OHA Investment Corporation
NGP Capital Resources CO (Form: 10-Q, Received: 08/06/2008 16:20:41)
UNITED STATES  
SECURITIES AND EXCHANGE COMMISSION  
Washington, D.C. 20549  
 

 
FORM 10-Q  
  (Mark One)
x
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 
For the quarterly period ended June 30, 2008
 
OR  
 
¨
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 
For the transition period              to             
 
Commission file number: 814-00672  
 

 
NGP Capital Resources Company
(Exact name of registrant as specified in its charter)
 

 
Maryland
20-1371499
(State or other jurisdiction of
incorporation or organization)
(I.R.S. Employer
Identification No.)
   
1221 McKinney Street, Suite 2975
Houston, Texas
77010
(Address of principal executive offices)
(Zip Code)
 
(713) 752-0062
(Registrant’s telephone number, including area code)

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 o

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

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

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

As of August 5, 2008, there were 21,628,202 shares of the registrant’s common stock outstanding.



TABLE OF CONTENTS

PART I - FINANCIAL INFORMATION
1
   
 
Item 1. Consolidated Financial Statements
1
 
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
25
 
Item 3. Quantitative and Qualitative Disclosures About Market Risk
33
 
Item 4. Controls and Procedures
33
     
PART II – OTHER INFORMATION
33
   
 
Item 1. Legal Proceedings
33
 
Item 1A. Risk Factors
33
 
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
35
 
Item 3. Defaults Upon Senior Securities
35
 
Item 4. Submission of Matters to a Vote of Security Holders
35
 
Item 5. Other Information
35
 
Item 6. Exhibits
36



PART I - FINANCIAL INFORMATION
I tem 1. Consolidated Financial Statements  

NGP CAPITAL RESOURCES COMPANY
CONSOLIDATED BALANCE SHEETS

 
 
June 30, 2008
 
 
 
 
 
(Unaudited)
 
December 31, 2007
 
Assets
         
Investments in portfolio securities at fair value
(cost: $331,601,471 and $277,947,454, respectively)
 
$
338,074,483
 
$
284,228,573
 
Investments in corporate notes at fair value
(cost: $11,609,569 and $11,631,599, respectively)
   
8,821,600
   
8,955,500
 
Investments in commodity derivative instruments at fair value
(cost: $1,546,700 and $0, respectively)
   
1,331,854
   
-
 
Investments in U.S. Treasury Bills, at amortized cost which approximates fair value
   
177,958,876
   
163,925,625
 
Total investments
   
526,186,813
   
457,109,698
 
 
         
Cash and cash equivalents
   
11,108,533
   
18,437,115
 
Accounts receivable
   
10,308
   
17,569
 
Interest receivable
   
1,383,271
   
647,839
 
Prepaid assets
   
1,070,521
   
2,020,655
 
 
         
Total assets
 
$
539,759,446
 
$
478,232,876
 
 
         
Liabilities and stockholders' equity (net assets)
         
Current liabilities
         
Accounts payable
 
$
595,572
 
$
928,761
 
Management and incentive fees payable
   
1,838,009
   
2,032,107
 
Dividends payable
   
8,651,281
   
9,012,671
 
Total current liabilities
   
11,084,862
   
11,973,539
 
 
         
Long-term debt
   
224,250,000
   
216,000,000
 
 
         
Total liabilities
   
235,334,862
   
227,973,539
 
 
         
Commitments and contingencies (Note 8)
         
 
         
Stockholders’ equity (net assets)
         
Common stock, $.001 par value, 250,000,000 shares authorized; 21,628,202 and 17,500,332 shares issued and outstanding, respectively
   
21,628
   
17,500
 
Paid-in capital in excess of par
   
307,928,101
   
245,881,078
 
Undistributed net investment income (loss)
   
(7,854,475
)
 
(103,394
)
Undistributed net realized capital gain (loss)
   
859,133
   
859,133
 
Net unrealized appreciation (depreciation) of portfolio securities, corporate notes and commodity derivative instruments
   
3,470,197
   
3,605,020
 
 
         
Total stockholders’ equity (net assets)
   
304,424,584
   
250,259,337
 
 
         
Total liabilities and stockholders' equity (net assets)
 
$
539,759,446
 
$
478,232,876
 
 
         
Net asset value per share
 
$
14.08
 
$
14.30
 

(See accompanying notes to consolidated financial statements)

1


NGP CAPITAL RESOURCES COMPANY
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)

 
 
For the Three Months Ended 
 
For the Six Months Ended 
 
 
 
June 30, 2008
 
June 30, 2007
 
June 30, 2008
 
June 30, 2007
 
Investment income
                 
Interest income
 
$
8,152,713
 
$
9,507,862
 
$
17,650,679
 
$
17,929,117
 
Dividend income
   
-
   
93,710
   
-
   
93,710
 
Other income
   
44,520
   
142,237
   
84,890
   
197,745
 
 
                 
Total investment income
   
8,197,233
   
9,743,809
   
17,735,569
   
18,220,572
 
 
                 
Operating expenses
                 
Management fees
   
1,838,009
   
1,585,494
   
3,638,215
   
3,150,003
 
Incentive fees
   
-
   
1,054,358
   
-
   
1,054,358
 
Professional fees
   
224,390
   
174,987
   
433,369
   
328,583
 
Insurance expense
   
198,812
   
132,423
   
397,629
   
264,846
 
Interest expense and fees
   
1,440,572
   
1,619,226
   
3,881,648
   
3,176,422
 
State franchise taxes
   
23,196
   
34,612
   
32,712
   
34,593
 
Other general and administrative expenses
   
713,063
   
631,491
   
1,451,664
   
1,283,063
 
 
                 
Total operating expenses
   
4,438,042
   
5,232,591
   
9,835,237
   
9,291,868
 
 
                 
Net investment income (loss)
   
3,759,191
   
4,511,218
   
7,900,332
   
8,928,704
 
 
                 
Net realized capital gain (loss) on portfolio securities, corporate notes and commodity derivative instruments
   
-
   
6,666,858
   
-
   
6,666,858
 
Net increase (decrease) in unrealized appreciation (depreciation) on portfolio securities, corporate notes and commodity derivative instruments
   
1,611,339
   
2,291,165
   
(134,823
)
 
6,021,150
 
 
                 
Net increase (decrease) in stockholders' equity (net assets) resulting from operations
 
$
5,370,530
 
$
13,469,241
 
$
7,765,509
 
$
21,616,712
 
 
                 
