UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

___________________________

FORM 10-Q

___________________________

x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

FOR THE QUARTERLY PERIOD ENDED MARCH 31, 2023

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

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 x No ¨.

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	Accelerated filer	Non-accelerated filer	Smaller reporting company	Emerging growth company
¨	¨	x	¨	¨

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. ¨

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

Securities registered pursuant to Section 12(b) Act: None

Title of each class	Trading symbol(s)	Name on each exchange on which registered
N/A	N/A	N/A

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 454,129,547 common shares of beneficial interest outstanding as of May 1, 2023.

TABLE OF CONTENTS

		Page
PART I—FINANCIAL INFORMATION
ITEM 1.	FINANCIAL STATEMENTS
	Consolidated Balance Sheets as of March 31, 2023 (Unaudited) and December 31, 2022	1
	Unaudited Consolidated Statements of Operations for the three months ended March 31, 2023 and 2022	2
	Unaudited Consolidated Statements of Changes in Net Assets for the three months ended March 31, 2023 and 2022	3
	Unaudited Consolidated Statements of Cash Flows for the three months ended March 31, 2023 and 2022	4
	Consolidated Schedules of Investments as of March 31, 2023 (Unaudited) and December 31, 2022	5
	Notes to Unaudited Consolidated Financial Statements	18
ITEM 2.	MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS	37
ITEM 3.	QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK	50
ITEM 4.	CONTROLS AND PROCEDURES	50
PART II—OTHER INFORMATION
ITEM 1.	LEGAL PROCEEDINGS	51
ITEM 1A.	RISK FACTORS	51
ITEM 2.	UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS	52
ITEM 3.	DEFAULTS UPON SENIOR SECURITIES	52
ITEM 4.	MINE SAFETY DISCLOSURES	52
ITEM 5.	OTHER INFORMATION	52
ITEM 6.	EXHIBITS	53
	SIGNATURES	54

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, 2023  (Unaudited)		December 31, 2022
Assets
Investments, at fair value
Non-controlled/unaffiliated investments (amortized cost—$1,429,977 and $1,656,169, respectively)	$	1,536,176	$	1,786,887
Non-controlled/affiliated investments (amortized cost—$47,102 and $94,068, respectively)	16,250		65,777
Controlled/affiliated investments (amortized cost—$171,880 and $172,703, respectively)	190,235		194,451
Total investments, at fair value (amortized cost—$1,648,959 and $1,922,940, respectively)	1,742,661		2,047,115
Cash	438,494		481,655
Receivable for investments sold and repaid	—		7,022
Interest receivable	17,890		21,932
Dividends receivable	878		878
Unrealized appreciation on swap contracts	379		—
Swap income receivable	65		83
Prepaid expenses and other assets	50		96
Total assets	$	2,200,417	$	2,558,781
Liabilities
Credit facilities payable (net of deferred financing costs of $0 and $238, respectively)(1)	$	—	$	305,438
Secured note payable (net of deferred financing costs of $845 and $1,253, respectively)(1)	455,535		454,671
Unrealized depreciation on swap contracts	—		698
Swap income payable	—		26
Shareholder distributions payable	13,584		13,543
Management fees payable	10,219		11,185
Administrative services expense payable	869		1,086
Interest payable	4,380		13,371
Trustees' fees payable	164		164
Other accrued expenses and liabilities	2,838		4,851
Total liabilities	487,589		805,033
Commitments and contingencies(2)
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, 452,787,008 and 451,465,673 shares issued and outstanding, respectively	453		451
Capital in excess of par value	3,196,509		3,191,293
Accumulated earnings (deficit)	(1,484,134)		(1,437,996)
Total shareholders' equity	1,712,828		1,753,748
Total liabilities and shareholders' equity	$	2,200,417	$	2,558,781
Net asset value per common share at period end	$	3.78	$	3.88

_________________________

(1)    See Note 9 for a discussion of the Company's financing arrangements.

(2)    See Note 10 for a discussion of the Company's commitments and contingencies.

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,
	2023		2022
Investment income
From non-controlled/unaffiliated investments:
Interest income	$	30,190	$	23,140
Paid-in-kind interest income	4,306		4,423
Fee income	97		1,233
Dividend income	5,690		—
From non-controlled/affiliated investments:
Interest income	157		1,910
Paid-in-kind interest income	24		35
Dividend income	—		1,726
From controlled/affiliated investments:
Interest income	2,459		2,037
Paid-in-kind interest income	172		670
Dividend income	—		735
Total investment income	43,095		35,909
Operating expenses
Management fees	10,474		10,735
Administrative services expenses	1,320		1,420
Share transfer agent fees	751		720
Accounting and administrative fees	183		177
Interest expense(1)	12,598		13,694
Trustees' fees	164		227
Other general and administrative expenses	703		1,444
Total operating expenses	26,193		28,417
Less: Management fee offset(2)	(255)		(698)
Net expenses	25,938		27,719
Net investment income	17,157		8,190
Realized and unrealized gain/loss
Net realized gain (loss) on investments:
Non-controlled/unaffiliated	(8,848)		(16,664)
Non-controlled/affiliated	(11,359)		(12,380)
Net realized gain (loss) on foreign currency	(120)		—
Net realized gain (loss) on swap contracts	12		(416)
Net realized gain (loss) on debt extinguishment	—		(746)
Net change in unrealized appreciation (depreciation) on investments:
Non-controlled/unaffiliated	(24,519)		135,503
Non-controlled/affiliated	(2,561)		56,051
Controlled/affiliated	(3,393)		23,727
Net change in unrealized appreciation (depreciation) on swap contracts	1,077		(3,482)
Total net realized and unrealized gain (loss)	(49,711)		181,593
Net increase (decrease) in net assets resulting from operations	$	(32,554)	$	189,783
Per share information—basic and diluted
Net increase (decrease) in net assets resulting from operations (Earnings per Share)	$	(0.07)	$	0.42
Weighted average shares outstanding	452,684,238		447,404,395

________________________

(1)    See Note 9 for a discussion of the Company's financing arrangements.

(2)    See Note 4 for a discussion of the offset by FS/EIG Advisor, LLC, the Company's investment adviser, of certain management fees to which it was otherwise entitled during the applicable period.

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,
	2023		2022
Operations
Net investment income	$	17,157	$	8,190
Net realized gain (loss) on investments, foreign currency, swap contracts and debt extinguishment	(20,315)		(30,206)
Net change in unrealized appreciation (depreciation) on investments	(30,473)		215,281
Net change in unrealized appreciation (depreciation) on swap contracts	1,077		(3,482)
Net increase (decrease) in net assets resulting from operations	(32,554)		189,783
Shareholder distributions(1)
Distributions to shareholders	(13,584)		(13,426)
Net decrease in net assets resulting from shareholder distributions	(13,584)		(13,426)
Capital share transactions(2)
Reinvestment of shareholder distributions	5,218		5,235
Net increase in net assets resulting from capital share transactions	5,218		5,235
Total increase (decrease) in net assets	(40,920)		181,592
Net assets at beginning of period	1,753,748		1,602,323
Net assets at end of period	$	1,712,828	$	1,783,915

_________________________

(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,
	2023		2022
Cash flows from operating activities
Net increase (decrease) in net assets resulting from operations	$	(32,554)	$	189,783
Adjustments to reconcile net increase (decrease) in net assets resulting from operations to net cash provided by (used in) operating activities:
Purchases of investments	(25,032)		(122,503)
Paid-in-kind interest	(4,502)		(5,128)
Proceeds from sales and repayments of investments	284,570		238,748
Net realized (gain) loss on investments	20,207		29,044
Net change in unrealized (appreciation) depreciation on investments	30,473		(215,281)
Net change in unrealized (appreciation) depreciation on swap contracts	(1,077)		3,482
Accretion of discount	(1,262)		(2,029)
Amortization of deferred financing costs and discount	1,238		2,185
(Increase) decrease in receivable for investments sold and repaid	7,022		4,975
(Increase) decrease in interest receivable	4,042		7,129
(Increase) decrease in swap income receivable	18		—
(Increase) decrease in prepaid expenses and other assets	46		68
Increase (decrease) in payable for investments purchased	—		(49,500)
Increase (decrease) in swap income payable	(26)		416
Increase (decrease) in management fees payable	(966)		(429)
Increase (decrease) in administrative services expense payable	(217)		81
Increase (decrease) in interest payable(1)	(8,991)		(9,468)
Increase (decrease) in trustees' fees payable	—		27
Increase (decrease) in other accrued expenses and liabilities	(2,013)		(368)
Net cash provided by (used in) operating activities	270,976		71,232
Cash flows from financing activities
Shareholder distributions paid	(8,325)		(8,153)
Borrowings under credit facilities(1)	—		29,009
Repayments of credit facilities(1)	(305,676)		(10,000)
Repayments under senior secured notes(1)	—		(22,383)
Deferred financing costs paid	(136)		(132)
Net cash provided by (used in) financing activities	(314,137)		(11,659)
Total increase (decrease) in cash	(43,161)		59,573
Cash at beginning of period	481,655		33,879
Cash at end of period	$	438,494	$	93,452
Supplemental disclosure
Non-cash reinvestment of shareholder distributions	$	5,218	$	5,235
Non-cash purchases of investments	$	(3,284)	$	(1,587)
Non-cash sales of investments	$	3,284	$	1,587
Excise and state taxes paid	$	711	$	846

_________________________

(1)    See Note 9 for a discussion of the Company's financing arrangements. During the three months ended March 31, 2023 and 2022, the Company paid $20,351 and $20,977, respectively, in interest expense on the financing arrangements and Senior Secured Notes.

