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
      March 31, 2007
  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
      number)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  ̈




Indicate
by check mark whether the registrant is a large accelerated filer, an
accelerated filer, or a non-accelerated filer. See definition of “accelerated
filer and large accelerated filer” in Rule 12b-2 of the Exchange
Act. (Check one):




Large accelerated filer  ̈
            Accelerated
      filerx
            Non-accelerated filer  ̈




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





As of May
7, 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
                24Item
      3. Quantitative and Qualitative Disclosures About Market
      Risk
                27Item
      4. Controls and Procedures
                27PART
      II – OTHER INFORMATION
                29Item
      1. Legal Proceedings
                29Item
      1A. Risk Factors
                29Item
      2. Unregistered Sales of Equity Securities and Use of
    Proceeds
                29Item
      3. Defaults Upon Senior Securities
                29Item
      4. Submission of Matters to a Vote of Security Holders
                29Item
      5. Other Information
                29Item
      6. Exhibits
                30




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 three-month period ended
March 31, 2007, which we refer to as the Amended Filing, to restate our
unaudited consolidated financial statements and related disclosures for the
three-month period ended March 31, 2007, 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 March 31, 2007, which we refer to as the Original Filing, was
filed with the Securities and Exchange Commission on May 9,
2007.
 
 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.  With the filing of this Amended
Filing, we are concurrently filing amendments to our Quarterly Reports on Form
10-Q for each of the quarters ended March 31 in the Affected Periods and plan to
subsequently file amendments to our Quarterly Reports on Form 10-Q for each of
the other quarters in 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 May
9, 2007, 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





Item 1. Consolidated Financial
Statements.


NGP
CAPITAL RESOURCES COMPANY
 CONSOLIDATED
BALANCE SHEETS
 
 (Unaudited)March 31, 2007
                                
                                
                                December 31, 2006(As restated)AssetsInvestments
      in portfolio securities at fair valueControl
      investments- majority owned(cost:  $37,152,493
      and $36,136,463, respectively)
                                
                                $
                                39,152,493
                                
                                
                                $
                                36,136,463Non-affiliate
      investments(cost:
      $192,984,846 and $134,726,740, respectively)
                                
                                
                                195,718,591
                                
                                
                                
                                135,889,035Investments
      in corporate notes at fair value(cost:  $17,671,070
      and $17,681,646, respectively)
                                
                                
                                15,264,040
                                
                                
                                
                                15,116,080Investments
      in U.S. Treasury Bills, at amortized costwhich
      approximates fair value
                                
                                
                                103,950,558
                                
                                
                                
                                142,669,579Total
      investments
                                
                                
                                354,085,682
                                
                                
                                
                                329,811,157Cash
      and cash equivalents, at cost which approximates fair
value
                                
                                
                                2,367,150
                                
                                
                                
                                12,334,329Accounts
      receivable
                                
                                
                                32,713
                                
                                
                                
                                452,916Interest
      receivable
                                
                                
                                1,220,978
                                
                                
                                
                                1,400,757Prepaid
      assets
                                
                                
                                1,359,917
                                
                                
                                
                                1,598,501Total
      assets
                                
                                $
                                359,066,440
                                
                                
                                $
                                345,597,660Liabilities
      and stockholders' equity (net assets)Current
      liabilitiesAccounts
      payable
                                
                                $
                                811,204
                                
                                
                                $
                                965,105Management
      and incentive fees payable
                                
                                
                                1,564,509
                                
                                
                                
                                1,374,299Dividends
      payable
                                
                                
                                4,616,901
                                
                                
                                
                                -Income
      taxes payable
                                
                                
                                11,471
                                
                                
                                
                                -Deferred
      tax liabilities
                                
                                
                                713,924
                                
                                
                                
                                -Total
      current liabilities
                                
                                
                                7,718,009
                                
                                
                                
                                2,339,404Long-term
      debt
                                
                                
                                105,285,000
                                
                                
                                
                                100,000,000Total
      liabilities
                                
                                
                                113,003,009
                                
                                
                                
                                102,339,404Commitments
      and contingencies  (Note 8)Stockholders’
      equity (net assets)Common
      stock, $.001 par value, 250,000,000 shares authorized; 17,422,268 and
      17,422,268 issued and 17,422,268 and 17,422,268 outstanding,
      respectively
                                
