UNITED STATES


SECURITIES AND EXCHANGE
COMMISSION


Washington, D.C.
20549









FORM 10-Q/A


(Mark One)


x
            QUARTERLY REPORT PURSUANT TO
      SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934




For the quarterly period ended June
30, 2008




OR




 ̈
            TRANSITION REPORT PURSUANT TO
      SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934




For the transition period
             to




Commission file number:
814-00672







NGP Capital Resources
Company


(Exact name of registrant as
specified in its charter)







Maryland
            20-1371499(State or other jurisdiction
      of
              incorporation or
      organization)
            (I.R.S.
      Employer
              Identification
      No.)1221 McKinney Street, Suite
      2975
              Houston,
      Texas
            77010(Address of principal executive
      offices)
            (Zip
    Code)




(713) 752-0062


(Registrant’s telephone number,
including area code)





Indicate
by check mark whether the registrant (1) has filed all reports required to be
filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the
preceding 12 months (or for such shorter period that the registrant was required
to file such reports), and (2) has been subject to such filing requirements for
the past 90 days.


Yes x No o





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





Large
      accelerated filero
            Accelerated
      filerx
            Non-accelerated
      filero
              (Do
      not check if smaller reporting company)
            Smaller
      reporting companyo





Indicate
by check mark whether the registrant is a shell company (as defined in Rule
12b-2 of the Exchange Act).


Yes o No x





As
of June 22, 2010, there were 21,628,202 shares of the registrant’s common
stock outstanding.





TABLE OF
CONTENTS





PART I - FINANCIAL
      INFORMATION
            1Item 1. Consolidated Financial
      Statements
            1Item 2. Management’s Discussion
      and Analysis of Financial Condition and Results of
      Operations
            28Item 3. Quantitative and
      Qualitative Disclosures About Market Risk
            36Item 4. Controls and
      Procedures
            36PART II – OTHER
      INFORMATION
            37Item 1. Legal
      Proceedings
            37Item 1A. Risk
      Factors
            37Item 2. Unregistered Sales of
      Equity Securities and Use of Proceeds
            39Item 3. Defaults Upon Senior
      Securities
            39Item 4. Submission of Matters
      to a Vote of Security Holders
            39Item 5. Other
      Information
            39Item 6.
      Exhibits
            40




i


Explanatory
Note
 
 We are filing this Amended Quarterly
Report on Form 10-Q/A to our Quarterly Report on Form 10-Q for the quarter
ended June 30, 2008, which we refer to as the Amended Filing, to restate our
unaudited consolidated financial statements and related disclosures for the
quarter ended June 30, 2008, as discussed in Note 2 to the accompanying restated
unaudited consolidated financial statements.  Our original Quarterly
Report on Form 10-Q for the quarter ended June 30, 2008, which we refer to as
the Original Filing, was filed with the Securities and Exchange Commission on
August 6, 2008.
 
 Background
of the Restatement
 
 On March 15, 2010, our Board of
Directors and the members of the Audit Committee of our Board of Directors
concluded that the Company should restate its financial statements for the years
ended December 31, 2007 and December 31, 2008 and for each of the quarters in
2007 and 2008 and the first three quarters in 2009, which we collectively refer
to as the Affected Periods.
 
 The determination to restate the
financial statements for the Affected Periods was made in connection with
management’s assessment of accounting errors it discovered as part of a process
to remediate a material weakness in internal controls previously disclosed in
the Company’s Annual Report on Form 10-K for the year ended December 31, 2008
and the Company’s Quarterly Reports on Form 10-Q in 2009.  While the
Company has taken steps to remediate the previously disclosed material weakness,
the material weakness existed throughout the quarterly periods of 2009, and at
December 31, 2009, the Company had not yet remediated the material
weakness.  The Company anticipates that it will complete its testing
of the additional internal control processes designed to remediate the
previously disclosed material weakness in 2010.
 
 The errors and consequent restatements
described below principally involved non-cash accounting entries related to net
deferred tax assets and liabilities that typically arise as a result of timing
differences in tax and GAAP (book) accounting.  Taxable Net Investment
Income, which is the primary determinant of the Company’s distributable income,
has not been affected in any of the Affected Periods by these
restatements.
 
 The Company’s assessment of certain
identified accounting errors results in the following adjustments to previously
reported periods:
 
 1.      In the
quarter ended March 31, 2007, the Company failed to record a deferred tax
liability with respect to approximately $2.1 million in unrealized appreciation
on an investment in partnerships.  Similarly, in the quarters ended
June 30, 2007 and September 30, 2007, the Company failed to record deferred tax
liabilities with respect to approximately $4.0 million and $2.0 million,
respectively, in unrealized appreciation on an investment.
 
 2.      In the
quarter ended September 30, 2008, the Company realized a $12.34 million pre-tax
gain on this same investment (as compared to the $8.15 million of unrealized
appreciation previously recorded in 2007).  The reversal of the
previously unrecorded deferred tax liability in 2008 resulted in the incorrect
recording of a net tax deferred tax asset of $3.8 million at year end
2008.  This item
does not affect the periods presented in this Amended
Filing.
 
 Unrelated
to the restatements, we have reclassified certain balance sheet, statement of
operations and statement of cash flows amounts to conform to the presentation in
our most recently-filed Annual Report on Form 10-K. These reclassifications were
primarily related to the disaggregation of investments in portfolio securities,
investment income, net realized capital gain (loss) on investments and net
unrealized gain (loss) on investments into separate classifications according to
level of control.
  ii
  Restatement
of Other Financial Statements
 
 We have
restated our financial statements for the years ended December 31, 2007 and
December 31, 2008 in our Annual Report on Form 10-K for the year ended December
31, 2009, which was filed on March 31, 2010.  We have not amended, and
we do not intend to amend, either of our previously filed Annual Reports on Form
10-K for the years ended December 31, 2007 or December 31,
2008.  We have
previously filed amendments to our Quarterly Reports on Form 10-Q for each of
the quarters ended March 31 in the Affected Periods.With the filing of
this Amended Filing, we are concurrently filing amendments to our Quarterly
Reports on Form 10−Q for the quarters ended June 30 and September 30 in each of
the Affected Periods.  For this reason, readers should no longer rely
on those previously issued financial statements and the related information
contained in such previously filed reports for the Affected
Periods.
 
 For the convenience of the reader, this
Amended Filing sets forth the Original Filing, as modified and superseded where
necessary to reflect the amendment and restatement of our unaudited consolidated
financial statements and related disclosures.  The following items
have been amended principally as a result of, and to reflect, the
restatement:
 
 ·
              Part
      I – Item 1. Consolidated Financial
Statements;
 ·
              Part
      I – Item 2. Management’s Discussion and Analysis of Financial Condition
      and Results of Operations;
 ·
              Part
      I – Item 4. Controls and
Procedures;
 ·
              Part
      II –Item 1.A. Risk Factors; and
 ·
              Part
      II –Item 6. Exhibits.
 
 In accordance with applicable rules of
the Securities and Exchange Commission, this Amended Filing includes
certifications from our Chief Executive Officer and Chief Financial Officer
dated as of the date of this filing.
 
 The
remaining items contained in this Amended Filing consist of all other items
originally contained in the Original Filing and are included for the convenience
of the reader.  The sections of the Original Filing which were not
amended are unchanged and continue in full force and effect as originally
filed.  This Amended Filing speaks as of August 6, 2008, the date we
filed the Original Filing, and has not been updated to reflect events occurring
subsequent to the date of the original filing other than those associated with
the evaluation of and resulting restatement of the Company’s consolidated
financial statements.


iii


PART I - FINANCIAL
INFORMATION


I tem 1. Consolidated Financial
Statements.




NGP
CAPITAL RESOURCES COMPANY
 CONSOLIDATED
BALANCE SHEETS
  (Unaudited)June 30, 2008
                    
                    
                    December 31, 2007(As Restated)
                    
                    
                    (As Restated)AssetsInvestments
      in portfolio securities at fair value
                      Control
      investments - majority owned
                      (cost:
      $25,652,798 and $21,488,105, respectively)
                    
                    $
                    33,834,830
                    
                    
                    $
                    29,669,857Affiliate
      investments
                      (cost:
      $15,085,253 and $0, respectively)
                    
                    
                    15,085,253
                    
                    
                    
                    -Non-affiliate
      investments
                      (cost:
      $290,863,420 and $256,459,349, respectively)
                    
                    
                    289,154,400
                    
                    
                    
                    254,558,716Investments
      in corporate notes at fair value
                      (cost:
      $11,609,569 and $11,631,599, respectively)
                    
                    
                    8,821,600
                    
                    
                    
                    8,955,500Investments
      in commodity derivatives at fair value
                      (cost:
      $1,546,700 and $0, respectively)
                    
                    
                    1,331,854
                    
                    
                    
                    -Investments
      in U.S. Treasury Bills, at amortized cost
                      which
      approximates fair value
                    
                    
                    177,958,876
                    
                    
                    
                    163,925,625Total
      investments
                    
                    
                    526,186,813
                    
                    
                    
                    457,109,698Cash
      and cash equivalents
                    
                    
                    11,108,533
                    
                    
                    
                    18,437,115Accounts
      receivable and other current assets
                    
                    
                    54,058
                    
                    
                    
                    61,319Interest
      receivable
                    
                    
                    1,383,271
                    
                    
                    
                    647,839Prepaid
      assets
                    
                    
                    1,070,521
                    
                    
                    
                    2,020,655Total
      current assets
                    
                    
                    13,616,383
                    
                    
                    
                    21,166,928Total
      assets
                    
                    $
                    539,803,196
                    
                    
                    $
                    478,276,626Liabilities
      and stockholders' equity (net assets)Current
      liabilitiesAccounts
      payable
                    
                    $
                    595,572
                    
                    
                    $
                    928,761Management
      and incentive fees payable
                    
                    
                    1,838,009
                    
                    
                    
                    2,032,107Dividends
      payable
                    
                    
                    8,651,281
                    
                    
                    
                    9,012,671Deferred
      tax liabilities
                    
                    
                    2,770,924
                    
                    
                    
                    2,770,924Total
      current liabilities
                    
                    
                    13,855,786
                    
                    
                    
                    14,744,463Deferred
      tax liabilities
                    
                    
                    61,407
                    
                    
                    
                    116,221Long-term
      debt
                    
                    
                    224,250,000
                    
                    
                    
                    216,000,000Total
      liabilities
                    
                    
                    238,167,193
                    
                    
                    
                    230,860,684Commitments
      and contingencies (Note 9)Stockholders’
      equity (net assets)Common
      stock, $.001 par value, 250,000,000 shares authorized; 21,628,202 and
      17,500,332 shares issued and outstanding, respectively
                    
                    
                    21,628
                    
                    
                    
                    17,500Paid-in
      capital in excess of par
                    
                    
                    307,731,522
                    
                    
                    
                    245,684,499Undistributed
      net investment income (loss)
                    
                    
                    (7,675,553
                    )
                    
                    
                    20,714Undistributed
      net realized capital gain (loss)
                    
                    
                    859,133
                    
                    
                    
                    859,133Net
      unrealized appreciation (depreciation) of portfolio securities, corporate
      notes and commodity derivative instruments
                    
                    
                    699,273
                    
                    
                    
                    834,096Total
      stockholders’ equity (net assets)
                    
                    
                    301,636,003
                    
                    
                    
                    247,415,942Total
      liabilities and stockholders' equity (net assets)
                    
                    $
                    539,803,196
                    
                    
                    $
                    478,276,626Net
      asset value per share
                    
                    $
                    13.95
                    
                    
                    $
                    14.14
 
 (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 EndedJune 30, 2008
                    
                    
                    June 30, 2007
                    
                    
                    June 30, 2008
                    
                    
                    June 30, 2007(As Restated)
                    
                    
                    (As Restated)
                    
                    
                    (As Restated)
                    
                    
                    (As Restated)Investment
      incomeInterest
      and dividend income:Control
      investments - majority owned
                    
                    
                    134,601
                    
                    
                    
                    1,239,507
                    
                    
                    
                    255,515
                    
                    
                    
                    2,246,785Affiliate
      investments
                    
                    
                    522,622
                    
                    
                    
                    -
                    
                    
                    
                    717,401
                    
                    
                    
                    -Non-affiliate
      investments
                    
                    
                    6,920,901
                    
                    
                    
                    8,051,232
                    
                    
                    
                    15,557,325
                    
                    
                    
                    15,264,458Royalty
      income, net of amortization:Control
      investments - majority owned
                    
                    
                    20,692
                    
                    
                    
                    -
                    
                    
                    
                    48,707
                    
                    
                    
                    -Non-affiliate
      investments
                    
                    
                    553,897
                    
                    
                    
                    310,833
                    
                    
                    
                    1,071,731
                    
                    
                    
                    511,584Other
      income
                    
                    
                    44,520
                    
                    
                    
                    142,237
                    
                    
                    
                    84,890
                    
                    
                    
                    197,745Total
      investment income
                    
                    
                    8,197,233
                    
                    
                    
                    9,743,809
                    
                    
                    
                    17,735,569
                    
                    
                    
                    18,220,572Operating
      expensesManagement
      fees
                    
                    
                    1,838,009
                    
                    
                    
                    1,585,494
                    
                    
                    
                    3,638,215
                    
                    
                    
                    3,150,003Incentive
      fees
                    
                    
                    -
                    
                    
                    
                    1,054,358
                    
                    
                    
                    -
                    
                    
                    
                    1,054,358Professional
      fees
                    
                    
                    224,390
                    
                    
                    
                    174,987
                    
                    
                    
                    433,369
                    
                    
                    
                    328,583Insurance
      expense
                    
                    
                    198,812
                    
                    
                    
                    132,423
                    
                    
                    
                    397,629
                    
                    
                    
                    264,846Interest
      expense and fees
                    
                    
                    1,440,572
                    
                    
                    
                    1,619,226
                    
                    
                    
                    3,881,648
                    
                    
                    
                    3,176,422State
      franchise taxes
                    
                    
                    23,196
                    
                    
                    
                    34,612
                    
                    
                    
                    32,712
                    
                    
                    
                    34,593Other
      general and administrative expenses
                    
                    
                    713,063
                    
                    
                    
                    631,491
                    
                    
                    
                    1,451,663
                    
                    
                    
                    1,283,063Total
      operating expenses
                    
                    
                    4,438,042
                    
                    
                    
                    5,232,591
                    
                    
                    
                    9,835,236
                    
                    
                    
                    9,291,868Net
      investment income before income taxes
                    
                    
                    3,759,191
                    
                    
                    
                    4,511,218
                    
                    
                    
                    7,900,333
                    
                    
                    
                    8,928,704Benefit
      (provision) for income taxes
                    
                    
                    32,611
                    
                    
                    
                    (44,760
                    )
                    
                    
                    54,813
                    
                    
                    
                    (56,231
                    )Net
      investment income
                    
                    
                    3,791,802
                    
                    
                    
                    4,466,458
                    
                    
                    
                    7,955,146
                    
                    
                    
                    8,872,473Net
      realized capital gain (loss) on portfolio securities, corporate notes and
      commodity derivative instrumentsNon-affiliate
      investments
                    
                    
                    -
                    
                    
                    
                    6,666,858
                    
                    
                    
                    -
                    
                    
                    
                    6,666,858Benefit
      (provision) for taxes on capital gain (loss)
                    
                    
                    -
                    
                    
                    
                    (154,258
                    )
                    
                    
                    -
                    
                    
                    
                    (154,258
                    )Total
      net realized gain on investments
                    
                    
                    -
                    
                    
                    
                    6,512,600
                    
                    
                    
                    -
                    
                    
                    
                    6,512,600Net
      unrealized gain (loss) on investmentNet increase (decrease) in unrealized appreciation
                      (depreciation)
      on portfolio securities, corporate notes and
                      commodity
      derivative instruments:Control
      investments - majority owned
                    
                    
                    217
                    
                    
                    
                    4,000,000
                    
                    
                    
                    280
                    
                    
                    
                    6,000,000Non-affiliate
      investments
                    
                    
                    1,611,122
                    
                    
                    
                    (1,708,835
                    )
                    
                    
                    (135,103
                    )
                    
                    
                    21,150Benefit
      (provision) for taxes on unrealized gain (loss)
                    
                    
                    -
                    
                    
                    
                    (1,377,000
                    )
                    
                    
                    -
                    
                    
                    
                    (2,090,924
                    )Total
      net unrealized gain (loss) on investments
                    
                    
                    1,611,339
                    
                    
                    
                    914,165
                    
                    
                    
                    (134,823
                    )
                    
                    
                    3,930,226Net
      increase (decrease) in stockholders' equity (net assets) resulting from
      operations
                    
                    $
                    5,403,141
                    
                    
                    $
                    11,893,223
                    
                    
                    $
                    7,820,323
                    
                    
                    $
                    19,315,299Net
      increase (decrease) in stockholders' equity (net assets) resulting from
      operations per common share
                    
                    $
                    0.28
                    
                    
                    $
                    0.70
                    
                    
                    $
                    0.39
                    
                    
                    $
                    1.12
 
 (See
accompanying notes to consolidated financial statements)
  2
 
 NGP
CAPITAL RESOURCES COMPANY
 CONSOLIDATED
STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY (NET ASSETS)
 
 Net UnrealizedAppreciation (Depreciation)
                    
                    
                    TotalPaid-in Capital
                    
                    
                    Undistributed
                    
                    
                    Undistributed
                    
                    
                    of Portfolio Securities,
                    
                    
                    Stockholders'Common Stock
                    
                    
                    in Excess
                    
                    
                    Net Investment
                    
                    
                    Net Realized
                    
                    
                    Corporate Notes and Commodity
                    
                    
                    EquityShares
                    
                    
                    Amount
                    
                    
                    of Par
                    
                    
                    Income (Loss)
                    
                    
                    Capital Gain (Loss)
                    
                    
                    Derivative Instruments
                    
                    
                    (Net Assets)Balance
      at December 31, 2007 (as restated)
                    
                    
                    17,500,332
                    
                    
                    $
                    17,500
                    
                    
                    $
                    245,684,499
                    
                    
                    $
                    20,714
                    
                    
                    $
                    859,133
                    
                    
                    $
                    834,096
                    
                    
                    $
                    247,415,942Net
      increase (decrease) in stockholders' equity (net assets) resulting from
      operations
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    7,955,146
                    
                    
                    
                    -
                    
                    
                    
                    (134,823
                    )
                    
                    
                    7,820,323Issuance
      of common stock from public offering (net of underwriting
      costs)
                    
                    
                    4,086,388
                    
                    
                    
                    4,086
                    
                    
                    
                    62,109,012
                    
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    62,113,098Offering
      costs
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    (739,265
                    )
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    (739,265
                    )Dividends
      declared
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    (15,651,413
                    )
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    (15,651,413
                    )Issuance
      of common stock under dividend reinvestment plan
                    
                    
                    41,482
                    
                    
                    
                    42
                    
                    
                    
                    677,276
                    
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    677,318Balance
      at June 30, 2008 (unaudited and as restated)
                    
                    
                    21,628,202
                    
                    
                    $
                    21,628
                    
                    
                    $
                    307,731,522
                    
                    
                    $
                    (7,675,553
                    )
                    
                    $
                    859,133
                    
                    
                    $
                    699,273
                    
                    
                    $
                    301,636,003
 
 (See
accompanying notes to consolidated financial statements)
  3
  NGP
CAPITAL RESOURCES COMPANY
 CONSOLIDATED
STATEMENTS OF CASH FLOWS
 (Unaudited)
  For the Six Months EndedJune 30, 2008
                  
                  
                  June 30, 2007(As restated)
                  
                  
                  (As restated)Cash
      flows from operating activitiesNet
      increase in stockholders' equity (net assets) resulting from
      operations
                  
                  $
                  7,820,323
                  
                  
                  $
                  19,315,299Adjustments
      to reconcile net increase in stockholders' equity (net assets) resulting
      from operations to net cash provided by (used in) operating
      activitiesPayment-in-kind
      interest
                  
                  
                  (1,728,817
                  )
                  
                  
                  (1,935,532
                  )Payment-in-kind
      dividend
                  
                  
                  -
                  
                  
                  
                  (93,710
                  )Net
      amortization of premiums, discounts and fees
                  
                  
                  (589,096
                  )
                  
                  
                  (1,498,175
                  )Change
      in unrealized (appreciation) depreciation on portfolio securities,
      corporate notes and commodity derivative instruments
                  
                  
                  134,823
                  
                  
                  
                  (6,021,150
                  )Effects
      of changes in operating assets and liabilitiesAccounts
      receivable and other current assets
                  
                  
                  7,261
                  
                  
                  
                  452,184Interest
      receivable
                  
                  
                  (735,432
                  )
                  
                  
                  607,169Prepaid
      assets
                  
                  
                  950,134
                  
                  
                  
                  477,171Accounts
      payable
                  
                  
                  (527,287
                  )
                  
                  
                  1,024,280Income
      taxes payable
                  
                  
                  -
                  
                  
                  
                  210,489Current
      portion of deferred income taxes
                  
                  
                  -
                  
                  
                  
                  2,090,924Non-current
      portion of deferred income taxes
                  
                  
                  (54,814
                  )
                  
                  
                  -Purchase
      of investments in portfolio securities, corporate notes and commodity
      derivative instruments
                  
                  
                  (81,412,478
                  )
                  
                  
                  (152,705,108
                  )Redemption
      of investments in portfolio securities, corporate notes and commodity
      derivative instruments
                  
                  
                  28,551,706
                  
                  
                  
                  108,579,495Net
      sale (purchase) of investments in U.S. Treasury Bills
                  
                  
                  (14,033,251
                  )
                  
