OHA Investment (OHAI) 10-Q 2009 Q2 Quarterly report

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     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 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	%
Total operating expenses less management
and incentive fees/average net assets (3)		3.63	%		4.49	%
Total operating expenses/average net assets (3)		6.42	%		7.13	%
Net investment income (loss)/average net assets (3)		6.23	%		5.73	%
Net increase (decrease) in net assets resulting from
operations/average net assets (3)		(17.04	)%		5.63	%
Portfolio turnover rate		15.70	%		10.29	%

(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)

13

NGP CAPITAL RESOURCES COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2009

(Unaudited)

Note 1: Organization

NGP Capital Resources Company (together with its consolidated subsidiaries, where applicable, “NGPC”, or the “Company,” which may also be referred to as “we,” “us,” or “our”) 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’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, L.L.C., 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, 2008.  Interim results are not necessarily indicative of results for a full year. Management has evaluated subsequent events for recognition or disclosure through August 7, 2009, which was the date we filed this Form 10-Q with the SEC. See Subsequent Events in Note 12.

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.

14

Cash and Cash Equivalents

Cash and cash equivalents include short-term, liquid investments in accounts such as demand deposit accounts, money market accounts, certain overnight investment sweep accounts and money market fund accounts.  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 and fees associated with the establishment of the policy or credit facility. Such premiums and fees are amortized monthly on a straight-line basis over the term of the policy or credit facility.

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.  On September 15, 2008, Lehman Brothers Holdings Inc. (“Lehman Holdings”) filed for protection under Chapter 11 of the United States Bankruptcy Code in the United States Bankruptcy Court in the Southern District of New York. Subsidiaries of Lehman Holdings were not included in the filing. The business of Lehman Brothers Private Investment Management (“PIM”), including the Company’s money market and bond holdings, was transferred during September 2008 to Barclays Wealth, the wealth management division of Barclays Bank PLC (“Barclays”), which operates in the United States as Barclays Capital Inc. As of June 30, 2009, the Company’s Barclays money market account balance was $585,263 and the fair market value of our senior notes and corporate notes were $10.86 million and $7.82 million, respectively. The Company currently believes that the transfer of its Lehman Brothers account to Barclays will not have a material adverse effect on its financial position, results of operations or cash flows.

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 the Company’s portfolio 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. For investments in securities for which market quotations are unavailable, or which have various degrees of trading restrictions, the investment team of the Manager 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 natural 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 some or all of the above valuation methods to determine the estimated enterprise value of a portfolio company.

The methodologies for determining estimated current market values of comparable securities include estimates based on: recent initial offerings of comparable securities of public and private companies; recent secondary market sales of comparable securities of public and private companies; current market implied interest rates for comparable securities in general; and current market implied interest rates for non-comparable securities in general, with adjustments for such things as size of issue, tenor and liquidity. The investment team of the Manager considers some or all of the above valuation methods to determine the estimated current market value of a comparable security.

15

Debt Securities: The Company records its investments in non-convertible debt securities at fair value which generally approximates cost  plus amortized original issue discount (“OID”) to the extent that the estimated asset or enterprise value of the portfolio company exceeds the outstanding debt of the portfolio company, subject to comparison to the estimated current market values of comparable securities. 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, both subject to comparison to the estimated current market values of comparable securities. 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 the debt investment beginning with the junior-most debt investment such that the asset or enterprise value less the value of the outstanding pari passu or senior debt is zero, subject to comparison to the estimated current market values of comparable securities.  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.

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, subject to comparison to the estimated current market values of comparable securities.

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 natural 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.

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 amortization using the units of production 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.

16

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.  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 quarters ended June 30, 2009 and 2008, PIK interest income was $465,766 and $77,088, respectively.  For the quarter ended June 30, 2008, PIK dividend income was $131,505.  There was no PIK income for the quarter ended June 30, 2009. A reserve was recorded for the PIK interest income and PIK dividend income reported for the quarter ended June 30, 2008, effectively reversing the accruals. 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.

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 the 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, 2009 the Company accreted approximately $0.5 million of fee income into interest income, compared to approximately $0.3 million of fee income for the quarter ended June 30, 2008.

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.

17

The following table summarizes the Company’s dividends for the year 2008 and for the first and second quarters of 2009:

Dividend History
Declaration Date	Amount		Record Date	Payment Date
March 19, 2008	$	0.40	March 31, 2008	April 11, 2008
June 9, 2008	$	0.40	June 30, 2008	July 11, 2008
September 10, 2008	$	0.40	September 30, 2008	October 10, 2008
December 19, 2008	$	0.41	December 29, 2008	January 5, 2009
March 10, 2009	$	0.20	March 31, 2009	April 10, 2009
June 11, 2009	$	0.12	June 30, 2009	July 10, 2009

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 10, 2009, the date of the most recent dividend payment, holders of 1,889,207 shares, or approximately 8.7% 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 for the year 2008 and for the first and second quarters of 2009:

Dividend Reinvestment Plan Participation
			Percentage of							Common Stock Dividends
	Participating		Outstanding			Total				Purchased in			Newly Issued Shares
Dividend	Shares		Shares			Distribution		Cash Dividends		Open Market			Amount		Shares
March 2008		1,693,284		9.7	%	$	7,000,133	$	6,322,815	$	-		$	677,318		41,482
June 2008		1,655,552		9.4	%	$	8,651,281	$	7,989,060	$	662,221		$	-		-
September 2008		1,739,829		8.0	%	$	8,651,281	$	7,955,350	$	695,931		$	-		-
December 2008		1,749,954		8.1	%	$	8,867,563	$	8,150,082	$	717,481		$	-		-
March 2009		2,179,204		10.1	%	$	4,325,640	$	3,889,799	$	435,841		$	-		-
June 2009		1,889,207		8.7	%	$	2,595,384	$	2,368,679	$	226,705	(1)	$	-		-

(1) Shares were purchased on July 10, 2009 for the June 2009 dividend. See above and Note 4 for further detail.

Note 3: Credit Facilities and Borrowings

Under the terms of the Company’s Treasury Secured Revolving Credit Agreement (as amended, the “Treasury Facility”), the lenders party thereto and SunTrust Bank, as administrative agent for the lenders, have extended credit available under the Treasury Facility to an amount not to exceed $175 million by obtaining additional commitments from existing lenders or new lenders. The total amount committed and outstanding under the Treasury Agreement as of June 30, 2009 and as of December 31, 2008 was $75.0 million. Proceeds from the Treasury Facility are used to facilitate the growth of the Company’s investment portfolio and provide flexibility in the sizing of its portfolio investments. The Treasury Facility has a three-year term, maturing August 31, 2009, and bears interest, at the Company’s option, at either (i) LIBOR plus 25 basis points or (ii) the base rate. On September 29, 2008, the required lenders exercised their option to convert pricing of the Treasury Facility from LIBOR-based to prime-based. The prime rate as of December 31, 2008 and as of June 30, 2009 was 3.25%.

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The obligations under the Treasury Facility are collateralized by certain securities and are guaranteed by the Company’s existing and future subsidiaries, other than special purpose subsidiaries and certain other subsidiaries. The Treasury Facility contains affirmative and reporting covenants and certain financial ratio and restrictive covenants, including: (a) maintaining a ratio of net asset value to consolidated total indebtedness (excluding net hedging liabilities) of the Company and its subsidiaries, of not less than 2.25:1.0, (b) maintaining a ratio of net asset value to consolidated total indebtedness (including net hedging liabilities) of the Company and its subsidiaries, of not less than 2.0:1.0, (c) maintaining a ratio of net income plus interest, taxes, depreciation and amortization expenses (“EBITDA”) (excluding revenue from cash collateral) to interest expense (excluding interest on loans under the Treasury Facility) of the Company and its subsidiaries of not less than 3.0:1.0, (d) maintaining a ratio of collateral to the aggregate principal amount of loans under the Treasury Facility of not less than 1.01:1.0,  (e) limitations on additional indebtedness, (f) limitations on liens, (g) limitations on mergers and other fundamental changes, (h) limitations on dividends, (i) limitations on disposition of assets other than in the normal course of business, (j) limitations on transactions with affiliates, (k) limitations on agreements that prohibit liens on properties of the Company and its subsidiary guarantors, (l) limitations on sale and leaseback transactions, (m) limitations on speculative hedging transactions, and (n) limitations on the aggregate amount of unfunded commitments.

Under the terms of the Company’s Amended and Restated Revolving Credit Agreement (as amended, the “Investment Facility”), the lenders have agreed to extend revolving credit to the Company in an amount not to exceed $87.5 million, with the ability to increase the credit available to an amount not to exceed $175 million by obtaining additional commitments from existing lenders or new lenders. The total amount committed was $87.5 million and $15.0 million was outstanding under the Investment Facility as of June 30, 2009. By comparison, the total amount committed as of December 31, 2008 was $87.5 million and $45.0 million was outstanding under the Investment Facility. The Investment Facility has a four-year term, maturing on August 31, 2010, and bears interest, at the Company’s option, at either (i) LIBOR plus 150 to 250 basis points, based on the degree of leverage of the Company or (ii) the base rate plus 0 to 75 basis points, based on the degree of leverage of the Company. Proceeds from the Investment Facility will be used to supplement the Company’s equity capital to make portfolio investments. As of June 30, 2009, the interest rate was 3.5% on $15.0 million (prime rate plus 25 basis points).

