OHA Investment Corporation
NGP Capital Resources Co (Form: 10-Q, Received: 11/06/2009 17:01:14)

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 September 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   o
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 November 5, 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
26
Item 3.  Quantitative and Qualitative Disclosures About Market Risk
33
Item 4. Controls and Procedures
33
   
PART II – OTHER INFORMATION
35
   
Item 1. Legal Proceedings
35
Item 1A.  Risk Factors
35
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
35


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

NGP CAPITAL RESOURCES COMPANY
CONSOLIDATED BALANCE SHEETS

   
September 30, 2009
   
December 31, 2008
 
   
(Unaudited)
       
Assets
           
Investments in portfolio securities at fair value
           
(cost: $257,026,622 and $294,432,215, respectively)
  $ 193,728,176     $ 244,229,568  
Investments in corporate notes at fair value
               
(cost: $11,551,596 and $11,586,899, respectively)
    8,697,900       6,350,000  
Investments in commodity derivative instruments at fair value
               
(cost: $140,825 and $774,095, respectively)
    616,053       8,212,872  
Total investments
    203,042,129       258,792,440  
                 
Cash and cash equivalents
    83,506,819       133,805,575  
Interest receivable
    1,095,418       2,410,360  
Prepaid assets and other current assets
    1,146,045       1,940,282  
Deferred tax assets
    7,033,472       200,000  
Total current assets
    92,781,754       138,356,217  
                 
Deferred tax assets
    -       3,600,000  
                 
Total assets
  $ 295,823,883     $ 400,748,657  
                 
Liabilities and stockholders' equity (net assets)
               
Current liabilities
               
Accounts payable and accrued expenses
  $ 674,190     $ 512,926  
Management and incentive fees payable
    1,540,756       2,016,214  
Dividends payable
    3,244,230       8,867,563  
Income taxes payable
    93,787       3,529,308  
Current portion of long-term debt
    40,000,000       75,000,000  
Total current liabilities
    45,552,963       89,926,011  
                 
Deferred tax liabilities
    854,605       -  
Long-term debt, less current portion
    -       45,000,000  
                 
Total liabilities
    46,407,568       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)
    (2,096,939 )     (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
    (65,676,914 )     (48,000,769 )
                 
Total stockholders’ equity (net assets)
    249,416,315       265,822,646  
                 
Total liabilities and stockholders' equity (net assets)
  $ 295,823,883     $ 400,748,657  
                 
Net asset value per share
  $ 11.53     $ 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 Nine Months Ended
 
   
September 30, 2009
   
September 30, 2008
   
September 30, 2009
   
September 30, 2008
 
Investment income
                       
Interest income
  $ 6,091,199     $ 7,638,673     $ 18,658,074     $ 24,168,913  
Royalty income (loss), net of amortization
    (927,004 )     2,452,763       (4,595,107 )     3,573,202  
Commodity derivative income, net of expired options
    829,946       (274,625 )     5,884,027       (274,625 )
Other income
    27,526       52,877       144,264       137,767  
                                 
Total investment income
    6,021,667       9,869,688       20,091,258       27,605,257  
                                 
Operating expenses
                               
Management fees
    1,540,756       1,944,869       5,021,782       5,583,084  
Incentive fees
    -       2,526,011       -       2,526,011  
Professional fees
    214,591       174,150       701,217       607,519  
Insurance expense
    199,959       198,812       600,140       596,442  
Interest expense and fees
    446,600       1,470,091       2,541,151       5,351,738  
State and excise taxes
    30,047       -       42,732       32,712  
Other general and administrative expenses
    718,585       690,152       2,261,123       2,134,624  
                                 
Total operating expenses
    3,150,538       7,004,085       11,168,145       16,832,130  
                                 
Net investment income (loss) before income taxes
    2,871,129       2,865,603       8,923,113       10,773,127  
                                 
Benefit (provision) for income taxes
    847,254       1,400,000       2,565,919       1,392,808  
                                 
Net investment income (loss)
    3,718,383       4,265,603       11,489,032       12,165,935  
                                 