                                
                                17,422
                                
                                
                                
                                17,422Paid-in
      capital in excess of par
                                
                                
                                244,660,173
                                
                                
                                
                                244,660,173Undistributed
      net investment income (loss)
                                
                                
                                18,904
                                
                                
                                
                                229,791Undistributed
      net realized capital gain  (loss)
                                
                                
                                (245,859
                                )
                                
                                
                                (245,859
                                )Net
      unrealized appreciation (depreciation) of portfolio securities and
      corporate notes
                                
                                
                                1,612,791
                                
                                
                                
                                (1,403,271
                                )Total
      stockholders’ equity (net assets)
                                
                                
                                246,063,431
                                
                                
                                
                                243,258,256Total
      liabilities and stockholders' equity (net assets)
                                
                                $
                                359,066,440
                                
                                
                                $
                                345,597,660Net
      asset value per share
                                
                                $
                                14.11
                                
                                
                                $
                                13.96
  (See
accompanying notes to consolidated financial statements)




1




NGP CAPITAL RESOURCES COMPANY
 CONSOLIDATED
STATEMENTS OF OPERATIONS
 (unaudited)
 
 For the Three Months
      EndedMarch 31, 2007
                                  
                                  
                                  March 31, 2006Investment
      income
                                  
                                  (As restated)Interest
      income:Control
      investments - majority owned
                                  
                                  $
                                  1,007,278
                                  
                                  
                                  $
                                  -Non-affiliate
      investments
                                  
                                  
                                  7,213,226
                                  
                                  
                                  
                                  4,764,039Royalty
      income:Non-affiliate
      investments
                                  
                                  
                                  200,751
                                  
                                  
                                  
                                  94,465Other
      income
                                  
                                  
                                  55,507
                                  
                                  
                                  
                                  137,549Total
      operating income
                                  
                                  
                                  8,476,762
                                  
                                  
                                  
                                  4,996,053Operating
      expensesManagement
      fees
                                  
                                  
                                  1,564,509
                                  
                                  
                                  
                                  1,117,019Professional
      fees
                                  
                                  
                                  153,596
                                  
                                  
                                  
                                  121,703Insurance
      expense
                                  
                                  
                                  132,423
                                  
                                  
                                  
                                  144,354Interest
      expense and fees
                                  
                                  
                                  1,557,196
                                  
                                  
                                  
                                  79,003General
      and administrative expenses
                                  
                                  
                                  651,553
                                  
                                  
                                  
                                  544,077Total
      operating expenses
                                  
                                  
                                  4,059,277
                                  
                                  
                                  
                                  2,006,156Net
      investment income before income taxes
                                  
                                  
                                  4,417,485
                                  
                                  
                                  
                                  2,989,897Benefit
      (provision) for income taxes
                                  
                                  
                                  (11,471
                                  )
                                  
                                  
                                  -Net
      investment income
                                  
                                  
                                  4,406,014
                                  
                                  
                                  
                                  2,989,897Net
      unrealized gain (loss) on investmentsNet
      increase (decrease) in unrealized appreciation(depreciation)
      on portfolio securities and corporate notes:Control
      investments- majority owned
                                  
                                  
                                  2,110,662Non-affiliate
      investments
                                  
                                  
                                  1,619,324
                                  
                                  
                                  
                                  (1,146,362
                                  )Benefit
      (provision) for taxes on unrealized gain
                                  
                                  
                                  (713,924
                                  )
                                  
                                  
                                  -Total
      net unrealized capital gain (loss) on investments
                                  
                                  
                                  3,016,062
                                  
                                  
                                  
                                  (1,146,362
                                  )Net
      increase in stockholders' equity(net
      assets) resulting from operations
                                  
                                  $
                                  7,422,076
                                  
                                  
                                  $
                                  1,843,535Net
      increase in stockholders' equity (net assets)resulting
      from operations per common share
                                  
                                  $
                                  0.42
                                  
                                  
                                  $
                                  0.10
 
 (See
accompanying notes to consolidated financial statements)




2


NGP CAPITAL RESOURCES
      COMPANYCONSOLIDATED STATEMENTS OF
      CHANGES IN STOCKHOLDERS' EQUITY (NET ASSETS)
 Common
      Stock
                
