OHA Investment Corporation
NGP Capital Resources Co (Form: 10-Q, Received: 08/07/2009 16:17:56)
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
 


FORM 10-Q
  (Mark One)
þ
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2009

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  þ   No o

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

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

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

As of August 6, 2009, 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
27
Item 3.  Quantitative and Qualitative Disclosures About Market Risk
32
Item 4. Controls and Procedures
32
   
PART II – OTHER INFORMATION
34
   
Item 1. Legal Proceedings
34
Item 1A.  Risk Factors
34
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
34
Item 3. Defaults Upon Senior Securities
34
Item 4. Submission of Matters to a Vote of Security Holders
34
Item 5. Other Information
34
Item 6. Exhibits
35
 

 
PART I - FINANCIAL INFORMATION
Item 1. Consolidated Financial Statements

NGP CAPITAL RESOURCES COMPANY
CONSOLIDATED BALANCE SHEETS

   
June 30, 2009
   
December 31, 2008
 
   
(Unaudited)
       
Assets
           
Investments in portfolio securities at fair value (cost: $273,750,848 and $294,432,215, respectively)
  $ 199,368,528     $ 244,229,568  
Investments in corporate notes at fair value
               
(cost: $11,563,571 and $11,586,899, respectively)
    7,824,900       6,350,000  
Investments in commodity derivative instruments at fair value
               
(cost: $269,525 and $774,095, respectively)
    1,400,375       8,212,872  
Investments in U.S. Treasury Bills, at amortized cost
               
which approximates fair value
    76,151,096       -  
Total investments
    284,744,899       258,792,440  
                 
Cash and cash equivalents
    37,678,624       133,805,575  
Interest receivable
    3,521,030       2,410,360  
Prepaid and other current assets
    995,853       1,940,282  
Deferred tax assets
    6,509,431       200,000  
Total current assets
    48,704,938       138,356,217  
                 
Deferred tax assets
    -       3,600,000  
                 
Total assets
  $ 333,449,837     $ 400,748,657  
                 
Liabilities and stockholders' equity (net assets)
               
Current liabilities
               
Accounts payable and accrued expenses
  $ 507,387     $ 512,926  
Management and incentive fees payable
    1,647,178       2,016,214  
Dividends payable
    2,595,384       8,867,563  
Income taxes payable
    90,605       3,529,308  
Current portion of long-term debt
    75,000,000       75,000,000  
Total current liabilities
    79,840,554       89,926,011  
                 
Deferred tax liabilities
    980,346       -  
Long-term debt, less current portion
    15,000,000       45,000,000  
                 
Total liabilities
    95,820,900       134,926,011  
                 
Commitments and contingencies  (Note 8)
               
                 
Stockholders’ equity (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
    315,184,191       315,184,191  
Undistributed net investment income (loss)
    (2,571,090 )     (3,420,716 )
Undistributed net realized capital gain (loss)
    1,984,349       2,038,312  
Net unrealized appreciation (depreciation) of portfolio securities,
               
corporate notes and commodity derivative instruments
    (76,990,141 )     (48,000,769 )
                 
Total stockholders’ equity (net assets)
    237,628,937       265,822,646  
                 
Total liabilities and stockholders' equity (net assets)
  $ 333,449,837     $ 400,748,657  
                 
Net asset value per share
  $ 10.99     $ 12.29  

(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, 2009
   
June 30, 2008
   
June 30, 2009
   
June 30, 2008
 
Investment income
                       
Interest income
  $ 6,372,337     $ 7,578,124     $ 12,566,875     $ 16,530,241  
Royalty income (loss), net of amortization
    (2,773,803 )     574,589       (3,668,103 )     1,120,438  
Commodity derivative income, net of expired options
    1,880,229       -       5,054,081       -  
Other income
    57,940       44,520       116,739       84,890  
                                 
Total investment income
    5,536,703       8,197,233       14,069,592       17,735,569  
                                 
Operating expenses
                               
Management fees
    1,647,178       1,838,009       3,481,026       3,638,215  
Professional fees
    319,899       224,390       486,626       433,369  
Insurance expense
    199,959       198,812       400,180       397,629  
Interest expense and fees
    1,096,709       1,440,572       2,094,551       3,881,648  
State and excise taxes
    7,066       23,196       12,685       32,712  
Other general and administrative expenses
    745,589       713,063       1,542,538       1,451,664  
                                 