See notes to unaudited consolidated financial statements.

4

FS Energy and Power Fund

Unaudited Consolidated Schedule of Investments

As of March 31, 2023

(in thousands, except share amounts)

Portfolio Company(a)(f)	Footnotes	Industry	Rate(b)	Floor(b)	Maturity	Principal Amount(c)		Amortized Cost		Fair Value(d)
Senior Secured Loans—First Lien—35.0%
AIRRO (Mauritius) Holdings II	(k)(p)(r)	Power	L+400, 3.0% PIK (3.0% Max PIK)	1.5%	7/24/25	$	22,902	$	20,250	$	23,682
AIRRO (Mauritius) Holdings II	(e)(k)(p)(r)	Power	L+400, 3.0% PIK (3.0% Max PIK)	1.5%	7/24/25	5,359		5,359		5,542
Allied Downhole Technologies, LLC	(r)(t)	Service & Equipment	8.0% PIK (8.0% Max PIK)		9/30/23	7,553		7,553		7,553
Allied Downhole Technologies, LLC	(e)(r)(t)	Service & Equipment	8.0% PIK (8.0% Max PIK)		9/30/23	2,500		2,500		2,500
Allied Wireline Services, LLC	(r)(t)	Service & Equipment	10.0% PIK (10.0% Max PIK)		6/15/25	63,888		63,888		63,888
Compass Power Generation LLC		Power	S+425	1.0%	4/14/29	9,798		9,530		9,777
Cox Oil Offshore, LLC, Volumetric Production Payments	(g)(i)(r)	Upstream	12.8%		12/31/23	100,000		8,638		12,822
CPV Shore Holdings LLC		Power	L+375		12/29/25	23,601		22,819		21,874
EIF Van Hook Holdings, LLC		Midstream	S+525		9/5/24	26,882		26,644		26,781
FR BR Holdings LLC	(r)	Midstream	L+650		12/14/23	81,316		80,393		81,242
FR XIII PAA Holdings HoldCo, LLC	(r)	Midstream	L+750	0.5%	10/15/26	17,272		17,040		17,351
GasLog Ltd.	(k)(r)	Midstream	7.8%		3/31/29	14,648		14,559		14,125
Generation Bridge LLC		Power	L+500	0.8%	12/1/28	7,092		6,976		7,091
Generation Bridge LLC		Power	L+500	0.8%	12/1/28	163		160		163
GIP II Blue Holding LP		Midstream	L+450	1.0%	9/29/28	5,812		5,740		5,792
Goodnight Water Solutions, LLC	(r)	Midstream	S+700	0.5%	6/3/27	14,925		14,720		14,788
Hamilton Intermediate Holdings, LLC	(r)	Power	16.5% PIK (16.5% Max PIK)		6/17/25	31,655		32,281		31,996
Meritage Midstream Services II, LLC	(r)	Midstream	S+675	1.0%	8/13/28	25,000		24,511		24,500
OE2 North, LLC	(r)	Midstream	L+525	1.0%	5/21/26	19,108		19,034		19,243
OE2 North, LLC	(e)(r)	Midstream	L+525	1.0%	5/21/26	10,892		10,892		10,968
Oryx Midstream Services Permian Basin LLC		Midstream	S+325	0.5%	10/5/28	26,289		26,181		25,885
Parkway Generation LLC		Power	S+475	0.8%	2/18/29	5,760		5,709		5,577
Parkway Generation LLC		Power	S+475	0.8%	2/18/29	43,800		43,415		42,431
Permian Production Holdings, LLC	(r)(s)	Upstream	7.0%, 2.0% PIK (2.0% Max PIK)		11/23/25	4,791		4,322		4,791
Pinnacle Midland Gas Holdco LLC	(r)	Midstream	L+675	1.0%	12/9/26	9,370		9,308		9,314
Pinnacle Midland Gas Holdco LLC	(e)(r)	Midstream	L+675	1.0%	12/9/26	2,477		2,477		2,462
Plainfield Renewable Energy Holdings LLC	(r)	Power	6.0%, 9.5% PIK (9.5% Max PIK)		8/22/25	12,704		12,704		9,468
Plainfield Renewable Energy Holdings LLC	(m)(r)	Power	10.0% PIK (10.0% Max PIK)		8/22/25	3,827		3,827		—
Plainfield Renewable Energy Holdings LLC, Letter of Credit	(e)(r)	Power	10.0%		8/22/25	2,709		2,709		—
Potomac Energy Center, LLC	(r)	Power	L+600	0.5%	11/12/26	58,164		57,265		56,878
Warren Resources, Inc.	(r)(t)	Upstream	L+900, 1.0% PIK (1.0% Max PIK)	1.0%	5/22/24	23,644		23,644		23,644
Wattbridge Inc.	(r)	Power	S+785	1.8%	6/30/27	42,252		42,252		41,263
Total Senior Secured Loans—First Lien								627,300		623,391
Unfunded Loan Commitments								(23,937)		(23,937)
Net Senior Secured Loans—First Lien								603,363		599,454

See notes to unaudited consolidated financial statements.

5

FS Energy and Power Fund

Unaudited Consolidated Schedule of Investments (continued)

As of March 31, 2023

(in thousands, except share amounts)

Portfolio Company(a)(f)	Footnotes	Industry	Rate(b)	Floor(b)	Maturity	Principal Amount(c)		Amortized Cost		Fair Value(d)
Senior Secured Loans—Second Lien—7.5%
Aethon III BR LLC	(r)	Upstream	L+750	1.5%	1/10/25	$	20,000	$	19,862	$	20,111
Citizen Energy Operating, LLC	(r)	Upstream	S+765	1.0%	6/29/27	38,000		37,466		37,380
ERA II Minerals, LLC	(r)	Upstream	S+625	0.8%	3/7/27	36,000		35,628		35,564
SilverBow Resources, Inc.	(k)(r)	Upstream	L+750	1.0%	12/15/26	14,250		14,205		14,297
Tenrgys, LLC	(r)	Upstream	S+750 (9.5% Max PIK)	1.0%	3/17/27	20,537		20,537		20,691
Total Senior Secured Loans—Second Lien								127,698		128,043
Senior Secured Bonds—0.6%
ST EIP Holdings Inc.	(r)	Midstream	6.3%		1/10/30	10,526		10,076		10,164
Total Senior Secured Bonds								10,076		10,164
Unsecured Debt—8.1%
Aethon United BR LP		Upstream	8.3%		2/15/26	40,500		40,500		39,780
Earthstone Energy Holdings, LLC	(k)	Upstream	8.0%		4/15/27	11,400		11,400		11,073
Hammerhead Resources Inc.	(k)(r)	Upstream	12.0% PIK (12.0% Max PIK)		7/15/24	37,225		37,085		37,225
Moss Creek Resources, LLC		Upstream	7.5%		1/15/26	11,693		10,446		10,856
NRG Energy, Inc.	(k)	Power	3.9%		2/15/32	16,125		15,658		12,917
Sitio Royalties Operating Partnership, LP	(k)(r)	Upstream	S+575	1.5%	9/20/26	19,000		18,835		18,818
Tallgrass Energy Partners, LP		Midstream	6.0%		3/1/27	9,761		9,580		9,250
Total Unsecured Debt								143,504		139,919

Portfolio Company(a)(f)	Footnotes	Industry	Rate(b)	Floor(b)	Maturity	Number of Shares		Amortized Cost		Fair Value(d)
Preferred Equity—24.2%(l)
Abaco Energy Technologies LLC, Preferred Equity	(o)(r)	Service & Equipment				28,942,003		$	1,447	$	9,175
Global Jet Capital Holdings, LP, Preferred Equity	(o)(r)	Industrials				2,785,562		2,786		—
Global Jet Capital Holdings, LP, Preferred Equity	(m)(o)(r)	Industrials	9.0% PIK (9.0% Max PIK)		10/1/28	18,676		12,493		9,641
NGL Energy Partners, LP, Preferred Equity	(k)(m)(o)(r)	Midstream	14.2%		7/2/27	156,250		157,633		134,138
NuStar, Preferred Equity	(k)(r)	Midstream	12.8%		6/29/28	67,011		73,650		83,272
Segreto Power Holdings, LLC, Preferred Equity	(m)(n)(o)(r)	Power	13.1%		6/30/25	70,297		99,761		86,037
USA Compression Partners, LP, Preferred Equity	(k)(r)	Midstream	9.8%		4/3/28	79,336		77,991		92,436
Total Preferred Equity								425,761		414,699
Sustainable Infrastructure Investments, LLC—3.1%						Principal Amount(c)		Cost		Fair Value(d)
Sustainable Infrastructure Investments, LLC	(k)(o)(r)(t)	Power				$	60,603	$	54,514	$	52,937
Total Sustainable Infrastructure Investments, LLC								54,514		52,937

See notes to unaudited consolidated financial statements.

