Inc.	(f)	Power	L+725		1.0	%	10/15/22		13,150		13,050		10,323
Gruden Acquisition, Inc.	(j)	Service & Equipment	L+850		1.0	%	8/18/23		15,000		14,304		11,250
Horn Intermediate Holdings, Inc.	(g)(j)	Service & Equipment	L+775		1.3	%	10/2/18		50,250		50,250		49,999
Jonah Energy LLC	(i)(j)	Upstream	L+650		1.0	%	5/12/21		25,133		24,834		12,944
MD America Energy, LLC	(f)(g)(j)	Upstream	L+850		1.0	%	8/4/19		41,612		40,206		31,937
Neff Rental LLC	(j)	Service & Equipment	L+625		1.0	%	6/9/21		15,039		15,075		13,346
Oxbow Carbon LLC	(g)	Midstream	L+700		1.0	%	1/19/20		15,000		14,910		11,938
P2 Upstream Acquisition Co.	(g)(j)	Service & Equipment	L+800		1.0	%	4/30/21		32,599		32,853		21,515
Templar Energy LLC	(g)(i)(y)	Upstream	L+750		1.0	%	11/25/20		91,746		88,592		10,321
Total Safety U.S., Inc.	(g)(j)	Service & Equipment	L+800		1.3	%	9/13/20		14,795		14,969		6,658
UTEX Industries, Inc.	(f)(j)	Service & Equipment	L+725		1.0	%	5/20/22		36,192		36,231		16,407
Vantage Energy, LLC	(i)(j)	Upstream	L+750		1.0	%	12/20/18		30,002		29,868		15,976
Vantage Energy II, LLC	(i)(j)	Upstream	L+750		1.0	%	5/8/17		85,000		85,000		85,000

Total Senior Secured Loans—Second Lien											1,215,633		915,333

See notes to unaudited consolidated financial statements.

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FS Energy and Power Fund

Unaudited Consolidated Schedule of Investments (Continued)
As of March 31, 2016
(in thousands, except share amounts)



Portfolio Company^(a)	Footnotes	Industry	Rate^(b)	Floor	Maturity	Principal Amount^(c)		Amortized Cost			Fair Value^(d)
Senior Secured Bonds—13.4%
American Energy—Woodford, LLC	(h)(q)(y)	Upstream	12.0% PIK (12.0% Max PIK)		12/30/20	$	7,806	$	5,662		$	1,600
FourPoint Energy, LLC	(j)(k)(o)	Upstream	8.0%		12/31/20		290,813		282,327			229,015
FourPoint Energy, LLC	(e)(o)	Upstream	8.0%		12/31/20		18,563		18,470			14,618
Light Tower Rentals, Inc.	(h)(n)	Service & Equipment	8.1%		8/1/19		17,500		17,322			9,603
Lightstream Resources Ltd.	(k)(l)	Upstream	9.9%		6/15/19		62,400		62,400			54,132
Mirant Mid-Atlantic Trust	(f)(h)(n)	Power	10.1%		12/30/28		23,344		26,061			22,790
SandRidge Energy, Inc.	(h)(n)(q)(y)	Upstream	8.8%		6/1/20		46,700		46,600			11,442

Total Senior Secured Bonds									458,842			343,200
Unfunded Bond Commitment									(18,470	)		(18,470	)

Net Senior Secured Bonds									440,372			324,730

Subordinated Debt—22.3%
Alta Mesa Holdings, LP	(h)	Upstream	9.6%		10/15/18		18,451		18,386			5,097
Archrock Partners, L.P.	(h)(l)	Midstream	6.0%		4/1/21		3,055		2,642			2,272
Archrock Partners, L.P.	(h)(l)	Midstream	6.0%		10/1/22		10,533		8,905			7,597
Atlas Energy Holdings Operating Co., LLC	(h)	Upstream	7.8%		1/15/21		28,285		25,950			3,907
Atlas Energy Holdings Operating Co., LLC	(h)	Upstream	9.3%		8/15/21		24,460		23,597			3,440
Bellatrix Exploration Ltd.	(f)(h)(l)	Upstream	8.5%		5/15/20		45,590		44,771			23,821
Brand Energy & Infrastructure Services, Inc.	(f)(h)	Service & Equipment	8.5%		12/1/21		27,500		27,268			25,884
Calpine Corp.	(f)(l)	Power	5.8%		1/15/25		5,100		5,092			4,936
Canbriam Energy Inc.	(h)(j)(l)	Upstream	9.8%		11/15/19		115,200		111,744			100,032
Compressco Partners, LP	(f)(h)	Service & Equipment	7.3%		8/15/22		20,050		19,893			14,010
Crestwood Equity Partners L.P.	(f)(l)	Midstream	6.1%		3/1/22		5,500		5,500			4,132
Dynegy Finance I/II Inc.	(f)(l)	Power	7.6%		11/1/24		17,080		16,663			15,521
Eclipse Resources Corp.	(h)(l)	Upstream	8.9%		7/15/23		32,500		28,621			16,646
EV Energy Partners, L.P.	(h)(n)	Upstream	8.0%		4/15/19		33,964		24,404			9,005
Everest Acquisition LLC	(h)(l)	Upstream	9.4%		5/1/20		19,970		15,740			10,160

See notes to unaudited consolidated financial statements.

Table of Contents

FS Energy and Power Fund

Unaudited Consolidated Schedule of Investments (Continued)
As of March 31, 2016
(in thousands, except share amounts)