Total operating expenses
    4,016,400       4,438,042       8,017,606       9,835,237  
                                 
Net investment income (loss) before income taxes
    1,520,303       3,759,191       6,051,986       7,900,332  
                                 
Benefit (provision) for income taxes
    376,672       -       1,718,665       -  
                                 
Net investment income (loss)
    1,896,975       3,759,191       7,770,651       7,900,332  
                                 
Net realized capital gain (loss) on portfolio securities, corporate notes and commodity derivative instruments
    (53,963 )     -       (53,963 )     -  
                                 
Net increase (decrease) in unrealized appreciation
                               
(depreciation) on portfolio securities, corporate
                               
notes and commodity derivative instruments
    (4,429,340 )     1,611,339       (28,989,372 )     (134,823 )
                                 
Net increase (decrease) in stockholders' equity
                               
(net assets) resulting from operations
  $ (2,586,328 )   $ 5,370,530     $ (21,272,684 )   $ 7,765,509  
                                 
Net increase (decrease) in stockholders' equity (net assets)
                               
resulting from operations per common share
  $ (0.12 )   $ 0.25     $ (0.98 )   $ 0.36  

(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, 2008
    21,628,202     $ 21,628     $ 315,184,191     $ (3,420,716 )   $ 2,038,312     $ (48,000,769 )   $ 265,822,646  
Net increase in stockholders' equity (net assets) resulting from operations
    -       -       -       7,770,651       (53,963 )     (28,989,372 )     (21,272,684 )
                                                         
Dividends declared
    -       -       -       (6,921,025 )     -       -       (6,921,025 )
                                                         
Balance at June 30, 2009 (unaudited)
    21,628,202     $ 21,628     $ 315,184,191     $ (2,571,090 )   $ 1,984,349     $ (76,990,141 )   $ 237,628,937  

(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, 2009
   
June 30, 2008
 
Cash flows from operating activities
           
Net increase (decrease) in stockholders' equity (net assets) resulting from operations
  $ (21,272,684 )   $ 7,765,509  
Adjustments to reconcile net increase (decrease) in stockholders' equity (net assets)
               
resulting from operations to net cash used in operating activities
               
Payment-in-kind interest
    (1,378,292 )     (1,728,817 )
Net amortization of premiums, discounts and fees
    6,267,170       (589,096 )
Change in unrealized (appreciation) depreciation on portfolio securities,
               
corporate notes and commodity derivative instruments
    28,989,372       134,823  
Effects of changes in operating assets and liabilities
               
Interest receivable
    (1,110,670 )     (735,432 )
Prepaid and other current assets
    944,429       957,395  
Current portion of deferred income taxes
    (6,309,431 )     -  
Non-current deferred income taxes
    4,580,346       -  
Accounts payable and accrued expenses
    (374,575 )     (527,287 )
Income taxes payable
    (3,438,703 )     -  
Purchase of investments in portfolio securities, corporate notes
               
and commodity derivative instruments
    (23,212,163 )     (81,412,478 )
Redemption of investments in portfolio securities, corporate notes
               
and commodity derivative instruments
    39,532,549       28,551,706  
Net sale (purchase) of investments in U.S. Treasury Bills
    (76,151,096 )     (14,033,251 )
                 
Net cash used in operating activities
    (52,933,748 )     (61,616,928 )
                 
Cash flows from financing activities
               
Proceeds from the issuance of common stock, net of underwriting costs
    -       62,790,415  
Borrowings under revolving credit facility
    32,000,000       108,000,000  
Repayments on revolving credit facility
    (62,000,000 )     (99,750,000 )
Offering costs from the issuance of common stock
    -       (739,265 )
Dividends paid
    (13,193,203 )     (16,012,804 )
                 
Net cash provided by (used in) financing activities
    (43,193,203 )     54,288,346  
                 
Net increase (decrease) in cash and cash equivalents
    (96,126,951 )     (7,328,582 )
Cash and cash equivalents, beginning of period
    133,805,575       18,437,115  
                 