                  
                  41,167,748Net
      cash provided by (used in) operating activities
                  
                  
                  (61,616,928
                  )
                  
                  
                  11,671,084Cash
      flows from financing activitiesNet
      proceeds from the issuance of common stock
                  
                  
                  62,790,415
                  
                  
                  
                  -Borrowings
      under revolving credit facility
                  
                  
                  108,000,000
                  
                  
                  
                  -Repayments
      on revolving credit facility
                  
                  
                  (99,750,000
                  )
                  
                  
                  -Offering
      costs from the issuance of common stock
                  
                  
                  (739,265
                  )
                  
                  
                  -Dividends
      paid
                  
                  
                  (16,012,804
                  )
                  
                  
                  (4,257,648
                  )Net
      cash provided by (used in) financing activities
                  
                  
                  54,288,346
                  
                  
                  
                  (4,257,648
                  )Net
      increase (decrease) in cash and cash equivalents
                  
                  
                  (7,328,582
                  )
                  
                  
                  7,413,436Cash
      and cash equivalents, beginning of period
                  
                  
                  18,437,115
                  
                  
                  
                  12,334,329Cash
      and cash equivalents, end of period
                  
                  $
                  11,108,533
                  
                  
                  $
                  19,747,765
 
 (See
accompanying notes to consolidated financial statements)
  4




NGP CAPITAL RESOURCES COMPANY
 CONSOLIDATED
SCHEDULE OF INVESTMENTS
 June
30, 2008
 (Unaudited)
  Portfolio Company
                                                                                                                                                                                                                                                                                                                                                                                                                                                  
                                                                                                                                                                                                                                                                                                                                                                                                                                                  Energy Industry Segment
                                                                                                                                                                                                                                                                                                                                                                                                                                                  
                                                                                                                                                                                                                                                                                                                                                                                                                                                  Investment (1) (2) (4)
                                                                                                                                                                                                                                                                                                                                                                                                                                                  
                                                                                                                                                                                                                                                                                                                                                                                                                                                  Principal
                                                                                                                                                                                                                                                                                                                                                                                                                                                  
                                                                                                                                                                                                                                                                                                                                                                                                                                                  
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                                                                                                                                                                                                                                                                                                                                                                                                                                                  Fair Value
      (3)TARGETED
      INVESTMENTS
      (9)Control
      Investments- Majority Owned (50% to 100%
      owned)Rubicon
      Energy Partners, LLC
                                                                                                                                                                                                                                                                                                                                                                                                                                                  
                                                                                                                                                                                                                                                                                                                                                                                                                                                  Oil
      & Natural Gas
                                                                                                                                                                                                                                                                                                                                                                                                                                                  
                                                                                                                                                                                                                                                                                                                                                                                                                                                  Senior
      Subordinated Secured
                                                                                                                                                                                                                                                                                                                                                                                                                                                  
                                                                                                                                                                                                                                                                                                                                                                                                                                                  $
                                                                                                                                                                                                                                                                                                                                                                                                                                                  5,000,000
                                                                                                                                                                                                                                                                                                                                                                                                                                                  
                                                                                                                                                                                                                                                                                                                                                                                                                                                  
                                                                                                                                                                                                                                                                                                                                                                                                                                                  $
                                                                                                                                                                                                                                                                                                                                                                                                                                                  5,000,000
                                                                                                                                                                                                                                                                                                                                                                                                                                                  
                                                                                                                                                                                                                                                                                                                                                                                                                                                  
                                                                                                                                                                                                                                                                                                                                                                                                                                                  $
                                                                                                                                                                                                                                                                                                                                                                                                                                                  5,000,000Production
      and Development
                                                                                                                                                                                                                                                                                                                                                                                                                                                  
                                                                                                                                                                                                                                                                                                                                                                                                                                                  Multiple-Advance
      Term Loan(LIBOR
      + 8.00%, due 5/01/2010)LLC
      Units (4,000 units) (5)
                                                                                                                                                                                                                                                                                                                                                                                                                                                  
                                                                                                                                                                                                                                                                                                                                                                                                                                                  
                                                                                                                                                                                                                                                                                                                                                                                                                                                  
                                                                                                                                                                                                                                                                                                                                                                                                                                                  
                                                                                                                                                                                                                                                                                                                                                                                                                                                  
                                                                                                                                                                                                                                                                                                                                                                                                                                                  
                                                                                                                                                                                                                                                                                                                                                                                                                                                  4,000,000
                                                                                                                                                                                                                                                                                                                                                                                                                                                  
                                                                                                                                                                                                                                                                                                                                                                                                                                                  
                                                                                                                                                                                                                                                                                                                                                                                                                                                  
                                                                                                                                                                                                                                                                                                                                                                                                                                                  12,000,000TierraMar
      Energy LP
                                                                                                                                                                                                                                                                                                                                                                                                                                                  
                                                                                                                                                                                                                                                                                                                                                                                                                                                  Oil
      & Natural Gas
                                                                                                                                                                                                                                                                                                                                                                                                                                                  
                                                                                                                                                                                                                                                                                                                                                                                                                                                  Overriding
      Royalty Interest
                                                                                                                                                                                                                                                                                                                                                                                                                                                  
                                                                                                                                                                                                                                                                                                                                                                                                                                                  
                                                                                                                                                                                                                                                                                                                                                                                                                                                  
                                                                                                                                                                                                                                                                                                                                                                                                                                                  
                                                                                                                                                                                                                                                                                                                                                                                                                                                  
                                                                                                                                                                                                                                                                                                                                                                                                                                                  
                                                                                                                                                                                                                                                                                                                                                                                                                                                  17,968
                                                                                                                                                                                                                                                                                                                                                                                                                                                  
                                                                                                                                                                                                                                                                                                                                                                                                                                                  
                                                                                                                                                                                                                                                                                                                                                                                                                                                  
                                                                                                                                                                                                                                                                                                                                                                                                                                                  200,000Production
      and Development
                                                                                                                                                                                                                                                                                                                                                                                                                                                  
                                                                                                                                                                                                                                                                                                                                                                                                                                                  Class
      A Preferred LP Units (5)
                                                                                                                                                                                                                                                                                                                                                                                                                                                  
                                                                                                                                                                                                                                                                                                                                                                                                                                                  
                                                                                                                                                                                                                                                                                                                                                                                                                                                  
                                                                                                                                                                                                                                                                                                                                                                                                                                                  
                                                                                                                                                                                                                                                                                                                                                                                                                                                  
                                                                                                                                                                                                                                                                                                                                                                                                                                                  
                                                                                                                                                                                                                                                                                                                                                                                                                                                  16,634,830
                                                                                                                                                                                                                                                                                                                                                                                                                                                  
                                                                                                                                                                                                                                                                                                                                                                                                                                                  
                                                                                                                                                                                                                                                                                                                                                                                                                                                  
                                                                                                                                                                                                                                                                                                                                                                                                                                                  16,634,830Total
      Control Investments- Majority Owned (50% to 100% owned)
                                                                                                                                                                                                                                                                                                                                                                                                                                                  
                                                                                                                                                                                                                                                                                                                                                                                                                                                  
                                                                                                                                                                                                                                                                                                                                                                                                                                                  $
                                                                                                                                                                                                                                                                                                                                                                                                                                                  25,652,798
                                                                                                                                                                                                                                                                                                                                                                                                                                                  
                                                                                                                                                                                                                                                                                                                                                                                                                                                  
                                                                                                                                                                                                                                                                                                                                                                                                                                                  $
                                                                                                                                                                                                                                                                                                                                                                                                                                                  33,834,830Affiliate
      Investments- (5% to 25%
      owned)Bionol
      Clearfield, LLC
                                                                                                                                                                                                                                                                                                                                                                                                                                                  
                                                                                                                                                                                                                                                                                                                                                                                                                                                  Alternative
      Fuels and
                                                                                                                                                                                                                                                                                                                                                                                                                                                  
                                                                                                                                                                                                                                                                                                                                                                                                                                                  Senior
      Secured Tranche C
                                                                                                                                                                                                                                                                                                                                                                                                                                                  
                                                                                                                                                                                                                                                                                                                                                                                                                                                  $
                                                                                                                                                                                                                                                                                                                                                                                                                                                  5,000,000
                                                                                                                                                                                                                                                                                                                                                                                                                                                  
                                                                                                                                                                                                                                                                                                                                                                                                                                                  
                                                                                                                                                                                                                                                                                                                                                                                                                                                  $
                                                                                                                                                                                                                                                                                                                                                                                                                                                  5,000,000
                                                                                                                                                                                                                                                                                                                                                                                                                                                  
                                                                                                                                                                                                                                                                                                                                                                                                                                                  
                                                                                                                                                                                                                                                                                                                                                                                                                                                  $
                                                                                                                                                                                                                                                                                                                                                                                                                                                  5,000,000Specialty
      Chemicals
                                                                                                                                                                                                                                                                                                                                                                                                                                                  
                                                                                                                                                                                                                                                                                                                                                                                                                                                  Construction
      Loan(LIBOR
      + 7.00%, due 09/06/2016)BioEnergy
      Holding, LLC
                                                                                                                                                                                                                                                                                                                                                                                                                                                  
                                                                                                                                                                                                                                                                                                                                                                                                                                                  Alternative
      Fuels and
                                                                                                                                                                                                                                                                                                                                                                                                                                                  
                                                                                                                                                                                                                                                                                                                                                                                                                                                  Senior
      Secured Notes
                                                                                                                                                                                                                                                                                                                                                                                                                                                  
                                                                                                                                                                                                                                                                                                                                                                                                                                                  
                                                                                                                                                                                                                                                                                                                                                                                                                                                  10,000,000
                                                                                                                                                                                                                                                                                                                                                                                                                                                  
                                                                                                                                                                                                                                                                                                                                                                                                                                                  
                                                                                                                                                                                                                                                                                                                                                                                                                                                  
                                                                                                                                                                                                                                                                                                                                                                                                                                                  9,112,721
                                                                                                                                                                                                                                                                                                                                                                                                                                                  
                                                                                                                                                                                                                                                                                                                                                                                                                                                  
                                                                                                                                                                                                                                                                                                                                                                                                                                                  
                                                                                                                                                                                                                                                                                                                                                                                                                                                  9,112,721Specialty
      Chemicals
                                                                                                                                                                                                                                                                                                                                                                                                                                                  
                                                                                                                                                                                                                                                                                                                                                                                                                                                  (15.00%,
      due 03/06/2015)BioEnergy
      International Warrants (5) (18)
                                                                                                                                                                                                                                                                                                                                                                                                                                                  
                                                                                                                                                                                                                                                                                                                                                                                                                                                  
                                                                                                                                                                                                                                                                                                                                                                                                                                                  
                                                                                                                                                                                                                                                                                                                                                                                                                                                  
                                                                                                                                                                                                                                                                                                                                                                                                                                                  
                                                                                                                                                                                                                                                                                                                                                                                                                                                  
                                                                                                                                                                                                                                                                                                                                                                                                                                                  595,845
                                                                                                                                                                                                                                                                                                                                                                                                                                                  
                                                                                                                                                                                                                                                                                                                                                                                                                                                  
                                                                                                                                                                                                                                                                                                                                                                                                                                                  
                                                                                                                                                                                                                                                                                                                                                                                                                                                  595,845BioEnergy
      Holding Units (5)
                                                                                                                                                                                                                                                                                                                                                                                                                                                  
                                                                                                                                                                                                                                                                                                                                                                                                                                                  
                                                                                                                                                                                                                                                                                                                                                                                                                                                  
                                                                                                                                                                                                                                                                                                                                                                                                                                                  
                                                                                                                                                                                                                                                                                                                                                                                                                                                  
                                                                                                                                                                                                                                                                                                                                                                                                                                                  
                                                                                                                                                                                                                                                                                                                                                                                                                                                  376,687
                                                                                                                                                                                                                                                                                                                                                                                                                                                  
                                                                                                                                                                                                                                                                                                                                                                                                                                                  
                                                                                                                                                                                                                                                                                                                                                                                                                                                  
                                                                                                                                                                                                                                                                                                                                                                                                                                                  376,687Total
      Affiliate Investments- (5% to 25% owned)
                                                                                                                                                                                                                                                                                                                                                                                                                                                  
                                                                                                                                                                                                                                                                                                                                                                                                                                                  
                                                                                                                                                                                                                                                                                                                                                                                                                                                  
                                                                                                                                                                                                                                                                                                                                                                                                                                                  
                                                                                                                                                                                                                                                                                                                                                                                                                                                  
                                                                                                                                                                                                                                                                                                                                                                                                                                                  $
                                                                                                                                                                                                                                                                                                                                                                                                                                                  15,085,253
                                                                                                                                                                                                                                                                                                                                                                                                                                                  
                                                                                                                                                                                                                                                                                                                                                                                                                                                  
                                                                                                                                                                                                                                                                                                                                                                                                                                                  $
                                                                                                                                                                                                                                                                                                                                                                                                                                                  15,085,253Non-Affiliate
      Investments- (less than 5%
      owned)Alden
      Resources, LLC
                                                                                                                                                                                                                                                                                                                                                                                                                                                  
                                                                                                                                                                                                                                                                                                                                                                                                                                                  Coal
      Production
                                                                                                                                                                                                                                                                                                                                                                                                                                                  
                                                                                                                                                                                                                                                                                                                                                                                                                                                  Senior
      Secured
                                                                                                                                                                                                                                                                                                                                                                                                                                                  
                                                                                                                                                                                                                                                                                                                                                                                                                                                  $
                                                                                                                                                                                                                                                                                                                                                                                                                                                  36,285,168
                                                                                                                                                                                                                                                                                                                                                                                                                                                  
                                                                                                                                                                                                                                                                                                                                                                                                                                                  
                                                                                                                                                                                                                                                                                                                                                                                                                                                  $
                                                                                                                                                                                                                                                                                                                                                                                                                                                  33,553,912
                                                                                                                                                                                                                                                                                                                                                                                                                                                  
                                                                                                                                                                                                                                                                                                                                                                                                                                                  
                                                                                                                                                                                                                                                                                                                                                                                                                                                  $
                                                                                                                                                                                                                                                                                                                                                                                                                                                  33,553,912Multiple-Advance
      Term Loan(LIBOR
      + 8.00% cash, due 1/05/2013)Royalty
      Interest
                                                                                                                                                                                                                                                                                                                                                                                                                                                  
                                                                                                                                                                                                                                                                                                                                                                                                                                                  
                                                                                                                                                                                                                                                                                                                                                                                                                                                  
                                                                                                                                                                                                                                                                                                                                                                                                                                                  
                                                                                                                                                                                                                                                                                                                                                                                                                                                  
                                                                                                                                                                                                                                                                                                                                                                                                                                                  
                                                                                                                                                                                                                                                                                                                                                                                                                                                  2,598,578
                                                                                                                                                                                                                                                                                                                                                                                                                                                  
                                                                                                                                                                                                                                                                                                                                                                                                                                                  
                                                                                                                                                                                                                                                                                                                                                                                                                                                  
                                                                                                                                                                                                                                                                                                                                                                                                                                                  2,660,000Warrants
      (5) (15)
                                                                                                                                                                                                                                                                                                                                                                                                                                                  
                                                                                                                                                                                                                                                                                                                                                                                                                                                  
                                                                                                                                                                                                                                                                                                                                                                                                                                                  
                                                                                                                                                                                                                                                                                                                                                                                                                                                  
                                                                                                                                                                                                                                                                                                                                                                                                                                                  
                                                                                                                                                                                                                                                                                                                                                                                                                                                  
                                                                                                                                                                                                                                                                                                                                                                                                                                                  100,000
                                                                                                                                                                                                                                                                                                                                                                                                                                                  
                                                                                                                                                                                                                                                                                                                                                                                                                                                  
                                                                                                                                                                                                                                                                                                                                                                                                                                                  
                                                                                                                                                                                                                                                                                                                                                                                                                                                  100,000Anadarko
      Petroleum Corporation
                                                                                                                                                                                                                                                                                                                                                                                                                                                  
                                                                                                                                                                                                                                                                                                                                                                                                                                                  Oil
      & Natural Gas
                                                                                                                                                                                                                                                                                                                                                                                                                                                  
                                                                                                                                                                                                                                                                                                                                                                                                                                                  Multiple-Advance
      Net Profits Interest
                                                                                                                                                                                                                                                                                                                                                                                                                                                  
                                                                                                                                                                                                                                                                                                                                                                                                                                                  
                                                                                                                                                                                                                                                                                                                                                                                                                                                  55,082,664
                                                                                                                                                                                                                                                                                                                                                                                                                                                  
                                                                                                                                                                                                                                                                                                                                                                                                                                                  
                                                                                                                                                                                                                                                                                                                                                                                                                                                  
                                                                                                                                                                                                                                                                                                                                                                                                                                                  55,177,417
                                                                                                                                                                                                                                                                                                                                                                                                                                                  
                                                                                                                                                                                                                                                                                                                                                                                                                                                  
                                                                                                                                                                                                                                                                                                                                                                                                                                                  
                                                                                                                                                                                                                                                                                                                                                                                                                                                  55,177,4172007-III
      Drilling Fund
                                                                                                                                                                                                                                                                                                                                                                                                                                                  
                                                                                                                                                                                                                                                                                                                                                                                                                                                  Production
      and Development
                                                                                                                                                                                                                                                                                                                                                                                                                                                  
                                                                                                                                                                                                                                                                                                                                                                                                                                                  (Due
      4/23/2032)ATP
      Oil & Gas Corporation
                                                                                                                                                                                                                                                                                                                                                                                                                                                  
                                                                                                                                                                                                                                                                                                                                                                                                                                                  Oil
      & Natural Gas
                                                                                                                                                                                                                                                                                                                                                                                                                                                  
                                                                                                                                                                                                                                                                                                                                                                                                                                                  Limited
      Term Royalty Interest
                                                                                                                                                                                                                                                                                                                                                                                                                                                  
                                                                                                                                                                                                                                                                                                                                                                                                                                                  
                                                                                                                                                                                                                                                                                                                                                                                                                                                  
                                                                                                                                                                                                                                                                                                                                                                                                                                                  
                                                                                                                                                                                                                                                                                                                                                                                                                                                  
                                                                                                                                                                                                                                                                                                                                                                                                                                                  
                                                                                                                                                                                                                                                                                                                                                                                                                                                  32,800,000
                                                                                                                                                                                                                                                                                                                                                                                                                                                  
                                                                                                                                                                                                                                                                                                                                                                                                                                                  
                                                                                                                                                                                                                                                                                                                                                                                                                                                  
                                                                                                                                                                                                                                                                                                                                                                                                                                                  32,800,000Production
      and DevelopmentBSR
      Loco Bayou, LLC (10)
                                                                                                                                                                                                                                                                                                                                                                                                                                                  
                                                                                                                                                                                                                                                                                                                                                                                                                                                  Oil
      & Natural Gas
                                                                                                                                                                                                                                                                                                                                                                                                                                                  
                                                                                                                                                                                                                                                                                                                                                                                                                                                  Senior
      Secured
                                                                                                                                                                                                                                                                                                                                                                                                                                                  
                                                                                                                                                                                                                                                                                                                                                                                                                                                  
                                                                                                                                                                                                                                                                                                                                                                                                                                                  3,055,455
                                                                                                                                                                                                                                                                                                                                                                                                                                                  
                                                                                                                                                                                                                                                                                                                                                                                                                                                  
                                                                                                                                                                                                                                                                                                                                                                                                                                                  
                                                                                                                                                                                                                                                                                                                                                                                                                                                  2,584,326
                                                                                                                                                                                                                                                                                                                                                                                                                                                  
                                                                                                                                                                                                                                                                                                                                                                                                                                                  
                                                                                                                                                                                                                                                                                                                                                                                                                                                  
                                                                                                                                                                                                                                                                                                                                                                                                                                                  1,722,239Production
      and Development
                                                                                                                                                                                                                                                                                                                                                                                                                                                  
                                                                                                                                                                                                                                                                                                                                                                                                                                                  Multiple-Advance
      Term Loan(LIBOR
      + 5.50% cash, +7.50% PIK - until 8/15/08,cash
      only thereafter, due 8/15/2009) (7)Overriding
      Royalty Interest
                                                                                                                                                                                                                                                                                                                                                                                                                                                  
                                                                                                                                                                                                                                                                                                                                                                                                                                                  
                                                                                                                                                                                                                                                                                                                                                                                                                                                  
                                                                                                                                                                                                                                                                                                                                                                                                                                                  
                                                                                                                                                                                                                                                                                                                                                                                                                                                  
                                                                                                                                                                                                                                                                                                                                                                                                                                                  
                                                                                                                                                                                                                                                                                                                                                                                                                                                  19,638
                                                                                                                                                                                                                                                                                                                                                                                                                                                  
                                                                                                                                                                                                                                                                                                                                                                                                                                                  
                                                                                                                                                                                                                                                                                                                                                                                                                                                  
                                                                                                                                                                                                                                                                                                                                                                                                                                                  20,000Warrants
      (5) (12)
                                                                                                                                                                                                                                                                                                                                                                                                                                                  
                                                                                                                                                                                                                                                                                                                                                                                                                                                  
                                                                                                                                                                                                                                                                                                                                                                                                                                                  
                                                                                                                                                                                                                                                                                                                                                                                                                                                  
                                                                                                                                                                                                                                                                                                                                                                                                                                                  
                                                                                                                                                                                                                                                                                                                                                                                                                                                  
                                                                                                                                                                                                                                                                                                                                                                                                                                                  10,000
                                                                                                                                                                                                                                                                                                                                                                                                                                                  
                                                                                                                                                                                                                                                                                                                                                                                                                                                  
                                                                                                                                                                                                                                                                                                                                                                                                                                                  