The obligations under the Investment Facility are collateralized by substantially all of the Company’s assets, except certain assets that collateralize the Treasury Facility and are guaranteed by the Company’s existing and future subsidiaries, other than special purpose subsidiaries and certain other subsidiaries. The Investment Facility contains affirmative and reporting covenants and certain financial ratio and restrictive covenants, including: (a) maintaining a ratio of net asset value to consolidated total indebtedness (excluding net hedging liabilities) of the Company and its subsidiaries, of not less than 2.25:1.0, (b) maintaining a ratio of net asset value to consolidated total indebtedness (including net hedging liabilities) of the Company and its subsidiaries, of not less than 2.0:1.0, (c) maintaining a ratio of EBITDA (excluding revenue from collateral under the Treasury Facility) to interest expense (excluding interest on loans under the Treasury Facility) of the Company and its subsidiaries of not less than 3.0:1.0, (d) limitations on additional indebtedness, (e) limitations on liens, (f) limitations on mergers and other fundamental changes, (g) limitations on dividends, (h) limitations on disposition of assets other than in the normal course of business, (i) limitations on transactions with affiliates, (j) limitations on agreements that prohibit liens on properties of the Company and its subsidiary guarantors, (k) limitations on sale and leaseback transactions, (l) limitations on speculative hedging transactions and (m) limitations on the aggregate amount of unfunded commitments. From time to time, certain of the lenders may provide customary commercial and investment banking services to the Company.

As of June 30, 2009, the Company was in compliance with all financial ratios required by the credit facility covenants discussed above.

In addition to the Company’s Investment Facility, the Company may also fund a portion of its investments with issuances of equity or senior debt securities. The Company may also securitize a portion of its investments in mezzanine or senior secured loans or other assets. The Company expects its primary use of funds to be investments in portfolio companies, cash distributions to holders of its common stock and payment of fees and other operating expenses.

Note 4: Issuance of Common Stock

On August 6, 2004, the Company, in its initial capitalization transaction, sold 100 shares of common stock to NGP Energy Capital Management, L.L.C. (formerly known as Natural Gas Partners, L.L.C.) for $15.00 per share. On November 9, 2004, the Company’s Registration Statement on Form N-2 (Registration No. 333-118279) was declared effective by the SEC in connection with the public offering of 16,000,000 shares of common stock (plus up to 2,400,000 additional shares of common stock upon the exercise of the underwriters’ over-allotment option), which commenced on November 10, 2004. The number of securities covered by the registration statement, including the shares of common stock subject to the underwriters’ over-allotment option, was 18,400,000, of which 17,400,000 were sold to the public at a price of $15.00 per share.  The net proceeds from this offering, after deducting expenses of approximately $2,308,000 and underwriting discounts and commissions of $0.825 per share, were approximately $244,337,000.

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On February 6, 2008, the Company’s shelf registration statement on Form N-2 (Registration No. 333-146715) registering the offering, from time to time, of up to $250,000,000 in aggregate offering price of the Company’s common stock was declared effective by the SEC.  On April 10, 2008, the Company commenced a public offering of 3,700,000 shares of common stock (plus up to 550,000 additional shares of common stock subject to the underwriters’ over-allotment option) of which 4,086,388 shares were sold to the public at a price of $16.00 per share.  The net proceeds from this offering, after deducting expenses of approximately $781,000 and underwriting discounts and commissions of $0.80 per share, were approximately $61,330,000. 

The Company has established a dividend reinvestment plan for the Company’s common stockholders, which provides for reinvestment of distributions paid by the Company, on behalf of each plan participant, by the Company’s transfer agent, in accordance with the plan terms. The purpose of the plan is to provide stockholders of record of the Company’s common stock, par value $.001 per share, with a method of investing cash dividends and distributions in additional shares at the current market price without charges for record-keeping, custodial, and reporting services. However, the plan is an “opt-out” plan. This means, if the Company declares a cash dividend, a stockholder’s cash dividend will be automatically reinvested in additional shares of its common stock unless the stockholder specifically “opts out” of the dividend reinvestment plan in writing, and elects to receive cash dividends. Any stockholder of record may elect to partially participate in the plan, or begin or resume participation at any time, by providing the plan agent with written notice. It is customary practice for many brokers to “opt out” of dividend reinvestment plans on behalf of their clients unless specifically instructed otherwise.

The Company has issued a total of 141,714 shares of common stock to participants in the dividend reinvestment plan since the inception of the plan.  See Dividends in Note 2.

Note 5: Investment Management

Investment Advisory Agreement

The Company has entered into an investment advisory agreement with the Manager under which the Manager, subject to the overall supervision of the Company’s Board of Directors, manages the day-to-day operations of, and provides investment advisory services to, the Company.

For providing these services, the Manager receives a fee from the Company, consisting of two components — a base management fee and an incentive fee.

Under the investment advisory agreement, the base management fee is calculated quarterly as 0.45% of the average of total assets of the Company as of the end of the two previous quarters, and is payable quarterly in arrears.  The Manager has agreed to waive permanently, subsequent to September 30, 2007, that portion of the management fee attributable to U.S. Treasury securities or other short term investments acquired with borrowings under the Company’s credit facilities to the extent the amount of such securities exceeds $100 million.  All of the $1,647,178 management and incentive fees payable to the Manager as of June 30, 2009 is attributable to the base management fee for the quarter ended June 30, 2009.  The base management fee for the quarter ended June 30, 2008 was $1,838,009.

The incentive fee under the investment advisory agreement consists of two parts. The first part, which is calculated and payable quarterly in arrears, equals 20% of the excess, if any, of the Company’s net investment income for the quarter that exceeds a quarterly hurdle rate equal to 2% (8% annualized) of the Company’s net assets.

For this purpose, net investment income means interest income, dividend income, and any other income (including any other fees, such as commitment, origination, syndication, structuring, diligence, managerial assistance, monitoring, and consulting fees or other fees that the Company receives from portfolio companies) accrued during the fiscal quarter, minus the Company’s operating expenses for the quarter (including the base management fee, expenses payable under the administration agreement, any interest expense and dividends paid on issued and outstanding preferred stock, if any, but excluding the incentive fee).   Accordingly, the Company may pay an incentive fee based partly on accrued interest, the collection of which is uncertain or deferred.  Net investment income includes, in the case of investments with a deferred interest feature (such as original issue discount, debt instruments with payment-in-kind interest and zero coupon securities), accrued income that the Company has not yet received in cash. Net investment income does not include any realized capital gains or losses, or unrealized capital appreciation or depreciation.

The incentive fees due in any fiscal quarter will be calculated as follows:

· No incentive fee in any fiscal quarter in which the Company’s net investment income does not exceed the hurdle rate.

· 20% of the amount of the Company’s net investment income, if any, that exceeds the hurdle rate in any fiscal quarter.

There were no investment income incentive fees earned for the second quarters of 2009 and 2008.

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The second part of the incentive fee (the “Capital Gains Fee”) is determined and payable in arrears as of the end of each fiscal year (or upon termination of the investment advisory agreement, as of the termination date), and equals (1) 20% of (a) the Company’s net realized capital gain (realized capital gains less realized capital losses) on a cumulative basis from the closing date of the Company’s initial public offering to the end of such fiscal year, less (b) any unrealized capital depreciation at the end of such fiscal year, less (2) the aggregate amount of all Capital Gains Fees paid to the Manager in prior fiscal years.  No Capital Gains Fees were earned for the second quarters of 2009 and 2008.

Realized capital gains on a security are calculated as the excess of the net amount realized from the sale or other disposition of such security over the amortized cost for the security. Realized capital losses on a security are calculated as the amount by which the net amount realized from the sale or other disposition of such security is less than the amortized cost of such security. Unrealized capital depreciation on a security is calculated as the amount by which the original cost of such security exceeds the fair value of such security at the end of a fiscal year. All period-end valuations are determined by the Company in accordance with GAAP and the 1940 Act.

The Manager has agreed that, to the extent permissible under federal securities laws and regulations, including Regulation M, it will utilize 30% of the fees it receives from the capital gains portion of the incentive fee (up to a maximum of $5 million of fees received in the aggregate) to purchase shares of the Company’s common stock in open market purchases through an independent trustee or agent.  Pursuant to this voluntary agreement, with respect to the capital gains incentive fees earned for 2007, the Manager previously purchased approximately $105,000 of the Company’s stock.  Any sales of such stock will comply with any applicable six-month holding period under Section 16(b) of the Securities Act of 1933 and all other restrictions contained in any law or regulation, to the fullest extent applicable to any such sale.  Any change in this voluntary agreement will not be implemented without at least 90 days’ prior notice to stockholders and compliance with all applicable laws and regulations.

The investment advisory agreement was originally approved by the Company’s Board of Directors on November 9, 2004. The investment advisory agreement provides that unless terminated earlier as described below, the agreement shall remain in effect from year-to-year after November 9, 2006, provided continuation is approved at least annually by the Company’s Board of Directors or by the affirmative vote of the holders of a majority of the Company’s outstanding voting securities, including, in either case, approval by a majority of the Company’s Board of Directors who are not interested persons.  On October 30, 2008, the Company’s Board of Directors, including all of the independent directors, approved an extension of the investment advisory agreement through November 9, 2009.

The agreement may be terminated at any time, without the payment of any penalty, by a vote of the Company’s Board of Directors or the holders of a majority of the Company’s shares on 60 days written notice to the Manager, and would automatically terminate in the event of its “assignment” (as defined in the 1940 Act).  The agreement may be terminated by either party without penalty upon not more than 60 days written notice to the other.