Cash and cash equivalents, end of period
  $ 37,678,624     $ 11,108,533  

(See accompanying notes to consolidated financial statements)

 
4

 

NGP CAPITAL RESOURCES COMPANY
CONSOLIDATED SCHEDULE OF INVESTMENTS
June 30, 2009
(Unaudited)

Portfolio Company
 
Energy Industry Segment
 
Investment (2) (4)
 
Principal
   
Cost
   
Fair Value (3)
 
                       
TARGETED INVESTMENTS (24)
                     
                       
Venoco, Inc. (1)
 
Oil & Natural Gas
 
Senior Notes (7)
  $ 12,000,000     $ 11,942,577     $ 10,860,000  
   
Production and Development
 
(8.75%, due 12/15/2011)
                       
                                 
Chroma Exploration &
 
Oil & Natural Gas
 
9,711 Shares Series A Participating
    -       2,221,710       -  
    Production, Inc. (1)
 
Production and Development
 
Convertible Preferred Stock (9)
                       
       
8,868 Shares Series AA Participating
    -       2,089,870       500,000  
       
Convertible Preferred Stock (9)
                       
       
8.11 Shares Common Stock (5)
    -       -       -  
       
Warrants (5) (11)
    -       -       -  
                                 
Resaca Exploitation Inc. (1)
 
Oil & Natural Gas
 
Senior Secured
    9,098,889       8,541,955       8,541,955  
   
Production and Development
 
Revolving Credit Facility
                       
       
(The greater of 8.0% or LIBOR + 5.50%,
                       
       
due 7/01/2012)
                       
       
Common Stock (6,574,216 shares) (5) (6) (20)
    3,235,256       3,235,256       1,687,916  
                                 
Rubicon Energy Partners,
 
Oil & Natural Gas
 
LLC Units (4,000 units) (5)
    -       -       -  
    LLC (8)
 
Production and Development
                           
                                 
BSR Loco Bayou, LLC (1) (10)
 
Oil & Natural Gas
 
Senior Secured
    2,654,935       2,192,489       1,330,401  
   
Production and Development
 
Multiple-Advance Term Loan
                       
       
(LIBOR + 5.50% cash, LIBOR + 8.50%
                       
       
  default, due 8/15/2009) (9)
                       
       
Overriding Royalty Interest
    20,000       18,205       20,000  
       
Warrants (5) (12)
    10,000       10,000       -  
                                 
Sonoran Energy, Inc. (1)
 
Oil & Natural Gas
 
Warrants (5) (13)
    10,000       10,000       -  
   
Production and Development
                           
                                 
Nighthawk Transport I, LP (1)
 
Energy Services
 
Second Lien
    13,022,642       12,492,212       -  
       
Term Loan B
                       
       
(The greater of 21.0% or LIBOR + 16.50%,
                       
       
w/ PIK option available up to 6.0%,
                       
       
due 10/03/2010) (9)
                       
       
LP Units (5)
    224       224       -  
       
Warrants (5) (14)
    850,000       850,000       -  
                                 
       
Second Lien
    1,457,656       1,440,477       -  
       
Delayed Draw Term Loan B
                       
       
(The greater of 21.0% or LIBOR + 16.50%,
                       
       
w/ PIK option available up to 6.0%,
                       
       
due 10/03/2010) (9)
                       
                                 
Alden Resources, LLC (1) (21)
 
Coal Production
 
Senior Secured
    36,497,815       34,216,680       28,728,083  
       
Multiple-Advance Term Loan
                       
       
(LIBOR + 8.00% cash, LIBOR + 11.0%
                       
       
default, due 1/05/2013)
                       
       
Royalty Interest
    2,660,000       2,565,017       7,500,000  
       
Warrants (5) (15)
    100,000       100,000       -  

 
5

 

NGP CAPITAL RESOURCES COMPANY
CONSOLIDATED SCHEDULE OF INVESTMENTS
June 30, 2009
(Unaudited)
(Continued)

Portfolio Company
 
Energy Industry Segment
 
Investment (2) (4)
 
Principal
   
Cost
   
Fair Value (3)
 
                       
TARGETED INVESTMENTS (24) - Continued
                     
Tammany Oil & Gas, LLC (1)
 