Net realized capital gain (loss) on investments
                               
Net realized capital gain (loss) on portfolio securities, corporate notes and commodity derivative instruments
    -       18,301,090       (53,963 )     18,301,090  
Benefit (provision) for taxes on capital gain
    -       (4,300,000 )     -       (4,300,000 )
                                 
Total net realized capital gain (loss) on investments
    -       14,001,090       (53,963 )     14,001,090  
                                 
Net increase (decrease) in unrealized appreciation (depreciation) on portfolio securities, corporate notes and commodity derivative instruments
    11,313,227       (3,812,904 )     (17,676,145 )     (3,947,727 )
                                 
Net increase (decrease) in stockholders' equity (net assets) resulting from operations
  $ 15,031,610     $ 14,453,789     $ (6,241,076 )   $ 22,219,298  
                                 
Net increase (decrease) in stockholders' equity (net assets) resulting from operations per common share
  $ 0.69     $ 0.66     $ (0.29 )   $ 1.02  

(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 (decrease) in
                                                       
stockholders' equity (net assets)
                                                       
resulting from operations
    -       -       -       11,489,032       (53,963 )     (17,676,145 )     (6,241,076 )
                                                         
Dividends declared
    -       -       -       (10,165,255 )     -       -       (10,165,255 )
Balance at September 30, 2009 (unaudited)
    21,628,202     $ 21,628     $ 315,184,191     $ (2,096,939 )   $ 1,984,349     $ (65,676,914 )   $ 249,416,315  
 
(See accompanying notes to consolidated financial statements)

3


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

   
For The Nine Months Ended
 
   
September 30, 2009
   
September 30, 2008
 
Cash flows from operating activities
           
Net increase (decrease) in stockholders' equity (net assets) resulting from operations
  $ (6,241,076 )   $ 22,219,298  
Adjustments to reconcile net increase (decrease) in stockholders' equity (net assets) resulting from operations to net cash provided by operating activities
               
Payment-in-kind interest
    (3,317,164 )     (2,335,374 )
Net amortization of premiums, discounts and fees
    10,128,588       4,639,765  
Change in unrealized (appreciation) depreciation on portfolio securities,
               
corporate notes and commodity derivative instruments
    17,676,145       3,947,727  
Effects of changes in operating assets and liabilities
               
Interest receivable
    1,314,942       (321,671 )
Prepaid assets and other current assets
    794,237       524,444  
Current portion of deferred income taxes
    (6,833,472 )     2,900,000  
Non-current deferred income taxes
    4,454,605       -  
Accounts payable and accrued expenses
    (314,194 )     2,227,171  
Income taxes payable
    (3,435,521 )     -  
Purchase of investments in portfolio securities, corporate notes
               
and commodity derivative instruments
    (33,196,662 )     (100,885,393 )
Redemption of investments in portfolio securities, corporate notes
               
and commodity derivative instruments
    64,459,403       76,409,056  
Net sale (purchase) of investments in U.S. Treasury Bills
    -       35,420,333  
                 
Net cash provided by operating activities
    45,489,831       44,745,356  
                 
Cash flows from financing activities
               
Proceeds from the issuance of common stock, net of underwriting costs
    -       62,790,416  
Borrowings under revolving credit facility
    72,000,000       151,000,000  
Repayments on revolving credit facility
    (152,000,000 )     (188,125,000 )
Offering costs from the issuance of common stock
    -       (780,628 )
Dividends paid
    (15,788,587 )     (24,664,085 )
                 
Net cash provided by (used in) financing activities
    (95,788,587 )     220,703  
                 
Net increase (decrease) in cash and cash equivalents
    (50,298,756 )     44,966,059  
Cash and cash equivalents, beginning of period
    133,805,575       18,437,115  
                 
Cash and cash equivalents, end of period
  $ 83,506,819     $ 63,403,174  

(See accompanying notes to consolidated financial statements)

 
4

 

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

Portfolio Company
 
Energy Industry Segment
 
Investment (2) (4)
 