6

FS Energy and Power Fund

Unaudited Consolidated Schedule of Investments (continued)

As of March 31, 2023

(in thousands, except share amounts)

Portfolio Company(a)(f)	Footnotes	Industry	Rate(b)	Floor(b)	Maturity	Number of Shares	Amortized Cost		Fair Value(d)
Equity/Other—23.2%
Abaco Energy Technologies LLC, Common Equity	(o)(r)	Service & Equipment				6,944,444	$	6,944	$	1,313
AIRRO (Mauritius) Holdings II, Warrants, Strike: $1.00	(k)(o)(p)(r)	Power			7/24/25	35	2,652		1,381
AirSwift Holdings, Ltd., Common Equity	(k)(o)(r)	Service & Equipment				3,750,000	6,029		3,413
Allied Wireline Services, LLC, Common Equity	(n)(o)(r)(t)	Service & Equipment				48,400	1,527		12,385
Allied Wireline Services, LLC, Warrants	(n)(o)(r)(t)	Service & Equipment				22,000	—		—
Arena Energy, LP, Contingent Value Rights	(r)	Upstream			2/1/25	126,632,117	351		514
Ascent Resources Utica Holdings, LLC, Common Equity	(n)(o)(r)	Upstream				148,692,948	44,700		40,221
GWP Midstream Holdco, LLC, Common Equity	(n)(o)(r)(s)	Midstream				105,785	6,681		3,607
Harvest Oil & Gas Corp., Common Equity	(o)(r)(s)	Upstream				135,062	14,553		810
Limetree Bay Energy, LLC, Class A Units	(o)(r)(s)	Midstream				76,938,973	21,541		939
Maverick Natural Resources, LLC, Common Equity	(n)(r)	Upstream				503,176	138,208		278,760
NGL Energy Partners, LP, Warrants (Par), Strike: $14.54	(k)(o)(r)	Midstream			12/31/25	2,187,500	3,083		441
NGL Energy Partners, LP, Warrants (Premium), Strike: $17.45	(k)(o)(r)	Midstream			12/31/25	3,125,000	2,623		449
NGL Energy Partners, LP, Warrants (Premium), Strike: $16.27	(k)(o)(r)	Midstream			12/31/25	781,250	576		113
NGL Energy Partners, LP, Warrants (Par), Strike:$13.56	(k)(o)(r)	Midstream			12/31/25	546,880	630		105
Permian Production Holdings, LLC, Common Equity	(n)(o)(r)(s)	Upstream				1,968,861	5		6,103
Saturn Oil & Gas Inc., Common Equity	(k)(o)(q)	Upstream				1,735,283	3,284		3,220
Telpico, LLC, Common Equity	(n)(o)(r)(s)	Upstream				50	—		—
Tenrgys, LLC, Common Equity	(n)(o)(r)	Upstream				50	7,571		5,672
USA Compression Partners, LP, Common Equity	(k)	Midstream				84,779	1,617		1,791
USA Compression Partners, LP, Warrants (Premium), Strike: $19.59	(k)(o)(r)	Midstream			4/2/28	1,586,719	714		6,380
Warren Resources, Inc., Common Equity	(o)(r)(t)	Upstream				4,415,749	20,754		29,828
Total Equity/Other							284,043		397,445
TOTAL INVESTMENTS—101.7%							$	1,648,959	1,742,661
LIABILITIES IN EXCESS OF OTHER ASSETS—(1.7%)	(j)								(29,833)
NET ASSETS—100.0%									$	1,712,828

See notes to unaudited consolidated financial statements.

7

FS Energy and Power Fund

Unaudited Consolidated Schedule of Investments (continued)

As of March 31, 2023

(in thousands, except share amounts)

Fixed Price Swap Contracts—Crude Oil(i)

Counterparty	Type	Settlement Index	Period	Bbls	Weighted Average Price ($/Bbls)	Unrealized Appreciation(h)		Unrealized Depreciation(h)
BP Energy Co.	Fixed	ICE Brent	April 1, 2023 – December 31, 2023	123,680	$80.00	$	161	$	—
Total Swap Contracts—Crude Oil						$	161	$	—

Fixed Price Swap Contracts—Natural Gas(i)

Counterparty	Type	Settlement Index	Period	MMBtu	Weighted Average Price ($/MMBtu)	Unrealized Appreciation(h)		Unrealized Depreciation(h)
BP Energy Co.	Fixed	NYMEX Henry Hub	May 1, 2023 – December 31, 2023	227,542	$3.80	$	218	$	—
Total Swap Contracts—Natural Gas						$	218	$	—
TOTAL SWAP CONTRACTS						$	379	$	—

__________________

Bbls – Barrels

MMBtu – One million British thermal units

__________________

(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, 2023, the three-month London Interbank Offered Rate, or LIBOR, or L, was 5.19% and the Secured Overnight Financing Rate, or SOFR, or S, was 4.91%. PIK means paid-in-kind. PIK income accruals may be adjusted based on the fair value of the underlying investment. Variable rate securities with no floor rate use the respective benchmark rate in all cases.

(c)    Denominated in U.S. dollars, unless otherwise noted.

(d)    See Note 8 for additional information regarding the fair value of the Company’s financial instruments.

(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 is pledged as collateral supporting the amounts outstanding under the Senior Secured Notes with JPMorgan Chase Bank, N.A. (see Note 9).

(g)    Investment is a real property interest and is included with Senior Secured Loans—First Lien to facilitate comparison with other investments.

(h)    Represents the amounts the Company would pay or receive under each swap contract if it were to settle on March 31, 2023 (see Note 6).

(i)    Security held within EP Northern Investments, LLC, a wholly-owned subsidiary of the Company.

(j)    Includes the effect of swap contracts.

(k)    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, 2023, 76.7% of the Company’s total assets represented qualifying assets.

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

(m)    Security was on non-accrual status as of March 31, 2023.

(n)    Security held within FSEP Investments, Inc., a wholly-owned subsidiary of the Company.

(o)    Security is non-income producing.

(p)    Security or portion thereof held within FS Power Investments II, LLC, a wholly-owned subsidiary of the Company.

(q)    Investment denominated in Canadian dollars. Amortized cost and fair value are converted into U.S. dollars as of March 31, 2023.

(r)    Security is classified as Level 3 in the Company’s fair value hierarchy (see Note 8).

See notes to unaudited consolidated financial statements.

8

FS Energy and Power Fund

Unaudited Consolidated Schedule of Investments (continued)

As of March 31, 2023

(in thousands, except share amounts)

(s)    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, 2023, 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 investments in portfolio companies of which the Company was deemed to be an affiliated person as of March 31, 2023:

Portfolio Company	Fair Value at December 31, 2022		Gross Additions(1)		Gross Reductions(2)		Net Realized Gain (Loss)		Net Change in Unrealized Appreciation (Depreciation)		Fair Value at March 31, 2023		Interest Income(3)		PIK Income(3)
Senior Secured Loans—First Lien
Permian Production Holdings, LLC	$	4,767	$	56	$	—	$	—	$	(32)	$	4,791	$	157	$	24
Equity/Other
GWP Midstream Holdco, LLC, Common Equity	5,044		—		—		—		(1,437)		3,607		—		—
Harvest Oil & Gas Corp., Common Equity	810		—		(506)		—		506		810		—		—
Limetree Bay Energy, LLC, Class A Units	1,885		83		—		—		(1,029)		939		—		—
Permian Production Holdings, LLC, Common Equity	11,420		—		—		—		(5,317)		6,103		—		—
Ridgeback Resources Inc., Common Equity	41,851		—		(35,240)		(11,359)		4,748		—		—		—
Telpico, LLC, Common Equity	—		—		—		—		—		—		—		—
	$	65,777	$	139	$	(35,746)	$	(11,359)	$	(2,561)	$	16,250	$	157	$	24

_____________

(1)    Gross additions may include increases in the cost basis of investments resulting from new portfolio investments, PIK interest, the amortization of unearned income, the exchange of one or more existing securities for one or more new securities and/or the movement of an existing portfolio company into this category from a different category.