Oil & Natural Gas
 
Senior Secured
    28,872,804       28,719,666       28,719,666  
   
Production and Development
 
Multiple-Advance Term Loan
                       
       
(The greater of 11.0% or LIBOR + 6.00%,
                       
       
 due 3/21/2010)
                       
       
Overriding Royalty Interest (6)
    200,000       192,211       1,000,000  
                                 
TierraMar Energy LP (8)
 
Oil & Natural Gas
 
Class A Preferred LP Units (5)
    17,710,788       17,710,788       10,500,000  
   
Production and Development
 
Overriding Royalty Interest
    20,000       16,350       300,000  
                                 
Anadarko Petroleum Corporation
 
Oil & Natural Gas
 
Multiple-Advance Net Profits Interest
    29,931,369       30,017,373       30,367,373  
    2007-III Drilling Fund (1)
 
Production and Development
 
(Due 4/23/2032)
                       
                                 
Formidable, LLC (1) (19)
 
Oil & Natural Gas
 
Senior Secured
    38,615,809       38,615,809       5,600,000  
   
Production and Development
 
Multiple-Advance Term Loan
                       
       
(LIBOR + 5.50% cash, LIBOR + 8.50%
                       
       
 default, due 5/31/2008) (9)
                       
       
Warrants (5) (16)
    500,000       500,000       -  
                                 
DeanLake Operator, LLC (8)
 
Oil & Natural Gas
 
Class A Preferred Units (5)
    13,900,255       13,900,255       10,000,000  
   
Production and Development
 
Overriding Royalty Interest
    20,000       18,456       100,000  
                                 
Bionol Clearfield, LLC (1)
 
Alternative Fuels and
 
Senior Secured Tranche C
    5,000,000       5,000,000       5,000,000  
   
Specialty Chemicals
 
Construction Loan
                       
       
(LIBOR + 7.00%, due 9/06/2016)
                       
                                 
BioEnergy Holding, LLC (1)
 
Alternative Fuels and
 
Senior Secured Notes
    11,402,395       9,850,326       9,850,326  
   
Specialty Chemicals
 
(15.00%, due 3/06/2015)
                       
       
BioEnergy International Warrants (5) (17)
    502,759       502,759       502,759  
       
BioEnergy Holding Units (5)
    1,296,771       1,296,771       1,296,771  
                                 
Greenleaf Investments, LLC (1)
 
Oil & Natural Gas
 
Senior Secured
    11,674,268       11,449,553       11,449,553  
   
Production and Development
 
Multiple-Advance Term Loan
                       
       
(The greater of 10.50% or LIBOR + 6.50%,
                       
       
due 4/30/2011)
                       
       
Overriding Royalty Interest (6)
    100,000       69,323       400,000  
                                 
ATP Oil & Gas Corporation (1)
 
Oil & Natural Gas
 
Limited Term Royalty Interest
    32,814,792       17,266,351       8,415,540  
   
Production and Development
                           
                                 
Black Pool Energy
 
Oil & Natural Gas
 
Senior Secured
    17,000,000       16,678,185       16,678,185  
   Partners, LLC (1)
 
Production and Development
 
Multiple-Advance Term Loan
                       
       
(The greater of 12.00% or LIBOR +
                       
       
8.00 % cash, 14.00% or LIBOR +
                       
       
10.00% PIK, due 10/24/2011)
                       
       
Overriding Royalty Interest (5) (6)
    10,000       10,000       10,000  
       
Warrants (5) (22)
    10,000       10,000       10,000  
                                 
Subtotal Targeted Investments (61.83% of total investments)
          $ 273,750,848     $ 199,368,528  

 
6

 

NGP CAPITAL RESOURCES COMPANY
CONSOLIDATED SCHEDULE OF INVESTMENTS
June 30, 2009
(Unaudited)
(Continued)

Issuing Company
 
Energy Industry Segment
  
Investment (2) (4)
 
Principal
   
Cost
   
Fair Value (3)
 
CORPORATE NOTES (24)
                     
                                 
Pioneer Natural Resources Co.
 