                                                                                                                                                                                                                                                                                                                                                                                                                                                  -Chroma
      Exploration &
                                                                                                                                                                                                                                                                                                                                                                                                                                                  
                                                                                                                                                                                                                                                                                                                                                                                                                                                  Oil
      & Natural Gas
                                                                                                                                                                                                                                                                                                                                                                                                                                                  
                                                                                                                                                                                                                                                                                                                                                                                                                                                  9,428
      Shares Series A Participating
                                                                                                                                                                                                                                                                                                                                                                                                                                                  
                                                                                                                                                                                                                                                                                                                                                                                                                                                  
                                                                                                                                                                                                                                                                                                                                                                                                                                                  
                                                                                                                                                                                                                                                                                                                                                                                                                                                  
                                                                                                                                                                                                                                                                                                                                                                                                                                                  
                                                                                                                                                                                                                                                                                                                                                                                                                                                  
                                                                                                                                                                                                                                                                                                                                                                                                                                                  2,221,710
                                                                                                                                                                                                                                                                                                                                                                                                                                                  
                                                                                                                                                                                                                                                                                                                                                                                                                                                  
                                                                                                                                                                                                                                                                                                                                                                                                                                                  
                                                                                                                                                                                                                                                                                                                                                                                                                                                  -Production,
      Inc.
                                                                                                                                                                                                                                                                                                                                                                                                                                                  
                                                                                                                                                                                                                                                                                                                                                                                                                                                  Production
      and Development
                                                                                                                                                                                                                                                                                                                                                                                                                                                  
                                                                                                                                                                                                                                                                                                                                                                                                                                                  Convertible
      Preferred Stock (7)8,610
      Shares Series AA Participating
                                                                                                                                                                                                                                                                                                                                                                                                                                                  
                                                                                                                                                                                                                                                                                                                                                                                                                                                  
                                                                                                                                                                                                                                                                                                                                                                                                                                                  
                                                                                                                                                                                                                                                                                                                                                                                                                                                  
                                                                                                                                                                                                                                                                                                                                                                                                                                                  
                                                                                                                                                                                                                                                                                                                                                                                                                                                  
                                                                                                                                                                                                                                                                                                                                                                                                                                                  2,089,870
                                                                                                                                                                                                                                                                                                                                                                                                                                                  
                                                                                                                                                                                                                                                                                                                                                                                                                                                  
                                                                                                                                                                                                                                                                                                                                                                                                                                                  
                                                                                                                                                                                                                                                                                                                                                                                                                                                  1,567,402Convertible
      Preferred Stock (7)8.11
      Shares Common Stock (5)
                                                                                                                                                                                                                                                                                                                                                                                                                                                  
                                                                                                                                                                                                                                                                                                                                                                                                                                                  
                                                                                                                                                                                                                                                                                                                                                                                                                                                  
                                                                                                                                                                                                                                                                                                                                                                                                                                                  
                                                                                                                                                                                                                                                                                                                                                                                                                                                  
                                                                                                                                                                                                                                                                                                                                                                                                                                                  
                                                                                                                                                                                                                                                                                                                                                                                                                                                  -
                                                                                                                                                                                                                                                                                                                                                                                                                                                  
                                                                                                                                                                                                                                                                                                                                                                                                                                                  
                                                                                                                                                                                                                                                                                                                                                                                                                                                  
                                                                                                                                                                                                                                                                                                                                                                                                                                                  -Warrants
      (5) (11)
                                                                                                                                                                                                                                                                                                                                                                                                                                                  
                                                                                                                                                                                                                                                                                                                                                                                                                                                  
                                                                                                                                                                                                                                                                                                                                                                                                                                                  
                                                                                                                                                                                                                                                                                                                                                                                                                                                  
                                                                                                                                                                                                                                                                                                                                                                                                                                                  
                                                                                                                                                                                                                                                                                                                                                                                                                                                  
                                                                                                                                                                                                                                                                                                                                                                                                                                                  -
                                                                                                                                                                                                                                                                                                                                                                                                                                                  
                                                                                                                                                                                                                                                                                                                                                                                                                                                  
                                                                                                                                                                                                                                                                                                                                                                                                                                                  
                                                                                                                                                                                                                                                                                                                                                                                                                                                  -Crossroads
      Energy, LP
                                                                                                                                                                                                                                                                                                                                                                                                                                                  
                                                                                                                                                                                                                                                                                                                                                                                                                                                  Oil
      & Natural Gas
                                                                                                                                                                                                                                                                                                                                                                                                                                                  
                                                                                                                                                                                                                                                                                                                                                                                                                                                  Senior
      Secured
                                                                                                                                                                                                                                                                                                                                                                                                                                                  
                                                                                                                                                                                                                                                                                                                                                                                                                                                  
                                                                                                                                                                                                                                                                                                                                                                                                                                                  4,508,755
                                                                                                                                                                                                                                                                                                                                                                                                                                                  
                                                                                                                                                                                                                                                                                                                                                                                                                                                  
                                                                                                                                                                                                                                                                                                                                                                                                                                                  
                                                                                                                                                                                                                                                                                                                                                                                                                                                  4,434,261
                                                                                                                                                                                                                                                                                                                                                                                                                                                  
                                                                                                                                                                                                                                                                                                                                                                                                                                                  
                                                                                                                                                                                                                                                                                                                                                                                                                                                  
                                                                                                                                                                                                                                                                                                                                                                                                                                                  4,434,261Production
      and Development
                                                                                                                                                                                                                                                                                                                                                                                                                                                  
                                                                                                                                                                                                                                                                                                                                                                                                                                                  Multiple-Advance
      Term Loan(The
      greater of 10.0% or LIBOR + 5.50%,due
      6/29/2009)Overriding
      Royalty Interest
                                                                                                                                                                                                                                                                                                                                                                                                                                                  
                                                                                                                                                                                                                                                                                                                                                                                                                                                  
                                                                                                                                                                                                                                                                                                                                                                                                                                                  
                                                                                                                                                                                                                                                                                                                                                                                                                                                  
                                                                                                                                                                                                                                                                                                                                                                                                                                                  
                                                                                                                                                                                                                                                                                                                                                                                                                                                  
                                                                                                                                                                                                                                                                                                                                                                                                                                                  6,653
                                                                                                                                                                                                                                                                                                                                                                                                                                                  
                                                                                                                                                                                                                                                                                                                                                                                                                                                  
                                                                                                                                                                                                                                                                                                                                                                                                                                                  
                                                                                                                                                                                                                                                                                                                                                                                                                                                  250,000DeanLake
      Operator, LLC (10)
                                                                                                                                                                                                                                                                                                                                                                                                                                                  
                                                                                                                                                                                                                                                                                                                                                                                                                                                  Oil
      & Natural Gas
                                                                                                                                                                                                                                                                                                                                                                                                                                                  
                                                                                                                                                                                                                                                                                                                                                                                                                                                  Senior
      Secured
                                                                                                                                                                                                                                                                                                                                                                                                                                                  
                                                                                                                                                                                                                                                                                                                                                                                                                                                  
                                                                                                                                                                                                                                                                                                                                                                                                                                                  13,418,453
                                                                                                                                                                                                                                                                                                                                                                                                                                                  
                                                                                                                                                                                                                                                                                                                                                                                                                                                  
                                                                                                                                                                                                                                                                                                                                                                                                                                                  
                                                                                                                                                                                                                                                                                                                                                                                                                                                  13,217,846
                                                                                                                                                                                                                                                                                                                                                                                                                                                  
                                                                                                                                                                                                                                                                                                                                                                                                                                                  
                                                                                                                                                                                                                                                                                                                                                                                                                                                  
                                                                                                                                                                                                                                                                                                                                                                                                                                                  13,217,846Production
      and Development
                                                                                                                                                                                                                                                                                                                                                                                                                                                  
                                                                                                                                                                                                                                                                                                                                                                                                                                                  Multiple-Advance
      Term Loan(LIBOR
      + 7.00%, due 6/25/2010)Overriding
      Royalty Interest
                                                                                                                                                                                                                                                                                                                                                                                                                                                  
                                                                                                                                                                                                                                                                                                                                                                                                                                                  
                                                                                                                                                                                                                                                                                                                                                                                                                                                  
                                                                                                                                                                                                                                                                                                                                                                                                                                                  
                                                                                                                                                                                                                                                                                                                                                                                                                                                  
                                                                                                                                                                                                                                                                                                                                                                                                                                                  
                                                                                                                                                                                                                                                                                                                                                                                                                                                  19,279
                                                                                                                                                                                                                                                                                                                                                                                                                                                  
                                                                                                                                                                                                                                                                                                                                                                                                                                                  
                                                                                                                                                                                                                                                                                                                                                                                                                                                  
                                                                                                                                                                                                                                                                                                                                                                                                                                                  20,000Warrants
      (5) (17)
                                                                                                                                                                                                                                                                                                                                                                                                                                                  
                                                                                                                                                                                                                                                                                                                                                                                                                                                  
                                                                                                                                                                                                                                                                                                                                                                                                                                                  
                                                                                                                                                                                                                                                                                                                                                                                                                                                  
                                                                                                                                                                                                                                                                                                                                                                                                                                                  
                                                                                                                                                                                                                                                                                                                                                                                                                                                  
                                                                                                                                                                                                                                                                                                                                                                                                                                                  10,000
                                                                                                                                                                                                                                                                                                                                                                                                                                                  
                                                                                                                                                                                                                                                                                                                                                                                                                                                  
                                                                                                                                                                                                                                                                                                                                                                                                                                                  
                                                                                                                                                                                                                                                                                                                                                                                                                                                  10,000Formidable,
      LLC
                                                                                                                                                                                                                                                                                                                                                                                                                                                  
                                                                                                                                                                                                                                                                                                                                                                                                                                                  Oil
      & Natural Gas
                                                                                                                                                                                                                                                                                                                                                                                                                                                  
                                                                                                                                                                                                                                                                                                                                                                                                                                                  Senior
      Secured
                                                                                                                                                                                                                                                                                                                                                                                                                                                  
                                                                                                                                                                                                                                                                                                                                                                                                                                                  
                                                                                                                                                                                                                                                                                                                                                                                                                                                  37,000,000
                                                                                                                                                                                                                                                                                                                                                                                                                                                  
                                                                                                                                                                                                                                                                                                                                                                                                                                                  
                                                                                                                                                                                                                                                                                                                                                                                                                                                  
                                                                                                                                                                                                                                                                                                                                                                                                                                                  37,000,000
                                                                                                                                                                                                                                                                                                                                                                                                                                                  
                                                                                                                                                                                                                                                                                                                                                                                                                                                  
                                                                                                                                                                                                                                                                                                                                                                                                                                                  
                                                                                                                                                                                                                                                                                                                                                                                                                                                  37,000,000Production
      and Development
                                                                                                                                                                                                                                                                                                                                                                                                                                                  
                                                                                                                                                                                                                                                                                                                                                                                                                                                  Multiple-Advance
      Term Loan(LIBOR
      + 5.50% cash, due 5/31/2008) (7)Warrants
      (5) (16)
                                                                                                                                                                                                                                                                                                                                                                                                                                                  
                                                                                                                                                                                                                                                                                                                                                                                                                                                  
                                                                                                                                                                                                                                                                                                                                                                                                                                                  
                                                                                                                                                                                                                                                                                                                                                                                                                                                  
                                                                                                                                                                                                                                                                                                                                                                                                                                                  
                                                                                                                                                                                                                                                                                                                                                                                                                                                  
                                                                                                                                                                                                                                                                                                                                                                                                                                                  500,000
                                                                                                                                                                                                                                                                                                                                                                                                                                                  
                                                                                                                                                                                                                                                                                                                                                                                                                                                  
                                                                                                                                                                                                                                                                                                                                                                                                                                                  
                                                                                                                                                                                                                                                                                                                                                                                                                                                  500,000
 (See
accompanying notes to consolidated financial statements)


5




NGP CAPITAL RESOURCES COMPANY
 CONSOLIDATED
SCHEDULE OF INVESTMENTS
 June
30, 2008
 (Unaudited)
 (Continued)
 
 Portfolio Company
                                                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                                                            Energy Industry Segment
                                                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                                                            Investment (1) (2) (4)
                                                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                                                            Principal
                                                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                                                            Cost
                                                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                                                            Fair Value (3)TARGETED
      INVESTMENTS (9) –
      ContinuedNon-Affiliate
      Investments- (less than 5% owned)-
      ContinuedGreenleaf
      Investments, LLC
                                                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                                                            Oil
      & Natural Gas
                                                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                                                            Senior
      Secured
                                                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                                                            $
                                                                                                                                                                                                                                                                                                                                            10,999,670
                                                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                                                            $
                                                                                                                                                                                                                                                                                                                                            10,666,186
                                                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                                                            $
                                                                                                                                                                                                                                                                                                                                            10,666,186Production
      and Development
                                                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                                                            Multiple-Advance
      Term Loan(The
      greater of 10.5% or LIBOR + 6.00%,due
      04/30/2011)Overriding
      Royalty Interest
                                                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                                                            98,551
                                                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                                                            100,000Nighthawk
      Transport I, LP
                                                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                                                            Energy
      Services
                                                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                                                            Second
      Lien
                                                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                                                            14,328,347
                                                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                                                            13,501,342
                                                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                                                            13,501,342Term
      Loan B(The
      greater of 15.0% or LIBOR + 10.50%,due
      10/03/2010)LP
      Units (5)
                                                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                                                            224
                                                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                                                            150,000Warrants
      (5) (14)
                                                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                                                            850,000
                                                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                                                            850,000Second
      Lien
                                                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                                                            1,595,043
                                                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                                                            1,572,047
                                                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                                                            1,572,047Delayed
      Draw Term Loan B(The
      greater of 15.0% or LIBOR + 10.50%,due
      10/03/2010)Resaca
      Exploitation, LP
                                                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                                                            Oil
      & Natural Gas
                                                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                                                            Senior
      Secured
                                                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                                                            26,993,572
                                                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                                                            26,538,095
                                                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                                                            26,538,095Production
      and Development
                                                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                                                            Multiple-Advance
      Tranche A Term Loan(LIBOR
      + 6.00%, due 5/01/2012)Overriding
      Royalty Interest
                                                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                                                            28,616
                                                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                                                            750,000Senior
      Secured Tranche B Term Loan
                                                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                                                            6,000,000
                                                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                                                            6,000,000
                                                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                                                            6,000,000(LIBOR
      + 9.00%, due 8/31/2008)Overriding
      Royalty Interest
                                                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                                                            28,616
                                                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                                                            750,000Senior
      Subordinated
                                                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                                                            4,000,000
                                                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                                                            4,000,000
                                                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                                                            4,000,000Secured
      Convertible Term Loan(6.00%
      cash, 8.00% PIK, due 5/01/2012)Sonoran
      Energy, Inc.
                                                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                                                            Oil
      & Natural Gas
                                                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                                                            Warrants
      (5) (13)
                                                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                                                            10,000
                                                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                                                            10,000Production
      and DevelopmentTammany
      Oil & Gas, LLC
                                                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                                                            Oil
      & Natural Gas
                                                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                                                            Senior
      Secured
                                                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                                                            29,447,804
                                                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                                                            29,103,653
                                                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                                                            29,103,653Production
      and Development
                                                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                                                            Multiple-Advance
      Term Loan(The
      greater of 11.0% or LIBOR + 6.00%,due
      3/21/2010)Overriding
      Royalty Interest (5)
                                                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                                                            200,000
                                                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                                                            400,000Venoco,
      Inc.
                                                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                                                            Oil
      & Natural Gas
                                                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                                                            Senior
      Notes (6)Production
      and Development
                                                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                                                            (8.75%,
      due 12/15/2011)
                                                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                                                            12,000,000
                                                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                                                            11,922,600
                                                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                                                            11,730,000Total
      Non-Affiliate Investments- (less than 5% owned)
                                                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                                                            $
                                                                                                                                                                                                                                                                                                                                            290,863,420
                                                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                                                            $
                                                                                                                                                                                                                                                                                                                                            289,154,400Subtotal
      Targeted Investments (62.95% of total investments)
                                                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                                                            $
                                                                                                                                                                                                                                                                                                                                            331,601,471
                                                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                                                            $
                                                                                                                                                                                                                                                                                                                                            338,074,483
 
 (See
accompanying notes to consolidated financial statements)


6




NGP CAPITAL RESOURCES COMPANY
 CONSOLIDATED
SCHEDULE OF INVESTMENTS
 June
30, 2008
 (Unaudited)
 (Continued)
 
 Issuing Company
                                                                                                                                                                                                                                                                                                                                                                    
                                                                                                                                                                                                                                                                                                                                                                    Energy Industry Segment
                                                                                                                                                                                                                                                                                                                                                                    
                                                                                                                                                                                                                                                                                                                                                                    Investment (1) (2) (4)
                                                                                                                                                                                                                                                                                                                                                                    
                                                                                                                                                                                                                                                                                                                                                                    Principal
                                                                                                                                                                                                                                                                                                                                                                    
                                                                                                                                                                                                                                                                                                                                                                    
                                                                                                                                                                                                                                                                                                                                                                    Cost
                                                                                                                                                                                                                                                                                                                                                                    
                                                                                                                                                                                                                                                                                                                                                                    
                                                                                                                                                                                                                                                                                                                                                                    Fair Value (3)CORPORATE
      NOTES
      (9)Pioneer
      Natural Resources Co.
                                                                                                                                                                                                                                                                                                                                                                    
                                                                                                                                                                                                                                                                                                                                                                    Oil
      & Natural Gas
                                                                                                                                                                                                                                                                                                                                                                    
                                                                                                                                                                                                                                                                                                                                                                    Senior
      Notes, 7.2%, due 2028
                                                                                                                                                                                                                                                                                                                                                                    
                                                                                                                                                                                                                                                                                                                                                                    $
                                                                                                                                                                                                                                                                                                                                                                    10,000,000
                                                                                                                                                                                                                                                                                                                                                                    
                                                                                                                                                                                                                                                                                                                                                                    
                                                                                                                                                                                                                                                                                                                                                                    $
                                                                                                                                                                                                                                                                                                                                                                    11,609,569
                                                                                                                                                                                                                                                                                                                                                                    
                                                                                                                                                                                                                                                                                                                                                                    
                                                                                                                                                                                                                                                                                                                                                                    $
                                                                                                                                                                                                                                                                                                                                                                    8,821,600Production
      and DevelopmentSubtotal
      Corporate Notes ( 1.64% of total investments)
                                                                                                                                                                                                                                                                                                                                                                    
                                                                                                                                                                                                                                                                                                                                                                    
                                                                                                                                                                                                                                                                                                                                                                    $
                                                                                                                                                                                                                                                                                                                                                                    11,609,569
                                                                                                                                                                                                                                                                                                                                                                    
                                                                                                                                                                                                                                                                                                                                                                    
                                                                                                                                                                                                                                                                                                                                                                    $
                                                                                                                                                                                                                                                                                                                                                                    8,821,600COMMODITY
      DERIVATIVE INSTRUMENTS
      (9)Put
      Options (19)
                                                                                                                                                                                                                                                                                                                                                                    
                                                                                                                                                                                                                                                                                                                                                                    
                                                                                                                                                                                                                                                                                                                                                                    
                                                                                                                                                                                                                                                                                                                                                                    Put
      Options with BP Corp. NA to sell up to 615,000 MMBtu of
                                                                                                                                                                                                                                                                                                                                                                    
                                                                                                                                                                                                                                                                                                                                                                    
                                                                                                                                                                                                                                                                                                                                                                    
                                                                                                                                                                                                                                                                                                                                                                    
                                                                                                                                                                                                                                                                                                                                                                    
                                                                                                                                                                                                                                                                                                                                                                    $
                                                                                                                                                                                                                                                                                                                                                                    359,775
                                                                                                                                                                                                                                                                                                                                                                    
                                                                                                                                                                                                                                                                                                                                                                    
                                                                                                                                                                                                                                                                                                                                                                    $
                                                                                                                                                                                                                                                                                                                                                                    228,195natural
      gas at a strike price of $10.00 per Mmbtu.  12
      monthlycontracts
      beginning on July 1, 2008 and expiring on June 30, 2009.Put
      Options with BP Corp. NA to sell up to 237,750 Bbls of
                                                                                                                                                                                                                                                                                                                                                                    
                                                                                                                                                                                                                                                                                                                                                                    
                                                                                                                                                                                                                                                                                                                                                                    
                                                                                                                                                                                                                                                                                                                                                                    
                                                                                                                                                                                                                                                                                                                                                                    
                                                                                                                                                                                                                                                                                                                                                                    
                                                                                                                                                                                                                                                                                                                                                                    1,046,100
                                                                                                                                                                                                                                                                                                                                                                    
                                                                                                                                                                                                                                                                                                                                                                    
                                                                                                                                                                                                                                                                                                                                                                    
                                                                                                                                                                                                                                                                                                                                                                    975,200crude
      oil at a strike price of $101.00 per Bbl.  15 monthly
      contractsbeginning
      on July 1, 2008 and expiring on September 30, 2009.Put
      Options with BP Corp. NA to sell up to 32,750 Bbls of
                                                                                                                                                                                                                                                                                                                                                                    
                                                                                                                                                                                                                                                                                                                                                                    
                                                                                                                                                                                                                                                                                                                                                                    
                                                                                                                                                                                                                                                                                                                                                                    
                                                                                                                                                                                                                                                                                                                                                                    
                                                                                                                                                                                                                                                                                                                                                                    
                                                                                                                                                                                                                                                                                                                                                                    140,825
                                                                                                                                                                                                                                                                                                                                                                    
                                                                                                                                                                                                                                                                                                                                                                    
                                                                                                                                                                                                                                                                                                                                                                    