Net increase (decrease) in stockholders' equity (net assets) resulting from operations per common share
 
$
0.25
 
$
0.78
 
$
0.36
 
$
1.25
 

(See accompanying notes to consolidated financial statements)

2


NGP CAPITAL RESOURCES COMPANY
CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY (NET ASSETS)

 
 
 
 
 
 
 
 
 
 
 
 
Net Unrealized
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Appreciation (Depreciation)
 
Total
 
 
 
 
 
 
 
Paid-in Capital 
 
Undistributed
 
Undistributed
 
of Portfolio Securities,
 
Stockholders'
 
 
 
Common Stock
 
in Excess
 
Net Investment
 
Net Realized
 
Corporate Notes and Commodity
 
Equity
 
 
 
Shares
 
Amount
 
of Par
 
Income (Loss)
 
Capital Gain (Loss)
 
Derivative Instruments
 
(Net Assets)
 
Balance at December 31, 2007
   
17,500,332
 
$
17,500
 
$
245,881,078
 
$
(103,394
)
$
859,133
 
$
3,605,020
 
$
250,259,337
 
Net increase in stockholders' equity (net assets) resulting from operations
   
-
   
-
   
-
   
7,900,332
   
-
   
(134,823
)
 
7,765,509
 
 
   
   
   
   
   
   
   
 
Issuance of common stock from public offering (net of underwriting costs)
   
4,086,388
   
4,086
   
62,109,012
   
-
   
-
   
-
   
62,113,098
 
 
   
   
   
   
   
   
   
 
Offering costs
   
-
   
-
   
(739,265
)
 
-
   
-
   
-
   
(739,265
)
 
   
   
   
   
   
   
   
 
Dividends declared
   
-
   
-
   
-
   
(15,651,413
)
 
-
   
-
   
(15,651,413
)
Issuance of common stock under dividend reinvestment plan
   
41,482
   
42
   
677,276
   
-
   
-
   
-
   
677,318
 
Balance at June 30, 2008 (unaudited)
   
21,628,202
 
$
21,628
 
$
307,928,101
 
$
(7,854,475
)
$
859,133
 
$
3,470,197
 
$
304,424,584
 

(See accompanying notes to consolidated financial statements)

3


NGP CAPITAL RESOURCES COMPANY
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)

 
 
For the Six Months Ended
 
 
 
June 30, 2008
 
June 30, 2007
 
Cash flows from operating activities
         
Net increase in stockholders' equity (net assets) resulting from operations
 
$
7,765,509
 
$
21,616,712
 
Adjustments to reconcile net increase in stockholders' equity (net assets) resulting from operations to net cash used in operating activities
         
Payment-in-kind interest
   
(1,728,817
)
 
(1,935,532
)
Payment-in-kind dividend
   
-
   
(93,710
)
Net amortization of premiums, discounts and fees
   
(589,096
)
 
(1,498,175
)
Change in unrealized (appreciation) depreciation on portfolio securities, corporate notes and commodity derivative instruments
   
134,823
   
(6,021,150
)
Effects of changes in operating assets and liabilities
         
Accounts receivable
   
7,261
   
452,184
 
Interest receivable
   
(735,432
)
 
607,169
 
Prepaid assets
   
950,134
   
477,171
 
Accounts payable
   
(527,287
)
 
1,024,280
 
Purchase of investments in portfolio securities, corporate notes and commodity derivative instruments
   
(81,412,478
)
 
(152,705,108
)
Redemption of investments in portfolio securities, corporate notes and commodity derivative instruments
   
28,551,706
   
108,579,495
 
Net sale of investments in U.S. Treasury Bills
   
(14,033,251
)
 
41,167,748
 
 
         
Net cash provided by (used in) operating activities
   
(61,616,928
)
 
11,671,084
 
 
         
Cash flows from financing activities
         
Net proceeds from the issuance of common stock
   
62,790,415
   
-
 
Borrowings under revolving credit facility
   
108,000,000
   
-
 
Repayments on revolving credit facility
   
(99,750,000
)
 
-
 
Offering costs from the issuance of common stock
   
(739,265
)
 
-
 
Dividends paid
   
(16,012,804
)
 
(4,257,648
)
 
         
Net cash provided by (used in) financing activities
   
54,288,346
   
(4,257,648
)
 
         
Net increase (decrease) in cash and cash equivalents
   
(7,328,582
)
 
7,413,436
 
Cash and cash equivalents, beginning of period
   
18,437,115
   
12,334,329
 
 
         
Cash and cash equivalents, end of period
 
$
11,108,533
 
$
19,747,765
 

(See accompanying notes to consolidated financial statements)

4


NGP CAPITAL RESOURCES COMPANY
CONSOLIDATED SCHEDULE OF INVESTMENTS
June 30, 2008
(Unaudited)

Portfolio Company
 
Energy Industry Segment
 
Investment (2) (4)
 
Principal
 
Cost
 
Fair Value (3)
 
TARGETED INVESTMENTS  
               
Venoco, Inc. (1) (11)
   
Oil & Natural Gas
   
Senior Notes (7)
 
$
12,000,000
 
$
11,922,600
 
$
11,730,000
 
 
   
Production and
   
(8.75%, due 12/15/2011)
 
 
 
   
 
   
 
 
     
Development 
   
 
                   
 
          
 
 
 
  
   
 
   
 
 
Chroma Exploration &
   
Oil & Natural Gas
   
9,428 Shares Series A Participating
   
-
   
2,221,710
   
-
 
Production, Inc. (1) (11)
   
Production and
   
Convertible Preferred Stock (9)
 
 
   
   
 
 
   
Development
   
8,610 Shares Series AA Participating
   
-
   
2,089,870
   
1,567,402
 
 
          
Convertible Preferred Stock (9)
 
 
   
   
 
 
          
8.11 Shares Common Stock (5)
 
 
-
   
-
   
-
 
 
          
Warrants (5) (13)
 
 
-
   
-
   
-
 
 
   
 
   
  
   
 
   
 
   
  
 
Resaca Exploitation,
   
Oil & Natural Gas
   
Senior Secured
   
26,993,572
   
26,538,095
   
26,538,095
 
LP (1) (11)
   
Production and
   
Multiple-Advance Tranche A Term Loan
   
   
   
 
  
   
Development 
   
(LIBOR + 6.00%, due 5/01/2012)
 
 
   
   
 
 
         
Overriding Royalty Interest (6)
 
 
30,000
   
28,616
   
750,000
 
  
   