The investment advisory agreement provides that, absent willful misfeasance, bad faith or gross negligence in the performance of its duties or the reckless disregard of its duties and obligations, the Manager and its officers, manager, agents, employees, controlling persons, members and any other person or entity affiliated with it are entitled to indemnification from the Company for any damages, liabilities, costs and expenses (including reasonable attorneys’ fees and amounts reasonably paid in settlement) arising from the rendering of the Manager’s services under the investment advisory agreement or otherwise as the Company’s Manager.

Pursuant to the investment advisory agreement, the compensation and routine overhead expenses of the investment professionals of the Company’s management team and their respective staffs, when and to the extent engaged in providing management and investment advisory services to the Company, will be paid for by the Manager.  The Company will bear all other costs and expenses of its operations and transactions.

The Manager, NGP Investment Advisor, LP, was formed in 2004 and maintains an office at 1221 McKinney Street, Suite 2975, Houston, Texas 77010.  The Manager’s sole activity is to perform management and investment advisory services for the Company. The Manager is a registered investment adviser under the Investment Advisers Act of 1940.

The foregoing description of the investment advisory agreement is qualified in its entirety by reference to the full text of the document, a copy of which was filed as Exhibit 10.1 to the Company’s Form 10-K for the year ended December 31, 2004, and is incorporated herein by reference.

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Administration  Agreement

The Company has entered into an administration agreement with the Administrator, under which the Administrator furnishes the Company with office facilities, equipment and clerical, bookkeeping and record keeping services at such facilities.  Under the administration agreement, the Administrator also performs, or oversees the performance by third parties of, the Company’s required administrative services, which include being responsible for the financial records that the Company is required to maintain and preparing reports to the Company’s stockholders and reports filed with the SEC.  In addition, the Administrator assists in determining and publishing the Company’s net asset value, oversees the preparation and filing of the Company’s tax returns and the printing and dissemination of reports to the Company’s stockholders and generally oversees the payment of the Company’s expenses and the performance of administrative and professional services rendered to the Company by others.  To the extent permitted under the 1940 Act, the Administrator may also provide on the Company’s behalf, significant managerial assistance to the Company’s portfolio companies.  Payments under the agreement are equal to amounts based upon the allocable portion of the Administrator’s costs and expenses incurred in connection with administering the Company’s business.  The Administrator bills the Company for charges under the administration agreement monthly in arrears.  The agreement may be terminated by either party without penalty upon 60 days’ written notice to the other party and will automatically terminate in the event of its “assignment” (as defined in the 1940 Act).

Of the $507,387 in accounts payable as of June 30, 2009, $194,273 was due to the Administrator for expenses incurred on the Company’s behalf for the month of June 2009.  By comparison, $206,121 was due to the Administrator for expenses incurred on the Company’s behalf for the month of June 2008.

The administration agreement was originally approved by the Company’s Board of Directors on November 9, 2004. The administration agreement provides that unless terminated earlier the agreement will continue in effect until November 9, 2006, and from year-to-year thereafter provided such continuance is approved at least annually by (i) the Company’s Board of Directors and (ii) a majority of the members of the Company’s Board of Directors who are not parties to the administration agreement or “interested persons” of any such party.  On October 30, 2008, the Company’s Board of Directors, including a majority of the independent directors, approved the continuation of the administration agreement through November 9, 2009.

The foregoing description of the administration agreement is qualified in its entirety by reference to the full text of the document, a copy of which was filed as Exhibit 10.2 to the Company’s Form 10-K for the year ended December 31, 2004, and is incorporated herein by reference.

Note 6: Federal Income Taxes

The Company intends to qualify for tax purposes as a RIC under Subchapter M of Chapter 1 of the Code, as amended.  As a RIC, the Company generally will not be subject to federal income tax on the portion of its investment company taxable income and net capital gain (i.e., realized net long term capital gains in excess of realized net short term capital losses) distributed to stockholders. To qualify as a RIC, the Company is required, among other things, to distribute to its stockholders at least 90% of investment company taxable income, as defined by the Code, and to meet certain asset diversification requirements.

The Company met all RIC requirements and distributed substantially all of its investment company taxable income for the years ended December 31, 2006, 2007 and 2008.  Thus, the Company did not incur any federal income tax liability for any of these periods.

The Company’s consolidated subsidiaries, NGPC Asset Holdings, LP, NGPC Asset Holdings II, LP, NGPC Asset Holdings III, LP, NGPC Asset Holdings V, LP and NGPC Nevada, LLC, collectively (“NGPCAH”), are subject to federal income taxes for the period ended June 30, 2009.  The difference between the effective income tax rate of 7.63% and the statutory federal tax rate of 34% for the period ended June 30, 2009 is attributable to RIC investment company taxable income and net capital gains that generally will not be subject to federal income tax.

Note 7: Reclassifications

Certain components of net assets are adjusted to reflect permanent differences between financial and tax reporting. These reclassifications have no effect on total net assets or net asset value per share. During the years ended December 31, 2008 and 2007, $135,563 and $64,170, respectively, have been reclassified from undistributed net investment income (loss) to paid-in capital in excess of par.  These reclassifications were primarily due to non-deductible meal expenses, non-deductible excise taxes and income and expenses from a wholly owned subsidiary.  For the year ended December 31, 2008, $7,433,016 was reclassified from undistributed net realized capital gain (loss) to paid-in capital in excess of par. During the year ended December 31, 2007 there were no reclassifications from undistributed net realized capital gain (loss) to paid-in capital in excess of par.

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Note 8: Commitments and Contingencies

As of June 30, 2009, the Company had investments in or commitments to fund investments to eighteen portfolio companies totaling $280.5 million, on which $274.3 million was drawn. In addition, the Company has continuing obligations under the investment advisory agreement with the Manager and the administration agreement with the Administrator. The agreements provide that, absent willful misfeasance, bad faith or gross negligence in the performance of its duties or by reason of the reckless disregard of its duties and obligations, the Manager, the Administrator and its officers, managers, agents, employees, controlling persons, members and any other person or entity affiliated with them will be entitled to indemnification from the Company for any damages, liabilities, costs and expenses (including reasonable attorneys’ fees and amounts reasonably paid in settlement) arising from the rendering of the Manager’s or Administrator’s services under the agreements or otherwise as the Company’s investment adviser or administrator. The agreements also provide that the Manager, the Administrator and their affiliates will not be liable to the Company or any stockholder for any error of judgment, mistake of law, any loss or damage with respect to any of the Company’s investments or any action taken or omitted to be taken by the Manager or the Administrator in connection with the performance of any of their duties or obligations under the agreements or otherwise as investment adviser or administrator to the Company, except to the extent specified in Section 36(b) of the 1940 Act concerning loss resulting from a breach of fiduciary duty with respect to the receipt of compensation for services. In the normal course of business, the Company enters into a variety of undertakings containing a variety of representations that may expose the Company to some risk of loss. The amount of future loss, if any, arising from such undertakings, while not quantifiable, is not expected to be significant.

Note 9: Fair Value

Statement on Financial Accounting Statement 157 , Fair Value Measurements (“Statement 157”) establishes a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value into the following three broad categories:

· Level 1— Quoted unadjusted prices for identical instruments in active markets to which the Company has access at the date of measurement.

· Level 2 — Quoted prices for similar instruments in active markets; quoted prices for identical or similar instruments in markets that are not active; and model-derived valuations in which all significant inputs and significant value drivers are observable in active markets. Level 2 inputs are those in markets for which there are few transactions, the prices are not current, little public information exists or instances where prices vary substantially over time or among brokered market makers.

· Level 3 — Model derived valuations in which one or more significant inputs or significant value drivers are unobservable.  Unobservable inputs are those inputs that reflect the Company’s own assumptions that market participants would use to price the asset or liability based on the best available information.

The following table sets forth by level within the fair value hierarchy the Company's financial assets that were accounted for at fair value on a recurring basis as of June 30, 2009.  As required by Statement 157, financial assets and liabilities are classified in their entirety based on the lowest level of input that is significant to the fair value measurement.  The Company's assessment of the significance of a particular input to the fair value measurement requires judgment, and may affect the valuation of fair value assets and liabilities and their placement within the fair value hierarchy levels. The fair value of the crude oil options are estimated using a combined income and market-based valuation methodology based upon forward commodity price and volatility curves.  The curves are obtained from independent pricing services reflecting broker market quotes.

The following table presents the Company’s assets measured at fair value on a recurring basis at June 30, 2009:

					Prices with
			Quoted Prices		Observable
			in Active		Market		Unobservable
			Markets		Inputs		Inputs
Assets at Fair Value	Total		(Level 1)		(Level 2)		(Level 3)
Long Term Investments	$	207,193,428	$	-	$	-	$	207,193,428
Short Term Investments		76,151,096		76,151,096		-		-
Crude Oil Put Options		1,400,375		-		-		1,400,375
Total Assets at Fair Value	$	284,744,899	$	76,151,096	$	-	$	208,593,803

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The Company did not have any liabilities that were measured at fair value on a recurring basis at June 30, 2009.

The following table presents the Company’s assets measured at fair value on a recurring basis using significant unobservable inputs (Level 3) at December 31, 2008 and at June 30, 2009.

	Long Term
Assets at Fair Value Using Unobservable Inputs (Level 3)	Investments
Balance as of December 31, 2008	$	258,792,440
Transfers in (out) of Level 3		-
Net amortization of premiums, discounts and fees		(6,267,170	)
Net realized gains (losses)		(53,963	)
Net unrealized gains (losses)		(28,989,372	)
Purchases, sales and  redemptions		(14,888,132	)
Balance as of June 30, 2009	$	208,593,803

Of the $28,989,372 in net unrealized losses presented in the table above, $5,203,187 relates to reversals of unrealized gains on commodity derivative instruments recognized in 2008 and offset by realized gains during the second quarter of 2009.  The remaining balance of $23,786,185 relates to unrealized losses on investments that are still held at June 30, 2009.  The Company presents net unrealized losses on the Consolidated Statement of Operations as net increase (decrease) in unrealized appreciation (depreciation) on portfolio securities, corporate notes and commodity derivative instruments.