(2)    Gross reductions may include decreases in the cost basis of investments resulting from principal collections related to investment repayments or sales, the exchange of one or more existing securities for one or more new securities and/or the movement of an existing portfolio company out of this category into a different category.

(3)    Interest and PIK income presented for the three months ended March 31, 2023.

See notes to unaudited consolidated financial statements.

9

FS Energy and Power Fund

Unaudited Consolidated Schedule of Investments (continued)

As of March 31, 2023

(in thousands, except share amounts)

(t)    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, 2023, the Company held investments in portfolio companies 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 and deemed to control as of March 31, 2023:

Portfolio Company	Fair Value at December 31, 2022		Gross Additions(1)		Gross Reductions(2)		Net Realized Gain (Loss)		Net Change in Unrealized Appreciation (Depreciation)		Fair Value at March 31, 2023		Interest Income(3)		PIK Income(3)
Senior Secured Loans—First Lien
Allied Downhole Technologies, LLC(4)	$	8,436	$	113	$	(996)	$	—	$	—	$	7,553	$	52	$	113
Allied Wireline Services, LLC	63,888		—		—		—		—		63,888		1,597		—
Warren Resources, Inc.	23,584		60		—		—		—		23,644		810		59
Sustainable Infrastructure Investments, LLC
Sustainable Infrastructure Investments, LLC	51,098		—		—		—		1,839		52,937		—		—
Equity/Other
Allied Wireline Services, LLC, Common Equity	10,463		—		—		—		1,922		12,385		—		—
Allied Wireline Services, LLC, Warrants	—		—		—		—		—		—		—		—
Warren Resources, Inc., Common Equity	36,982		—		—		—		(7,154)		29,828		—		—
	$	194,451	$	173	$	(996)	$	—	$	(3,393)	$	190,235	$	2,459	$	172

_____________

(1)    Gross additions may include increases in the cost basis of investments resulting from new portfolio investments, PIK interest, the amortization of unearned income, the exchange of one or more existing securities for one or more new securities and/or the movement of an existing portfolio company into this category from a different category.

(2)    Gross reductions may include decreases in the cost basis of investments resulting from principal collections related to investment repayments or sales, the exchange of one or more existing securities for one or more new securities and/or the movement of an existing portfolio company out of this category into a different category.

(3)    Interest and PIK income presented for the three months ended March 31, 2023.

(4)    Security includes a partially unfunded commitment with amortized cost of $2,500 and fair value of $2,500.

See notes to unaudited consolidated financial statements.

10

FS Energy and Power Fund

Consolidated Schedule of Investments

As of December 31, 2022

(in thousands, except share amounts)

Portfolio Company(a)	Footnotes	Industry	Rate(b)	Floor(b)	Maturity	Principal Amount(c)		Amortized Cost		Fair Value(d)
Senior Secured Loans—First Liens—40.3%
AIRRO (Mauritius) Holdings II	(k)(p)(s)	Power	L+400, 3.0% PIK (3.0% Max PIK)	1.5%	7/24/25	$	22,734	$	20,082	$	23,519
AIRRO (Mauritius) Holdings II	(e)(k)(p)(s)	Power	L+400, 3.0% PIK (3.0% Max PIK)	1.5%	7/24/25	5,359		5,359		5,545
Allied Downhole Technologies, LLC	(f)(s)(u)	Service & Equipment	8.0% PIK (8.0% Max PIK)		9/30/23	8,436		8,436		8,436
Allied Downhole Technologies, LLC	(e)(s)(u)	Service & Equipment	8.0% PIK (8.0% Max PIK)		9/30/23	2,500		2,500		2,500
Allied Wireline Services, LLC	(f)(s)(u)	Service & Equipment	10.0% PIK (10.0% Max PIK)		6/15/25	63,888		63,888		63,888
Brazos Delaware II LLC		Midstream	L+400		5/21/25	39,259		38,085		39,137
Cimarron Energy Inc.	(f)(m)(o)(s)	Service & Equipment	L+900	1.0%	12/31/24	7,500		6,563		3,713
Compass Power Generation LLC		Power	S+425	1.0%	4/14/29	31,575		30,712		31,384
Cox Oil Offshore, LLC, Volumetric Production Payments	(g)(i)(s)	Upstream	12.9%		12/31/23	100,000		11,081		20,683
CPV Maryland, LLC		Power	L+400	1.0%	5/11/28	14,286		14,146		14,155
CPV Shore Holdings LLC		Power	L+375		12/29/25	23,601		22,760		21,935
EIF Van Hook Holdings, LLC		Midstream	S+525		9/5/24	26,882		26,609		26,075
FR BR Holdings LLC	(f)(s)	Midstream	L+650		12/14/23	81,582		80,371		81,361
FR XIII PAA Holdings HoldCo, LLC	(s)	Midstream	L+750	0.5%	10/15/26	17,347		17,103		17,406
GasLog Ltd.	(k)(s)	Midstream	L+775		3/31/29	14,648		14,556		14,010
Generation Bridge LLC		Power	L+500	0.8%	12/1/28	7,432		7,305		7,385
Generation Bridge LLC		Power	L+500	0.8%	12/1/28	163		160		162
GIP II Blue Holding LP		Midstream	L+450	1.0%	9/29/28	5,918		5,842		5,877
Goodnight Water Solutions, LLC	(s)	Midstream	S+725	0.5%	6/3/27	14,963		14,752		14,819
Hamilton Intermediate Holdings, LLC	(s)	Power	16.5% PIK (16.5% Max PIK)		6/17/25	30,391		31,075		31,007
Medallion Midland Acquisition LP		Midstream	S+375	0.8%	10/18/28	7,920		7,886		7,862
OE2 North, LLC	(s)	Midstream	L+525	1.0%	5/21/26	18,659		18,579		18,847
OE2 North, LLC	(e)(s)	Midstream	L+525	1.0%	5/21/26	11,341		11,341		11,455
Oryx Midstream Services Permian Basin LLC	(f)	Midstream	L+325	0.5%	10/5/28	32,357		32,220		32,026
Parkway Generation LLC		Power	S+475	0.8%	2/18/29	5,760		5,708		5,700
Parkway Generation LLC		Power	S+475	0.8%	2/18/29	43,910		43,513		43,285
Permian Production Holdings, LLC	(f)(s)(t)	Upstream	7.0%, 2.0% PIK (2.0% Max PIK)		11/23/25	4,767		4,266		4,767
Pinnacle Midland Gas Holdco LLC	(s)	Midstream	L+675	1.0%	12/9/26	9,370		9,304		9,310
Pinnacle Midland Gas Holdco LLC	(e)(s)	Midstream	L+675	1.0%	12/9/26	2,477		2,477		2,461
Plainfield Renewable Energy Holdings LLC	(f)(s)	Power	6.0%, 9.5% PIK (9.5% Max PIK)		8/22/25	12,121		12,121		9,997
Plainfield Renewable Energy Holdings LLC	(f)(s)	Power	10.0% PIK (10.0% Max PIK)		8/22/25	3,643		3,643		—
Plainfield Renewable Energy Holdings LLC, Letter of Credit	(e)(s)	Power	10.0%		8/22/23	2,709		2,709		—
Potomac Energy Center, LLC	(s)	Power	L+600	0.5%	11/12/26	58,459		57,508		58,443

See notes to unaudited consolidated financial statements.