  
   
 
   
 
   
 
   
 
 
           
Senior Secured Tranche B Term Loan 
   
6,000,000
   
6,000,000
   
6,000,000
 
 
          
(LIBOR + 9.00%, due 8/31/2008)
 
 
   
   
 
 
          
Overriding Royalty Interest (6)
 
 
30,000
   
28,616
   
750,000
 
 
   
  
   
   
   
   
 
 
   
 
   
Senior Subordinated 
   
4,000,000
   
4,000,000
   
4,000,000
 
  
       
 
 
Secured Convertible Term Loan
   
   
   
 
 
   
  
   
(6.00% cash, 8.00% PIK, due 5/01/2012)
 
 
   
   
 
 
   
   
 
   
   
 
   
 
 
Crossroads Energy,
   
Oil & Natural Gas
   
Senior Secured
   
4,508,755
   
4,434,261
   
4,434,261
 
LP (1) (11)
   
Production and
   
Multiple-Advance Term Loan
   
 
   
 
   
 
 
 
   
Development 
   
(The greater of 10.0% or LIBOR + 5.50%,
 
 
   
 
   
 
 
 
          
due 6/29/2009)
 
 
 
   
 
   
 
 
 
          
Overriding Royalty Interest (6)
 
 
10,000
   
6,653
   
250,000
 
 
   
  
   
  
   
 
   
 
   
  
 
Rubicon Energy Partners,
   
Oil & Natural Gas
   
Senior Subordinated Secured
   
5,000,000
   
5,000,000
   
5,000,000
 
LLC (8) (11)
   
Production and
   
Multiple-Advance Term Loan
 
 
 
 
 
 
 
 
 
 
 
 
 
Development 
 
 
(LIBOR + 8.00%, due 5/01/2010) 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
LLC Units (4,000 units) (5) 
   
-
   
4,000,000
   
12,000,000
 
 
   
 
   
 
   
 
   
 
   
 
 
BSR Loco Bayou,
   
Oil & Natural Gas
   
Senior Secured
   
3,055,455
   
2,584,326
   
1,722,239
 
LLC (1) (11) (12)
   
Production and  
   
Multiple-Advance Term Loan
   
   
   
 
 
   
Development 
   
(LIBOR + 5.50% cash, +7.50% PIK - until 8/15/08,
   
   
   
 
 
       
cash only thereafter, due 8/15/2009) (9)
 
 
   
   
 
 
         
Overriding Royalty Interest (6)
 
 
20,000
   
19,638
   
20,000
 
 
         
Warrants (5) (14)
 
 
10,000
   
10,000
   
-
 
 
       
 
             
Sonoran Energy,
   
Oil & Natural Gas
   
Warrants (5) (15)
 
 
10,000
   
10,000
   
10,000
 
Inc. (1) (11)
   
Production and
   
 
 
   
   
                 
 
     
Development 
                         
           
 
                   
Nighthawk Transport I,
   
Energy Services
   
Second Lien
   
14,328,347
   
13,501,342
   
13,501,342
 
LP (1) (11)          
Term Loan B
                   
 
          
(The greater of 15.0% or LIBOR + 10.50%,
   
 
   
 
   
 
 
 
          
due 10/03/2010)
 
 
 
   
 
   
 
 
 
          
LP Units (5)
 
 
224
   
224
   
150,000
 
  
          
Warrants (5) (16)
 
 
850,000
   
850,000
   
850,000
 
 
   
 
   
   
   
 
   
 
 
 
          
Second Lien
   
1,595,043
   
1,572,047
   
1,572,047
 
 
          
Delayed Draw Term Loan B
   
 
   
 
   
 
 
 
          
(The greater of 15.0% or LIBOR + 10.50%,
   
 
   
 
   
 
 
 
          
due 10/03/2010)
 
 
 
   
 
   
 
 

5


NGP CAPITAL RESOURCES COMPANY
CONSOLIDATED SCHEDULE OF INVESTMENTS
June 30, 2008
(Unaudited)
(Continued)

Portfolio Company
 
Energy Industry Segment
 
Investment (2) (4)
 
Principal
 
Cost
 
Fair Value (3)
 
TARGETED INVESTMENTS - Continued
 
 
 
 
 
 
 
 
 
Alden Resources,
   
Coal Production
   
Senior Secured
   
36,285,168
   
33,553,912
   
33,553,912
 
LLC (1) (11)          
Multiple-Advance Term Loan
                   
 
     
 
 
(LIBOR + 8.00% cash, due 1/05/2013)
 
 
   
   
 
 
   
 
   
Royalty Interest (6)
 
 
2,660,000
   
2,598,578
   
2,660,000
 
 
   
   
Warrants (5) (17)
 
 
100,000
   
100,000
   
100,000
 
 
   
   
   
   
   
 
Tammany Oil & Gas,
   
Oil & Natural Gas
   
Senior Secured
   
29,447,804
   
29,103,653
   
29,103,653
 
LLC (1) (11)    
Production and
   
Multiple-Advance Term Loan
   
  
   
 
   
 
 
 
   
Development
 
 
(The greater of 11.0% or LIBOR + 6.00%,
   
 
   
 
   
 
 
 
   
  
   
due 3/21/2010)
 
 
 
   
 
   
 
 
 
          
Overriding Royalty Interest (5) (6)
 
 
200,000
   
200,000
   
400,000
 
 
   
  
   
 
   
 
   
 
   
 
 
TierraMar Energy
   
Oil & Natural Gas
   
Overriding Royalty Interest (6)
 
 
20,000
   
17,968
   
200,000
 
LP (8) (11)
   
Production and
   
Class A Preferred LP Units (5)
 
 
16,634,830
   
16,634,830
   
16,634,830
 
     
Development  
                         
 
   
   
   
   
   
 
   
 
   
 
 
Anadarko Petroleum
   
Oil & Natural Gas
   
Multiple-Advance Net Profits Interest
   
55,082,664
   
55,177,417
   
55,177,417
 
Corporation 2007-III
   
Production and
   
(Due 4/23/2032)
 
 
 
   
 
   
 
 
Drilling Fund (1) (11)    
Development
                         
 
   
  
   
  
   
  
   
  
   
 
  
Formidable, LLC (1) (11)
   
Oil & Natural Gas
   
Senior Secured
   
37,000,000
   
37,000,000
   
 37,000,000
 
     
Production and
   
Multiple-Advance Term Loan
   
 
   
 
   
 
 
  
   