Principal
   
Cost
   
Fair Value (3)
 
TARGETED INVESTMENTS (21)
                     
Venoco, Inc. (1)
 
Oil & Natural Gas
 
Senior Notes (7)
  $ 12,000,000     $ 11,947,893     $ 12,120,000  
   
Production and Development
 
(8.75%, due 12/15/2011)
                       
                                 
Chroma Exploration &
 
Oil & Natural Gas
 
10,002 Shares Series A Participating
    -       2,221,710       -  
    Production, Inc. (1)
 
Production and Development
 
Convertible Preferred Stock (9)
                       
       
9,134 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
    10,000,000       9,815,376       9,815,376  
   
Production and Development
 
Revolving Credit Facility
                       
       
(The greater of 8.0% or LIBOR + 5.50%,
                       
       
due 5/01/2012)
                       
       
Common Stock (6,574,216 shares) (5) (6) (19)
    3,235,256       3,235,256       6,199,078  
                                 
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
 
Overriding Royalty Interest
    20,000       16,885       100,000  
   
Production and Development
 
Warrants (5) (12)
    10,000       10,000       200,000  
                                 
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       12,498,495       -  
       
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 (8)
 
Coal Production
 
Senior Secured
    20,631,213       18,575,047       18,475,047  
       
Multiple-Advance Term Loan - Tranche A
                       
       
(The greater of 12.00% or LIBOR +
                       
       
9.00 % cash, 15.00% or LIBOR +
                       
       
12.00% PIK, due 1/01/2013)
                       
                                 
       
Senior Secured
    20,135,900       19,519,841       19,519,841  
       
Multiple-Advance Term Loan - Tranche B
                       
       
(The greater of 12.00% or LIBOR +
                       
       
9.00 % cash, 15.00% or LIBOR +
                       
       
12.00% PIK, due 1/01/2013) (9)
                       
                                 
       
Class E Units (5)
    5,800,000       5,800,000       5,800,000  
       
Royalty Interest
    2,660,000       2,530,325       5,330,000  
 
 
5

 

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

Portfolio Company
 
Energy Industry Segment
 
Investment (2) (4)
 
Principal
   
Cost
   
Fair Value (3)
 
TARGETED INVESTMENTS (21) - Continued
                     
Tammany Oil & Gas, LLC (1)
 
Oil & Natural Gas
 
Senior Secured
    26,022,804       25,921,525       25,921,525  
   
 Production and Development
 
Multiple-Advance Term Loan
                       
       
(The greater of 13.0% or LIBOR + 8.00%,
                       
       
 due 3/21/2010)
                       
       
Overriding Royalty Interest (6)
    200,000       180,549       1,000,000  
                                 
TierraMar Energy LP (8)
 
Oil & Natural Gas
 
Class A Preferred LP Units (5)
    17,710,788       17,710,788       9,000,000  
   
 Production and Development
 
Overriding Royalty Interest
    20,000       16,149       300,000  
                                 
Anadarko Petroleum Corporation
 
Oil & Natural Gas
 
Multiple-Advance Net Profits Interest
    10,970,082       11,049,824       11,399,824  
    2007-III Drilling Fund (1)
 
 Production and Development
 
(Due 4/23/2032)
                       
                                 
Formidable, LLC (1) (15)
 
Oil & Natural Gas
 
Senior Secured
    38,771,388       38,771,388       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) (15)
    500,000       500,000       -  
       
Formidable Holdings, LLC Units (5)
    10,000       10,000       -  
                                 
DeanLake Operator, LLC (8)
 
Oil & Natural Gas
 
Senior Secured Term Loan
    3,500,000       3,500,000       3,500,000  
   
 Production and Development
 
(12.00% cash, 14.00% PIK,
                       
       
payable quarterly, due 6/30/2011)
                       
       
Class A Preferred Units (5)
    10,400,255       10,400,255       6,500,000  
       
Overriding Royalty Interest
    20,000       18,260       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
    12,255,231       10,822,116       10,822,116  
   