                Paid-in
      Capital
                  in
      Excess
                
                Undistributed
                  Net
      Investment
                
                Undistributed
                  Net
      Realized
                  Capital
      Gain
                
                Net
      Unrealized
                  Appreciation
                  (Depreciation)
                  of
      Portfolio Securities
                  and
      Corporate
                
                Total
                  Stockholders'
                  EquityShares
                
                Amount
                
                of
      Par
                
                Income
      (Loss)
                
                (Loss)
                
                Notes
                
                (Net
      Assets)Balance
      at December 31, 2006
                
                
                17,422,268
                
                $
                17,422
                
                $
                244,660,173
                
                $
                229,791
                
                $
                (245,859
                )
                $
                (1,403,271
                )
                $
                243,258,256Net
      increase in stockholders' equity (net assets) resulting from
      operations
                
                
                -
                
                
                -
                
                
                -
                
                
                4,406,014
                
                
                -
                
                
                3,016,062
                
                
                7,422,076Dividends
      declared
                
                
                -
                
                
                -
                
                
                -
                
                
                (4,616,901
                )
                
                -
                
                
                -
                
                
                (4,616,901
                )Balance
      at March 31, 2007 (unaudited and as restated)
                
                
                17,422,268
                
                $
                17,422
                
                $
                244,660,173
                
                $
                18,904
                
                $
                (245,859
                )
                $
                1,612,791
                
                $
                246,063,431
 
 (See accompanying notes to
      consolidated financial
statements)




3


NGP
CAPITAL RESOURCES COMPANY
 CONSOLIDATED
STATEMENTS OF CASH FLOWS
 (Unaudited)
 
 For the Three Months
      EndedMarch 31, 2007
                                
                                
                                March 31, 2006Cash
      flows from operating activities
                                
                                (As Restated)Net
      increase in stockholders' equity (net assets) resulting from
      operations
                                
                                $
                                7,422,076
                                
                                
                                $
                                1,843,535Adjustments
      to reconcile net increase in stockholders' equity (net
    assets)resulting
      from operations to net cash used in operating activitiesPayment-in-kind
      interest
                                
                                
                                (1,115,048
                                )
                                
                                
                                (23,781
                                )Net
      amortization of premiums, discounts and fees
                                
                                
                                (381,727
                                )
                                
                                
                                (92,584
                                )Change
      in unrealized appreciation (depreciation) onportfolio
      securities and corporate notes before taxes
                                
                                
                                (3,729,986
                                )
                                
                                
                                1,146,362Effects
      of changes in operating assets and liabilitiesAccounts
      receivable
                                
                                
                                420,203
                                
                                
                                
                                12,500Interest
      receivable
                                
                                
                                179,779
                                
                                
                                
                                25,337Prepaid
      assets
                                
                                
                                238,584
                                
                                
                                
                                199,223Accounts
      payable
                                
                                
                                36,309
                                
                                
                                
                                896,711Income
      taxes payable
                                
                                
                                11,471
                                
                                
                                
                                -Current
      portion of deferred income taxes
                                
                                
                                713,924
                                
                                
                                
                                -Purchase
      of investments in portfolio securities
                                
                                
                                (58,354,311
                                )
                                
                                
                                (20,111,132
                                )Redemption
      of investments in portfolio securities
                                
                                
                                587,526
                                
                                
                                
                                2,402Net
      sale of investments in U.S. Treasury Bills
                                
                                
                                38,719,021
                                
                                
                                
                                13,269,118Net
      cash used in operating activities
                                
                                
                                (15,252,179
                                )
                                
                                
                                (2,832,309
                                )Cash
      flows from financing activitiesBorrowings
      under revolving credit facility
                                
                                
                                5,285,000
                                
                                
                                
                                -Dividends
      paid
                                
                                
                                -
                                
                                
                                
                                (4,785,028
                                )Net
      cash provided by (used in) financing activities
                                
                                
                                5,285,000
                                
                                
                                
                                (4,785,028
                                )Net
      (decrease) in cash and cash equivalents
                                
                                
                                (9,967,179
                                )
                                
                                
                                (7,617,337
                                )Cash
      and cash equivalents, beginning of the period
                                
                                
                                12,334,329
                                
                                
                                
                                13,350,588Cash
      and cash equivalents, end of period
                                
                                $
                                2,367,150
                                
                                
                                $
                                5,733,251
 
 (See
accompanying notes to consolidated financial statements)