Oil & Natural Gas
 
Senior Notes, 7.2%, due 2028
  $ 10,000,000     $ 11,563,571     $ 7,824,900  
   
 Production and Development
                           
                                 
   Subtotal Corporate Notes ( 2.43% of total investments)
              $ 11,563,571     $ 7,824,900  
                                 
COMMODITY DERIVATIVE INSTRUMENTS (24)
                           
Put Options (18)
 
Put Options with BP Corporation North America, Inc. to sell up to
            128,700       881,229  
   
237,750 Bbls of 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 Corporation North America, Inc. to sell up to
            140,825       519,146  
   
32,750 Bbls of 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 Derivatives ( 0.43% of total investments)
          $ 269,525     $ 1,400,375  
                                 
GOVERNMENT SECURITIES (23)
                           
U.S. Treasury Bills
 
U.S. Treasury Bills, 0.06%, due 07/16/2009
  $ 50,000,000     $ 49,998,750     $ 49,998,750  
U.S. Treasury Bills
 
U.S. Treasury Bills, 0.06%, due 07/16/2009
    26,153,000       26,152,346       26,152,346  
                                 
   Subtotal Government Securities (23.62% of total investments)
          $ 76,151,096     $ 76,151,096  
                                 
CASH
                               
   Subtotal Cash (11.69% of total investments)
              $ 37,678,624     $ 37,678,624  
                                 
TOTAL INVESTMENTS, CASH AND CASH EQUIVALENTS
          $ 399,413,664     $ 322,423,523  
                                 
LIABILITIES IN EXCESS OF OTHER ASSETS
                  $ (84,794,586 )
                                 
NET ASSETS
                          $ 237,628,937  

 
7

 

NGP CAPITAL RESOURCES COMPANY
CONSOLIDATED SCHEDULE OF INVESTMENTS
June 30, 2009
(Unaudited)
(Continued)

NOTES TO CONSOLIDATED SCHEDULE OF INVESTMENTS
 
 
(1)
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 the end of the period 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)
BSR Loco Bayou was issued a written notice of default.
 
(11)
Chroma warrants expire on April 5, 2012 and provide the Company the right to purchase 2,462 shares of common stock at a purchase price of $75.00 per share.
 
(12)
BSR Loco Bayou warrants 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.
 
(13)
Sonoran warrants 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.
 
(14)
Nighthawk warrants expire on May 13, 2017 and provide the Company the right to purchase approximately 7.1% of limited partnership units at the exercise price of $0.001 per unit.
 
(15)
Alden warrants 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.
 
(16)
Formidable warrants 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.
 
(17)
BioEnergy International, LLC warrants expire on August 15, 2010 and provide the Company the right to purchase 648,000 units, representing membership interests of BioEnergy International, LLC, at the purchase price of $10.00 per unit.
 
(18)
Put Options are related to the limited term royalty interest purchased from ATP Oil & Gas Corporation.
 
(19)
Formidable was issued a written notice of default on February 13, 2009.
 
(20)
Resaca stock is listed on the Alternative Investment Market of the London Stock Exchange, denominated in British pounds and its reported fair value at June 30, 2009 has been converted to U.S. dollars at the exchange rate effective on June 30, 2009.
 
(21)
Alden was issued a written notice of default on February 5, 2009 and entered into a forbearance agreement on April 16, 2009.
 
(22)
Black Pool warrants expire seven years after repayment of principal and interest and provide the Company the right to purchase approximately 25% of membership interest at the exercise price of $0.01 per unit.
 
(23)
Investments in U.S. Treasury instruments are level 1 securities per SFAS No. 157 hierarchy.
 
(24)
All investments in portfolio securities, corporate notes and commodity derivative instruments are level 3 securities per SFAS No. 157 hierarchy.