Portfolio Company^(a)	Footnotes	Industry	Rate^(b)	Floor			Maturity	Principal Amount^(c)		Amortized Cost		Fair Value^(d)
Genesis Energy, L.P.	(f)(l)	Midstream	6.8%				8/1/22	$	12,100	$	11,700	$	11,298
GenOn Energy, Inc.	(h)(n)	Power	9.9%				10/15/20		42,698		44,591		27,751
GenOn Energy, Inc.	(h)	Power	7.9%				6/15/17		5,000		4,827		3,752
Global Jet Capital Inc.		Service & Equipment	15.0% PIK (15.0% Max PIK)				1/30/25		654		654		654
Global Jet Capital Inc.		Service & Equipment	15.0% PIK (15.0% Max PIK)				4/30/25		4,155		4,155		4,155
Global Jet Capital Inc.		Service & Equipment	15.0% PIK (15.0% Max PIK)				9/3/25		859		859		859
Global Jet Capital Inc.		Service & Equipment	15.0% PIK (15.0% Max PIK)				9/29/25		808		808		808
Global Partners L.P.	(f)(h)(l)(n)	Midstream	6.3%				7/15/22		68,350		68,350		50,693
Jupiter Resources Inc.	(h)(l)	Upstream	8.5%				10/1/22		71,125		67,409		37,718
Lonestar Resources America Inc.	(h)(n)	Upstream	8.8%				4/15/19		21,500		21,586		12,497
Martin Midstream Partners L.P.	(f)(l)	Midstream	7.3%				2/15/21		15,658		16,123		13,525
ONEOK, Inc.	(f)(h)(l)(n)	Midstream	7.5%				9/1/23		28,000		26,801		27,304
Seven Generations Energy Ltd.	(f)(l)	Upstream	6.8%				5/1/23		5,150		4,702		4,852
Talos Production LLC	(h)(n)	Upstream	9.8%				2/15/18		43,250		43,256		13,256
Tenrgys, LLC	(i)(j)	Upstream	L+900		2.5	%	12/23/18		75,000		75,000		65,625
Whiting Petroleum Corp.	(h)(l)	Upstream	5.0%				3/15/19		4,685		4,162		3,250
Zachry Holdings, Inc.	(f)	Service & Equipment	7.5%				2/1/20		14,300		14,371		13,853

Total Subordinated Debt											788,530		538,310

See notes to unaudited consolidated financial statements.

Table of Contents

FS Energy and Power Fund

Unaudited Consolidated Schedule of Investments (Continued)
As of March 31, 2016
(in thousands, except share amounts)



Portfolio Company^(a)	Footnotes	Industry	Number of Shares		Amortized Cost		Fair Value^(d)
Equity/Other—15.1%^(m)
Abaco Energy Technologies LLC, Common Equity	(q)	Service & Equipment		6,944,444	$	6,944	$	347
Allied Downhole Technologies, LLC, Common Equity	(k)(p)(q)	Service & Equipment		6,600,000		6,600		2,310
Allied Downhole Technologies, LLC, Warrants, 2/28/2019	(k)(p)(q)	Service & Equipment		5,344,680		1,865		1,871
Altus Power America Holdings, LLC, Preferred Equity		Power		17,768,478		17,713		31,095
Altus Power America Management, LLC, Class B Units	(q)(r)	Power		2,250		—		—
AP Exhaust Holdings, LLC, Common Equity	(k)(p)(q)	Service & Equipment		811		811		341
Ascent Resources Utica Holdings, LLC, Common Equity	(q)(s)	Upstream		148,692,909		44,700		33,319
BL Sand Hills Unit, L.P., Net Profits Interest	(q)(u)	Upstream		N/A		5,074		4,409
BL Sand Hills Unit, L.P., Overriding Royalty Interest	(u)	Upstream		N/A		725		349
Cimarron Energy Holdco Inc., Common Equity	(q)	Service & Equipment		3,201,631		2,991		2,241
Extraction Oil & Gas Holdings, LLC, Common Equity	(k)(p)(q)	Upstream		4,191,800		11,250		18,863
Fortune Creek Co-Invest I L.P., LP Interest	(l)(q)(v)(y)	Midstream		N/A		16,697		3,017
FourPoint Energy, LLC, Common Equity, Class C Units	(k)(o)(p)(q)	Upstream		66,000		66,000		21,615
FourPoint Energy, LLC, Common Equity, Class D Units	(k)(o)(p)(q)	Upstream		12,374		8,176		4,083
Global Jet Capital Holdings, LP, Preferred Equity	(q)	Service & Equipment		2,448,883		2,449		2,449
Industrial Group Intermediate Holdings, LLC, Common Equity	(k)(p)(q)	Service & Equipment		371,901		372		614
Lusk Operating LLC, Common Equity	(q)(t)	Upstream		1,000		1,000		—
MB Precision Investment Holdings LLC, Class A-2 Units	(k)(p)(q)	Service & Equipment		490,213		490		245
Plains Offshore Operations Inc., Preferred Equity	(f)	Upstream		21,067		26,757		26,031
Plains Offshore Operations Inc., Warrants, 11/18/2019	(q)	Upstream		427,005		689		—
Summit Midstream Partners, LLC, Preferred Equity		Midstream		39,163		39,163		37,988
Sunnova Energy Corp., Common Equity	(o)(q)	Power		6,667,368		25,026		35,470
Sunnova Energy Corp., Preferred Equity	(o)(q)	Power		8,677,024		46,196		46,162
Swift Worldwide Resources Holdco Limited, Common Equity	(l)(q)(w)	Service & Equipment		3,750,000		6,029		4,125
Synergy Offshore LLC, Preferred Equity	(k)(x)	Upstream		50,000		62,666		88,950

Total Equity/Other						400,383		365,894

TOTAL INVESTMENTS—121.4%					$	3,807,007		2,938,243



LIABILITIES IN EXCESS OF OTHER ASSETS—(21.4%)								(516,973	)

NET ASSETS—100.0%							$	2,421,270

See notes to unaudited consolidated financial statements.

Table of Contents

FS Energy and Power Fund

Unaudited Consolidated Schedule of Investments (Continued)
As of March 31, 2016
(in thousands, except share amounts)