Development
   
(LIBOR + 5.50% cash, due 5/31/2008) (9)
 
 
 
   
 
   
 
 
  
           
Warrants (5) (18)
 
 
500,000
   
500,000
   
500,000
 
 
   
   
   
   
   
 
DeanLake Operator,
   
Oil & Natural Gas
   
Senior Secured
   
13,418,453
   
13,217,846
   
13,217,846
 
LLC (1) (11) (12)    
Production and
   
Multiple-Advance Term Loan
   
 
   
 
   
 
 
 
   
Development
   
(LIBOR + 7.00%, due 6/25/2010)
 
 
 
   
 
   
 
 
 
            
Overriding Royalty Interest (6)
 
 
20,000
   
19,279
   
20,000
 
 
           
Warrants (5) (19)
 
 
10,000
   
10,000
   
10,000
 
 
   
 
   
   
 
   
 
   
 
 
Bionol Clearfield,
   
Alternative Fuels and
   
Senior Secured Tranche C
   
5,000,000
   
5,000,000
   
5,000,000
 
LLC (1) (11)    
Specialty Chemicals 
   
Construction Loan
   
 
   
 
   
 
 
 
          
(LIBOR + 7.00%, due 09/06/2016)
 
 
 
   
 
   
 
 
 
   
 
   
   
  
    
 
   
 
 
BioEnergy Holding,
   
Alternative Fuels and
   
Senior Secured Notes
   
10,000,000
   
9,1 12,721
   
9,112,721
 
LLC (1) (11)    
Specialty Chemicals 
   
(15.00%, due 03/06/2015)
 
 
 
   
 
   
 
 
 
          
BioEnergy International Warrants (5) (20)
 
 
595,845
   
595,845
   
595,845
 
 
          
BioEnergy Holding Units (5)
 
 
376,687
   
376,687
   
376,687
 
 
   
 
   
 
   
 
   
 
   
 
 
Greenleaf Investments,
   
Oil & Natural Gas
   
Senior Secured
   
10,999,670
   
10,666,186
   
10,666,186
 
LLC (1) (11)    
Production and  
   
Multiple-Advance Term Loan
   
 
   
 
   
 
 
 
   
Development
   
(The greater of 10.5% or LIBOR + 6.00%,
   
 
   
 
   
 
 
 
          
due 04/30/2011)
 
 
 
   
 
   
 
 
 
         
Overriding Royalty Interest (6)
 
 
100,000
   
98,551
   
100,000
 
 
   
 
   
   
   
   
 
ATP Oil & Gas
   
Oil & Natural Gas
   
Limited Term Royalty Interest
   
32,800,000
   
32,800,000
   
32,800,000
 
Corporation (1) (11)    
Production and
   
 
   
 
   
 
   
 
 
 
   
Development
   
 
   
 
   
 
   
 
 
                     
Subtotal Targeted Investments (62.95% of total investments)  
   
 
 
$
331,601,471
 
$
338,074,483
 

6


NGP CAPITAL RESOURCES COMPANY
CONSOLIDATED SCHEDULE OF INVESTMENTS
June 30, 2008
(Unaudited)
(Continued)

Issuing Company
 
Energy Industry Segment
 
Investment (2) (4)
 
Principal
 
Cost
 
Fair Value (3)
 
CORPORATE NOTES
                     
Pioneer Natural Resources Co. (11)
   
Oil & Natural Gas
   
Senior Notes, 7.2%, due 2028
 
$
10,000,000
 
$
11,609,569
 
$
8,821,600
 
 
   
Production and
   
   
   
   
 
     
Development
                         
 
   
   
   
   
   
 
Subtotal Corporate Notes ( 1.64% of total investments)
       
$
11,609,569
 
$
8,821,600
 
 
   
   
   
   
   
 
COMMODITY DERIVATIVE INSTRUMENTS
 
   
   
   
 
Put Options (11) (21)
   
 
 
 
Put Options with BP Corp. NA to sell up to 615,000 MMBtu of
   
 
$
359,775
 
$
228,195
 
 
         
natural gas at a strike price of $10.00 per MMBtu. 12 monthly
   
   
   
 
 
         
contracts beginning on July 1, 2008 and expiring on June 30, 2009.
   
   
   
 
 
   
   
   
   
   
 
 
         
Put Options with BP Corp. NA to sell up to 237,750 Bbls of
   
   
1,046,100
   
975,200
 
 
         
crude oil at a strike price of $101.00 per Bbl. 15 monthly contracts
   
   
   
 
 
         
beginning on July 1, 2008 and expiring on September 30, 2009.
   
   
   
 
 
   
   
   
   
   
 
 
         
Put Options with BP Corp. NA to sell up to 32,750 Bbls of
   
   
140,825
   
128,459
 
 
         
crude oil at a strike price of $85.00 per Bbl. 4 monthly contracts
   
   
   
 
 
         
beginning on October 1, 2009 and expiring on January 31, 2010.
   
   
   
 
Subtotal Commodity Derivative Instruments ( 0.24% of total investments)
   
$
1,546,700
 
$
1,331,854
 
 
   
   
   
   
   
 
GOVERNMENT SECURITIES (10)        
             
U.S. Treasury Bills
   
   
U.S. Treasury Bills, 1.3059%, due 07/10/2008
 
$
8,000,000
 
$
7,997,440
 
$
7,997,440
 
U.S. Treasury Bills
   
   
U.S. Treasury Bills, 1.3059%, due 07/10/2008
   
12,000,000
   
11,996,160
   
11,996,160
 
U.S. Treasury Bills
   
   
U.S. Treasury Bills, 1.3059%, due 07/10/2008
   
12,000,000
   
11,996,160
   
11,996,160
 
U.S. Treasury Bills
   
   
U.S. Treasury Bills, 1.3059%, due 07/10/2008
   
12,000,000
   
11,996,161
   
11,996,161
 
U.S. Treasury Bills
   
   
U.S. Treasury Bills, 1.3059%, due 07/10/2008
   
12,000,000
   
11,996,160
   
11,996,160
 
U.S. Treasury Bills
   
   
U.S. Treasury Bills, 1.3059%, due 07/10/2008
   
12,000,000
   
11,996,160
   
11,996,160
 
U.S. Treasury Bills
   
   
U.S. Treasury Bills, 1.3059%, due 07/10/2008
   
12,000,000
   
11,996,161
   
11,996,161
 
U.S. Treasury Bills
   
   
U.S. Treasury Bills, 1.3059%, due 07/10/2008
   
12,000,000
   
11,996,160
   
11,996,160
 
U.S. Treasury Bills
   
   
U.S. Treasury Bills, 1.3059%, due 07/10/2008
   
12,000,000
   
11,996,160
   
11,996,160
 
U.S. Treasury Bills
   
   
U.S. Treasury Bills, 1.3059%, due 07/10/2008
   
12,000,000
   
11,996,161
   
11,996,161
 
U.S. Treasury Bills
   
   
U.S. Treasury Bills, 1.3059%, due 07/10/2008
   
12,000,000
   
11,996,160
   
11,996,160
 
U.S. Treasury Bills
   
   
U.S. Treasury Bills, 0.061%, due 07/03/2008
   
50,000,000
   
49,999,833
   
49,999,833
 
 
   