Note 10:  Commodity Derivative Instruments

 The Company may periodically enter into commodity derivative instruments to manage our exposure to commodity price fluctuations.  All of our derivatives are used for risk management purposes and are not held for speculative or trading purposes.  These contracts generally consists of options contracts on underlying commodities.

The Company acquired a limited term royalty interest from ATP Oil & Gas Corporation (“ATP”) and will receive royalty payments from this investment that are based on crude oil and natural gas production and prices.  As a result, the Company is exposed to fluctuations in crude oil and natural gas prices.  On June 4, 2008, the Company entered into option contracts to manage the price risk associated with these royalty payments.  The Company accounts for derivative instruments and hedging activities in accordance with SFAS No. 133, Accounting for Derivative Instruments and Hedging Activities.  The Company has decided not to designate these instruments as hedging instruments for financial accounting purposes, and as a result, we recognize the change in the instruments’ fair value currently on the Consolidated Statement of Operations as net increase (decrease) in unrealized appreciation (depreciation) on portfolio securities, corporate notes and commodity derivative instruments.

Investments in derivative instruments represent future commitments or options to purchase or sell other financial instruments or commodities at specific prices at specified future dates, which expose the Company to market risk if the market value of the contract is higher or lower than the contract price at the maturity date.  Additionally, these derivative instruments expose the Company to credit risk arising from the potential inability of counterparties to perform under the terms of the contracts.

The components of gains (losses) on commodity derivative instruments are as follows:

	For the Six Months Ended
	June 30, 2009			June 30, 2008
Unrealized gains (losses) on commodity derivatives	$	(6,307,927	)	$	-
Realized gains (losses) on commodity derivatives		5,054,081			-
Net gains (losses) on commodity derivative instruments	$	(1,253,846	)	$	-

The unrealized gains (losses) on commodity derivatives are included in net increase (decrease) in unrealized appreciation (depreciation) on portfolio securities, corporate notes and commodity derivatives instruments.

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The realized gains (losses) on commodity derivatives are composed of revenues received on favorable expired options less the cost of the related expired positions and are included in total investment income.

Below is a summary of the Company’s commodity derivative instruments as of June 30, 2009.

			Weighted
	Volumes (Bbls) at		average strike		Fair Value at
	June 30, 2009		price per Bbl		June 30, 2009
Oil:
Put Options:
2009		55,000	$	92.55		1,286,984
2010		7,000	$	85.00		113,391
Total Oil Put Options		62,000			$	1,400,375

Note 11: Recent Accounting Pronouncements

In September 2006, FASB issued Statement 157, Fair Value Measurements, which establishes a framework for measuring fair value and requires additional disclosures about fair value measurements.  Beginning January 1, 2008, the Company partially applied Statement 157 as allowed by FASB Staff Position (FSP) 157-2, which delayed the effective date of Statement 157 for nonrecurring fair value measurements associated with the Company’s nonfinancial assets and liabilities.  As of January 1, 2008, the Company has applied the provisions of Statement 157 to its recurring fair value measurements and the impact was not material.  See Note 9 for disclosure of fair value measurements for the Company’s financial instruments.  Under FSP 157-2, the Company is required to apply Statement 157 to its nonrecurring fair value measurements associated with its non-financial assets and liabilities beginning January 1, 2009.  As of January 1, 2009, the Company has considered the provisions of FSP 157-2 and there is no impact to our consolidated financial statements, as we do not have non-financial assets or liabilities.

In March 2008, FASB issued SFAS No. 161, Disclosures about Derivative Instruments and Hedging Activities, (“SFAS No. 161”).  SFAS No. 161 requires enhanced disclosure about the fair value of derivative instruments and their gains or losses in tabular format and information about credit risk related contingent features in derivative agreements, counterparty credit risk, and the company’s strategies and objectives for using derivative instruments.  SFAS No. 161 is effective for financial statements issued for fiscal years beginning after December 15, 2008, and as such, was adopted by the Company on January 1, 2009.  The principal impact was to require the expansion of our disclosure regarding our derivative instruments.  See Note 10 for additional disclosures required by SFAS No. 161.

In May 2008, FASB issued Statement 162, The Hierarchy of Generally Accepted Accounting Principles (“SFAS 162”), which identifies a consistent framework for selecting accounting principles to be used in preparing financial statements for nongovernmental entities that are presented in conformity with United States GAAP.  The current GAAP hierarchy was criticized due to its complexity, ranking position of FASB Statements of Financial Accounting Concepts, and the fact that it is directed at auditors rather than entities.  SFAS 162 is effective November 15, 2008.  The FASB does not expect that SFAS 162 will cause a change in current practice, and the Company does not believe that SFAS 162 will have an impact on its consolidated financial statements.

In April 2009, FASB issued three new FASB Staff Positions (“FSP”) relating to fair value accounting; FAS 157-4, Determining Fair Value When Market Activity Has Decreased, FSP FAS 115-2 and FAS 124-2, Other-Than-Temporary Impairment and FSP FAS 107-1/APB 28-1, Interim Fair Value Disclosures for Financial Instruments. These FSPs impact certain aspects of fair value measurement and related disclosures. The provisions of these FSPs were effective beginning in the second quarter of 2009. The impact of adopting these FSPs did not have a material effect on our consolidated financial statements or disclosures.

In April 2009, the SEC issued Staff Accounting Bulletin (“SAB”) No. 111, Miscellaneous Accounting-Other Than Temporary Impairment of Certain Investments in Equity Securities (“SAB 111”). SAB 111 addresses the guidance provided in FSP FAS 115-2 and FAS 124-2 and states the SEC staff’s views as to whether an impairment of an equity security is other-than-temporary. As the related FSPs, SAB 111 was effective for interim and annual reporting periods ending after June 15, 2009. The impact of adopting SAB 111 did not have a material effect on our consolidated financial statements or disclosures.

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In April 2009, the FASB issued FSP FAS 157-4, Determining Fair Value when the Volume and Level of Activity for the Asset or Liability Have Significantly Decreased and Identifying Transactions That Are Not Orderly (“FAS 157-4”). FAS 157-4 provides additional guidance for estimating fair value in accordance with Statement 157 and for identifying circumstances that indicate a transaction is not orderly and requires additional disclosures. FAS 157-4 was effective prospectively for interim and annual reporting periods ending after June 15, 2009. The impact of adopting FAS 157-4 did not have a material effect on our consolidated financial statements or disclosures.

In May 2009, the FASB issued SFAS 165, Subsequent Events, which establishes reporting and disclosure requirements based on the existence of conditions at the date of the balance sheet for events or transactions that occurred after the balance sheet date but before the financial statements are issued or are available to be issued. Companies are required to disclose the date through which subsequent events have been evaluated and whether that date is the date the financial statements were issued or were available to be issued. SFAS 165 is effective for financial statements issued for fiscal and interim periods ending after June 15, 2009 and is applied prospectively. The Company adopted SFAS 165 as of June 30, 2009. See Significant Accounting Policies in Note 2.

In June 2009, the FASB issued SFAS 168, The FASB Accounting Standards Codification and the Hierarchy of Generally Accepted Accounting Principles – a replacement of FASB Statement No. 162 (“SFAS 168”). SFAS 168 identifies the FASB Accounting Standards Codification as the source of authoritative U.S. GAAP recognized by the FASB to be applied by nongovernmental entities. SFAS 168 is effective for financial statements issued for interim and annual periods ending after September 15, 2009. The implementation of this standard will not have a material impact on our consolidated financial statements or results of operations.

Note 12: Subsequent Events

In May of this year, Nighthawk Transport I, LP and its subsidiaries (collectively, “Nighthawk”) defaulted under the terms of its senior credit facility.  Nighthawk was unable to restructure its obligations under the senior credit facility and on July 10, 2009 filed a voluntary petition under Chapter 7 of the United States Bankruptcy Code.  The Company holds a 16.98% participation in a $109 million senior secured, second lien facility for Nighthawk. As of July 21, 2009, the outstanding balance due to the Company under this facility was $14.5 million and   as of June 30, 2009, NGPC recorded its investment in Nighthawk at a fair value of zero. Although NGPC is pursuing its claims, it does not expect a material recovery.

On July 20, 2009, the Company closed a recapitalization transaction with Alden Resources, LLC (“Alden”), a Kentucky-based specialty coal producer. As part of the recapitalization, NGPC Asset Holdings, LP, a wholly-owned subsidiary of the Company, purchased $5.8 million of preferred units representing substantially all of the equity interest in Alden. The proceeds of the preferred equity issuance will be used for capital expenditures, working capital, and general corporate purposes. In addition to acquiring a majority ownership position, NGPC will hold a majority of the seats on the board of directors of Alden. NGPC also restructured its existing $36.5 million Senior Secured Credit Facility with Alden into an amended and restated $60 million two tranche Senior Secured Credit Facility with initial funded amounts of $20 million in Tranche A Notes and $19.5 million in Tranche B Notes. The Tranche A and Tranche B Notes bear interest at LIBOR plus 9%, with a LIBOR floor of 3%. Both the Tranche A Notes and the Tranche B Notes have the option to pay interest in kind (PIK) at a coupon rate of LIBOR plus 12%, with a LIBOR floor of 3%.