(a): Security may be an obligation of one or more entities affiliated with the named company.
(b): Certain variable rate securities in the Company's portfolio bear interest at a rate determined by a publicly disclosed base rate plus a basis point spread. As of March 31, 2016, the three-month London Interbank Offered Rate, or LIBOR, was 0.63% and the U.S. Prime Lending Rate, or Prime, was 3.50%.
(c): Denominated in U.S. dollars, unless otherwise noted.
(d): Fair value determined by the Company's board of trustees (see Note 7).
(e): Security is an unfunded commitment. The stated rate reflects the spread disclosed at the time of commitment and may not indicate the actual rate received upon funding.
(f): Security or portion thereof held within FSEP Term Funding, LLC and is pledged as collateral supporting the amounts outstanding under the revolving credit facility with Deutsche Bank AG, New York Branch (see Note 8).
(g): Security or portion thereof held within Energy Funding LLC and is pledged as collateral supporting the amounts outstanding under the revolving credit facility with Natixis, New York Branch (see Note 8).
(h): Security or portion thereof held within Berwyn Funding LLC and is pledged as collateral supporting the amounts outstanding under the prime brokerage facility with BNP Paribas Prime Brokerage, Inc., or BNP. Securities held within Berwyn Funding LLC may be rehypothecated from time to time as permitted under Rule 15c-1(a)(1) of the Securities Exchange Act of 1934, as amended, or the Exchange Act, subject to the terms and conditions governing the prime brokerage facility with BNP (see Note 8).
(i): Security or portion thereof held within Wayne Funding LLC and is pledged as collateral supporting the amounts outstanding under the revolving credit facility with Wells Fargo Securities, LLC (see Note 8).
(j): Security or portion thereof held within Gladwyne Funding LLC and is pledged as collateral supporting the obligations outstanding under the repurchase transaction with Goldman Sachs Bank USA (see Note 8).
(k): Security or portion thereof held within Foxfields Funding LLC and is pledged as collateral supporting the obligations outstanding under the term loan facility with Fortress Credit Co LLC (see Note 8).
(l): The investment is not a qualifying asset under the Investment Company Act of 1940, as amended, or the 1940 Act. A business development company may not acquire any asset other than a qualifying asset, unless, at the time the acquisition is made, qualifying assets represent at least 70% of the business development company's total assets. As of March 31, 2016, 87.7% of the Company's total assets represented qualifying assets.
(m): Listed investments may be treated as debt for U.S. generally accepted accounting principles, or GAAP, or tax purposes.
(n): Security or portion thereof held within Berwyn Funding LLC has been rehypothecated under Rule 15c-1(a)(1) of the Exchange Act, subject to the terms and conditions governing the prime brokerage facility with BNP (see Note 8). As of March 31, 2016, the fair value of securities rehypothecated by BNP was $91,837.
(o): Under the 1940 Act, the Company generally is deemed to be an "affiliated person" of a portfolio company if it owns 5% or more of the portfolio company's voting securities and generally is deemed to "control" a portfolio company if it owns 25% or more of the portfolio company's voting securities or it has the power to exercise control over the management or policies of a portfolio company. As of March 31, 2016, the Company held investments in portfolio companies of which it is deemed to be an "affiliated person" but is not deemed to "control." The following table presents certain information with respect to such portfolio companies for the three months ended March 31, 2016:

Portfolio Company	Purchases		Sales and Repayments		Interest Income		Fee Income		Net Realized Gain (Loss)		Net Change in Unrealized Appreciation (Depreciation)

Senior Secured Loans—First Lien
Sunnova Asset Portfolio 5 Holdings, LLC	$	10,434	$	112,745	$	5,736	$	7,356	$	2,265	$	3,519
Senior Secured Bonds
FourPoint Energy, LLC		—		—	$	6,256		—		—	$	2,779
Equity/Other
FourPoint Energy, LLC, Common Equity, Class C Units		—		—		—		—		—	$	(24,585	)
FourPoint Energy, LLC, Common Equity, Class D Units		—		—		—		—		—	$	(4,641	)
Sunnova Energy Corp., Common Equity	$	25,026		—		—		—		—	$	10,444
Sunnova Energy Corp., Preferred Equity	$	46,196		—		—		—		—	$	(34	)

(p): Security held within FSEP Investments, Inc., a wholly-owned subsidiary of Foxfields Funding LLC.
(q): Security is non-income producing.
(r): Security is held within EP Altus Investments, LLC, a wholly-owned subsidiary of the Company.
(s): Security held within EP American Energy Investments, Inc., a wholly-owned subsidiary of the Company.
(t): Security held within FSEP-BBH, Inc., a wholly-owned subsidiary of the Company.
(u): Security held within EP Burnett Investments, Inc., a wholly-owned subsidiary of the Company.
(v): Investment denominated in Canadian dollars. Amortized cost and fair value are converted into U.S. dollars as of March 31, 2016.
(w): Investment denominated in British pounds. Amortized cost and fair value are converted into U.S. dollars as of March 31, 2016.
(x): Security held within EP Synergy Investments, Inc., a wholly-owned subsidiary of Foxfields Funding LLC.
(y): Security was on non-accrual status as of March 31, 2016.

See notes to unaudited consolidated financial statements.

Table of Contents

FS Energy and Power Fund

Consolidated Schedule of Investments
As of December 31, 2015
(in thousands, except share amounts)



Portfolio Company^(a)	Footnotes	Industry	Rate^(b)	Floor			Maturity	Principal Amount^(c)		Amortized Cost			Fair Value^(d)
Senior Secured Loans—First Lien—38.5%
Abaco Energy Technologies LLC	(g)(i)(j)	Service & Equipment	L+700		1.0	%	11/20/20	$	60,938	$	57,911		$	31,383
Allied Wireline Services, LLC	(g)(i)(j)(k)	Service & Equipment	L+400, 5.5% PIK (5.5% Max PIK)		1.5	%	2/28/19		103,061		101,930			96,234
Alon USA Partners, L.P.	(g)(i)(l)	Downstream	L+800		1.3	%	11/26/18		7,158		7,342			7,140
Altus Power America, Inc.	(j)	Power	L+750		1.5	%	10/10/21		46,555		46,555			46,090
Altus Power America, Inc.	(e)	Power	L+750		1.5	%	10/10/21		37,820		37,820			37,441
AP Exhaust Acquisition, LLC	(g)	Service & Equipment	L+775		1.5	%	1/16/21		15,811		15,811			14,842
BBH Operating LLC		Upstream	Prime+500 PIK (8.25% Max PIK)		3.3	%	2/26/16		24,441		24,441			17,719
BBH Operating LLC	(e)	Upstream	Prime+500 PIK (8.25% Max PIK)		3.3	%	2/26/16		5,559		5,559			4,031
BL Sand Hills Unit, L.P.		Upstream	Prime+650		3.5	%	12/17/17		36,626		31,807			34,016
BL Sand Hills Unit, L.P.	(e)	Upstream	Prime+650		3.5	%	12/17/17		19,367		16,819			17,987
Cactus Wellhead, LLC	(g)(i)(j)	Service & Equipment	L+600		1.0	%	7/31/20		51,844		51,012			37,457
Cimarron Energy Inc.	(g)	Service & Equipment	L+775, 0.0% PIK (3.75% Max PIK)		1.0	%	12/15/19		24,250		24,250			24,129
Crestwood Holdings LLC	(f)(g)(j)	Midstream	L+600		1.0	%	6/19/19		30,565		30,689			19,816
EnergySolutions, LLC	(i)(j)	Service & Equipment	L+575		1.0	%	5/29/20		20,462		20,150			18,211
EP Acquisition LLC	(q)(y)	Upstream	Prime+500 PIK (8.25% Max PIK)		3.3	%	2/26/16		525		525			—
Industrial Group Intermediate Holdings, LLC	(i)	Service & Equipment	L+800		1.3	%	5/31/20		14,951		14,951			14,801
MB Precision Holdings LLC	(g)	Service & Equipment	L+725		1.3	%	1/23/20		12,855		12,855			12,726
Moxie Liberty LLC	(g)(j)	Power	L+650		1.0	%	8/21/20		32,432		32,540			30,162
Panda Sherman Power, LLC	(g)(j)	Power	L+750		1.5	%	9/14/18		22,643		22,937			20,492
Panda Temple Power, LLC	(j)	Power	L+625		1.0	%	3/6/22		9,925		9,747			8,188
Panda Temple Power II, LLC	(g)(j)	Power	L+600		1.3	%	4/3/19		27,809		28,132			24,750
ProPetro Services, Inc.	(i)	Service & Equipment	L+625		1.0	%	9/30/19		11,612		11,599			7,838
Stallion Oilfield Holdings, Inc.	(g)(i)(j)	Service & Equipment	L+675		1.3	%	6/19/18		45,025		45,045			24,404
Stonewall Gas Gathering LLC	(j)	Midstream	L+775		1.0	%	1/28/22		26,794		25,803			26,727
Sunnova Asset Portfolio 5 Holdings, LLC	(j)(z)	Power	12.0% PIK (12.0% Max PIK)				11/14/21		250,138		245,363			244,510
Sunnova Asset Portfolio 5 Holdings, LLC	(e)(z)	Power	12.0% PIK (12.0% Max PIK)				11/14/21		7,167		7,167			7,006
Swift Worldwide Resources US Holdings Corp.	(g)(j)	Service & Equipment	L+800		1.3	%	4/30/19		59,057		59,057			59,057
UTEX Industries, Inc.	(f)	Service & Equipment	L+400		1.0	%	5/21/21		4,485		3,443			3,091
Warren Resources, Inc.	(k)	Upstream	L+850		1.0	%	5/22/20		131,175		131,175			106,907