(See accompanying notes to consolidated financial statements)

 
8

 

  NGP CAPITAL RESOURCES COMPANY

CONSOLIDATED SCHEDULE OF INVESTMENTS
December 31, 2008
 
Portfolio Company
 
Energy Industry
Segment
 
Investment  (2) (4)
 
Principal
 
Cost
 
Fair Value   (3)
Targeted Investments
           
  
     
  
     
  
 
Venoco, Inc. (1) (23)
 
Oil & Natural Gas
Production and Development
 
Senior Notes (7)
(8.75%, due 12/15/2011)
 
$
12,000,000
   
$
11,932,367
   
$
5,760,000
 
Chroma Exploration & Production, Inc. (1) (23)
 
Oil & Natural Gas
Production and Development
 
9,711 Shares Series A Participating
Convertible Preferred Stock (9)
   
     
2,221,710
     
 
  
     
8,868 Shares Series AA Participating
Convertible Preferred Stock (9)
   
     
2,089,870
     
1,000,000
 
  
     
8.11 Shares Common Stock (5)
   
     
     
 
  
     
Warrants (5) (11)
   
     
     
 
Resaca Exploitation Inc. (1) (23)
 
Oil & Natural Gas
Production and Development
 
Senior Secured
Multiple-Advance Term Loan
(The greater of 10.0% or LIBOR +
6.00%, due 5/01/2012)
   
28,000,000
     
27,592,657
     
27,592,657
 
  
     
Common Stock (6,574,216 shares) (5) (6) (20)
   
3,235,256
     
3,235,256
     
1,093,688
 
Crossroads Energy, LP (1) (23)
 
Oil & Natural Gas
Production and Development
 
Senior Secured
Multiple-Advance Term Loan
(The greater of 10.0% or LIBOR + 5.50%, due 6/29/2009)
   
4,820,204
     
4,781,487
     
4,781,487
 
  
     
Overriding Royalty Interest (6)
   
10,000
     
5,120
     
250,000
 
Rubicon Energy Partners, LLC (8) (23)
 
Oil & Natural Gas
Production and Development
 
LLC Units (4,000 units) (5)
   
     
     
750,000
 
BSR Loco Bayou, LLC (1) (10) (23)
 
Oil & Natural Gas
Production and Development
 
Senior Secured
Multiple-Advance Term Loan
(LIBOR + 5.50% cash, LIBOR + 8.50%
default, due 8/15/2009) (9)
   
2,888,986
     
2,401,884
     
1,539,795
 
  
     
Overriding Royalty Interest
   
20,000
     
19,372
     
20,000
 
  
     
Warrants (5) (12)
   
10,000
     
10,000
     
 
Sonoran Energy, Inc. (1) (23)
 
Oil & Natural Gas
Production and Development
 
Warrants (5) (13)
   
10,000
     
10,000
     
 
Nighthawk Transport I, LP (1) (23)
 
Energy Services
 
Second Lien
Term Loan B
(The greater of 15.0% or
LIBOR + 10.50%, due 10/03/2010)
   
12,895,524
     
12,184,611
     
8,929,131
 
  
     
LP Units (5)
   
224
     
224
     
 
  
     
Warrants (5) (14)
   
850,000
     
850,000
     
 
  
     
Second Lien
Delayed Draw Term Loan B
(The greater of 15.0% or LIBOR +
10.50%, due 10/03/2010)
   
1,443,427
     
1,420,362
     
1,075,842
 
Alden Resources, LLC (1) (21) (23)
 
Coal Production
 
Senior Secured
Multiple-Advance Term Loan
(LIBOR + 8.00% cash, due 1/05/2013)
   
36,285,168
     
33,772,038
     
28,283,440
 
  
     
Royalty Interest
   
2,660,000
     
2,565,017
     
7,500,000
 
  
     
Warrants (5) (15)
   
100,000
     
100,000
     
 

(See accompanying notes to consolidated financial statements)

 
9

 

NGP CAPITAL RESOURCES COMPANY

CONSOLIDATED SCHEDULE OF INVESTMENTS
December 31, 2008
(continued)
 
Portfolio Company
 
Energy Industry
Segment
 
Investment  (2) (4)
 
Principal
 
Cost
 
Fair Value   (3)
Targeted Investments – Continued
       
  
     
  
     
  
 
Tammany Oil & Gas, LLC (1) (23)
 
Oil & Natural Gas
Production and Development
 
Senior Secured
Multiple-Advance Term Loan
(The greater of 11.0% or LIBOR + 6.00%, due 3/21/2010)
   
31,447,804
     
31,197,085
     
31,197,085
 
  
     
Overriding Royalty Interest (5) (6)
   
200,000
     
200,000
     
550,000
 
TierraMar Energy LP (8) (23)
 
