OHA Investment Corporation
Aug 9, 2011

NGP Capital Resources Company Announces Second Quarter 2011 Financial Results and Portfolio Activity

HOUSTON, Aug. 9, 2011 (GLOBE NEWSWIRE) -- NGP Capital Resources Company (Nasdaq:NGPC) (the "Company") today announced its financial results for the three- and six-months ended June 30, 2011.

Highlights for the quarter ended June 30, 2011:

Quarterly dividends declared: $0.18 per share, an increase of 6% from the second quarter of 2010
Net asset value: $208.3 million, or $9.63 per share
 
Operating Results:
Total investment income: $9.1 million, increasing $3.0 from second quarter of 2010
Net investment income: $4.4 million, increasing $1.1 million from second quarter of 2010
Net realized capital gain on investments: $1.0 million, compared to $0 in second quarter of 2010
Net unrealized loss on investments: $21.8 million, or $(1.01) per share
Net increase (decrease) in net assets resulting from operations per share: $(0.76), compared to $0.18 in the second quarter of 2010
 
Portfolio and Investment Activity:
New investments made in portfolio companies during the quarter: $37.0 million
Redemption of portfolio securities during the quarter: $16.1 million
Total invested in portfolio companies at June 30, 2011: $199.7 million
Number of portfolio companies at June 30, 2011: 19

Portfolio and Investment Activity

During the quarter ended June 30, 2011, we funded a $7.7 million investment in Spirit Resources, LLC, a new portfolio company, and an additional $29.3 million to existing portfolio companies, including $25.0 million to acquire a limited term overriding royalty interest in certain offshore Gulf of Mexico oil and gas producing properties operated by ATP Oil & Gas Corporation.  Also during the second quarter of 2011, we received principal repayments, realizations and settlements totaling $16.1 million.  

In June 2011, we entered into definitive agreements to sell all of our interests in Alden Resources, LLC ("Alden") and Gatliff Services, LLC ("Gatliff") for $73.2 million in cash, subject to a working capital adjustment, and a contingent future payment of up to $6.8 million. This transaction resulted in the recognition of $4.5 million of previously unrecognized PIK interest income, and in revisions to values attributable to term loans, overriding royalty interests and equity interests in these portfolio companies. The combined investments in Alden and Gatliff generated an all in, cash-on-cash, return in excess of 16% per annum; however, the revisions to values from March 31, 2011 resulted in a net unrealized loss of $9.8 million, or $0.45 per share, in the second quarter. This transaction closed on July 28, 2011. 

Primarily as a result of continued deterioration in the ethanol market and the resulting decline in the fair value of the collateral securing our investments, we reduced the carrying value of our investments in and receivables from BioEnergy Holding LLC ("BioEnergy") and its affiliate, Bionol Clearfield LLC ("Bionol"), to zero. On July 20, 2011, BioEnergy and Bionol filed for protection under Chapter 7 of the U.S. Bankruptcy Code, with the intention of selling Bionol's ethanol plant. Bionol has been involved in an arbitration case in connection with a contractual dispute with the former major purchaser of its ethanol; however, we believe it is unlikely that the ultimate outcome of these events will provide any significant realization on our investment. This reduction in carrying value resulted in an unrealized loss of $10.2 million, or $0.47 per share, during the second quarter, and a reduction in previously accrued interest income of $0.6 million

At June 30, 2011, our targeted investment portfolio consisted of nineteen portfolio companies with values totaling $199.7 million. The weighted average yield on targeted portfolio investments (exclusive of capital gains or losses) was 9.1% at June 30, 2011.

Operating Results — Three months ended June 30, 2011

Investment income totaled $9.1 million for the quarter ended June 30, 2011, compared to $6.0 million in the corresponding quarter of 2010. This increase is primarily attributable the recognition of $4.5 million of previously reserved PIK interest income on Alden's Tranche B Term Loan, partially offset by the reserve of $0.6 million of previously recorded interest income from BioEnergy and Bionol and $0.6 million of fee income recorded in the second quarter of 2010 related to a specific transaction. Operating expenses for the second quarter of 2011 were $3.4 million, increasing $0.4 million, or 13%, compared to the second quarter of 2010. The increase is primarily attributable to increased management and incentive fees due to incentive fees earned on higher investment income, and increased interest expense due to increased average borrowings. The resulting net investment income, including a $1.3 million provision for income taxes, was $4.4 million for the quarter ended June 30, 2011, compared to $3.3 million in the quarter ended June 30, 2010.  

We had a net realized capital gain of $1.0 million in the second quarter of 2011, resulting from the sale of our royalty interest in Greenleaf Investments, LLC. We recorded no realized gains or losses in the second quarter of 2010.

During the three months ended June 30, 2011, we recorded net increases in unrealized depreciation on portfolio investments totaling $21.8 million, primarily as a result of the BioEnergy writedown totaling $10.2 million and unrealized losses on Alden and Gatliff totaling $9.8 million.