   
   
   
   
 
 
   
   
   
   
   
 
Subtotal Government Securities (33.1% of total investments)
   
$
177,958,876
 
$
177,958,876
 
 
       
             
CASH
       
             
Subtotal Cash (2.07% of total investments)
 
     
$
11,108,533
 
$
11,108,533
 
 
       
             
TOTAL INVESTMENTS, CASH AND CASH EQUIVALENTS
 
     
$
533,825,149
 
$
537,295,346
 
 
                     
LIABILITIES IN EXCESS OF OTHER ASSETS
           
$
(232,870,762
)
 
                     
NET ASSETS
                 
$
304,424,584
 

7


NGP CAPITAL RESOURCES COMPANY
CONSOLIDATED SCHEDULE OF INVESTMENTS
June 30, 2008
(Unaudited)
(Continued)

NOTES TO CONSOLIDATED SCHEDULE OF INVESTMENTS

Portfolio company is not controlled by or affiliated with the Company as defined by the Investment Company Act of 1940.
   
(2)
Percentages represent interest rates in effect at June 30, 2008, and due dates represent the contractual maturity dates.
   
(3)
Fair value of targeted investments is determined by or under the direction of the Board of Directors.
   
(4)
All investments are in entities with primary operations in the United States of America.
   
(5)
Non-income producing securities.
   
(6)
Securities are subject to restrictions as to their sale.
   
(7)
Upon the March 30, 2006 closing of Venoco, Inc.'s TexCal acquisition, Venoco Inc.'s senior notes became collateralized by second priority liens.
   
(8)
Portfolio company is controlled by the Company as defined by the Investment Company Act of 1940.
   
(9)
Non-accrual status.
   
(10)
Level 1 security per Statement 157 hierarchy.
   
(11)
Level 3 security per Statement 157 hierarchy.
   
(12)
Portfolio company was issued a written notice of default.
   
(13)
Chroma warrants are non-income producing, expire on April 5, 2012 and provide the Company the right to purchase 2,462 shares of common stock at a purchase price of $325.00 per share.
   
(14)
BSR Loco Bayou warrants are non-income producing, expire on August 15, 2013 and provide the Company the right to purchase 10,000 investor units at the exercise price of $160.00 per investor unit.
   
(15)
Sonoran warrants are non-income producing, expire on November 28, 2014, and provide the Company the right to purchase shares of common stock up to 2.87 million shares, on a fully diluted basis with anti-dilution provisions, at the exercise price of $0.20 per share.
   
(16)
Nighthawk warrants are non-income producing, expire on May 13, 2017 and provide the Company the right to purchase approximately 2.5% of limited partnership units at the exercise price of $0.001 per unit.
   
(17)
Alden warrants are non-income producing and provide the Company the right to purchase 23% of class C units at an exercise price of $0.739 per unit, expiring in December 2013 and the right to purchase 10% of class C units at an exercise price of $0.739 per unit, expiring in July 2014.
   
(18)
Formidable warrants are non-income producing, expire on March 31, 2015 and provide the Company the right to purchase membership interest representing 30% of all distributions at an exercise price of $1,000 per percentage point.
   
(19)
DeanLake warrants are non-income producing, expire on June 22, 2014 and provide the Company the right to purchase a 10% membership interest at the exercise price of $300,000 or $30,000 per 1% membership interest representing 30% of all distributions.
   
(20)
BioEnergy International warrants are non-income producing, expire on August 15, 2010 and provide the Company the right to purchase 648,000 units, representing membership interests of BioEnergy International, at the purchase price of $10.00 per unit.
   
(21)
Put Options are related to the limited term royalty interest purchased from ATP Oil & Gas Corporation.

(See accompanying notes to consolidated financial statements)

8


NGP CAPITAL RESOURCES COMPANY
CONSOLIDATED FINANCIAL HIGHLIGHTS
(Unaudited)

 
 
For the Six Months Ended
 
 
 
June 30, 2008
 
June 30, 2007
 
Per Share Data (1)
         
 
         
Net asset value, beginning of period
 
$
14.30
 
$
13.96
 
 
         
Increase in net assets as a result of secondary public stock offering
   
0.40
   
-
 
Underwriting discounts and commissions related to secondary public stock offering
   
(0.15
)
 
-
 
Other costs related to secondary public stock offering
   
(0.03
)
 
-
 
Net increase in net assets from secondary public offering
   
0.22
   
-
 
 
         
Net asset value after public stock offering
   
14.52
   
13.96
 
 
         
Net investment income (loss)
   
0.37
   
0.51
 
Net realized and unrealized gain (loss) on portfolio securities,
         
corporate notes and commodity derivative instruments
   
(0.01
)
 
0.74
 
 
         
Net increase (decrease) in stockholders' equity (net assets)
         
resulting from operations
   
0.36
   
1.25
 
           
Dividends declared
   
(0.80
)
 
(0.58
)
 
         
Net asset value, end of period
 
$
14.08
 
$
14.63
 
 
         
Market value, beginning of period
 
$
15.63
 
$
16.75
 
Market value, end of period
 
$
15.41
 
$
16.72
 
Market value return (2)
   
3.64
%
 
3.28
%
Net asset value return (2)
   
3.50
%
 
8.43
%
 
         
Ratios and Supplemental Data
         
($ and shares in thousands)
         
 
         
Net assets, end of period
 
$
304,425
 
$
255,209
 
Average net assets
 
$
277,342
 
$
249,234
 
Common shares outstanding at end of period
   
21,628
   
17,445
 
Total operating expenses less management and
         
incentive fees and interest expense/average net assets (3)
   
1.68
%
 
1.55
%
Total operating expenses less management
         
and incentive fees/average net assets (3)
   
4.49
%
 
4.12
%
Total operating expenses/average net assets (3)
   
7.13
%
 
7.52
%
Net investment income (loss)/average net assets (3)
   
5.73
%
 
7.22
%
Net increase (decrease) in net assets resulting from
         
operations/average net assets (3)
   
5.63
%
 
17.49
%
Portfolio turnover rate
   
10.29
%
 
43.57
%

(1) Per Share Data is based on common shares outstanding at end of period.
(2) Return calculations assume reinvestment of dividends and are not annualized.
(3) Annualized.