11

FS Energy and Power Fund

Consolidated Schedule of Investments (continued)

As of December 31, 2022

(in thousands, except share amounts)

Portfolio Company(a)	Footnotes	Industry	Rate(b)	Floor(b)	Maturity	Principal Amount(c)		Amortized Cost		Fair Value(d)
Traverse Midstream Partners LLC		Midstream	S+425	1.0%	9/27/24	$	28,436	$	28,484	$	28,418
Warren Resources, Inc.	(s)(u)	Upstream	L+900, 1.0% PIK (1.0% Max PIK)	1.0%	5/22/24	23,584		23,584		23,584
Wattbridge Inc.	(s)	Power	S+785	1.8%	6/30/27	42,500		42,500		41,880
Total Senior Secured Loans—First Lien								727,228		731,032
Unfunded Loan Commitments								(24,386)		(24,386)
Net Senior Secured Loans—First Lien								702,842		706,646
Senior Secured Loans—Second Lien—8.2%
Aethon III BR LLC	(f)(s)	Upstream	L+750	1.5%	1/10/25	20,000		19,848		20,138
Citizen Energy Operating, LLC	(f)(s)	Upstream	S+765	1.0%	6/29/27	39,000		38,440		38,240
ERA II Minerals, LLC	(f)(s)	Upstream	S+625	0.8%	3/7/27	37,000		36,601		36,656
Peak Exploration & Production, LLC	(f)(s)	Upstream	L+675	1.5%	11/16/23	13,545		13,528		13,394
Peak Exploration & Production, LLC	(e)(s)	Upstream	L+675	1.5%	11/16/23	1,505		1,505		1,488
SilverBow Resources, Inc.	(f)(k)(s)	Upstream	L+750	1.0%	12/15/26	14,250		14,199		14,322
Tenrgys, LLC	(f)(s)	Upstream	S+750 (9.5% Max PIK)	1.0%	3/17/27	20,537		20,537		20,537
Total Senior Secured Loans—Second Lien								144,658		144,775
Unfunded Loan Commitments								(1,505)		(1,505)
Net Senior Secured Loans—Second Lien								143,153		143,270
Senior Secured Bonds—0.6%
ST EIP Holdings Inc.	(s)	Midstream	6.3%		1/10/30	10,526		10,064		10,074
Total Senior Secured Bonds								10,064		10,074
Unsecured Debt—13.7%
Aethon United BR LP	(f)	Upstream	8.3%		2/15/26	40,500		40,500		40,221
Archrock Partners, L.P.	(f)(k)	Midstream	6.3%		4/1/28	3,098		3,168		2,840
Earthstone Energy Holdings, LLC	(k)	Upstream	8.0%		4/15/27	11,400		11,400		10,920
Endeavor Energy Resources, L.P.	(f)	Upstream	5.8%		1/30/28	24,299		25,388		23,306
Hammerhead Resources Inc.	(f)(k)(s)	Upstream	12.0% PIK (12.0% Max PIK)		7/15/24	35,118		34,961		35,118
Moss Creek Resources, LLC	(f)	Upstream	7.5%		1/15/26	11,693		10,358		10,561
NRG Energy, Inc.	(k)	Power	3.9%		2/15/32	19,125		18,668		14,401
Permian Resources Operating LLC		Upstream	7.8%		2/15/26	26,365		27,511		25,703
Permian Resources Operating LLC	(f)	Upstream	5.9%		7/1/29	5,200		5,257		4,473
Ranger Oil Corp.	(k)	Upstream	9.3%		8/15/26	29,772		29,633		29,678

See notes to unaudited consolidated financial statements.

12

FS Energy and Power Fund

Consolidated Schedule of Investments (continued)

As of December 31, 2022

(in thousands, except share amounts)

Portfolio Company(a)	Footnotes	Industry	Rate(b)	Floor(b)	Maturity	Principal Amount(c)		Amortized Cost		Fair Value(d)
Sitio Royalties Operating Partnership, LP	(f)(k)(s)	Upstream	S+650	1.5%	9/20/26	$	19,500	$	19,318	$	19,256
Suburban Propane Partners LP	(f)(k)	Midstream	5.0%		6/1/31	7,590		7,837		6,461
Tallgrass Energy Partners, LP	(f)	Midstream	6.0%		3/1/27	19,761		19,676		18,480
Total Unsecured Debt								253,675		241,418

Portfolio Company(a)	Footnotes	Industry	Rate(b)	Floor(b)	Maturity	Number of Shares		Amortized Cost		Fair Value(d)
Preferred Equity—22.8%(l)
Abaco Energy Technologies LLC, Preferred Equity	(f)(o)(s)	Service & Equipment				28,942,003		$	1,447	$	8,321
Global Jet Capital Holdings, LP, Preferred Equity	(f)(o)(s)	Industrials				2,785,562		2,786		—
Global Jet Capital Holdings, LP, Preferred Equity	(f)(m)(o)(s)	Industrials	9.0% PIK (9.0% Max PIK)		10/1/28	18,296		12,493		9,377
NGL Energy Partners, LP, Preferred Equity	(f)(k)(m)(o)(s)	Midstream	14.2%		7/2/27	156,250		157,633		125,000
NuStar, Preferred Equity	(f)(k)(s)	Midstream	12.8%		6/29/28	2,640,311		73,114		83,590
Segreto Power Holdings, LLC, Preferred Equity	(f)(m)(n)(o)(s)	Power	13.1%		6/30/25	70,297		99,766		83,647
USA Compression Partners, LP, Preferred Equity	(k)(s)	Midstream	9.8%		4/3/28	79,336		77,943		90,479
Total Preferred Equity								425,182		400,414
						Principal Amount(c)		Cost		Fair Value(d)
Sustainable Infrastructure Investments, LLC—2.9%
Sustainable Infrastructure Investments, LLC	(k)(s)(u)	Power				$	60,603	$	54,514	$	51,098
Total Sustainable Infrastructure Investments, LLC								54,514		51,098
						Number of Shares		Amortized Cost		Fair Value(d)
Equity/Other—28.2%
Abaco Energy Technologies LLC, Common Equity	(f)(o)(s)	Service & Equipment				6,944,444		$	6,944	$	1,219
AIRRO (Mauritius) Holdings II, Warrants, Strike: $1.00	(f)(k)(o)(p)(s)	Power			7/24/25	35		2,652		1,630
Allied Wireline Services, LLC, Common Equity	(f)(n)(o)(s)(u)	Service & Equipment				48,400		1,527		10,463
Allied Wireline Services, LLC, Warrants	(f)(n)(o)(s)(u)	Service & Equipment				22,000		—		—
Arena Energy, LP, Contingent Value Rights	(f)(o)(s)	Upstream			2/1/25	126,632,117		351		858
Ascent Resources Utica Holdings, LLC, Common Equity	(f)(n)(o)(s)	Upstream				148,692,948		44,700		52,340
Cimarron Energy Holdco Inc., Common Equity	(f)(o)(s)	Service & Equipment				4,302,293		3,950		—
Cimarron Energy Holdco Inc., Participation Option	(f)(o)(s)	Service & Equipment				25,000,000		1,289		—
GWP Midstream Holdco, LLC, Common Equity	(f)(n)(o)(s)(t)	Midstream				105,785		6,681		5,044
Harvest Oil & Gas Corp., Common Equity	(f)(o)(t)	Upstream				135,062		15,059		810

See notes to unaudited consolidated financial statements.

13

FS Energy and Power Fund

Consolidated Schedule of Investments (continued)

As of December 31, 2022

(in thousands, except share amounts)

Portfolio Company(a)	Footnotes	Industry	Rate(b)	Floor(b)	Maturity	Number of Shares	Amortized Cost		Fair Value(d)
Limetree Bay Energy, LLC, Class A Units	(f)(o)(s)(t)	Midstream				76,938,973	$	21,458	$	1,885
Maverick Natural Resources, LLC, Common Equity	(f)(n)(s)	Upstream				503,176	138,208		312,372
MB Precision Investment Holdings LLC, Class A-2 Units	(f)(n)(o)(s)	Industrials				1,426,110	490		—
NGL Energy Partners, LP, Warrants (Par), Strike: $14.54	(f)(k)(o)(s)	Midstream			12/31/25	2,187,500	3,083		10
NGL Energy Partners, LP, Warrants (Premium), Strike: $17.45	(f)(k)(o)(s)	Midstream			12/31/25	3,125,000	2,623		8
NGL Energy Partners, LP, Warrants (Premium), Strike: $16.27	(f)(k)(o)(s)	Midstream			12/31/25	781,250	576		2
NGL Energy Partners, LP, Warrants (Par), Strike: $13.56	(f)(k)(o)(s)	Midstream			12/31/25	546,880	630		3
Permian Production Holdings, LLC, Common Equity	(f)(n)(s)(t)	Upstream				1,968,861	5		11,420
Ridgeback Resources Inc., Common Equity	(f)(k)(q)(s)(t)	Upstream				9,599,928	46,599		41,851
Swift Worldwide Resources Holdco Limited, Common Equity	(f)(k)(o)(r)(s)	Service & Equipment				3,750,000	6,029		3,131
Telpico, LLC, Common Equity	(f)(n)(o)(s)(t)	Upstream				50	—		—
Tenrgys, LLC, Common Equity	(f)(n)(o)(s)	Upstream				50	7,571		6,801
USA Compression Partners, LP, Common Equity	(f)(k)(o)	Midstream				84,779	1,617		1,655
USA Compression Partners, LP, Warrants (Premium), Strike: $19.59	(f)(k)(o)(s)	Midstream			4/2/28	1,586,719	714		5,711
Warren Resources, Inc., Common Equity	(f)(o)(s)(u)	Upstream				4,415,749	20,754		36,982
Total Equity/Other							333,510		494,195
TOTAL INVESTMENTS—116.7%							$	1,922,940	2,047,115
LIABILITIES IN EXCESS OF OTHER ASSETS—(16.7%)	(j)								(293,367)
NET ASSETS—100.0%									$	1,753,748

Fixed Price Swap Contracts—Crude Oil(i)

Counterparty	Type	Settlement Index	Period	Bbls	Weighted Average Price ($/Bbls)	Unrealized Appreciation(h)		Unrealized Depreciation(h)
BP Energy Co.	Fixed	ICE Brent	January 1, 2023 – December 31, 2023	168,511	$80.00	$	—	$	572
Total Swap Contracts—Crude Oil						$	—	$	572

Fixed Price Swap Contracts—Natural Gas(i)

Counterparty	Type	Settlement Index	Period	MMBtu	Weighted Average Price ($/MMBtu)	Unrealized Appreciation(h)		Unrealized Depreciation(h)
BP Energy Co.	Fixed	NYMEX Henry Hub	February 1, 2023 – December 31, 2023	314,818	$3.80	$	—	$	126
Total Swap Contracts—Natural Gas						$	—	$	126
TOTAL SWAP CONTRACTS						$	—	$	698

__________________

Bbls – Barrels

MMBtu – One million British thermal units

See notes to unaudited consolidated financial statements.

