FS Specialty Lending Fund (FSEN) 10-Q 2018 Q1 Quarterly report

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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, 2018
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, a smaller reporting company or an emerging growth company. See the definitions of "large accelerated filer," "accelerated filer", "smaller reporting company" and "emerging growth company" in Rule 12b-2 of the Exchange Act.

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

        If an emerging growth company, indicate by check mark if the registrant has elected to not use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. 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 438,487,393 common shares of beneficial interest outstanding as of May 14, 2018.

TABLE OF CONTENTS

		Page
PART I—FINANCIAL INFORMATION
ITEM 1.	FINANCIAL STATEMENTS
	Consolidated Balance Sheets as of March 31, 2018 (Unaudited) and December 31, 2017		1
	Unaudited Consolidated Statements of Operations for the three months ended March 31, 2018 and 2017		2
	Unaudited Consolidated Statements of Changes in Net Assets for the three months ended March 31, 2018 and 2017		3
	Unaudited Consolidated Statements of Cash Flows for the three months ended March 31, 2018 and 2017		4
	Consolidated Schedules of Investments as of March 31, 2018 (Unaudited) and December 31, 2017		5
	Notes to Unaudited Consolidated Financial Statements		19
ITEM 2.	MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS		46
ITEM 3.	QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK		61
ITEM 4.	CONTROLS AND PROCEDURES		62
PART II—OTHER INFORMATION
ITEM 1.	LEGAL PROCEEDINGS		63
ITEM 1A.	RISK FACTORS		63
ITEM 2.	UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS		63
ITEM 3.	DEFAULTS UPON SENIOR SECURITIES		64
ITEM 4.	MINE SAFETY DISCLOSURES		64
ITEM 5.	OTHER INFORMATION		64
ITEM 6.	EXHIBITS		65
	SIGNATURES		71

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, 2018 (Unaudited)			December 31, 2017
Assets
Investments, at fair value
Non-controlled/unaffiliated investments (amortized cost—$3,134,868 and $3,490,683, respectively)	$	2,966,788		$	3,281,536
Non-controlled/affiliated investments (amortized cost—$843,517 and $839,619, respectively)		652,284			715,169
Controlled/affiliated investments (amortized cost—$27,464 and $27,464, respectively)		—			—
Total investments, at fair value (amortized cost—$4,005,849 and $4,357,766, respectively)		3,619,072			3,996,705
Cash		383,536			195,376
Receivable for investments sold and repaid		1,231			66,337
Income receivable		50,172			51,293
Deferred financing costs		410			720
Reimbursement due from sponsor(1)		—			5,945
Prepaid expenses and other assets		8			55
Total assets	$	4,054,429		$	4,316,431
Liabilities
Payable for investments purchased	$	106,573		$	88,033
Credit facilities payable (net of deferred financing costs of $1,662 and $1,883, respectively)(2)		1,068,338			1,218,117
Shareholder distributions payable		7,954			10,938
Management fees payable		18,298			21,834
Administrative services expense payable		580			361
Interest payable		5,432			6,033
Trustees' fees payable		450			252
Other accrued expenses and liabilities		3,837			4,821
Total liabilities		1,211,462			1,350,389
Commitments and contingencies ($28,104 and $28,104, respectively)(3)
Shareholders' equity
Preferred shares, $0.001 par value, 50,000,000 shares authorized, none issued and outstanding		—			—
Common shares, $0.001 par value, 700,000,000 shares authorized, 441,740,665 and 446,045,135 shares issued and outstanding, respectively		442			446
Capital in excess of par value(4)		3,785,262			3,814,303
Accumulated undistributed net realized gains (losses) on investments and gain/loss on foreign currency(4)		(555,259	)		(487,379	)
Accumulated undistributed (distributions in excess of) net investment income(4)		(682	)		(247	)
Net unrealized appreciation (depreciation) on investments and unrealized gain/loss on foreign currency		(386,796	)		(361,081	)
Total shareholders' equity		2,842,967			2,966,042
Total liabilities and shareholders' equity	$	4,054,429		$	4,316,431
Net asset value per common share at period end	$	6.44		$	6.65

(1)

See Note 4 for a discussion of expense reimbursements paid to the Company by its former investment adviser and affiliates.

(2)

See Note 8 for a discussion of the Company's financing arrangements.

(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.

1

FS Energy and Power Fund

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

	Three Months Ended March 31,
	2018			2017
Investment income
From non-controlled/unaffiliated investments:
Interest income	$	66,380		$	69,178
Paid-in-kind interest income		2,390			5,363
Fee income		6,965			23,822
From non-controlled/affiliated investments:
Interest income		11,518			15,023
Paid-in-kind interest income		629			2,860
Fee income		2,091			—
Total investment income		89,973			116,246
Operating expenses
Management fees		18,298			22,385
Subordinated income incentive fees(1)		—			10,499
Administrative services expenses		793			808
Share transfer agent fees		643			734
Accounting and administrative fees		361			422
Interest expense(2)		14,107			10,235
Trustees' fees		450			250
Other general and administrative expenses		933			1,125
Total operating expenses		35,585			46,458
Less: Expense reimbursement from sponsor(3)		—			(18,220	)
Net expenses		35,585			28,238
Net investment income		54,388			88,008
Realized and unrealized gain/loss
Net realized gain (loss) on investments:
Non-controlled/unaffiliated		(67,880	)		(30,861	)
Non-controlled/affiliated		—			208
Net realized gain (loss) on foreign currency		—			3
Net change in unrealized appreciation (depreciation) on investments:
Non-controlled/unaffiliated		41,067			27,235
Non-controlled/affiliated		(66,783	)		(21,595	)
Controlled/affiliated		—			(1,531	)
Net change in unrealized gain (loss) on foreign currency		1			52
Total net realized and unrealized gain (loss)		(93,595	)		(26,489	)
Net increase (decrease) in net assets resulting from operations	$	(39,207	)	$	61,519
Per share information—basic and diluted
Net increase (decrease) in net assets resulting from operations (Earnings per Share)	$	(0.09	)	$	0.14
Weighted average shares outstanding		439,924,494			440,957,676

(1)

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

(2)

See Note 8 for a discussion of the Company's financing arrangements.

(3)

See Note 4 for a discussion of expense reimbursements payable to the Company by its former investment adviser and affiliates.

See notes to unaudited consolidated financial statements.

2

FS Energy and Power Fund

Unaudited Consolidated Statements of Changes in Net Assets

(in thousands)

	Three Months Ended March 31,
	2018			2017
Operations
Net investment income	$	54,388		$	88,008
Net realized gain (loss) on investments and foreign currency		(67,880	)		(30,650	)
Net change in unrealized appreciation (depreciation) on investments		(25,716	)		4,109
Net change in unrealized gain (loss) on foreign currency		1			52
Net increase (decrease) in net assets resulting from operations		(39,207	)		61,519
Shareholder distributions(1)
Distributions from net investment income		(54,823	)		(77,984	)
Net decrease in net assets resulting from shareholder distributions		(54,823	)		(77,984	)
Capital share transactions(2)
Reinvestment of shareholder distributions		31,380			46,964
Repurchases of common shares		(60,425	)		(17,244	)
Net increase (decrease) in net assets resulting from capital share transactions		(29,045	)		29,720
Total increase (decrease) in net assets		(123,075	)		13,255
Net assets at beginning of period		2,966,042			3,348,894
Net assets at end of period	$	2,842,967		$	3,362,149
Accumulated undistributed (distributions in excess of) net investment income(1)	$	(682	)	$	(3,714	)

(1)

See Note 5 for a discussion of the sources of distributions paid by the Company.

(2)

See Note 3 for a discussion of the Company's common share transactions.

See notes to unaudited consolidated financial statements.

3

FS Energy and Power Fund

Unaudited Consolidated Statements of Cash Flows

(in thousands)

	Three Months Ended March 31,
	2018			2017
Cash flows from operating activities
Net increase (decrease) in net assets resulting from operations	$	(39,207	)	$	61,519
Adjustments to reconcile net increase (decrease) in net assets resulting from operations to net cash provided by (used in) operating activities:
Purchases of investments		(260,693	)		(766,544	)
Paid-in-kind interest		(3,019	)		(8,223	)
Proceeds from sales and repayments of investments		551,229			442,033
Net realized (gain) loss on investments		67,880			30,653
Net change in unrealized (appreciation) depreciation on investments		25,716			(4,109	)
Accretion of discount		(3,480	)		(5,246	)
Amortization of deferred financing costs		531			838
(Increase) decrease in receivable for investments sold and repaid		65,106			(306,492	)
(Increase) decrease in income receivable		1,121			(21,148	)
(Increase) decrease in expense reimbursement due from sponsor(1)		5,945			(18,220	)
(Increase) decrease in prepaid expenses and other assets		47			(197	)
Increase (decrease) in payable for investments purchased		18,540			273,064
Increase (decrease) in management fees payable		(3,536	)		1,530
Increase (decrease) in subordinated income incentive fees payable		—			10,499
Increase (decrease) in administrative services expense payable		219			(122	)
Increase (decrease) in interest payable(2)		(601	)		320
Increase (decrease) in trustees' fees payable		198			—
Increase (decrease) in other accrued expenses and liabilities		(984	)		149
Net cash provided by (used in) operating activities		425,012			(309,696	)
Cash flows from financing activities
Reinvestment of shareholder distributions		31,380			46,964
Repurchases of common shares		(60,425	)		(17,244	)
Shareholder distributions		(57,807	)		(76,873	)
Borrowings under credit facilities(2)		—			140,000
Repayments of credit facilities(2)		(150,000	)		(4,273	)
Net cash provided by (used in) financing activities		(236,852	)		88,574
Total increase (decrease) in cash		188,160			(221,122	)
Cash at beginning of period		195,376			317,520
Cash at end of period	$	383,536		$	96,398
Supplemental disclosure
Non-cash purchase of investments	$	(7,140	)	$	(16,062	)
Non-cash sales of investments	$	7,140		$	16,062

(1)

See Note 4 for a discussion of expense reimbursements payable to the Company by its former investment adviser and affiliates.

(2)

See Note 8 for a discussion of the Company's credit facilities. During the three months ended March 31, 2018 and 2017, the Company paid $14,177 and $5,548, respectively, in interest expense on the credit facilities and $0 and $3,529, respectively, in interest expense pursuant to the repurchase agreement.

See notes to unaudited consolidated financial statements.

4

FS Energy and Power Fund

Unaudited Consolidated Schedule of Investments
As of March 31, 2018
(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—31.4%
Abaco Energy Technologies LLC	(j)	Service & Equipment	L+950		1.0	%	11/20/20	$	85,565	$	82,357		$	84,565
Allied Wireline Services, LLC	(k)(l)	Service & Equipment	L+400, 5.5% PIK (5.5% Max PIK)		1.5	%	6/30/20		115,104		114,714			113,090
Altus Power America, Inc.	(j)(aa)	Power	L+750		1.5	%	9/30/21		77,378		77,378			75,830
Altus Power America, Inc.	(e)(aa)	Power	L+750		1.5	%	9/30/21		23,872		23,872			23,395
ARB Midstream Operating Company, LLC	(g)	Midstream	L+725		1.0	%	11/3/21		3,182		3,150			3,150
ARB Midstream Operating Company, LLC	(e)	Midstream	L+725		1.0	%	11/3/21		1,819		1,791			1,800
Bioenergy Infrastructure Holdings Ltd.	(g)(m)	Power	L+725		1.0	%	11/1/22		734		727			727
Bioenergy Infrastructure Holdings Ltd.	(e)(m)	Power	L+725		1.0	%	11/1/22		796		796			788
BL Sand Hills Unit, L.P.	(l)(aa)	Upstream	Prime+650		3.5	%	12/17/21		20,000		17,369			20,000
Cimarron Energy Inc.		Service & Equipment	L+1150 PIK (L+1150 Max PIK)		1.0	%	12/15/19		25,854		25,646			12,055
Compass Power Generation LLC	(g)	Power	L+375		1.0	%	12/20/24		3,000		3,056			3,045
Eagle Midstream Canada Finance Inc.	(l)(m)	Midstream	8.5%				9/27/20		175,000		175,000			173,031
Felix Investments Holdings II, LLC	(g)	Upstream	L+650		1.0	%	8/9/22		1,933		1,914			1,914
Felix Investments Holdings II, LLC	(e)	Upstream	L+650		1.0	%	2/16/25		967		957			957
Fortis Minerals Intermediate Holdings, LLC	(g)	Upstream	L+625		1.0	%	2/16/25		11,725		11,609			11,608
Fortis Minerals Intermediate Holdings, LLC	(e)	Upstream	L+625		1.0	%	2/16/25		35,175		34,823			34,823
Gulf Finance, LLC	(f)	Midstream	L+525		1.0	%	8/25/23		18,439		18,004			17,091
Industrial Group Intermediate Holdings, LLC		Service & Equipment	L+800		1.3	%	5/31/20		23,015		23,015			23,360
JSS Holdings, Inc.	(l)	Service & Equipment	L+800, 0.0% PIK (2.5% Max PIK)		1.0	%	3/31/23		14,924		14,799			15,243
JSS Holdings, Inc.	(e)	Service & Equipment	L+800, 0.0% PIK (2.5% Max PIK)		1.0	%	3/31/23		2,727		2,727			2,786
Kraken Oil & Gas LLC		Upstream	L+750		1.0	%	5/7/21		35,000		34,682			35,044
Kraken Oil & Gas LLC	(e)	Upstream	L+750		1.0	%	5/7/21		25,000		25,000			25,031
Lucid Energy Group, LLC	(f)(g)	Midstream	L+300		1.0	%	2/18/25		16,500		16,488			16,443
Lusk Operating LLC	(p)(r)(bb)	Upstream	Prime+500 PIK (8.8% Max PIK)		3.3	%	4/30/18		29,297		27,464			—
MB Precision Holdings LLC		Service & Equipment	L+725, 2.3% PIK (2.3% Max PIK)		1.3	%	1/23/21		13,226		13,226			10,813
Medallion Midland Acquisition, LLC	(g)	Upstream	L+325		1.0	%	10/30/24		5,000		5,013			5,000
New Age (African Global Energy) Ltd.	(g)(m)	Upstream	15.0%				6/28/20		1,617		1,601			1,601
NNE Holding LLC	(g)	Upstream	L+800				3/2/22		2,650		2,624			2,624
NNE Holding LLC	(e)	Upstream	L+800				3/2/22		350		347			347
ORYX Southern Delaware Holdings LLC	(f)(g)	Upstream	L+325		1.0	%	2/28/25		25,000		25,125			25,063
Power Distribution, Inc.		Power	L+725		1.3	%	1/25/23		29,853		29,853			30,375
Strike, LLC	(j)	Midstream	L+800		1.0	%	5/30/19		3,207		3,170			3,223
Strike, LLC	(j)	Midstream	L+800		1.0	%	11/30/22		23,438		22,884			23,789
Swift Worldwide Resources US Holdings Corp.	(j)	Service & Equipment	L+1000, 1.0% PIK (1.0% Max PIK)		1.0	%	7/20/21		58,473		58,473			58,911
Traverse Midstream Partners LLC	(f)(g)	Midstream	L+400		1.0	%	9/27/24		74,672		75,105			75,197
UTEX Industries, Inc.	(f)	Service & Equipment	L+400		1.0	%	5/21/21		24,147		22,083			23,745
Warren Resources, Inc.	(j)(l)(aa)	Upstream	L+900, 1.0% PIK (1.0% Max PIK)		1.0	%	5/22/20		27,092		27,092			27,092
Total Senior Secured Loans—First Lien											1,023,934			983,556
Unfunded Loan Commitments											(90,313	)		(90,313	)
Net Senior Secured Loans—First Lien											933,621			893,243

See notes to unaudited consolidated financial statements.

5

FS Energy and Power Fund

Unaudited Consolidated Schedule of Investments (Continued)
As of March 31, 2018
(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—26.5%
Aethon United BR LP	(g)	Upstream	L+675		1.0	%	9/8/23	$	87,931	$	86,715		$	88,375
Aethon United BR LP	(e)	Upstream	L+675		1.0	%	9/8/23		39,969		39,955			40,171
Arena Energy, LP	(j)(k)	Upstream	L+900, 4.0% PIK (4.0% Max PIK)		1.0	%	1/24/21		108,654		108,654			104,851
Chief Exploration & Development LLC	(f)	Upstream	L+650		1.0	%	5/16/21		16,156		15,713			16,069
Chisholm Oil and Gas Operating, LLC	(j)(k)(l)	Upstream	L+800		1.0	%	3/21/24		196,000		196,000			195,931
Granite Acquisition, Inc.	(f)(g)	Power	L+725		1.0	%	12/19/22		22,331		22,036			22,645
Gruden Acquisition, Inc.	(j)	Service & Equipment	L+850		1.0	%	8/18/23		15,000		14,486			15,113
Horn Intermediate Holdings, Inc.	(j)	Service & Equipment	L+775		1.3	%	10/2/18		50,250		50,250			50,376
P2 Upstream Acquisition Co.	(f)(j)	Service & Equipment	L+800		1.0	%	4/30/21		42,399		42,066			39,819
Panda Temple Power, LLC	(k)	Power	L+800 (L+800 Max PIK)		1.0	%	2/7/23		3,497		3,430			3,572
Penn Virginia Holding Corp.	(m)	Upstream	L+700		1.0	%	9/29/22		50,000		50,000			50,500
Rosehill Operating Company, LLC	(g)	Upstream	10.0%				1/31/23		1,667		1,650			1,650
SilverBow Resources, Inc.	(g)(m)	Upstream	L+750		1.0	%	12/15/24		19,000		18,814			19,560
Talos Production LLC	(k)(l)	Upstream	11.0%				4/3/22		43,250		40,627			43,250
Titan Energy Operating, LLC	(k)(aa)	Upstream	2.0%, L+1100 PIK (L+1100 Max PIK)		1.0	%	2/23/20		120,686		100,902			19,225
UTEX Industries, Inc.	(f)(j)	Service & Equipment	L+725		1.0	%	5/20/22		85,192		79,513			82,743
Total Senior Secured Loans—Second Lien											870,811			793,850
Unfunded Loan Commitment											(39,955	)		(39,955	)
Net Senior Secured Loans—Second Lien											830,856			753,895
Senior Secured Bonds—21.3%
Black Swan Energy Ltd.	(j)(m)	Upstream	9.0%				1/20/24		90,000		90,000			87,975
CITGO Holding, Inc.	(f)	Downstream	10.8%				2/15/20		31,380		32,930			33,322
CSVC Acquisition Corp.	(h)	Service & Equipment	7.8%				6/15/25		30,608		30,608			26,438
EP Energy LLC	(f)(h)(m)(o)	Upstream	8.0%				2/15/25		49,880		47,886			33,357
EP Energy LLC	(h)(m)	Upstream	9.4%				5/1/24		5,000		4,842			3,563
FourPoint Energy, LLC	(j)(k)(l)(aa)	Upstream	9.0%				12/31/21		235,125		227,376			239,240
Mirant Mid-Atlantic Trust	(f)(h)(o)	Power	10.1%				12/30/28		31,752		33,690			31,911
Ridgeback Resources Inc.	(k)(m)(aa)	Upstream	12.0%				12/29/20		3,887		3,825			3,887
Sunnova Energy Corp.	(j)(aa)	Power	6.0%, 6.0% PIK (6.0% Max PIK)				10/24/18		25,504		25,504			25,472
Velvet Energy Ltd.	(j)(l)(m)	Upstream	9.0%				10/5/23		120,000		120,000			119,520
Total Senior Secured Bonds											616,661			604,685

See notes to unaudited consolidated financial statements.

6

FS Energy and Power Fund

Unaudited Consolidated Schedule of Investments (Continued)
As of March 31, 2018
(in thousands, except share amounts)

Portfolio Company(a)	Footnotes	Industry	Rate(b)	Floor			Maturity	Principal Amount(c)		Amortized Cost		Fair Value(d)
Subordinated Debt—34.2%
Alta Mesa Holdings, LP	(f)(h)(o)	Upstream	7.9%				12/15/24	$	20,425	$	20,425	$	21,361
Ascent Resources Utica Holdings, LLC	(f)(h)(j)(o)	Upstream	10.0%				4/1/22		200,000		200,000		216,750
Bellatrix Exploration Ltd.	(f)(h)(m)(o)	Upstream	8.5%				5/15/20		60,120		59,323		49,106
Brand Energy & Infrastructure Services, Inc.	(f)(h)	Service & Equipment	8.5%				7/15/25		44,759		44,759		46,829
Canbriam Energy Inc.	(f)(h)(j)(m)(o)	Upstream	9.8%				11/15/19		110,965		109,324		113,323
Compressco Partners, LP	(f)(h)(o)	Service & Equipment	7.3%				8/15/22		20,050		19,934		18,797
Covey Park Energy LLC		Upstream	7.5%				5/15/25		9,482		9,426		9,446
Eclipse Resources Corp.	(f)(h)(m)(o)	Upstream	8.9%				7/15/23		62,745		57,558		59,372
Endeavor Energy Resources, L.P.		Upstream	5.5%				1/30/26		2,000		1,975		1,993
EV Energy Partners, L.P.	(f)(h)(o)(p)(r)	Upstream	8.0%				4/15/19		48,814		39,678		23,736
Genesis Energy, L.P.	(h)(m)	Midstream	6.8%				8/1/22		23,540		23,032		24,249
Genesis Energy, L.P.	(h)(m)	Midstream	6.0%				5/15/23		15,280		14,303		15,139
Global Jet Capital Inc.		Service & Equipment	15.0% PIK (15.0% Max PIK)				1/30/25		881		881		889
Global Jet Capital Inc.		Service & Equipment	15.0% PIK (15.0% Max PIK)				4/30/25		5,600		5,600		5,649
Global Jet Capital Inc.		Service & Equipment	15.0% PIK (15.0% Max PIK)				9/3/25		1,157		1,157		1,167
Global Jet Capital Inc.		Service & Equipment	15.0% PIK (15.0% Max PIK)				9/29/25		1,089		1,089		1,099
Global Jet Capital Inc.		Service & Equipment	15.0% PIK (15.0% Max PIK)				12/2/26		958		958		966
Global Partners L.P.	(f)(m)	Midstream	6.3%				7/15/22		30,835		30,835		30,792
Global Partners L.P.	(f)(m)	Midstream	7.0%				6/15/23		2,824		2,478		2,852
Great Western Petroleum, LLC	(f)(h)(o)	Upstream	9.0%				9/30/21		35,830		35,723		36,860
Hammerhead Resources Inc.	(j)(m)	Upstream	9.0%				7/10/22		100,000		97,334		99,000
Hilcorp Energy I LP	(h)	Upstream	5.0%				12/1/24		35,000		35,166		34,475
Lonestar Resources America Inc.	(h)	Upstream	11.3%				1/1/23		25,000		25,000		25,031
Martin Midstream Partners L.P.	(f)(h)(m)(o)	Midstream	7.3%				2/15/21		24,660		24,100		24,796
Moss Creek Resources, LLC	(h)	Upstream	7.5%				1/15/26		30,000		30,000		30,329
ONEOK, Inc.	(f)(m)	Midstream	7.5%				9/1/23		12,600		11,818		14,775
Tenrgys, LLC	(k)(p)(r)	Upstream	L+900		2.5	%	12/23/18		75,000		75,000		38,625
Zachry Holdings, Inc.	(f)	Service & Equipment	7.5%				2/1/20		23,925		23,928		24,269
Total Subordinated Debt											1,000,804		971,675

See notes to unaudited consolidated financial statements.