On July 16, 2009, NGPC repaid the entire $75 million balance on its Treasury Facility with proceeds from the sale of its treasury securities. There are no plans to renew or extend the Treasury Facility at its maturity on August 31, 2009. In addition, on July 9, 2009, the Company repaid the outstanding balance of its Investment Facility, leaving the Company with no outstanding indebtedness. The Company is currently in discussions with its bank group to extend the Investment Facility beyond its current maturity of August 31, 2010.

On July 31, 2009, BSR Loco Bayou, LLC (“BSR”) repaid in its entirety its $2.72 million Senior Secured Multiple Advance Term Loan and accrued interest of $0.27 million. NGPC continues to hold its overriding royalty interest and warrants in BSR.

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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.

The following analysis of our financial condition and results of operations should be read in conjunction with management’s discussion and analysis contained in our 2008 Annual Report on Form 10-K, as well as our consolidated financial statements and the notes thereto included in this Quarterly Report on Form 10-Q.

Forward-Looking Statements

Certain statements in this report that relate to estimates or expectations of our future performance or financial condition may constitute “forward-looking statements” as defined under the Private Securities Litigation Reform Act of 1995. These forward-looking statements are subject to various risks and uncertainties, which could cause actual results and conditions to differ materially from those projected, including, but not limited to,

· uncertainties associated with the timing of transaction closings;

· changes in the prospects of our portfolio companies;

· changes in interest rates;

· changes in regional, national or international economic conditions and their impact on the industries in which we invest;

· continued disruption of credit and capital markets, such as the events that have occurred since the third quarter of 2008;

· the future operating results of our portfolio companies and their ability to achieve their objectives;

· changes in the conditions of the industries in which we invest;

· the adequacy of our cash resources and working capital;

· the timing of cash flows, if any, from the operations of our portfolio companies;

· the ability of our Manager to locate suitable investments for us and to monitor and administer the investments; and

· other factors enumerated in our filings with the SEC.

We may use words such as “anticipates,” “believes,” “expects,” “intends,” “will,” “should,” “may” and similar expressions to identify forward-looking statements. Such statements are based on currently available operating, financial and competitive information and are subject to various risks and uncertainties that could cause actual results to differ materially from our historical experience and present expectations. Undue reliance should not be placed on such forward-looking statements, as such statements speak only as of the date on which they are made. Additional information regarding these and other risks and uncertainties is contained in our periodic filings with the SEC.

Overview

We are a financial services company created to invest primarily in debt securities of small and mid-size private energy companies.  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. We have elected to be regulated as a BDC under the 1940 Act and, as such, we are required to comply with certain regulatory requirements. For instance, we generally have to invest at least 70% of our total assets in “qualifying assets,” including securities of private U.S. companies, cash, cash equivalents, U.S. government securities and high-quality debt investments that mature in one year or less. In addition, for federal income tax purposes we operate so as to be treated as a RIC under the Code. Pursuant to these elections, we generally will not have to pay corporate-level taxes on any income and capital gains we distribute to our stockholders. 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 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.

Our investment objective is to generate both current income and capital appreciation primarily through debt investments with certain equity components.  A key focus area for our targeted investments in the energy industry is domestic upstream businesses that produce, develop, acquire and explore for oil and natural gas. We also evaluate investment opportunities in such businesses as coal, power, electricity, energy services and alternative energy. Our investments generally range in size from $10 million to $50 million, however, we may invest more or less depending on market conditions and our Manager’s view of a particular investment opportunity. Our targeted investments primarily consist of debt instruments, including senior and subordinated loans combined in one facility, sometimes with an equity component, and subordinated loans, sometimes with equity components. We may also invest in preferred stock and other equity securities on a stand-alone basis.

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We generate revenue in the form of interest income on the debt securities that we own, dividend income on any common or preferred stock that we own and capital gains or losses on any debt or equity securities that we acquire in portfolio companies and subsequently sell. Our investments, if in the form of debt securities, typically have a term of three to seven years and bear interest at a fixed or floating rate. To the extent achievable, we seek to collateralize our investments by obtaining security interests in our portfolio companies' assets. We also may acquire minority or majority equity interests in our portfolio companies, which may pay cash or in-kind dividends on a recurring or otherwise negotiated basis. In addition, we may generate revenue in other forms including commitment, origination, structuring, administration or due diligence fees; fees for providing managerial assistance; and possibly consultation fees.  Any such fees generated in connection with our investments are recognized as earned.

Our level of investment activity can and does vary substantially from period to period depending on many factors, including the amount of debt and equity capital available to energy companies, the level of acquisition and divestiture activity for such companies, the level and volatility of energy commodity prices, the general economic and competitive environment for the types of investments we make, and our own ability to raise capital, both through issuance of debt and equity securities, to fund our investments.  We believe that the recent dislocation in the credit markets and decline in energy commodity prices should favorably impact the competitive environment, in that it has reduced the debt capital available to energy companies from other sources.  Though the same macro economic factors also make our access to new debt and equity capital less certain, we have recently extended the maturity of our Investment Facility to August 2010.  While we currently have capital available to invest, it is not unlimited.  We remain committed to our underwriting and investment disciplines in selectively investing in appropriate risk-reward opportunities within the energy sector.

Portfolio and Investment Activity

On June 18, 2009, Crossroads Energy, LP (“Crossroads”) repaid in its entirety its $5.24 million Senior Secured Credit Facility with the proceeds from a new senior bank facility.  On June 25, 2009, Crossroads repurchased NGPC’s overriding royalty interest, resulting in a $0.29 million realized capital gain for NGPC.

On June 26, 2009, Resaca Exploitation, Inc.(“Resaca”) repaid in full the $31.1 million balance on its Multiple Advance Senior Secured Term Loan.  Concurrently, NGPC provided a $10 million commitment as part of Resaca’s new $35 million Senior Secured Revolving Credit Facility, agented by another financial institution, and funded $9.1 million at closing.  The Revolving Credit Facility matures on July 1, 2012, and bears interest at LIBOR plus 5.50%, with a LIBOR floor of 2.50%.

In total for the quarter ended June 30, 2009, we funded $12.8 million to existing portfolio companies and received $33.5 million in cash repayments.  We did not add any new companies to our portfolio during the second quarter of 2009.

Following these transactions our investment portfolio consisted of eighteen portfolio companies and was invested as follows based on their fair values as of June 30, 2009: 38.9% in senior secured term loans, 3.4% in senior subordinated secured notes, 0.2% in participating convertible preferred stock, 0.5% in common stock, 2.4% in corporate notes, 6.8% in membership and partnership units, 9.4% in net profits interests, 2.6% in limited term royalty interests, and 0.5% in other investments.  The balance of our investment portfolio (as a percentage of the whole portfolio) was comprised 23.6% of U.S. Treasury Bills and 11.7% of cash and cash equivalents.

Results of Operations

Investment Income

Investment income for the quarter ended June 30, 2009 was $5.5 million, with $6.2 million attributable to interest from targeted investments in eleven portfolio companies, $1.9 million attributable to income from commodity derivative instruments, a $2.8 million net loss attributable to royalty income net of amortization, and $0.2 million from corporate notes, investments in cash and cash equivalents and fee income from third parties and affiliates. This compares to investment income for the quarter ended June 30, 2008 of $8.2 million, with $6.9 million attributable to targeted investments in 18 portfolio companies, $0.6 million attributable to royalty income net of amortization, and $0.7 million from corporate notes, investments in cash and cash equivalents and fee income from third parties and affiliates.

For the six months ended June 30, 2009, investment income decreased by $3.7 million, or 20.7%, to $14.1 million from $17.7 million for the same period in 2008. For the six months ended June 30, 2009, we recorded $12.1 million attributable to targeted investments in portfolio companies, $5.1 million attributable to income from commodity derivative instruments, a $3.7 million net loss attributable to royalty income net of amortization, $0.6 million from corporate notes, investments in cash and cash equivalents and fee income from third parties and affiliates. This compares to $14.6 million attributable to targeted investments in portfolio companies, $1.1 million attributable to royalty income net of amortization, $2.0 million from corporate notes, investments in cash and cash equivalents and fee income from third parties and affiliates, for the same period in 2008.

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Our total targeted portfolio balance decreased on a cost basis by approximately $57.8 million from $331.6 million on June 30, 2008 to $273.8 million on June 30, 2009. The balance of non-accruing and non-income producing investments increased from approximately $59.3 million at June 30, 2008 to approximately $97.2 million at June 30, 2009. Although LIBOR rates dropped significantly from the second quarter of 2008 compared to the second quarter of 2009, this had a minimal effect on our targeted investment income because of LIBOR floors established for new portfolio companies and certain other existing portfolio companies during 2008.  Additionally, the continued downward pressure on U.S. Treasury Bill interest rates during 2008 and the first and second quarters of 2009 reduced interest from cash and cash equivalents.

At June 30, 2009, the weighted average yield on targeted portfolio investments, exclusive of capital gains, was 4.09%.  The weighted average yield of our corporate notes was 5.82%. The weighted average yield of our U.S. Treasury Bills and cash equivalents was 0.06% and 0.05%, respectively.  The weighted average yield on our total capital invested at June 30, 2009 was 3.34%.  The primary cause of the decline in the weighted average yield on targeted portfolio investments as of June 30, 2009 is that the calculation includes a negative yield on our investment in the ATP Limited Term Royalty, which had a cost basis of $17.3 million as of quarter end.  The negative yield is the result of amortization on the investment being substantially higher than the income earned for the first six months of 2009 due to lower oil and natural gas prices.  In addition, though the investment is substantially hedged and such hedges produced substantial income for the first six months of 2009, such income is not included in the yield calculation for targeted portfolio investments as the investment in commodity hedges is not included in the targeted investment portfolio.  Further, investments totaling $59.0 million on a cost basis (Nighthawk, $13.9 million, Formidable, LLC (“Formidable”), $38.6 million, BSR Loco Bayou, LLC $2.2 million, Chroma Exploration & Production, Inc.(“Chroma”), $4.3 million) are currently on non-accrual status. Investments totaling $38.2 million on a cost basis are non-income producing.