                                                                                                                                                                                                                                                                                                                                                                    128,459crude
      oil at a strike price of $85.00 per Bbl.  4 monthly
      contractsbeginning
      on October 1, 2009 and expiring on January 31, 2010.Subtotal
      Commodity Derivatives ( 0.24% of total investments)
                                                                                                                                                                                                                                                                                                                                                                    
                                                                                                                                                                                                                                                                                                                                                                    
                                                                                                                                                                                                                                                                                                                                                                    $
                                                                                                                                                                                                                                                                                                                                                                    1,546,700
                                                                                                                                                                                                                                                                                                                                                                    
                                                                                                                                                                                                                                                                                                                                                                    
                                                                                                                                                                                                                                                                                                                                                                    $
                                                                                                                                                                                                                                                                                                                                                                    1,331,854GOVERNMENT
      SECURITIES
      (8)U.S.
      Treasury Bills
                                                                                                                                                                                                                                                                                                                                                                    
                                                                                                                                                                                                                                                                                                                                                                    
                                                                                                                                                                                                                                                                                                                                                                    
                                                                                                                                                                                                                                                                                                                                                                    U.S.
      Treasury Bills, 1.3059%, due 07/10/2008
                                                                                                                                                                                                                                                                                                                                                                    
                                                                                                                                                                                                                                                                                                                                                                    $
                                                                                                                                                                                                                                                                                                                                                                    8,000,000
                                                                                                                                                                                                                                                                                                                                                                    
                                                                                                                                                                                                                                                                                                                                                                    
                                                                                                                                                                                                                                                                                                                                                                    $
                                                                                                                                                                                                                                                                                                                                                                    7,997,440
                                                                                                                                                                                                                                                                                                                                                                    
                                                                                                                                                                                                                                                                                                                                                                    
                                                                                                                                                                                                                                                                                                                                                                    $
                                                                                                                                                                                                                                                                                                                                                                    7,997,440U.S.
      Treasury Bills
                                                                                                                                                                                                                                                                                                                                                                    
                                                                                                                                                                                                                                                                                                                                                                    
                                                                                                                                                                                                                                                                                                                                                                    
                                                                                                                                                                                                                                                                                                                                                                    U.S.
      Treasury Bills, 1.3059%, due 07/10/2008
                                                                                                                                                                                                                                                                                                                                                                    
                                                                                                                                                                                                                                                                                                                                                                    
                                                                                                                                                                                                                                                                                                                                                                    12,000,000
                                                                                                                                                                                                                                                                                                                                                                    
                                                                                                                                                                                                                                                                                                                                                                    
                                                                                                                                                                                                                                                                                                                                                                    
                                                                                                                                                                                                                                                                                                                                                                    11,996,160
                                                                                                                                                                                                                                                                                                                                                                    
                                                                                                                                                                                                                                                                                                                                                                    
                                                                                                                                                                                                                                                                                                                                                                    
                                                                                                                                                                                                                                                                                                                                                                    11,996,160U.S.
      Treasury Bills
                                                                                                                                                                                                                                                                                                                                                                    
                                                                                                                                                                                                                                                                                                                                                                    
                                                                                                                                                                                                                                                                                                                                                                    
                                                                                                                                                                                                                                                                                                                                                                    U.S.
      Treasury Bills, 1.3059%, due 07/10/2008
                                                                                                                                                                                                                                                                                                                                                                    
                                                                                                                                                                                                                                                                                                                                                                    
                                                                                                                                                                                                                                                                                                                                                                    12,000,000
                                                                                                                                                                                                                                                                                                                                                                    
                                                                                                                                                                                                                                                                                                                                                                    
                                                                                                                                                                                                                                                                                                                                                                    
                                                                                                                                                                                                                                                                                                                                                                    11,996,160
                                                                                                                                                                                                                                                                                                                                                                    
                                                                                                                                                                                                                                                                                                                                                                    
                                                                                                                                                                                                                                                                                                                                                                    
                                                                                                                                                                                                                                                                                                                                                                    11,996,160U.S.
      Treasury Bills
                                                                                                                                                                                                                                                                                                                                                                    
                                                                                                                                                                                                                                                                                                                                                                    
                                                                                                                                                                                                                                                                                                                                                                    
                                                                                                                                                                                                                                                                                                                                                                    U.S.
      Treasury Bills, 1.3059%, due 07/10/2008
                                                                                                                                                                                                                                                                                                                                                                    
                                                                                                                                                                                                                                                                                                                                                                    
                                                                                                                                                                                                                                                                                                                                                                    12,000,000
                                                                                                                                                                                                                                                                                                                                                                    
                                                                                                                                                                                                                                                                                                                                                                    
                                                                                                                                                                                                                                                                                                                                                                    
                                                                                                                                                                                                                                                                                                                                                                    11,996,161
                                                                                                                                                                                                                                                                                                                                                                    
                                                                                                                                                                                                                                                                                                                                                                    
                                                                                                                                                                                                                                                                                                                                                                    
                                                                                                                                                                                                                                                                                                                                                                    11,996,161U.S.
      Treasury Bills
                                                                                                                                                                                                                                                                                                                                                                    
                                                                                                                                                                                                                                                                                                                                                                    
                                                                                                                                                                                                                                                                                                                                                                    
                                                                                                                                                                                                                                                                                                                                                                    U.S.
      Treasury Bills, 1.3059%, due 07/10/2008
                                                                                                                                                                                                                                                                                                                                                                    
                                                                                                                                                                                                                                                                                                                                                                    
                                                                                                                                                                                                                                                                                                                                                                    12,000,000
                                                                                                                                                                                                                                                                                                                                                                    
                                                                                                                                                                                                                                                                                                                                                                    
                                                                                                                                                                                                                                                                                                                                                                    
                                                                                                                                                                                                                                                                                                                                                                    11,996,160
                                                                                                                                                                                                                                                                                                                                                                    
                                                                                                                                                                                                                                                                                                                                                                    
                                                                                                                                                                                                                                                                                                                                                                    
                                                                                                                                                                                                                                                                                                                                                                    11,996,160U.S.
      Treasury Bills
                                                                                                                                                                                                                                                                                                                                                                    
                                                                                                                                                                                                                                                                                                                                                                    
                                                                                                                                                                                                                                                                                                                                                                    
                                                                                                                                                                                                                                                                                                                                                                    U.S.
      Treasury Bills, 1.3059%, due 07/10/2008
                                                                                                                                                                                                                                                                                                                                                                    
                                                                                                                                                                                                                                                                                                                                                                    
                                                                                                                                                                                                                                                                                                                                                                    12,000,000
                                                                                                                                                                                                                                                                                                                                                                    
                                                                                                                                                                                                                                                                                                                                                                    
                                                                                                                                                                                                                                                                                                                                                                    
                                                                                                                                                                                                                                                                                                                                                                    11,996,160
                                                                                                                                                                                                                                                                                                                                                                    
                                                                                                                                                                                                                                                                                                                                                                    
                                                                                                                                                                                                                                                                                                                                                                    
                                                                                                                                                                                                                                                                                                                                                                    11,996,160U.S.
      Treasury Bills
                                                                                                                                                                                                                                                                                                                                                                    
                                                                                                                                                                                                                                                                                                                                                                    
                                                                                                                                                                                                                                                                                                                                                                    
                                                                                                                                                                                                                                                                                                                                                                    U.S.
      Treasury Bills, 1.3059%, due 07/10/2008
                                                                                                                                                                                                                                                                                                                                                                    
                                                                                                                                                                                                                                                                                                                                                                    
                                                                                                                                                                                                                                                                                                                                                                    12,000,000
                                                                                                                                                                                                                                                                                                                                                                    
                                                                                                                                                                                                                                                                                                                                                                    
                                                                                                                                                                                                                                                                                                                                                                    
                                                                                                                                                                                                                                                                                                                                                                    11,996,161
                                                                                                                                                                                                                                                                                                                                                                    
                                                                                                                                                                                                                                                                                                                                                                    
                                                                                                                                                                                                                                                                                                                                                                    
                                                                                                                                                                                                                                                                                                                                                                    11,996,161U.S.
      Treasury Bills
                                                                                                                                                                                                                                                                                                                                                                    
                                                                                                                                                                                                                                                                                                                                                                    
                                                                                                                                                                                                                                                                                                                                                                    
                                                                                                                                                                                                                                                                                                                                                                    U.S.
      Treasury Bills, 1.3059%, due 07/10/2008
                                                                                                                                                                                                                                                                                                                                                                    
                                                                                                                                                                                                                                                                                                                                                                    
                                                                                                                                                                                                                                                                                                                                                                    12,000,000
                                                                                                                                                                                                                                                                                                                                                                    
                                                                                                                                                                                                                                                                                                                                                                    
                                                                                                                                                                                                                                                                                                                                                                    
                                                                                                                                                                                                                                                                                                                                                                    11,996,160
                                                                                                                                                                                                                                                                                                                                                                    
                                                                                                                                                                                                                                                                                                                                                                    
                                                                                                                                                                                                                                                                                                                                                                    
                                                                                                                                                                                                                                                                                                                                                                    11,996,160U.S.
      Treasury Bills
                                                                                                                                                                                                                                                                                                                                                                    
                                                                                                                                                                                                                                                                                                                                                                    
                                                                                                                                                                                                                                                                                                                                                                    
                                                                                                                                                                                                                                                                                                                                                                    U.S.
      Treasury Bills, 1.3059%, due 07/10/2008
                                                                                                                                                                                                                                                                                                                                                                    
                                                                                                                                                                                                                                                                                                                                                                    
                                                                                                                                                                                                                                                                                                                                                                    12,000,000
                                                                                                                                                                                                                                                                                                                                                                    
                                                                                                                                                                                                                                                                                                                                                                    
                                                                                                                                                                                                                                                                                                                                                                    
                                                                                                                                                                                                                                                                                                                                                                    11,996,160
                                                                                                                                                                                                                                                                                                                                                                    
                                                                                                                                                                                                                                                                                                                                                                    
                                                                                                                                                                                                                                                                                                                                                                    
                                                                                                                                                                                                                                                                                                                                                                    11,996,160U.S.
      Treasury Bills
                                                                                                                                                                                                                                                                                                                                                                    
                                                                                                                                                                                                                                                                                                                                                                    
                                                                                                                                                                                                                                                                                                                                                                    
                                                                                                                                                                                                                                                                                                                                                                    U.S.
      Treasury Bills, 1.3059%, due 07/10/2008
                                                                                                                                                                                                                                                                                                                                                                    
                                                                                                                                                                                                                                                                                                                                                                    
                                                                                                                                                                                                                                                                                                                                                                    12,000,000
                                                                                                                                                                                                                                                                                                                                                                    
                                                                                                                                                                                                                                                                                                                                                                    
                                                                                                                                                                                                                                                                                                                                                                    
                                                                                                                                                                                                                                                                                                                                                                    11,996,161
                                                                                                                                                                                                                                                                                                                                                                    
                                                                                                                                                                                                                                                                                                                                                                    
                                                                                                                                                                                                                                                                                                                                                                    
                                                                                                                                                                                                                                                                                                                                                                    11,996,161U.S.
      Treasury Bills
                                                                                                                                                                                                                                                                                                                                                                    
                                                                                                                                                                                                                                                                                                                                                                    
                                                                                                                                                                                                                                                                                                                                                                    
                                                                                                                                                                                                                                                                                                                                                                    U.S.
      Treasury Bills, 1.3059%, due 07/10/2008
                                                                                                                                                                                                                                                                                                                                                                    
                                                                                                                                                                                                                                                                                                                                                                    
                                                                                                                                                                                                                                                                                                                                                                    12,000,000
                                                                                                                                                                                                                                                                                                                                                                    
                                                                                                                                                                                                                                                                                                                                                                    
                                                                                                                                                                                                                                                                                                                                                                    
                                                                                                                                                                                                                                                                                                                                                                    11,996,160
                                                                                                                                                                                                                                                                                                                                                                    
                                                                                                                                                                                                                                                                                                                                                                    
                                                                                                                                                                                                                                                                                                                                                                    
                                                                                                                                                                                                                                                                                                                                                                    11,996,160U.S.
      Treasury Bills
                                                                                                                                                                                                                                                                                                                                                                    
                                                                                                                                                                                                                                                                                                                                                                    
                                                                                                                                                                                                                                                                                                                                                                    
                                                                                                                                                                                                                                                                                                                                                                    U.S.
      Treasury Bills, 0.0610%, due 07/03/2008
                                                                                                                                                                                                                                                                                                                                                                    
                                                                                                                                                                                                                                                                                                                                                                    
                                                                                                                                                                                                                                                                                                                                                                    50,000,000
                                                                                                                                                                                                                                                                                                                                                                    
                                                                                                                                                                                                                                                                                                                                                                    
                                                                                                                                                                                                                                                                                                                                                                    
                                                                                                                                                                                                                                                                                                                                                                    49,999,833
                                                                                                                                                                                                                                                                                                                                                                    
                                                                                                                                                                                                                                                                                                                                                                    
                                                                                                                                                                                                                                                                                                                                                                    
                                                                                                                                                                                                                                                                                                                                                                    49,999,833Subtotal
      Government Securities (33.1% of total investments)
                                                                                                                                                                                                                                                                                                                                                                    
                                                                                                                                                                                                                                                                                                                                                                    
                                                                                                                                                                                                                                                                                                                                                                    $
                                                                                                                                                                                                                                                                                                                                                                    177,958,876
                                                                                                                                                                                                                                                                                                                                                                    
                                                                                                                                                                                                                                                                                                                                                                    
                                                                                                                                                                                                                                                                                                                                                                    $
                                                                                                                                                                                                                                                                                                                                                                    177,958,876CASH
      AND CASH
      EQUIVALENTSSubtotal
      Cash and Cash Equivalents (2.07% of total investments)
                                                                                                                                                                                                                                                                                                                                                                    
                                                                                                                                                                                                                                                                                                                                                                    $
                                                                                                                                                                                                                                                                                                                                                                    11,108,533
                                                                                                                                                                                                                                                                                                                                                                    
                                                                                                                                                                                                                                                                                                                                                                    
                                                                                                                                                                                                                                                                                                                                                                    $
                                                                                                                                                                                                                                                                                                                                                                    11,108,533TOTAL
      INVESTMENTS, CASH AND CASH
      EQUIVALENTS
                                                                                                                                                                                                                                                                                                                                                                    
                                                                                                                                                                                                                                                                                                                                                                    
                                                                                                                                                                                                                                                                                                                                                                    $
                                                                                                                                                                                                                                                                                                                                                                    533,825,149
                                                                                                                                                                                                                                                                                                                                                                    
                                                                                                                                                                                                                                                                                                                                                                    
                                                                                                                                                                                                                                                                                                                                                                    $
                                                                                                                                                                                                                                                                                                                                                                    537,295,346LIABILITIES
      IN EXCESS OF OTHER ASSETS
      (20)
                                                                                                                                                                                                                                                                                                                                                                    
                                                                                                                                                                                                                                                                                                                                                                    
                                                                                                                                                                                                                                                                                                                                                                    
                                                                                                                                                                                                                                                                                                                                                                    
                                                                                                                                                                                                                                                                                                                                                                    
                                                                                                                                                                                                                                                                                                                                                                    
                                                                                                                                                                                                                                                                                                                                                                    $
                                                                                                                                                                                                                                                                                                                                                                    (235,659,343
                                                                                                                                                                                                                                                                                                                                                                    )NET
      ASSETS
      (20)
                                                                                                                                                                                                                                                                                                                                                                    
                                                                                                                                                                                                                                                                                                                                                                    
                                                                                                                                                                                                                                                                                                                                                                    
                                                                                                                                                                                                                                                                                                                                                                    
                                                                                                                                                                                                                                                                                                                                                                    
                                                                                                                                                                                                                                                                                                                                                                    
                                                                                                                                                                                                                                                                                                                                                                    
                                                                                                                                                                                                                                                                                                                                                                    
                                                                                                                                                                                                                                                                                                                                                                    
                                                                                                                                                                                                                                                                                                                                                                    
                                                                                                                                                                                                                                                                                                                                                                    
                                                                                                                                                                                                                                                                                                                                                                    
                                                                                                                                                                                                                                                                                                                                                                    
                                                                                                                                                                                                                                                                                                                                                                    $
                                                                                                                                                                                                                                                                                                                                                                    301,636,003
 
 (See
accompanying notes to consolidated financial statements)


7




NGP
CAPITAL RESOURCES COMPANY
 CONSOLIDATED
SCHEDULE OF INVESTMENTS
 June
30, 2008
 (Unaudited)
 (Continued)
 
 NOTES TO CONSOLDIATED
SCHEDULE OF INVESTMENTS
 
 (1)
                All
      investments are pledged as collateral for obligations uder the Company's
      credit facilities.
 (2)
                Percentages
      represent interest rates in effect at June 30, 2008, and due dates
      represent the contractual maturity dates.
 (3)
                Fair
      value of targeted investments is determined by or under the direction of
      the Board of Directors.
 (4)
                All
      investments are in entities with primary operations in the United States
      of America.
 (5)
                Non-income
      producing securities.
 (6)
                Upon
      the March 30, 2006 closing of Venoco, Inc.'s TexCal acquisition, Venoco
      Inc.'s senior notes became collateralized by second priority
      liens.
 (7)
                Non-accrual
      status.
 (8)
                Level
      1 security per SFAS No.
      157 hierachy.
 (9)
                Level
      3 security per SFAS No.
      157 hierachy.
 (10)
                Portfolio
      company was issued a written notice of default.
 (11)
                Chroma
      warrants are non-income producing, expire on April 5, 2012 and provide the
      Company the right to purchase 2,462 shares of common stock at a purchase
      price of $325.00 per share.
 (12)
                BSR
      Loco Bayou warrants are non-income producing, expire on August 15, 2013
      and provide the Company the right to purchase 10,000 investor units at the
      exercise price of $160.00 per investor unit.
 (13)
                Sonoran
      warrants are non-income producing, expire on November 28, 2014, and
      provide the Company the right to purchase shares of common stock up to
      2.87 million shares, on a fully diluted basis with anti-dilution
      provisions, at the exercise price of $0.20 per share.
 (14)
                Nighthawk
      warrants are non-income producing, expire on May 13, 2017 and provide the
      Company the right to purchase approximately 2.5% of limited partnership
      units at the exercise price of $0.001 per unit.
 (15)
                Alden
      warrants are non-income producing and provide the Company the right to
      purchase 23% of class C units at an exercise price of $0.739 per unit,
      expiring in December 2013 and the right to purchase 10% of class C units
      at an exercise price of $0.739 per unit, expiring in July
      2014.
 (16)
                Formidable
      warrants are non-income producing, expire on March 31, 2015 and provide
      the Company the right to purchase membership interest representing 30% of
      all distributions at an exercise price of $1,000 per percentage
      point.
 (17)
                DeanLake
      warrants are non-income producing, expire on June 22, 2014 and provide the
      Company the right to purchase a 10% membership interest at the exercise
      price of $300,000 or $30,000 per 1% membership interest representing 30%
      of all distributions.
 (18)
                BioEnergy
      International, LLC. warrants are non-income producing, expire on August
      15, 2010 and provide the Company the right to purchase 648,000 units,
      representing membership interests of BioEnergy International, LLC, at the
      purchase price of $10.00 per unit.
 (19)
                Put
      Options are related to the limited term royalty interest purchased from
      ATP Oil & Gas Corporation.
 (20)
              As
      restated.
 
 (See
accompanying notes to consolidated financial statements)


8


NGP
CAPITAL RESOURCES COMPANY
 CONSOLIDATED
FINANCIAL HIGHLIGHTS
 (Unaudited)
 
 For the Six Months EndedJune 30, 2008
                                      
                                      
                                      June 30, 2007(As Restated)
                                      
                                      
                                      (As Restated)Per
      Share Data  (1)Net
      asset value, beginning of period
                                      
                                      $
                                      14.14
                                      
                                      
                                      $
                                      13.96Increase
      in net assets as a result of secondarypublic
      stock offering
                                      
                                      
                                      0.40
                                      
                                      
                                      
                                      -Underwriting
      discounts and commissions relatedto
      secondary public stock offering
                                      
                                      
                                      (0.15
                                      )
                                      
                                      
                                      -Other
      costs related to secondary public stock offering
                                      
                                      
                                      (0.03
                                      )
                                      
                                      
                                      -Net
      increase in net assets from secondary public offering
                                      
                                      
                                      0.22
                                      
                                      
                                      
                                      -Net
      asset value after public stock offering
                                      
                                      
                                      14.36
                                      
                                      
                                      
                                      13.96Net
      investment income
                                      
                                      
                                      0.37
                                      
                                      
                                      
                                      0.51Net
      realized and unrealized gain (loss) on portfolio
    securities,corporate
      notes and commodity derivative instruments (4)
                                      
                                      
                                      0.02
                                      
                                      
                                      
                                      0.61Net
      increase (decrease) in stockholders' equity (net assets)resulting
      from operations
                                      
                                      
                                      0.39
                                      
                                      
                                      
                                      1.12Dividends
      declared
                                      
                                      
                                      (0.80
                                      )
                                      
                                      
                                      (0.58
                                      )Net
      asset value, end of period
                                      
                                      $
                                      13.95
                                      
                                      
                                      $
                                      14.50Market
      value, beginning of period
                                      
                                      $
                                      15.63
                                      
                                      
                                      $
                                      16.75Market
      value, end of period
                                      
                                      $
                                      15.41
                                      
                                      
                                      $
                                      16.72Market
      value return  (2)
                                      
                                      
                                      3.64
                                      %
                                      
                                      
                                      3.28
                                      %Net
      asset value return (2)
                                      
                                      
                                      3.70
                                      %
                                      
                                      
                                      7.46
                                      %Ratios
      and Supplemental Data($
      and shares in thousands)Net
      assets, end of period
                                      
                                      $
                                      301,636
                                      
                                      
                                      $
                                      252,908Average
      net assets
                                      
                                      $
                                      274,526
                                      
                                      
                                      $
                                      248,083Common
      shares outstanding at end of period
                                      
                                      
                                      21,628
                                      
                                      
                                      
                                      17,445Total
      operating expenses/average net assets (3)
                                      
                                      
                                      7.20
                                      %
                                      
                                      
                                      7.55
                                      %Total
      operating expenses less management andincentive
      fees and interest expense/average net assets (3)
                                      
                                      
                                      1.70
                                      %
                                      
                                      
                                      1.55
                                      %Total
      operating expenses less managementand
      incentive fees/average net assets (3)
                                      
                                      
                                      4.54
                                      %
                                      
                                      
                                      4.14
                                      %Net
      investment income/average net assets (3)
                                      
                                      
                                      5.83
                                      %
                                      
                                      
                                      7.21
                                      %Net
      increase (decrease) in net assets resulting fromoperations/average
      net assets (3)
                                      
                                      
                                      5.73
                                      %
                                      
                                      
                                      15.70
                                      %Portfolio
      turnover rate
                                      
                                      
                                      10.40
                                      %
                                      
                                      
                                      43.77
                                      %
  (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.
 (4)
Calculated as a balancing amount necessary to reconcile the change in net assets
value per share with the other per share information presented.  This
amount may not agree with the aggregate gains and losses for the period because
the difference in the net asset value at the beginning and end of year may not
equal the per share changes of the line items disclosed.
  (See
accompanying notes to consolidated financial statements)


9


NGP CAPITAL RESOURCES
COMPANY


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS


June 30, 2008


(Unaudited)




Note 1:  Organization





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





The
Company was created to invest primarily in small and mid-size private energy
companies, which, until July 21, 2008, were generally defined as companies that
have net asset values or annual revenues of less than $500 million and are not
issuers of publicly traded securities. On July 21, 2008, the Securities and
Exchange Commission expanded the definition of eligible portfolio companies to
include domestic operating companies with securities listed on a national
securities exchange so long as the company has a market capitalization of less
than $250 million. The Company’s investment objective is to generate both
current income and capital appreciation through debt investments with certain
equity components.