4


NGP
CAPITAL RESOURCES COMPANY
 CONSOLIDATED
SCHEDULE OF INVESTMENTS
 March
31, 2007
 (unaudited)
 
 Portfolio
      Company
                                                                                                                                                                    
                                                                                                                                                                    Energy
      Industry Segment
                                                                                                                                                                    
                                                                                                                                                                    Investment
      (1) (2) (4)
                                                                                                                                                                    
                                                                                                                                                                    Principal
                                                                                                                                                                    
                                                                                                                                                                    
                                                                                                                                                                    Cost
                                                                                                                                                                    
                                                                                                                                                                    
                                                                                                                                                                    Fair
      Value (3)TARGETED
      INVESTMENTSControl
      Investments- Majority Owned (50% to 100%
    owned)Rubicon
      Energy Partners,
                                                                                                                                                                    
                                                                                                                                                                    Oil
      & Gas Production
                                                                                                                                                                    
                                                                                                                                                                    Senior
      Secured
                                                                                                                                                                    
                                                                                                                                                                    $
                                                                                                                                                                    33,597,349
                                                                                                                                                                    
                                                                                                                                                                    
                                                                                                                                                                    $
                                                                                                                                                                    33,152,493
                                                                                                                                                                    
                                                                                                                                                                    
                                                                                                                                                                    $
                                                                                                                                                                    33,152,493LLC
                                                                                                                                                                    
                                                                                                                                                                    and
      Development
                                                                                                                                                                    
                                                                                                                                                                    Multiple-Advance
      Term Loan(LIBOR
      + 6.50%, due 7/26/2010)LLC
      Units (4,000 units )
                                                                                                                                                                    
                                                                                                                                                                    
                                                                                                                                                                    
                                                                                                                                                                    
                                                                                                                                                                    
                                                                                                                                                                    
                                                                                                                                                                    4,000,000
                                                                                                                                                                    
                                                                                                                                                                    
                                                                                                                                                                    
                                                                                                                                                                    6,000,000Total
      Control Investments- Majority Owned (50% to 100%
      owned)
                                                                                                                                                                    
                                                                                                                                                                    
                                                                                                                                                                    
                                                                                                                                                                    
                                                                                                                                                                    
                                                                                                                                                                    $
                                                                                                                                                                    37,152,493
                                                                                                                                                                    
                                                                                                                                                                    
                                                                                                                                                                    $
                                                                                                                                                                    39,152,493Non-affiliate
      Investments - (Less than 5% owned)Alden
      Resources, LLC
                                                                                                                                                                    
                                                                                                                                                                    Oil
      & Gas Production
                                                                                                                                                                    
                                                                                                                                                                    Senior
      Secured
                                                                                                                                                                    
                                                                                                                                                                    
                                                                                                                                                                    33,749,111
                                                                                                                                                                    
                                                                                                                                                                    
                                                                                                                                                                    
                                                                                                                                                                    30,541,748
                                                                                                                                                                    
                                                                                                                                                                    
                                                                                                                                                                    
                                                                                                                                                                    30,541,748and
      Development
                                                                                                                                                                    
                                                                                                                                                                    Multiple-Advance
      Term Loan(LIBOR
      + 8.00% cash, +10.00% PIK - until 1/05/2008)cash
      only thereafter, due 1/05/2013)Royalty
      Interest
                                                                                                                                                                    
                                                                                                                                                                    
                                                                                                                                                                    
                                                                                                                                                                    
                                                                                                                                                                    
                                                                                                                                                                    
                                                                                                                                                                    2,656,979
                                                                                                                                                                    
                                                                                                                                                                    
                                                                                                                                                                    
                                                                                                                                                                    2,660,000Warrants
      (5)
                                                                                                                                                                    
                                                                                                                                                                    
                                                                                                                                                                    
                                                                                                                                                                    
                                                                                                                                                                    
                                                                                                                                                                    
                                                                                                                                                                    100,000
                                                                                                                                                                    
                                                                                                                                                                    
                                                                                                                                                                    