7

FS Energy and Power Fund

Unaudited Consolidated Schedule of Investments (Continued)
As of March 31, 2018
(in thousands, except share amounts)

Portfolio Company(a)	Footnotes	Industry	Rate(b)	Number of Shares		Amortized Cost		Fair Value(d)
Equity/Other—13.9%(n)
Abaco Energy Technologies LLC, Common Equity	(r)	Service & Equipment			6,944,444	$	6,944	$	1,736
Abaco Energy Technologies LLC, Preferred Equity	(r)	Service & Equipment			28,942,003		1,447		8,683
Allied Downhole Technologies, LLC, Common Equity	(k)(q)(r)	Service & Equipment			7,431,113		7,223		1,858
Allied Downhole Technologies, LLC, Warrants, 2/28/2019	(k)(q)(r)	Service & Equipment			5,344,680		1,865		1,336
Altus Power America Holdings, LLC, Common Equity	(k)(r)(aa)	Power			12,474,205		12,474		—
Altus Power America Holdings, LLC, Preferred Equity	(k)(s)(aa)	Power	9.0%, 5.0% PIK (5.0% Max PIK)		25,792,683		25,793		25,664
Ascent Resources Utica Holdings, LLC, Common Equity	(r)(t)	Upstream			148,692,909		44,700		37,173
BL Sand Hills Unit, L.P., Net Profits Interest	(r)(v)(aa)	Upstream			N/A		5,180		1,031
BL Sand Hills Unit, L.P., Overriding Royalty Interest	(v)(aa)	Upstream			N/A		740		736
BL Sand Hills Unit, L.P., Series A Units	(i)(r)(aa)	Upstream			29,117		24,019		6,931
Chisholm Oil and Gas, LLC, Series A Units	(i)(r)	Upstream			13,905,565		13,906		13,892
Cimarron Energy Holdco Inc., Common Equity	(r)	Service & Equipment			3,675,487		3,323		—
Cimarron Energy Holdco Inc., Preferred Equity	(r)	Service & Equipment			626,806		627		—
Extraction Oil & Gas, Inc., Common Equity	(k)(r)(z)	Upstream			1,140,637		11,250		13,072
FourPoint Energy, LLC, Common Equity, Class C-II-A Units	(k)(q)(r)(aa)	Upstream			66,000		66,000		18,645
FourPoint Energy, LLC, Common Equity, Class D Units	(k)(q)(r)(aa)	Upstream			12,374		8,176		3,527
FourPoint Energy, LLC, Common Equity, Class E-II Units	(i)(r)(aa)	Upstream			150,937		37,734		42,640
FourPoint Energy, LLC, Common Equity, Class E-III Units	(i)(k)(q)(r)(aa)	Upstream			222,750		55,688		62,927
Global Jet Capital Holdings, LP, Preferred Equity	(r)	Service & Equipment			2,785,562		2,786		2,507
Industrial Group Intermediate Holdings, LLC, Common Equity	(k)(q)(r)	Service & Equipment			472,755		473		591
JSS Holdco, LLC, Net Profits Interest	(r)	Service & Equipment			N/A		—		68
Lusk Operating LLC, Common Equity	(r)(u)(bb)	Upstream			2,000		—		—
MB Precision Investment Holdings LLC, Class A-2 Units	(k)(q)(r)	Service & Equipment			490,213		490		—
New Age (African Global Energy) Limited	(g)(m)(r)	Upstream			19		19		19
PDI Parent LLC, Common Equity	(r)	Power			1,384,615		1,385		1,385
Ridgeback Resources Inc., Common Equity	(k)(l)(m)(r)(w)(aa)	Upstream			9,599,928		58,985		54,693
Rosehill Resources, Inc.	(g)(r)	Upstream			2,511		2,486		2,486
Sunnova Energy Corp., Common Equity	(r)(aa)	Power			6,667,368		25,026		333
Sunnova Energy Corp., Preferred Equity	(r)(aa)	Power			1,117,214		5,948		6,614
Swift Worldwide Resources Holdco Limited, Common Equity	(m)(r)(x)	Service & Equipment			3,750,000		6,029		1,687
Synergy Offshore LLC, Preferred Equity	(k)(p)(r)(y)	Upstream			71,131		93,009		26,318
T1 Power Holdings LLC, Common Equity	(k)(q)(r)	Power			3,758		3,758		4,297
TE Holdings, LLC, Common Equity	(i)(r)	Upstream			2,225,950		18,921		2,782
TE Holdings, LLC, Preferred Equity	(l)(r)	Upstream			1,475,531		14,734		11,066
The Brock Group, Inc., Common Equity	(l)(r)	Service & Equipment			786,094		15,617		15,290
Titan Energy, LLC, Common Equity	(k)(r)(z)(aa)	Upstream			555,496		17,554		611
Total Safety Holdings, LLC, Common Equity	(l)(r)	Service & Equipment			12,897		4,707		4,514
Warren Resources, Inc., Common Equity	(l)(r)(aa)	Upstream			4,415,749		20,754		17,663
White Star Petroleum Holdings, LLC, Common Equity	(i)(r)	Upstream			4,867,084		4,137		2,799
Total Equity/Other							623,907		395,574
TOTAL INVESTMENTS—127.3%						$	4,005,849		3,619,072
LIABILITIES IN EXCESS OF OTHER ASSETS—(27.3%)									(776,105	)
NET ASSETS—100.0%								$	2,842,967

See notes to unaudited consolidated financial statements.

8

FS Energy and Power Fund

Unaudited Consolidated Schedule of Investments (Continued)

As of March 31, 2018
(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, 2018, the three-month London Interbank Offered Rate, or LIBOR or "L," was 2.31% and the U.S. Prime Lending Rate, or Prime, was 4.75%. PIK means paid-in-kind. PIK income accruals may be adjusted based on the fair value of the underlying investment.

(c)

Denominated in U.S. dollars, unless otherwise noted.

(d)

Investments classified as Level 3 in the Company's fair value hierarchy whereby fair value was determined by the Company's board of trustees, unless otherwise noted (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)

Position or portion thereof unsettled as of March 31, 2018.

(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 held within FS Energy Investments, LLC, a wholly-owned subsidiary of the Company.

(j)

Security or portion thereof held within Gladwyne Funding LLC and is pledged as collateral supporting the obligations outstanding under the term loan facility 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)

Security or portion thereof held within Bryn Mawr Funding LLC and is pledged as collateral supporting the amounts outstanding under the revolving credit facility with Barclays Bank PLC (see Note 8).

(m)

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, 2018, 75.4% of the Company's total assets represented qualifying assets.

(n)

Listed investments may be treated as debt for U.S. generally accepted accounting principles, or GAAP, or tax purposes.

(o)

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, 2018, the fair value of securities rehypothecated by BNP was $191,186.

(p)

Security was on non-accrual status as of March 31, 2018.

(q)

Security held within FSEP Investments, Inc., a wholly-owned subsidiary of Foxfields Funding LLC.

(r)

Security is non-income producing.

(s)

Security is held within EP Altus Investments, LLC, a wholly-owned subsidiary of Foxfields Funding LLC.

(t)

Security held within EP American Energy Investments, Inc., a wholly-owned subsidiary of the Company.

(u)

Security held within FSEP-BBH, Inc., a wholly-owned subsidiary of the Company.

(v)

Security held within EP Burnett Investments, Inc., a wholly-owned subsidiary of the Company.

(w)

Investment denominated in Canadian dollars. Amortized cost and fair value are converted into U.S. dollars as of March 31, 2018.

(x)

Investment denominated in British pounds. Amortized cost and fair value are converted into U.S. dollars as of March 31, 2018.

(y)

Security held within EP Synergy Investments, Inc., a wholly-owned subsidiary of Foxfields Funding LLC.

(z)

Security is classified as Level 1 in the Company's fair value hierarchy (See Note 7).

See notes to unaudited consolidated financial statements.

9

FS Energy and Power Fund

Unaudited Consolidated Schedule of Investments (Continued)
As of March 31, 2018
(in thousands, except share amounts)

(aa)

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 more than 25% of the portfolio company's voting securities or it has the power to exercise control over the management or policies of such portfolio company. As of March 31, 2018, 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, 2018:

Portfolio Company	Fair Value at December 31, 2017		Purchases, Paid-in-Kind Interest and Transfers In		Sales, Repayments and Transfers Out			Accretion of Discount		Net Change in Unrealized Appreciation (Depreciation)			Fair Value at March 31, 2018		Interest Income(2)		PIK Income(2)		Fee Income(2)
Senior Secured Loans—First Lien
Altus Power America, Inc.(1)	$	75,353	$	—	$	—		$	—	$	—		$	75,353	$	1,795	$	—	$	—
BL Sand Hills Unit, L.P.		20,000		—		—			—		—			20,000		544		—		—
Warren Resources, Inc.		81,214		124		(52,265	)		—		(1,981	)		27,092		1,254		124		2,091
Senior Secured Loans—Second Lien
Titan Energy Operating, LLC		62,026		—		—			—		(42,801	)		19,225		592		—		—
Senior Secured Bonds
FourPoint Energy, LLC		238,946		—		(1,485	)		1,046		733			239,240		5,290		—		—
Ridgeback Resources Inc.		3,887		—		—			—		—			3,887		117		—		—
Sunnova Energy Corp.		—		34,176		(8,672	)		—		(32	)		25,472		1,023		505		—
Equity/Other				—
Altus Power America Holdings, LLC, Common Equity		1,871		—		—			—		(1,871	)		—		—		—		—
Altus Power America Holdings, LLC, Preferred Equity		25,793		—		—			—		(129	)		25,664		903		—		—
BL Sand Hills Unit, L.P., Net Profits Interest		966		—		—			—		65			1,031		—		—		—
BL Sand Hills Unit, L.P., Overriding Royalty Interest		726		—		—			—		10			736		—		—		—
BL Sand Hills Unit, L.P., Series A Units		7,000		—		—			—		(69	)		6,931		—		—		—
FourPoint Energy, LLC, Common Equity, Class C-II-A Units		19,140		—		—			—		(495	)		18,645		—		—		—
FourPoint Energy, LLC, Common Equity, Class D Units		3,619		—		—			—		(92	)		3,527		—		—		—
FourPoint Energy, LLC, Common Equity, Class E-II Units		43,395		—		—			—		(755	)		42,640		—		—		—
FourPoint Energy, LLC, Common Equity, Class E-III Units		64,598		—		—			—		(1,671	)		62,927		—		—		—
Ridgeback Resources Inc., Common Equity		58,284		—		—			—		(3,591	)		54,693		—		—		—
Sunnova Energy Corp., Common Equity		—		25,026		—			—		(24,693	)		333		—		—		—
Sunnova Energy Corp., Preferred Equity		—		5,948		—			—		666			6,614		—		—		—
Titan Energy, LLC, Common Equity		844		—		—			—		(233	)		611		—		—		—
Warren Resources, Inc., Common Equity		7,507		—		—			—		10,156			17,663		—		—		—
Total	$	715,169	$	65,274	$	(62,422	)	$	1,046	$	(66,783	)	$	652,284	$	11,518	$	629	$	2,091

(1)

Security includes a partially unfunded commitment with an amortized cost of $23,872 and a fair value of $23,395.

(2)

Interest, PIK and fee income presented for the full three months ended March 31, 2018.

See notes to unaudited consolidated financial statements.

10

FS Energy and Power Fund

Unaudited Consolidated Schedule of Investments (Continued)
As of March 31, 2018
(in thousands, except share amounts)

(bb)

Under the 1940 Act, the Company generally is deemed to "control" a portfolio company if it owns more than 25% of the portfolio company's voting securities or it has the power to exercise control over the management or policies of such portfolio company. As of March 31, 2018, the Company held investments in one portfolio company of which it is deemed to be an "affiliated person" of and deemed to "control". The following table presents certain information with respect to investments in portfolio companies of which the Company was deemed to be an "affiliated person" of and deemed to "control" for the three months ended March 31, 2018:

Portfolio Company	Fair Value at December 31, 2017		Purchases, Paid-in-Kind Interest and Other		Sales, Repayments and Other		Accretion of Discount		Net Realized Gain (Loss)		Net Change in Unrealized Appreciation (Depreciation)		Fair Value at March 31, 2018
Senior Secured Loans—First Lien
Lusk Operating LLC	$	—	$	—	$	—	$	—	$	—	$	—	$	—
Equity/Other
Lusk Operating LLC, Common Equity		—		—		—		—		—		—		—
Total	$	—	$	—	$	—	$	—	$	—	$	—	$	—

See notes to unaudited consolidated financial statements.

11

FS Energy and Power Fund

Consolidated Schedule of Investments
As of December 31, 2017
(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—31.2%
Abaco Energy Technologies LLC	(g)(j)	Service & Equipment	L+700, 2.5% PIK (2.5% Max PIK)		1.0	%	11/20/20	$	86,207	$	82,722		$	84,697
Allied Wireline Services, LLC	(k)(l)	Service & Equipment	L+400, 5.5% PIK (5.5% Max PIK)		1.5	%	2/28/19		115,104		114,625			113,377
Altus Power America, Inc.	(j)(aa)	Power	L+750		1.5	%	9/30/21		77,378		77,378			75,830
Altus Power America, Inc.	(e)(aa)	Power	L+750		1.5	%	9/30/21		23,872		23,872			23,395
BL Sand Hills Unit, L.P.	(l)(aa)	Upstream	Prime+650		3.5	%	12/17/21		20,000		17,369			20,000
Cactus Wellhead, LLC	(f)(j)	Service & Equipment	L+600		1.0	%	7/31/20		41,225		39,865			41,293
Cimarron Energy Inc.		Service & Equipment	L+1150 PIK (L+1150 Max PIK)		1.0	%	12/15/19		25,470		25,470			10,379
CITGO Holding, Inc.	(f)	Downstream	L+850		1.0	%	5/12/18		26,014		26,149			26,340
Crestwood Holdings LLC	(f)	Midstream	L+800		1.0	%	6/19/19		29,151		29,210			29,297
Eagle Midstream Canada Finance Inc.	(l)(m)	Midstream	8.5%				9/27/20		175,000		175,000			175,000
Gulf Finance, LLC	(f)	Midstream	L+525		1.0	%	8/25/23		18,485		18,030			16,687
Industrial Group Intermediate Holdings, LLC		Service & Equipment	L+800		1.3	%	5/31/20		23,027		23,027			23,373
JSS Holdings, Inc.	(l)	Service & Equipment	L+800, 0.0% PIK (2.5% Max PIK)		1.0	%	3/31/23		14,941		14,809			15,173
JSS Holdings, Inc.	(e)	Service & Equipment	L+800, 0.0% PIK (2.5% Max PIK)		1.0	%	3/31/23		2,727		2,727			2,770
Kraken Oil & Gas LLC		Upstream	L+750		1.0	%	5/7/21		35,000		34,660			34,913
Kraken Oil & Gas LLC	(e)	Upstream	L+750		1.0	%	5/7/21		25,000		25,000			24,938
Lusk Operating LLC	(p)(r)(bb)	Upstream	Prime+500 PIK (8.8% Max PIK)		3.3	%	1/31/18		29,297		27,464			—
MB Precision Holdings LLC		Service & Equipment	L+725, 2.25% PIK (2.25% Max PIK)		1.3	%	1/23/21		13,793		13,793			12,638
Panda Temple Power, LLC	(j)(p)(r)	Power	L+625		1.0	%	3/6/22		9,923		9,782			7,219
Panda Temple Power, LLC		Power	L+900		1.0	%	4/28/18		377		377			378
Power Distribution, Inc.		Power	L+725		1.3	%	1/25/23		29,928		29,928			30,377
Strike, LLC	(j)	Midstream	L+800		1.0	%	5/30/19		19,600		19,358			19,698
Strike, LLC	(j)	Midstream	L+800		1.0	%	11/30/22		23,750		23,160			24,106
Swift Worldwide Resources US Holdings Corp.	(j)	Service & Equipment	L+1000, 1.0% PIK (1.0% Max PIK)		1.0	%	7/20/21		58,468		58,468			59,637
UTEX Industries, Inc.	(f)	Service & Equipment	L+400		1.0	%	5/21/21		24,210		22,006			23,796
Warren Resources, Inc.	(j)(l)(aa)	Upstream	L+900, 1.0% PIK (1.0% Max PIK)		1.0	%	5/22/20		79,233		79,233			81,214
Total Senior Secured Loans—First Lien											1,013,482			976,525
Unfunded Loan Commitments											(51,599	)		(51,599	)
Net Senior Secured Loans—First Lien											961,883			924,926

See notes to unaudited consolidated financial statements.

12

FS Energy and Power Fund

Consolidated Schedule of Investments (Continued)
As of December 31, 2017
(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—26.8%
Aethon United BR LP		Upstream	L+675		1.0	%	9/8/23	$	85,938	$	84,698		$	85,052
Aethon United BR LP	(e)	Upstream	L+675		1.0	%	9/8/23		39,063		39,063			38,660
Arena Energy, LP	(j)(k)	Upstream	L+900, 4.0% PIK (4.0% Max PIK)		1.0	%	1/24/21		107,656		107,656			102,360
Chief Exploration & Development LLC	(f)	Upstream	L+650		1.0	%	5/16/21		16,156		15,685			15,928
Chisholm Oil and Gas Operating, LLC	(j)(k)(l)	Upstream	L+800		1.0	%	3/21/24		196,000		196,000			195,971
Emerald Performance Materials, LLC	(f)	Downstream	L+775		1.0	%	8/1/22		11,819		11,764			11,838
Fieldwood Energy LLC	(f)(p)(r)	Upstream	L+713		1.3	%	9/30/20		33,591		34,068			11,252
Granite Acquisition, Inc.	(f)	Power	L+725		1.0	%	12/19/22		18,694		18,330			18,825
Gruden Acquisition, Inc.	(j)	Service & Equipment	L+850		1.0	%	8/18/23		15,000		14,463			14,981
Horn Intermediate Holdings, Inc.	(j)	Service & Equipment	L+775		1.3	%	10/2/18		50,250		50,250			50,501
P2 Upstream Acquisition Co.	(f)(j)	Service & Equipment	L+800		1.0	%	4/30/21		42,399		42,046			39,218
Penn Virginia Holding Corp.	(m)	Upstream	L+700		1.0	%	9/29/22		50,000		50,000			50,053
SilverBow Resources, Inc.	(m)	Upstream	L+750		1.0	%	12/15/24		15,000		14,850			14,850
Talos Production LLC	(k)(l)	Upstream	11.0%				4/3/22		43,250		40,495			42,926
Titan Energy Operating, LLC	(k)(aa)	Upstream	2.0%, L+1100 PIK (L+1100 Max PIK)		1.0	%	2/23/20		116,964		100,902			62,026
UTEX Industries, Inc.	(f)(j)	Service & Equipment	L+725		1.0	%	5/20/22		85,192		79,263			81,146
Total Senior Secured Loans—Second Lien											899,533			835,587
Unfunded Loan Commitment											(39,063	)		(39,063	)
Net Senior Secured Loans—Second Lien											860,470			796,524
Senior Secured Bonds—22.3%
Black Swan Energy Ltd.	(j)(m)	Upstream	9.0%				1/20/24		90,000		90,000			90,675
CITGO Holding, Inc.	(f)	Downstream	10.8%				2/15/20		9,000		9,045			9,653
CSVC Acquisition Corp.	(f)	Service & Equipment	7.8%				6/15/25		30,608		30,608			29,460
EP Energy LLC	(f)(h)(m)(o)	Upstream	8.0%				2/15/25		54,880		52,838			40,131
EP Energy LLC	(g)(h)(m)	Upstream	9.4%				5/1/24		68,614		63,012			60,134
FourPoint Energy, LLC	(j)(k)(l)(aa)	Upstream	9.0%				12/31/21		235,125		227,815			238,946
Mirant Mid-Atlantic Trust	(f)(h)(o)	Power	10.1%				12/30/28		31,752		33,728			32,052
Ridgeback Resources Inc.	(k)(m)(aa)	Upstream	12.0%				12/29/20		3,887		3,825			3,887
Sunnova Energy Corp.	(j)	Power	6.0%, 6.0% PIK (6.0% Max PIK)				10/24/18		33,671		33,671			33,671
Velvet Energy Ltd.	(j)(l)(m)	Upstream	9.0%				10/5/23		120,000		120,000			121,542
Total Senior Secured Bonds											664,542			660,151

See notes to unaudited consolidated financial statements.

13

FS Energy and Power Fund

Consolidated Schedule of Investments (Continued)
As of December 31, 2017
(in thousands, except share amounts)

Portfolio Company(a)	Footnotes	Industry	Rate(b)	Floor			Maturity	Principal Amount(c)		Amortized Cost		Fair Value(d)
Subordinated Debt—40.6%
Alta Mesa Holdings, LP	(f)(h)	Upstream	7.9%				12/15/24	$	20,425	$	20,425	$	22,459
Archrock Partners, L.P.	(h)(m)(o)	Midstream	6.0%				4/1/21		8,555		7,714		8,587
Archrock Partners, L.P.	(h)(m)	Midstream	6.0%				10/1/22		14,283		12,661		14,337
Ascent Resources Utica Holdings, LLC	(f)(h)(j)(o)	Upstream	10.0%				4/1/22		200,000		200,000		216,132
Bellatrix Exploration Ltd.	(f)(h)(m)(o)	Upstream	8.5%				5/15/20		60,120		59,240		57,415
Brand Energy & Infrastructure Services, Inc.	(f)(h)	Service & Equipment	8.5%				7/15/25		44,759		44,759		47,165
Canbriam Energy Inc.	(f)(h)(j)(m)(o)	Upstream	9.8%				11/15/19		115,200		113,222		117,648
Compressco Partners, LP	(f)(h)(o)	Service & Equipment	7.3%				8/15/22		20,050		19,929		18,972
Covey Park Energy LLC	(h)(o)	Upstream	7.5%				5/15/25		8,333		8,333		8,705
Eclipse Resources Corp.	(f)(h)(m)(o)	Upstream	8.9%				7/15/23		62,745		57,444		64,549
EV Energy Partners, L.P.	(f)(h)(o)(p)	Upstream	8.0%				4/15/19		48,814		39,678		24,895
Extraction Oil & Gas Holdings, LLC	(h)(o)	Upstream	7.9%				7/15/21		37,500		37,500		39,777
Genesis Energy, L.P.	(f)(m)	Midstream	6.8%				8/1/22		23,540		23,036		24,477
Genesis Energy, L.P.	(f)(m)	Midstream	6.0%				5/15/23		15,280		14,264		15,519
Global Jet Capital Inc.		Service & Equipment	15.0% PIK (15.0% Max PIK)				1/30/25		849		849		864
Global Jet Capital Inc.		Service & Equipment	15.0% PIK (15.0% Max PIK)				4/30/25		5,398		5,398		5,492
Global Jet Capital Inc.		Service & Equipment	15.0% PIK (15.0% Max PIK)				9/3/25		1,115		1,115		1,135
Global Jet Capital Inc.		Service & Equipment	15.0% PIK (15.0% Max PIK)				9/29/25		1,050		1,050		1,068
Global Jet Capital Inc.		Service & Equipment	15.0% PIK (15.0% Max PIK)				12/2/26		923		923		940
Global Partners L.P.	(f)(h)(m)(o)	Midstream	6.3%				7/15/22		68,335		68,188		70,385
Global Partners L.P.	(f)(m)	Midstream	7.0%				6/15/23		2,824		2,466		2,909
Great Western Petroleum, LLC	(f)(h)(o)	Upstream	9.0%				9/30/21		35,830		35,708		37,398
Gulfport Energy Corp.	(h)(m)(o)	Upstream	6.0%				10/15/24		10,000		10,000		10,010
Hammerhead Resources Inc.	(j)(m)	Upstream	9.0%				7/10/22		100,000		97,229		100,000
Jupiter Resources Inc.	(h)(m)	Upstream	8.5%				10/1/22		76,125		72,383		47,007
Lonestar Resources America Inc.	(f)(h)	Upstream	8.8%				4/15/19		24,200		24,055		25,289
Lonestar Resources America Inc.	(g)	Upstream	11.3%				1/1/23		25,000		25,000		25,563
Martin Midstream Partners L.P.	(f)(h)(m)(o)	Midstream	7.3%				2/15/21		24,660		24,059		25,073
Moss Creek Resources, LLC	(l)	Upstream	L+800		1.5	%	4/7/22		65,000		65,000		66,443
ONEOK, Inc.	(f)(m)	Midstream	7.5%				9/1/23		12,600		11,789		15,114
Tenrgys, LLC	(k)(p)(r)	Upstream	L+900		2.5	%	12/23/18		75,000		75,000		34,313
Whiting Petroleum Corp.	(h)(m)(o)	Upstream	5.0%				3/15/19		11,685		11,034		11,990
Whiting Petroleum Corp.	(f)(m)	Upstream	5.8%				3/15/21		7,000		6,479		7,219
WildHorse Resource Development Corp.	(h)(m)	Upstream	6.9%				2/1/25		10,000		9,930		10,242
Zachry Holdings, Inc.	(f)	Service & Equipment	7.5%				2/1/20		23,925		23,930		24,433
Total Subordinated Debt											1,229,790		1,203,524

See notes to unaudited consolidated financial statements.

14

FS Energy and Power Fund

Consolidated Schedule of Investments (Continued)
As of December 31, 2017
(in thousands, except share amounts)

Portfolio Company(a)	Footnotes	Industry	Rate(b)		Number of Shares		Amortized Cost		Fair Value(d)
Equity/Other—13.9%(n)
Abaco Energy Technologies LLC, Common Equity	(r)	Service & Equipment				6,944,444	$	6,944	$	1,042
Abaco Energy Technologies LLC, Preferred Equity	(r)	Service & Equipment				28,942,003		1,447		5,065
Allied Downhole Technologies, LLC, Common Equity	(k)(q)(r)	Service & Equipment				7,431,113		7,223		1,858
Allied Downhole Technologies, LLC, Warrants, 2/28/2019	(k)(q)(r)	Service & Equipment				5,344,680		1,865		1,336
Altus Power America Holdings, LLC, Common Equity	(k)(r)(aa)	Power		��		12,474,205		12,474		1,871
Altus Power America Holdings, LLC, Preferred Equity	(k)(s)(aa)	Power	9.0%, 5.0% PIK (5.0% Max PIK)			25,792,683		25,793		25,793
AP Exhaust Holdings, LLC, Class A1 Common Units	(k)(q)(r)	Service & Equipment				8		—		—
AP Exhaust Holdings, LLC, Class A1 Preferred Units	(k)(q)(r)	Service & Equipment				803		895		811
Ascent Resources Utica Holdings, LLC, Common Equity	(r)(t)	Upstream				148,692,909		44,700		37,173
BL Sand Hills Unit, L.P., Net Profits Interest	(r)(v)(aa)	Upstream				N/A		5,180		966
BL Sand Hills Unit, L.P., Overriding Royalty Interest	(v)(aa)	Upstream				N/A		740		726
BL Sand Hills Unit, L.P., Series A Units	(i)(r)(aa)	Upstream				29,117		24,019		7,000
Chisholm Oil and Gas, LLC, Series A Units	(i)(r)	Upstream				13,905,565		13,906		13,815
Cimarron Energy Holdco Inc., Common Equity	(r)	Service & Equipment				3,675,487		3,323		—
Cimarron Energy Holdco Inc., Preferred Equity	(r)	Service & Equipment				626,806		627		—
Extraction Oil & Gas, Inc., Common Equity	(k)(r)(z)	Upstream				1,140,637		11,250		16,323
FourPoint Energy, LLC, Common Equity, Class C-II-A Units	(k)(q)(r)(aa)	Upstream				66,000		66,000		19,140
FourPoint Energy, LLC, Common Equity, Class D Units	(k)(q)(r)(aa)	Upstream				12,374		8,176		3,619
FourPoint Energy, LLC, Common Equity, Class E-II Units	(i)(r)(aa)	Upstream				150,937		37,734		43,395
FourPoint Energy, LLC, Common Equity, Class E-III Units	(i)(k)(q)(r)(aa)	Upstream				222,750		55,688		64,598
Global Jet Capital Holdings, LP, Preferred Equity	(r)	Service & Equipment				2,785,562		2,786		2,507
Industrial Group Intermediate Holdings, LLC, Common Equity	(k)(q)(r)	Service & Equipment				472,755		473		709
JSS Holdco, LLC, Net Profits Interest	(r)	Service & Equipment				N/A		—		103
Lusk Operating LLC, Common Equity	(r)(u)(bb)	Upstream				2,000		—		—
MB Precision Investment Holdings LLC, Class A-2 Units	(k)(q)(r)	Service & Equipment				490,213		490		—
PDI Parent LLC, Common Equity	(r)	Power				1,384,615		1,385		1,454
Ridgeback Resources Inc., Common Equity	(k)(l)(m)(r)(w)(aa)	Upstream				9,599,928		58,985		58,284
SandRidge Energy, Inc., Common Equity	(h)(l)(m)(o)(r)(z)	Upstream				1,009,878		22,542		21,278
Sunnova Energy Corp., Common Equity	(r)	Power				6,667,368		25,026		—
Sunnova Energy Corp., Preferred Equity	(r)	Power				1,117,214		5,948		4,502
Swift Worldwide Resources Holdco Limited, Common Equity	(m)(r)(x)	Service & Equipment				3,750,000		6,029		2,062
Synergy Offshore LLC, Preferred Equity	(k)(p)(r)(y)	Upstream				71,131		93,009		25,465
TE Holdings, LLC, Common Equity	(i)(r)	Upstream				2,225,950		18,921		3,617
TE Holdings, LLC, Preferred Equity	(l)(r)	Upstream				1,475,531		14,734		14,018
The Brock Group, Inc., Common Equity	(j)(r)	Service & Equipment				786,094		15,617		16,390
Titan Energy, LLC, Common Equity	(k)(r)(z)(aa)	Upstream				555,496		17,554		844
Total Safety Holdings, LLC, Common Equity	(j)(r)	Service & Equipment				12,897		4,707		4,659
Warren Resources, Inc., Common Equity	(l)(r)(aa)	Upstream				4,415,749		20,754		7,507
White Star Petroleum Holdings, LLC, Common Equity	(i)(r)	Upstream				4,867,084		4,137		3,650
Total Equity/Other								641,081		411,580
TOTAL INVESTMENTS—134.8%							$	4,357,766		3,996,705
LIABILITIES IN EXCESS OF OTHER ASSETS—(34.8%)										(1,030,663	)
NET ASSETS—100.0%									$	2,966,042

See notes to unaudited consolidated financial statements.