14

FS Energy and Power Fund

Consolidated Schedule of Investments (continued)

As of December 31, 2022

(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, 2022, the three-month London Interbank Offered Rate, or LIBOR, or L, was 4.77% and the Secured Overnight Financing Rate, or SOFR, or S, was 4.59%. PIK means paid-in-kind. PIK income accruals may be adjusted based on the fair value of the underlying investment. Variable rate securities with no floor rate use the respective benchmark rate in all cases.

(c)    Denominated in U.S. dollars, unless otherwise noted.

(d)    See Note 8 for additional information regarding the fair value of the Company’s financial instruments.

(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 is pledged as collateral supporting the amounts outstanding under the Senior Secured Notes with JPMorgan Chase Bank, N.A. (see Note 9).

(g)    Investment is a real property interest and is included with Senior Secured Loans—First Lien to facilitate comparison with other investments.

(h)    Represents the amounts the Company would pay or receive under each swap contract if it were to settle on December 31, 2022 (see Note 6).

(i)    Security held within EP Northern Investments, LLC, a wholly-owned subsidiary of the Company.

(j)    Includes the effect of swap contracts.

(k)    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, 2022, 77.5% of the Company’s total assets represented qualifying assets.

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

(m)    Security was on non-accrual status as of December 31, 2022.

(n)    Security held within FSEP Investments, Inc., a wholly-owned subsidiary of the Company.

(o)    Security is non-income producing.

(p)    Security or portion thereof held within FS Power Investments II, LLC, a wholly-owned subsidiary of the Company.

(q)    Investment denominated in Canadian dollars. Amortized cost and fair value are converted into U.S. dollars as of December 31, 2022.

(r)    Investment denominated in British pounds. Amortized cost and fair value are converted into U.S. dollars as of December 31, 2022.

(s)    Security is classified as Level 3 in the Company’s fair value hierarchy (see Note 8).

See notes to unaudited consolidated financial statements.

15

FS Energy and Power Fund

Consolidated Schedule of Investments (continued)

As of December 31, 2022

(in thousands, except share amounts)

(t)    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, 2022, 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 investments in portfolio companies of which the Company was deemed to be an affiliated person as of December 31, 2022:

Portfolio Company	Fair Value at December 31, 2021		Gross Additions(1)		Gross Reductions(2)		Net Realized Gain (Loss)		Net Change in Unrealized Appreciation (Depreciation)		Fair Value at December 31, 2022		Interest Income(3)		PIK Income(3)		Fee Income(3)		Dividend Income(3)
Senior Secured Loans—First Lien
Limetree Bay Energy, LLC	$	3,166	$	—	$	(1,587)	$	(12,756)	$	11,177	$	—	$	—	$	—	$	—	$	—
Permian Production Holdings, LLC	7,889		697		(3,674)		551		(696)		4,767		570		105		—		—
Senior Secured Bonds
Great Western Petroleum, LLC	58,055		96		(55,096)		1,087		(4,142)		—		2,649		—		7,268		—
Equity/Other
Great Western Petroleum, LLC, Common Equity	40,731		—		(84,871)		54,081		(9,941)		—		—		—		—		—
GWP Midstream Holdco, LLC, Common Equity	—		6,681		—		—		(1,637)		5,044		—		—		—		—
Harvest Oil & Gas Corp., Common Equity	2,836		—		(743)		—		(1,283)		810		—		—		—		—
Limetree Bay Energy, LLC, Class A Units	6,046		1,795		—		—		(5,956)		1,885		—		—		—		—
Permian Production Holdings, LLC, Common Equity	8,829		4		—		—		2,587		11,420		—		—		—		1,726
Ridgeback Resources Inc., Common Equity	48,356		—		(12,559)		173		5,881		41,851		—		—		—		3,691
Telpico, LLC, Common Equity	—		—		—		—		—		—		—		—		—		—
	$	175,908	$	9,273	$	(158,530)	$	43,136	$	(4,010)	$	65,777	$	3,219	$	105	$	7,268	$	5,417

_____________

(1)    Gross additions may include increases in the cost basis of investments resulting from new portfolio investments, PIK interest, the amortization of unearned income, the exchange of one or more existing securities for one or more new securities and/or the movement of an existing portfolio company into this category from a different category.

(2)    Gross reductions may include decreases in the cost basis of investments resulting from principal collections related to investment repayments or sales, the exchange of one or more existing securities for one or more new securities and/or the movement of an existing portfolio company out of this category into a different category.

(3)    Interest, PIK, fee and dividend income presented for the year ended December 31, 2022.

See notes to unaudited consolidated financial statements.

16

FS Energy and Power Fund

Consolidated Schedule of Investments (continued)

As of December 31, 2022

(in thousands, except share amounts)

(u)    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, 2022, the Company held investments in portfolio companies 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 and deemed to control as of December 31, 2022:

Portfolio Company	Fair Value at December 31, 2021		Gross Additions(1)		Gross Reductions(2)		Net Realized Gain (Loss)		Net Change in Unrealized Appreciation (Depreciation)		Fair Value at December 31, 2022		Interest Income(3)		PIK Income(3)		Dividend Income(3)
Senior Secured Loans—First Lien
Allied Downhole Technologies, LLC(4)	$	7,782	$	654	$	—	$	—	$	—	$	8,436	$	—	$	654	$	—
Allied Wireline Services, LLC	46,339		5,808		—		—		11,741		63,888		316		5,808		—
MECO IV Holdco, LLC	22,745		455		(23,200)		—		—		—		—		455		—
Warren Resources, Inc.	23,688		237		(341)		—		—		23,584		2,620		237		—
Sustainable Infrastructure Investments, LLC
Sustainable Infrastructure Investments, LLC	50,770		—		—		—		328		51,098		—		—		735
Equity/Other
Allied Wireline Services, LLC, Common Equity	—		—		—		—		10,463		10,463		—		—		—
Allied Wireline Services, LLC, Warrants	—		—		—		—		—		—		—		—		—
MECO IV Holdco, LLC, Class A-1 Units	4,181		—		(18,060)		15,899		(2,020)		—		—		—		—
Warren Resources, Inc., Common Equity	25,854		—		—		—		11,128		36,982		—		—		—
	$	181,359	$	7,154	$	(41,601)	$	15,899	$	31,640	$	194,451	$	2,936	$	7,154	$	735

_____________

(1)    Gross additions may include increases in the cost basis of investments resulting from new portfolio investments, PIK interest, the amortization of unearned income, the exchange of one or more existing securities for one or more new securities and/or the movement of an existing portfolio company into this category from a different category.

(2)    Gross reductions may include decreases in the cost basis of investments resulting from principal collections related to investment repayments or sales, the exchange of one or more existing securities for one or more new securities and/or the movement of an existing portfolio company out of this category into a different category.

(3)    Interest, PIK and dividend income presented for the year ended December 31, 2022.

(4)    Security includes a partially unfunded commitment with amortized cost of $2,500 and fair value of $2,500.

See notes to unaudited consolidated financial statements.

17

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 is an externally managed, non-diversified, closed-end management investment company that 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. In addition, the Company 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. The Company has various wholly-owned financing subsidiaries, including special-purpose financing subsidiaries and subsidiaries through which it holds or 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, 2023. 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. The Company’s board of trustees has approved changing the Company’s name to FS Specialty Lending Fund and changing its non-fundamental investment policy to be to invest primarily in a portfolio of secured and unsecured floating and fixed rate loans, bonds and other types of credit instruments, which, under normal circumstances, will represent at least 80% of the Fund’s total assets, rather than to invest at least 80% of its total assets in securities of Energy companies.