Total Senior Secured Loans—First Lien											1,122,435			997,155
Unfunded Loan Commitments											(67,365	)		(67,365	)

Net Senior Secured Loans—First Lien											1,055,070			929,790

See notes to unaudited consolidated financial statements.

Table of Contents

FS Energy and Power Fund

Consolidated Schedule of Investments (Continued)
As of December 31, 2015
(in thousands, except share amounts)



Portfolio Company^(a)	Footnotes	Industry	Rate^(b)	Floor			Maturity	Principal Amount^(c)		Amortized Cost		Fair Value^(d)
Senior Secured Loans—Second Lien—38.2%
Alison US LLC	(f)(j)(l)	Service & Equipment	L+850		1.0	%	8/29/22	$	17,222	$	16,641	$	13,993
American Energy—Marcellus, LLC		Upstream	L+750		1.0	%	8/4/21		10,000		9,874		233
Ameriforge Group Inc.	(f)(g)	Service & Equipment	L+750		1.3	%	12/21/20		35,950		36,433		2,831
AP Exhaust Acquisition, LLC		Service & Equipment	12.0%, 0.0% PIK (12.0% Max PIK)				9/28/21		3,243		3,243		2,959
Arena Energy, LP	(i)(k)	Upstream	L+1000		1.0	%	1/24/21		65,000		65,000		59,854
Ascent Resources—Utica, LLC	(g)(j)(k)	Upstream	L+950, 2.0% PIK (2.0% Max PIK)		1.5	%	9/30/18		280,735		279,572		251,258
Atlas Resource Partners, L.P.	(i)(k)	Upstream	L+900		1.0	%	2/23/20		100,000		97,489		79,986
BlackBrush Oil & Gas, L.P.	(f)(i)	Upstream	L+650		1.0	%	7/30/21		31,519		30,708		25,268
Brock Holdings III, Inc.	(f)(g)(j)	Service & Equipment	L+825		1.8	%	3/16/18		29,605		29,766		22,796
Chief Exploration & Development LLC	(f)(i)	Upstream	L+650		1.0	%	5/16/21		19,576		19,504		13,143
Consolidated Precision Products Corp.	(g)(j)	Service & Equipment	L+775		1.0	%	4/30/21		11,574		11,529		10,532
Emerald Performance Materials, LLC	(j)	Downstream	L+675		1.0	%	8/1/22		5,319		5,296		5,055
Extraction Oil & Gas Holdings, LLC	(i)(j)	Upstream	11.0%				5/29/19		74,186		74,186		74,650
Extraction Oil & Gas Holdings, LLC	(i)(j)	Upstream	10.0%				5/29/19		32,462		32,462		32,259
Fieldwood Energy LLC	(f)(i)	Upstream	L+713		1.3	%	9/30/20		41,047		41,951		6,547
Granite Intermediate Holdings, Inc.	(f)	Power	L+725		1.0	%	10/15/22		13,150		13,047		10,257
Gruden Acquisition, Inc.	(j)	Service & Equipment	L+850		1.0	%	8/18/23		15,000		14,281		14,288
Horn Intermediate Holdings, Inc.	(g)	Service & Equipment	L+775		1.3	%	10/2/18		50,250		50,250		49,496
Jonah Energy LLC	(i)(j)	Upstream	L+650		1.0	%	5/12/21		25,133		24,821		15,960
MD America Energy, LLC	(f)(g)(j)	Upstream	L+850		1.0	%	8/4/19		41,612		40,121		34,815
Neff Rental LLC	(j)	Service & Equipment	L+625		1.0	%	6/9/21		15,145		15,182		12,570
Oxbow Carbon LLC	(g)	Midstream	L+700		1.0	%	1/19/20		15,000		14,904		12,631
P2 Upstream Acquisition Co.	(g)(j)	Service & Equipment	L+800		1.0	%	4/30/21		32,599		32,862		27,302
Templar Energy LLC	(f)(g)(i)	Upstream	L+750		1.0	%	11/25/20		89,923		88,451		10,903
Total Safety U.S., Inc.	(f)(g)(j)	Service & Equipment	L+800		1.3	%	9/13/20		14,795		14,978		8,335
UTEX Industries, Inc.	(f)(j)	Service & Equipment	L+725		1.0	%	5/20/22		36,192		36,232		23,706
Vantage Energy, LLC	(i)(j)	Upstream	L+750		1.0	%	12/20/18		30,078		29,933		19,325
Vantage Energy II, LLC	(i)(j)	Upstream	L+750		1.0	%	5/8/17		85,000		85,000		82,450

Total Senior Secured Loans—Second Lien											1,213,716		923,402

See notes to unaudited consolidated financial statements.