15

FS Energy and Power Fund

Consolidated Schedule of Investments (Continued)
As of December 31, 2017
(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, 2017, the three-month London Interbank Offered Rate, or LIBOR or 'L,' was 1.69% and the U.S. Prime Lending Rate, or Prime, was 4.50%. PIK means paid-in-kind.

(c)

Denominated in U.S. dollars, unless otherwise noted.

(d)

Investments classified as Level 3 in the Company's fair value hierarchy whereby fair value was determined by the Company's board of trustees, unless otherwise noted (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)

Position or portion thereof unsettled as of December 31, 2017.

(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 held within FS Energy Investments, LLC, a wholly-owned subsidiary of the Company.

(j)

Security or portion thereof held within Gladwyne Funding LLC and is pledged as collateral supporting the obligations outstanding under the term loan facility 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)

Security or portion thereof held within Bryn Mawr Funding LLC and is pledged as collateral supporting the amounts outstanding under the revolving credit facility with Barclays Bank PLC (see Note 8).

(m)

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, 2017, 71.2% of the Company's total assets represented qualifying assets.

(n)

Listed investments may be treated as debt for U.S. generally accepted accounting principles, or GAAP, or tax purposes.

(o)

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, 2017, the fair value of securities rehypothecated by BNP was $279,961.

(p)

Security was on non-accrual status as of December 31, 2017.

(q)

Security held within FSEP Investments, Inc., a wholly-owned subsidiary of Foxfields Funding LLC.

(r)

Security is non-income producing.

(s)

Security is held within EP Altus Investments, LLC, a wholly-owned subsidiary of Foxfields Funding LLC.

(t)

Security held within EP American Energy Investments, Inc., a wholly-owned subsidiary of the Company.

(u)

Security held within FSEP-BBH, Inc., a wholly-owned subsidiary of the Company.

(v)

Security held within EP Burnett Investments, Inc., a wholly-owned subsidiary of the Company.

(w)

Investment denominated in Canadian dollars. Amortized cost and fair value are converted into U.S. dollars as of December 31, 2017.

(x)

Investment denominated in British pounds. Amortized cost and fair value are converted into U.S. dollars as of December 31, 2017.

(y)

Security held within EP Synergy Investments, Inc., a wholly-owned subsidiary of Foxfields Funding LLC.

(z)

Security is classified as Level 1 in the Company's fair value hierarchy (See Note 7).

See notes to unaudited consolidated financial statements.

16

FS Energy and Power Fund

Consolidated Schedule of Investments (Continued)
As of December 31, 2017
(in thousands, except share amounts)

(aa)

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 more than 25% of the portfolio company's voting securities or it has the power to exercise control over the management or policies of such portfolio company. As of December 31, 2017, 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 year December 31, 2017:

Portfolio Company	Fair Value at December 31, 2016		Purchases, Paid-In-Kind, Interest and Transfers In		Sales, Repayments and Transfers Out			Accretion of Discount		Net Realized Gain (Loss)			Net Change in Unrealized Appreciation (Depreciation)			Fair Value at December 31, 2017		Interest Income(2)		PIK Income(2)		Fee Income(2)
Senior Secured Loans—First Lien
Altus Power America, Inc.(1)	$	73,294	$	5,433	$	—		$	—	$	—		$	(3,374	)	$	75,353	$	7,152	$	—	$	—
BL Sand Hills Unit, L.P.		—		64,187		(44,460	)		—		(2,358	)		2,631			20,000		3,857		—		—
Sunnova Asset Portfolio 5 Holdings, LLC		151,148		—		(149,652	)		2,217		—			(3,713	)		—		6,992		—		—
Warren Resources, Inc.		78,437		796		—			—		—			1,981			81,214		7,818		796		—
Senior Secured Loans—Second Lien
Titan Energy Operating, LLC		85,427		9,863		(332	)		4,237		—			(37,169	)		62,026		16,269		9,863		—
Senior Secured Bonds
FourPoint Energy, LLC		240,709		—		(2,227	)		2,183		—			(1,719	)		238,946		22,834		—		—
Ridgeback Resources Inc.		3,887		—		—			16		—			(16	)		3,887		473		—		—
Sunnova Energy Corp(3)		—		33,671		(33,671	)		—		—			—			—		2,738		859		656
Equity/Other
Altus Power America Holdings, LLC, Common Equity		12,474		—		—			—		—			(10,603	)		1,871		—		—		—
Altus Power America Holdings, LLC, Preferred Equity		23,982		1,811		—			—		—			—			25,793		3,586		—		—
BL Sand Hills Unit, L.P., Net Profits Interest		—		5,180		—			—		—			(4,214	)		966		—		—		—
BL Sand Hills Unit, L.P., Overriding Royalty Interest		—		740		—			—		—			(14	)		726		—		—		—
BL Sand Hills Unit, L.P., Series A Units		—		24,019		—			—		—			(17,019	)		7,000		—		—		—
FourPoint Energy, LLC, Common Equity, Class C-II-A Units		31,845		—		—			—		—			(12,705	)		19,140		—		—		—
FourPoint Energy, LLC, Common Equity, Class D Units		6,032		—		—			—		—			(2,413	)		3,619		—		—		—
FourPoint Energy, LLC, Common Equity, Class E-II Units		125,670		—		(30,938	)		—		—			(51,337	)		43,395		—		—		—
FourPoint Energy, LLC, Common Equity, Class E-III Units		107,477		—		—			—		—			(42,879	)		64,598		—		—		—
Ridgeback Resources Inc., Common Equity		58,985		—		—			—		—			(701	)		58,284		—		—		—
Sunnova Energy Corp., Common Equity(3)		36,204		—		(25,026	)		—		—			(11,178	)		—		—		—		—
Sunnova Energy Corp., Preferred Equity(3)		3,141		2,868		(5,948	)		—		—			(61	)		—		—		—		—
Titan Energy, LLC, Common Equity		13,332		—		—			—		—			(12,488	)		844		—		—		—
Warren Resources, Inc., Common Equity		18,988		—		—			—		—			(11,481	)		7,507		—		—		—
Total	$	1,071,032	$	148,568	$	(292,254	)	$	8,653	$	(2,358	)	$	(218,472	)	$	715,169	$	71,719	$	11,518	$	656

(1)

Security includes a partially unfunded commitment with an amortized cost of $23,872 and a fair value of $23,395.



(2)

Interest, PIK and fee income presented for the year ended December 31, 2017.



(3)

The Company held this investment as of December 31, 2017 but as of such date, was not deemed to be an "affiliated person" of the portfolio company or deemed to "control" the portfolio company,

See notes to unaudited consolidated financial statements.

17

FS Energy and Power Fund

Consolidated Schedule of Investments (Continued)
As of December 31, 2017
(in thousands, except share amounts)

(bb)

Under the 1940 Act, the Company generally is deemed to "control" a portfolio company if it owns more than 25% of the portfolio company's voting securities or it has the power to exercise control over the management or policies of such portfolio company. As of December 31, 2017, the Company held investments in a portfolio company of which it is deemed to be an "affiliated person" of and deemed to "control". The following table presents certain information with respect to investments in portfolio companies of which the Company was deemed to be an "affiliated person" of and deemed to "control" for the year ended December 31, 2017:

Portfolio Company	Fair Value at December 31, 2016		Purchases, Paid-In-Kind, Interest and Transfers In		Sales, Repayments and Transfers Out			Accretion of Discount		Net Realized Gain (Loss)		Net Change in Unrealized Appreciation (Depreciation)			Fair Value at December 31, 2017
Senior Secured Loans—First Lien
Lusk Operating LLC	$	1,031	$	1,800	$	—		$	—	$	—	$	(2,831	)	$	—
Equity/Other
Lusk Operating LLC, Common Equity		—		—		(1,000	)		—		—		1,000			—
Total	$	1,031	$	1,800	$	(1,000	)	$	—	$	—	$	(1,831	)	$	—

See notes to unaudited consolidated financial statements.

18

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. 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, 2018, the Company had five wholly-owned financing subsidiaries, seven wholly-owned subsidiaries through which it holds interests in certain portfolio companies and two wholly-owned subsidiaries through which it expects to hold interests in certain 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, 2018. 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.

        As the Company previously announced on April 9, 2018, GSO Capital Partners LP, or GSO, resigned as the Company's investment sub-adviser and terminated the investment sub-advisory agreement, dated April 28, 2011, or the investment sub-advisory agreement, that FS Investment Advisor, LLC, or FS Advisor, had entered into with GSO, effective April 9, 2018. In connection with GSO's resignation as investment sub-adviser to the Company, on April 9, 2018, the Company entered into a new investment advisory and administrative services agreement, or the FS/EIG investment advisory agreement, with FS/EIG Advisor, LLC, or FS/EIG Advisor, a newly-formed entity that is jointly operated by an affiliate of Franklin Square Holdings, L.P., (which does business as FS Investments) and EIG Asset Management, LLC, or EIG, pursuant to which the FS/EIG Advisor acts as investment adviser to the Company. The FS/EIG investment advisory agreement replaced the investment advisory and administrative services agreement, dated April 28, 2011, as amended by the first amendment to the investment advisory and administrative services agreement, dated August 10, 2012, or the FS Advisor investment advisory agreement, by and between the Company and FS Advisor. See Note 11 for additional information.

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, 2017 included in the

19

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)

Company's annual report on Form 10-K. Operating results for the three months ended March 31, 2018 are not necessarily indicative of the results that may be expected for the year ending December 31, 2018. The December 31, 2017 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, 2017. The Company is considered an investment company under GAAP and follows the accounting and reporting guidance applicable to investment companies under Accounting Standards Codification Topic 946,Financial Services—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.

        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:    Pursuant to the terms of the FS Advisor investment advisory 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. 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. See Note 11 for information relating to the incentive fee on capital gains under the FS/EIG investment advisory agreement.

        Subordinated Income Incentive Fee:    Pursuant to the FS Advisor investment advisory 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. See Note 11 for information relating to the subordinated incentive fee on income under the FS/EIG investment advisory agreement.

20

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)

        Reclassifications:    Certain amounts in the unaudited consolidated financial statements for the three months ended March 31, 2017 may have been reclassified to conform to the classifications used to prepare the unaudited consolidated financial statements for the three months ended March 31, 2018. These reclassifications had no material impact on the Company's consolidated financial position, results of operations or cash flows as previously reported.

        Revenue Recognition:    Security transactions are accounted for on the trade date. The Company records interest income on an accrual basis to the extent that it expects to collect such amounts. The Company records dividend income on the ex-dividend date. The Company does not accrue as a receivable interest or dividends on loans and securities if it has reason to doubt its ability to collect such income. The Company's policy is to place investments on non-accrual status when there is reasonable doubt that interest income will be collected. The Company considers many factors relevant to an investment when placing it on or removing it from non-accrual status including, but not limited to, the delinquency status of the investment, economic and business conditions, the overall financial condition of the underlying investment, the value of the underlying collateral, bankruptcy status, if any, and any other facts or circumstances relevant to the investment. If there is reasonable doubt that the Company will receive any previously accrued interest, then the interest income will be written-off. Payments received on non-accrual investments may be recognized as income or applied to principal depending upon the collectability of the remaining principal and interest. Non-accrual investments may be restored to accrual status when principal and interest become current and are likely to remain current based on the Company's judgment.

        Loan origination fees, original issue discount and market discount are capitalized and the Company amortizes such amounts as interest income over the respective term of the loan or security. Upon the prepayment of a loan or security, any unamortized loan origination fees and original issue discount are recorded as interest income. The Company records prepayment premiums on loans and securities as fee income when it receives such amounts.

        Effective January 1, 2018, the Company adopted Accounting Standards Codification Topic 606,Revenue from Contracts with Customers, using the cumulative effect method applied to in-scope contracts with customers that have not been completed as of the date of adoption. The Company did not identify any in-scope contracts that had not been completed as of the date of adoption and, as a result, the Company did not recognize a cumulative effect on shareholders' equity in connection with the adoption of the new revenue recognition guidance.

        The new revenue recognition guidance applies to all entities and all contracts with customers to provide goods or services in the ordinary course of business, excluding, among other things, financial instruments as well as certain other contractual rights and obligations. Under the new revenue recognition guidance, which the Company has applied to all new in-scope contracts as of the date of adoption, structuring and other upfront fees are recognized as revenue based on the transaction price as the performance obligation is fulfilled. The related performance obligation consists of structuring activities and is satisfied over time as such activities are performed. Consideration is variable and is constrained from being included in the transaction price until the uncertainty associated with the variable consideration is resolved, typically as of the trade date of the related transaction. Payment is typically due on the settlement date of the related transaction.

        For the three months ended March 31, 2018, the Company did not recognize any structuring fee revenue under the new revenue recognition guidance. If the Company had recognized structuring fee revenue under the new revenue recognition guidance, the Company would have included such revenue in the fee income line item on its consolidated statements of operations. Comparative periods are presented in accordance with revenue recognition guidance effective prior to January 1, 2018, under

21

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)

which the Company recorded structuring and other non-recurring upfront fees as income when earned. The Company has determined that the adoption of the new revenue recognition guidance did not have a material impact on the amount of revenue recognized for the three months ended March 31, 2018.

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, 2018 and 2017:

	Three Months Ended March 31,
	2018						2017
	Shares			Amount			Shares			Amount
Reinvestment of Distributions		4,714,195		$	31,380			6,059,668		$	46,964
Share Repurchase Program		(9,018,665	)		(60,425	)		(2,239,480	)		(17,244	)
Net Proceeds from Share Transactions		(4,304,470	)	$	(29,045	)		3,820,188		$	29,720

        During the period from April 1, 2018 to May 14, 2018, the Company issued 1,532,743 common shares pursuant to its distribution reinvestment plan for gross proceeds of $9,953 at an average price per share of $6.49.

Share Repurchase Program

        The Company intends to conduct quarterly tender offers pursuant to its share repurchase program. The Company's board of trustees will consider the following factors, among others, in making its determination regarding whether to cause the Company to offer to repurchase common shares and under what terms:

•

the effect of such repurchases on the Company's qualification as a RIC (including the consequences of any necessary asset sales);

•

the liquidity of the Company's assets (including fees and costs associated with disposing of assets);

•

the Company's investment plans and working capital requirements;

•

the relative economies of scale with respect to the Company's size;

•

the Company's history in repurchasing common shares or portions thereof; and

•

the condition of the securities markets.

        Historically, the Company limited the number of common shares to be repurchased during any calendar year to the lesser of (i) the number of common shares the Company can repurchase with the proceeds it receives from the issuance of common shares under the Company's distribution reinvestment plan and (ii) 10% of the weighted average number of common shares outstanding in the prior calendar year, or 2.5% in each calendar quarter. On May 5, 2017, the board of trustees of the Company further amended the share repurchase program. As amended, the Company will limit the maximum number of common shares to be repurchased for any repurchase offer to the greater of (A) the number of common shares that the Company can repurchase with the proceeds it has received from the sale of common shares under its distribution reinvestment plan during the twelve-month period ending on the date the applicable repurchase offer expires (less the amount of proceeds used to repurchase common shares on each previous repurchase date for repurchase offers conducted during such twelve-month period) (this limitation is referred to as the twelve-month repurchase limitation) and

22

FS Energy and Power Fund

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

Note 3. Share Transactions (Continued)

(B) the number of common shares that the Company can repurchase with the proceeds the Company receives from the sale of common shares under its distribution reinvestment plan during the three-month period ending on the date the applicable repurchase offer expires (this limitation is referred to as the three-month repurchase limitation). In addition to this limitation, the maximum number of common shares to be repurchased for any repurchase offer will also be limited to 10% of the weighted average number of common shares outstanding in the prior calendar year, or 2.5% in each calendar quarter. As a result, the maximum number of common shares to be repurchased for any repurchase offer will not exceed the lesser of (i) 10% of the weighted average number of common shares outstanding in the prior calendar year, or 2.5% in each calendar quarter, and (ii) whichever is greater of the twelve-month repurchase limitation described in clause (A) above and the three-month repurchase limitation described in clause (B) above.

        The Company intends to offer to repurchase common shares at a price equal to the price at which common shares are issued pursuant to the Company's distribution reinvestment plan on the distribution date coinciding with the applicable share repurchase date. The price at which common shares are issued under the Company's distribution reinvestment plan is determined by the Company's board of trustees or a committee thereof, in its sole discretion, and will be (i) not less than the net asset value per common share as determined in good faith by the Company's board of trustees or a committee thereof, in its sole discretion, immediately prior to the payment date of the distribution and (ii) not more than 2.5% greater than the net asset value per common share as of such date. The Company's board of trustees may amend, suspend or terminate the share repurchase program at any time, upon 30 days' notice.

        In order to minimize the expense of supporting small accounts and provide additional liquidity to shareholders of the Company holding small accounts after completion of the regular quarterly share repurchase offer, the Company reserves the right to repurchase the shares of and liquidate any investor's account if the balance of such account is less than the Company's $5,000 minimum initial investment, unless the account balance has fallen below the minimum solely as a result of a decline in the Company's net asset value per share. The Company will provide or will cause to be provided 30 days' prior written notice to potentially affected investors, which notice may be included in the regular quarterly repurchase offer materials, of any such repurchase. Any such repurchases will be made at the Company's most recent price at which the Company's shares were issued pursuant to its distribution reinvestment plan. The Company intends to conduct the first such repurchase and de minimis account liquidation after the Company's second quarter 2018 share repurchase offer.

        The following table provides information concerning the Company's repurchases of common shares pursuant to its share repurchase program during the three months ended March 31, 2018 and 2017:

For the Three Months Ended	Repurchase Date	Shares Repurchased		Percentage of Shares Tendered That Were Repurchased			Percentage of Outstanding Shares Repurchased as of the Repurchase Date			Repurchase Price Per Share		Aggregate Consideration for Repurchased Shares
Fiscal 2016
December 31, 2016	January 3, 2017		2,239,480		100	%		0.51	%	$	7.70	$	17,244
Fiscal 2017
December 31, 2017	January 12, 2018		9,018,665		64	%		2.02	%	$	6.70	$	60,425

        On April 2, 2018, the Company repurchased 4,786,015 common shares (representing 24% of common shares tendered for repurchase and 1.08% of the shares outstanding as of such date) at $6.55 per share for aggregate consideration totaling $31,348.

23

FS Energy and Power Fund

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

Note 4. Related Party Transactions

Compensation of the Investment Adviser

        Effective January 1, 2018, FS Advisor is entitled to an annual base management fee of 1.75% of the average value of the Company's gross assets (gross assets equals total assets as set forth on the Company's consolidated balance sheets) and an incentive fee based on the Company's performance. The Company commenced accruing fees under the FS Advisor investment advisory agreement on July 18, 2011, upon commencement of the Company's investment operations. Base management fees are paid on a quarterly basis in arrears. Effective January 1, 2018, FS Advisor agreed to waive incentive fees on income for a period of twelve months ending December 31, 2018. See Note 2 for a discussion of the capital gains and subordinated income incentive fees that FS Advisor may be entitled to under the FS Advisor investment advisory agreement.

        Pursuant to the investment sub-advisory agreement, GSO is entitled to receive 50% of all management and incentive fees payable to FS Advisor under the FS Advisor investment advisory agreement with respect to each year.

        The Company reimburses FS Advisor for expenses necessary to perform services related to the Company's administration and operations, including FS Advisor's allocable portion of the compensation and related expenses of certain personnel of Franklin Square Holdings, L.P., or FS Investments, the Company's sponsor and an affiliate of FS Advisor, providing administrative services to the Company on behalf of FS Advisor. The amount of the reimbursement payable to FS Advisor is the lesser of (1) FS Advisor's actual costs incurred in providing such services and (2) the amount that the Company estimates it would be required to pay alternative service providers for comparable services in the same geographic location. FS Advisor is required to allocate the cost of such services to the Company based on factors such as assets, revenues, time allocations and/or other reasonable metrics. The Company's board of trustees reviews the methodology employed in determining how the expenses are allocated to the Company and the proposed allocation of the administrative expenses among the Company and certain affiliates of FS Advisor. The Company's board of trustees then assesses the reasonableness of such reimbursements for expenses allocated to the Company based on the breadth, depth and quality of such services as compared to the estimated cost to the Company of obtaining similar services from third-party providers known to be available. In addition, the Company's board of trustees considers whether any single third-party service provider would be capable of providing all such services at comparable cost and quality. Finally, the Company's board of trustees, among other things, compares the total amount paid to FS Advisor for such services as a percentage of the Company's net assets to the same ratio as reported by other comparable BDCs. The Company will not reimburse FS Advisor for any services for which it receives a separate fee, or for rent, depreciation, utilities, capital equipment or other administrative items allocated to a controlling person of FS Advisor.

        The following table describes the fees and expenses accrued under the FS Advisor investment advisory agreement during the three months ended March 31, 2018 and 2017:

			Three Months Ended March 31,
Related Party	Source Agreement	Description	2018		2017
FS Advisor	FS Advisor Investment Advisory Agreement	Base Management Fee(1)	$	18,298	$	22,385
FS Advisor	FS Advisor Investment Advisory Agreement	Subordinated Incentive Fee on Income(2)		—	$	10,499
FS Advisor	FS Advisor Investment Advisory Agreement	Administrative Services Expenses(3)	$	793	$	808

(1)

During the three months ended March 31, 2018, and 2017, $15,889 and $20,855, respectively, in base management fees were paid to FS Advisor and $5,945 and $0, respectively, in base management fees were applied to offset the liability of FS Investments under the expense reimbursement agreement (see "—Expense

24

FS Energy and Power Fund

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

Note 4. Related Party Transactions (Continued)

Reimbursement" below). As of March 31, 2018, $18,298 in base management fees were payable to FS Advisor.

(2)

During the three months ended March 31, 2018, and 2017, the Company did not pay any amounts in subordinated incentive fees on income to FS Advisor. As of March 31, 2018, the Company did not have any subordinated incentive fee on income payable to FS Advisor.

(3)

During the three months ended March 31, 2018 and 2017, $586 and $785, respectively, of the accrued administrative services expenses related to the allocation of costs of administrative personnel for services rendered to the Company by FS Advisor and the remainder related to other reimbursable expenses. The Company paid $574 and $930 in administrative services expenses to FS Advisor during the three months ended March 31, 2018 and 2017, respectively.

        See Note 11 for information relating to the compensation of FS/EIG Advisor under the FS/EIG investment advisory agreement.

Potential Conflicts of Interest

        The members of the senior management and investment teams of FS/EIG Advisor serve or may serve as officers, directors or principals of entities that operate in the same or a related line of business as the Company does, or of investment vehicles managed by the same personnel. In serving in these multiple and other capacities, they may have obligations to other clients or investors in those entities, the fulfillment of which may not be in the Company's best interests or in the best interest of the Company's shareholders. The Company's investment objectives may overlap with the investment objectives of such investment funds, accounts or other investment vehicles. For example, the Company may rely on FS/EIG Advisor to manage the Company's day-to-day activities and to implement its investment strategy. FS/EIG Advisor and certain of its affiliates are presently, and plan in the future to continue to be, involved with activities which are unrelated to the Company. As a result of these activities, FS/EIG Advisor, its employees and certain of its affiliates will have conflicts of interest in allocating their time between the Company and other activities in which they are or may become involved, including the management of other entities affiliated with FS Investments or EIG. FS/EIG Advisor and its employees will devote only as much of its or their time to our business as FS/EIG Advisor and its employees, in their judgment, determine is reasonably required, which may be substantially less than their full time.