The
Company is managed and advised, subject to the overall supervision of the
Company’s board of directors (the “Board of Directors”), by NGP Investment
Advisor, LP (the “Manager”), a Delaware limited partnership owned by NGP Energy
Capital Management, LLC, and NGP Administration, LLC (the “Administrator”), the
Company’s administrator.


Note
2: Restatement of Consolidated Financial Statements
  Background of the
Restatement
 
 On March 15, 2010, our Board of
Directors and the members of the Audit Committee of our Board of Directors
concluded that we should restate our consolidated financial statements for the
years ended December 31, 2007 and December 31, 2008, and for the quarters in
2007 and 2008 and the first three quarters of 2009 (collectively, the “Affected
Periods”).
 
 The determination to restate the
financial statements for the Affected Periods was made in connection with
management’s assessment of accounting errors it discovered as part of a process
to remediate a material weakness in internal controls previously disclosed in
the Company’s Annual Report on Form 10-K for the year ended December 31, 2008
and the Company’s Quarterly Reports on Form 10-Q in 2009. While the Company has
taken steps to remediate the previously disclosed material weakness, the
material weakness existed throughout the quarterly periods of 2009, and at
December 31, 2009, the Company had not yet completed its assessment as to
whether the material weakness had been fully remediated. The Company anticipates
that it will complete its testing of the additional internal control processes
designed to remediate the previously disclosed material weakness in
2010.
 
 The errors and consequent restatements
described below principally involved non-cash accounting entries related to net
deferred tax assets and liabilities that typically arise as a result of timing
differences in tax and GAAP (book) accounting. Taxable Net Investment Income,
which is the primary determinant of the Company’s distributable income, has not
been affected in any of the Affected Periods by these restatements.
 
 The Company’s assessment of certain
identified accounting errors results in the following adjustments to previously
reported periods:
 
 1.           In
the quarter ended March 31, 2007, the Company failed to record a deferred tax
liability with respect to approximately $2.1 million in unrealized appreciation
on an investment in partnerships.  Similarly, in the quarters ended
June 30, 2007 and September 30, 2007, the Company failed to record deferred tax
liabilities with respect to approximately $4.0 million and $2.0 million,
respectively, in unrealized appreciation on an investment.
 
 2.           In
the quarter ended September 30, 2008, the Company realized a $12.34 million
pre-tax gain on this same investment (as compared to the $8.15 million of
unrealized appreciation previously recorded in 2007). The reversal of the
previously unrecorded deferred tax liability in 2008 resulted in the incorrect
recording of a net deferred tax asset of $3.8 million at year end 2008. 
This item
does not affect the periods presented in this Amended
Filing.
 
 Unrelated
to the restatements, we have reclassified certain  balance sheet,
statement of operations and statement of cash flows amounts to conform to the
presentation in our most recently-filed Annual Report on Form 10-K. These
reclassifications were primarily related to the disaggregation of investments in
portfolio securities, investment income, net realized capital gain (loss) on
investments and net unrealized gain (loss) on investments into separate
classifications according to level of control.
 
 Impact of the Restatement
and Reclassification
 
 The
restatement and reclassification adjustments detailed below to our previously
filed consolidated financial statements reflect adjustments which principally
involved non-cash accounting entries related to net deferred tax assets and
liabilities, which impact the consolidated balance sheets, consolidated
statement of operations and consolidated statement of cash flows.
 
 10
 The
effects of the restatement on the unaudited consolidated balance sheet at June
30, 2008 and consolidated balance sheet  at December 31, 2007 are
summarized in the following table:
 
 As PreviouslyReported
                          
                          
                          Reclassifications
                          
                          
                          As Reclassified
                          
                          
                          Restatement
                          
                          
                          As RestatedConsolidated
      Balance Sheets:As
      of June 30, 2008Investments
      in portfolio securities at fair value
                          
                          $
                          338,074,483
                          
                          
                          $
                          (338,074,483
                          )
                          
                          $
                          -
                          
                          
                          $
                          -
                          
                          
                          $
                          -Control
      investments - majority owned
                          
                          
                          -
                          
                          
                          
                          33,834,830
                          
                          
                          
                          33,834,830
                          
                          
                          
                          -
                          
                          
                          
                          33,834,830Affiliate
      investments
                          
                          
                          -
                          
                          
                          
                          15,085,253
                          
                          
                          
                          15,085,253
                          
                          
                          
                          -
                          
                          
                          
                          15,085,253Non-affiliate
      investments
                          
                          
                          -
                          
                          
                          
                          289,154,400
                          
                          
                          
                          289,154,400
                          
                          
                          
                          -
                          
                          
                          
                          289,154,400Accounts
      receivable and other current assets
                          
                          
                          10,308
                          
                          
                          
                          -
                          
                          
                          
                          10,308
                          
                          
                          
                          43,750
                          
                          
                          
                          54,058Total
      current assets
                          
                          
                          13,572,633
                          
                          
                          
                          -
                          
                          
                          
                          13,572,633
                          
                          
                          
                          43,750
                          
                          
                          
                          13,616,383Total
      assets
                          
                          
                          539,759,446
                          
                          
                          
                          -
                          
                          
                          
                          539,759,446
                          
                          
                          
                          43,750
                          
                          
                          
                          539,803,196Deferred
      tax liabilities – current
                          
                          
                          -
                          
                          
                          
                          -
                          
                          
                          
                          -
                          
                          
                          
                          2,770,924
                          
                          
                          
                          2,770,924Total
      current liabilities
                          
                          
                          11,084,862
                          
                          
                          
                          -
                          
                          
                          
                          11,084,862
                          
                          
                          
                          2,770,924
                          
                          
                          
                          13,855,786Deferred
      tax liabilities - non-current
                          
                          
                          -
                          
                          
                          
                          -
                          
                          
                          
                          -
                          
                          
                          
                          61,407
                          
                          
                          
                          61,407Total
      liabilities
                          
                          
                          235,334,862
                          
                          
                          
                          -
                          
                          
                          
                          235,334,862
                          
                          
                          
                          2,832,331
                          
                          
                          
                          238,167,193Paid-in
      capital in excess of par
                          
                          
                          307,928,101
                          
                          
                          
                          -
                          
                          
                          
                          307,928,101
                          
                          
                          
                          (196,579
                          )
                          
                          
                          307,731,522Undistributed
      net investment income (loss)
                          
                          
                          (7,854,475
                          )
                          
                          
                          -
                          
                          
                          
                          (7,854,475
                          )
                          
                          
                          178,922
                          
                          
                          
                          (7,675,553
                          )Net
      unrealized appreciation (depreciation) of portfolio
      securities,corporate
      notes and commodity derivative instruments
                          
                          
                          3,470,197
                          
                          
                          
                          -
                          
                          
                          
                          3,470,197
                          
                          
                          
                          (2,770,924
                          )
                          
                          
                          699,273Total
      stockholders’ equity (net assets)
                          
                          
                          304,424,584
                          
                          
                          
                          -
                          
                          
                          
                          304,424,584
                          
                          
                          
                          (2,788,581
                          )
                          
                          
                          301,636,003Total
      liabilities and stockholders' equity (net assets)
                          
                          
                          539,759,446
                          
                          
                          
                          -
                          
                          
                          
                          539,759,446
                          
                          
                          
                          43,750
                          
                          
                          
                          539,803,196Net
      asset value per share
                          
                          
                          14.08
                          
                          
                          
                          -
                          
                          
                          
                          14.08
                          
                          
                          
                          (0.13
                          )
                          
                          
                          13.95As
      of December 31, 2007Investments
      in portfolio securities at fair value
                          
                          $
                          284,228,573
                          
                          
                          $
                          (284,228,573
                          )
                          
                          $
                          -
                          
                          
                          $
                          -
                          
                          
                          $
                          -Control
      investments - majority owned
                          
                          
                          -
                          
                          
                          
                          29,669,857
                          
                          
                          
                          29,669,857
                          
                          
                          
                          -
                          
                          
                          
                          29,669,857Non-affiliate
      investments
                          
                          
                          -
                          
                          
                          
                          254,558,716
                          
                          
                          
                          254,558,716
                          
                          
                          
                          -
                          
                          
                          
                          254,558,716Accounts
      receivable and other current assets
                          
                          
                          17,569
                          
                          
                          
                          -
                          
                          
                          
                          17,569
                          
                          
                          
                          43,750
                          
                          
                          
                          61,319Total
      current assets
                          
                          
                          21,123,178
                          
                          
                          
                          -
                          
                          
                          
                          21,123,178
                          
                          
                          
                          43,750
                          
                          
                          
                          21,166,928Total
      assets
                          
                          
                          478,232,876
                          
                          
                          
                          -
                          
                          
                          
                          478,232,876
                          
                          
                          
                          43,750
                          
                          
                          
                          478,276,626Deferred
      tax liabilities - current
                          
                          
                          -
                          
                          
                          
                          -
                          
                          
                          
                          -
                          
                          
                          
                          2,770,924
                          
                          
                          
                          2,770,924Total
      current liabilities
                          
                          
                          11,973,539
                          
                          
                          
                          -
                          
                          
                          
                          11,973,539
                          
                          
                          
                          2,770,924
                          
                          
                          
                          14,744,463Deferred
      tax liabilities - non-current
                          
                          
                          -
                          
                          
                          
                          -
                          
                          
                          
                          -
                          
                          
                          
                          116,221
                          
                          
                          
                          116,221Total
      liabilities
                          
                          
                          227,973,539
                          
                          
                          
                          -
                          
                          
                          
                          227,973,539
                          
                          
                          
                          2,887,145
                          
                          
                          
                          230,860,684Paid-in
      capital in excess of par
                          
                          
                          245,881,078
                          
                          
                          
                          -
                          
                          
                          
                          245,881,078
                          
                          
                          
                          (196,579
                          )
                          
                          
                          245,684,499Undistributed
      net investment income (loss)
                          
                          
                          (103,394
                          )
                          
                          
                          -
                          
                          
                          
                          (103,394
                          )
                          
                          
                          124,108
                          
                          
                          
                          20,714Net
      unrealized appreciation (depreciation) of portfolio
      securities,corporate
      notes and commodity derivative instruments
                          
                          
                          3,605,020
                          
                          
                          
                          -
                          
                          
                          
                          3,605,020
                          
                          
                          
                          (2,770,924
                          )
                          
                          
                          834,096Total
      stockholders’ equity (net assets)
                          
                          
                          250,259,337
                          
                          
                          
                          -
                          
                          
                          
                          250,259,337
                          
                          
                          
                          (2,843,395
                          )
                          
                          
                          247,415,942Total
      liabilities and stockholders' equity (net assets)
                          
                          
                          478,232,876
                          
                          
                          
                          -
                          
                          
                          
                          478,232,876
                          
                          
                          
                          43,750
                          
                          
                          
                          478,276,626Net
      asset value per share
                          
                          
                          14.30
                          
                          
                          
                          -
                          
                          
                          
                          14.30
                          
                          
                          
                          (0.16
                          )
                          
                          
                          14.14
 
 11
  The
effects of the restatement on the unaudited consolidated statements of
operations for the three and six-month periods ended June 30, 2008 are
summarized in the following table:
 
 As PreviouslyReported
                                      
                                      
                                      Reclassifications
                                      
                                      
                                      As Reclassified
                                      
                                      
                                      Restatement
                                      
                                      
                                      As RestatedConsolidated
      Statements of Operations:For
      the Three Months Ended June 30, 2008Investment
      incomeInterest
      and dividend income:
                                      
                                      $
                                      8,152,713
                                      
                                      
                                      $
                                      (8,152,713
                                      )
                                      
                                      $
                                      -
                                      
                                      
                                      $
                                      -
                                      
                                      
                                      $
                                      -Control
      investments - majority owned
                                      
                                      
                                      -
                                      
                                      
                                      
                                      134,601
                                      
                                      
                                      
                                      134,601
                                      
                                      
                                      
                                      -
                                      
                                      
                                      
                                      134,601Affiliate
      investments
                                      
                                      
                                      -
                                      
                                      
                                      
                                      522,622
                                      
                                      
                                      
                                      522,622
                                      
                                      
                                      
                                      -
                                      
                                      
                                      
                                      522,622Non-affiliate
      investments
                                      
                                      
                                      -
                                      
                                      
                                      
                                      6,920,901
                                      
                                      
                                      
                                      6,920,901
                                      
                                      
                                      
                                      -
                                      
                                      
                                      
                                      6,920,901Royalty
      income, net of amortization:Control
      investments - majority owned
                                      
                                      
                                      -
                                      
                                      
                                      
                                      20,692
                                      
                                      
                                      
                                      20,692
                                      
                                      
                                      
                                      -
                                      
                                      
                                      
                                      20,692Non-affiliate
      investments
                                      
                                      
                                      -
                                      
                                      
                                      
                                      553,897
                                      
                                      
                                      
                                      553,897
                                      
                                      
                                      
                                      -
                                      
                                      
                                      
                                      553,897Benefit
      (provision) for income taxes
                                      
                                      
                                      -
                                      
                                      
                                      
                                      -
                                      
                                      
                                      
                                      -
                                      
                                      
                                      
                                      32,611
                                      
                                      
                                      
                                      32,611Net
      investment income
                                      
                                      
                                      3,759,191
                                      
                                      
                                      
                                      -
                                      
                                      
                                      
                                      3,759,191
                                      
                                      
                                      
                                      32,611
                                      
                                      
                                      
                                      3,791,802Net
      increase (decrease) in unrealized appreciation(depreciation)
      on portfolio securities, corporate notes andcommodity
      derivative instruments:
                                      
                                      
                                      1,611,339
                                      
                                      
                                      
                                      (1,611,339
                                      )
                                      
                                      
                                      -
                                      
                                      
                                      
                                      -
                                      
                                      
                                      
                                      -Control
      investments - majority owned
                                      
                                      
                                      -
                                      
                                      
                                      
                                      217
                                      
                                      
                                      
                                      217
                                      
                                      
                                      
                                      -
                                      
                                      
                                      
                                      217Non-affiliate
      investments
                                      
                                      
                                      -
                                      
                                      
                                      
                                      1,611,122
                                      
                                      
                                      
                                      1,611,122
                                      
                                      
                                      
                                      -
                                      
                                      
                                      
                                      1,611,122Net
      increase (decrease) in stockholders' equity(net
      assets) resulting from operations
                                      
                                      
                                      5,370,530
                                      
                                      
                                      
                                      -
                                      
                                      
                                      
                                      5,370,530
                                      
                                      
                                      
                                      32,611
                                      
                                      
                                      
                                      5,403,141Net
      increase (decrease) in stockholders' equity (net assets)resulting
      from operations per common share
                                      
                                      
                                      0.25
                                      
                                      
                                      
                                      -
                                      
                                      
                                      
                                      0.25
                                      
                                      
                                      
                                      0.03
                                      
                                      
                                      
                                      0.28For
      the Six Months Ended June 30, 2008Investment
      incomeInterest
      and dividend income:
                                      
                                      $
                                      17,650,679
                                      
                                      
                                      $
                                      (17,650,679
                                      )
                                      
                                      $
                                      -
                                      
                                      
                                      $
                                      -
                                      
                                      
                                      $
                                      -Control
      investments - majority owned
                                      
                                      
                                      -
                                      
                                      
                                      
                                      255,515
                                      
                                      
                                      
                                      255,515
                                      
                                      
                                      
                                      -
                                      
                                      
                                      
                                      255,515Affiliate
      investments
                                      
                                      
                                      -
                                      
                                      
                                      
                                      717,401
                                      
                                      
                                      
                                      717,401
                                      
                                      
                                      
                                      -
                                      
                                      
                                      
                                      717,401Non-affiliate
      investments
                                      
                                      
                                      -
                                      
                                      
                                      
                                      15,557,325
                                      
                                      
                                      
                                      15,557,325
                                      
                                      
                                      
                                      -
                                      
                                      
                                      
                                      15,557,325Royalty
      income, net of amortization:Control
      investments - majority owned
                                      
                                      
                                      -
                                      
                                      
                                      
                                      48,707
                                      
                                      
                                      
                                      48,707
                                      
                                      
                                      
                                      -
                                      
                                      
                                      
                                      48,707Non-affiliate
      investments
                                      
                                      
                                      -
                                      
                                      
                                      
                                      1,071,731
                                      
                                      
                                      
                                      1,071,731
                                      
                                      
                                      
                                      -
                                      
                                      
                                      
                                      1,071,731Other
      general and administrative expenses
                                      
                                      
                                      1,451,664
                                      
                                      
                                      
                                      -
                                      
                                      
                                      
                                      1,451,664
                                      
                                      
                                      
                                      (1
                                      )
                                      
                                      
                                      1,451,663Total
      operating expenses
                                      
                                      
                                      9,835,237
                                      
                                      
                                      
                                      -
                                      
                                      
                                      
                                      9,835,237
                                      
                                      
                                      
                                      (1
                                      )
                                      
                                      
                                      9,835,236Net
      investment income before income taxes
                                      
                                      
                                      7,900,332
                                      
                                      
                                      
                                      -
                                      
                                      
                                      
                                      7,900,332
                                      
                                      
                                      
                                      1
                                      
                                      
                                      
                                      7,900,333Benefit
      (provision) for income taxes
                                      
                                      
                                      -
                                      
                                      
                                      
                                      -
                                      
                                      
                                      
                                      -
                                      
                                      
                                      
                                      54,813
                                      
                                      
                                      
                                      54,813Net
      investment income
                                      
                                      
                                      7,900,332
                                      
                                      
                                      
                                      -
                                      
                                      
                                      
                                      7,900,332
                                      
                                      
                                      
                                      54,814
                                      
                                      
                                      
                                      7,955,146Net
      increase (decrease) in unrealized appreciation
    (depreciation)on
      portfolio securities, corporate notes and commodity derivative
      instruments:
                                      
                                      
                                      (134,823
                                      )
                                      
                                      
                                      134,823
                                      
                                      
                                      
                                      -
                                      
                                      
                                      
                                      -
                                      
                                      
                                      
                                      -Control
      investments - majority owned
                                      
                                      
                                      -
                                      
                                      
                                      
                                      280
                                      
                                      
                                      
                                      280
                                      
                                      
                                      
                                      -
                                      
                                      
                                      
                                      280Non-affiliate
      investments
                                      
                                      
                                      -
                                      
                                      
                                      
                                      (135,103
                                      )
                                      
                                      
                                      (135,103
                                      )
                                      
                                      
                                      -
                                      
                                      
                                      
                                      (135,103
                                      )Net
      increase (decrease) in stockholders' equity(net
      assets) resulting from operations
                                      
                                      
                                      7,765,509
                                      
                                      
                                      
                                      -
                                      
                                      
                                      
                                      7,765,509
                                      
                                      
                                      
                                      54,814
                                      
                                      
                                      
                                      7,820,323Net
      increase (decrease) in stockholders' equity (net assets)resulting
      from operations per common share
                                      
                                      
                                      0.36
                                      
                                      
                                      
                                      -
                                      
                                      
                                      
                                      0.36
                                      
                                      
                                      
                                      0.03
                                      
                                      
                                      
                                      0.39
  12
  The
effects of the restatement on the unaudited consolidated statement of cash flows
for the six-month period ended June 30, 2008 are summarized in the following
table:
  As PreviouslyReported
                      
                      
                      Reclassifications
                      
                      
                      As Reclassified
                      
                      
                      Restatement
                      
                      
                      As RestatedConsolidated
      Statement of Cash Flows:For
      the Six Months Ended June 30, 2008Net
      increase in stockholders' equity (net assets) resulting from
      operationsEffects
      of changes in operating assets and liabilities
                      
                      $
                      7,765,509
                      
                      
                      $
                      -
                      
                      
                      $
                      7,765,509
                      
                      
                      $
                      54,814
                      
                      
                      $
                      7,820,323Non-current
      portion of deferred income taxes
                      
                      
                      -
                      
                      
                      
                      -
                      
                      
                      
                      -
                      
                      
                      
                      (54,814
                      )
                      
                      
                      (54,814
                      )
  Note 3:  Significant Accounting
Policies




The
interim unaudited consolidated financial statements include the accounts of the
Company and its subsidiaries. All significant intercompany accounts and
transactions have been eliminated in consolidation. The interim consolidated
financial statements have been prepared by management of the Company, without
audit, pursuant to the rules and regulations of the Securities and Exchange
Commission (the “SEC”). Certain information and footnote disclosures normally
included in financial statements prepared in accordance with accounting
principles generally accepted in the United States of America (“GAAP”) have been
omitted pursuant to such rules and regulations, although the Company believes
the disclosures included herein are adequate to make the information presented
not misleading. In the opinion of management, all adjustments which are of a
normal recurring nature considered necessary for presentation of the information
have been included. These unaudited consolidated financial statements should be
read in conjunction with the consolidated financial statements and related notes
included in the Company’s Annual Report on Form 10-K for the year ended December
31, 2007. Interim results are not necessarily indicative of results for a full
year.