Table of Contents

FS Energy and Power Fund

Consolidated Schedule of Investments (Continued)
As of December 31, 2015
(in thousands, except share amounts)



Portfolio Company^(a)	Footnotes	Industry	Rate^(b)	Floor	Maturity	Principal Amount^(c)		Amortized Cost			Fair Value^(d)
Senior Secured Bonds—13.4%
American Energy—Woodford, LLC	(h)(q)(y)	Upstream	12.0% PIK (12.0% Max PIK)		12/30/20	$	7,806	$	5,662		$	1,112
FourPoint Energy, LLC	(j)(k)(o)	Upstream	8.0%		12/31/20		290,813		282,012			226,107
FourPoint Energy, LLC	(e)(o)	Upstream	8.0%		12/31/20		18,563		18,470			14,432
Gastar Exploration USA, Inc.	(h)	Upstream	8.6%		5/15/18		5,690		5,393			2,902
Light Tower Rentals, Inc.	(h)(n)	Service & Equipment	8.1%		8/1/19		17,500		17,313			8,947
Lightstream Resources Ltd.	(k)(l)	Upstream	9.9%		6/15/19		62,400		62,400			52,104
Mirant Mid-Atlantic Trust	(f)(h)(n)	Power	10.1%		12/30/28		23,344		26,097			22,556
SandRidge Energy, Inc.	(h)(n)	Upstream	8.8%		6/1/20		46,700		46,598			14,258

Total Senior Secured Bonds									463,945			342,418
Unfunded Bond Commitment									(18,470	)		(18,470	)

Net Senior Secured Bonds									445,475			323,948

Subordinated Debt—24.0%
Alta Mesa Holdings, LP	(h)(n)	Upstream	9.6%		10/15/18		18,451		18,376			6,481
Archrock Partners, L.P.	(h)(l)	Midstream	6.0%		4/1/21		3,055		2,625			2,452
Archrock Partners, L.P.	(h)(l)	Midstream	6.0%		10/1/22		10,533		8,858			8,124
Atlas Energy Holdings Operating Co., LLC	(h)	Upstream	7.8%		1/15/21		28,285		25,869			5,648
Atlas Energy Holdings Operating Co., LLC	(h)	Upstream	9.3%		8/15/21		24,460		23,574			5,022
Bellatrix Exploration Ltd.	(f)(h)(l)	Upstream	8.5%		5/15/20		45,590		44,731			30,716
Brand Energy & Infrastructure Services, Inc.	(f)(h)	Service & Equipment	8.5%		12/1/21		27,500		27,261			23,684
Calpine Corp.	(f)(l)	Power	5.8%		1/15/25		5,100		5,093			4,501
Canbriam Energy Inc.	(h)(j)(l)	Upstream	9.8%		11/15/19		115,200		111,556			104,256
Chaparral Energy Inc.	(h)(n)	Upstream	7.6%		11/15/22		15,225		16,150			3,191
Compressco Partners, LP	(f)(h)(l)	Service & Equipment	7.3%		8/15/22		20,050		19,889			14,862
Crestwood Equity Partners L.P.	(f)(l)	Midstream	6.1%		3/1/22		5,500		5,500			3,827
Dynegy Finance I/II Inc.	(f)(l)	Power	7.6%		11/1/24		17,080		16,654			14,603
Eclipse Resources Corp.	(h)(l)	Upstream	8.9%		7/15/23		27,500		26,949			13,234
EV Energy Partners, L.P.	(h)(n)	Upstream	8.0%		4/15/19		25,560		21,221			12,716
Everest Acquisition LLC	(f)(l)	Upstream	9.4%		5/1/20		14,250		14,250			9,054

See notes to unaudited consolidated financial statements.

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FS Energy and Power Fund

Consolidated Schedule of Investments (Continued)
As of December 31, 2015
(in thousands, except share amounts)



Portfolio Company^(a)	Footnotes	Industry	Rate^(b)	Floor			Maturity	Principal Amount^(c)		Amortized Cost		Fair Value^(d)
Genesis Energy, L.P.	(f)(l)	Midstream	6.8%				8/1/22	$	12,100	$	11,688	$	10,179
GenOn Energy, Inc.	(f)(h)(n)	Power	9.9%				10/15/20		42,698		44,669		31,383
GenOn Energy, Inc.	(h)	Power	7.9%				6/15/17		5,000		4,795		4,371
Global Jet Capital Inc.		Service & Equipment	15.0% PIK (15.0% Max PIK)				1/30/25		635		635		635
Global Jet Capital Inc.		Service & Equipment	15.0% PIK (15.0% Max PIK)				4/30/25		4,030		4,030		4,030
Global Jet Capital Inc.		Service & Equipment	15.0% PIK (15.0% Max PIK)				9/3/25		828		828		828
Global Jet Capital Inc.		Service & Equipment	15.0% PIK (15.0% Max PIK)				9/29/25		779		779		779
Global Partners L.P.	(f)(h)(l)(n)	Midstream	6.3%				7/15/22		68,350		68,350		54,424
Jones Energy, Inc.	(h)(n)	Upstream	6.8%				4/1/22		8,000		8,000		4,345
Jupiter Resources Inc.	(h)(l)	Upstream	8.5%				10/1/22		71,125		67,291		28,539
Kenan Advantage Group, Inc.	(f)	Service & Equipment	7.9%				7/31/23		11,970		11,970		11,820
Legacy Reserves LP	(h)	Upstream	8.0%				12/1/20		16,750		16,499		3,371
Legacy Reserves LP	(h)	Upstream	6.6%				12/1/21		14,000		13,847		3,028
Lonestar Resources America Inc.	(h)(n)	Upstream	8.8%				4/15/19		21,500		21,591		13,231
Martin Midstream Partners L.P.	(f)(l)	Midstream	7.3%				2/15/21		15,658		16,144		13,877
Memorial Production Partners L.P.	(h)	Upstream	6.9%				8/1/22		12,250		12,059		3,690
ONEOK, Inc.	(f)(h)(l)(n)	Midstream	7.5%				9/1/23		28,000		26,771		23,363
Seven Generations Energy Ltd.	(f)(l)	Upstream	6.8%				5/1/23		6,150		5,612		5,220
Talos Production LLC	(f)(h)(n)	Upstream	9.8%				2/15/18		43,250		43,258		17,841
Tenrgys, LLC	(i)(j)	Upstream	L+900		2.5	%	12/23/18		75,000		75,000		64,875
Whiting Petroleum Corp.	(f)(l)	Upstream	5.0%				3/15/19		4,685		4,124		3,562
Zachry Holdings, Inc.	(f)	Service & Equipment	7.5%				2/1/20		14,300		14,376		13,978

Total Subordinated Debt											860,872		579,740

See notes to unaudited consolidated financial statements.