Specialty Chemicals
 
(15.00%, due 3/06/2015)
                       
       
BioEnergy International Warrants (5) (16)
    34,766       34,766       34,766  
       
BioEnergy Holding Units (5)
    1,296,771       1,296,771       1,296,771  
       
Myriant Technologies Warrants (5) (17)
    49,238       49,238       49,238  
       
Myriant Technologies Units (5)
    418,755       418,755       418,755  
                                 
Greenleaf Investments, LLC (1)
 
Oil & Natural Gas
 
Senior Secured
    11,352,336       11,155,813       11,155,813  
   
 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       61,149       400,000  
                                 
ATP Oil & Gas Corporation (1)
 
Oil & Natural Gas
 
Limited Term Royalty Interest
    32,814,792       12,820,896       6,353,000  
   
 Production and Development
                           
                                 
Black Pool Energy
 
Oil & Natural Gas
 
Senior Secured
    17,000,000       16,707,026       16,707,026  
   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 (6)
    10,000       9,955       100,000  
       
Warrants (5) (20)
    10,000       10,000       10,000  
                                 
   Subtotal Targeted Investments (67.61% of total investments)
              $ 257,026,622     $ 193,728,176  
 
 
6

 

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

Issuing Company
 
Energy Industry Segment
 
Investment (2) (4)
 
Principal
   
Cost
   
Fair Value (3)
 
CORPORATE NOTES (21)
                     
Pioneer Natural Resources Co.
 
Oil & Natural Gas
 
Senior Notes, 7.2%, due 2028
  $ 10,000,000     $ 11,551,596     $ 8,697,900  
   
 Production and Development
                           
                                 
   Subtotal Corporate Notes ( 3.04% of total investments)
              $ 11,551,596     $ 8,697,900  
                                 
COMMODITY DERIVATIVE INSTRUMENTS (21)
                           
Put Options (18)
 
Put Options with BP Corporation North America, Inc. to sell up to
            140,825       616,053  
   
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 Derivative Instruments ( 0.21% of total investments)
          $ 140,825     $ 616,053  
                                 
CASH
                               
   Subtotal Cash (29.14% of total investments)
              $ 83,506,819     $ 83,506,819  
                                 
TOTAL INVESTMENTS, CASH AND CASH EQUIVALENTS
          $ 352,225,862     $ 286,548,948  
                                 
LIABILITIES IN EXCESS OF OTHER ASSETS
                      $ (37,132,633 )
                                 
NET ASSETS
                          $ 249,416,315  

 
7

 

NGP CAPITAL RESOURCES COMPANY
CONSOLIDATED SCHEDULE OF INVESTMENTS
September 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 repaid its term note in full on July 31, 2009. The Company retains ownership of ORRI and Warrants until settlement is negotiated and approved.
(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. Sonoran announced it filed Chapter 11 bankruptcy on June 19, 2009 and sold all of its assets under Section 363. Upon official notification of results of the Section 363 sale, Sonoron warrants will be written off as a realized loss
(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. On July 10, 2009, Nighthawk filed a voluntary petition under Chapter 7 of the United States Bankruptcy Code.
(15)
Formidable senior note was accelerated and the Company foreclosed on the member units of Formidable, LLC on September 28, 2009.
(16)
BioEnergy International, LLC warrants expire on August 15, 2010 and provide the Company the right to purchase 140,687 units, representing membership interests of BioEnergy International, LLC, at the purchase price of $10.00 per unit.
(17)
Myriant Technologies, LLC warrants expire on August 15, 2015 and provide the Company the right to purchase 32,680 units, representing membership interests of Myriant Technologies, 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)
Resaca stock is listed on the Alternative Investment Market of the London Stock Exchange, denominated in British pounds and its reported fair value at   September 30, 2009 has been converted to U.S. dollars at the exchange rate effective on September 30, 2009.
(20)
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.
(21)
All investments in portfolio securities, corporate notes and commodity derivative instruments are level 3 securities.

(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 collate