                                                                                                                                                                    100,000Atchee
      CBM, LLC
                                                                                                                                                                    
                                                                                                                                                                    Oil
      & Gas Production
                                                                                                                                                                    
                                                                                                                                                                    Senior
      Secured
                                                                                                                                                                    
                                                                                                                                                                    
                                                                                                                                                                    1,460,540
                                                                                                                                                                    
                                                                                                                                                                    
                                                                                                                                                                    
                                                                                                                                                                    1,440,229
                                                                                                                                                                    
                                                                                                                                                                    
                                                                                                                                                                    
                                                                                                                                                                    1,440,229and
      Development
                                                                                                                                                                    
                                                                                                                                                                    Multiple-Advance
      Term Loan(LIBOR
      + 5.50% cash, +7.50% PIK, due 4/25/2009)Overriding
      Royalty Interest (5)
                                                                                                                                                                    
                                                                                                                                                                    
                                                                                                                                                                    
                                                                                                                                                                    
                                                                                                                                                                    
                                                                                                                                                                    
                                                                                                                                                                    5,000
                                                                                                                                                                    
                                                                                                                                                                    
                                                                                                                                                                    
                                                                                                                                                                    5,000Senior
      Secured
                                                                                                                                                                    
                                                                                                                                                                    
                                                                                                                                                                    713,036
                                                                                                                                                                    
                                                                                                                                                                    
                                                                                                                                                                    
                                                                                                                                                                    713,036
                                                                                                                                                                    
                                                                                                                                                                    
                                                                                                                                                                    
                                                                                                                                                                    713,036Multiple-Advance
      Supplemental Term Loan(LIBOR
      + 5.50% cash, +7.50% PIK, due 4/30/2007)BSR
      Alto, LLC
                                                                                                                                                                    
                                                                                                                                                                    Oil
      & Gas Production
                                                                                                                                                                    
                                                                                                                                                                    Senior
      Secured
                                                                                                                                                                    
                                                                                                                                                                    
                                                                                                                                                                    2,445,129
                                                                                                                                                                    
                                                                                                                                                                    
                                                                                                                                                                    
                                                                                                                                                                    2,325,845
                                                                                                                                                                    
                                                                                                                                                                    
                                                                                                                                                                    
                                                                                                                                                                    2,325,845and
      Development
                                                                                                                                                                    
                                                                                                                                                                    Multiple-Advance
      Term Loan(LIBOR
      + 5.50% cash, +7.50% PIK - until 8/17/08,cash
      only thereafter, due 8/17/2009)Overriding
      Royalty Interest
                                                                                                                                                                    
                                                                                                                                                                    
                                                                                                                                                                    
                                                                                                                                                                    
                                                                                                                                                                    
                                                                                                                                                                    
                                                                                                                                                                    29,722
                                                                                                                                                                    
                                                                                                                                                                    
                                                                                                                                                                    
                                                                                                                                                                    75,000Warrants
      (5)
                                                                                                                                                                    
                                                                                                                                                                    
                                                                                                                                                                    
                                                                                                                                                                    
                                                                                                                                                                    
                                                                                                                                                                    
                                                                                                                                                                    10,000
                                                                                                                                                                    
                                                                                                                                                                    
                                                                                                                                                                    
                                                                                                                                                                    100,000BSR
      Loco Bayou, LLC
                                                                                                                                                                    
                                                                                                                                                                    Oil
      & Gas Production
                                                                                                                                                                    
                                                                                                                                                                    Senior
      Secured
                                                                                                                                                                    
                                                                                                                                                                    
                                                                                                                                                                    3,523,760
                                                                                                                                                                    
                                                                                                                                                                    
                                                                                                                                                                    
                                                                                                                                                                    3,360,390
                                                                                                                                                                    
                                                                                                                                                                    
                                                                                                                                                                    
                                                                                                                                                                    3,360,390and
      Development
                                                                                                                                                                    
                                                                                                                                                                    Multiple-Advance
      Term Loan(LIBOR
      + 5.50% cash, +7.50% PIK - until 8/15/08,cash
      only thereafter, due 8/15/2009)Overriding
      Royalty Interest  (5)
                                                                                                                                                                    
                                                                                                                                                                    
                                                                                                                                                                    
                                                                                                                                                                    
                                                                                                                                                                    
                                                                                                                                                                    
                                                                                                                                                                    20,000
                                                                                                                                                                    
                                                                                                                                                                    
                                                                                                                                                                    