Exemptive Relief

        As a BDC, the Company is subject to certain regulatory restrictions in making its investments. For example, BDCs generally are not permitted to co-invest with certain affiliated entities in transactions originated by the BDC or its affiliates in the absence of an exemptive order from the SEC. However, BDCs are permitted to, and may, simultaneously co-invest in transactions where price is the only negotiated term. In an order dated June 4, 2013, or the Order, the SEC granted exemptive relief permitting the Company, subject to the satisfaction of certain conditions, to co-invest in certain privately negotiated investment transactions with certain affiliates of FS Advisor, including FS Investment Corporation, FS Investment Corporation II, FS Investment Corporation III, FS Investment Corporation IV, and any future BDCs that are advised by FS Advisor or its affiliated investment advisers, or collectively the Company's co-investment affiliates. However, effective April 9, 2018, or the JV Effective Date, and in connection with the transition of advisory services to a joint advisory relationship with EIG, the Company's board of trustees has authorized and directed that the Company (i) withdraw from the Order, except with respect to any transaction in which the Company participated in reliance on the Order prior to the JV Effective Date, and (ii) rely on an exemptive relief order dated April 10, 2018, granted to certain other funds and accounts managed or previously managed by EIG or its affiliates which would permit the Company to participate in co-investment transactions with

25

FS Energy and Power Fund

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

Note 4. Related Party Transactions (Continued)

certain other EIG advised funds or accounts, or the EIG Order. The Company believes the Order and the EIG Order have and may continue to enhance its ability to further its investment objectives and strategy.

Expense Reimbursement

        Pursuant to an expense support and conditional reimbursement agreement, amended and restated as of May 16, 2013, or, the expense reimbursement agreement, FS Investments has agreed to reimburse the Company for expenses in an amount that is sufficient to ensure that no portion of the Company's distributions to shareholders will be paid from its offering proceeds or borrowings. However, because certain investments the Company may make, including preferred and common equity investments, may generate dividends and other distributions to the Company that are treated for tax purposes as a return of capital, a portion of the Company's distributions to shareholders may also be deemed to constitute a return of capital for tax purposes to the extent that the Company may use such dividends or other distribution proceeds to fund its distributions to shareholders. Under those circumstances, FS Investments will not reimburse the Company for the portion of such distributions to shareholders that represent a return of capital for tax purposes, as the purpose of the expense reimbursement arrangement is not to prevent tax-advantaged distributions to shareholders.

        Under the expense reimbursement agreement, FS Investments will reimburse the Company quarterly for expenses in an amount equal to the difference between the Company's cumulative distributions paid to its shareholders in each quarter, less the sum of the Company's net investment company taxable income, net capital gains and dividends and other distributions paid to the Company on account of preferred and common equity investments in portfolio companies (to the extent such amounts are not included in net investment company taxable income or net capital gains) in each quarter.

        Pursuant to the expense reimbursement agreement, the Company has a conditional obligation to reimburse FS Investments for any amounts funded by FS Investments under such agreement if (and only to the extent that), during any fiscal quarter occurring within three years of the date on which FS Investments funded such amount, the sum of the Company's net investment company taxable income, net capital gains and the amount of any dividends and other distributions paid to the Company on account of preferred and common equity investments in portfolio companies (to the extent not included in net investment company taxable income or net capital gains) exceeds the distributions paid by the Company to its shareholders; provided, however, that (i) the Company will only reimburse FS Investments for expense support payments made by FS Investments with respect to any calendar quarter beginning on or after July 1, 2013 to the extent that the payment of such reimbursement (together with any other reimbursement paid during such fiscal year) does not cause "other operating expenses" (as defined below) (on an annualized basis and net of any expense support payments received by the Company during such fiscal year) to exceed the lesser of (A) 1.75% of the Company's average net assets attributable to its common shares for the fiscal year-to-date period after taking such payments into account and (B) the percentage of the Company's average net assets attributable to its common shares represented by "other operating expenses" during the fiscal year in which such expense support payment from FS Investments was made (provided, however, that this clause (B) shall not apply to any reimbursement payment which relates to an expense support payment from FS Investments made during the same fiscal year) and (ii) the Company will not reimburse FS Investments for expense support payments made by FS Investments if the aggregate amount of distributions per share declared by the Company in such calendar quarter is less than the aggregate amount of distributions per share declared by the Company in the calendar quarter in which FS Investments made the expense support payment to which such reimbursement relates. The Company is not obligated to

26

FS Energy and Power Fund

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

Note 4. Related Party Transactions (Continued)

pay interest on the payments it receives from FS Investments. "Other operating expenses" means the Company's total "operating expenses" (as defined below), excluding base management fees, incentive fees, organization and offering expenses, financing fees and costs, interest expense, brokerage commissions and extraordinary expenses. "Operating expenses" means all operating costs and expenses incurred, as determined in accordance with GAAP for investment companies.

        During the three months ended March 31, 2018, the Company did not accrue any expense reimbursements from FS Investments. During the three months ended March 31, 2017, the Company accrued $18,220 for expense reimbursements that FS Investments agreed to offset against management fees and subordinated income incentive fees payable by the Company to FS Advisor. As of March 31, 2018, the Company had no reimbursements due from FS Investments.

        As discussed above, under the expense reimbursement agreement, amounts reimbursed to the Company by FS Investments may become subject to repayment by the Company in the future. During the three months ended March 31, 2018, the Company did not pay any amounts in expense recoupments to FS Investments. As of March 31, 2018, $28,104 of reimbursements may become subject to repayment by the Company to FS Investments in the future.

        The following table reflects the expense reimbursement payments due from FS Investments to the Company as of March 31, 2018 that may become subject to repayment by the Company to FS Investments:

For the Three Months Ended	Amount of Expense Reimbursement Payment			Annualized "Other Operating Expenses" Ratio as of the Date of Expense Reimbursement			Annualized Rate of Distributions Per Share(1)			Reimbursement Eligibility Expiration
March 31, 2017	$	15,362	(2)		0.40	%		9.14	%	March 31, 2020
June 30, 2017		—			N/A			N/A		N/A
September 30, 2017		7,095			0.36	%		9.91	%	September 30, 2020
December 31, 2017		5,647			0.36	%		10.57	%	December 31, 2020
Total	$	28,104

(1)

The annualized rate of distributions per share is expressed as a percentage equal to the projected annualized distribution amount as of the end of the applicable period (which is calculated by annualizing the regular monthly cash distribution per share as of such date without compounding), divided by the Company's distribution reinvestment price per share as of such date.

(2)

Amount has been reduced by $2,858, which was paid during the year ended December 31, 2017 for expense recoupments payable to FS Investments.

        The expense reimbursement agreement was terminated on the JV Effective Date. The Company's conditional obligation to reimburse FS Investments pursuant to the terms of the expense reimbursement agreement survived the termination of the agreement. As of the JV Effective Date, the Company has entered into a new expense support and conditional reimbursement agreement with FS/EIG Advisor, or the FS/EIG expense reimbursement agreement, on substantially similar terms. There can be no assurance that the FS/EIG expense reimbursement agreement will remain in effect or FS/EIG Advisor will reimburse any portion of the Company's expenses in future quarters.

27

FS Energy and Power Fund

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

Note 5. Distributions

        The following table reflects the cash distributions per share that the Company declared and paid on its common shares during the three months ended March 31, 2018 and 2017:

	Distribution
For the Three Months Ended	Per Share		Amount
Fiscal 2017
March 31, 2017	$	0.17713	$	77,984
Fiscal 2018
March 31, 2018	$	0.12500	$	54,823

        Subject to applicable legal restrictions and the sole discretion of the Company's board of trustees, the Company intends to declare regular cash distributions on a quarterly basis and pay such distributions on a monthly basis. On March 6, 2018 and May 7, 2018, the Company's board of trustees declared regular monthly cash distributions for April 2018 through June 2018 and July 2018 through September 2018, respectively, each in the amount of $0.041667 per share. These distributions have been or will be paid monthly to shareholders of record as of monthly record dates previously determined by the Company's board of trustees. The timing and amount of any future distributions to shareholders are subject to applicable legal restrictions and the sole discretion of the Company's board of trustees.

        The Company has adopted an "opt in" distribution reinvestment plan for its shareholders. As a result, if the Company makes a cash distribution, its shareholders will receive distributions in cash unless they specifically "opt in" to the distribution reinvestment plan so as to have their cash distributions reinvested in additional common shares. However, certain state authorities or regulators may impose restrictions from time to time that may prevent or limit a shareholder's ability to participate in the distribution reinvestment plan.

        On October 13, 2016, the Company further amended and restated its distribution reinvestment plan, or the amended distribution reinvestment plan, which first applied to the reinvestment of cash distributions paid on or after November 30, 2016. Under the original plan, cash distributions to participating shareholders were reinvested in additional common shares at a purchase price equal to 90% of the public offering price per share in effect as of the date of issuance. Under the amended distribution reinvestment plan, cash distributions to participating shareholders will be reinvested in additional common shares at a purchase price determined by the Company's board of trustees, or a committee thereof, in its sole discretion, that is (i) not less than the net asset value per common share as determined in good faith by the Company's board of trustees or a committee thereof, in its sole discretion, immediately prior to the payment of the distribution and (ii) not more than 2.5% greater than the net asset value per common share as of such date. Any distributions reinvested under the plan will remain taxable to a U.S. shareholder.

        The Company may fund its cash distributions to shareholders from any sources of funds legally available to it, including proceeds from the sale of the Company's common shares, borrowings, net investment income from operations, capital gains proceeds from the sale of assets, non-capital gains proceeds from the sale of assets, dividends or other distributions paid to the Company on account of preferred and common equity investments in portfolio companies and expense reimbursements from FS Investments. The Company has not established limits on the amount of funds it may use from available sources to make distributions.

        No portion of the distributions paid during the three months ended March 31, 2018 was funded through the reimbursement of operating expenses by FS Investments. During the three months ended March 31, 2017, certain portions of the Company's distributions were funded through the reimbursement of certain expenses by FS Investments and its affiliates, including through the offset of

28

FS Energy and Power Fund

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

Note 5. Distributions (Continued)

certain investment advisory fees by FS Advisor, that are, if certain conditions are met, subject to repayment by the Company within three years. Any such distributions funded through expense reimbursements or the offset of advisory fees are not based on the Company's investment performance, and can only be sustained if the Company achieves positive investment performance in future periods and/or FS Investments and its affiliates continues to make such reimbursements or offset such fees. The Company's future repayments of amounts reimbursed or offset by FS Investments or its affiliates will reduce the distributions that shareholders would otherwise receive in the future. During the three months ended March 31, 2018 and 2017, the Company did not repay any amounts to FS Investments for expenses previously reimbursed or waived. There can be no assurance that the Company will continue to achieve the performance necessary to sustain its distributions or that the Company will be able to pay distributions at a specific rate or at all. FS Investments and its affiliates have no obligation to offset or waive advisory fees or otherwise reimburse expenses in future periods. If FS Investments had not reimbursed certain of the Company's expenses, 23% of the aggregate amount of distributions paid during the three months ended March 31, 2017 would have been funded from offering proceeds or borrowings.

        The following table reflects the sources of the cash distributions on a tax basis that the Company paid on its common shares during the three months ended March 31, 2018 and 2017:

	Three Months Ended March 31,
	2018					2017
Source of Distribution	Distribution Amount		Percentage			Distribution Amount		Percentage
Offering proceeds	$	—		—		$	—		—
Borrowings		—		—			—		—
Net investment income (prior to expense reimbursement)(1)		54,823		100	%		58,396		75	%
Short-term capital gains proceeds from the sale of assets		—		—			—		—
Long-term capital gains proceeds from the sale of assets		—		—			—		—
Non-capital gains proceeds from the sale of assets		—		—			—		—
Distributions on account of investments in portfolio companies		—		—			1,368		2	%
Expense reimbursement from sponsor		—		—			18,220		23	%
Total	$	54,823		100	%	$	77,984		100	%

(1)

During the three months ended March 31, 2018 and 2017, 84.3% and 85.0%, respectively, of the Company's gross investment income on a tax basis was attributable to cash income earned and 0.0% and 0.9%, respectively, was attributable to non-cash income earned. In addition, 12.0% and 11.6%, respectively, was attributed to paid-in-kind, or PIK, interest and 3.7% and 2.5%, respectively, was attributed to accretion of discount during the three months ended March 31, 2018 and 2017.

        The Company's net investment income on a tax basis for the three months ended March 31, 2018 and 2017 was $60,214 and $76,616, respectively. As of March 31, 2018 and December 31, 2017, the Company had $5,390 and $0, respectively, of undistributed ordinary income on a tax basis.

        The Company has in the past and may experience additional restructurings or defaults in the future. Any restructuring or default may have an impact on the level of income received by the Company.

        The difference between the Company's GAAP-basis net investment income and its tax-basis net investment income was primarily due to the reclassification of unamortized original issue discount, certain amendment fees and prepayment fees recognized upon prepayment of loans from income for

29

FS Energy and Power Fund

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

Note 5. Distributions (Continued)

GAAP purposes to realized gains for tax purposes, the impact of certain subsidiaries that are consolidated for purposes of computing GAAP-basis net investment income but are not consolidated for purposes of computing tax-basis net investment income and income recognized for tax purposes on certain transactions but not recognized for GAAP purposes.

        The following table sets forth a reconciliation between GAAP-basis net investment income and tax-basis net investment income during the three months ended March 31, 2018 and 2017:

	Three Months Ended March 31,
	2018			2017
GAAP-basis net investment income	$	54,388		$	88,008
Reclassification of unamortized original issue discount, amendment fees and prepayment fees		(9,459	)		(17,436	)
GAAP versus tax-basis impact of consolidation of certain subsidiaries		6,549			6,418
Income subject to tax not recorded for GAAP		8,742			(371	)
Other miscellaneous differences		(6	)		(3	)
Tax-basis net investment income	$	60,214		$	76,616

        The determination of the tax attributes of the Company's distributions is made annually as of the end of the Company's fiscal year based upon the Company's taxable income for the full year and distributions paid for the full year. Therefore, a determination made on a quarterly basis may not be representative of the actual tax attributes of the Company's distributions for a full year. The actual tax characteristics of distributions to shareholders are reported to shareholders annually on Form 1099-DIV.

        As of March 31, 2018 and December 31, 2017, the components of accumulated earnings (deficit) on a tax basis were as follows:

	March 31, 2018 (Unaudited)			December 31, 2017
Distributable ordinary income	$	5,390		$	—
Accumulated capital losses(1)		(510,557	)		(430,039	)
Other temporary differences		(193	)		(198	)
Net unrealized appreciation (depreciation) on investments and unrealized gain/loss on foreign currency(2)		(427,986	)		(498,322	)
Total	$	(933,346	)	$	(928,559	)

(1)

Net capital losses may be carried forward indefinitely, and their character is retained as short-term or long-term. As of March 31, 2018, the Company had short-term and long-term capital loss carryforwards available to offset future realized capital gains of $19,235 and $491,322, respectively.

(2)

As of March 31, 2018 and December 31, 2017, the gross unrealized appreciation on the Company's investments and unrealized gain on foreign currency was $120,532 and $104,844, respectively, and the gross unrealized depreciation on the Company's investments and unrealized loss on foreign currency was $548,518 and $603,166, respectively.

        The aggregate cost of the Company's investments for federal income tax purposes totaled $4,047,058 and $4,557,977 as of March 31, 2018 and December 31, 2017, respectively. The aggregate net unrealized appreciation (depreciation) on a tax basis was $(427,986) and $(498,322) as of March 31, 2018 and December 31, 2017, respectively.

30

FS Energy and Power Fund

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

Note 5. Distributions (Continued)

        As of March 31, 2018 and December 31, 2017, the Company had deferred tax assets of $76,910 and $73,103, respectively, resulting from net operating losses and capital losses of the Company's wholly-owned taxable subsidiaries. As of March 31, 2018 and December 31, 2017, certain wholly-owned taxable subsidiaries anticipated that they would be unable to fully utilize their generated net operating and capital losses, therefore the deferred tax assets were offset by valuation allowances of $76,910 and $73,103, respectively. For the three months ended March 31, 2018 and the year ended December 31, 2017, the Company did not record a provision for taxes related to its wholly-owned taxable subsidiaries.

Note 6. Investment Portfolio

        The following table summarizes the composition of the Company's investment portfolio at cost and fair value as of March 31, 2018 and December 31, 2017:

	March 31, 2018 (Unaudited)							December 31, 2017
	Amortized Cost(1)		Fair Value		Percentage of Portfolio			Amortized Cost(1)		Fair Value		Percentage of Portfolio
Senior Secured Loans—First Lien	$	933,621	$	893,243		25	%	$	961,883	$	924,926		23	%
Senior Secured Loans—Second Lien		830,856		753,895		21	%		860,470		796,524		20	%
Senior Secured Bonds		616,661		604,685		17	%		664,542		660,151		17	%
Subordinated Debt		1,000,804		971,675		26	%		1,229,790		1,203,524		30	%
Equity/Other		623,907		395,574		11	%		641,081		411,580		10	%
Total	$	4,005,849	$	3,619,072		100	%	$	4,357,766	$	3,996,705		100	%

(1)

Amortized cost represents the original cost adjusted for the amortization of premiums and/or accretion of discounts, as applicable, on investments.

        In general, under the 1940 Act, the Company would be presumed to "control" a portfolio company if it owned more than 25% of its voting securities or it had the power to exercise control over the management or policies of a portfolio company, and would be an "affiliated person" of a portfolio company if it owned 5% or more of its voting securities.

        As of March 31, 2018, the Company held investments in one portfolio company of which it is deemed to "control." As of March 31, 2018, the Company held investments in seven portfolio companies of which it is deemed to be an "affiliated person" but is not deemed to "control." For additional information with respect to such portfolio companies, see footnotes (aa) and (bb) to the unaudited consolidated schedule of investments as of March 31, 2018 in this quarterly report on Form 10-Q.

        As of December 31, 2017, the Company held investments in one portfolio company of which it is deemed to "control." As of December 31, 2017, the Company held investments in six portfolio companies of which it is deemed to be an "affiliated person" but is not deemed to "control." For additional information with respect to such portfolio companies, see footnotes (aa) and (bb) to the consolidated schedule of investments as of December 31, 2017 in this quarterly report on Form 10-Q.

31

FS Energy and Power Fund

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

Note 6. Investment Portfolio (Continued)

        The Company's investment portfolio may contain loans or bonds that are in the form of lines of credit or revolving credit facilities, or other investments, pursuant to which the Company may be required to provide funding when requested by portfolio companies in accordance with the terms of the underlying agreements. As of March 31, 2018, the Company had nine senior secured loan investments with aggregate unfunded commitments of $130,268 and three equity/other investments with aggregate unfunded commitments of $9,584. As of March 31, 2018, these unfunded equity/other investments were Altus Power America Holdings, LLC, preferred equity, Chisholm Oil and Gas, LLC and Rosehill Resources, Inc. As of December 31, 2017, the Company had four senior secured loan investments with aggregate unfunded commitments of $90,662 and two equity/other investments with aggregate unfunded commitments of $8,751. As of December 31, 2017, these unfunded equity/other investments were Altus Power America Holdings, LLC, preferred equity and Chisholm Oil and Gas, LLC. The Company maintains sufficient cash on hand, available borrowings and liquid securities to fund such unfunded commitments should the need arise.

        The table below describes investments by industry classification and enumerates the percentage, by fair value, of the total portfolio assets in such industries as of March 31, 2018 and December 31, 2017:

	March 31, 2018 (Unaudited)					December 31, 2017
Industry Classification	Fair Value		Percentage of Portfolio			Fair Value		Percentage of Portfolio
Upstream	$	2,235,564		62	%	$	2,539,867		64	%
Midstream		424,536		12	%		441,189		11	%
Downstream		33,322		1	%		47,831		1	%
Power		231,385		6	%		231,495		6	%
Service & Equipment		694,265		19	%		736,323		18	%
Total	$	3,619,072		100	%	$	3,996,705		100	%

Note 7. Fair Value of Financial Instruments

        Under existing accounting guidance, fair value is defined as the price that the Company would receive upon selling an investment or pay to transfer a liability in an orderly transaction to a market participant in the principal or most advantageous market for the investment. This accounting guidance emphasizes valuation techniques that maximize the use of observable market inputs and minimize the use of unobservable inputs. Inputs refer broadly to the assumptions that market participants would use in pricing an asset or liability, including assumptions about risk. Inputs may be observable or unobservable. Observable inputs are inputs that reflect the assumptions market participants would use in pricing an asset or liability developed based on market data obtained from sources independent of the Company. Unobservable inputs are inputs that reflect the assumptions market participants would use in pricing an asset or liability developed based on the best information available in the circumstances. The Company classifies the inputs used to measure these fair values into the following hierarchy as defined by current accounting guidance:

        Level 1:    Inputs that are quoted prices (unadjusted) in active markets for identical assets or liabilities.

        Level 2:    Inputs that are quoted prices for similar assets or liabilities in active markets.

        Level 3:    Inputs that are unobservable for an asset or liability.

32

FS Energy and Power Fund

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

Note 7. Fair Value of Financial Instruments (Continued)

        A financial instrument's categorization within the valuation hierarchy is based upon the lowest level of input that is significant to the fair value measurement.

        As of March 31, 2018 and December 31, 2017, the Company's investments were categorized as follows in the fair value hierarchy:

Valuation Inputs	March 31, 2018 (Unaudited)		December 31, 2017
Level 1—Price quotations in active markets	$	13,683	$	38,445
Level 2—Significant other observable inputs		—		—
Level 3—Significant unobservable inputs		3,605,389		3,958,260
Total	$	3,619,072	$	3,996,705

        The Company's investments consist primarily of debt investments that were acquired directly from the issuer. Debt investments, for which broker quotes are not generally available, are valued by independent valuation firms, which determine the fair value of such investments by considering, among other factors, the borrower's ability to adequately service its debt, prevailing interest rates for like investments, call features, anticipated prepayments and other relevant terms of the investments. Except as described below, all of the Company's equity/other investments are also valued by independent valuation firms, which determine the fair value of such investments by considering, among other factors, contractual rights ascribed to such investments, as well as various income scenarios and multiples of earnings before interest, taxes, depreciation and amortization, or EBITDA, cash flows, net income, revenues or, in limited instances, book value or liquidation value. Investments that are traded on an active public market are valued at their closing price as of the date of the financial statements. An investment that is newly issued and purchased near the date of the financial statements is valued at cost if the Company's board of trustees determines that the cost of such investment is the best indication of its fair value. Except as described above, the Company values its other investments by using the midpoint of the prevailing bid and ask prices from dealers on the date of the relevant period end, which are provided by an independent third-party pricing service and screened for validity by such service.

        The Company periodically benchmarks the bid and ask prices it receives from the third-party pricing service and/or dealers, as applicable, against the actual prices at which the Company purchases and sells its investments. Based on the results of the benchmark analysis and the experience of the Company's management in purchasing and selling these investments, the Company believes that these prices are reliable indicators of fair value. However, because of the private nature of this marketplace (meaning actual transactions are not publicly reported), the Company believes that these valuation inputs are classified as Level 3 within the fair value hierarchy. The Company may also use other methods, including the use of independent valuation firms, to determine fair value for securities for which it cannot obtain prevailing bid and ask prices through third-party pricing services or independent dealers or where the Company's board of trustees otherwise determines that the use of such other method is appropriate. The Company periodically benchmarks the valuations provided by the independent valuation firms against the actual prices at which it purchases and sells its investments. The valuation committee of the board of trustees, or the valuation committee, and the board of trustees reviewed and approved the valuation determinations made with respect to these investments in a manner consistent with the Company's valuation policy.