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FS Energy and Power Fund

Consolidated Schedule of Investments (Continued)
As of December 31, 2015
(in thousands, except share amounts)



Portfolio Company^(a)	Footnotes	Industry	Number of Shares		Amortized Cost		Fair Value^(d)
Equity/Other—12.9%^(m)
Abaco Energy Technologies LLC, Common Equity	(q)	Service & Equipment		6,944,444	$	6,944	$	1,042
Allied Downhole Technologies, LLC, Common Equity	(k)(p)(q)	Service & Equipment		6,600,000		6,600		4,950
Allied Downhole Technologies, LLC, Warrants, 2/28/2019	(k)(p)(q)	Service & Equipment		5,344,680		1,865		4,009
Altus Power America Holdings, LLC, Preferred Equity		Power		15,518,478		15,464		28,709
Altus Power America Management, LLC, Class B Units	(q)(r)	Power		2,250		—		—
AP Exhaust Holdings, LLC, Common Equity	(k)(p)(q)	Service & Equipment		811		811		405
Ascent Resources Utica Holdings, LLC, Common Equity	(q)(s)	Upstream		15,657,194		14,900		3,131
BBH Operating LLC, Common Equity	(q)(t)	Upstream		1,000		1,000		—
BL Sand Hills Unit, L.P., Net Profits Interest	(q)(u)	Upstream		N/A		4,677		5,966
BL Sand Hills Unit, L.P., Overriding Royalty Interest	(u)	Upstream		N/A		668		227
Cimarron Energy Holdco Inc., Common Equity	(q)	Service & Equipment		2,500,000		2,500		1,750
Extraction Oil & Gas Holdings, LLC, Common Equity	(k)(p)(q)	Upstream		4,191,800		11,250		15,090
Fortune Creek Co-Invest I L.P., LP Interest	(l)(q)(v)(y)	Midstream		N/A		16,697		3,281
FourPoint Energy, LLC, Common Equity, Class C Units	(k)(o)(p)(q)	Upstream		66,000		66,000		46,200
FourPoint Energy, LLC, Common Equity, Class D Units	(k)(o)(p)(q)	Upstream		12,374		8,176		8,724
Global Jet Capital Holdings, LP, Preferred Equity	(q)	Service & Equipment		2,448,883		2,449		2,449
Industrial Group Intermediate Holdings, LLC, Common Equity	(k)(p)(q)	Service & Equipment		371,901		372		614
MB Precision Investment Holdings LLC, Class A-2 Units	(q)	Service & Equipment		490,213		490		466
Plains Offshore Operations Inc., Preferred Equity	(f)	Upstream		21,067		26,321		25,869
Plains Offshore Operations Inc., Warrants, 11/18/2019	(f)(q)	Upstream		427,005		689		—
Summit Midstream Partners, LLC, Preferred Equity		Midstream		39,163		39,163		37,205
Sunnova Holdings, LLC, Common Equity	(q)(z)	Power		1,074,951		25,026		29,561
Swift Worldwide Resources Holdco Limited, Common Equity	(l)(q)(w)	Service & Equipment		3,750,000		6,029		3,870
Synergy Offshore LLC, Preferred Equity	(k)(x)	Upstream		50,000		61,183		89,100

Total Equity/Other						319,274		312,618

TOTAL INVESTMENTS—127.0%					$	3,894,407		3,069,498



LIABILITIES IN EXCESS OF OTHER ASSETS—(27.0%)								(651,637	)

NET ASSETS—100.0%							$	2,417,861

See notes to unaudited consolidated financial statements.

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FS Energy and Power Fund

Consolidated Schedule of Investments (Continued)
As of December 31, 2015
(in thousands, except share amounts)

(a): Security may be an obligation of one or more entities affiliated with the named company.
(b): Certain variable rate securities in the Company's portfolio bear interest at a rate determined by a publicly disclosed base rate plus a basis point spread. As of December 31, 2015, the three-month London Interbank Offered Rate was 0.61% and the U.S. Prime Lending Rate was 3.50%.
(c): Denominated in U.S. dollars, unless otherwise noted.
(d): Fair value determined by the Company's board of trustees (see Note 7).
(e): Security is an unfunded commitment.
(f): Security or portion thereof held within FSEP Term Funding, LLC and is pledged as collateral supporting the amounts outstanding under the revolving credit facility with Deutsche Bank AG, New York Branch (see Note 8).
(g): Security or portion thereof held within Energy Funding LLC and is pledged as collateral supporting the amounts outstanding under the revolving credit facility with Natixis, New York Branch (see Note 8).
(h): Security or portion thereof held within Berwyn Funding LLC and is pledged as collateral supporting the amounts outstanding under the prime brokerage facility with BNP Paribas Prime Brokerage, Inc., or BNP. Securities held within Berwyn Funding LLC may be rehypothecated from time to time as permitted under Rule 15c-1(a)(1) of the Securities Exchange Act of 1934, as amended, or the Exchange Act, subject to the terms and conditions governing the prime brokerage facility with BNP (see Note 8).
(i): Security or portion thereof held within Wayne Funding LLC and is pledged as collateral supporting the amounts outstanding under the revolving credit facility with Wells Fargo Securities, LLC (see Note 8).
(j): Security or portion thereof held within Gladwyne Funding LLC and is pledged as collateral supporting the obligations outstanding under the repurchase transaction with Goldman Sachs Bank USA (see Note 8).
(k): Security or portion thereof held within Foxfields Funding LLC and is pledged as collateral supporting the obligations outstanding under the term loan facility with Fortress Credit Co LLC (see Note 8).
(l): The investment is not a qualifying asset under the Investment Company Act of 1940, as amended, or the 1940 Act. A business development company may not acquire any asset other than a qualifying asset, unless, at the time the acquisition is made, qualifying assets represent at least 70% of the business development company's total assets. As of December 31, 2015, 87.8% of the Company's total assets represented qualifying assets.
(m): Listed investments may be treated as debt for U.S. generally accepted accounting principles, or GAAP, or tax purposes.
(n): Security or portion thereof held within Berwyn Funding LLC has been rehypothecated under Rule 15c-1(a)(1) of the Exchange Act, subject to the terms and conditions governing the prime brokerage facility with BNP (see Note 8). As of December 31, 2015, the fair value of securities rehypothecated by BNP was $108,340.
(o): Under the 1940 Act, the Company generally is deemed to be an "affiliated person" of a portfolio company if it owns 5% or more of the portfolio company's voting securities. As of December 31, 2015, the Company held investments in a portfolio company of which it is deemed to be an "affiliated person" but is not deemed to "control." The following table presents certain information with respect to such portfolio company for the year ended December 31, 2015:

Portfolio Company	Purchases			Interest Income		Fee Income			Net Change in Unrealized Appreciation (Depreciation)

Senior Secured Bonds
FourPoint Energy, LLC	$	67,722	—	$	21,503	$	681	—	$	(32,843	)
Equity/Other
FourPoint Energy, LLC, Common Equity, Class C Units		—	—		—		—	—	$	(37,950	)
FourPoint Energy, LLC, Common Equity, Class D Units		—	—		—		—	—	$	(7,177	)

(p): Security held within FSEP Investments, Inc., a wholly-owned subsidiary of Foxfields Funding LLC.
(q): Security is non-income producing.
(r): Security is held within EP Altus Investments, LLC, a wholly-owned subsidiary of the Company.
(s): Security held within EP American Energy Investments, Inc., a wholly-owned subsidiary of the Company.
(t): Security held within FSEP-BBH, Inc., a wholly-owned subsidiary of the Company.

See notes to unaudited consolidated financial statements.

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FS Energy and Power Fund

Consolidated Schedule of Investments (Continued)
As of December 31, 2015
(in thousands, except share amounts)

(u): Security held within EP Burnett Investments, Inc., a wholly-owned subsidiary of the Company.
(v): Investment denominated in Canadian dollars. Amortized cost and fair value are converted into U.S. dollars as of December 31, 2015.
(w): Investment denominated in British pounds. Amortized cost and fair value are converted into U.S. dollars as of December 31, 2015.
(x): Security held within EP Synergy Investments, Inc., a wholly-owned subsidiary of Foxfields Funding LLC.
(y): Security was on non-accrual as of December 31, 2015.
(z): Under the 1940 Act, the Company generally is deemed to "control" a portfolio company if it owns 25% or more of the portfolio company's voting securities or it has the power to exercise control over the management or policies of a portfolio company. As of December 31, 2015, the Company held investments in a portfolio company of which it is deemed to be an "affiliated person" and is also deemed to "control." The following table presents certain information with respect to such portfolio company for the year ended December 31, 2015:

Portfolio Company	Purchases			Interest Income		Fee Income			Net Change in Unrealized Appreciation (Depreciation)

Senior Secured Loans—First Lien
Sunnova Asset Portfolio 5 Holdings, LLC	$	187,636	—	$	19,950	$	2,162	—	$	(1,014	)
Equity/Other
Sunnova Holdings, LLC, Common Equity	$	25,026	—		—	$	6,523	—	$	4,535

See notes to unaudited consolidated financial statements.

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FS Energy and Power Fund

Notes to Unaudited Consolidated Financial Statements
(in thousands, except share and per share amounts)

Note 1. Principal Business and Organization

FS Energy and Power Fund, or the Company, was formed as a Delaware statutory trust under the Delaware Statutory Trust Act on September 16, 2010 and formally commenced investment operations on July 18, 2011 upon raising gross proceeds in excess of $2,500, or the minimum offering requirement, from sales of its common shares of beneficial interest, or common shares, in its continuous public offering to persons who were not affiliated with the Company or the Company's investment adviser, FS Investment Advisor, LLC, or FS Advisor, a private investment firm that is registered as an investment adviser under the Investment Advisers Act of 1940, as amended, or the Advisers Act, and an affiliate of the Company.

The Company has elected to be regulated as a business development company, or BDC, under the Investment Company Act of 1940, as amended, or the 1940 Act. The Company is an externally managed, non-diversified, closed-end management investment company that has elected to be treated for U.S. federal income tax purposes, and intends to qualify annually, as a regulated investment company, or RIC, as defined under Subchapter M of the Internal Revenue Code of 1986, as amended, or the Code. As of March 31, 2016, the Company had seven wholly-owned financing subsidiaries, six wholly-owned subsidiaries through which it holds interests in certain non-controlled portfolio companies and one wholly-owned subsidiary through which it will hold interests in certain non-controlled portfolio companies. The unaudited consolidated financial statements include both the Company's accounts and the accounts of its wholly-owned subsidiaries as of March 31, 2016. All significant intercompany transactions have been eliminated in consolidation. Certain of the Company's consolidated subsidiaries are subject to U.S. federal and state income taxes.

The Company's investment objective is to generate current income and long-term capital appreciation by investing primarily in privately-held U.S. companies in the energy and power industry. The Company's investment policy is to invest, under normal circumstances, at least 80% of its total assets in securities of energy and power related, or Energy, companies. The Company considers Energy companies to be those companies that engage in the exploration, development, production, gathering, transportation, processing, storage, refining, distribution, mining, generation or marketing of natural gas, natural gas liquids, crude oil, refined products, coal or power, including those companies that provide equipment or services to companies engaged in any of the foregoing.

Note 2. Summary of Significant Accounting Policies

Basis of Presentation: The accompanying unaudited consolidated financial statements of the Company have been prepared in accordance with U.S. generally accepted accounting principles, or GAAP, for interim financial information and with the instructions for Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. For a more complete discussion of significant accounting policies and certain other information, the Company's interim unaudited consolidated financial statements should be read in conjunction with its audited consolidated financial statements as of and for the year ended December 31, 2015 included in the Company's annual report on Form 10-K. Operating results for the three months ended March 31, 2016 are not necessarily indicative of the results that may be expected for the year ending December 31, 2016. The December 31, 2015 consolidated balance sheet and consolidated schedule of investments are derived from the Company's audited consolidated financial statements as of and for the year ended December 31, 2015. The Company is considered an investment company under GAAP and follows the accounting and reporting guidance applicable to investment companies. The Company has evaluated the impact of subsequent events through the date the consolidated financial statements were issued and filed with the Securities and Exchange Commission, or the SEC.

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FS Energy and Power Fund

Notes to Unaudited Consolidated Financial Statements (Continued)
(in thousands, except share and per share amounts)

Note 2. Summary of Significant Accounting Policies (Continued)

Use of Estimates: The preparation of the unaudited consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Many of the amounts have been rounded, and all amounts are in thousands, except share and per share amounts.

Capital Gains Incentive Fee: The Company entered into an investment advisory and administrative services agreement with FS Advisor, dated as of April 28, 2011, which was amended on August 10, 2012, and which, as amended, is referred to herein as the investment advisory and administrative services agreement. Pursuant to the terms of the investment advisory and administrative services agreement, the incentive fee on capital gains is determined and payable in arrears as of the end of each calendar year (or upon termination of such agreement). Such fee equals 20.0% of the Company's incentive fee capital gains (i.e., the Company's realized capital gains on a cumulative basis from inception, calculated as of the end of the applicable period, computed net of all realized capital losses and unrealized capital depreciation on a cumulative basis), less the aggregate amount of any previously paid capital gains incentive fees. On a quarterly basis, the Company accrues for the capital gains incentive fee by calculating such fee as if it were due and payable as of the end of such period.