(See accompanying notes to consolidated financial statements)

9


NGP CAPITAL RESOURCES COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
June 30, 2008
(Unaudited)
 
Note 1:   Organization  

NGP Capital Resources Company (the “Company”) was organized as a Maryland corporation in July 2004. The Company has elected to be regulated as a business development company (“BDC”) under the Investment Company Act of 1940, as amended (the “1940 Act”). In addition, for federal income tax purposes the Company has elected to be treated as a regulated investment company (“RIC”) under the Internal Revenue Code of 1986, as amended (the “Code”). The Company has several subsidiaries that are single member limited liability companies and wholly-owned limited partnerships established to hold certain portfolio investments or provide services to the Company in accordance with specific rules prescribed for a company operating as a RIC. These consolidated subsidiaries are: NGPC Funding GP, LLC, a Texas limited liability company; NGPC Nevada, LLC, a Nevada limited liability company; NGPC Funding, LP, a Texas limited partnership; NGPC Asset Holdings GP, LLC, a Texas limited liability company; NGPC Asset Holdings, LP, a Texas limited partnership; NGPC Asset Holdings II, LP, a Texas limited partnership (“NGPC II”); NGPC Asset Holdings III, LP, a Texas limited partnership, and NGPC Asset Holdings V, LP, a Texas limited partnership. Effective May 28, 2008, NGPC Asset Holdings IV, LP merged with and into NGPC II. The Company consolidates the results of its subsidiaries for financial reporting purposes. The Company does not consolidate the financial results of its portfolio companies.

The Company was created to invest primarily in small and mid-size private energy companies, which, until July 21, 2008, were generally defined as companies that have net asset values or annual revenues of less than $500 million and are not issuers of publicly traded securities. On July 21, 2008, the Securities and Exchange Commission expanded the definition of eligible portfolio companies to include domestic operating companies with securities listed on a national securities exchange so long as the company has a market capitalization of less than $250 million. The Company’s investment objective is to generate both current income and capital appreciation through debt investments with certain equity components.
 
The Company is managed and advised, subject to the overall supervision of the Company’s board of directors (the “Board of Directors”), by NGP Investment Advisor, LP (the “Manager”), a Delaware limited partnership owned by NGP Energy Capital Management, LLC, and NGP Administration, LLC (the “Administrator”), the Company’s administrator.
 
Note 2:   Significant Accounting Policies  
 
The interim unaudited consolidated financial statements include the accounts of the Company and its subsidiaries. All significant intercompany accounts and transactions have been eliminated in consolidation. The interim consolidated financial statements have been prepared by management of the Company, without audit, pursuant to the rules and regulations of the Securities and Exchange Commission (the “SEC”). Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) have been omitted pursuant to such rules and regulations, although the Company believes the disclosures included herein are adequate to make the information presented not misleading. In the opinion of management, all adjustments which are of a normal recurring nature considered necessary for presentation of the information have been included. These unaudited consolidated financial statements should be read in conjunction with the consolidated financial statements and related notes included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2007. Interim results are not necessarily indicative of results for a full year.

The following is a summary of the significant accounting policies consistently applied by the Company in the preparation of its consolidated financial statements:
 
Use of Estimates  
 
The interim consolidated financial statements have been prepared in accordance with GAAP that require management to make estimates and assumptions that affect the amounts reported in the interim consolidated financial statements and the accompanying notes to the interim consolidated financial statements. Actual results could differ from these estimates.

10

 
Cash and Cash Equivalents
 
Cash and cash equivalents consist of demand deposits and highly liquid investments with original maturities of three months or less when purchased. Cash and cash equivalents are carried at cost, which approximates fair value.

Prepaid Assets
 
Prepaid assets consist of premiums paid for directors’ and officers’ insurance and fidelity bonds with a policy term of one year, fees associated with the establishment of the policy or credit facility, and registration expenses related to the Company’s shelf filing. Such premiums and fees are amortized monthly on a straight-line basis over the term of the policy or credit facility. Registration expenses are deferred and will be charged as a reduction of capital upon the sale of shares.
 
Concentration of Credit Risk  
 
The Company places its cash and cash equivalents with financial institutions and, at times, cash held in checking accounts may exceed the Federal Deposit Insurance Corporation insured limit.
 
Valuation of Investments  
 
Investments are carried at fair value, as determined in good faith by the Company’s Board of Directors. On a quarterly basis, the investment team of the Manager prepares valuations for all of the assets in our portfolio companies and presents the valuations to the Company’s valuation committee (the “Valuation Committee”) and Board of Directors. The valuations are determined and recommended by the Valuation Committee to the Board of Directors, which reviews and ratifies the final portfolio valuations.

Investments in securities for which market quotations are readily available are recorded in the financial statements at such market quotations as of the valuation date adjusted for appropriate liquidity discounts, if applicable. For investments in securities for which market quotations are unavailable, or which have various degrees of trading restrictions, the investment team prepares valuation analyses, as generally described below.

Using the most recently available financial statements, forecasts and, when applicable, comparable transaction data, the investment team of the Manager prepares valuation analyses for the various securities in the Company’s investment portfolio. These valuation analyses are prepared using traditional valuation methodologies, which rely on estimates of the asset values and enterprise values of portfolio companies issuing securities.
 
The methodologies for determining asset valuations include estimates based on: the liquidation or sale value of a portfolio company’s assets, the discounted value of expected future net cash flows from the assets and third party valuations of the portfolio company’s assets, such as engineering reserve reports of oil and gas properties. The investment team of the Manager considers some or all of the above valuation methods to determine the estimated asset value of a portfolio company.

The methodologies for determining enterprise valuations include estimates based on: valuations of comparable public companies, recent sales of comparable companies, the value of recent investments in the equity securities of a portfolio company and also on the methodologies used for asset valuations. The investment team of the Manager considers one or all of the above valuation methods to determine the estimated enterprise value of a portfolio company.