At June 30, 2008, the weighted average yield on targeted portfolio investments, exclusive of capital gains, was 8.94%. The weighted average yield of our corporate notes was 5.82%. The weighted average yield of our U.S. Treasury Bills and cash equivalents was 1.01%. The weighted average yield on our total capital invested at June 30, 2008 was 6.04%. The yield on targeted portfolio investments and the yield on our total capital invested did not include income amounts on our $32.8 million limited term royalty interest. This investment was acquired during the month of June 2008 and no income was received from it during the quarter ended June 30, 2008. These yields did not include income from our four investments on non-accrual status.

Weighted average yields on investments are computed as of a specific date using interest rates as of the balance sheet date and include amortization of loan discount points, original issue discount and market premium or discount, royalty interest income, net profits income and other similar investment income, weighted by their respective costs when averaged. Additionally, these yields do not include income from any investments on non-accrual status. Such weighted average yields are not necessarily indicative of expected total returns on a portfolio.

Operating Expenses

For the quarter ended June 30, 2009, operating expenses were $4.0 million compared to $4.4 million for the quarter ended June 30, 2008. The 2009 amount consisted of investment advisory and management fees of $1.6 million, insurance expenses, administrative services fees, professional fees, directors’ fees and other general and administrative expenses of $1.3 million and credit facility interest and fees of $1.1 million.  In comparison, for the quarter ended June 30, 2008, investment advisory and management fees were $1.8 million, insurance expenses, administrative services fees, professional fees, directors’ fees and other general and administrative expenses were $1.2 million and credit facility interest and fees were $1.4 million.

For the six months ended June 30, 2009, operating expenses were $8.0 million compared to $9.8 million for the same period of 2008. The 2009 amount consisted of investment advisory and management and incentive fees of $3.5 million, insurance expenses, administrative services fees, professional fees, directors’ fees, organization costs and other general and administrative expenses of $2.4 million and credit facility interest and fees of $2.1 million. This compares to investment advisory and management fees of $3.6 million, insurance expenses, administrative services fees, professional fees, directors’ fees, organization costs and other general and administrative expenses of $2.3 million and credit facility interest and fees of $3.9 million for the six months ended June 30, 2008.

Operating expenses for the three and six month periods include our allocable portion of the total organizational and operating expenses incurred by us, the Manager and the Administrator, as determined by our Board of Directors and representatives of the Manager and the Administrator.  According to the terms of the investment advisory agreement, the base management fee is calculated quarterly as 0.45% of the average of our total assets as of the end of the two previous quarters.  Other general and administrative expenses include allocated share of employee, facilities and stockholder services and marketing costs.

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Net Investment Income before Income Taxes

For the quarter ended June 30, 2009, net investment income before income taxes was $1.5 million compared to $3.8 million for the quarter ended June 30, 2008.  The 59.6% decrease was primarily due to lower interest income on overall lower principal balances, the increase in the balance of non-accruing investments and the effect of lower commodity prices on royalty income, net of amortization.

For the six months ended June 30, 2009, net investment income before income taxes was $6.1 million compared to $7.9 million for the six months ended June 30, 2008.  The 23.4% decrease was primarily due to lower interest income on overall lower principal balances and an increase in the balance of non-accruing and non-income producing investments, offset by lower credit facility interest expense and fees on our reduced debt balance.

Net Realized Gains

A net capital loss of $0.05 million was realized for the quarter ended June 30, 2009, a result of a $0.30 million capital gain on the sale of our Crossroads overriding royalty interest, less a $0.35 million reduction to our Rubicon Energy Partners, LLC capital gain recorded in 2008. There were no realized capital gains or losses for the quarter ended June 30, 2008.

Unrealized Appreciation or Depreciation on Investments

For the quarter ended June 30, 2009, the increase in net unrealized depreciation was $4.4 million, comprised of a $3.0 million decrease in targeted portfolio fair value and a decrease of $3.1 million in commodity derivative instruments fair value, offset by an increase of $1.7 million in the fair value of our corporate notes.  The decrease in targeted portfolio fair value was largely a result of changes in the estimated current market values of underlying assets.  The decrease in the fair value of commodity derivative instruments was a result of the reversal of 2008 unrealized appreciation due to realizations in the second quarter of 2009.

For the quarter ended June 30, 2008, the increase in net unrealized appreciation was $1.6 million, comprised of a $1.6 million increase in targeted portfolio fair value, a $0.2 million increase in the fair value of corporate notes and a $0.2 million decrease in the fair value of commodity derivative instruments.

For the six months ended June 30, 2009, the increase in net unrealized depreciation was $29.0 million, comprised of a decrease in targeted portfolio fair value of $24.2 million and a $6.3 million decrease in the fair value of commodity derivative instruments, offset by a $1.5 million increase in the fair value of our corporate notes. This compares to an increase in net unrealized depreciation of $0.1 million for the six months ended June 30, 2008, comprised of an increase in targeted portfolio fair value of $0.2 million, a $0.1 million decrease in the fair value of our corporate notes and a $0.2 million decrease in the fair value of commodity derivative instruments.

In light of the recent disruption in the credit and equity capital markets and the downward volatility of energy commodity prices, it has become more difficult to predict the timing and amount of future realized capital gains.  In addition, recent capital markets volatility has impacted our unrealized capital appreciation and unrealized depreciation.  For example, since September 30, 2008, the price of Resaca common stock as traded on the London AIM has fallen by approximately 71% from £1.24 to £0.365 as of July 22, 2009 while the U.S. dollar has strengthened against the British pound.  Also, corporate bond prices have generally declined since September 30, 2008.

Net Increase or Decrease in Stockholders’ Equity from Operations

For the quarter ended June 30, 2009, we had a net decrease in stockholders’ equity (net assets) resulting from operations of $2.6 million, or $0.12 per share, compared to a net increase of $5.4 million, or $0.25 per share for the quarter ended June 30, 2008.  The $8.0 million, or $0.37 per share net decrease is attributable to the $1.9 million decrease in net investment income after income taxes and the $6.1 million increase in unrealized depreciation on our investments during the second quarter of 2009, compared to the second quarter of 2008.

For the six months ended June 30, 2009 the net decrease in stockholders’ equity (net assets) resulting from operations was $21.3 million, or $0.98 per share, compared to an increase of $7.8 million, or $0.36 per share for the six months ended June 30, 2008.

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Financial Condition, Liquidity and Capital Resources

During the quarter ended June 30, 2009, we generated cash from operations, including interest earned on our portfolio securities, as well as our investments in corporate notes and U.S. government securities.  We received cash redemptions of investments in portfolio securities and commodity derivative instruments of $39.5 million.  At June 30, 2009, we had cash and cash equivalents of $37.7 million, investments in U.S. Treasury Bills of $76.2 million and investments in corporate notes of $7.8 million. Our Investment Facility, with an outstanding balance of $15 million at June 30, 2009, will mature on August 31, 2010. Our Treasury Facility, with an outstanding balance of $75 million at June 30, 2009, will mature on August 31, 2009.  As of June 30, 2009, we had investments in or commitments to fund loan facilities to eighteen portfolio companies totaling $280.5 million, of which $274.3 million was drawn.  We expect to fund our investments in 2009 from income earned on our portfolio and temporary investments, repayments or realizations of existing investments and from borrowings under our Investment Facility.  In the future, we may also fund a portion of our investments with issuances of equity or senior debt securities.  We may also securitize a portion of our investments in mezzanine or senior secured loans or other assets.  We expect our primary use of funds to be investments in portfolio companies, cash distributions to holders of our common stock and payment of fees and other operating expenses.

Commodity Derivative Instruments

We use commodity derivative instruments to manage our exposure to commodity price fluctuations.  We do not designate these instruments as hedging instruments for financial accounting purposes, and, as a result, we recognize the change in the instruments’ fair value currently on the Consolidated Statement of Operations as net increase (decrease) in unrealized appreciation (depreciation) on portfolio securities, corporate notes and commodity derivative instruments.

We acquired a limited term royalty interest from ATP, and the royalty payments associated with this investment are subject to fluctuations in natural gas and oil prices.  To manage this risk, we purchased oil and natural gas put options on approximately 93% of our royalty interest.  These transactions limit exposure to declines in oil and natural gas prices.  See “Note 10: Commodity Derivative Instruments” in the accompanying notes to the consolidated financial statements for further description of our put options.

Contractual Obligations

A summary of our contractual payment obligations at June 30, 2009 is as follows:

			Less than						More than
Contractual Obligations	Total		1 Year		1-3 Years		3-5 Years		5 Years
June 30, 2009:
Long-term debt obligations—
revolving credit facilities (1)	$	90,000,000	$	75,000,000	$	15,000,000	$	-	$	-
Total	$	90,000,000	$	75,000,000	$	15,000,000	$	-	$	-
(1) Excludes accrued interest amounts.

Off-Balance Sheet Arrangements

Currently, we do not engage in any off-balance sheet arrangements, including any risk management of commodity pricing or other hedging practices.