Oil & Natural Gas
Production and Development
 
Overriding Royalty Interest
   
20,000
     
16,828
     
300,000
 
  
     
Class A Preferred LP Units (5)
   
16,634,830
     
16,634,830
     
13,500,000
 
Anadarko Petroleum Corporation
2007-III Drilling Fund (1) (23)
 
Oil & Natural Gas
Production and Development
 
Multiple-Advance Net Profits Interest
(Due 4/23/2032)
   
37,255,948
     
37,352,982
     
37,352,982
 
Formidable, LLC (1) (19) (23)
 
Oil & Natural Gas
Production and Development
 
Senior Secured
Multiple-Advance Term Loan
(LIBOR + 5.50% cash, LIBOR + 8.50%
default, due 5/31/2008) (9)
   
37,299,054
     
37,299,054
     
22,500,000
 
  
     
Warrants (5) (16)
   
500,000
     
500,000
     
 
DeanLake Operator, LLC (8) (23)
 
Oil & Natural Gas
Production and Development
 
Class A Preferred Units (5)
   
13,900,255
     
13,900,255
     
10,000,000
 
  
     
Overriding Royalty Interest
   
20,000
     
18,897
     
20,000
 
Bionol Clearfield, LLC (1) (23)
 
Alternative Fuels and
Specialty Chemicals
 
Senior Secured Tranche C
Construction Loan
(LIBOR + 7.00%, due 9/06/2016)
   
5,000,000
     
5,000,000
     
5,000,000
 
BioEnergy Holding, LLC (1) (23)
 
Alternative Fuels and
Specialty Chemicals
 
Senior Secured Notes
(15.00%, due 3/06/2015)
   
10,606,557
     
9,757,613
     
9,757,613
 
  
     
BioEnergy International Warrants (5) (17)
   
595,845
     
595,845
     
595,845
 
  
     
BioEnergy Holding Units (5)
   
376,687
     
376,687
     
376,687
 
Greenleaf Investments, LLC (1) (23)
 
Oil & Natural Gas
Production and Development
 
Senior Secured
Multiple-Advance Term Loan
(The greater of 10.50% or LIBOR +
6.50%, due 4/30/2011)
   
12,229,693
     
11,951,818
     
11,951,818
 
  
     
Overriding Royalty Interest (6)
   
100,000
     
86,263
     
300,000
 
ATP Oil & Gas Corporation (1) (23)
 
Oil & Natural Gas
Production and Development
 
Limited Term Royalty Interest
   
32,814,792
     
24,319,585
     
12,219,000
 
Black Pool Energy Partners, LLC (1) (23)
 
Oil & Natural Gas
Production and Development
 
Senior Secured
Multiple-Advance Term Loan
(The greater of 12.00% or LIBOR + 8.00% cash, 14.00% or LIBOR + 10.00% PIK,
due 10/24/2011)
   
302,497
     
12,498
     
12,498
 
  
     
Overriding Royalty Interest (5) (6)
   
10,000
     
10,000
     
10,000
 
  
     
Warrants (5) (22)
   
10,000
     
10,000
     
10,000
 
Subtotal Targeted Investments (62.2% of total investments)
          $
294,432,215
    $
244,229,568
 

(See accompanying notes to consolidated financial statements)

 
10

 

NGP CAPITAL RESOURCES COMPANY

CONSOLIDATED SCHEDULE OF INVESTMENTS
December 31, 2008
(continued)

Issuing Company
 
Energy
Industry
Segment
 
Investment  (2) (4)
 
Principal
 
Cost
 
Fair Value   (3)
Corporate Notes
     
      
   
  
     
  
     
  
 
Pioneer Natural Resources Co. (23)
 
Oil & Natural Gas Production and Development
 
Senior Notes, 7.2%, due 2028
 
$
10,000,000
   
$
 11,586,899
   
$
6,350,000
 
Subtotal Corporate Notes ( 1.62% of total investments)
  $
11,586,899
    $
6,350,000
 

Commodity Derivative Instruments
   
  
     
  
 
Put Options (18) (23)
Put Options with BP Corporation North America, Inc. to sell up to
615,000 MMBtu of 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.
 
$
    141,570
   
$
     933,484
 
  
Put Options with BP Corporation North America, Inc. to sell up to
237,750 Bbls of 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.
   