Debt Securities: The Company records its investments in non-convertible debt securities at fair value which generally approximates cost plus amortized original issue discount, or OID, to the extent that the estimated asset or enterprise value of the portfolio company exceeds the outstanding debt of the portfolio company. The Company records its investment in convertible debt securities at fair value which generally approximates the higher of: 1) cost plus amortized OID, to the extent that the estimated asset or enterprise value of the portfolio company equals or exceeds the outstanding debt of the portfolio company; and 2) the Company’s pro rata share, upon conversion, of the residual equity value of the portfolio company available after deducting all outstanding debt from its estimated enterprise value. If the estimated asset or enterprise value is less than the sum of the value of the Company’s debt investment and all other debt securities of the portfolio company pari passu or senior to the Company’s debt investment, the Company reduces the value of its debt investment beginning with its junior-most debt investment such that the asset or enterprise value less the value of the outstanding pari passu or senior debt is zero. Investments in debt securities for which market quotations are readily available are recorded in the financial statements at such market quotations as of the valuation date adjusted for appropriate liquidity discounts, if applicable.

11


Equity Securities: The Company records its investments in preferred and common equity securities (including warrants or options to acquire equity securities) at fair value based on its pro rata share of the residual equity value available after deducting all outstanding debt from the estimated enterprise value.

Property-Based Equity Participation Rights: The Company records its investments in overriding royalty and net profits interests at fair value based on a multiple of cash flows generated by such investments, multiples from transactions involving the sale of comparable assets and/or the discounted value of expected future net cash flows from such investments. Appropriate cash flow multiples are derived from the review of comparable transactions involving similar assets. The discounted value of future net cash flows is derived, when appropriate, from third party valuations of a portfolio company’s assets, such as engineering reserve reports of oil and gas properties.

Due to the uncertainty inherent in the valuation process, such estimates of fair value may differ significantly from the values that would have been used had a ready market for the securities existed, and the differences could be material. Additionally, changes in the market environment and other events that may occur over the life of the investments may cause the gains or losses ultimately realized on these investments to be different from the valuations currently assigned.
 
In September 2006, the Financial Accounting Standards Board (“FASB”) issued Statement on Financial Accounting Statement 157, Fair Value Measurements (“Statement 157”). This standard establishes a single authoritative definition of fair value, sets out a framework for measuring fair value and requires additional disclosures about fair value measurements. Statement 157 applies to fair value measurements already required or permitted by existing standards. Statement 157 is effective for financial statements issued for fiscal years beginning after November 15, 2007 and interim periods within those fiscal years. The changes to current generally accepted accounting principles from the application of Statement 157 relate to the definition of fair value, the methods used to measure fair value and the expanded disclosures about fair value measurements.

As of January 1, 2008, the Company adopted Statement 157. The Company has performed an analysis of all existing investments to determine the significance and character of all inputs to their fair value determination. Based on this assessment, the adoption of this standard did not have a material effect on the Company’s net asset value.

Valuation of Commodity Derivative Instruments

Current accounting rules require that all derivative instruments, other than those that meet specific exclusions, be recorded at fair value. Quoted market prices are the best evidence of fair value. If quotations are not available, management’s best estimate of fair value is based on the quoted market price of derivatives with similar characteristics or on valuation techniques. The Company’s derivative instruments are either exchange traded or transacted in an over-the-counter market. Valuation is determined by reference to readily available public data. Option fair values for the natural gas option transactions are based on the Black-Scholes pricing model and the crude oil transactions are based on the Turnbull-Wakeman pricing model and verified against the applicable counterparty’s fair values.

Securities Transactions, Interest and Dividend Income Recognition  

All securities transactions are accounted for on a trade-date basis. Interest income is recorded on the accrual basis to the extent that such amounts are expected to be collected. Premiums and discounts are accreted into interest income using the effective interest method. Detachable warrants, other equity securities or property interests such as overriding royalty interests obtained in conjunction with the acquisition of debt securities are recorded separately from the debt securities at their initial fair value, with a corresponding amount recorded as a discount to the associated debt security. Income from overriding royalty interests is recognized as received and the recorded assets are charged depletion using the unit of production depletion method. The portion of the loan origination fees paid that represent additional yield or discount on a loan are deferred and accreted into interest income over the life of the loan using the effective interest method. Upon the prepayment of a loan or debt security, any unamortized loan origination fees are recorded as interest income and any unamortized premium or discount is recorded as a realized gain or loss. Market premiums or discounts on acquired loans or fixed income investments are accreted into interest income using the effective interest method. Dividend income is recognized on the ex-dividend date. Accruing interest or dividends on investments is deferred when it is determined that the interest or dividend is not collectible. Collectability of the interest and dividends is assessed, based on many factors including the portfolio company’s ability to service its loan based on current and projected cash flows as well as the current valuation of the portfolio company’s assets.

12


Payment-in-Kind Interest and Dividends

The Company may have investments in its portfolio that contain payment-in-kind (“PIK”) provisions. PIK interest or dividends, computed at the contractual rate specified in each investment agreement, are added to the principal balance of the investment and recorded as interest or dividend income. For investments with PIK interest or dividends, the Company bases income accruals on the principal balance including any PIK. If the portfolio company’s asset valuation is not sufficient to cover the contractual interest, the Company will not accrue interest income or dividend income on the investment. To maintain the Company’s RIC status, this non-cash source of income must be paid out to stockholders in the form of dividends, even though the Company has not yet collected the cash. For the quarter ended June 30, 2008, PIK interest income totaled $77,088 and PIK dividend income totaled $131,505. Both of these amounts were reserved, effectively reversing the accruals. For the quarter ended June 30, 2007, PIK interest income totaled $820,483, and PIK dividend income totaled $93,710.

Net Realized Gains or Losses and Net Change in Unrealized Appreciation or Depreciation  
 
Realized gains or losses are measured by the difference between the net proceeds from the repayment or sale and the amortized cost basis of the investment, considering unamortized fees and prepayment premiums, and without regard to unrealized appreciation or depreciation previously recognized, and include investments charged off during the year, net of recoveries. Net unrealized appreciation or depreciation reflects the change in portfolio investment values during the reporting period including the reversal of previously recorded unrealized appreciation or depreciation, when capital gains or losses are realized.

Derivative accounting rules require that fair value changes of derivative instruments that do not qualify for hedge accounting be reported in current period, rather than in the period the derivatives are settled and/or the hedged transaction is settled. This can result in significant earnings volatility. The company has decided not to designate these instruments as hedging instruments for financial accounting purposes. Net unrealized appreciation or depreciation reflects the change in derivative values during the reporting period including the reversal of previously recorded unrealized appreciation or depreciation, when settled gains or losses are realized.