33

FS Energy and Power Fund

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

Note 7. Fair Value of Financial Instruments (Continued)

        The following is a reconciliation for the three months ended March 31, 2018 and 2017 of investments for which significant unobservable inputs (Level 3) were used in determining fair value:

	For the Three Months Ended March 31, 2018
	Senior Secured Loans— First Lien			Senior Secured Loans— Second Lien			Senior Secured Bonds			Subordinated Debt			Equity/ Other			Total
Fair value at beginning of period	$	924,926		$	796,524		$	660,151		$	1,203,524		$	373,135		$	3,958,260
Accretion of discount (amortization of premium)		1,070			519			1,042			849			—			3,480
Net realized gain (loss)		(1,926	)		(29,312	)		(4,226	)		(28,785	)		(84	)		(64,333	)
Net change in unrealized appreciation (depreciation)		(3,421	)		(13,015	)		(7,585	)		(2,863	)		3,388			(23,496	)
Purchases		146,200			14,403			24,371			76,596			6,263			267,833
Paid-in-kind interest		1,328			1,298			68			325			—			3,019
Sales and repayments		(174,934	)		(16,522	)		(69,136	)		(277,971	)		(811	)		(539,374	)
Net transfers in or out of Level 3		—			—			—			—			—			—
Fair value at end of period	$	893,243		$	753,895		$	604,685		$	971,675		$	381,891		$	3,605,389
The amount of total gains or losses for the period included in changes in net assets attributable to the change in unrealized gains or losses relating to investments still held at the reporting date	$	(2,481	)	$	(34,532	)	$	(9,272	)	$	(18,319	)	$	1,569		$	(63,035	)

	For the Three Months Ended March 31, 2017
	Senior Secured Loans— First Lien			Senior Secured Loans— Second Lien			Senior Secured Bonds			Subordinated Debt			Equity/ Other			Total
Fair value at beginning of period	$	912,491		$	873,869		$	397,614		$	1,043,167		$	636,571		$	3,863,712
Accretion of discount (amortization of premium)		820			2,102			299			2,025			—			5,246
Net realized gain (loss)		(350	)		(10,711	)		466			(5,016	)		(15,042	)		(30,653	)
Net change in unrealized appreciation (depreciation)		1,515			9,834			(7,005	)		5,579			2,327			12,250
Purchases		98,622			198,327			148,977			305,961			19,364			771,251
Paid-in-kind interest		2,236			3,820			—			301			1,866			8,223
Sales and repayments		(56,197	)		(314,489	)		(16,594	)		(43,382	)		(27,433	)		(458,095	)
Net transfers in or out of Level 3		—			—			—			—			—			—
Fair value at end of period	$	959,137		$	762,752		$	523,757		$	1,308,635		$	617,653		$	4,171,934
The amount of total gains or losses for the period included in changes in net assets attributable to the change in unrealized gains or losses relating to investments still held at the reporting date	$	(10,204	)	$	17,127		$	(18,887	)	$	(665	)	$	(1,390	)	$	(14,019	)

34

FS Energy and Power Fund

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

Note 7. Fair Value of Financial Instruments (Continued)

        The valuation techniques and significant unobservable inputs used in recurring Level 3 fair value measurements as of March 31, 2018 and December 31, 2017 were as follows:

Type of Investment	Fair Value at March 31, 2018 (Unaudited)		Valuation Technique(1)	Unobservable Input	Range	Weighted Average
Senior Secured Loans—First Lien	$	566,918	Market Comparables	Market Yield (%)	8.3% - 13.0%	10.5	%
				EBITDA Multiples (x)	5.3x - 10.5x	7.2x
				Proved Reserves Multiples (Mmboe)	$5.8 - $6.3	$6.0
				PV-10 Multiples (x)	0.4x - 0.5x	0.4x
		10,017	Cost	Cost	99.0% - 99.0%	99.0	%
		39,147	Other(2)	Other(2)	N/A	N/A
		277,161	Market Quotes	Indicative Dealer Quotes	91.9% - 102.0%	99.4	%
Senior Secured Loans—Second Lien		553,059	Market Comparables	Market Yield (%)	8.6% - 18.5%	12.0	%
		1,650	Cost	Cost	99.0% - 99.0%	99.0	%
		19,225	Other(2)	Other(2)	N/A	N/A
		179,961	Market Quotes	Indicative Dealer Quotes	93.2% - 102.7%	97.6	%
Senior Secured Bonds		476,094	Market Comparables	Market Yield (%)	8.3% - 12.5%	9.2	%
				Production Multiples (Mboe/d)	$41,000.0 - $43,500.0	$42,250.0
				Proved Reserves Multiples (Mmboe)	$13.5 - $14.5	$14.0
				PV-10 Multiples (x)	1.0x - 1.0x	1.0x
				EBITDA Multiples (x)	4.5x - 5.0x	4.8x
		128,591	Market Quotes	Indicative Dealer Quotes	66.8% - 106.5%	89.5	%
Subordinated Debt		48,395	Market Comparables	Market Yield (%)	14.5% - 15.0%	14.8	%
				PV-10 Multiples (x)	1.1x - 1.1x	1.1x
		923,280	Market Quotes	Indicative Dealer Quotes	47.5% - 117.4%	100.2	%
Equity/Other		330,282	Market Comparables	EBITDA Multiples (x)	4.5x - 27.8x	8.1x
				Production Multiples (Mboe/d)	$32,500.0 - $43,500.0	$36,335.3
				Proved Reserves Multiples (Mmboe)	$4.3 - $14.5	$7.4
				Production Multiples (MMcfe/d)	$4,000.0 - $4,500.0	$4,250.0
				Proved Reserves Multiples (Bcfe)	$1.0 - $1.1	$1.0
				PV-10 Multiples (x)	0.4x - 2.0x	1.2x
				Capacity Multiple ($/kW)	$1,875.0 - $2,125.0	$2,000.0
				Market Yield (%)	16.0% - 16.5%	16.3	%
		1,767	Discounted Cash Flow	Discount Rate (%)	10.5% - 30.5%	11.6	%
		68	Option Valuation Model	Volatility (%)	30.0% - 30.0%	30.0	%
		2,505	Cost	Cost	$0.59 - $0.99	$0.99
		24,610	Other(2)	Other(2)	N/A	N/A
		22,659	Market Quotes	Indicative Dealer Quotes	$1.0 - $360.0	$76.8
Total	$	3,605,389

35

FS Energy and Power Fund

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

Note 7. Fair Value of Financial Instruments (Continued)

Type of Investment	Fair Value at December 31, 2017		Valuation Technique(1)	Unobservable Input	Range	Weighted Average
Senior Secured Loans—First Lien	$	560,200	Market Comparables	Market Yield (%)	8.0% - 13.0%	10.4	%
				EBITDA Multiples (x)	5.3x - 8.0x	6.4x
				Proved Reserves Multiples (Mmboe)	$5.8 - $6.3	$6.0
				PV-10 Multiples (x)	0.4x - 0.5x	0.4x
		273,133	Market Quotes	Indicative Dealer Quotes	71.3% - 102.0%	98.4	%
		91,593	Other(2)	Other(2)	N/A	N/A
Senior Secured Loans—Second Lien		588,486	Market Comparables	Market Yield (%)	8.5% - 20.7%	11.9	%
				EBITDA Multiples (x)	6.0x - 6.5x	6.3x
		14,850	Cost	Cost	100.0% - 100.0%	100.0	%
		193,188	Market Quotes	Indicative Dealer Quotes	31.0% - 101.3%	92.6	%
Senior Secured Bonds		488,721	Market Comparables	Market Yield (%)	7.7% - 12.3%	8.9	%
				Production Multiples (Mboe/d)	$42,250.0 - $44,750.0	$43,500.0
				Proved Reserves Multiples (Mmboe)	$10.3 - $11.3	$10.8
				PV-10 Multiples (x)	0.8x - 0.8x	0.8x
				EBITDA Multiples (x)	4.8x - 5.3x	5.0x
		171,430	Market Quotes	Indicative Dealer Quotes	73.0% - 107.8%	89.1	%
Subordinated Debt		110,255	Market Comparables	Market Yield (%)	11.0% - 14.8%	11.4	%
				PV-10 Multiples (x)	1.2x - 1.2x	1.2x
		1,093,269	Market Quotes	Indicative Dealer Quotes	50.0% - 120.2%	100.7	%
Equity/Other		329,226	Market Comparables	EBITDA Multiples (x)	5.5x - 23.5x	8.1x
				Production Multiples (Mboe/d)	$32,500.0 - $51,250.0	$37,007.0
				Proved Reserves Multiples (Mmboe)	$8.3 - $11.3	$9.1
				Production Multiples (MMcfe/d)	$5,000.0 - $5,500.0	$5,250.0
				Proved Reserves Multiples (Bcfe)	$1.8 - $2.0	$1.9
				PV-10 Multiples (x)	0.8x - 2.6x	1.9x
				Capacity Multiple ($/kW)	$2,000.0 - $2,250.0	$2,125.0
				Market Yield (%)	15.3% - 15.8%	15.5	%
		1,692	Discounted Cash Flow	Discount Rate (%)	11.0% - 30.5%	12.2	%
		103	Option Valuation Model	Volatility (%)	30.0% - 30.0%	30.0	%
		19,820	Other(2)	Other(2)	N/A	N/A
		22,294	Market Quotes	Indicative Dealer Quotes	$1.5 - $372.5	$81.7
Total	$	3,958,260

(1)

Investments using a market quotes valuation technique were valued by using the midpoint of the prevailing bid and ask prices from dealers on the date of the relevant period end, which were provided by an independent third-party pricing service and screened for validity by such service. For investments utilizing a market comparables valuation technique, a significant increase (decrease) in the market yield, in isolation, would result in a significantly lower (higher) fair value measurement, and a significant increase (decrease) in any of the valuation multiples, in isolation, would result in a significantly higher (lower) fair value measurement. For investments utilizing a discounted cash flow valuation technique, a significant increase (decrease) in the discount rate, in isolation, would result in a significantly lower (higher) fair value measurement. For investments utilizing an option valuation model valuation technique, a significant increase (decrease) in the volatility, in isolation, would result in a significantly higher (lower) fair value measurement.

(2)

Fair valued based on expected outcome of proposed corporate transactions and/or other factors.

36

FS Energy and Power Fund

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

Note 8. Financing Arrangements

        The following tables present a summary of information with respect to the Company's outstanding financing arrangements as of March 31, 2018 and December 31, 2017. For additional information regarding these financing arrangements, see the notes to the Company's audited consolidated financial statements contained in its annual report on Form 10-K for the year ended December 31, 2017 and the additional disclosure set forth in this Note 8.

	As of March 31, 2018 (Unaudited)
Arrangement(1)	Type of Arrangement	Rate	Amount Outstanding		Amount Available		Maturity Date
Barclays Credit Facility	Revolving	L+3.25%	$	—	$	100,000	March 29, 2019
BNP Facility	Prime Brokerage	L+1.35%		200,000		100,000	December 26, 2018(2)
Deutsche Bank Credit Facility	Revolving	L+2.05%		290,000		50,000	June 11, 2018
Fortress Facility	Term	L+5.00%(3)		155,000		—	November 6, 2020
Goldman Facility	Term	L+3.72%		425,000		—	September 15, 2019
Total			$	1,070,000	$	250,000

	As of December 31, 2017
Arrangement(1)	Type of Arrangement	Rate	Amount Outstanding		Amount Available		Maturity Date
Barclays Credit Facility	Revolving	L+3.25%	$	—	$	100,000	May 18, 2021
BNP Facility	Prime Brokerage	L+1.35%		300,000		—	September 27, 2018(2)
Deutsche Bank Credit Facility	Revolving	L+2.05%		340,000		—	June 11, 2018
Fortress Facility	Term	L+5.00%(3)		155,000		—	November 6, 2020
Goldman Facility	Term	L+3.72%		425,000		—	September 15, 2019
Total			$	1,220,000	$	100,000

(1)

The carrying amount outstanding under the facility approximates its fair value.

(2)

As described below, this facility generally is terminable upon 270 days' notice by either party. As of March 31, 2018 and December 31, 2017, neither party had provided notice of its intent to terminate the facility.

(3)

As described below, borrowings under the Fortress facility accrue interest at a rate equal to LIBOR plus 5.00%, subject to a floor of 0.75%.

37

FS Energy and Power Fund

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

Note 8. Financing Arrangements (Continued)

        For the three months ended March 31, 2018 and 2017, the components of total interest expense for the Company's financing arrangements were as follows:

	Three Months Ended March 31,
	2018						2017
Arrangement(1)	Direct Interest Expense(2)		Amortization of Deferred Financing Costs		Total Interest Expense		Direct Interest Expense(2)		Amortization of Deferred Financing Costs		Total Interest Expense
Barclays Credit Facility	$	94	$	19	$	113	$	94	$	14	$	108
BNP Facility		2,121		—		2,121		1,140		—		1,140
Deutsche Bank Credit Facility		3,243		291		3,534		1,775		271		2,046
Fortress Facility		2,486		77		2,563		2,176		67		2,243
Goldman Facility		5,632		144		5,776		—		—		—
Goldman Repurchase Financing		—		—		—		3,546		32		3,578
Natixis Credit Facility		—		—		—		423		256		679
Wells Fargo Credit Facility		—		—		—		243		198		441
Total	$	13,576	$	531	$	14,107	$	9,397	$	838	$	10,235

(1)

Borrowings of each of the Company's wholly-owned special-purpose financing subsidiaries are considered borrowings of the Company for purposes of complying with the asset coverage requirements applicable to BDCs under the 1940 Act.

(2)

Interest expense includes the effect of non-usage fees, administration fees and make-whole fees, if any.

        For the three months ended March 31, 2018 and 2017, the cash paid for interest expense, average borrowings, effective interest rate and weighted average interest rate for the Company's financing arrangements were as follows:

	Three Months Ended March 31,
	2018										2017
Arrangement	Cash Paid for Interest Expense		Average Borrowings		Effective Interest Rate(1)			Weighted Average Interest Rate(1)			Cash Paid for Interest Expense		Average Borrowings		Effective Interest Rate(1)			Weighted Average Interest Rate(1)
Barclays Credit Facility	$	94	$	—		—			—		$	96	$	—		—			—
BNP Facility(2)		2,842		247,778		3.65	%		3.42	%		989		127,071		2.50	%		3.59	%
Deutsche Bank Credit Facility(3)		3,109		329,444		4.11	%		3.94	%		1,741		205,333		3.03	%		3.46	%
Fortress Facility(3)		2,492		155,000		6.38	%		6.42	%		2,041		155,000		5.79	%		5.62	%
Goldman Facility(3)		5,640		425,000		5.31	%		5.30	%		—		—		—			—
Goldman Repurchase Financing(3)		—		—		—			—			3,529		325,000		4.34	%		4.36	%
Natixis Credit Facility(3)		—		—		—			—			433		49,466		3.48	%		3.42	%
Wells Fargo Credit Facility(3)		—		—		—			—			248		26,861		3.71	%		3.62	%
Total/Average	$	14,177	$	1,157,222		4.83	%		4.69	%	$	9,077	$	888,731		3.80	%		4.23	%

(1)

Effective interest rate and weighted average interest rate include the effect of non-usage fees, administration fees and make-whole fees, if any. If applicable, the weighted average interest rate presented for periods of less than one year is annualized

(2)

Interest paid monthly in arrears.

(3)

Interest paid quarterly in arrears.

38

FS Energy and Power Fund

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

Note 8. Financing Arrangements (Continued)

Barclays Credit Facility

        On May 18, 2016, Bryn Mawr Funding LLC, or Bryn Mawr Funding, a wholly-owned subsidiary, entered into a revolving credit facility, or the Barclays credit facility, with Barclays Bank PLC, or Barclays, as administrative agent, and the lenders from time to time party thereto. As amended to date, the Barclays credit facility provides for borrowings in U.S. dollars and certain agreed upon foreign currencies in an aggregate amount of up to $100,000, including a subfacility for the issuance of letters of credit for Bryn Mawr Funding's account in an aggregate face amount of up to $10,000. Bryn Mawr Funding's obligations to Barclays under the Barclays credit facility are secured by a first priority security interest in substantially all of the assets of Bryn Mawr Funding, including its portfolio of assets and the assets of its subsidiaries, subject to customary exceptions. In addition, the Company has agreed to guaranty the obligations of Barclays and grant a first priority lien in favor of Barclays, for the benefit of the lenders, on the membership interests in Bryn Mawr Funding.

        Interest under the Barclays credit facility for (i) loans for which the Company elects the eurocurrency option is payable at a rate equal to LIBOR plus 325 basis points per annum; and (ii) loans for which the Company elects the base rate option is payable at a rate equal to 225 basis points per annum plus the greatest of (a) the U.S. Prime Rate, (b) the federal funds effective rate for such day plus 50 basis points, (c) three-month LIBOR plus 100 basis points per annum and (d) zero. Bryn Mawr Funding will pay a commitment fee of 37.5 basis points per annum on the unused portion of the commitments under the Barclays credit facility during the revolving period and letter of credit participation fees and a fronting fee on the average daily amount of any letters of credit issued under the Barclays credit facility.

        On September 30, 2018 and December 31, 2018, the amount available for borrowing under the Barclays credit facility will be reduced to $75,000 and $50,000, respectively, and Bryn Mawr Funding will be required to repay any outstanding borrowings in excess of these amounts. The Barclays credit facility will mature on March 29, 2019.

        The Company incurred costs in connection with obtaining the Barclays credit facility, which the Company recorded as deferred financing costs on its consolidated balance sheets and amortizes to interest expense over the life of the Barclays credit facility. As of March 31, 2018, $177 of such deferred financing costs had yet to be amortized to interest expense.

BNP Facility

        On December 11, 2013, Berwyn Funding LLC, or Berwyn Funding, the Company's wholly-owned, special-purpose financing subsidiary, entered into a committed facility arrangement, or the BNP facility, with BNP Paribas Prime Brokerage International, Ltd (as assignee of BNP Paribas Prime Brokerage, Inc.), or BNP. As amended to date, Berwyn Funding can borrow, from time to time, up to $325,000 from BNP. The BNP facility was effected through a committed facility agreement by and between Berwyn Funding and BNP, or the committed facility agreement, a U.S. PB Agreement by and between Berwyn Funding and BNP, and related transaction documents each dated as of December 11, 2013, as amended to date, which are collectively referred to herein as the BNP financing agreements. Under the terms of the BNP facility, as amended, the maximum committed amount available to Berwyn Funding is $300,000, the interest rate payable on borrowings under the committed facility agreement is three-month LIBOR plus 135 basis points and the commitment fee payable under the committed facility agreement is (a) 65 basis points on unused amounts so long as 75% or more of the facility amount under the committed facility agreement is utilized or (b) 85 basis points on unused amounts if less than 75% of the facility amount under the committed facility agreement is utilized.

39

FS Energy and Power Fund

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

Note 8. Financing Arrangements (Continued)

        Berwyn Funding will pledge certain of its securities as collateral to secure borrowings under the BNP facility. The value of securities required to be pledged by Berwyn Funding is determined in accordance with the margin requirements described in the BNP financing agreements. Berwyn Funding's obligations to BNP under the BNP facility are secured by a first priority security interest in substantially all of the assets of Berwyn Funding, including its portfolio of securities. The obligations of Berwyn Funding under the BNP facility are non-recourse to the Company and the Company's exposure under the BNP facility is limited to the value of the Company's investment in Berwyn Funding.

        Berwyn Funding may terminate the committed facility agreement upon 270 days' notice. Subject to certain cancellation rights, and absent a default or facility termination event, BNP is required to provide Berwyn Funding with 270 days' notice prior to terminating or amending the committed facility agreement.

Deutsche Bank Credit Facility

        On June 24, 2011, FSEP Term Funding, LLC, or FSEP Funding, the Company's wholly-owned, special-purpose financing subsidiary, entered into a revolving credit facility, or the Deutsche Bank credit facility, with Deutsche Bank AG, New York Branch, or Deutsche Bank, as administrative agent and the lender party thereto. Under the terms of the Deutsche Bank credit facility, as amended, the maximum committed amount available to FSEP Funding is $340,000, the interest rate payable on borrowings is three-month LIBOR plus 205 basis points and FSEP Funding is subject to a non-usage fee of 75 basis points per annum. Any amounts borrowed under the Deutsche Bank credit facility will mature, and all accrued and unpaid interest thereunder will be due and payable, on June 11, 2018.

        FSEP Funding's obligations to the lenders under the Deutsche Bank credit facility are secured by a first priority security interest in substantially all of the assets of FSEP Funding, including its portfolio of securities. The obligations of FSEP Funding under the Deutsche Bank credit facility are non-recourse to the Company and the Company's exposure under the Deutsche Bank credit facility is limited to the value of the Company's investment in FSEP Funding.

        The Company incurred costs in connection with obtaining and amending the Deutsche Bank credit facility, which the Company recorded as deferred financing costs on its consolidated balance sheets and amortizes to interest expense over the life of the Deutsche Bank credit facility. As of March 31, 2018, $233 of such deferred financing costs had yet to be amortized to interest expense.

Fortress Facility

        On November 6, 2015, Foxfields Funding LLC, or Foxfields Funding, a wholly-owned financing subsidiary of the Company, entered into a senior secured multiple draw term loan facility, or the Fortress facility, with Fortress as administrative agent, the lenders from time to time party thereto and the other loan parties from time to time party thereto. Pursuant to the Fortress facility, as amended, Foxfields Funding has borrowed term loans in the amount of $155,000. Interest under the Fortress facility for (i) loans bearing interest by reference to LIBOR accrues at a rate equal to LIBOR (subject to a floor of 75 basis points) plus 500 basis points per annum, and (ii) loans bearing interest by reference to the base rate accrues at 400 basis points per annum plus the greater of: (x) the per annum rate of interest announced, from time to time, within Wells Fargo Bank, National Association at its principal office in San Francisco as its "prime rate," and (y) 175 basis points per annum.

        The Company incurred costs in connection with obtaining and amending the Fortress facility, which the Company recorded as deferred financing costs on its consolidated balance sheets and amortizes to interest expense over the life of the Fortress facility. As of March 31, 2018, $807 of such deferred financing costs had yet to be amortized to interest expense.

40

FS Energy and Power Fund

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

Note 8. Financing Arrangements (Continued)

Goldman Repurchase Financing

        On September 11, 2014, through its two wholly-owned, special-purpose financing subsidiaries, Gladwyne Funding LLC, or Gladwyne Funding, and Strafford Funding LLC, or Strafford Funding, the Company entered into a debt financing arrangement with Goldman, which was subsequently twice amended, or the Goldman repurchase financing. Prior to its termination on April 19, 2017, the amount borrowed under the Goldman repurchase financing was $325,000. On April 19, 2017, in connection with the closing of the Goldman repurchase financing, (i) all of the Floating Rate Notes, or Notes, issued by Gladwyne Funding to Strafford Funding were canceled and the indenture under which the Notes were issued was discharged, (ii) the master repurchase agreement between Strafford Funding and Goldman and each transaction thereunder was terminated and (iii) accordingly, the Goldman repurchase financing was prepaid in full and terminated.

Goldman Facility

        On April 19, 2017, Gladwyne Funding entered into a Credit Agreement with Goldman, as lender, sole lead arranger and administrative agent, Citibank, N.A., as collateral agent, and Virtus Group, LP, as collateral administrator, or the Goldman term facility. Under the terms of the Goldman term facility, as amended, Gladwyne Funding has borrowed term loans in the amount of $425,000. The interest payable on borrowings under the Goldman term facility is three-month LIBOR plus 372 basis points per annum. The Goldman term facility will mature, and all outstanding principal and accrued and unpaid interest thereunder, will be due and payable, on September 15, 2019.

        If the Goldman term facility is accelerated prior to its stated maturity date due to an event of default or all or a portion of the borrowings are prepaid, then Gladwyne Funding must pay to Goldman a fee equal to the present value of the aggregate amount of the spread over LIBOR (372 basis points per annum) that would have been payable to Goldman on the subject borrowings through the facility's maturity date had the acceleration or prepayment not occurred.

        The Company incurred costs in connection with obtaining the Goldman term facility, which the Company recorded as deferred financing costs on its consolidated balance sheets and amortizes to interest expense over the life of the Goldman term facility. As of March 31, 2018, $855 of such deferred financing costs had yet to be amortized to interest expense.

Natixis Credit Facility

        On August 2, 2017, Energy Funding LLC, or Energy Funding, the Company's wholly-owned, special-purpose financing subsidiary, repaid and terminated the revolving credit facility, or the Natixis credit facility, which Energy Funding originally entered into on July 11, 2015 with Natixis, New York Branch, or Natixis, as administrative agent and lender, Wells Fargo Bank, National Association, as collateral agent and custodian, and the other lenders from time to time party thereto. The Natixis credit facility provided for revolving borrowings through January 11, 2015 in an aggregate principal amount up to $150,000 on a committed basis. Prior to the termination of the Natixis credit facility, borrowings under the Natixis credit facility accrued interest at a rate equal to the applicable commercial paper rate plus 225 basis points per annum.

Wells Fargo Credit Facility

        On July 27, 2017 and July 28, 2017, Wayne Funding LLC, or Wayne Funding, the Company's wholly-owned, special purpose financing subsidiary, repaid and terminated, respectively, the revolving credit facility, or the Wells Fargo credit facility, which Wayne Funding originally entered into on September 9, 2014 with Wells Fargo Securities, LLC, as administrative agent, each of the conduit

41

FS Energy and Power Fund

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

Note 8. Financing Arrangements (Continued)

lenders and institutional lenders from time to time party thereto and Wells Fargo Bank, National Association, collectively referred to herein as Wells Fargo, as the collateral agent, account bank and collateral custodian under the Wells Fargo credit facility. The Wells Fargo credit facility provided for borrowings in an aggregate principal amount up to $60,000 on a committed basis. Prior to the termination of the Wells Fargo credit facility, borrowings accrued interest at a rate equal to three-month LIBOR plus a spread ranging between 250 and 275 basis points per annum, depending on the composition of the portfolio of assets for the relevant period.

Note 9. Commitments and Contingencies

        The Company enters into contracts that contain a variety of indemnification provisions. The Company's maximum exposure under these arrangements is unknown; however, the Company has not had prior claims or losses pursuant to these contracts. Management of FS Advisor has reviewed the Company's existing contracts and expects the risk of loss to the Company to be remote.

        The Company is not currently subject to any material legal proceedings and, to the Company's knowledge, no material legal proceedings are threatened against the Company. From time to time, the Company may be party to certain legal proceedings in the ordinary course of business, including proceedings relating to the enforcement of the Company's rights under contracts with its portfolio companies. While the outcome of any legal proceedings cannot be predicted with certainty, the Company does not expect that any such proceedings will have a material effect upon its financial condition or results of operations.

        See Note 4 for a discussion of the Company's commitments to FS Advisor and its affiliates (including FS Investments) and Note 6 for a discussion of the Company's unfunded commitments.

42

FS Energy and Power Fund

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

Note 10. Financial Highlights

        The following is a schedule of financial highlights of the Company for the three months ended March 31, 2018 and the year ended December 31, 2017:

	Three Months Ended March 31, 2018 (Unaudited)			Year Ended December 31, 2017
Per Share Data:(1)
Net asset value, beginning of period	$	6.65		$	7.61
Results of operations(2)
Net investment income		0.13			0.65
Net realized gain (loss) and unrealized appreciation (depreciation)		(0.21	)		(0.90	)
Net increase (decrease) in net assets resulting from operations		(0.08	)		(0.25	)
Shareholder distributions(3)
Distributions from net investment income		(0.13	)		(0.71	)
Distributions representing tax return of capital		—			(0.00	)
Net decrease in net assets resulting from shareholder distributions		(0.13	)		(0.71	)
Capital share transactions
Issuance of common shares(4)		—			—
Repurchases of common shares(5)		—			—
Net increase (decrease) in net assets resulting from capital share transactions		—			—
Net asset value, end of period	$	6.44		$	6.65
Shares outstanding, end of period		441,740,665			446,045,135
Total return(6)		(1.33	)%		(3.65	)%
Total return (without assuming reinvestment of distributions)(6)		(1.20	)%		(3.29	)%
Ratio/Supplemental Data:
Net assets, end of period	$	2,842,967		$	2,966,042
Ratio of net investment income to average net assets(7)		7.37	%		8.82	%
Ratio of total operating expenses to average net assets(7)		4.82	%		4.94	%
Portfolio turnover(8)		7.06	%		34.08	%
Total amount of senior securities outstanding, exclusive of treasury securities	$	1,070,000		$	1,220,000
Asset coverage per unit(9)		3.66			3.43

(1)

Per share data may be rounded in order to recompute the ending net asset value per share.

(2)

The per share data was derived by using the weighted average shares outstanding during the applicable period.

(3)

The per share data for distributions reflects the actual amount of distributions paid per share during the applicable period.