491,700
     
6,146,906
 
  
Put Options with BP Corporation North America, Inc. to sell up to
32,750 Bbls of 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.
   
140,825
     
1,132,482
 
                   
Subtotal Commodity Derivatives (2.1% of total investments)
  $
774,095
    $
8,212,872
 
Cash
   
  
     
  
 
Subtotal Cash (34.08% of total investments)
  $
133,805,575
    $
133,805,575
 
Total investments, cash and cash equivalents
  $
440,598,784
   
$
392,598,015
 
Liabilities in excess of other assets
          $
(126,775,369)
 
Net assets
          $
265,822,646
 

(See accompanying notes to consolidated financial statements)

 
11

 

NGP CAPITAL RESOURCES COMPANY
CONSOLIDATED SCHEDULE OF INVESTMENTS
December 31, 2008
(continued)

Notes to Consolidated Schedule of Investments

 
(1)
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 the end of the period 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)
Portfolio company was issued a written notice of default.

 
(11)
Chroma warrants expire on April 5, 2012 and provide the Company the right to purchase 2,462 shares of common stock at a purchase price of $75.00 per share.

 
(12)
BSR Loco Bayou warrants 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.

 
(13)
Sonoran warrants 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.

 
(14)
Nighthawk warrants 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.

 
(15)
Alden warrants 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.

 
(16)
Formidable warrants 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.

 
(17)
BioEnergy International, LLC warrants expire on August 15, 2010 and provide the Company the right to purchase 648,000 units, representing membership interests of BioEnergy International, LLC, at the purchase price of $10.00 per unit.

 
(18)
Put Options are related to the limited term royalty interest purchased from ATP Oil & Gas Corporation.

 
(19)
Portfolio company was issued a written notice of default on February 13, 2009.

 
(20)
Resaca stock is listed on the Alternative Investment Market of the London Stock Exchange, denominated in British pounds and its reported fair value at December 31, 2008 has been converted to U.S. dollars at the exchange rate effective on December 31, 2008.

 
(21)
Portfolio company was issued a written notice of default on February 5, 2009.

 
(22)
Black Pool warrants expire seven years after repayment of principal and interest and provide the Company the right to purchase approximately 25% of membership interest at the exercise price of $0.01 per unit.

 
(23)
Level 3 security per SFAS No. 157 hierarchy.

(See accompanying notes to consolidated financial statements)

12


NGP CAPITAL RESOURCES COMPANY
CONSOLIDATED FINANCIAL HIGHLIGHTS
(Unaudited)
 
   
For the Six Months Ended
 
   
June 30, 2009
   
June 30, 2008
 
Per Share Data  (1)
           
             
Net asset value, beginning of period
  $ 12.29     $ 14.30  
                 
Increase in net assets as a result of
               
secondary public stock offering
    -       0.40  
Underwriting discounts and commissions related
               
to secondary public stock offerings
    -       (0.15 )
Other costs related to secondary public stock offerings
    -       (0.03 )
Net increase in net assets from secondary public offerings
    -       0.22  
                 
Net asset value after public stock offerings
    12.29       14.52  
                 
Net investment income (loss)
    0.36       0.37  
Net realized and unrealized gain (loss) on portfolio securities,
               
corporate notes and commodity derivative instruments
    (1.34 )     (0.01 )
                 
Net increase (decrease) in stockholders' equity (net assets)
               
resulting from operations
    (0.98 )     0.36  
                 
Dividends declared
    (0.32 )     (0.80 )
                 
Net asset value, end of period
  $ 10.99     $ 14.08  
                 
Market value, beginning of period
  $ 8.37     $ 15.63  
Market value, end of period
  $ 5.87     $ 15.41  
Market value return  (2)
    (26.16 )%     3.64 %
Net asset value return (2)
    (5.85 )%     3.50 %
                 
Ratios and Supplemental Data
               
($ and shares in thousands)
               
                 
Net assets, end of period
  $ 237,629     $ 304,425  
Average net assets
  $ 251,726     $ 277,342  
Common shares outstanding at end of period
    21,628       21,628  
Total operating expenses less management and
               
incentive fees and interest expense/average net assets (3)
    1.96 %     1.68