                                                                                                                                                                    20,000Warrants
      (5)
                                                                                                                                                                    
                                                                                                                                                                    
                                                                                                                                                                    
                                                                                                                                                                    
                                                                                                                                                                    
                                                                                                                                                                    
                                                                                                                                                                    10,000
                                                                                                                                                                    
                                                                                                                                                                    
                                                                                                                                                                    
                                                                                                                                                                    10,000C-Gas,
      LLC
                                                                                                                                                                    
                                                                                                                                                                    Oil
      & Gas Production
                                                                                                                                                                    
                                                                                                                                                                    Senior
      Secured
                                                                                                                                                                    
                                                                                                                                                                    
                                                                                                                                                                    18,570,200
                                                                                                                                                                    
                                                                                                                                                                    
                                                                                                                                                                    
                                                                                                                                                                    18,375,278
                                                                                                                                                                    
                                                                                                                                                                    
                                                                                                                                                                    
                                                                                                                                                                    18,375,278and
      Development
                                                                                                                                                                    
                                                                                                                                                                    Multiple-Advance
      Term Loan(LIBOR
      + 5.50% cash, +7.50% PIK, due 4/25/2009)Overriding
      Royalty Interest
                                                                                                                                                                    
                                                                                                                                                                    
                                                                                                                                                                    
                                                                                                                                                                    
                                                                                                                                                                    
                                                                                                                                                                    
                                                                                                                                                                    44,575
                                                                                                                                                                    
                                                                                                                                                                    
                                                                                                                                                                    
                                                                                                                                                                    200,000Senior
      Secured
                                                                                                                                                                    
                                                                                                                                                                    
                                                                                                                                                                    4,300,000
                                                                                                                                                                    
                                                                                                                                                                    
                                                                                                                                                                    
                                                                                                                                                                    4,300,000
                                                                                                                                                                    
                                                                                                                                                                    
                                                                                                                                                                    
                                                                                                                                                                    4,300,000Multiple-Advance
      Supplemental Term Loan(LIBOR
      + 5.50% cash, +7.50% PIK, due 4/30/2007)Chroma
      Exploration &
                                                                                                                                                                    
                                                                                                                                                                    Oil
      & Gas Production
                                                                                                                                                                    
                                                                                                                                                                    Tranche
      A - Senior Secured
                                                                                                                                                                    
                                                                                                                                                                    
                                                                                                                                                                    15,000,000
                                                                                                                                                                    
                                                                                                                                                                    
                                                                                                                                                                    
                                                                                                                                                                    14,809,895
                                                                                                                                                                    
                                                                                                                                                                    
                                                                                                                                                                    
                                                                                                                                                                    14,809,895Production,
      Inc.
                                                                                                                                                                    
                                                                                                                                                                    and
      Development
                                                                                                                                                                    
                                                                                                                                                                    Multiple-Advance
      Term Loan(LIBOR
      + 7.75% until Tranche B payoff, +6.00% thereafter, due
      9/20/2008)Overriding
      Royalty Interest
                                                                                                                                                                    
                                                                                                                                                                    
                                                                                                                                                                    
                                                                                                                                                                    
                                                                                                                                                                    
                                                                                                                                                                    
                                                                                                                                                                    81,979
                                                                                                                                                                    
                                                                                                                                                                    
                                                                                                                                                                    
                                                                                                                                                                    1,650,0008,628
      Shares Series A Participating
                                                                                                                                                                    
                                                                                                                                                                    
                                                                                                                                                                    
                                                                                                                                                                    
                                                                                                                                                                    
                                                                                                                                                                    
                                                                                                                                                                    2,157,000
                                                                                                                                                                    
                                                                                                                                                                    
                                                                                                                                                                    
                                                                                                                                                                    2,157,000Convertible
      Preferred Stock8.11
      Shares Common Stock
                                                                                                                                                                    
                                                                                                                                                                    
                                                                                                                                                                    
                                                                                                                                                                    
                                                                                                                                                                    
                                                                                                                                                                    
                                                                                                                                                                    -
                                                                                                                                                                    
                                                                                                                                                                    
                                                                                                                                                                    
                                                                                                                                                                    -Tranche
      B - Senior Secured
                                                                                                                                                                    
                                                                                                                                                                    
                                                                                                                                                                    2,100,000
                                                                                                                                                                    
                                                                                                                                                                    
                                                                                                                                                                    