The
following is a summary of the significant accounting policies consistently
applied by the Company in the preparation of its consolidated financial
statements:




Use of
Estimates




The
interim consolidated financial statements have been prepared in accordance with
GAAP that require management to make estimates and assumptions that affect the
amounts reported in the interim consolidated financial statements and the
accompanying notes to the interim consolidated financial statements. Actual
results could differ from these estimates.


13




Cash and Cash Equivalents




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





Prepaid
Assets




Prepaid
assets consist of premiums paid for directors’ and officers’ insurance and
fidelity bonds with a policy term of one year, fees associated with the
establishment of the policy or credit facility, and registration expenses
related to the Company’s shelf filing. Such premiums and fees are amortized
monthly on a straight-line basis over the term of the policy or credit facility.
Registration expenses are deferred and will be charged as a reduction of capital
upon the sale of shares.




Concentration of Credit
Risk




The
Company places its cash and cash equivalents with financial institutions and, at
times, cash held in checking accounts may exceed the Federal Deposit Insurance
Corporation insured limit.




Valuation of
Investments




Investments
are carried at fair value, as determined in good faith by the Company’s Board of
Directors. On a quarterly basis, the investment team of the Manager prepares
valuations for all of the assets in our portfolio companies and presents the
valuations to the Company’s valuation committee (the “Valuation Committee”) and
Board of Directors. The valuations are determined and recommended by the
Valuation Committee to the Board of Directors, which reviews and ratifies the
final portfolio valuations.





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





Using the
most recently available financial statements, forecasts and, when applicable,
comparable transaction data, the investment team of the Manager prepares
valuation analyses for the various securities in the Company’s investment
portfolio. These valuation analyses are prepared using traditional valuation
methodologies, which rely on estimates of the asset values and enterprise values
of portfolio companies issuing securities.




The
methodologies for determining asset valuations include estimates based on: the
liquidation or sale value of a portfolio company’s assets, the discounted value
of expected future net cash flows from the assets and third party valuations of
the portfolio company’s assets, such as engineering reserve reports of oil and
gas properties. The investment team of the Manager considers some or all of the
above valuation methods to determine the estimated asset value of a portfolio
company.





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





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


14


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





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





Due to
the uncertainty inherent in the valuation process, such estimates of fair value
may differ significantly from the values that would have been used had a ready
market for the securities existed, and the differences could be material.
Additionally, changes in the market environment and other events that may occur
over the life of the investments may cause the gains or losses ultimately
realized on these investments to be different from the valuations currently
assigned.




In
September 2006, the Financial Accounting Standards Board (“FASB”) issued
Statement on Financial Accounting Statement 157, Fair Value
Measurements (“Statement 157”). This standard establishes a single authoritative definition
of fair value, sets out a framework for measuring fair value and requires
additional disclosures about fair value measurements. Statement 157 applies
to fair value measurements already required or permitted by existing standards.
Statement 157 is effective for financial statements issued for fiscal years
beginning after November 15, 2007 and interim periods within those fiscal
years. The changes to current generally accepted accounting principles from the
application of Statement 157 relate to the definition of fair value, the methods
used to measure fair value and the expanded disclosures about fair value
measurements.





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





Valuation of Commodity Derivative
Instruments





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





Securities Transactions, Interest
and Dividend Income Recognition





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


15


Payment-in-Kind Interest and
Dividends





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





Net Realized Gains or Losses and Net
Change in Unrealized Appreciation or Depreciation




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





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





Fee Income
Recognition




Fees
primarily include financial advisory, transaction structuring, loan
administration, commitment and prepayment fees. Financial advisory fees
represent amounts received for providing advice and analysis to companies and
are recognized as earned when such services are performed, provided collection
is probable. Transaction structuring fees represent amounts received for
structuring, financing and executing transactions and are generally payable only
if the transaction closes. Such fees are deferred and accreted into interest
income over the life of the loan using the effective interest method. Commitment
fees represent amounts received for committed funding and are generally payable
whether or not the transaction closes. On transactions that close within the
commitment period, commitment fees are deferred and accreted into interest
income over the life of the loan using the effective interest method. Commitment
fees on transactions that do not close are generally recognized over the period
the commitment is outstanding. Prepayment and loan administration fees are
recognized as they are received. For the quarter ended June 30, 2008, the
Company accreted approximately $0.3 million of fee income into interest income,
compared to approximately $1.1 million of fee income for the quarter ended June
30, 2007.




Dividends




Dividends
to stockholders are recorded on the ex-dividend date. The Company currently
intends that its distributions each year will be sufficient to maintain the
Company’s status as a RIC for federal income tax purposes and to eliminate
excise tax liability. The Company currently intends to make distributions to
stockholders on a quarterly basis of substantially all of its net taxable
income. The Company also intends to make distributions of net realized capital
gains, if any, at least annually. However, the Company may in the future decide
to retain such capital gains for investment and designate such retained amount
as a deemed distribution. The amount to be paid out as a dividend, if any, is
determined by the Company’s Board of Directors each quarter and is based on the
annual taxable earnings estimated by the Manager. Based on that estimate, a
dividend is declared each quarter and paid shortly thereafter.


16


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





Dividend
History




Declaration
      Date
              
              Amount
              
              Record
      Date
              
              Payment
      DateMarch
      18, 2005
              
              $
              0.120
              
              March
      31, 2005
              
              April
      15, 2005June
      17, 2005
              
              $
              0.125
              
              June
      30, 2005
              
              July
      15, 2005September
      19, 2005
              
              $
              0.140
              
              September
      30, 2005
              
              October
      14, 2005December
      15, 2005
              
              $
              0.275
              
              December
      27, 2005
              
              January
      4, 2006March
      10, 2006
              
              $
              0.160
              
              March
      31, 2006
              
              April
      17, 2006June
      14, 2006
              
              $
              0.180
              
              June
      30, 2006
              
              July
      14, 2006September
      14, 2006
              
              $
              0.250
              
              September
      29, 2006
              
              October
      13, 2006December
      7, 2006
              
              $
              0.330
              
              December
      19, 2006
              
              December
      29, 2006March
      19, 2007
              
              $
              0.265
              
              March
      30, 2007
              
              April
      13, 2007June
      13, 2007
              
              $
              0.310
              
              June
      29, 2007
              
              July
      13, 2007September
      12, 2007
              
              $
              0.350
              
              September
      28, 2007
              
              October
      12, 2007December
      12, 2007
              
              $
              0.515
              
              December
      28, 2007
              
              January
      4, 2008March
      19, 2008
              
              $
              0.400
              
              March
      31, 2008
              
              April
      11, 2008June
      9, 2008
              
              $
              0.400
              
              June
      30, 2008
              
              July
      11, 2008




The
Company has established an “opt out” dividend reinvestment plan for its common
stockholders. As a result, if the Company declares a dividend, then a
stockholder’s cash dividend will be automatically reinvested in additional
shares of the Company’s common stock unless the stockholder, or his or her
broker, specifically “opts out” of the dividend reinvestment plan and elects to
receive cash dividends. It is customary practice for many brokers to “opt out”
of dividend reinvestment plans on behalf of their clients unless specifically
instructed otherwise. As of July 11, 2008, holders of 1,655,552 shares, or
approximately 9.4% of outstanding shares, were participants in the Company’s
dividend reinvestment plan.





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





The table
below summarizes participation in the Company’s dividend reinvestment plan:




Dividend Reinvestment Plan
Participation




Percentage of
              
              
              
              
              
              Common Stock DividendsParticipating
              
              Outstanding
              
              Total
              
              
              
              Purchased in
              
              Newly Issued SharesDividend
              
              Shares
              
              Shares
              
              Distribution
              
              Cash Dividends
              
              Open Market
              
              Amount
              
              SharesMarch
      2005
              
              
              -
              
              
              0.0
              %
              $
              2,088,012
              
              $
              2,088,012
              
              $
              -
              
              $
              -
              
              
              -June
      2005
              
              
              1,215,870
              
              
              7.0
              %
              $
              2,175,013
              
              $
              2,023,029
              
              $
              151,984
              
              $
              -
              
              
              -September
      2005
              
              
              1,488,904
              
              
              8.6
              %
              $
              2,436,014
              
              $
              2,227,567
              
              $
              208,447
              
              $
              -
              
              
              -December
      2005
              
              
              1,660,140
              
              
              9.5
              %
              $
              4,785,028
              
              $
              4,328,488
              
              $
              456,540
              
              $
              -
              
              
              -March
      2006
              
              
              1,618,940
              
              
              9.3
              %
              $
              2,784,016
              
              $
              2,524,986
              
              $
              259,030
              
              $
              -
              
              
              -June
      2006
              
              
              1,410,227
              
              
              8.1
              %
              $
              3,132,018
              
              $
              2,878,177
              
              $
              253,841
              
              $
              -
              
              
              -September
      2006
              
              
              1,270,634
              
              
              7.3
              %
              $
              4,350,025
              
              $
              4,032,366
              
              $
              317,659
              
              $
              -
              
              
              -December
      2006
              
              
              1,111,045
              
              
              6.4
              %
              $
              5,742,033
              
              $
              5,375,388
              
              $
              -
              
              $
              366,645
              
              
              22,168March
      2007
              
              
              1,355,671
              
              
              7.8
              %
              $
              4,616,901
              
              $
              4,257,648
              
              $
              -
              
              $
              359,253
              
              
              22,692June
      2007
              
              
              1,363,066
              
              
              7.8
              %
              $
              5,407,938
              
              $
              4,985,387
              
              $
              -
              
              $
              422,550
              
              
              24,694September
      2007
              
              
              1,438,143
              
              
              8.2
              %
              $
              6,114,379
              
              $
              5,611,029
              
              $
              -
              
              $
              503,350
              
              
              30,678December
      2007
              
              
              1,605,164
              
              
              9.2
              %
              $
              9,012,670
              
              $
              8,186,010
              
              $
              826,659
              
              $
              -
              
              
              -March
      2008
              
              
              1,693,284
              
              
              9.7
              %
              $
              7,000,133
              
              $
              6,322,815
              
              $
              -
              
              $
              677,318
              
              
              41,482June
      2008
              
              
              1,655,552
              
              
              9.4
              %
              $
              8,651,281
              
              $
              7,989,060
              
              $
              662,221
              
              $
              -
              
              
              -
              (1)




(1)
            Shares
      were purchased on July 11, 2008 for the June 2008 dividend. See above and
      Note 5 for further detail.


17


Note 4:  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 Facility as of June 30, 2008 was
$126.25 million, which was unchanged compared to the committed and outstanding
amounts as of December 31, 2007. 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 and bears interest, at the Company’s option, at either (i)
LIBOR plus 25 basis points or (ii) the base rate. As of June 30, 2008, the
interest rate on the Company’s outstanding borrowings under the Treasury
Facility was 2.7325% (LIBOR rate of 2.4825% plus 25 basis points) on $126.25
million. 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
(excluding revenue from cash collateral) plus interest, taxes, depreciation and
amortization expenses (“EBITDA”) 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 $100 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 $100 million and $98 million was outstanding under the
Investment Facility as of June 30, 2008. By comparison, the total amount
committed as of December 31, 2007 was $100 million and $89.75 million was
outstanding under the Investment Facility. The Investment Facility has a
three-year term and bears interest, at the Company’s option, at either (i) LIBOR
plus 125 to 225 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, 2008,
the interest rates were 5.25% (Prime rate of 5.00% plus 25 basis points) on $57
million, 4.22688% (LIBOR rate of 2.47688% plus 175 basis points) on $36 million
and 4.19813% (LIBOR rate of 2.44813% plus 175 basis points) on $5 million.





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.


18


The
Manager has agreed to waive permanently, subsequent to September 30, 2007, that
portion of the management fee attributable to U.S. Treasury securities acquired
with borrowings under the Company’s credit facilities to the extent the amount
of such securities exceeds $100 million.




In
addition to the Company’s credit 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 5:  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.





On
February 6, 2008, the Company’s Registration Statement on Form N-2 (Registration
No. 333-146715) was declared effective by the SEC in connection with the public
offering of an additional 3,700,000 shares of common stock (plus up to 555,000
additional shares of common stock upon the exercise of the underwriters’
over-allotment option), which commenced on April 10, 2008. The number of
securities covered by this registration statement, including the shares of
common stock subject to the underwriters’ over-allotment option, was 4,255,000,
of which 4,086,388 were sold to the public at a price of $16.00 per share.





The net
proceeds from this offering, after deducting expenses of approximately $739,000
and underwriting discounts and commissions of $0.80 per share, were
approximately $61,370,000.





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 issued 22,168 and 78,064 shares of common stock, respectively, in 2006
and 2007 to participants in the dividend reinvestment plan. As of June 30, 2008,
holders of 1,655,552 shares, or approximately 9.4% of outstanding shares, were
participants in the Company’s dividend reinvestment plan. As a result, of the
$8,651,281 total amount distributed for the 2008 second quarter dividend,
$662,221 was used by the dividend reinvestment plan agent to acquire shares in
the open market for credit to the accounts of the plan participants. See
Dividends in Note 3 .




Note 6:  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.


19


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 acquired with borrowings
under the Company’s credit facilities to the extent the amount of such
securities exceeds $100 million. All of the $1,838,009 management and incentive
fees payable to the Manager as of June 30, 2008 is attributable to the base
management fee for the quarter ended June 30, 2008. The base management fee for
the quarter ended June 30, 2007 was $1,585,494.




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, realized capital 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.





No
investment income incentive fees were earned for the second quarter of 2008. The
investment income incentive fees earned for the second quarter of 2007 were
$88,060.





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. There were no Capital Gains Fees earned for the second quarter of 2008.
An accrual of $966,298 was made for estimated Capital Gains Fees for the second
quarter of 2007.


As a
result of the accounting errors that necessitated the restatement of our
financial statements for the fiscal years ended December 31, 2007 and 2008,
between 2007 and 2009, the Company overpaid the Manager’s management and
incentive fees by approximately $34,600. The Company overpaid the base
management fee to the Manager in 2008 and 2009 by approximately $33,400 as
detailed by quarter below. These errors resulted principally from the incorrect
reporting of Total Assets and Net Assets. In the quarters ended June 30, 2007
and December 31, 2007, the Company underpaid the Manager’s investment income
incentive fee by approximately $4,400 and $9,100, respectively and overpaid the
capital gains fee as of December 31, 2007 by approximately $14,700. The
approximate $34,600 net overpayment to the Manager was settled in the first
quarter of 2010.
 
 Summary
of (Over)/ Under Payment of Management Fee by Quarter
 AverageTotal Assets
                        
                        
                        Change from
                        
                        
                        0.45% Fee
                        
                        
                        FeeAs Reported
                        
                        
                        As Restated
                        
                        
                        Change
                        
                        
                        Prior Quarter
                        
                        
                        Correction
                        
                        
                        Quarter3Q
      2007
                        
                        $
                        413,597,732
                        
                        
                        $
                        413,597,732
                        
                        
                        $
                        -
                        
                        
                        $
                        -
                        
                        
                        $
                        -4Q
      2007
                        
                        
                        478,232,876
                        
                        
                        
                        478,276,626
                        
                        
                        
                        43,750
                        
                        
                        
                        21,875
                        
                        
                        
                        100
                        
                        
                        
                        1Q
      20081Q
      2008
                        
                        
                        446,563,953
                        
                        
                        
                        446,607,703
                        
                        
                        
                        43,750
                        
                        
                        
                        43,750
                        
                        
                        
                        200
                        
                        
                        
                        2Q
      20082Q
      2008
                        
                        
                        539,759,446
                        
                        
                        
                        539,803,196
                        
                        
                        
                        43,750
                        
                        
                        
                        43,750
                        
                        
                        
                        200
                        
                        
                        
                        3Q
      20083Q
      2008
                        
                        
                        505,800,049
                        
                        
                        
                        506,521,583
                        
                        
                        
                        721,534
                        
                        
                        
                        382,642
                        
                        
                        
                        1,700
                        
                        
                        
                        4Q
      20084Q
      2008
                        
                        
                        400,748,657
                        
                        
                        
                        398,994,441
                        
                        
                        
                        (1,754,216
                        )
                        
                        
                        (516,341
                        )
                        
                        
                        (2,300
                        )
                        
                        
                        1Q
      20091Q
      2009
                        
                        
                        353,330,559
                        
                        
                        
                        350,284,110
                        
                        
                        
                        (3,046,449
                        )
                        
                        
                        (2,400,333
                        )
                        
                        
                        (10,800
                        )
                        
                        
                        2Q
      20092Q
      2009
                        
                        
                        333,449,837
                        
                        
                        
                        331,199,409
                        
                        
                        
                        (2,250,428
                        )
                        
                        
                        (2,648,439
                        )
                        
                        
                        (11,900
                        )
                        
                        
                        3Q
      20093Q
      2009
                        
                        
                        295,823,883
                        
                        
                        
                        293,370,642
                        
                        
                        
                        (2,453,241
                        )
                        
                        
                        (2,351,835
                        )
                        
                        
                        (10,600
                        )
                        
                        
                        4Q
      2009$
                        (7,424,931
                        )
                        
                        $
                        (33,400
                        )




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 will devote approximately
$105,000 to the purchase 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, as amended, 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.


20


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
members of the Company’s Board of Directors who are not interested persons. On
November 1, 2007, the Company’s Board of Directors, including all of the
independent directors, approved an extension of the investment advisory
agreement through November 9, 2008.





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.





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
$595,572 in accounts payable as of June 30, 2008, $206,121 was due to the
Administrator for expenses incurred on the Company’s behalf for the month of
June 2008. By comparison, $208,789 was due to the Administrator for expenses
incurred on the Company’s behalf for the month of June 2007.


21


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
November 1, 2007, the Company’s Board of Directors, including all of the
independent directors, approved the continuation of the administration agreement
through November 9, 2008.





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 7:  FederalIncome
Taxes
 
 The
Company intends to qualify for tax purposes as a RIC under Subchapter M of
Chapter 1 of the Internal Revenue Code of 1986, 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 and
2007.  Thus, the Company did not incur any federal income tax
liability for any of these periods.
 
 The
following Company consolidated subsidiaries are subject to federal income taxes
for the period ended June 30, 2008: NGPC Asset Holdings, LP, NGPC Asset Holdings
II, LP, NGPC Asset Holdings III, LP, NGPC Asset Holdings IV, LP and NGPC Asset
Holdings V, LP.  The difference between the effective income tax rate of
(0.71%) and the statutory federal tax rate of 34% for the six months ended June
30, 2008 is primarily attributable to RIC investment company taxable income that
generally will not be subject to federal income tax.  The difference
between the effective income tax rate of (0.61%) and the statutory federal tax
rate of 34% for the three months ended June 30, 2008 is attributable to RIC
investment company taxable income that generally will not be subject to federal
income tax.
  22




Note 8:  Reclassifications




GAAP
requires that certain components of net assets be 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. The table
below summarizes the reclassifications from undistributed net investment income
(loss), undistributed net realized capital gain (loss), and paid-in capital in
excess of par for the year ended December 31, 2007, as restated. These
reclassifications were primarily due to non-deductible meal expenses,
non-deductible excise taxes and income and expenses from a wholly-owned
subsidiary.




Unrelated
to the restatement, the Company has also reclassified certain balance sheet,
statement of operations and statement of cash flows amounts to conform to the
current year presentation.  These reclassifications were primarily
related to the disaggregation of investments in portfolio securities, investment
income, net realized capital gain (loss) on investments and net unrealized gain
(loss) on investments into separate classifications according to level of
control.  See Note 2 for a summary of these reclassified
amounts.




Undistributed
                      
                      
                      Undistributed
                      
                      
                      Paid-in
      CapitalNet
      Investment
                      
                      
                      Net
      Realized
                      
                      
                      in
      ExcessYear
                      
                      Income (Loss)
                      
                      
                      Capital Gain (Loss)
                      
                      
                      of Par2007,
      as restated
                      
                      $
                      120,359
                      
                      
                      $
                      140,390
                      
                      
                      $
                      (260,749
                      )


23


Note 9:  Commitments and Contingencies




As of
June 30, 2008, the Company had investments in or commitments to fund loan
facilities to 18 portfolio companies totaling $358 million, on which $334
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 10:  Fair Value





In
September 2006, FASB issued Statement 157, which establishes a single
authoritative definition of fair value, sets out a framework for measuring fair
value and requires additional disclosures about fair value measurements.
Statement 157 applies to fair value measurements already required or
permitted by existing standards. Statement 157 is effective for financial
statements issued for fiscal years beginning after November 15, 2007 and
interim periods within those fiscal years. The changes to current generally
accepted accounting principles from the application of this Statement relate to
the definition of fair value, the methods used to measure fair value, and the
expanded disclosures about fair value measurements.