The Company is managed by FS/EIG Advisor, LLC, or FS/EIG Advisor, pursuant to an investment advisory and administrative services agreement, dated as of April 9, 2018, or the FS/EIG investment advisory agreement. FS/EIG Advisor oversees the management of the Company’s operations and is responsible for making investment decisions with respect to the Company’s portfolio. FS/EIG Advisor 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.

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 accounting principles generally accepted in the United States of America, 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, 2022 included in the Company’s annual report on Form 10-K. Operating results for the three months ended March 31, 2023 are not necessarily indicative of the results that may be expected for the year ending December 31, 2023. The December 31, 2022 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, 2022. 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 unaudited 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/EIG 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,” which 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

18

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)

gains and no such fee will be payable with respect to unrealized gains unless and until such gains are actually realized. For the three months ended March 31, 2023 and 2022, the Company did not accrue any amount of capital gains incentive fee.

Subordinated Income Incentive Fee: Pursuant to the terms of the FS/EIG investment advisory agreement, FS/EIG Advisor may also be entitled to receive a subordinated incentive fee on income. The subordinated incentive fee on income under the FS/EIG investment advisory agreement is calculated and payable quarterly in arrears and equals 20.0% of the Company’s “pre-incentive fee net investment income” for the immediately preceding quarter 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/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%. 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/EIG Advisor will be entitled to a “catch-up” fee 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 adjusted capital. 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. For the three months ended March 31, 2023 and 2022, the Company did not accrue any amount of subordinated incentive fee on income.

Reclassifications: Certain amounts in the unaudited consolidated financial statements for the three months ended March 31, 2022 may have been reclassified to conform to the classifications used to prepare the unaudited consolidated financial statements for the three months ended March 31, 2023.

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. Distributions received from limited liability company, or LLC, and limited partnership, or LP, investments are evaluated to determine if the distribution should be recorded as dividend income or a return of capital. 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 accrued interest 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. Structuring and other non-recurring upfront fees are recorded as fee income when earned. The Company records prepayment premiums on loans and securities as fee income when it earns such amounts. For the three months ended March 31, 2023 and 2022, the Company did not recognize any structuring or other upfront fee revenue.

Net Realized Gains or Realized Losses on Extinguishment of Debt: Upon the repayment of debt obligations which are deemed to be extinguishments, the difference between the principal amount due at maturity and the amount repaid on the extinguishment of debt is recognized as a gain or loss.

Recent Accounting Pronouncements: In March 2020, the FASB issued Accounting Standards Update No. 2020-04, Reference Rate Reform (Topic 848), or ASU 2020-04, which provides optional expedients and exceptions for applying GAAP to contracts, hedging relationships, and other transactions affected by reference rate reform if certain criteria are met. The amendments apply only to contracts, hedging relationships, and other transactions that reference LIBOR or another reference rate expected to be discontinued because of reference rate reform. In January 2021, the FASB issued Accounting Standards Update No. 2021-01, Reference Rate Reform (Topic 848), or ASU 2021-01, which expanded the scope of Topic 848 to include derivative instruments impacted by discounting transition. ASU 2020-04 and ASU 2021-01 are effective for all entities through December 31, 2022. The expedients and exceptions provided by the amendments do not apply to contract modifications and hedging relationships entered into or evaluated after December 31, 2022, except for hedging transactions as of December 31, 2022, that an entity has elected certain optional expedients for and that are retained through the end of the hedging relationship. In December 2022, the FASB issued Accounting Standards Update No. 2022-06, Reference Rate Reform (Topic 848): Deferral of the Sunset Date of Topic 848, or ASU 2022-06, which deferred the sunset date of this guidance to December 31, 2024. The Company is currently evaluating the impact of this guidance on its consolidated financial statements.

19

FS Energy and Power Fund

Notes to Unaudited Consolidated Financial Statements (continued)

(in thousands, except share and per share amounts)

Note 3. Share Transactions

Below is a summary of transactions with respect to the Company’s common shares during the three months ended March 31, 2023 and 2022:

	Three Months Ended March 31,
	2023			2022
	Shares	Amount		Shares	Amount
Reinvestment of Distributions	1,321,335	$	5,218	1,434,432	$	5,235
Proceeds from Share Transactions	1,321,335	$	5,218	1,434,432	$	5,235

During the period from April 1, 2023 to May 1, 2023, the Company issued 1,342,539 common shares pursuant to its distribution reinvestment plan for gross proceeds of $5,170 at an average price per share of $3.85.

On February 25, 2020, the Company received exemptive relief from the SEC permitting it to offer multiple classes of common shares. While the Company has no present intention to recommence a public offering of its common shares, the Company could do so in the future.

Share Repurchase Program

In March 2020, in light of difficult market conditions and in an effort to preserve liquidity in the Company, the Company’s board of trustees determined to suspend for an indefinite period of time the Company’s share repurchase program and will reassess the Company’s ability to recommence such program in future periods.

Prior to its suspension, the Company intended 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 (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.

If the Company recommences its share repurchase program, 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

20

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)

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. The Company did not repurchase any shares pursuant to its share repurchase program during the three months ended March 31, 2023 and 2022.

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 a 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 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 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. There were no de minimis account liquidations during the three months ended March 31, 2023 and 2022.

Note 4. Related Party Transactions

Compensation of the Investment Adviser

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 (gross assets equals total assets as set forth on the Company’s consolidated balance sheets) 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. See Note 2 for a discussion of the capital gains and subordinated income incentive fees that FS/EIG Advisor may be entitled to under the FS/EIG investment advisory agreement.

FS/EIG Advisor may receive structuring or other upfront fees from portfolio companies in which FS/EIG Advisor has caused the Company to invest. FS/EIG Advisor has agreed to offset the amount of any structuring, upfront or certain other fees received by FS/EIG Advisor or its members against the management fees payable by the Company under the FS/EIG investment advisory agreement. During the three months ended March 31, 2023 and 2022, $255 and $698, respectively, of structuring, upfront or certain other fees received by FS/EIG Advisor or its members were offset against management fees.

Pursuant to the FS/EIG investment advisory agreement, FS/EIG Advisor oversees the Company’s 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, the Company’s corporate operations and required administrative services, which includes being responsible for the financial records that the Company is required to maintain and preparing reports for the Company’s shareholders and reports filed with the SEC.

The Company reimburses FS/EIG Advisor for expenses necessary to perform services related to the Company’s administration and operations, including FS/EIG Advisor’s allocable portion of the compensation and/or related expenses of certain personnel of FS Investments and EIG providing administrative services to the Company on behalf of FS/EIG Advisor, and for transactional expenses for prospective investments, such as fees and expenses associated with performing due diligence reviews of investments that do not close, often referred to as “broken deal” costs. The Company reimburses FS/EIG Advisor no less than quarterly 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. The Company does not reimburse FS/EIG 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/EIG Advisor.

21

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)

The following table describes the fees and expenses accrued under the FS/EIG investment advisory agreement during the three months ended March 31, 2023 and 2022:

			Three Months Ended March 31,
Related Party	Source Agreement	Description	2023		2022
FS/EIG Advisor	FS/EIG investment advisory agreement	Base Management Fee(1)	$	10,219	$	10,037
FS/EIG Advisor	FS/EIG investment advisory agreement	Administrative Services Expenses(2)	$	1,320	$	1,420

_________________________

(1)    During the three months ended March 31, 2023 and 2022, $11,185 and $10,466, respectively, in base management fees were paid to FS/EIG Advisor. The base management fee amount shown in the table above is shown net of $255 and $698 in structuring, upfront or certain other fees received by FS/EIG Advisor or its members and offset against base management fees for the three months ended March 31, 2023 and 2022, respectively. As of March 31, 2023, $10,219 in base management fees were payable to FS/EIG Advisor.

(2)    During the three months ended March 31, 2023 and 2022, $645 and $638, respectively, of the accrued administrative services expenses related to the allocation of costs of administrative personnel for services rendered to the Company by FS/EIG Advisor and the remainder related to other reimbursable expenses. The Company paid $1,458 and $1,121 in administrative services expenses to FS/EIG Advisor, or its affiliates, during the three months ended March 31, 2023 and 2022, respectively.

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. The officers, managers and other personnel of FS/EIG Advisor may serve in similar or other capacities for the investment advisers to future investment vehicles affiliated with FS Investments or EIG. 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 additional information regarding potential conflicts of interest, see the Company’s annual report on Form 10-K for the year ended December 31, 2022.

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 its former investment adviser, including FS KKR Capital Corp., or collectively the Company’s co-investment affiliates. 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 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 EIG and its affiliates which permits the Company to participate in co-investment transactions with certain other EIG advised funds, or the EIG Order.