Fee Income Recognition  
 
Fees primarily include financial advisory, transaction structuring, loan administration, commitment and prepayment fees. Financial advisory fees represent amounts received for providing advice and analysis to companies and are recognized as earned when such services are performed, provided collection is probable. Transaction structuring fees represent amounts received for structuring, financing and executing transactions and are generally payable only if the transaction closes. Such fees are deferred and accreted into interest income over the life of the loan using the effective interest method. Commitment fees represent amounts received for committed funding and are generally payable whether or not the transaction closes. On transactions that close within the commitment period, commitment fees are deferred and accreted into interest income over the life of the loan using the effective interest method. Commitment fees on transactions that do not close are generally recognized over the period the commitment is outstanding. Prepayment and loan administration fees are recognized as they are received. For the quarter ended June 30, 2008, the Company accreted approximately $0.3 million of fee income into interest income, compared to approximately $1.1 million of fee income for the quarter ended June 30, 2007.
 
Dividends  
 
Dividends to stockholders are recorded on the ex-dividend date. The Company currently intends that its distributions each year will be sufficient to maintain the Company’s status as a RIC for federal income tax purposes and to eliminate excise tax liability. The Company currently intends to make distributions to stockholders on a quarterly basis of substantially all of its net taxable income. The Company also intends to make distributions of net realized capital gains, if any, at least annually. However, the Company may in the future decide to retain such capital gains for investment and designate such retained amount as a deemed distribution. The amount to be paid out as a dividend, if any, is determined by the Company’s Board of Directors each quarter and is based on the annual taxable earnings estimated by the Manager. Based on that estimate, a dividend is declared each quarter and paid shortly thereafter.

13


Prior to 2005, the Company was treated as a “C” corporation, had no taxable income and therefore did not declare a dividend for that period. The following table summarizes the Company’s dividend history:

Dividend History
 
Declaration Date
  Amount  
Record Date
 
Payment Date
March 18, 2005
 
 0.120
 
March 31, 2005
 
April 15, 2005
June 17, 2005
 
 0.125
 
June 30, 2005
 
July 15, 2005
September 19, 2005
 
 0.140
 
September 30, 2005
 
October 14, 2005
December 15, 2005
 
 0.275
 
December 27, 2005
 
January 4, 2006
March 10, 2006
 
 0.160
 
March 31, 2006
 
April 17, 2006
June 14, 2006
 
 0.180
 
June 30, 2006
 
July 14, 2006
September 14, 2006
 
 0.250
 
September 29, 2006
 
October 13, 2006
December 7, 2006
 
 0.330
 
December 19, 2006
 
December 29, 2006
March 19, 2007
 
 0.265
 
March 30, 2007
 
April 13, 2007
June 13, 2007
 
 0.310
 
June 29, 2007
 
July 13, 2007
September 12, 2007
 
 0.350
 
September 28, 2007
 
October 12, 2007
December 12, 2007
 
 0.515
 
December 28, 2007
 
January 4, 2008
March 19, 2008
 
 0.400
 
March 31, 2008
 
April 11, 2008
June 9, 2008
 
 0.400
 
June 30, 2008
 
July 11, 2008
 
The Company has established an “opt out” dividend reinvestment plan for its common stockholders. As a result, if the Company declares a dividend, then a stockholder’s cash dividend will be automatically reinvested in additional shares of the Company’s common stock unless the stockholder, or his or her broker, specifically “opts out” of the dividend reinvestment plan and elects to receive cash dividends. It is customary practice for many brokers to “opt out” of dividend reinvestment plans on behalf of their clients unless specifically instructed otherwise. As of July 11, 2008, holders of 1,655,552 shares, or approximately 9.4% of outstanding shares, were participants in the Company’s dividend reinvestment plan.

The Company’s dividend reinvestment plan provides for the plan agent to purchase shares in the open market for credit to the accounts of plan participants unless the average of the closing sales prices for the shares for the five days immediately preceding the payment date exceeds 110% of the most recently reported net asset value per share.

The table below summarizes participation in the Company’s dividend reinvestment plan:
 
 
 
 
 
 
Percentage of
 
 
 
 
 
Common Stock Dividends
 
 
 
Participating 
 
Outstanding
 
Total
 
 
 
Purchased in  
 
Newly Issued Shares
 
Dividend
 
Shares 
 
Shares 
 
Distribution 
 
Cash Dividends 
 
Open Market 
 
Amount 
 
Shares   
 
March 2005
   
-
   
0.0
%
$
2,088,012
 
$
2,088,012
 
$
-
 
$
-
   
-
 
June 2005
   
1,215,870
   
7.0
%   
$
2,175,013
 
$
2,023,029
 
$
151,984
 
$
-
   
-
 
September 2005
   
1,488,904
   
8.6
%
$
2,436,014
 
$
2,227,567
 
$
208,447
 
$
-
   
-
 
December 2005
   
1,660,140
   
9.5
%
$
4,785,028
 
$
4,328,488
 
$
456,540
 
$
-
   
-
 
March 2006
   
1,618,940
   
9.3
%
$
2,784,016
 
$
2,524,986
 
$
259,030
 
$
-
   
-
 
June 2006
   
1,410,227
   
8.1
%
$
3,132,018
 
$
2,878,177
 
$
253,841
 
$
-
   
-
 
September 2006
   
1,270,634
   
7.3
%
$
4,350,025
 
$
4,032,366
 
$
317,659
 
$
-
   
-
 
December 2006
   
1,111,045
   
6.4
%
$
5,742,033
 
$
5,375,388
 
$
-
 
$
366,645
   
22,168
 
March 2007
   
1,355,671
   
7.8
%
$
4,616,901
 
$
4,257,648
 
$
-
 
$
359,253
   
22,692
 
June 2007
   
1,363,066
   
7.8
%
$
5,407,938
 
$
4,985,387
 
$
-
 
$
422,550
   
24,694
 
September 2007
   
1,438,143
   
8.2
%
$
6,114,379
 
$
5,611,029
 
$
-
 
$
503,350
   
30,678
 
December 2007
   
1,605,164
   
9.2
%
$
9,012,670
 
$
8,186,010
 
$
826,659
 
$
-
   
-
 
March 2008
   
1,693,284
   
9.7
%
$
7,000,133
 
$
6,322,815
 
$
-