As of
January 1, 2008, the Company adopted Statement 157. The Company has
performed an analysis of all existing investments and derivative instruments to
determine the significance and character of all inputs to their fair value
determination. Based on this assessment, the adoption of this standard did not
have a material effect on the Company’s net asset value. However, the adoption
of the standard does require the Company to provide additional disclosures about
the inputs used to develop the measurements and the effect of certain
measurements on changes in net assets for the reportable periods as contained in
the Company’s periodic filings.





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, 2008. 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 and natural gas 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.




24


The
following table presents the Company’s assets measured at fair value on a
recurring basis at June 30, 2008:




Prices
      withQuoted Prices
              
              Observablein
      Active
              
              Market
              
              UnobservableMarkets
              
              Inputs
              
              InputsAssets
      at Fair Value
              
              Total
              
              (Level
      1)
              
              (Level
      2)
              
              (Level
      3)Long term investments
              
              $
              346,896,083
              
              $
              -
              
              $
              -
              
              $
              346,896,083Short term investments
              
              
              177,958,876
              
              
              177,958,876
              
              
              -
              
              
              -Crude oil put options
              
              
              1,103,659
              
              
              -
              
              
              -
              
              
              1,103,659Natural gas put options
              
              
              228,195
              
              
              -
              
              
              -
              
              
              228,195Total assets at fair value
              
              $
              526,186,813
              
              $
              177,958,876
              
              $
              -
              
              $
              348,227,937





The
Company did not have any liabilities that were measured at fair value on a
recurring basis at June 30, 2008.





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, 2007 and at June 30, 2008.




Long
      TermAssets
      at Fair Value Using Unobservable Inputs (Level 3)
              
              InvestmentsBalance
      as of December 31, 2007
              
              $
              272,348,573Transfers
      in (out) of Level 3
              
              
              20,835,500Net
      investment income (loss)
              
              
              589,096Net
      realized gains (losses)
              
              
              -Net
      unrealized gains (losses)
              
              
              (134,823
              )Purchases,
      sales and redemptions
              
              
              54,589,591Balance
      as of June 30, 2008
              
              $
              348,227,937




The
$134,823 of net unrealized losses presented in the table above relates to
investments that are still held at June 30, 2008, and the Company presents these
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 11: Commodity Derivative
Instruments





The
Company acquired a limited term royalty interest from ATP Oil & Gas
Corporation 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. As of
June 4, 2008, the Company has 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.




25




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




For the Six Months EndedJune 30, 2008
              
              June 30, 2007Unrealized
      gains (losses) on commodity derivatives
              
              $
              (214,846
              )
              $
              -Realized
      gains (losses) on commodity derivatives
              
              
              -
              
              
              -Total
      gains (losses) on commodity derivative instruments
              
              $
              (214,846
              )
              $
              -




Below is
a summary of the Company’s commodity derivative instruments as of June 30,
2008.




WeightedAverage StrikeVolumes
              
              Price per
              
              Fair Value atBbls/MMBtu
              
              Bbl/MMBtu
              
              June 30, 2008Oil:Put
      options:Remainder
      of 2008
              
              
              126,000
              
              $
              101.00
              
              $
              549,6102009
              
              
              137,500
              
              $
              98.00
              
              
              527,3802010
              
              
              7,000
              
              $
              85.00
              
              
              26,669Total
      oil
              
              
              270,500
              
              
              
              
              $
              1,103,659Natural
      gas:Put
      options:Remainder
      of 2008
              
              
              373,000
              
              $
              10.00
              
              $
              189,3562009
              
              
              242,000
              
              $
              10.00
              
              
              38,839Total
      natural gas
              
              
              615,000
              
              
              
              
              $
              228,195Total
      oil & natural gas put options
              
              
              
              
              
              
              
              $
              1,331,854





Note 12:  Recent Accounting
Pronouncements





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, will be adopted by the Company on January 1, 2009. The
Company is currently evaluating the effect of adopting SFAS No. 161 on its
financial statements.







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 will be required to apply
Statement 157 to its nonrecurring fair value measurements associated with its
nonfinancial assets and liabilities beginning January 1, 2009. The Company
is currently reviewing the applicability of Statement 157 to our nonrecurring
fair value measurements associated with its nonfinancial assets and liabilities
as well as the potential impact on the Company’s consolidated financial
statements.


26


Note 13:  Subsequent Events





As
previously announced, in connection with Resaca Exploitation, Inc.’s (“Resaca”)
$105.5 million initial public offering of shares of common stock on the
Alternative Investment Market of the London Stock Exchange, the Company
converted its Senior Subordinated Secured Convertible Term Loan into shares of
common stock of Resaca and sold 1.554 million of those shares in the offering
for gross proceeds of $4 million. The Company continues to hold 6.8 million
shares of Resaca common stock or approximately 6.9% of Resaca’s fully diluted
common shares having a gross value of $17.0 million based on the closing price
of Resaca’s common shares on August 4, 2008.





Immediately
following its initial public offering, Resaca repaid its Senior Secured Tranche
B Term Loan in full and repurchased overriding royalty interests held by the
Company. The Company has become Resaca’s sole lender, providing it with a $60
million Senior Secured Multiple-Advance Term Loan. At present, approximately $22
million is outstanding under this facility.





The sale
of the overriding royalty interest resulted in realized long term capital gains
of approximately $2.7 million and the sale of the common stock resulted in short
term capital gains of approximately $3.3 million, which will be recognized in
the third quarter of 2008. Such gains may result in incentive fees payable to
the Manager according to the terms of the investment advisory
agreement.





On July
21, 2008, the Company exchanged its $13.4 million Senior Secured Note and
warrants for preferred membership interests in DeanLake Operator, LLC
(“DeanLake”). In addition, the Company has agreed to make available an
additional $3.6 million to DeanLake to be used for capital expenditures on
DeanLake’s properties.


27


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
our consolidated financial statements and the notes thereto contained elsewhere
in this report.




As
discussed in the Explanatory Note to this Amended Filing, the Company is
amending and restating its Original Filing of its Quarterly Report on Form 10−Q
for the quarter ended June 30, 2008, including comparative prior year
financial results.  For a discussion of the significant restatement
adjustments and the background leading to the adjustments, see Note 2,
Restatement of Consolidated Financial Statements, in Notes to Consolidated
Financial Statements.  All amounts in this Amended Filing affected by
the restatement adjustments reflect such amounts as restated.




Forward-Looking
Statements




The safe
harbor for forward-looking statements under the Private Securities Litigation
Reform Act of 1995 does not apply to business development companies and
statements made in this report. Nonetheless, certain statements in this report
that relate to estimates or expectations of our future performance or financial
condition may be forward-looking. These forward-looking statements are not
historical facts, but rather are based on current expectations, estimates and
projections in our industry, our beliefs and our assumptions. These statements
are not guarantees of future performance and 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;


·
            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 external manager, NGP Investment Advisor, LP, which we
      refer to as our Manager, to locate suitable investments for us and to
      monitor and administer the investments;
and


·
            other
      factors enumerated in our filings with the Securities and Exchange
      Commission, or the SEC.





We may
use words such as “anticipates,” “believes,” “estimates,” “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. Although we believe that the
assumptions on which these forward-looking statements are based are reasonable,
any of those assumptions could prove to be inaccurate, and as a result, the
forward-looking statements based on those assumptions also could be inaccurate.
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, which until July 21, 2008, we
generally defined as companies that have net asset values or annual revenues of
less than $500 million and are not issuers of publicly traded securities. On
July 21, 2008, the Securities and Exchange Commission expanded the definition of
eligible portfolio companies to include domestic operating companies with
securities listed on a national securities exchange so long as the company has a
market capitalization of less than $250 million. We have elected to be regulated
as a business development company, or a BDC, under the Investment Company Act of
1940, as amended, or 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,” which are securities of
private or thinly traded public 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 regulated investment company, or RIC, under the Internal Revenue
Code of 1986, as amended, or 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.





Our
investment objective is to generate both current income and capital appreciation
primarily through debt and equity investments with certain equity components. A
key focus area for our targeted investments in the energy industry is domestic
exploration and production businesses and midstream businesses that gather,
process and transport oil and natural gas. We also evaluate investment
opportunities in such businesses as coal, power, electricity, energy services
and alternative energy. Our investments will 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 with equity components. We may also invest in preferred
stock and other equity securities on a stand-alone basis.


28


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 environment and the competitive environment for the types of
investments we make. We believe that, for energy companies, the availability of
debt capital from banks, mezzanine providers and alternative investment vehicles
such as hedge funds has remained strong over the last 12 months and has
continued to put downward pressure on spreads. However, we do not expect this
availability of capital to impair our ability to make attractive long-term
investment decisions with our capital.  We remain committed to our
underwriting and investment disciplines in selectively investing in appropriate
risk-reward opportunities within the energy sector.




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.





Portfolio and Investment
Activity




During
the quarter ended June 30, 2008, we added three new companies to our portfolio.
On April 30, 2008, we closed a $30 million Senior Secured Credit Facility (the
“Facility”) with Greenleaf Investments, LLC, a private company based in
Victoria, Texas (“Greenleaf”). We acted as agent and sole lender for the
Facility. Initial availability under the Facility is $12.5 million with
approximately $10.5 million funded at closing. The Facility is secured by first
liens on substantially all of Greenleaf’s assets. As partial consideration for
providing the Facility, we received an overriding royalty interest in
Greenleaf’s properties. Proceeds from the Facility will be used by Greenleaf to
acquire certain properties in Victoria County, Texas, to develop additional oil
and gas properties and to fund capital expenditures. Greenleaf is an oil and gas
producer with interests in production located along the Texas Gulf
Coast.





Also on
April 30, 2008, we made a follow-on investment in Tammany Oil & Gas, LLC, an
existing portfolio company. Availability under this facility was increased from
$30.0 million to $34.0 million. We funded an additional $6.2 million, which was
used to acquire certain producing properties in the federal waters of the Gulf
of Mexico. Following the investment and as of June 30, 2008, there was
approximately $29.5 million outstanding under this facility.





In June
2008, we acquired a limited term royalty interest from ATP Oil & Gas
Corporation in certain oil and gas producing properties in offshore Gulf of
Mexico for approximately $32.8 million. The royalty interest will continue until
we have received 292 MBbl of crude oil and 648,000 MMBtu of natural gas. In
conjunction with this investment, we purchased a series of oil and gas put
options from BP Corporation North America Inc. to hedge against downside price
movements while preserving upside potential.





Following
these transactions, as of June 30, 2008, our investment portfolio consisted of
18 portfolio companies invested as follows: 34.9% in senior secured term loans,
5.9% in senior subordinated secured notes, 0.3% in participating convertible
preferred stock, 1.6% in corporate notes, 5.5% in member and partnership units,
10.3% in net profits interests, 6.1% in limited term royalty interests, and 0.2%
in other investments. The balance of our investment portfolio (as a percentage
of the whole portfolio) was comprised 33.1% of U.S. Treasury Bills and 2.1% of
cash and cash equivalents.





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 and no income was received from it during the quarter
ended June 30, 2008. Additionally, these yields do not include income from our
four investments on non-accrual status. See additional discussion in Portfolio
Credit Quality below.


29


By
comparison, at June 30, 2007, the weighted average yield on targeted portfolio
investments, exclusive of capital gains, was 12.2%. The weighted average yield
of our corporate notes was 5.5%. The weighted average yield of our U.S. Treasury
Bills and cash equivalents was 4.8%. The weighted average yield on our total
capital invested at June 30, 2007 was 9.4%.





Yields
are computed 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.





Critical Accounting
Policies




The
preparation of financial statements and related disclosures in conformity with
generally accepted accounting principles in the United States requires
management to make estimates and assumptions that affect the reported amounts of
assets and liabilities, disclosure of contingent assets and liabilities at the
date of the financial statements, and income and expenses during the periods
reported. Actual results could materially differ from those estimates. We have
identified the following as critical accounting policies.




Basis of
Presentation




The
accompanying consolidated financial statements have been prepared on the accrual
basis of accounting in conformity with accounting principles generally accepted
in the United States, and include the accounts of the company and its wholly
owned subsidiaries. The consolidated financial statements reflect all
adjustments and reclassifications which, in the opinion of management, are
necessary for the fair presentation of the results of the operations and
financial condition for the periods presented. All significant intercompany
balances and transactions have been eliminated.




Cash and Cash
Equivalents




Cash and
cash equivalents include short-term, liquid investments in a money market fund.
Cash and cash equivalents are carried at cost which approximates fair value.




Prepaid
Assets




Prepaid
assets may consist of premiums paid for directors’ and officers’ insurance and
fidelity bonds with policy terms of one year, fees associated with the
establishment of the credit facility, and registration expenses related to our
shelf filing. Such premiums and fees are amortized monthly on a straight line
basis over the term of the policy or credit facility. Registration expenses, if
any, are deferred and will be charged as a reduction of capital upon the sale of
shares.




Concentration of Credit
Risk




We place
our cash and cash equivalents with financial institutions and, at times, cash
held in checking accounts may exceed the Federal Deposit Insurance Corporation
insured limit.




Valuation of
Investments




Investments
are carried at fair value, as determined in good faith by our Board of
Directors. On a quarterly basis, the investment team of our Manager prepares
valuations for all of the assets in our portfolio and presents the valuations to
our valuation committee and Board of Directors. The valuations are determined
and recommended by the valuation committee to our Board of Directors, which
reviews and ratifies the final portfolio valuations.




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




30


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
a portfolio company’s assets, such as engineering reserve reports of oil and
natural gas properties. Our 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
our Manager considers some or all of the above valuation methods to determine
the estimated enterprise value of a portfolio company.




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




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




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




Due to
the uncertainty inherent in the valuation process, such estimates of fair value
may differ significantly from the values that would have been used had a ready
market for the securities existed, and the differences could be material.
Additionally, changes in the market environment and other events that may occur
over the life of the investments may cause the gains or losses ultimately
realized on these investments to be different from the valuations currently
assigned.




In
September 2006, the FASB issued Statement 157 which establishes a single
authoritative definition of fair value, sets out a framework for measuring fair
value and requires additional disclosures about fair value measurements.
Statement 157 applies to fair value measurements already required or
permitted by existing standards. Statement 157 is effective for financial
statements issued for fiscal years beginning after November 15, 2007 and
interim periods within those fiscal years. The changes to current generally
accepted accounting principles from the application of Statement 157 relate to
the definition of fair value, the methods used to measure fair value and the
expanded disclosures about fair value measurements.





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





Valuation of Commodity Derivative
Instruments





Current
accounting rules require that all derivative instruments, other than those that
meet specific exclusions, be recorded at fair value. Quoted market prices are
the best evidence of fair value. If quotations are not available, management’s
best estimate of fair value is based on the quoted market price of derivatives
with similar characteristics or on valuation techniques. Our 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 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.


31


Securities Transactions, Interest
and Dividend Income Recognition




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




Payment-in-Kind
Interest




We may
have investments in our portfolio that contain payment-in-kind, or 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, we base income accruals on the principal balance
including any PIK. If the portfolio company’s asset valuation is not sufficient
to cover the contractual interest, we will not accrue interest or dividend
income on the investment. To maintain our RIC status, this non-cash source of
income must be paid out to stockholders in the form of dividends, even though we
have not yet collected the cash.




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 time period the commitment is outstanding. Prepayment and
loan administration fees are recognized as they are received.




Net Realized Gains or Losses and Net
Change in Unrealized Appreciation or Depreciation




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




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


32


Dividends




Dividends
to stockholders are recorded on the ex-dividend date. We currently intend that
our distributions each year will be sufficient to maintain our status as a RIC
for federal income tax purposes and to eliminate our liability for federal
excise taxes. We intend to make distributions to stockholders on a quarterly
basis of substantially all net taxable income. We also intend to make
distributions of net realized capital gains, if any, at least annually. However,
we may in the future decide to retain capital gains for investment and designate
such retained dividends as a deemed distribution. The amount to be paid out as a
dividend is determined by our Board of Directors each quarter and is based on
the annual taxable earnings estimated by our Manager. Based on that estimate, a
dividend is declared each quarter and paid shortly thereafter.




Results of
Operations




Investment
Income




Investment
income for the quarter ended June 30, 2008 was $8.2 million with $7.5 million
attributable to targeted investments in 18 portfolio companies, $0.2 million
from corporate notes, $0.5 million attributable to investments in cash
equivalents and less than $0.1 million in fee income from third parties and
affiliates. This compares to investment income for the quarter ended June 30,
2007 of $9.7 million with $7.7 million attributable to targeted investments in
nineteen portfolio companies, $0.3 million from corporate notes, $1.6 million
attributable to investments in cash equivalents and $0.1 million in fee income
from third parties and affiliates.





For the
six months ended June 30, 2008, investment income decreased by $0.5 million, or
2.7%, to $17.7 million from $18.2 million for the same period in 2007. For the
six months ended June 30, 2008, we recorded $15.7 million attributable to
targeted investments in portfolio companies, $0.3 million from corporate notes,
$1.6 million attributable to investments in cash equivalents, and $0.1 million
in fee income from third parties and affiliates. This compares to investment
income of $14.4 million attributable to targeted investments in portfolio
companies, $0.5 million from corporate notes, $3.1 million attributable to
investments in cash equivalents, and $0.2 million in fee income from third
parties and affiliates, for the same period in 2007.





While our
total targeted portfolio balance increased by approximately $113 million from
June 30, 2007 to June 30, 2008, the balance of non-accruing and non-income
producing investments increased from approximately $26 million to approximately
$72 million during the same period. Also, a $32.8 million investment purchased
in June 2008 is not expected to accrue income until July 2008. Although LIBOR
rates dropped significantly from the second quarter of 2007 compared to the
second quarter of 2008, this had a minimal effect on our targeted investment
income because of LIBOR floors established for new clients and certain other
existing clients during 2008. Conversely, significantly lower U.S. Treasury Bill
rates during 2008 reduced interest from cash and cash equivalents. Also, the
second quarter of 2007 included $1.4 million in non-recurring income premiums
from client repayments.





Operating
Expenses




For the
quarter ended June 30, 2008, operating expenses were $4.4 million compared to
$5.2 million for the quarter ended June 30, 2007. The 2008 amount consisted of
investment advisory and management fees of $1.8 million, insurance expenses,
administrative services fees, professional fees, directors’ fees and other
general and administrative expenses of $1.2 million and credit facility interest
and fees of $1.4 million. This compares to investment advisory and management
and incentive fees of $2.6 million, insurance expenses, administrative services
fees, professional fees, directors’ fees and other general and administrative
expenses of $1.0 million and credit facility interest and fees of $1.6 million
for the quarter ended June 30, 2007. Approximately $1.0 million of incentive
fees were accrued in the second quarter of 2007.





For the
six months ended June 30, 2008, operating expenses were $9.8 million compared to
$9.3 million for the same period of 2007. The 2008 amount consisted of
investment advisory and management and incentive 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. This compares to
investment advisory and management fees or $4.2 million, insurance expenses,
administrative services fees, professional fees, directors’ fees, organization
costs and other general and administrative expenses of $1.9 million and credit
facility interest and fees of $3.2 million for the six months ended June 30,
2007.





Operating
expenses for the three and six month periods include our allocable portion of
the total organizational and operating expenses incurred by us, our Manager, and
NGP Administration, LLC, which we refer to as our Administrator, as determined
by our Board of Directors and representatives of our Manager and our
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.


33


Net Investment
Income Before Income
Taxes




For the
quarter ended June 30, 2008, net investment income before income taxes was $3.8
million compared to $4.5 million for the quarter ended June 30, 2007, primarily
due to decreased interest income caused by the overall decrease in variable
interest rates and the increase in portfolio loans in a non-accrual status
partially offset by lower incentive fees and interest expenses.





Net
investment income for the six months ended June 30, 2008 was $7.9 million
compared to $8.9 million for six months ended June 30, 2007 primarily due to
decreased interest income caused by the overall decrease in variable interest
rates, the increase in portfolio loans in a non-accrual status, and higher
management fees and interest expenses.





Unrealized Appreciation or
Depreciation on Investments




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. This
compares to an increase of $2.3 million net unrealized appreciation before
income taxes of $1.4 million for the quarter ended June 30, 2007, as restated,
consisting of a $2.7 million increase in targeted portfolio fair value and a
$0.4 million decrease in the fair value of corporate notes.





For the
six months ended June 30, 2008, the increase in net unrealized depreciation was
$0.1 million, comprised of an increase in targeted portfolio fair value of $0.2
million, a $0.1 million decrease in the fair value of corporate notes and a $0.2
million decrease in the fair value of commodity derivative instruments. This
compares to an increase of $6.0 million net unrealized appreciation before taxes
of $2.1 million for the six months ended June 30, 2007, as restated, consisting
of a $6.2 million increase in portfolio fair value and a $0.2 million decrease
in the fair value of corporate notes.





Net Realized
Gains





There
were no realized capital gains or losses for the quarter ended June 30, 2008.
For the quarter ended June 30, 2007, as restated, we realized a capital gain of
$6.7 million before income taxes of $0.2 million, from the sale of portfolio
company warrants and overriding royalty interests.