Overall, we had a net decrease in net assets resulting from operations of $16.4 million, or $0.76 per common share, for the three months ended June 30, 2011 and dividends declared during the period of $0.18 per common share, resulting in net asset value per common share of $9.63 as of June 30, 2011. 

Liquidity and Capital Resources

At June 30, 2011, we had cash and cash equivalents of $50.0 million. We had $40.0 million outstanding under our Investment Facility at June 30, 2011, and $24.3 million available for borrowing. In addition, we received $73.2 million in July in connection with the sale of our interests in Alden and Gatliff.

Conference Call at 11:00 a.m. Eastern Time on August 9, 2011 

We invite all interested persons to participate in our conference call on Tuesday, August 9, 2011 at 11:00 a.m. Eastern Time. The dial-in number for the call is (877) 303-7617. International callers should dial (760) 666-3609.  We will maintain an audio replay of the call from 2:00 p.m. Eastern Time on August 9, 2011 through midnight August 15, 2011. The replay dial-in numbers are (855) 859-2056 in the U.S. and (404) 537-3406 for international callers. The replay pass code is 85106464. The call will also be accessible via the internet, on our Investor Relations page at www.ngpcrc.com.

NGP CAPITAL RESOURCES COMPANY
CONSOLIDATED BALANCE SHEETS
 
  June 30, 2011 December 31, 2010
  (Unaudited)  
     
Assets    
Investments in portfolio securities at fair value     
 Control investments - majority owned     
 (cost: $101,989,595 and $89,502,910, respectively)   $ 74,221,913  $ 70,973,316
 Affiliate investments     
 (cost: $36,083,334 and $34,146,328, respectively)   13,463,505  33,064,028
 Non-affiliate investments     
 (cost: $113,556,532 and $114,852,057, respectively)   112,012,623  112,025,645
Investments in U.S. Treasury Bills at fair value    
 (cost: $30,600,298 and $0, respectively)   30,599,663  -- 
Total investments  230,297,704  216,062,989
     
Cash and cash equivalents  50,010,276  68,456,908
Accounts receivable and other current assets  1,242,430  3,095,882
Interest receivable  1,397,457  2,236,122
Prepaid assets  1,342,941  1,736,732
 Total current assets  53,993,104  75,525,644
     
Deferred tax assets  5,615,099  -- 
     
Total assets  $ 289,905,907  $ 291,588,633
     
Liabilities and net assets    
Current liabilities    
Accounts payable and accrued expenses  $ 485,831  $ 525,111
Management and incentive fees payable  1,591,714  1,376,032
Dividends payable  3,893,076  3,893,076
Income taxes payable  18,052  50,350
Current portion of long-term debt  30,000,000  -- 
Deferred tax liabilities  5,630,437  -- 
Total current liabilities  41,619,110  5,844,569
     
Deferred tax liabilities  --   18,136
Long-term debt, less current portion  40,000,000  50,000,000
     
Total liabilities  81,619,110  55,862,705
     
Net assets    
 Common stock, $.001 par value, 250,000,000 shares authorized;    
21,628,202 shares issued and outstanding  21,628  21,628
 Paid-in capital in excess of par  293,789,803  293,789,803
 Undistributed net investment income (loss)  (8,234,138)  (7,845,925)
 Undistributed net realized capital gain (loss)  (32,319,233)  (32,778,782)
 Net unrealized appreciation (depreciation) of portfolio securities  (44,971,263)  (17,460,796)
     
Total net assets  208,286,797  235,725,928
     
Total liabilities and net assets  $ 289,905,907  $ 291,588,633
     
Net asset value per share  $ 9.63  $ 10.90
     
NGP CAPITAL RESOURCES COMPANY
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
         
  For The Three Months Ended For The Six Months Ended
  June 30, 2011 June 30, 2010 June 30, 2011 June 30, 2010
Investment income        
Interest income:        
Control investments - majority owned  $ 5,810,435  $ 1,095,924  $ 7,166,344  $ 2,195,903
Affiliate investments  (320,821)  899,981  631,044  1,732,894
Non-affiliate investments  3,038,632  3,379,706  6,517,637  6,557,247
Royalty income (loss), net of amortization:        
Control investments - majority owned  201,785  459,974  680,135  754,785
Non-affiliate investments  270,906  (444,619)  526,688  (962,675)
Other income  58,887  640,000  92,637  946,079
         
Total investment income  9,059,824  6,030,966  15,614,485  11,224,233
         
Operating expenses        
Management and incentive fees  1,591,714  1,423,830  2,925,002  2,762,399
Professional fees  236,026  221,672  435,066  486,976
Insurance expense  182,303  185,658  364,846  371,316
Interest expense and fees  457,256  304,118  766,677  617,181
Other general and administrative expenses  896,969  843,568  1,726,704  1,789,988
         
Total operating expenses  3,364,268  2,978,846  6,218,295  6,027,860
         
Net investment income before income taxes  5,695,556  3,052,120  9,396,190  5,196,373
         