Dividends

We have elected to operate our business so as to be taxed as a RIC under Subchapter M of the Code.  To maintain our RIC status, we must distribute at least 90% of our “investment company taxable income” (which generally consists of ordinary income and realized net short-term gains in excess of realized net long-term capital losses, if any, reduced by deductible expenses) and net tax-exempt interest.  In order to avoid certain excise taxes imposed on RICs, we will be required to distribute at least 98% of our ordinary income and net capital gains, and 100% of any income realized, but not distributed or deemed distributed, in preceding years.  We currently intend to make sufficient distributions to satisfy the annual distribution requirement and to avoid the excise taxes.

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We may not be able to achieve operating results that will allow us to make distributions at a specific level or to increase the amount of these distributions from time to time. In addition, we may be limited in our ability to make distributions due to the asset coverage test for borrowings when applicable to us as a BDC under the 1940 Act and due to provisions in our credit facilities. If we do not distribute a certain percentage of our income annually, we will suffer adverse tax consequences, including possible loss of our status as a RIC. We cannot assure stockholders that they will receive any distributions or distributions at a particular level.

Portfolio Credit Quality

Virtually all of our portfolio investments are in negotiated, and often illiquid, securities of energy companies. We maintain a system to evaluate the credit quality of these investments. While incorporating quantitative analysis, this system is a qualitative assessment. This system is intended to reflect the overall, long term performance of a portfolio company’s business, the collateral coverage of an investment, and other relevant factors. As a consequence of the general economic downturn and associated weakness in the energy markets, two of our investments, Nighthawk and Formidable, have experienced significant degradation in value that may not be recoverable. However, we believe that our other assets which may be experiencing stress in the near term generally have cost structures that should tolerate it. Of the twenty-one rated investments in eighteen portfolio companies, compared to the prior quarter end, one improved in rating, three declined in rating and seventeen retained the same rating.  Eleven investments totaling approximately $139.7 million, or approximately 51% of the $274.0 million in targeted investments and commodity derivative instruments, on a cost basis, are carried on our watch list due to deterioration in asset coverage, slower than expected development of the assets supporting the investments, or the downturn in general economic and energy market conditions.  While restructuring of some of these watch list investments has been and may be required, subject to general economic and commodity market conditions in the long term, other than the investments in Nighthawk and Formidable, we do not currently foresee significant permanent long-term deterioration in the existing portfolio.

For the second quarter of 2009, the combined decrease in the fair value of our portfolio securities, corporate notes and commodity derivative instrument of $4.4 million is due to changes in the estimated current market values of underlying assets totaling $1.3 million, and $3.1 million in reversals of prior year unrealized appreciation of commodity derivative instruments due to second quarter 2009 realizations.  The $1.3 million net decrease in fair value was comprised of increases of unrealized depreciation totaling $12.3 million offset by increases in unrealized appreciation of $11.0 million. The $12.3 million increase in unrealized depreciation consisted primarily of Nighthawk, $10.2 million; Rubicon Energy Partners, LLC, $0.7 million; Formidable, $0.6 million; and Chroma, $0.5 million. We also recorded a $0.3 million reversal of prior year unrealized appreciation due to our second quarter realization on our Crossroads overriding royalty interest. The $11.0 million increase in unrealized appreciation consisted primarily of Venoco, Inc. senior notes, $4.3 million; ATP, $3.5 million; corporate notes, $1.7 million; Anadarko Petroleum Corporation, $0.3 million; and increases to various stock and overriding royalty interests, $1.2 million.

Recently Issued Accounting Pronouncements

See “Note 11: Recent Accounting Pronouncements” in the accompanying notes to consolidated financial statements for details of recently issued accounting pronouncements and their expected impact on our financial statements.

Item 3. Quantitative and Qualitative Disclosures About Market Risk

There have been no material changes from the information provided in Item 7A of our Annual Report on Form 10-K for the year ended December 31, 2008.

Item 4. Controls and Procedures

Disclosure Controls and Procedures

We maintain disclosure controls and procedures (as defined in 13a-15(e) and 15d-15(e) of the Exchange Act) designed to ensure that information required to be disclosed in our reports under the Exchange Act is recorded, processed, summarized and reported on a timely basis and accumulated and made known to management, including our Chief Executive Officer and our Chief Financial Officer, to allow timely decisions regarding required disclosures.  Based on an evaluation of our disclosure controls and procedures as of the end of the period covered by this Quarterly Report on Form 10-Q conducted by our management, with the participation of our Chief Executive Officer and our Chief Financial Officer, our Chief Executive Officer and our Chief Financial Officer concluded that our disclosure controls and procedures were not effective as of June 30, 2009 because they are not yet able to conclude that we have remediated the material weakness in internal control over financial reporting identified in Item 9A of our Annual Report on Form 10-K for the year ended December 31, 2008.

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The certifications of our Chief Executive Officer and our Chief Financial Officer required in accordance with Section 302 of the Sarbanes-Oxley Act of 2002 are attached as exhibits to this Quarterly Report on Form 10-Q. The disclosures set forth in this Item 4 contain information concerning (i) the evaluation of our disclosure controls and procedures referred to in paragraph 4 of the certifications, and (ii) material weaknesses in the design or operation of our internal control over financial reporting referred to in paragraph 5 of those certifications. Those certifications should be read in conjunction with this Item 4 for a more complete understanding of the matters covered by the certifications.

Changes in Internal Control Over Financial Reporting

As of December 31, 2008, our assessment of the effectiveness of our internal control over financial reporting identified a material weakness in our internal control over financial reporting.  Our management determined that as of December 31, 2008, the Company did not maintain effective controls over the determination and reporting of the provision for income taxes. Specifically, management did not perform a sufficiently precise review to ensure the completeness and accuracy of the Company’s calculation of its income tax provision and deferred income tax assets and liabilities. This deficiency resulted in errors in the annual tax provision and deferred income tax assets and liabilities for the fiscal year ended December 31, 2008 (which resulted in audit adjustments to our consolidated financial statements).

Beginning in the first quarter of 2009, and into the second quarter, the Company implemented the following remediation steps to address this material weakness discussed above and to improve its internal controls over financial reporting:

· improved procedures for the calculation and reconciliation process of our deferred income tax assets and liabilities, including validation of underlying supporting data;

· enhanced quarterly management review of the calculation of the deferred income tax assets and liabilities and underlying supporting data; and

· engaged external tax experts to support the Company’s financial closing and reporting process.

We believe that these remediation steps represent ongoing improvement measures. While we have taken steps to begin remediation of the material weakness, additional measures may be required. We will assess the effectiveness of our remediation efforts in connection with our management's tests of internal control over financial reporting in conjunction with our December 31, 2009 financial statements.  Except as discussed above, we have not identified any changes in our internal controls over financial reporting during the second quarter of 2009 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

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PART II – OTHER INFORMATION

Item 1. Legal Proceedings

We are not currently a defendant in any material legal proceeding, nor to our knowledge, is any material legal proceeding threatened against us.

Item 1A. Risk Factors

There have been no material changes to the risk factors disclosed under Part I, Item 1A, "Risk Factors" in our Annual Report on Form 10-K for the fiscal year ended December 31, 2008.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

Not applicable.

Item 3. Defaults Upon Senior Securities

Not applicable.

Item 4. Submission of Matters to a Vote of Security Holders

On Wednesday, May 13, 2009, we held our 2009 annual meeting of stockholders to elect two Class II directors to our Board of Directors and to consider and vote upon a proposal to authorize the Company to offer and issue warrants exercisable for, rights to subscribe for, and preferred stock and debt convertible into, shares of our common stock subject to certain limitations set forth in the proxy statement for the 2009 annual meeting of stockholders. At the meeting, David R. Albin and Lon C. Kile were re-elected as directors.

The following is a summary of the votes cast at the 2009 annual meeting of stockholders:

Results of Voting
1. Election of Directors:	Voted For	Withheld
David R. Albin	18,340,328	920,590
Lon C. Kile	18,326,289	934,629

				Broker
	Voted For	Against	Abstentions	Non-Votes
2. To authorize the Company to offer and issue warrants exercisable for, rights to subscribe for, and preferred stock and debt convertible into, shares of our common stock subject to certain limitations set forth in the proxy statement for the 2009 annual meeting of stockholders	9,116,423	1,787,604	124,116	8,232,775

Item 5. Other Information

Not applicable.