(4)

The issuance of common shares on a per share basis reflects the incremental net asset value changes as a result of the issuance of common shares, pursuant to the Company's distribution reinvestment plan. The issuance of common shares at a price that is greater than the net asset value per share results in an increase in net asset value per share. The per share impact of the Company's issuance of common shares was an increase in net asset value of less than $0.01 per share during the three months ended March 31, 2018.

(5)

The per share impact of the Company's repurchases of common shares was a reduction to net asset value of less than $0.01 per share during each period.

43

FS Energy and Power Fund

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

Note 10. Financial Highlights (Continued)

(6)

The total return for each period presented was calculated based on the change in net asset value during the applicable period, including the impact of distributions reinvested in accordance with the Company's distribution reinvestment plan. The total return (without assuming reinvestment of distributions) for each period presented was calculated by taking the net asset value per share as of the end of the applicable period, adding the cash distributions per share which were declared during the applicable period and dividing the total by the net asset value per share at the beginning of the applicable period. The total returns do not consider the effect of any sales commissions or charges that may be incurred in connection with the sale of the Company's common shares. The total returns include the effect of the issuance of common shares at a net offering price that is greater than net asset value per share, which causes an increase in net asset value per share. The historical calculations of total returns in the table should not be considered representations of the Company's future total returns, which may be greater or less than the returns shown in the table due to a number of factors, including the Company's ability or inability to make investments in companies that meet its investment criteria, the interest rates payable on the debt securities the Company acquires, the level of the Company's expenses, variations in and the timing of the recognition of realized and unrealized gains or losses, the degree to which the Company encounters competition in its markets and general economic conditions. As a result of these factors, results for any previous period should not be relied upon as being indicative of performance in future periods. The total return calculations set forth above represent the total returns on the Company's investment portfolio during the applicable period and do not represent actual returns to shareholders.

(7)

Weighted average net assets during the applicable period are used for this calculation. Ratios for the three months ended March 31, 2018 are annualized. Annualized ratios for the three months ended March 31, 2018 are not necessarily indicative of the ratios that may be expected for the year ending December 31, 2018. The following is a schedule of supplemental ratios for the three months ended March 31, 2018 and year ended December 31, 2017:

	Three Months Ended March 31, 2018 (Unaudited)			Year Ended December 31, 2017
Ratio of subordinated income incentive fees to average net assets		—			0.32	%
Ratio of interest expense to average net assets		1.91	%		1.52	%

(8)

Portfolio turnover for the three months ended March 31, 2018 is not annualized.

(9)

Asset coverage per unit is the ratio of the carrying value of the Company's total consolidated assets, less liabilities and indebtedness not represented by senior securities, to the aggregate amount of senior securities representing indebtedness.

Note 11. Subsequent Events

        On April 9, 2018, the Company entered into the FS/EIG investment advisory agreement which replaced the FS Advisor investment advisory agreement.

        Pursuant to the FS/EIG investment advisory agreement, FS/EIG Advisor is entitled to an annual base management fee based on the average weekly value of the Company's gross assets during the most recently completed calendar quarter and an incentive fee based on the Company's performance. The base management fee is payable quarterly in arrears, and is calculated at an annual rate of 1.75% of the average weekly value of the Company's gross assets.

        The incentive fee consists of two parts. The first part of the incentive fee, which is referred to as the subordinated incentive fee on income, 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 the Company's net assets, equal to 1.625% per quarter, or an annualized hurdle rate of 6.5%. As a result, FS/EIG Advisor will 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%. Once the Company's pre-incentive fee net investment income in any quarter exceeds the hurdle rate, FS/EIG Advisor will be entitled to a "catch-up" fee

44

FS Energy and Power Fund

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

Note 11. Subsequent Events (Continued)

equal to the amount of the Company's 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 the value of the Company's net assets. This "catch-up" feature will allow FS/EIG Advisor to recoup the fees foregone as a result of the existence of the hurdle rate. Thereafter, FS/EIG Advisor will be entitled to receive 20.0% of the Company's pre-incentive fee net investment income.

        The second part of the incentive fee, which is referred to as the incentive fee on capital gains, is determined and payable in arrears as of the end of each calendar year (or upon termination of the FS/EIG investment advisory agreement). This fee equals 20.0% of the Company's "incentive fee capital gains." "Incentive fee capital gains" are 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 incentive fees on capital gains. The Company will accrue for the incentive fee on capital gains, which, if earned, will be paid annually. The Company will accrue the incentive fee on capital gains based on net realized and unrealized gains; however, the fee payable to FS/EIG Advisor will be based on realized gains and no such fee will be payable with respect to unrealized gains unless and until such gains are actually realized.

        Pursuant to the FS/EIG investment advisory agreement, FS/EIG Advisor oversees our day-to-day operations, including the provision of general ledger accounting, fund accounting, legal services, investor relations, certain government and regulatory affairs activities and other administrative services. FS/EIG Advisor also performs, or oversees the performance of, our corporate operations and required administrative services, which includes being responsible for the financial records that we are required to maintain and preparing reports for our shareholders and reports filed with the SEC.

        Pursuant to the FS/EIG investment advisory agreement, the Company reimburses FS/EIG Advisor no less than monthly for expenses necessary to perform services related to the Company's administration and operations. The amount of this reimbursement is set at the lesser of (1) FS/EIG Advisor's actual costs incurred in providing such services and (2) the amount that the Company estimates it would be required to pay alternative service providers for comparable services in the same geographic location. FS/EIG Advisor allocates the cost of such services to the Company based on factors such as time allocations and other reasonable metrics. The Company's board of trustees reviews the methodology employed in determining how the expenses are allocated to the Company and assesses the reasonableness of such reimbursements for expenses allocated to the Company based on the breadth, depth and quality of such services as compared to the estimated cost to the Company of obtaining similar services from third-party providers known to be available. In addition, the Company's board of trustees considers whether any single third-party service provider would be capable of providing all such services at comparable cost and quality. Finally, the Company's board of trustees, among other things, compares the total amount paid to FS/EIG Advisor for such services as a percentage of the Company's net assets to the same ratio as reported by other comparable BDCs.

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Item 2.    Management's Discussion and Analysis of Financial Condition and Results of Operations.
                              (in thousands, except share and per share amounts)

        The information contained in this section should be read in conjunction with our unaudited consolidated financial statements and related notes thereto included elsewhere in this quarterly report on Form 10-Q. In this report, "we," "us" and "our" refer to FS Energy and Power Fund.

Forward-Looking Statements

        Some of the statements in this quarterly report on Form 10-Q constitute forward-looking statements because they relate to future events or our future performance or financial condition. The forward-looking statements contained in this quarterly report on Form 10-Q may include statements as to:

•

our future operating results;

•

our business prospects and the prospects of the companies in which we may invest;

•

the impact of the investments that we expect to make;

•

the ability of our portfolio companies to achieve their objectives;

•

our current and expected financing arrangements and investments;

•

changes in the general interest rate environment;

•

the adequacy of our cash resources, financing sources and working capital;

•

the timing and amount of cash flows, distributions and dividends, if any, from our portfolio companies;

•

our contractual arrangements and relationships with third parties;

•

actual and potential conflicts of interest with FS/EIG Advisor, FS Investments, EIG, or any of their respective affiliates;

•

the dependence of our future success on the general economy and its effect on the industries in which we may invest;

•

our use of financial leverage;

•

the ability of FS/EIG Advisor to locate suitable investments for us and to monitor and administer our investments;

•

the ability of FS/EIG Advisor or its affiliates to attract and retain highly talented professionals;

•

our ability to maintain our qualification as a RIC and as a BDC;

•

the impact on our business of the Dodd-Frank Wall Street Reform and Consumer Protection Act, as amended, and the rules and regulations issued thereunder;

•

the effect of changes to tax legislation and our tax position; and

•

the tax status of the enterprises in which we may invest.

        In addition, words such as "anticipate," "believe," "expect" and "intend" indicate a forward-looking statement, although not all forward-looking statements include these words. The forward-looking statements contained in this quarterly report on Form 10-Q involve risks and uncertainties. Our actual results could differ materially from those implied or expressed in the forward-looking statements for any reason. Factors that could cause actual results to differ materially include:

•

changes in the economy;

•

risks associated with possible disruption in our operations or the economy generally due to terrorism or natural disasters; and

•

future changes in laws or regulations and conditions in our operating areas;

        We have based the forward-looking statements included in this quarterly report on Form 10-Q on information available to us on the date of this quarterly report on Form 10-Q. Except as required by

46

the federal securities laws, we undertake no obligation to revise or update any forward-looking statements, whether as a result of new information, future events or otherwise. Shareholders are advised to consult any additional disclosures that we may make directly to shareholders or through reports that we may file in the future with the SEC, including annual reports on Form 10-K, quarterly reports on Form 10-Q and current reports on Form 8-K. The forward-looking statements and projections contained in this quarterly report on Form 10-Q are excluded from the safe harbor protection provided by Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, or the Exchange Act.

Overview

        We were 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. We are an externally managed, non-diversified, closed-end management investment company that has elected to be regulated as a BDC under the 1940 Act and has elected to be treated for U.S. federal income tax purposes, and intends to qualify annually, as a RIC under Subchapter M of the Code. In November 2016, we closed our continuous public offering of common shares to new investors.

        Our investment activities are managed by FS/EIG Advisor and supervised by our board of trustees, a majority of whom are independent. Under the FS/EIG investment advisory agreement, we have agreed to pay FS/EIG Advisor an annual base management fee based on the average weekly value of our gross assets and an incentive fee based on our performance.

        Our investment activities were managed by FS Advisor until April 9, 2018 and thereafter have been managed by FS/EIG Advisor. FS Advisor previously engaged GSO to act as our investment sub-adviser. GSO resigned as our investment sub-adviser and terminated the investment sub-advisory agreement on April 9, 2018.

        Our investment policy is to invest, under normal circumstances, at least 80% of our total assets in securities of Energy companies. This investment policy may not be changed without at least 60 days' prior notice to holders of our common shares of any such change.

        Our investment objective is to generate current income and long-term capital appreciation. We have identified and intend to focus on the following investment categories, which we believe will allow us to generate an attractive total return with an acceptable level of risk.

        Direct Originations:    We intend to directly source investment opportunities. Such investments are originated or structured for us or made by us and are not generally available to the broader market. These investments may include both debt and equity components, although we do not generally make equity investments independent of having an existing credit relationship. We believe directly originated investments may offer higher returns and more favorable protections than broadly syndicated transactions.

        Opportunistic:    We intend to seek to capitalize on market price inefficiencies by investing in loans, bonds and other securities where the market price of such investment reflects a lower value than deemed warranted by our fundamental analysis. We believe that market price inefficiencies may occur due to, among other things, general dislocations in the markets, a misunderstanding by the market of a particular company or an Energy industry sub-sector being out of favor with the broader investment community. We seek to allocate capital to these securities that have been misunderstood or mispriced by the market and where we believe there is an opportunity to earn an attractive return on our investment. Such opportunities may include event driven investments, anchor orders (i.e., opportunities that are originated and then syndicated by a commercial or investment bank but where we provide a capital commitment significantly above the average syndicate participant) and CLOs.

        In the case of event driven investments, we intend to take advantage of dislocations that arise in the markets due to an impending event and where the market's apparent expectation of value differs substantially from our fundamental analysis. Such events may include a looming debt maturity or default, a merger, spin-off or other corporate reorganization, an adverse regulatory or legal ruling, or a material contract expiration, any of which may significantly improve or impair a company's financial position. Compared to other investment strategies, event driven investing depends more heavily on our ability to successfully predict the outcome of an individual event rather than on underlying

47

macroeconomic fundamentals. As a result, successful event driven strategies may offer both substantial diversification benefits and the ability to generate performance in uncertain market environments.

        We may also invest in anchor orders. In these types of investments, we may receive fees, preferential pricing or other benefits not available to other lenders in return for our significant capital commitment. Our decision to provide an anchor order to a syndicated transaction is predicated on a rigorous credit analysis, our familiarity with a particular company, industry or financial sponsor, and the broader investment experiences of our investment adviser.

        Broadly Syndicated/Other:    Although our primary focus is to invest in directly originated transactions and opportunistic investments, in certain circumstances we will also invest in the broadly syndicated loan and high yield markets. Broadly syndicated loans and bonds are generally more liquid than our directly originated investments and provide a complement to our less liquid strategies. In addition, and because we typically receive more attractive financing terms on these positions than we do on our less liquid assets, we are able to leverage the broadly syndicated portion of our portfolio in such a way that maximizes the levered return potential of our portfolio.

        Our portfolio is comprised primarily of income-oriented securities, which refers to debt securities and income-oriented preferred and common equity interests, of privately-held Energy companies within the United States. We intend to weight our portfolio towards senior and subordinated debt. In addition to investments purchased from dealers or other investors in the secondary market, we expect to invest in primary market transactions and directly originated investments as this will provide us with the ability to tailor investments to best match a project's or company's needs with our investment objectives. Our portfolio may also be comprised of select income-oriented preferred or common equity interests, which refers to equity interests that pay consistent, high-yielding dividends, that we believe will produce both current income and long-term capital appreciation. These income-oriented preferred or common equity interests may include interests in master limited partnerships. In connection with certain of our debt investments or any restructuring of these debt investments, we may on occasion receive equity interests, including warrants or options, as additional consideration or otherwise in connection with a restructuring.

Revenues

        The principal measure of our financial performance is net increase or decrease in net assets resulting from operations, which includes net investment income, net realized gain or loss on investments, net realized gain or loss on foreign currency, net change in unrealized appreciation or depreciation on investments and net change in unrealized gain or loss on foreign currency. Net investment income is the difference between our income from interest, dividends, fees and other investment income and our operating and other expenses. Net realized gain or loss on investments is the difference between the proceeds received from dispositions of portfolio investments and their amortized cost, including the respective realized gain or loss on foreign currency for those foreign denominated investment transactions. Net realized gain or loss on foreign currency is the portion of realized gain or loss attributable to foreign currency fluctuations. Net change in unrealized appreciation or depreciation on investments is the net change in the fair value of our investment portfolio, including the respective unrealized gain or loss on foreign currency for those foreign denominated investments. Net change in unrealized gain or loss on foreign currency is the net change in the value of receivables or accruals due to the impact of foreign currency fluctuations.

        We principally generate revenues in the form of interest income on the debt investments we hold. We also generate revenues in the form of dividends and other distributions on the equity or other securities we may hold. In addition, we may generate revenues in the form of non-recurring commitment, closing, origination, structuring or diligence fees, fees for providing managerial assistance, consulting fees, prepayment fees and performance-based fees.

Expenses

        Our primary operating expenses include the payment of management and incentive fees and other expenses under the FS/EIG investment advisory agreement, interest expense from financing facilities and other indebtedness, and other expenses necessary for our operations. The management and

48

incentive fees compensate FS/EIG Advisor for its work in identifying, evaluating, negotiating, executing, monitoring and servicing our investments.

        FS/EIG Advisor oversees our day-to-day operations, including the provision of general ledger accounting, fund accounting, legal services, investor relations, certain government and regulatory affairs activities, and other administrative services. FS/EIG Advisor also performs, or oversees the performance of, our corporate operations and required administrative services, which includes being responsible for the financial records that we are required to maintain and preparing reports for our shareholders and reports filed with the SEC. In addition, FS/EIG Advisor assists us in calculating our net asset value, overseeing the preparation and filing of tax returns and the printing and dissemination of reports to our shareholders, and generally overseeing the payment of our expenses and the performance of administrative and professional services rendered to us by others.

        Pursuant to the FS/EIG investment advisory agreement, we reimburse FS/EIG Advisor for expenses necessary to perform services related to our administration and operations, including FS/EIG Advisor's allocable portion of the compensation and related expenses of certain personnel of FS Investments and EIG providing administrative services to us on behalf of FS/EIG Advisor. We reimburse FS/EIG Advisor no less than quarterly for all costs and expenses incurred by FS/EIG Advisor in performing its obligations and providing personnel and facilities under the FS/EIG investment advisory agreement. FS/EIG Advisor allocates the cost of such services to us based on factors such as time allocations and other reasonable metrics. Our board of trustees reviews the methodology employed in determining how the expenses are allocated to us and assesses the reasonableness of such reimbursements for expenses allocated to us based on the breadth, depth and quality of such services as compared to the estimated cost to us of obtaining similar services from third-party service providers known to be available. In addition, our board of trustees considers whether any single third-party service provider would be capable of providing all such services at comparable cost and quality. Finally, our board of trustees compares the total amount paid to FS/EIG Advisor for such services as a percentage of our net assets to the same ratio as reported by other comparable BDCs.

        We bear all other expenses of our operations and transactions, including all other expenses incurred by FS/EIG Advisor in performing services for us and administrative personnel paid by FS Investments and EIG.

        In addition, we have contracted with State Street to provide various accounting and administrative services, including, but not limited to, preparing preliminary financial information for review by FS/EIG Advisor, preparing and monitoring expense budgets, maintaining accounting and corporate books and records, processing trade information provided by us and performing testing with respect to RIC compliance.

        For information regarding our expense reimbursement arrangement with FS Investments, see Note 4 to our unaudited consolidated financial statements included herein.

Portfolio Investment Activity for the Three Months Ended March 31, 2018 and for the Year Ended December 31, 2017

Total Portfolio Activity

        The following tables present certain selected information regarding our portfolio investment activity for the three months ended March 31, 2018 and year ended December 31,2017:

Net Investment Activity	For the Three Months Ended March 31, 2018			For the Year Ended December 31, 2017
Purchases	$	267,833		$	1,861,618
Sales and Repayments		(558,369	)		(1,431,648	)
Net Portfolio Activity	$	(290,536	)	$	429,970

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	For the Three Months Ended March 31, 2018					For the Year Ended December 31, 2017
New Investment Activity by Asset Class	Purchases		Percentage			Purchases		Percentage
Senior Secured Loans—First Lien	$	146,200		55	%	$	397,162		21	%
Senior Secured Loans—Second Lien		14,403		5	%		428,871		23	%
Senior Secured Bonds		24,371		9	%		347,091		19	%
Subordinated Debt		76,596		29	%		621,372		33	%
Equity/Other		6,263		2	%		67,122		4	%
Total	$	267,833		100	%	$	1,861,618		100	%

        The following table summarizes the composition of our investment portfolio at cost and fair value as of March 31, 2018 and December 31, 2017:

	March 31, 2018 (Unaudited)							December 31, 2017
	Amortized Cost(1)		Fair Value		Percentage of Portfolio			Amortized Cost(1)		Fair Value		Percentage of Portfolio
Senior Secured Loans—First Lien	$	933,621	$	893,243		25	%	$	961,883	$	924,926		23	%
Senior Secured Loans—Second Lien		830,856		753,895		21	%		860,470		796,524		20	%
Senior Secured Bonds		616,661		604,685		17	%		664,542		660,151		17	%
Subordinated Debt		1,000,804		971,675		26	%		1,229,790		1,203,524		30	%
Equity/Other		623,907		395,574		11	%		641,081		411,580		10	%
Total	$	4,005,849	$	3,619,072		100	%	$	4,357,766	$	3,996,705		100	%

(1)

Amortized cost represents the original cost adjusted for the amortization of premiums and/or accretion of discounts, as applicable, on investments.

        The following table presents certain selected information regarding the composition of our investment portfolio as of March 31, 2018 and December 31, 2017:

	March 31, 2018			December 31, 2017
Number of Portfolio Companies		79			76
% Variable Rate (based on fair value)		40.5	%		40.1	%
% Fixed Rate (based on fair value)		48.6	%		49.6	%
% Income Producing Equity/Other Investments (based on fair value)		0.7	%		0.7	%
% Non-Income Producing Equity/Other Investments (based on fair value)		10.2	%		9.6	%
Average Annual EBITDA of Portfolio Companies	$	142,857		$	188,168
Weighted Average Purchase Price of Debt Investments (as a % of par value)		97.2	%		97.0	%
% of Investments on Non-Accrual (based on fair value)		2.5	%		2.6	%
Gross Portfolio Yield Prior to Leverage (based on amortized cost)		8.0	%		8.0	%
Gross Portfolio Yield Prior to Leverage (based on amortized cost)—Excluding Non-Income Producing Assets		9.6	%		9.8	%

        Based on our regular monthly cash distribution rate of $0.041667 per share as of March 31, 2018, and the price at which we issued shares pursuant to our distribution reinvestment plan of $6.55 per share, the annualized distribution rate to shareholders as of March 31, 2018 was 7.63%. Based on our regular monthly cash distribution rate of $0.059042 per share as of December 31, 2017, and the price at which we issued shares pursuant to our distribution reinvestment plan of $6.70 per share, the annualized distribution rate to shareholders as of December 31, 2017 was 10.57%. For the three months ended March 31, 2018 and year ended December 31, 2017, our total return was (1.33)% and (3.65)%, respectively, and our total return without assuming reinvestment of distributions was (1.20)% and (3.29)%, respectively

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        Our estimated gross portfolio yield and annualized distribution rate to shareholders do not represent actual investment returns to shareholders. Our gross annual portfolio yield and distribution rate to shareholders are subject to change and in the future may be greater or less than the rates set forth above. See the sections entitled "Risk Factors" in our annual report on Form 10-K for the fiscal year ended December 31, 2017 and in our other periodic reports filed with the SEC for a discussion of the uncertainties, risks and assumptions associated with these statements.

Direct Originations

        The following tables present certain selected information regarding our direct originations for the three months ended March 31, 2018 and year ended December 31, 2017:

New Direct Originations	For the Three Months Ended March 31, 2018			For the Year Ended December 31, 2017
Total Commitments (including unfunded commitments)	$	72,878		$	1,045,373
Exited Investments (including partial paydowns)		(127,697	)		(590,931	)
Net Direct Originations	$	(54,819	)	$	454,442

	For the Three Months Ended March 31, 2018					For the Year Ended December 31, 2017
New Direct Originations by Asset Class     (including Unfunded Commitments)	Commitment Amount		Percentage			Commitment Amount		Percentage
Senior Secured Loans—First Lien	$	60,948		83	%	$	285,688		27	%
Senior Secured Loans—Second Lien		8,567		12	%		386,000		37	%
Senior Secured Bonds		—		—			162,812		16	%
Subordinated Debt		—		—			165,000		16	%
Equity/Other		3,363		5	%		45,873		4	%
Total	$	72,878		100	%	$	1,045,373		100	%

	For the Three Months Ended March 31, 2018			For the Year Ended December 31, 2017
Average New Direct Origination Commitment Amount	$	6,625		$	47,517
Weighted Average Maturity for New Direct Originations		5/19/24			9/27/22
Gross Portfolio Yield Prior to Leverage (based on amortized cost) of Direct Originations Funded during Period		9.0	%		8.6	%
Gross Portfolio Yield Prior to Leverage (based on amortized cost) of Direct Originations Funded during Period—Excluding Non-Income Producing Assets		9.8	%		9.0	%
Gross Portfolio Yield Prior to Leverage (based on amortized cost) of Direct Originations Exited during Period		10.8	%		10.2	%

        The following table presents certain selected information regarding our direct originations as of March 31, 2018 and December 31, 2017:

Characteristics of All Direct Originations held in Portfolio	March 31, 2018			December 31, 2017
Number of Portfolio Companies		41			36
Average Annual EBITDA of Portfolio Companies	$	79,501		$	77,664
Average Leverage Through Tranche of Portfolio Companies—Excluding Equity/Other Securities		5.5x			5.7x
% of Investments on Non-Accrual (based on fair value)		3.0	%		2.6	%
Gross Portfolio Yield Prior to Leverage (based on amortized cost) of Funded Direct Originations		7.5	%		7.4	%
Gross Portfolio Yield Prior to Leverage (based on amortized cost) of Funded Direct Originations—Excluding Non-Income Producing Assets		10.1	%		9.8	%

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Portfolio Composition by Strategy

        The table below summarizes the composition of our investment portfolio by strategy and enumerates the percentage, by fair value, of the total portfolio assets in such strategies as of March 31, 2018 and December 31, 2017:

	March 31, 2018					December 31, 2017
Portfolio Composition by Strategy	Fair Value		Percentage of Portfolio			Fair Value		Percentage of Portfolio
Direct Originations	$	2,142,991		59	%	$	2,277,397		57	%
Opportunistic		818,049		23	%		1,037,413		26	%
Broadly Syndicated/Other		658,032		18	%		681,895		17	%
Total	$	3,619,072		100	%	$	3,996,705		100	%

        See Note 6 to our unaudited consolidated financial statements included herein for additional information regarding our investment portfolio.

Portfolio Asset Quality

        In addition to various risk management and monitoring tools, FS/EIG Advisor uses, and FS Advisor historically used, an investment rating system to characterize and monitor the expected level of returns on each investment in our portfolio. FS/EIG Advisor uses, and FS Advisor historically used, an investment rating scale of 1 to 5. The following is a description of the conditions associated with each investment rating:

Investment Rating	Summary Description
1	Investment exceeding expectations and/or capital gain expected.
2	Performing investment generally executing in accordance with the portfolio company's business plan—full return of principal and interest expected.
3	Performing investment requiring closer monitoring.
4	Underperforming investment—some loss of interest or dividend possible, but still expecting a positive return on investment.
5	Underperforming investment with expected loss of interest and some principal.

        The following table shows the distribution of our investments on the 1 to 5 investment rating scale at fair value as of March 31, 2018 and December 31, 2017:

	March 31, 2018					December 31, 2017
Investment Rating	Fair Value		Percentage of Portfolio			Fair Value		Percentage of Portfolio
1	$	27,847		1	%	$	99,205		2	%
2		3,028,873		84	%		3,125,386		78	%
3		340,253		9	%		546,153		14	%
4		10,813		0	%		—		—
5		211,286		6	%		225,961		6	%
Total	$	3,619,072		100	%	$	3,996,705		100	%

        The amount of the portfolio in each grading category may vary substantially from period to period resulting primarily from changes in the composition of the portfolio as a result of new investment, repayment and exit activities. In addition, changes in the grade of investments may be made to reflect our expectation of performance and changes in investment values.