Note 5. Distributions

The following table reflects the cash distributions per share that the Company declared on its common shares during the three months ended March 31, 2023 and 2022:

	Distribution
For the Three Months Ended	Per Share		Amount
Fiscal 2022
March 31, 2022	$	0.03	$	13,426
Fiscal 2023
March 31, 2023	$	0.03	$	13,584

Although the Company's board of trustees has not declared or resumed regular cash distributions to shareholders for any period after March 31, 2020, the Company's board of trustees has since declared three cash distributions in 2020, four cash distributions in 2021, four cash distributions in 2022 and one cash distribution in 2023, each in the amount of $0.03 per share. FS/EIG Advisor and the Company’s board of trustees expect that future regular cash distributions to shareholders will remain suspended until

22

FS Energy and Power Fund

Notes to Unaudited Consolidated Financial Statements (continued)

(in thousands, except share and per share amounts)

Note 5. Distributions (continued)

such time that the Company’s board of trustees and FS/EIG Advisor believe that market conditions and the financial condition of the Company support the resumption of such distributions. The Company's board of trustees has and will continue to evaluate the Company's ability to pay any distributions in the future. There can be no assurance that the Company will be able to pay distributions in the future. 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. Furthermore, prior to its termination, the JPMorgan Facility restricted the ability of the Company to make certain discretionary cash dividends and distributions and other restricted payments. See Note 9 for a discussion of the JPMorgan Facility.

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.

Under the 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 and 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. The Company has not established limits on the amount of funds it may use from available sources to make distributions. The Company's distribution proceeds have exceeded and in the future may exceed its earnings. Therefore, portions of the distributions that the Company has made represented, and may make in the future may represent, a return of capital to shareholders, which lowers their tax basis in their common shares. A return of capital generally is a return of a shareholder’s investment rather than a return of earnings or gains derived from the Company’s investment activities. Each year a statement on Form 1099-DIV identifying the sources of the distributions (i.e., paid from ordinary income, paid from net capital gains on the sale of securities, and/or a return of capital, which is a nontaxable distribution) will be mailed to the Company’s shareholders. There can be no assurance that the Company will be able to pay distributions at a specific rate or at all.

The following table reflects the sources of the cash distributions on a tax basis that the Company declared on its common shares during the three months ended March 31, 2023 and 2022:

	Three Months Ended March 31,
	2023				2022
Source of Distribution	Distribution Amount		Percentage		Distribution Amount		Percentage
Net investment income(1)	$	13,584	100	%	$	13,426	100	%
Short-term capital gains proceeds from the sale of assets	—		—		—		—
Long-term capital gains proceeds from the sale of assets	—		—		—		—
Total	$	13,584	100	%	$	13,426	100	%

_________________________

(1)    During the three months ended March 31, 2023 and 2022, 86.6% and 80.1%, respectively, of the Company's gross investment income was attributable to cash income earned, 10.5% and 14.3%, respectively, was attributable to paid-in-kind, or PIK, interest and 2.9% and 5.6%, respectively, was attributable to non-cash accretion of discount.

In the past, the Company has experienced restructurings and defaults and may experience such events again in the future. Any restructuring or default may have an impact on the level of income received by the Company.

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.

23

FS Energy and Power Fund

Notes to Unaudited Consolidated Financial Statements (continued)

(in thousands, except share and per share amounts)

Note 5. Distributions (continued)

Net capital losses may be carried forward indefinitely, and their character is retained as short-term or long-term. As of March 31, 2023, the Company had short-term and long-term capital loss carryforwards available to offset future realized capital gains of $69,270 and $1,248,683, respectively.

As of March 31, 2023 and December 31, 2022, for federal income tax purposes, the gross unrealized appreciation on the Company’s investments, swap contracts and unrealized gain on foreign currency was $276,302 and $334,635, respectively, and the gross unrealized depreciation on the Company’s investments, swap contracts and unrealized loss on foreign currency was $471,400 and $512,206, respectively.

The aggregate cost of the Company’s investments for federal income tax purposes totaled $1,938,093 and $2,223,943 as of March 31, 2023 and December 31, 2022, respectively. The aggregate net unrealized appreciation (depreciation) on a tax basis was $(195,432) and $(176,828) as of March 31, 2023 and December 31, 2022, respectively.

As of March 31, 2023 and December 31, 2022, the Company had deferred tax assets of $145,397 and $145,383, respectively, resulting from interest expense disallowance, net operating losses and capital losses of the Company's wholly-owned taxable subsidiaries. As of March 31, 2023 and December 31, 2022, the Company had deferred tax liabilities of $19,413 and $28,753, respectively, resulting from unrealized appreciation on investments held by the Company's wholly-owned taxable subsidiaries. As of March 31, 2023 and December 31, 2022, certain wholly-owned taxable subsidiaries anticipated that they would be unable to fully utilize their deferred tax assets, therefore the deferred tax assets were offset by valuation allowances of $125,984 and $116,630, respectively. For the three months ended March 31, 2023, the Company did not record a provision for taxes related to its wholly-owned taxable subsidiaries. For the year ended December 31, 2022, the Company recorded a provision for taxes related to its wholly-owned taxable subsidiaries of $1,207 related to current taxes.

Note 6. Financial Instruments

The Company may trade in financial instruments with off-balance sheet risk in the normal course of its investing activities. During the three months ended March 31, 2023, the Company utilized swap contracts to economically hedge certain risks against natural gas and crude oil price exposure related to certain investments in the Company's portfolio. While the use of these derivative instruments limits the downside risk of adverse price movements, their use also limits future revenues from upward price movements.

The Company's fixed price swaps are settled monthly based on differences between the fixed price specified in the contract and the referenced settlement price. When the referenced settlement price is less than the price specified in the contract, the Company receives an amount from the counterparty based on the price difference multiplied by the volume. Similarly, when the referenced settlement price exceeds the price specified in the contract, the Company pays the counterparty an amount based on the price difference multiplied by the volume. The prices contained in these fixed price swaps are based on the NYMEX Henry Hub for natural gas and the ICE Brent for oil. Gas volumes are measured in one million British thermal units, or MMBtus, and oil volumes are measured in barrels, or Bbls.

Below is a summary of the Company's open fixed price swap positions as of March 31, 2023. The hedged volumes reflected below represent an aggregation of multiple derivative contracts that have varying durations and may not be realized on a ratable basis over a calendar year.

Swap Contracts—Crude Oil

Year	Settlement Index	Bbls	Weighted Average Price ($/Bbls)
2023	ICE Brent	123,680	$80.00

Swap Contracts—Natural Gas

Year	Settlement Index	MMBtu	Weighted Average Price ($/MMBtu)
2023	NYMEX Henry Hub	227,542	$3.80

During the three months ended March 31, 2023, the average monthly notional volume of fixed price swap contracts—crude oil and fixed price swap contracts—natural gas outstanding were 153,486 Bbls and 285,889 MMBtus, respectively.

24

FS Energy and Power Fund

Notes to Unaudited Consolidated Financial Statements (continued)

(in thousands, except share and per share amounts)

Note 6. Financial Instruments (continued)

The following table presents the fair value of open swap contracts (which are not considered to be hedging instruments for accounting disclosure purposes) as of March 31, 2023 and December 31, 2022:

	March 31, 2023 (Unaudited)				December 31, 2022
Instrument	Asset(1)		Liability(2)		Asset(1)		Liability(2)
Swap Contracts—Crude Oil	$	161	$	—	$	—	$	(572)
Swap Contracts—Natural Gas	218		—		—		(126)
Total	$	379	$	—	$	—	$	(698)

______________

(1)    Reflected on the Company's consolidated balance sheets as: Unrealized appreciation on swap contracts.

(2)    Reflected on the Company's consolidated balance sheets as: Unrealized depreciation on swap contracts.

The effect of swap contracts (which are not considered to be hedging instruments for accounting disclosure purposes) on the Company's statements of operations for the three months ended March 31, 2023 and 2022 was as follows:

	Net Realized Gains (Losses)(1)				Net Change in Unrealized Appreciation (Depreciation)(2)
	Three Months Ended March 31,				Three Months Ended March 31,
Instrument	2023		2022		2023		2022
Swap Contracts—Crude Oil	$	(100)	$	(392)	$	733	$	(2,976)
Swap Contracts—Natural Gas	112		(24)		344		(506)
Total	$	12	$	(416)	$	1,077	$	(3,482)

______________

(1)    Reflected on the Company's consolidated statements of operations as: Net realized gain (loss) on swap contracts.

(2)    Reflected on the Company's consolidated statements of operations as: Net change in unrealized appreciation (depreciation) on swap contracts.

Offsetting of Derivative Instruments