34

Item 6. Exhibits

No. Exhibit

Exhibits No.	Exhibit
3.1	Articles of Amendment and Restatement (filed as Exhibit 3.2 to the Company’s Annual Report on Form 10-K for the year ended December 31, 2004 and incorporated herein by reference)
3.2	Bylaws (filed as Exhibit (b) to the Company’s Registration Statement on Form N-2 filed on August 16, 2004 (Registration No. 333-118279) and incorporated herein by reference)
4.1	Form of Stock Certificate (filed as Exhibit (d) to the Company’s Pre-Effective Amendment No. 2 to Registration Statement on Form N-2 filed on October 7, 2004 (Registration No. 333-118279) and incorporated herein by reference)
4.2	Dividend Reinvestment Plan (filed as Exhibit (e) to the Company’s Registration Statement on Form N-2 filed on August 16, 2004 (Registration No. 333-118279) and incorporated herein by reference)
10.1	Investment Advisory Agreement between the Company and NGP Investment Advisor, LP (filed as Exhibit 10.1 to the Company’s Annual Report on Form 10-K for the year ended December 31, 2004 and incorporated herein by reference)
10.2	Administration Agreement between the Company and NGP Administration, LLC (filed as Exhibit 10.2 to the Company’s Annual Report on Form 10-K for the year ended December 31, 2004 and incorporated herein by reference)
10.3	License Agreement between the Company and NGP Energy Capital Management, L.L.C. (formerly known as Natural Gas Partners, L.L.C.)(filed as Exhibit 10.3 to the Company’s Annual Report on Form 10-K for the year ended December 31, 2004 and incorporated herein by reference)
10.4	Form of Indemnity Agreement (filed as Exhibit 10.5 to the Company’s Annual Report on Form 10-K for the year ended December 31, 2004 and incorporated herein by reference)
10.5	Amended and Restated Revolving Credit Agreement, dated as of August 31, 2006, between the Company, the lenders from time to time party thereto and SunTrust Bank, as administrative agent for the lenders (filed as Exhibit 10.6 to the Company’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2006 and incorporated herein by reference)
10.6	Treasury Secured Revolving Credit Agreement, dated as of August 31, 2006, between the Company, the lenders from time to time party thereto and SunTrust Bank as administrative agent for the lenders (filed as Exhibit 10.7 to the Company’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2006 and incorporated herein by reference)
10.7	Custody Agreement between the Company and Wells Fargo Bank, N.A. (filed as Exhibit (j)(1) to the Company’s Pre-Effective Amendment No. 1 to Registration Statement on Form N-2 filed September 24, 2004 (Registration No. 333-118279) and incorporated herein by reference)
10.8	Amendment No. 1 to Custody Agreement between the Company and Wells Fargo Bank, N.A. (filed as Exhibit 10.8 to the Company’s Annual Report on Form 10-K for the year ended December 31,  2007 and incorporated herein by reference)
10.9	Amendment No. 2 to Custody Agreement between the Company and Wells Fargo Bank, N.A. (filed as Exhibit 10.9 to the Company’s Annual Report on Form 10-K for the year ended December 31, 2007 and incorporated herein by reference)
10.10	First Amendment to Amended and Restated Revolving Credit Agreement effective as of August 31, 2006, between the Company, the lenders from time to time party thereto and SunTrust Bank (filed as Exhibit 10.7 to the Company’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2007 and incorporated herein by reference)
10.11	First Amendment to Treasury Secured Revolving Credit Agreement effective as of August 31, 2006, between the Company, the lenders from time to time party thereto and SunTrust Bank (filed as Exhibit 10.9 to the Company’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2007 and incorporated herein by reference)
10.12	Second Amendment to Treasury Secured Revolving Credit Agreement effective as of September 28, 2007, between the Company, the lenders from time to time party thereto and SunTrust Bank (filed as Exhibit 10.1 to the Company’s Current Report on Form 8-K on October 24, 2007 and incorporated herein by reference)
10.13	Second Amendment to Amended and Restated Revolving Credit Agreement effective as of March 13, 2008, between the Company, the lenders from time to time party thereto and SunTrust Bank (filed as Exhibit 10.11 to the Company’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2008 and incorporated herein by reference)

35

Exhibits No.	Exhibit
10.14	Third Amendment to Treasury Secured Revolving Credit Agreement effective as of March 13, 2008, between the Company, the lenders from time to time party thereto and SunTrust Bank (filed as Exhibit 10.12 to the Company’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2008 and incorporated herein by reference)
10.15	Third Amendment to Amended and Restated Revolving Credit Agreement effective as of September 29, 2008, between the Company, the lenders from time to time party thereto and SunTrust Bank (filed as Exhibit 10.13 to the Company’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2008 and incorporated herein by reference)
10.16	Fourth Amendment to Treasury Secured Revolving Credit Agreement effective as of September 29, 2008, between the Company, the lenders from time to time party thereto and SunTrust (filed as Exhibit 10.14 to the Company’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2008 and incorporated herein by reference)
31.1	Certification required by Rule 13a-14(a)/15d-14(a) by the Chief Executive Officer
31.2	Certification required by Rule 13a-14(a)/15d-14(a) by the Chief Financial Officer
32.1	Section 1350 Certification by the Chief Executive Officer
32.2	Section 1350 Certification by the Chief Financial Officer

36

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

NGP CAPITAL RESOURCES COMPANY
	By:	/s/ John H. Homier
		John H. Homier
		President and Chief Executive Officer

NGP CAPITAL RESOURCES COMPANY
	By:	/s/ Stephen K. Gardner
		Stephen K. Gardner
		Chief Financial Officer, Treasurer and Secretary

Date: August 7, 2009

Index to Exhibits

Exhibits No.	Exhibit
3.1	Articles of Amendment and Restatement (filed as Exhibit 3.2 to the Company’s Annual Report on Form 10-K for the year ended December 31, 2004 and incorporated herein by reference)
3.2	Bylaws (filed as Exhibit (b) to the Company’s Registration Statement on Form N-2 filed on August 16, 2004 (Registration No. 333-118279) and incorporated herein by reference)
4.1	Form of Stock Certificate (filed as Exhibit (d) to the Company’s Pre-Effective Amendment No. 2 to Registration Statement on Form N-2 filed on October 7, 2004 (Registration No. 333-118279) and incorporated herein by reference)
4.2	Dividend Reinvestment Plan (filed as Exhibit (e) to the Company’s Registration Statement on Form N-2 filed on August 16, 2004 (Registration No. 333-118279) and incorporated herein by reference)
10.1	Investment Advisory Agreement between the Company and NGP Investment Advisor, LP (filed as Exhibit 10.1 to the Company’s Annual Report on Form 10-K for the year ended December 31, 2004 and incorporated herein by reference)
10.2	Administration Agreement between the Company and NGP Administration, LLC (filed as Exhibit 10.2 to the Company’s Annual Report on Form 10-K for the year ended December 31, 2004 and incorporated herein by reference)
10.3	License Agreement between the Company and NGP Energy Capital Management, L.L.C.(formerly known as Natural Gas Partners, L.L.C.)(filed as Exhibit 10.3 to the Company’s Annual Report on Form 10-K for the year ended December 31, 2004 and incorporated herein by reference)
10.4	Form of Indemnity Agreement (filed as Exhibit 10.5 to the Company’s Annual Report on Form 10-K for the year ended December 31, 2004 and incorporated herein by reference)
10.5	Amended and Restated Revolving Credit Agreement, dated as of August 31, 2006, between the Company, the lenders from time to time party thereto and SunTrust Bank, as administrative agent for the lenders (filed as Exhibit 10.6 to the Company’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2006 and incorporated herein by reference)
10.6	Treasury Secured Revolving Credit Agreement, dated as of August 31, 2006, between the Company, the lenders from time to time party thereto and SunTrust Bank as administrative agent for the lenders (filed as Exhibit 10.7 to the Company’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2006 and incorporated herein by reference)
10.7	Custody Agreement between the Company and Wells Fargo Bank, N.A. (filed as Exhibit (j)(1) to the Company’s Pre-Effective Amendment No. 1 to Registration Statement on Form N-2 filed September 24, 2004 (Registration No. 333-118279) and incorporated herein by reference)
10.8	Amendment No. 1 to Custody Agreement between the Company and Wells Fargo Bank, N.A. (filed as Exhibit 10.8 to the Company’s Annual Report on Form 10-K for the year ended December 31,  2007 and incorporated herein by reference)
10.9	Amendment No. 2 to Custody Agreement between the Company and Wells Fargo Bank, N.A. (filed as Exhibit 10.9 to the Company’s Annual Report on Form 10-K for the year ended December 31, 2007 and incorporated herein by reference)
10.10	First Amendment to Amended and Restated Revolving Credit Agreement effective as of August 31, 2006, between the Company, the lenders from time to time party thereto and SunTrust Bank (filed as Exhibit 10.7 to the Company’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2007 and incorporated herein by reference)
10.11	First Amendment to Treasury Secured Revolving Credit Agreement effective as of August 31, 2006, between the Company, the lenders from time to time party thereto and SunTrust Bank (filed as Exhibit 10.9 to the Company’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2007 and incorporated herein by reference)
10.12	Second Amendment to Treasury Secured Revolving Credit Agreement effective as of September 28, 2007, between the Company, the lenders from time to time party thereto and SunTrust Bank (filed as Exhibit 10.1 to the Company’s Current Report on Form 8-K on October 24, 2007 and incorporated herein by reference)
10.13	Second Amendment to Amended and Restated Revolving Credit Agreement effective as of March 13, 2008, between the Company, the lenders from time to time party thereto and SunTrust Bank (filed as Exhibit 10.11 to the Company’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2008 and incorporated herein by reference)

Exhibits No.	Exhibit
10.14	Third Amendment to Treasury Secured Revolving Credit Agreement effective as of March 13, 2008, between the Company, the lenders from time to time party thereto and SunTrust Bank (filed as Exhibit 10.12 to the Company’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2008 and incorporated herein by reference)
10.15	Third Amendment to Amended and Restated Revolving Credit Agreement effective as of September 29, 2008, between the Company, the lenders from time to time party thereto and SunTrust Bank (filed as Exhibit 10.13 to the Company’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2008 and incorporated herein by reference)
10.16	Fourth Amendment to Treasury Secured Revolving Credit Agreement effective as of September 29, 2008, between the Company, the lenders from time to time party thereto and SunTrust (filed as Exhibit 10.14 to the Company’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2008 and incorporated herein by reference)
31.1	Certification required by Rule 13a-14(a)/15d-14(a) by the Chief Executive Officer
31.2	Certification required by Rule 13a-14(a)/15d-14(a) by the Chief Financial Officer
32.1	Section 1350 Certification by the Chief Executive Officer
32.2	Section 1350 Certification by the Chief Financial Officer