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Results of Operations

Comparison of the Three Months Ended March 31, 2018 and 2017

Revenues

        Our investment income for the three months ended March 31, 2018 and 2017 was as follows:

	Three Months Ended March 31,
	2018					2017
	Amount		Percentage of Total Income			Amount		Percentage of Total Income
Interest income	$	77,898		87	%	$	84,201		72	%
Paid-in-kind interest income		3,019		3	%		8,223		7	%
Fee income		9,056		10	%		23,822		21	%
Total investment income(1)	$	89,973		100	%	$	116,246		100	%

(1)

Such revenues represent $83,987 and $103,768 of cash income earned as well as $5,986 and $12,478 in non-cash portions relating to accretion of discount and PIK interest for the three months ended March 31, 2018 and 2017, respectively. Cash flows related to such non-cash revenues may not occur for a number of reporting periods or years after such revenues are recognized.

        The level of investment income we receive is directly related to the balance of income-producing investments multiplied by the weighted average yield of our investments. We expect the dollar amount of interest and any dividend income that we earn to increase if the size of our investment portfolio increases and the proportion of directly originated investments in our portfolio increases.

        Fee income is transaction based, and typically consists of prepayment fees and structuring fees. As such, future fee income is generally dependent on new direct origination investments and the occurrence of events at existing portfolio companies resulting in such fees.

Expenses

        Our operating expenses for the three months ended March 31, 2018 and 2017 were as follows:

	Three Months Ended March 31,
	2018		2017
Management fees	$	18,298	$	22,385
Subordinated income incentive fees		—		10,499
Administrative services expenses		793		808
Share transfer agent fees		643		734
Accounting and administrative fees		361		422
Interest expense		14,107		10,235
Trustees' fees		450		250
Expenses associated with our independent audit and related fees		79		122
Legal fees		99		67
Printing fees		244		507
Other		511		429
Total operating expenses		35,585		46,458
Less: Expense reimbursement from sponsor		—		(18,220	)
Net operating expenses	$	35,585	$	28,238

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        The following table reflects selected expense ratios as a percent of average net assets for the three months ended March 31, 2018 and 2017:

	Three Months Ended March 31,
	2018			2017
Ratio of operating expenses to average net assets		1.21	%		1.38	%
Ratio of expense reimbursement from sponsor to average net assets		—			(0.54	)%
Ratio of net operating expenses to average net assets		1.21	%		0.84	%
Ratio of income incentive fees and interest expense to average net assets(1)		(0.48	)%		(0.62	)%
Ratio of net operating expenses to average net assets, excluding certain expenses		0.73	%		0.22	%

(1)

Ratio may be rounded in order to recompute the ending ratio of net operating expenses, excluding certain expenses, to average net assets.

        Incentive fees and interest expense, among other things, may increase or decrease our expense ratios relative to comparative periods depending on portfolio performance and changes in benchmark interest rates such as LIBOR, among other factors.

Expense Reimbursement

        During the three months ended March 31, 2018, we did not accrue any expense reimbursements. During the three months ended March 31, 2017, we accrued $18,220 for expense reimbursements that FS Investments agreed to pay and were funded through the offset of management fees payable by us to FS Advisor. Under the expense reimbursement agreement, amounts reimbursed to us by FS Investments may become subject to repayment by us in the future. During the three months ended March 31, 2018 and 2017 we did not accrue any expense recoupments payable to FS Advisor or its affiliates. See "—Overview—Expense Reimbursement" for a discussion of the expense reimbursement agreement.

Net Investment Income

        Our net investment income totaled $54,388 ($0.12 per share) and $88,008 ($0.20 per share) for the three months ended March 31, 2018 and 2017, respectively.

Net Realized Gains or Losses

        Our net realized gains (losses) on investments and foreign currency for the three months ended March 31, 2018 and 2017, were as follows:

	Three Months Ended March 31,
	2018			2017
Net realized gain (loss) on investments(1)	$	(67,880	)	$	(30,653	)
Net realized gain (loss) on foreign currency		—			3
Total net realized gain (loss)	$	(67,880	)	$	(30,650	)

(1)

We sold investments and received principal repayments of $301,194 and $257,175, respectively, during the three months ended March 31, 2018 and $97,055 and $361,040, respectively, during the three months ended March 31, 2017.

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Net Change in Unrealized Appreciation (Depreciation) on Investments and Unrealized Gain (Loss) on Foreign Currency

        Our net change in unrealized appreciation (depreciation) on investments and foreign currency for the three months ended March 31, 2018 and 2017 were as follows:

	Three Months Ended March 31,
	2018			2017
Net change in unrealized appreciation (depreciation) on investments	$	(25,716	)	$	4,109
Net change in unrealized appreciation (depreciation) on foreign currency		1			52
Total net change in unrealized appreciation (depreciation)	$	(25,715	)	$	4,161

        During the three months ended March 31, 2018, the net change in unrealized appreciation (depreciation) on our investments was primarily driven by the performance of our broadly syndicated and directly originated investments. The change in unrealized appreciation (depreciation) on our investments during the three months ended March 31, 2017 was primarily driven by a continuation of the recovery in the energy markets and by the conversion of unrealized depreciation to realized losses.

Net Increase (Decrease) in Net Assets Resulting from Operations

        For the three months ended March 31, 2018 and 2017, the net increase (decrease) in net assets resulting from operations was $(39,207) ($(0.09) per share) and $61,519 ($0.14 per share), respectively.

Financial Condition, Liquidity and Capital Resources

Overview

        As of March 31, 2018, we had $383,536 in cash, which we or our wholly-owned subsidiaries held in custodial accounts, and $250,000 in borrowings available under our financing arrangements, subject to borrowing base and other limitations. To seek to enhance our returns, we employ leverage as market conditions permit and at the discretion of FS Advisor, but in no event may leverage employed exceed 50% of the value of our assets, as required by the 1940 Act. See "—Financing Arrangements." As of March 31, 2018, we also had broadly syndicated investments and opportunistic investments that could be sold to create additional liquidity. As of March 31, 2018, we had nine senior secured loan investments with aggregate unfunded commitments of $130,268 and three equity/other investments with aggregate unfunded commitments of $9,584. We maintain sufficient cash on hand, available borrowings and liquid securities to fund such unfunded commitments should the need arise.

        We generate cash primarily from the issuance of shares under our distribution reinvestment plan and from cash flows from fees, interest and dividends earned from our investments as well as principal repayments and proceeds from sales of our investments. To seek to enhance our returns, we also employ leverage as market conditions permit and at the discretion of FS/EIG Advisor, but in no event will leverage employed exceed 50% of the value of our assets, as required by the 1940 Act. See "—Financing Arrangements."

        Prior to investing in securities of portfolio companies, we invest the net proceeds from the issuance of shares under our distribution reinvestment plan as well as from sales and paydowns of existing investments primarily in cash, cash equivalents, including money market funds, U.S. government securities, repurchase agreements and high-quality debt instruments maturing in one year or less from the time of investment, consistent with our BDC election and our election to be taxed as a RIC.

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Financing Arrangements

        The following table presents a summary of information with respect to our outstanding financing arrangements as of March 31, 2018:

Arrangement(1)	Type of Arrangement	Rate	Amount Outstanding		Amount Available		Maturity Date
Barclays Credit Facility	Revolving	L+3.25%	$	—	$	100,000	March 29, 2019
BNP Facility	Prime Brokerage	L+1.35%		200,000		100,000	December 26, 2018(2)
Deutsche Bank Credit Facility	Revolving	L+2.05%		290,000		50,000	June 11, 2018
Fortress Facility	Term	L+5.00%(3)		155,000		—	November 6, 2020
Goldman Facility	Term	L+3.72%		425,000		—	September 15, 2019
Total			$	1,070,000	$	250,000

(1)

The carrying amount outstanding under the facility approximates its fair value.

(2)

The BNP facility generally is terminable upon 270 days' notice by either party. As of March 31, 2018, neither Berwyn Funding nor BNP had provided notice of its intent to terminate the facility.

(3)

As described in Note 8 to our unaudited consolidated financial statements included herein, borrowings under the Fortress facility accrue interest at a rate equal to LIBOR plus 5.00%, subject to a floor of 0.75%.

        For additional information regarding our outstanding financing arrangements, see Note 8 to our unaudited consolidated financial statements included herein.

RIC Tax Treatment and Distributions

        We have elected to be treated for U.S. federal income tax purposes, and intend to qualify annually, as a RIC under Subchapter M of the Code. As a RIC, we generally do not have to pay corporate-level U.S. federal income taxes on any ordinary income or capital gains that we distribute as dividends to our shareholders. To maintain our qualification as a RIC, we must, among other things, meet certain source-of-income and asset diversification requirements. In addition, in order to maintain RIC tax treatment, we must distribute to our shareholders, for each tax year, dividends generally of an amount at least equal to 90% of our "investment company taxable income," which is generally the sum of our net ordinary income plus the excess, if any, of realized net short-term capital gains over realized net long-term capital losses, determined without regard to any deduction for dividends paid. In addition, we may, in certain cases, satisfy the Annual Distribution Requirement by distributing dividends relating to a tax year after the close of such tax year under the "spillover dividend" provisions of Subchapter M of the Code. If we distribute a spillover dividend, such dividend will be included in a shareholder's gross income for the tax year in which the spillover distribution is paid. We intend to make sufficient distributions to our shareholders to maintain our RIC tax treatment each tax year. We will also be subject to nondeductible U.S. federal excise taxes on certain undistributed income unless we distribute in a timely manner to our shareholders of an amount at least equal to the sum of (1) 98% of our net ordinary taxable income (taking into account certain deferrals and elections) for the calendar year, (2) 98.2% of our capital gain net income, which is the excess of capital gains over capital losses (adjusted for certain ordinary losses), for the one-year period ending October 31 of that calendar year and (3) any ordinary income and capital gain net income for the preceding years that were not distributed during such years and on which we paid no U.S. federal income tax. Any distribution declared by us during October, November or December of any calendar year, payable to our shareholders of record on a specified date in such a month and actually paid during January of the following calendar year, will be treated as if it had been paid by us, as well as received by our U.S. shareholders, on December 31 of the calendar year in which the distribution was declared.

        Prior to the closing of our continuous public offering in November 2016, we declared regular cash distributions on a weekly basis, and paid such distributions on a monthly basis. Effective November 30, 2016, and subject to applicable legal restrictions and the sole discretion of our board of trustees, we intend to declare regular cash distributions on a quarterly basis and pay such distributions on a monthly basis. We will calculate each shareholder's specific distribution amount for the period using record and declaration dates and each shareholder's distributions will begin to accrue on the date that common shares are issued to such shareholder. From time to time, we may also pay special interim distributions in the form of cash or common shares at the discretion of our board of trustees. The timing and

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amount of any future distributions to shareholders are subject to applicable legal restrictions and the sole discretion of our board of trustees.

        During certain periods, our distributions may exceed our earnings. As a result, it is possible that a portion of the distributions we make will represent a return of capital. A return of capital generally is a return of an investor's investment rather than a return of earnings or gains derived from our investment activities and will be made after deducting the fees and expenses payable in connection with our continuous public offering, including any fees payable to FS/EIG Advisor. Moreover, a return of capital will generally not be taxable, but will reduce each shareholder's cost basis in our common shares, and will result in a higher reported capital gain or lower reported capital loss when the common shares on which such return of capital was received are sold. Each year a statement on Form 1099-DIV identifying the sources of the distributions will be mailed to our shareholders.

        We intend to continue to make our regular distributions in the form of cash, out of assets legally available for distribution, unless shareholders elect to receive their distributions in additional common shares under our distribution reinvestment plan. Any distributions reinvested under the plan will nevertheless remain taxable to a U.S. shareholder.

        The following table reflects the cash distributions per share that we have declared and paid on our common shares during the three months ended March 31, 2018 and 2017:

	Distribution
For the Three Months Ended	Per Share		Amount
Fiscal 2017
March 31, 2017	$	0.17713	$	77,984
Fiscal 2018
March 31, 2018	$	0.12500	$	54,823

        See Note 5 to our unaudited consolidated financial statements included herein for additional information regarding our distributions, including a reconciliation of our GAAP-basis net investment income to our tax-basis net investment income, the components of accumulated earnings on a tax basis and deferred taxes.

Critical Accounting Policies

        Our financial statements are prepared in conformity with GAAP, which requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting periods. Critical accounting policies are those that require the application of management's most difficult, subjective or complex judgments, often because of the need to make estimates about the effect of matters that are inherently uncertain and that may change in subsequent periods. In preparing the financial statements, management has made estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting periods. In preparing the financial statements, management has utilized available information, including our past history, industry standards and the current economic environment, among other factors, in forming its estimates and judgments, giving due consideration to materiality. Actual results may differ from these estimates. In addition, other companies may utilize different estimates, which may impact the comparability of our results of operations to those of companies in similar businesses. As we execute our operating plans, we will describe additional critical accounting policies in the notes to our future financial statements in addition to those discussed below.

Valuation of Portfolio Investments

        We determine the net asset value of our investment portfolio each quarter. Securities are valued at fair value as determined in good faith by our board of trustees. In connection with that determination, FS/EIG Advisor provides our board of trustees with portfolio company valuations which are based on relevant inputs, including, but not limited to, indicative dealer quotes, values of like securities, recent portfolio company financial statements and forecasts, and valuations prepared by independent third-party valuation services.

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        Accounting Standards Codification Topic 820,Fair Value Measurements and Disclosure, or ASC Topic 820, issued by the FASB clarifies the definition of fair value and requires companies to expand their disclosure about the use of fair value to measure assets and liabilities in interim and annual periods subsequent to initial recognition. ASC Topic 820 defines fair value as the price that would be received from the sale of an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. ASC Topic 820 also establishes a three-tier fair value hierarchy, which prioritizes the inputs used in measuring fair value. These tiers include: Level 1, defined as observable inputs such as quoted prices in active markets; Level 2, which includes inputs such as quoted prices for similar securities in active markets and quoted prices for identical securities where there is little or no activity in the market; and Level 3, defined as unobservable inputs for which little or no market data exists, therefore requiring an entity to develop its own assumptions.

        With respect to investments for which market quotations are not readily available, we undertake a multi-step valuation process each quarter, as described below:

•

our quarterly fair valuation process begins with FS/EIG Advisor's management team reviewing and documenting preliminary valuations of each portfolio company or investment, which valuations may be obtained from an independent third-party valuation service, if applicable;

•

FS/EIG Advisor's management team then provides the valuation committee with the preliminary valuations for each portfolio company or investment;

•

preliminary valuations are then discussed with the valuation committee;

•

the valuation committee reviews the preliminary valuations and FS/EIG Advisor's management team, together with our independent third-party valuation services, if applicable, supplements the preliminary valuations to reflect any comments provided by the valuation committee;

•

following its review, the valuation committee will recommend that our board of trustees approve our fair valuations; and

•

our board of trustees discusses the valuations and determines the fair value of each such investment in our portfolio in good faith based on various statistical and other factors, including the input and recommendation of FS/EIG Advisor, the valuation committee and any independent third-party valuation services, if applicable.

        Determination of fair value involves subjective judgments and estimates. Accordingly, the notes to our consolidated financial statements refer to the uncertainty with respect to the possible effect of such valuations and any change in such valuations on our consolidated financial statements. In making its determination of fair value, our board of trustees may use any approved independent third-party pricing or valuation services. However, our board of trustees is not required to determine fair value in accordance with the valuation provided by any single source, and may use any relevant data, including information obtained from FS/EIG Advisor or any approved independent third-party valuation or pricing service that our board of trustees deems to be reliable in determining fair value under the circumstances. Below is a description of factors that FS/EIG Advisor's management team, any approved independent third-party valuation services and our board of trustees may consider when determining the fair value of our investments.

        Valuation of fixed income investments, such as loans and debt securities, depends upon a number of factors, including prevailing interest rates for like securities, expected volatility in future interest rates, call features, put features and other relevant terms of the debt. For investments without readily available market prices, we may incorporate these factors into discounted cash flow models to arrive at fair value. Other factors that may be considered include the borrower's ability to adequately service its debt, the fair market value of the portfolio company in relation to the face amount of its outstanding debt and the quality of collateral securing our debt investments.

        For convertible debt securities, fair value generally approximates the fair value of the debt plus the fair value of an option to purchase the underlying security (i.e., the security into which the debt may convert) at the conversion price. To value such an option, a standard option pricing model may be used.

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        Our equity interests in portfolio companies for which there is no liquid public market are valued at fair value. Our board of trustees, in its determination of fair value, may consider various factors, such as multiples of EBITDA, cash flows, net income, revenues or, in limited instances, book value or liquidation value. All of these factors may be subject to adjustments based upon the particular circumstances of a portfolio company or our actual investment position. For example, adjustments to EBITDA may take into account compensation to previous owners or acquisition, recapitalization, restructuring or other related items.

        FS/EIG Advisor's management team, any approved independent third-party valuation services and our board of trustees may also consider private merger and acquisition statistics, public trading multiples discounted for illiquidity and other factors, valuations implied by third-party investments in the portfolio companies or industry practices in determining fair value. FS/EIG Advisor's management team, any approved independent third-party valuation services and our board of trustees may also consider the size and scope of a portfolio company and its specific strengths and weaknesses, and may apply discounts or premiums, where and as appropriate, due to the higher (or lower) financial risk and/or the smaller size of portfolio companies relative to comparable firms, as well as such other factors as our board of trustees, in consultation with FS/EIG Advisor's management team and any approved independent third-party valuation services, if applicable, may consider relevant in assessing fair value. Generally, the value of our equity interests in public companies for which market quotations are readily available is based upon the most recent closing public market price. Portfolio securities that carry certain restrictions on sale are typically valued at a discount from the public market value of the security.

        When we receive warrants or other equity securities at nominal or no additional cost in connection with an investment in a debt security, the cost basis in the investment will be allocated between the debt securities and any such warrants or other equity securities received at the time of origination. Our board of trustees subsequently values these warrants or other equity securities received at their fair value.

        The fair values of our investments are determined in good faith by our board of trustees. Our board of trustees is solely responsible for the valuation of our portfolio investments at fair value as determined in good faith pursuant to our valuation policy and consistently applied valuation process. Our board of trustees has delegated day-to-day responsibility for implementing our valuation policy to FS/EIG Advisor's management team, and has authorized FS/EIG Advisor's management team to utilize independent third-party valuation and pricing services that have been approved by our board of trustees. The valuation committee is responsible for overseeing FS/EIG Advisor's implementation of the valuation process.

        See Note 7 to our unaudited consolidated financial statements included herein for additional information regarding the fair value of our financial instruments.

Revenue Recognition

        Security transactions are accounted for on the trade date. We record interest income on an accrual basis to the extent that we expect to collect such amounts. We record dividend income on the ex-dividend date. We do not accrue as a receivable interest or dividends on loans and securities if we have reason to doubt our ability to collect such income. Our policy is to place investments on non-accrual status when there is reasonable doubt that interest income will be collected. We consider many factors relevant to an investment when placing it on or removing it from non-accrual status including, but not limited to, the delinquency status of the investment, economic and business conditions, the overall financial condition of the underlying investment, the value of the underlying collateral, bankruptcy status, if any, and any other facts or circumstances relevant to the investment. If there is reasonable doubt that we will receive any previously accrued interest, then the interest income will be written-off. Payments received on nonaccrual investments may be recognized as income or applied to principal depending upon the collectability of the remaining principal and interest. Non-accrual investments may be restored to accrual status when principal and interest become current and are likely to remain current based on our judgment.

        Loan origination fees, original issue discount and market discount are capitalized and we amortize such amounts as interest income over the respective term of the loan or security. Upon the prepayment

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of a loan or security, any unamortized loan origination fees and original issue discount are recorded as interest income. We record prepayment premiums on loans and securities as fee income when we receive such amounts.

        Effective January 1, 2018, we adopted Accounting Standards Codification Topic 606, Revenue from Contracts with Customers, using the cumulative effect method applied to in-scope contracts with customers that have not been completed as of the date of adoption. We did not identify any in-scope contracts that had not been completed as of the date of adoption and, as a result, we did not recognize a cumulative effect on shareholders' equity in connection with the adoption of the new revenue recognition guidance.

        The new revenue recognition guidance applies to all entities and all contracts with customers to provide goods or services in the ordinary course of business, excluding, among other things, financial instruments as well as certain other contractual rights and obligations. Under the new revenue recognition guidance, which we have applied to all new in-scope contracts as of the date of adoption, structuring and other upfront fees are recognized as revenue based on the transaction price as the performance obligation is fulfilled. The related performance obligation consists of structuring activities and is satisfied over time as such activities are performed. Consideration is variable and is constrained from being included in the transaction price until the uncertainty associated with the variable consideration is resolved, typically as of the trade date of the related transaction. Payment is typically due on the settlement date of the related transaction.

Net Realized Gains or Losses, Net Change in Unrealized Appreciation or Depreciation and Net Change in Unrealized Gains or Losses on Foreign Currency

        Gains or losses on the sale of investments are calculated by using the specific identification method. We measure realized gains or losses by the difference between the net proceeds from the repayment or sale and the amortized cost basis of the investment, without regard to unrealized appreciation or depreciation previously recognized, but considering unamortized fees. Net change in unrealized appreciation or depreciation reflects the change in portfolio investment values during the reporting period, including any reversal of previously recorded unrealized gains or losses when gains or losses are realized and the respective unrealized gain or loss on foreign currency for any foreign denominated investments we may hold. Net change in unrealized gains or losses on foreign currency reflects the change in the value of foreign currency held, receivables or accruals during the reporting period due to the impact of foreign currency fluctuations.

Uncertainty in Income Taxes

        We evaluate our tax positions to determine if the tax positions taken meet the minimum recognition threshold in connection with accounting for uncertainties in income tax positions taken or expected to be taken for the purposes of measuring and recognizing tax benefits or liabilities in our consolidated financial statements. Recognition of a tax benefit or liability with respect to an uncertain tax position is required only when the position is "more likely than not" to be sustained assuming examination by taxing authorities. We recognize interest and penalties, if any, related to unrecognized tax liabilities as income tax expense in our consolidated statements of operations. During the three months ended March 31, 2018 and 2017, we did not incur any interest or penalties.

        See Note 2 to our unaudited consolidated financial statements included herein for additional information regarding our significant accounting policies.

Contractual Obligations

        We have entered into an agreement with FS/EIG Advisor to provide us with investment advisory and administrative services. Payments for investment advisory services under the FS/EIG investment advisory agreement are equal to 1.75% of the average value of our gross assets and an incentive fee based on our performance. Base management fees are paid on a quarterly basis in arrears. FS/EIG Advisor agreed to waive incentive fees on income for a period of twelve months ending December 31, 2018. See Notes 4 and 11 to our unaudited consolidated financial statements included herein for a discussion of these agreements and for the amount of fees and expenses accrued under these similar agreements with FS Advisor during the three months ended March 31, 2018 and 2017.

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        A summary of our significant contractual payment obligations for the repayment of outstanding indebtness at March 31, 2018 is as follows:

		Payments Due By Period
	Maturity Date(1)	Total		Less than 1 year		1-3 years		3-5 years		More than 5 years
BNP Facility(2)(3)	December 26, 2018	$	200,000	$	200,000		—		—		—
Deutsche Bank Credit Facility(4)	June 11, 2018	$	290,000	$	290,000		—		—		—
Fortress Facility(5)	November 6, 2020	$	155,000		—	$	155,000		—		—
Goldman Facility(5)	September 15, 2019	$	425,000		—	$	425,000		—		—

(1)

Amounts outstanding under the financing arrangements will mature, and all accrued and unpaid interest thereunder will be due and payable, on the maturity date.

(2)

The BNP facility generally is terminable upon 270 days' notice by either party. As of March 31, 2018, neither Berwyn Funding nor BNP had provided notice of its intent to terminate the facility.

(3)

At March 31, 2018, $100,000 remained unused under the financing arrangement.

(4)

At March 31, 2018, $50,000 remained unused under the financing arrangement.

(5)

At March 31, 2018, no amounts remained unused under the financing arrangement.

        As of March 31, 2018, no amounts were outstanding under the Barclays credit facility. All borrowed amounts under the facility will mature, and all accrued and unpaid interest thereunder will be due and payable, on March 26, 2019.

Off-Balance Sheet Arrangements

        We currently have no off-balance sheet arrangements, including any risk management of commodity pricing or other hedging practices.

Item 3.    Quantitative and Qualitative Disclosures About Market Risk.

        We are subject to financial market risks, including changes in interest rates. As of March 31, 2018, 40.5% of our portfolio investments (based on fair value) paid variable interest rates, 48.6% paid fixed interest rates, 0.7% were income producing equity/other investments and the remainder (10.2%) consisted of non-income producing equity or other investments. A rise in the general level of interest rates can be expected to lead to higher interest rates applicable to the variable rate investments we hold and to declines in the value of any fixed rate investments we hold. However, many of our variable rate investments provide for an interest rate floor, which may prevent our interest income from increasing until benchmark interest rates increase beyond a threshold amount. To the extent that a substantial portion of our investments may be in variable rate investments, an increase in interest rates beyond this threshold would make it easier for us to meet or exceed the hurdle rate applicable to the subordinated incentive fee on income and may result in a substantial increase in our net investment income and to the amount of incentive fees payable to FS/EIG Advisor with respect to our increased pre-incentive fee net investment income.

        Pursuant to the terms of each credit facility and financing arrangement, all credit facilities and financing arrangements borrow at a floating rate based on a benchmark interest rate. To the extent that any present or future credit facilities or other financing arrangements that we or any of our subsidiaries enter into are based on a floating interest rate, we will be subject to risks relating to changes in market interest rates. In periods of rising interest rates when we or our subsidiaries have such debt outstanding or financing arrangements in effect, our interest expense would increase, which could reduce our net investment income, especially to the extent we hold fixed rate investments.