Net Increase in Stockholders’ Equity
from Operations





For the
quarter ended June 30, 2008, as restated, we had a net increase in stockholders’
equity (net assets) resulting from operations of $5.4 million, or $0.28 per
share, compared to $11.9 million, or $0.70 per share for the quarter ended June
30, 2007, as restated. The $6.5 million, or $0.42 per share difference is
largely attributable to the $6.7 million net realized capital gain on portfolio
securities recorded during the second quarter of 2007.





For the
six months ended June 30, 2008, as restated, the net increase in stockholders’
equity (net assets) resulting from operations was $7.8 million, or $0.39 per
share, compared to $19.3 million, or $1.12 per share for the six months ended
June 30, 2007, as restated.




Financial Condition, Liquidity and
Capital Resources




During
the quarter ended June 30, 2008, we generated cash from operations, including
interest earned on our portfolio securities, as well as our investments in
corporate notes, U.S. government securities and other high quality debt
securities that mature in one year or less. At June 30, 2008, we had cash and
cash equivalents of $11.1 million, investments in U.S. Treasury Bills of $178.0
million and investments in corporate notes of $8.8 million.  As of
June 30, 2008, we had investments in or commitments to fund loan facilities to
18 portfolio companies totaling $358 million, of which $334 million was drawn.
We expect to fund our investments in 2008 from income earned on our portfolio
and temporary investments, repayments or realizations of existing investments
and from borrowings under our Credit Facilities. (See description under “Note 4:
Credit Facility” in the accompanying notes to consolidated financial
statements.) 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. 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.


34


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 Oil & Gas Corporation 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 prices. See “Note 11: 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, 2008 is as
follows:


Less than
              
              
              
              
              
              More thanContractual
      Obligations
              
              Total
              
              1
      Year
              
              1-3
      Years
              
              3-5
      Years
              
              5
      YearsJune
      30, 2008:Long-term
      debt obligations — revolving credit facilities (1)
              
              $
              224,250,000
              
              $
              -
              
              $
              224,250,000
              
              $
              -
              
              $
              -Total
              
              $
              224,250,000
              
              $
              -
              
              $
              224,250,000
              
              $
              -
              
              $
              -


(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.




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




We
maintain a system to evaluate the credit quality of our investments. While
incorporating quantitative analysis, this system is a qualitative
assessment.  This system is intended to reflect the overall performance of
a portfolio company’s business, the collateral coverage of an investment and
other relevant factors. Based on this system, the overall credit quality of our
targeted investment portfolio remained satisfactory in the quarter ended June
30, 2008.  Of the 23 rated investments as of June 30, 2008, 1 investment
declined in rating, 6 investments improved in rating, 13 retained the same
rating, and 3 new investments were previously unrated, when compared to the 20
rated investments as of March 31, 2008. Investments approximating $74 million,
or 22% of the $331.6 million cost basis of targeted investments, are carried on
our watch list due to slower than expected development of the assets supporting
the investments or deterioration in asset coverage. During the quarter ended
June 30, 2008, we did not record any additional unrealized depreciation on the
fair value of targeted investments to reflect any potential for loss of capital
inherent in those investments. Our investment in Formidable, LLC was placed on
non-accrual status effective April 1, 2008. Two portfolio companies, BSR Loco
Bayou, LLC and DeanLake Operator, LLC, were issued written notices of default.


35


Recently Issued Accounting
Pronouncements




See
Note 12: 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, 2007 other than the
addition of the market risk described below:





Commodity Price
Risk





We
acquired a limited term royalty interest from ATP Oil & Gas Corporation on a
transaction dated June 4, 2008. We will receive royalty payments from this
investment which will be impacted by fluctuations in the price of crude oil and
natural gas. We have purchased put options to protect a portion of our royalty
payments from declines in prices. These instruments ensure that a minimum level
of royalty payments is established in the event prices decline below the minimum
price set by the put option. At June 30, 2008, our open commodity
derivative instruments were in a net asset position with a fair value of
approximately $1.3 million.





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 us 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 us to credit risk arising from the potential
inability of counterparties to perform under the terms of the
contracts.





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 Securities Exchange Act of 1934, as amended, which we refer to
as 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.
 
 In
connection with the preparation of this Quarterly Report on Form 10-Q/A, as of
the end of the fiscal period covered by this Quarterly Report on Form 10-Q/A
(June 30, 2008), the Company performed an evaluation, under the supervision and
with the participation of the Company’s management, including our Chief
Executive Officer and our Chief Financial Officer, of the effectiveness of the
design and operation of the Company’s disclosure controls and procedures
pursuant to Rules 13a-15(b) and 15d-15(b) under the Exchange Act.
 
 After
giving effect to the restatement referred to below and based on an evaluation of
our disclosure controls and procedures as of the end of the period covered by
this Form 10-Q/A 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 ineffective in providing reasonable assurance that
information required to be disclosed in the reports we file or submit under the
Exchange Act is recorded, processed, summarized and reported when required and
that such information is accumulated and communicated to management in a manner
that allows timely decisions regarding required disclosure.  In light
of this material weakness, the Company performed additional analysis and
post-closing procedures to ensure the Company’s financial statements were
prepared in accordance with generally accepted accounting
principles.  After giving effect to the restatements referred to
below, and subject to the statements below regarding our inability to maintain
effective controls over the determination and reporting of the provision for
income taxes, the Company’s management has concluded that the financial
statements included in this Form 10-Q/A present fairly in all material respects
the Company’s financial condition, results of operations and cash flows for the
periods presented.
 
 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 Form 10-Q/A. 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.
 
 Discussion
of Material Weakness
 
 Management’s
assessment identified a material weakness in the Company’s internal control over
financial reporting.  As of June 30, 2008, the Company did not
maintain effective controls over the determination and reporting of the
provision for income taxes. This material weakness was initially disclosed in
Item 9A of our Annual Report on Form 10-K for the year ended December 31, 2008.
As of December 31, 2009, our management concluded that we had not yet remediated
this previously disclosed material weakness in our internal control over
financial reporting. Specifically, management did not perform a sufficiently
precise review of the 2007, 2008 and 2009 financial statements 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 the restatement of the Company’s consolidated financial statements
for the years ended December 31, 2007 and 2008 (and the unaudited selected
quarterly data for each of the quarters in 2007 and 2008 and the first three
quarters in 2009), and results in a reasonable possibility that a material
misstatement of the Company’s annual or interim financial statements would not
be prevented or detected on a timely basis.
 
 Remediation
Efforts
 
 The
remediation efforts, as outlined below, are designed to address the material
weakness identified by management and to strengthen the Company’s internal
control over financial reporting.
 
 Beginning
in the first quarter of 2009, 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;
 ·
              engaged
      external tax experts to support the Company’s financial closing and
      reporting process; and
 ·
              enhanced
      quarterly management review of the calculation of the deferred income tax
      assets and liabilities and underlying supporting
  data.
 
 We
believe that these remediation actions will represent ongoing improvement
measures. While we have taken steps to remediate the material weakness,
additional measures may be required. The Company anticipates that it will
complete its testing of the additional internal control processes designed to
remediate the previously disclosed material weakness in 2010.  We will
continue to assess the effectiveness of our remediation efforts in connection
with our management’s tests of internal control over financial reporting in
conjunction with our annual and quarterly reports.
 
 Changes
in Internal Control Over Financial Reporting
 
 There
were no changes in internal control over financial reporting during the quarter
ended June 30, 2008 that have materially affected or are reasonably likely to
materially affect, the Company’s internal control over financial
reporting.




36




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.
 
 Except as
provided below, 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, 2007.
 
 Additional
Risk Factors
 
 We
reported a material weakness in our internal control over financial reporting,
which resulted in material misstatements in our financial statements for the
years ended December 31, 2007 and December 31, 2008 and each of the quarters in
2007 and 2008 and the first three quarters of 2009  that required us
to restate certain of our historical financial statements. If we fail to improve
our internal control over financial reporting, we may not be able to accurately
report our financial results, which could have a material adverse effect on our
operations, investor confidence in our reported financial information and the
trading price of our securities.
 
 Our Board
of Directors, and the members of our Audit Committee, upon management’s
recommendation, determined to restate certain of our historical financial
statements, including the financial statements for the period of this report.
Our management concluded that the accounting errors that necessitated the
restatement resulted from a control deficiency in our internal control over
financial reporting constituting a material weakness. Specifically, our
management concluded that we did not maintain effective controls over the
determination and provision for income taxes. See Note 2, Restatement of
Consolidated Financial Statements in “Part I – Item 1. Consolidated Financial
Statements” and “Part I – Item 4. Controls and Procedures.”
 
 Management’s
assessment of our internal control over financial reporting as of December 31,
2008 identified a material weakness in our internal control over financial
reporting. As described in “Part I – Item 4. Controls and Procedures,” while the
Company has taken steps to remediate the previously disclosed material weakness,
the material weakness existed throughout the quarterly periods of 2009, and at
December 31, 2009, the Company had not yet completed its assessment as to
whether the material weakness had been fully remediated. The Company anticipates
that it will complete its testing of the additional internal control processes
designed to remediate the previously disclosed material weakness in 2010. Until
it is fully remediated, this material weakness could lead to errors in our
reported financial results and could have a material adverse effect on our
operations, investor confidence in our reported financial information and the
trading price of our securities.
 
 Further,
we cannot assure you that additional significant deficiencies or material
weaknesses in our internal control over financial reporting will not be
identified in the future. Any failure to maintain or implement required new or
improved controls, or any difficulties we encounter in their implementation,
could result in additional significant deficiencies or material weaknesses, and
cause us to fail to meet our periodic reporting obligations or result in
material misstatements in our financial statements. Any such failure could also
adversely affect the results of periodic management evaluations and annual
auditor attestation reports regarding the effectiveness of our internal control
over financial reporting required under Section 404 of the Sarbanes-Oxley Act of
2002 and the rules promulgated thereunder. The existence of a material weakness
could result in errors in our financial statements that could result in a
restatement of financial statements, cause us to fail to meet our reporting
obligations and cause investors to lose confidence in our reported financial
information, leading to a decline in our stock price.
 37




We may be subject to the risks
associated with the ethanol industry.




The
ethanol industry is subject to many risks which may adversely affect the market
price of ethanol. For example, overcapacity in the ethanol industry may result
in a decrease in the market price of ethanol if the demand for ethanol does not
grow at the same pace as increases in supply. In addition, the ethanol industry
is highly competitive, and other companies presently in the market, or that are
about to enter the market, could adversely affect the market price of ethanol.
Moreover, because corn is the principal raw material used to produce ethanol,
ethanol companies in general are directly affected by the cost and supply of
corn. Changes in the price and supply of corn are subject to and determined by
market forces over which we have no or little control, including overall supply
and demand, government programs and policies, weather, and other factors.
Furthermore, because growth and demand for ethanol may be driven primarily by
federal and state government policies, a change in government policies favorable
to ethanol may cause demand for ethanol to decline. These favorable government
policies include the national renewable fuels standard, and various federal
ethanol tax incentives that assist the ethanol industry. The continuation of
these policies is uncertain, which means that demand for ethanol may decline if
these policies change or are discontinued. A decline in the demand of ethanol is
likely to cause lower ethanol prices. In addition, tariffs on imported ethanol,
which currently effectively limit imported ethanol into the United States, could
be reduced or eliminated, which may in turn negatively affect the demand for
domestic ethanol and the price at which domestic ethanol is sold.




Revised Risk
Factors




We may be exposed to risks associated
with changes in interest rates.




General
interest rate fluctuations may have a negative impact on our investments and
investment opportunities and, accordingly, may have a material adverse effect on
investment objectives and our rate of return on invested capital. Because we may
borrow money to make investments, our net investment income is dependent upon
the difference between the rate at which we borrow funds and the rate at which
we invest these funds. As a result, there can be no assurance that a significant
change in market interest rates will not have a material adverse effect on our
net investment income. As of June 30, 2008, approximately 17% of the investments
at fair value in our portfolio were at fixed rates, while approximately 83% were
at variable rates. Trading prices for debt that pays a fixed rate of return tend
to fall as interest rates rise. Trading prices tend to fluctuate more for
fixed-rate securities that have longer maturities. Although we have no policy
governing the maturities of our investments, under current market conditions we
expect that we will invest in a portfolio of debt generally having maturities of
three to seven years, but may have longer maturities. This means that, to the
extent we fund longer term fixed rate investments with shorter term floating
rate borrowings, we will be subject to greater risk (other things being equal)
than a fund invested solely in shorter term securities. A decline in the prices
of the debt we own could adversely affect the trading price of our
shares.




If we issue senior securities, such
as debt or preferred stock, we will be exposed to additional risks.




We may
issue debt securities or preferred stock, and/or borrow money from banks or
other financial institutions, which we refer to collectively as senior
securities, up to the maximum amount permitted by the 1940 Act. We may issue
senior securities to make new or follow-on investments, to maintain our RIC
status or to pay contingencies and expenses. We are permitted under the 1940 Act
to issue senior securities if, immediately after the borrowing or issuance, we
will have an asset coverage of at least 200%. That is, we may borrow funds in an
amount up to 50% of the value of our assets (including investments made with
borrowed funds). As of June 30, 2008, our asset coverage for senior securities
was 241%.




The
amount and nature of any borrowings will depend on a number of factors over
which we have no control, including general economic conditions and conditions
in the financial markets. We may also need to borrow funds to make qualifying
investments to maintain our RIC status. Therefore, we may need to raise
additional capital, which we may elect to finance in part through a credit
facility. We may not be able to obtain a credit facility on terms that we find
acceptable, if at all. The unavailability of funds from commercial banks or
other sources on favorable terms could inhibit the growth of our business and
have a material adverse effect on our performance.




38


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.




(a)
            Our
      annual meeting of stockholders was held on Wednesday, May 14,
      2008.





(b)
            Proxies
      were solicited by our Board of Directors pursuant to Regulation 14A under
      the Securities and Exchange Act of 1934. There was no solicitation in
      opposition to the Board of Directors’ nominee for director as listed in
      the proxy statement, and such nominee was duly elected as reported
      below.





(c)
            Out
      of a total of 17,500,332 shares of our common stock outstanding and
      entitled to vote, 15,500,158 shares were present in person or by proxy,
      representing approximately 89% of the outstanding
  shares.





Our Board
of Directors is divided into three classes, which we refer to as Class I, Class
II and Class III directors. The only matter voted on by the stockholders at the
2008 annual meeting, as fully described in the proxy statement for the annual
meeting, was the election of one Class I director. The following table presents
the number of shares voted for and withheld for each nominee for
director.





Nominees For
            
            Number Of
            
            Number OfDirector
            
            Votes For
            
            Votes WithheldEdward W. Blessing
            
            
            14,941,945
            
            
            558,213




The terms
of the Class II directors, Mr. David R. Albin and Mr. Lon C. Kile, expire at our
2009 annual meeting of stockholders, and the terms of the Class III directors,
Mr. Kenneth A. Hersh and Mr. James R. Latimer, III, expire at our 2010 annual
meeting of stockholders.





Item 5.  Other Information.




Not
applicable.


39


Item 6.  Exhibits




No.
                
                Exhibit3.1
                -
                Articles
      of Incorporation of NGP Capital Resources Company dated as of July 15,
      2004 (filed as Exhibit (a)(1) to the Company’s Registration Statement on
      Form N-2 dated November 9, 2004 (Registration No. 333-118279) and
      incorporated herein by reference)3.2
                -
                Articles
      of Amendment and Restatement of NGP Capital Resources Company dated as of
      October 29, 2004 (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)3.3
                -
                Bylaws
      of NGP Capital Resources Company (filed as Exhibit (b) to the Company’s
      Registration Statement on Form N-2 dated August 16, 2004 (Registration No.
      333-118279) and incorporated herein by reference)10.1
                -
                Investment
      Advisory Agreement dated as of November 9, 2004, between NGP Capital
      Resources 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 dated as of November 9, 2004, by and between NGP Capital
      Resources 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 dated as of November 9, 2004, by and between NGP Capital
      Resources 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
                -
                Amended
      and Restated Joint Code of Ethics (filed
      as Exhibit 10.4 to the Company’s Quarterly Report on Form 10-Q for the
      quarterly period ended June 30, 2008, and incorporated herein by
      reference)10.5
                -
                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)10.6
                -
                Amended
      and Restated Revolving Credit Agreement dated as of August 31, 2006, by
      and between NGP Capital Resources Company, the lenders from time to time
      party thereto and SunTrust Bank (filed as Exhibit 10.6 to the Company’s
      Quarterly Report on Form 10-Q for the quarterly period ended September 30,
      2006, and incorporated herein by reference)10.7
                -
                First
      Amendment to Amended and Restated Revolving Credit Agreement effective as
      of August 31, 2006, by and between NGP Capital Resources 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
      quarterly period ended September 30, 2006, and incorporated herein by
      reference)10.8
                -
                Treasury
      Secured Revolving Credit Agreement dated as of August 31, 2006, by and
      between NGP Capital Resources 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 quarterly period ended September 30,
      2006, and incorporated herein by reference)10.9
                -
                First
      Amendment to Treasury Secured Revolving Credit Agreement effective as of
      August 31, 2006, by and between NGP Capital Resources 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 quarterly period
      ended September 30, 2006, and incorporated herein by
      reference)10.10
                -
                Second
      Amendment to Treasury Secured Revolving Credit Agreement effective as of
      September 28, 2007, by and between NGP Capital Resources 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)10.11
                -
                Second
      Amendment to Amended and Restated Revolving Credit Agreement effective as
      of March 13, 2008, by and between NGP Capital Resources 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
      quarterly period ended March 31, 2008, and incorporated herein by
      reference)10.12
                -
                Third
      Amendment to Treasury Secured Revolving Credit Agreement effective as of
      March 13, 2008, by and between NGP Capital Resources 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
      quarterly period ended March 31, 2008, and incorporated herein by
      reference)
  40
  31.1*
                -
                Certification
      required by Rule 13a-14(a)/15d-14(a) by the Chief Executive
      Officer31.2*
                -
                Certification
      required by Rule 13a-14(a)/15d-14(a) by the Chief Financial
      Officer32.1*
                -
                Section
      1350 Certification by the Chief Executive Officer32.2*
                -
                Section
      1350 Certification by the Chief Financial
  Officer




*   Filed
herewith.


41


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 COMPANYDate: June
      24, 2010
                    
                    By:
                    /s/
      John H. HomierJohn
      H. HomierPresident
      and Chief Executive OfficerDate: June
      24, 2010
                    
                    By:
                    /s/
      Stephen K. GardnerStephen
      K. GardnerChief Financial Officer, Treasurer and
      Secretary










Index to Exhibits




No.
              
              Exhibit3.1
              -
              Articles
      of Incorporation of NGP Capital Resources Company dated as of July 15,
      2004 (filed as Exhibit (a)(1) to the Company’s Registration Statement on
      Form N-2 dated November 9, 2004 (Registration No. 333-118279) and
      incorporated herein by reference)3.2
              -
              Articles
      of Amendment and Restatement of NGP Capital Resources Company dated as of
      October 29, 2004 (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)3.3
              -
              Bylaws
      of NGP Capital Resources Company (filed as Exhibit (b) to the Company’s
      Registration Statement on Form N-2 dated August 16, 2004 (Registration No.
      333-118279) and incorporated herein by reference)10.1
              -
              Investment
      Advisory Agreement dated as of November 9, 2004, between NGP Capital
      Resources 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 dated as of November 9, 2004, by and between NGP Capital
      Resources 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 dated as of November 9, 2004, by and between NGP Capital
      Resources 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
              -
              Amended
      and Restated Joint Code of Ethics (filed
      as Exhibit 10.4 to the Company’s Quarterly Report on Form 10-Q for the
      quarterly period ended June 30, 2008, and incorporated by
      reference)10.5
              -
              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)10.6
              -
              Amended
      and Restated Revolving Credit Agreement dated as of August 31, 2006, by
      and between NGP Capital Resources Company, the lenders from time to time
      party thereto and SunTrust Bank (filed as Exhibit 10.6 to the Company’s
      Quarterly Report on Form 10-Q for the quarterly period ended September 30,
      2006, and incorporated herein by reference)10.7
              -
              First
      Amendment to Amended and Restated Revolving Credit Agreement effective as
      of August 31, 2006, by and between NGP Capital Resources 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
      quarterly period ended September 30, 2006, and incorporated herein by
      reference)10.8
              -
              Treasury
      Secured Revolving Credit Agreement dated as of August 31, 2006, by and
      between NGP Capital Resources 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 quarterly period ended September 30,
      2006, and incorporated herein by reference)10.9
              -
              First
      Amendment to Treasury Secured Revolving Credit Agreement effective as of
      August 31, 2006, by and between NGP Capital Resources 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 quarterly period
      ended September 30, 2006, and incorporated herein by
      reference)10.10
              -
              Second
      Amendment to Treasury Secured Revolving Credit Agreement effective as of
      September 28, 2007, by and between NGP Capital Resources 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)10.11
              -
              Second
      Amendment to Amended and Restated Revolving Credit Agreement effective as
      of March 13, 2008, by and between NGP Capital Resources 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
      quarterly period ended March 31, 2008, and incorporated by
      reference)10.12
              -
              Third
      Amendment to Treasury Secured Revolving Credit Agreement effective as of
      March 13, 2008, by and between NGP Capital Resources 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
      quarterly period ended March 31, 2008, and incorporated by
      reference)








31.1*
            -
            Certification
      required by Rule 13a-14(a)/15d-14(a) by the Chief Executive
      Officer31.2*
            -
            Certification
      required by Rule 13a-14(a)/15d-14(a) by the Chief Financial
      Officer32.1*
            -
            Section
      1350 Certification by the Chief Executive Officer32.2*
            -
            Section
      1350 Certification by the Chief Financial Officer





*  Filed
herewith