While the investment advisory and administrative services agreement with FS Advisor neither includes nor contemplates the inclusion of unrealized gains in the calculation of the capital gains incentive fee, pursuant to an interpretation of an American Institute of Certified Public Accountants Technical Practice Aid, or AICPA, for investment companies, the Company includes unrealized gains in the calculation of the capital gains incentive fee expense and related accrued capital gains incentive fee. This accrual reflects the incentive fees that would be payable to FS Advisor as if the Company's entire portfolio was liquidated at its fair value as of the balance sheet date even though FS Advisor is not entitled to an incentive fee with respect to unrealized gains unless and until such gains are actually realized.

Subordinated Income Incentive Fee: Pursuant to the investment advisory and administrative services agreement, FS Advisor may also be entitled to receive a subordinated incentive fee on income. The subordinated incentive fee on income, which is calculated and payable quarterly in arrears, equals 20.0% of the Company's "pre-incentive fee net investment income" for the immediately preceding quarter and is subject to a hurdle rate, expressed as a rate of return on adjusted capital equal to 1.625% per quarter, or an annualized hurdle rate of 6.5%. As a result, FS Advisor does not earn this incentive fee for any quarter until the Company's pre-incentive fee net investment income for such quarter exceeds the hurdle rate of 1.625%. For purposes of this fee, "adjusted capital" means cumulative gross proceeds generated from sales of the Company's common shares (including proceeds from its distribution reinvestment plan) reduced for distributions from non-liquidating dispositions of the Company's investments paid to shareholders and amounts paid for share repurchases pursuant to the Company's share repurchase program. Once the Company's pre-incentive fee net investment income in any quarter exceeds the hurdle rate, FS Advisor is entitled to a "catch-up" fee equal to the amount of the pre-incentive fee net investment income in excess of the hurdle rate, until the Company's pre-incentive fee net investment income for such quarter equals 2.031%, or 8.125% annually, of adjusted capital. Thereafter, FS Advisor is entitled to receive 20.0% of pre-incentive fee net investment income.

Offering Costs: The Company's offering costs primarily include, among other things, marketing expenses and printing, legal and due diligence fees and other costs pertaining to the Company's continuous public offering of its common shares. Historically, the Company has charged offering costs

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FS Energy and Power Fund

Notes to Unaudited Consolidated Financial Statements (Continued)
(in thousands, except share and per share amounts)

Note 2. Summary of Significant Accounting Policies (Continued)

against capital in excess of par value on its consolidated balance sheets. Following recent discussions with the Staff of the Division of Investment Management of the SEC, the Company has decided to change its accounting treatment of offering costs and defer and amortize such costs as an expense over twelve months. The Company evaluated this change in accounting treatment of offering costs, which it implemented effective January 1, 2016, and determined that it did not have a material impact on the Company's consolidated financial position, results of operations or cash flows.

Reclassifications: Certain amounts in the unaudited consolidated financial statements for the three months ended March 31, 2015 may have been reclassified to conform to the classifications used to prepare the unaudited consolidated financial statements for the three months ended March 31, 2016. These reclassifications had no material impact on the Company's consolidated financial position, results of operations or cash flows as previously reported.

In April 2015, the Financial Accounting Standards Board, or the FASB, issued Accounting Standards Update No. 2015-03, Interest—Imputation of Interest, or ASU 2015-03, to simplify the presentation of debt issuance costs in financial statements. Under pre-existing guidance, debt issuance costs were recognized as a deferred charge and presented as an asset on the balance sheet. ASU 2015-03 requires that debt issuance costs related to a recognized liability for indebtedness be presented in the balance sheet as a direct deduction from the carrying amount of that liability, consistent with debt discounts. In August 2015, the FASB issued Accounting Standards Update No. 2015-15, Interest—Imputation of Interest, or ASU 2015-15, to update the guidance to include SEC staff views regarding the presentation and subsequent measurement of debt issuance costs related to line-of-credit arrangements. Given the absence of authoritative guidance within ASU 2015-03 for debt issuance costs related to line-of-credit arrangements, the SEC indicated that it would not object to an entity deferring and presenting debt issuance costs as an asset and subsequently amortizing the deferred debt issuance costs ratably over the term of the line-of-credit arrangement, regardless of whether there are any outstanding borrowings on the line-of-credit arrangement.

During the three months ended March 31, 2016, the Company adopted ASU 2015-03 and changed its method of disclosing debt issuance costs incurred in connection with its repurchase agreement entered into in connection with its financing arrangement with Goldman Sachs Bank USA, or Goldman, and its multiple draw term loan agreement entered into in connection with its financing arrangement with Fortress Credit Co LLC, or Fortress. ASU 2015-03 affects the presentation and disclosure of such costs in the Company's financial statements. There is no change to the Company's recognition and measurement of debt issuance costs. In accordance with ASU 2015-15, the Company elected to continue to present debt issuance costs associated with line-of-credit arrangements as an asset, which is unchanged from its prior method of disclosure.

Comparative financial statements of prior interim periods have been adjusted to apply the new method retrospectively. The adoption and retrospective adjustment of ASU 2015-03 had no material impact on the Company's consolidated financial position, results of operations or cash flows as previously reported.

Table of Contents

FS Energy and Power Fund

Notes to Unaudited Consolidated Financial Statements (Continued)
(in thousands, except share and per share amounts)

Note 3. Share Transactions

Below is a summary of transactions with respect to the Company's common shares during the three months ended March 31, 2016 and 2015:

	Three Months Ended March 31,

	2016						2015
	Shares			Amount			Shares			Amount
Gross Proceeds from Offering		13,333,668		$	92,620			19,243,929		$	184,430
Reinvestment of Distributions		6,643,252			42,231			2,437,037			21,167

Total Gross Proceeds		19,976,920			134,851			21,680,966			205,597
Commissions and Dealer Manager Fees		—			(7,923	)		—			(16,663	)

Net Proceeds to Company		19,976,920			126,928			21,680,966			188,934
Share Repurchase Program		(2,716,924	)		(18,339	)		(450,293	)		(3,972	)

Net Proceeds from Share Transactions		17,259,996		$	108,589			21,230,673		$	184,962

FS Energy & Power Fund - FORM 10-Q - May 9, 2016

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