        The following table shows the effect over a twelve-month period of changes in interest rates on our interest income, interest expense and net interest income, assuming no changes in the composition

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of our investment portfolio, including the accrual status of our investments, and our borrowing arrangements in effect as of March 31, 2018 (dollar amounts are presented in thousands):

Basis Point Change in Interest Rates	Increase (Decrease) in Interest Income			Increase (Decrease) in Interest Expense			Increase (Decrease) in Net Interest Income			Percentage Change in Net Interest Income
Down 100 basis points	$	(13,770	)	$	(10,603	)	$	(3,167	)		(1.2	)%
No change		—			—			—			—
Up 100 basis points	$	14,155		$	10,603		$	3,552			1.4	%
Up 300 basis points	$	42,466		$	31,808		$	10,658			4.1	%
Up 500 basis points	$	70,776		$	53,013		$	17,763			6.8	%

        We expect that our long-term investments will be financed primarily with equity and debt. If deemed prudent, we may use interest rate risk management techniques in an effort to minimize our exposure to interest rate fluctuations. These techniques may include various interest rate hedging activities to the extent permitted by the 1940 Act. Adverse developments resulting from changes in interest rates or hedging transactions could have a material adverse effect on our business, financial condition and results of operations. During the three months ended March 31, 2018 and 2017, we did not engage in interest rate hedging activities.

        In addition, we may have risk regarding portfolio valuation. See "Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations—Critical Accounting Policies—Valuation of Portfolio Investments."

Item 4.    Controls and Procedures.

        As required by Rule 13a-15(b) under the Exchange Act, we carried out an evaluation, under the supervision and with the participation of our management, including our chief executive officer and chief financial officer, of the effectiveness of the design and operation of our disclosure controls and procedures as of March 31, 2018. Based on the foregoing, our chief executive officer and chief financial officer concluded that our disclosure controls and procedures were effective to provide reasonable assurance that we would meet our disclosure obligations.

        There was no change in our internal control over financial reporting (as defined in Rules 13a-15(f) or 15d-15(f) under the Exchange Act) that occurred during the three month period ended March 31, 2018 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

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PART II—OTHER INFORMATION

Item 1.    Legal Proceedings.

        We are not currently subject to any material legal proceedings and, to our knowledge, no material legal proceedings are threatened against us. From time to time, we may be party to certain legal proceedings in the ordinary course of business, including proceedings relating to the enforcement of our rights under contracts with our portfolio companies. While the outcome of any legal proceedings cannot be predicted with certainty, we do not expect that any such proceedings will have a material effect upon our financial condition or results of operations.

Item 1A.    Risk Factors.

        Investing in our common shares involves a number of significant risks. In addition to the other information contained in this quarterly report on Form 10-Q, investors should consider carefully the risk factors set forth in our annual report on Form 10-K for the year ended December 31, 2017 and our additional filings with the SEC before making an investment in our common shares. All of the risk factors identified in Item 1A of our annual report on Form 10-K for the year ended December 31, 2017 that relate to our former investment adviser, FS Advisor, are generally applicable to our current investment adviser, FS/EIG Advisor.

Risks Related to FS/EIG Advisor and Its Affiliates

There may be conflicts of interest related to obligations FS/EIG Advisor's senior management and investment teams have to our affiliates and to other clients.

        The members of the senior management and investment teams of FS/EIG Advisor serve or may serve as officers, directors or principals of entities that operate in the same or a related line of business as we do, or of investment vehicles managed by the same personnel. In serving in these multiple and other capacities, they may have obligations to other clients or investors in those entities, the fulfillment of which may not be in our best interests or in the best interest of our shareholders. Our investment objectives may overlap with the investment objectives of such investment funds, accounts or other investment vehicles. For example, we rely on FS/EIG Advisor to manage our day-to-day activities and to implement our investment strategy. FS/EIG Advisor and certain of its affiliates are presently, and plan in the future to continue to be, involved with activities which are unrelated to us. As a result of these activities, FS/EIG Advisor, its employees and certain of its affiliates will have conflicts of interest in allocating their time between us and other activities in which they are or may become involved, including the management of other entities affiliated with FS Investments or EIG. FS/EIG Advisor and its employees will devote only as much of its or their time to our business as FS/EIG Advisor and its employees, in their judgment, determine is reasonably required, which may be substantially less than their full time.

Item 2.    Unregistered Sales of Equity Securities and Use of Proceeds.

        The table below provides information concerning our repurchases of common shares during the three months ended March 31, 2018 pursuant to our share repurchase program.

Period	Total Number of Shares Purchased		Average Price Paid per Share		Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs		Maximum Number of Shares that May Yet Be Purchased Under the Plans or Programs
January 1 to January 31, 2018		9,018,665	$	6.70		9,018,665		(1	)
February 1 to February 28, 2018		—		—		—		—
March 1 to March 31, 2018		—		—		—		—
Total		9,018,665	$	6.70		9,018,665		(1	)

(1)

The maximum number of common shares available for repurchase on January 12, 2018 was 10,224,187. A description of the maximum number of common shares that may be repurchased under our share repurchase program is set forth in Note 3 to our unaudited consolidated financial statements contained in this quarterly report on Form 10-Q.

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        See Note 3 to our unaudited consolidated financial statements contained in this quarterly report on Form 10-Q for a more detailed discussion of the terms of our share repurchase program.

Item 3.    Defaults upon Senior Securities.

        Not applicable.

Item 4.    Mine Safety Disclosures.

        Not applicable.

Item 5.    Other Information.

        Not applicable.

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Item 6.    Exhibits.

3.1	Third Amended and Restated Declaration of Trust of FS Energy and Power Fund. (Incorporated by reference to Exhibit 3.1 to FS Energy and Power Fund's Quarterly Report on Form 10-Q filed on August 10, 2017.)
3.2	Amendment No. 1 to the Third Amended and Restated Declaration of Trust of FS Energy and Power Fund. (Incorporated by reference to Exhibit 3.2 to FS Energy and Power Fund's Quarterly Report on Form 10-Q filed on August 10, 2017.)
3.3	Second Amended and Restated Bylaws of FS Energy and Power Fund. (Incorporated by reference to Exhibit 3.1 to FS Energy and Power Fund's Current Report on Form 8-K filed on June 1, 2017.)
4.1	Second Amended and Restated Distribution Reinvestment Plan of FS Energy and Power Fund. (Incorporated by reference to Exhibit 4.1 to FS Energy and Power Fund's Current Report on Form 8-K filed on October 17, 2016.)
10.1	Investment Advisory and Administrative Services Agreement, dated as of April 9, 2018, by and between FS Energy and Power Fund and FS/EIG Advisor, LLC(Incorporated by reference to Exhibit 10.1 to FS Energy and Power Fund's Current Report on Form 8-K filed on April 9, 2018.)
10.2	Investment Advisory and Administrative Services Agreement, dated as of April 28, 2011, by and between FS Energy and Power Fund and FS Investment Advisor, LLC. (Incorporated by reference to Exhibit (g)(1) filed with Amendment No. 3 to FS Energy and Power Fund's registration statement on Form N-2 (File No. 333-169679) filed on May 6, 2011.)
10.3	Amendment No. 1 dated as of August 10, 2012, to Investment Advisory and Administrative Services Agreement, dated as of April 28, 2011, by and between FS Energy and Power Fund and FS Investment Advisor, LLC. (Incorporated by reference to Exhibit 10.2 to FS Energy and Power Fund's Quarterly Report on Form 10-Q filed on August 14, 2012.)
10.4	Investment Sub-advisory Agreement, dated as of April 28, 2011, by and between FS Investment Advisor, LLC and GSO Capital Partners LP. (Incorporated by reference to Exhibit (g)(2) filed with Amendment No. 3 to FS Energy and Power Fund's registration statement on Form N-2 (File No. 333-169679) filed on May 6, 2011.)
10.5	Custodian Agreement, dated as of November 14, 2011, by and between State Street Bank and Trust Company and FS Energy and Power Fund. (Incorporated by reference to Exhibit 10.6 to FS Energy and Power Fund's Quarterly Report on Form 10-Q filed on November 14, 2011.)
10.6	Escrow Agreement, dated as of March 29, 2011, by and between FS Energy and Power Fund and UMB Bank, N.A. (Incorporated by reference to Exhibit (k) filed with Amendment No. 3 to FS Energy and Power Fund's registration statement on Form N-2 (File No. 333-169679) filed on May 6, 2011.)
10.7	Amended and Restated Credit Agreement, dated as of June 11, 2014, by and among FSEP Term Funding, LLC and Deutsche Bank AG, New York Branch. (Incorporated by reference to Exhibit 10.1 to FS Energy and Power Fund's Current Report on Form 8-K filed on June 17, 2014.)
10.8	First Amendment to Amended and Restated Credit Agreement, dated as of June 11, 2015, by and among FSEP Term Funding, LLC and Deutsche Bank AG, New York Branch (Incorporated by reference to Exhibit 10.1 to FS Energy and Power Fund's Current Report on Form 8-K filed on June 15, 2015.)
10.9	Second Amendment to Amended and Restated Credit Agreement, dated as of June 10, 2016, by and among FSEP Term Funding,  LLC, as borrower, Deutsche Bank AG, New York Branch, as administrative agent and a lender, and the other lenders party thereto. (Incorporated by reference to Exhibit 10.1 to FS Energy and Power Fund's Current Report on Form 8-K filed on June 16, 2016.)

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10.10	Third Amendment to Amended and Restated Credit Agreement, dated as of June 9, 2017, by and among FSEP Term Funding, LLC, as borrower, Deutsche Bank AG, New York Branch, as administrative agent and a lender, and the other lenders party thereto. (Incorporated by reference to Exhibit 10.1 to FS Energy and Power Fund's Current Report on Form 8-K filed on June 14, 2017.)
10.11	Asset Contribution Agreement, dated as of June 24, 2011, by and between FS Energy and Power Fund and FSEP Term Funding, LLC. (Incorporated by reference to Exhibit 10.8 to FS Energy and Power Fund's Quarterly Report on Form 10-Q filed on June 27, 2011.)
10.12	Investment Management Agreement, dated as of June 24, 2011, by and between FS Energy and Power Fund and FSEP Term Funding, LLC. (Incorporated by reference to Exhibit 10.9 to FS Energy and Power Fund's Quarterly Report on Form 10-Q filed on June 27, 2011.)
10.13	Security Agreement, dated as of June 24, 2011, by and between FSEP Term Funding, LLC and Deutsche Bank AG, New York Branch. (Incorporated by reference to Exhibit 10.10 to FS Energy and Power Fund's Quarterly Report on Form 10-Q filed on June 27, 2011.)
10.14	Termination and Release Acknowledgment, dated as of May 11, 2012, by Citibank N.A. in favor of FS Energy and Power Fund. (Incorporated by reference to Exhibit 10.15 to FS Energy and Power Fund's Quarterly Report on Form 10-Q filed on May 15, 2012.)
10.15	Termination Acknowledgment (TRS), dated as of May 24, 2013, by and between EP Investments LLC and Citibank, N.A. (Incorporated by reference to Exhibit 10.1 to FS Energy and Power Fund's Current Report on Form 8-K filed on May 31, 2013.)
10.16	Loan Agreement, dated as of May 24, 2013, by and among EP Funding LLC, the financial institutions and other lenders from time to time party thereto and Citibank, N.A., as administrative agent. (Incorporated by reference to Exhibit 10.1 to FS Energy and Power Fund's Current Report on Form 8-K filed on May 29, 2013.)
10.17	Account Control Agreement, dated as of May 24, 2013, by and among EP Funding LLC, Citibank, N.A. and Virtus Group, LP. (Incorporated by reference to Exhibit 10.2 to FS Energy and Power Fund's Current Report on Form 8-K filed on May 29, 2013.)
10.18	Security Agreement, dated as of May 24, 2013, by and between EP Funding LLC and Citibank, N.A. (Incorporated by reference to Exhibit 10.3 to FS Energy and Power Fund's Current Report on Form 8-K filed on May 29, 2013.)
10.19	Investment Management Agreement, dated as of May 24, 2013, by and between FS Energy and Power Fund and EP Funding LLC. (Incorporated by reference to Exhibit 10.4 to FS Energy and Power Fund's Current Report on Form 8-K filed on May 29, 2013.)
10.20	Credit Agreement, dated as of July 11, 2013, by and among Energy Funding LLC, Natixis, New York Branch, Wells Fargo Bank, National Association and the other lenders from time to time party thereto. (Incorporated by reference to Exhibit 10.1 to FS Energy and Power Fund's Current Report on Form 8-K filed on July 16, 2013.)
10.21	Securities Account Control Agreement, dated as of July 11, 2013, by and among Energy Funding LLC and Wells Fargo Bank, National Association. (Incorporated by reference to Exhibit 10.2 to FS Energy and Power Fund's Current Report on Form 8-K filed on July 16, 2013.)
10.22	Collateral Management Agreement, dated as of July 11, 2013, by and between FS Energy and Power Fund and Energy Funding LLC. (Incorporated by reference to Exhibit 10.3 to FS Energy and Power Fund's Current Report on Form 8-K filed on July 16, 2013.)
10.23	Amended and Restated Expense Support and Conditional Reimbursement Agreement, dated May 16, 2013, by and between FS Energy and Power Fund and Franklin Square Holdings, L.P. (Incorporated by reference to Exhibit 99.1 to FS Energy and Power Fund's Current report on Form 8-K filed on May 17, 2013.)
10.24	Expense Support and Conditional Reimbursement Agreement, dated as of April 9, 2018, by and between FS Energy and Power Fund and FS/EIG Advisor, LLC.

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10.25	Committed Facility Agreement, dated as of December 11, 2013, by and between Berwyn Funding LLC and BNP Paribas Prime Brokerage, Inc. (Incorporated by reference to Exhibit 10.1 to FS Energy and Power Fund's Current Report on Form 8-K filed on December 17, 2013.)
10.26	First Amendment Agreement, dated as of August 18, 2014, between BNP Paribas Prime Brokerage, Inc., on behalf of itself and as agent for the BNPP Entities, and Berwyn Funding LLC. (Incorporated by reference to Exhibit 10.1 to FS Energy and Power Fund's Current Report on Form 8-K filed on August 21, 2014.)
10.27	Fifth Amendment to the Committed Facility Agreement, dated as of May 4, 2016 by and between Berwyn Funding LLC and BNP Paribas Prime Brokerage, Inc. (Incorporated by reference to Exhibit 10.1 to FS Energy and Power Fund's Current Report on Form 8-K filed on May 10, 2016.)
10.28	U.S. PB Agreement, dated as of December 11, 2013, by and between Berwyn Funding LLC and BNP Paribas Prime Brokerage, Inc. (Incorporated by reference to Exhibit 10.2 to FS Energy and Power Fund's Current Report on Form 8-K filed on December 17, 2013.)
10.29	First Amendment to the U.S. PB Agreement, dated as of May 4, 2016, by and between Berwyn Funding LLC and BNP Paribas Prime Brokerage, Inc. (Incorporated by reference to Exhibit 10.2 to FS Energy and Power Fund's Current Report on Form 8-K filed on May 10, 2016.)
10.30	Special Custody and Pledge Agreement, dated as of December 11, 2013, by and among State Street Bank and Trust Company, Berwyn Funding LLC and BNP Paribas Prime Brokerage, Inc. (Incorporated by reference to Exhibit 10.3 to FS Energy and Power Fund's Current Report on Form 8-K filed on December 17, 2013.)
10.31	Investment Management Agreement, dated as of December 11, 2013, by and between FS Energy and Power Fund and Berwyn Funding LLC. (Incorporated by reference to Exhibit 10.4 to FS Energy and Power Fund's Current Report on Form 8-K filed on December 17, 2013.)
10.32	Loan and Servicing Agreement, dated as of September 9, 2014, among Wayne Funding LLC, as borrower, Wells Fargo Securities, LLC, as administrative agent, Wells Fargo Bank, National Association, as collateral agent, account bank and collateral custodian, and the other lenders and lender agents from time to time party thereto. (Incorporated by reference to Exhibit 10.1 to FS Energy and Power Fund's Current Report on Form 8-K filed on September 15, 2014.)
10.33	First Amendment to the Loan and Servicing Agreement, dated as of October 13, 2016, among Wayne Funding LLC, as Borrower, Wells Fargo Securities, LLC, as Administrative Agent, Wells Fargo Bank, National Association, as institutional lender, and Wells Fargo Bank, National Association, as collateral agent, account bank and collateral custodian. (Incorporated by reference to Exhibit 10.1 to FS Energy and Power Fund's Current Report on Form 8-K filed on October 14, 2016.)
10.34	Purchase and Sale Agreement, dated as of September 9, 2014, by and between Wayne Funding LLC, as purchaser, and FS Energy and Power Fund, as seller. (Incorporated by reference to Exhibit 10.2 to FS Energy and Power Fund's Current Report on Form 8-K filed on September 15, 2014.)
10.35	Collateral Management Agreement, dated as of September 9, 2014, by and between Wayne Funding LLC and FS Energy and Power Fund, as collateral manager. (Incorporated by reference to Exhibit 10.3 to FS Energy and Power Fund's Current Report on Form 8-K filed on September 15, 2014.)
10.36	Securities Account Control Agreement, dated as of September 9, 2014, by and among Wayne Funding LLC, as pledgor, Wells Fargo Bank, National Association, as collateral agent, and Wells Fargo Bank, National Association, as securities intermediary. (Incorporated by reference to Exhibit 10.4 to FS Energy and Power Fund's Current Report on Form 8-K filed on September 15, 2014.)

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10.37	Amended and Restated Sale and Contribution Agreement, dated as of September 11, 2014, by and between FS Energy and Power Fund and Gladwyne Funding LLC. (Incorporated by reference to Exhibit 10.5 to FS Energy and Power Fund's Current Report on Form 8-K filed on September 15, 2014.)
10.38	Indenture, dated as of September 11, 2014, by and between Gladwyne Funding LLC and Citibank, N.A., as trustee. (Incorporated by reference to Exhibit 10.6 to FS Energy and Power Fund's Current Report on Form 8-K filed on September 15, 2014.)
10.39	First Supplemental Indenture, dated as of December 15, 2014, by and between Gladwyne Funding LLC and Citibank, N.A., as trustee. (Incorporated by reference to Exhibit 10.1 of FS Energy and Power Fund's Current Report on Form 8-K filed on December 19, 2014.)
10.40	Second Supplemental Indenture, dated as of September 21, 2016, by and between Gladwyne Funding LLC and Citibank, N.A., as trustee. (Incorporated by reference to Exhibit 10.1 to FS Energy and Power Fund's Current Report on Form 8-K filed on September 22, 2016.)
10.41	Gladwyne Funding LLC Floating Rate Notes due 2024. (Incorporated by reference to Exhibit 10.7 to FS Energy and Power Fund's Current Report on Form 8-K filed on September 15, 2014.)
10.42	Amended and Restated September 1996 Version Master Repurchase Agreement between Goldman Sachs Bank USA and Strafford Funding LLC, dated as of September 21, 2016. (Incorporated by reference to Exhibit 10.2 to the Registrant's Current Report on Form 8-K filed on September 22, 2016.)
10.43	Second Amended and Restated Master Confirmation, dated as of September 21, 2016, by and between Goldman Sachs Bank USA and Strafford Funding LLC. (Incorporated by reference to Exhibit 10.56 of FS Energy and Power Fund's Quarterly Report on Form 10-Q filed on November 9, 2016.)
10.44	Amended and Restated Revolving Credit Agreement, dated as of December 15, 2014, by and between FS Energy and Power Fund and Strafford Funding LLC. (Incorporated by reference to Exhibit 10.3 of FS Energy and Power Fund's Current Report on Form 8-K filed on December 19, 2014.)
10.45	Amended and Restated Investment Management Agreement, dated as of September 11, 2014, by and between Gladwyne Funding LLC and FS Energy and Power Fund. (Incorporated by reference to Exhibit 10.10 to FS Energy and Power Fund's Current Report on Form 8-K filed on September 15, 2014.)
10.46	Collateral Administration Agreement, dated as of September 11, 2014, by and among Gladwyne Funding LLC, FS Energy and Power Fund and Virtus Group, LP. (Incorporated by reference to Exhibit 10.11 to FS Energy and Power Fund's Current Report on Form 8-K filed on September 15, 2014.)
10.47	Term Loan and Security Agreement, dated as of November 6, 2015, by and among Foxfields Funding LLC, Fortress Credit Co LLC, as administrative agent, the lenders from time to time party thereto and the other loan parties from time to time party thereto. (Incorporated by reference to Exhibit 10.1 to FS Energy and Power Fund's Current Report on Form 8-K filed on November 12, 2015.)
10.48	Contribution Agreement, dated as of November 6, 2015, by and between FS Energy and Power Fund and Foxfields Funding LLC. (Incorporated by reference to Exhibit 10.2 to FS Energy and Power Fund's Current Report on Form 8-K filed on November 12, 2015.)
10.49	Investment Management Agreement, dated as of November 6, 2015, by and between FS Energy and Power Fund and Foxfields Funding LLC. (Incorporated by reference to Exhibit 10.3 to FS Energy and Power Fund's Current Report on Form 8-K filed on November 12, 2015.)
10.50	Securities Account Control Agreement, dated as of November 6, 2015, by and among Foxfields Funding LLC, Fortress Credit Co LLC, as administrative agent and State Street Bank and Trust Company. (Incorporated by reference to Exhibit 10.4 to FS Energy and Power Fund's Current Report on Form 8-K filed on November 12, 2015.)

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10.51	Guaranty, dated as of November 6, 2015, by and between FS Energy and Power Fund and Fortress Credit Co LLC. (Incorporated by reference to Exhibit 10.5 to FS Energy and Power Fund's Current Report on Form 8-K filed on November 12, 2015.)
10.52	Pledge Agreement, dated as of November 6, 2015, by and between FS Energy and Power Fund and Fortress Credit Co LLC. (Incorporated by reference to Exhibit 10.6 to FS Energy and Power Fund's Current Report on Form 8-K filed on November 12, 2015.)
10.53	First Amendment to Term Loan and Security Agreement, dated as of November 25, 2015, by and among Foxfields Funding LLC, Fortress Credit Co LLC, as administrative agent, the lenders signatory thereto. (Incorporated by reference to Exhibit 10.1 to FS Energy and Power Fund's Current Report on Form 8-K filed on December 1, 2015.)
10.54	Consent and Third Amendment to Term Loan and Security Agreement, dated as of March 16, 2018, among Foxfields Funding LLC, as borrower, Fortress Credit Co LLC, as administrative agent, and the lenders party thereto. (Incorporated by reference to Exhibit 10.2 to FS Energy and Power Fund's Current Report on Form 8-K filed on March 19, 2018.)
10.55	Senior Secured Revolving Credit Agreement, dated as of May 18, 2016, by and among Bryn Mawr Funding LLC, Barclays Bank PLC, as administrative agent, and the lenders from time to time party thereto. (Incorporated by reference to Exhibit 10.1 to FS Energy and Power Fund's Current Report on Form 8-K filed on May 24, 2016.)
10.56	Contribution Agreement, dated as of May 18, 2016, by and between FS Energy and Power Fund and Bryn Mawr Funding LLC. (Incorporated by reference to Exhibit 10.2 to FS Energy and Power Fund's Current Report on Form 8-K filed on May 24, 2016.)
10.57	Investment Management Agreement, dated as of May 18, 2016, by and between FS Energy and Power Fund and Bryn Mawr Funding LLC. (Incorporated by reference to Exhibit 10.3 to FS Energy and Power Fund's Current Report on Form 8-K filed on May 24, 2016.)
10.58	Control Agreement, dated as of May 18, 2016, by and among Bryn Mawr Funding LLC, Barclays Bank PLC, as collateral agent, and State Street Bank and Trust Company, as custodian. (Incorporated by reference to Exhibit 10.4 to FS Energy and Power Fund's Current Report on Form 8-K filed on May 24, 2016.)
10.59	Guaranty, dated as of May 18, 2016, by and between FS Energy and Power Fund and Barclays Bank PLC, as collateral agent. (Incorporated by reference to Exhibit 10.5 to FS Energy and Power Fund's Current Report on Form 8-K filed on May 24, 2016.)
10.60	Pledge Agreement, dated as of May 18, 2016, by and between FS Energy and Power Fund and Barclays Bank PLC, as collateral agent. (Incorporated by reference to Exhibit 10.6 to FS Energy and Power Fund's Current Report on Form 8-K filed on May 24, 2016.)
10.61	Guarantee, Pledge and Security Agreement, dated as of May 18, 2016, by and among Bryn Mawr Funding LLC, any subsidiary guarantors from time to time party thereto, Barclays Bank PLC, as revolving administrative agent, and Barclays Bank PLC, as collateral agent. (Incorporated by reference to Exhibit 10.7 to FS Energy and Power Fund's Current Report on Form 8-K filed on May 24, 2016.)
10.62	First Amendment to Senior Secured Revolving Credit Agreement, dated as of March 14, 2018, among Bryn Mawr Funding, LLC, the lenders party thereto, Barclays Bank PLC, as administrative agent, and FS Energy and Power Fund. (Incorporated by reference to Exhibit 10.1 to FS Energy and Power Fund's Current Report on Form 8-K filed on March 19, 2018.)
10.63	Credit Agreement, dated as of April 19, 2017, among Gladwyne Funding LLC, Goldman Sachs Bank USA, as lender, sole lead arranger and administrative agent, Citibank, N.A., as collateral agent, and Virtus Group, LP, as collateral administrator. (Incorporated by reference to Exhibit 10.1 to FS Energy and Power Fund's Current Report on Form 8-K filed on April 25, 2017.)
31.1*	Certification of Chief Executive Officer pursuant to Rule 13a-14 under the Securities Exchange Act of 1934, as amended.

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31.2*	Certification of Chief Financial Officer pursuant to Rule 13a-14 under the Securities Exchange Act of 1934, as amended.
32.1*	Certification of Chief Executive Officer and Chief Financial Officer pursuant to Section 1350, Chapter 63 of Title 18, United States Code, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

*

Filed herewith.

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SIGNATURES

        Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized on May 14, 2018.

FS Energy and Power Fund
By:	/s/ MICHAEL C. FORMAN Michael C. Forman Chief Executive Officer (Principal Executive Officer)
By:	/s/ EDWARD T. GALLIVAN, JR. Edward T. Gallivan, Jr. Chief Financial Officer (Principal Financial and Accounting Officer)

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