Benefit (provision) for income taxes  (1,295,534)  222,496  (1,998,250)  509,570
         
Net investment income   4,400,022  3,274,616  7,397,940  5,705,943
         
Net realized capital gain (loss) on investments        
Net realized capital gain (loss) on portfolio securities:        
Control investments - majority owned  --   --   81,275  -- 
Non-affiliate investments  984,571  --   378,210  -- 
Benefit (provision) for taxes on capital gain (loss)   (223)  (9,462)  64  (18,613)
         
Total net realized capital gain (loss) on investments  984,348  (9,462)  459,549  (18,613)
         
Net unrealized gain (loss) on investments        
Net increase (decrease) in unrealized appreciation        
(depreciation) on portfolio securities        
 Control investments - majority owned  (12,665,451)  (93,176)  (9,238,088)  (86,675)
 Affiliate investments  (10,343,205)  (748,010)  (21,537,528)  (189,291)
 Non-affiliate investments  (58,606)  1,733,136  1,281,867  4,047,125
 Benefit (provision) for taxes on unrealized gain (loss)  1,289,139  (284,237)  1,983,282  (577,386)
         
 Total net unrealized gain (loss) on investments  (21,778,123)  607,713  (27,510,467)  3,193,773
         
Net increase (decrease) in net assets resulting         
from operations  $ (16,393,753)  $ 3,872,867  $ (19,652,978)  $ 8,881,103
         
Net increase (decrease) in net assets resulting        
from operations per common share  $ (0.76)  $ 0.18  $ (0.91)  $ 0.42
         
  For The Three Months Ended For The Six Months Ended
Per Share Data (1) June 30, 2011 June 30, 2010 June 30, 2011 June 30, 2010
  unaudited unaudited unaudited unaudited
         
Net asset value, beginning of period  $ 10.57  $ 11.17  $ 10.90  $ 11.10
         
Net investment income   0.20  0.15  0.34  0.26
         
Net realized and unrealized gain (loss) on portfolio securities  (0.96)  0.03  (1.25)  0.16
         
Net increase (decrease) in net assets resulting from        
operations  (0.76)  0.18  (0.91)  0.42
         
Net asset value before dividends  9.81  11.35  9.99  11.52
         
Dividends declared  (0.18)  (0.17)  (0.36)  (0.34)
         
Net asset value, end of period  $ 9.63  $ 11.18  $ 9.63  $ 11.18
         
(1)     We base Per Share Data on common shares outstanding at the end of the period.

About NGP Capital Resources Company

NGP Capital Resources Company is a closed-end, non-diversified management investment company that has elected to be regulated as a business development company under the Investment Company Act of 1940. We principally invest in energy related private companies and from time to time, we may also invest in public companies. We invest primarily in senior secured and mezzanine loans according to our business plan and in some instances receive equity interests in portfolio companies in connection with such investments. Our manager is NGP Investment Advisor, LP, an affiliate of NGP Energy Capital Management, L.L.C. NGP Energy Capital Management, L.L.C., based in Irving, Texas, is a leading investment firm with over $9.5 billion of cumulative capital under management since inception, serving all sectors of the energy industry.

The NGP Capital Resources Company logo is available at http://www.globenewswire.com/newsroom/prs/?pkgid=4362

Forward-Looking Statements This press release may contain forward-looking statements.  We may use words such as "anticipates," "believes," "intends," "plans," "expects," "projects," "estimates," "will," "should," "may" and similar expressions to identify forward-looking statements.  These forward-looking statements are subject to various risks and uncertainties. Certain factors could cause actual results and conditions to differ materially from those projected, including the uncertainties associated with the timing of transaction closings, changes in interest rates, availability of transactions, the future operating results of our portfolio companies, regulatory factors, changes in regional, national, or international economic conditions and their impact on the industries in which we invest, other changes in the conditions of the industries in which we invest and other factors enumerated in our filings with the Securities and Exchange Commission (the "SEC"). You should not place undue reliance on such forward-looking statements, which speak only as of the date they are made. We undertake no obligation to update our forward-looking statements made herein, unless required by law. Persons considering an investment in NGP Capital Resources Company should consider the investment objectives, risks, and charges and expenses of the Company carefully before investing.  Such information and other information about us is available in our annual report on Form 10-K, in our quarterly reports on Form 10-Q and in prospectuses we issue from time to time in connection with our offering of securities. Such materials are filed with the SEC and copies are available on the SEC's website, www.sec.gov, and in the Investor Relations section of our website at www.ngpcrc.com.  Prospective investors should read such materials carefully before investing. 

INVESTMENT CONTACT: Please send investment proposals to: NGP Capital Resources Company, Kelly Plato (kplato@ngpcrc.com), Dan Schockling (dschockling@ngpcrc.com), Hans Hubbard (hhubbard@ngpcrc.com), or Chris Ryals (cryals@ngpcrc.com), 713-752-0062.

CONTACT: Investor Relations Contact:

         Steve Gardner

         (investor_relations@ngpcrc.com)

         713-752-0062

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Source: NGP Capital Resources Company

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