NGP Capital Resources Company (NGPC)

Q1 2010 Earnings Conference Call

May 6, 2010 11:00 AM ET

Executives

John Homier – President and CEO

Steve Gardner – CFO

Kelly Plato – SVP

Analysts

Greg Mason – Stifel Nicolaus

Jasper Birch – Macquarie

Pavel Molchanov – Raymond James

Ralph Rueben [ph]

Bob Walt [ph] – NGPC

Presentation

Operator

Ladies and gentlemen, welcome to your NGP Capital Resources Company’s first quarter 2010 earnings call. At this time all lines are in a listen-only mode with Q&A session to follow.

(Operator Instructions)

As a reminder, this conversation is being recorded.

Now I would like to turn the call over to your host, NGPC’s President and CEO John Homier. Sir you may begin.

John Homier

Good morning everyone and thank you for joining us today on this call to discuss our results for the first quarter of 2010. As usual, with me today on the call are Steve Gardner, our Chief Financial Officer and Kelly Plato, our Senior Vice President who heads our investment team.

After my opening remarks, Steve will provide a summary of our financial performance for the first quarter and will provide an update on our recently announced restatement. Following Steve, Kelly will discuss our targeted investment portfolio, specifically Alden co-company investment and several other meaningful investments in that portfolio.

I will conclude our presentation with a summary of our overall portfolio performance and investment quality. After that we’ll take questions from those of you who have called in.

As we discussed in our last call in early April, we continue to believe that we have successfully weathered the economic downturn and its effects on the energy markets that we serve. We feel that we are now in an excellent position for growth and expansion of our business in our investment portfolio. As Steve and Kelly will discuss, NGPC continues to generate net investment income and dividend, manage its financial leverage, see improving performance in our existing portfolio as well as position itself to add new investments into that portfolio.

As we announced about six weeks ago, our dividend for the first quarter of this year is $0.17 per common share; the same as for our fourth quarter dividend in 2009. The dividend was paid on April 9th.

As of the end of the quarter, our funded targeted investment consisted of 15 portfolio companies totaling $242.7 million and having fair value of $193 million. Our total committed and available for funding was approximately $248.7 million. Our net asset value at the end of the first quarter was $11.17 per common share.

Our earnings release was distributed this morning. Those who did not receive the copy of the release can call us or can download the release from our website, which as you know is www.ngpcrc.com. Also for anyone wishing to listen to a recording of our prepared comments today, we will have a replay available by phone through next Wednesday. The call will also be available through a link on the investor relations page of our website.

I would like to remind everyone at this point that our remarks today may include comments which could be considered forward-looking statements. And such statements are subject to many factors that can cause actual results to differ materially from our expectations as expressed in those forward-looking statements. Those factors are described in more detail in our SEC filings, which I refer you through our website or through the SEC website to review those filings. We undertake no obligation to publicly update or revise any forward-looking statements.

With that, I will turn the call over to Steve.

Steve Gardner

Thank you, John. Good morning everybody. For the first quarter of 2010, our net investment income totaled $2.4 million or $0.11 per share and the net increase in stockholders equity from operations was $5 million or $0.24 per share. The weighted average yield on our targeted portfolio investments exclusive of capital gains or losses was 7.23% at March 31, 2010, up from 5.38% at the end of 2009.

Operating expenses decreased in the first quarter in 2010 as compared to 2009 and this was largely the result of lower management fees and lower interest expense. Net unrealized appreciation for the quarter was $2.6 million after a small provision for income tax as we had modest increases in the evaluations of a couple of our portfolio investments. We did not have any realized gains or losses in the first quarter.

Our net asset value per share as of quarter end after giving effect to the 17% per share dividend and the results for operations was $11.17.

We currently have through our investment facility cash on hand and scheduled repayments during the year in excess of $100 million for new investment activity during 2010.

In our recently filed annual report on Form 10-K for 2009, we’ve restated our financial statements for the years ending December 31, 2007 and 2008. The restatement principally involved noncash accounting entries related to the net deferred tax asset and liability balances that typically arises as a result of timing differences in tax and GAAP accounting. In our case these differences were driven by unrealized appreciation and depreciation in certain of our portfolio investments that are held in taxable subsidiaries.

While the 2009 10-K corrected the financial statements for the calendar years of 2007 and 2008 we will also file amended 10-Qs to correct the interim financial statements for each quarter in the years 2007, 2008 and 2009. We intend to file the amended 10-Qs for the first quarters of these three years 2007, 2008 and 2009 along with our 10-Q for the first quarter of 2010, so that the comparisons among the various first quarters can be made accurately. We will file the amended 10-Qs for the second and third quarters of 2007, 2008 and 2009 within the next several weeks.

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