                                                                                                                                                                    2,098,872
                                                                                                                                                                    
                                                                                                                                                                    
                                                                                                                                                                    
                                                                                                                                                                    2,098,872Multiple-Advance
      Term Loan(LIBOR
      + 7.75%, due 4/04/2007)
 
 (See
accompanying notes to consolidated financial statements)




5
 
  NGP
CAPITAL RESOURCES COMPANY
 CONSOLIDATED
SCHEDULE OF INVESTMENTS
 March
31, 2007
 (unaudited)
 (continued)
 
 Portfolio
      Company
                                                                                                                                  
                                                                                                                                  Energy
      Industry Segment
                                                                                                                                  
                                                                                                                                  Investment
      (1) (2) (4)
                                                                                                                                  
                                                                                                                                  Principal
                                                                                                                                  
                                                                                                                                  
                                                                                                                                  Cost
                                                                                                                                  
                                                                                                                                  
                                                                                                                                  Fair
      Value (3)Non-affiliate
      Investments - (Less than 5% owned) -
    (continued)Crossroads
      Energy, LP
                                                                                                                                  
                                                                                                                                  Oil
      & Gas Production
                                                                                                                                  
                                                                                                                                  Senior
      Secured
                                                                                                                                  
                                                                                                                                  
                                                                                                                                  2,648,580
                                                                                                                                  
                                                                                                                                  
                                                                                                                                  
                                                                                                                                  2,571,753
                                                                                                                                  
                                                                                                                                  
                                                                                                                                  
                                                                                                                                  2,571,753and
      Development
                                                                                                                                  
                                                                                                                                  Multiple-Advance
      Term Loan(LIBOR
      + 5.50% cash, +7.50% PIK - until 12/29/07,cash
      only thereafter, due 6/29/2009)Overriding
      Royalty Interest
                                                                                                                                  
                                                                                                                                  
                                                                                                                                  
                                                                                                                                  
                                                                                                                                  
                                                                                                                                  
                                                                                                                                  9,926
                                                                                                                                  
                                                                                                                                  
                                                                                                                                  
                                                                                                                                  70,000Energy
      XXI Gulf Coast,
                                                                                                                                  
                                                                                                                                  Oil
      & Gas Production
                                                                                                                                  
                                                                                                                                  Second
      Lien Term Loan
                                                                                                                                  
                                                                                                                                  
                                                                                                                                  14,000,000
                                                                                                                                  
                                                                                                                                  
                                                                                                                                  
                                                                                                                                  14,000,000
                                                                                                                                  
                                                                                                                                  
                                                                                                                                  
                                                                                                                                  14,000,000Inc.
                                                                                                                                  
                                                                                                                                  and
      Development
                                                                                                                                  
                                                                                                                                  (LIBOR
      + 5.50%, due 4/04/2010)Nighthawk
      Transport I,
                                                                                                                                  
                                                                                                                                  Oilfield
      Services
                                                                                                                                  
                                                                                                                                  Senior
      Secured
                                                                                                                                  
                                                                                                                                  
                                                                                                                                  2,034,660
                                                                                                                                  
                                                                                                                                  
                                                                                                                                  
                                                                                                                                  2,005,435
                                                                                                                                  
                                                                                                                                  
                                                                                                                                  
                                                                                                                                  2,005,435LP
                                                                                                                                  
                                                                                                                                  
                                                                                                                                  
                                                                                                                                  Term
      Loan A(LIBOR
      + 3.50%, due 6/15/2010)Second
      Lien
                                                                                                                                  
                                                                                                                                  
                                                                                                                                  3,487,715
                                                                                                                                  
                                                                                                                                  
                                                                                                                                  
                                                                                                                                  3,416,487
                                                                                                                                  
                                                                                                                                  
                                                                                                                                  
                                                                                                                                  3,416,487Term
      Loan B(LIBOR
      + 8.00%, due 6/15/2011)Second
      Lien
                                                                                                                                  
                                                                                                                                  
                                                                                                                                  3,387,585
                                                                                                                                  
                                                                                                                                  
                                                                                                                                  
                                                                                                                                  3,322,913
                                                                                                                                  
                                                                                                                                  
                                                                                                                                  
                                                                                                                                  3,322,913Delayed
      Draw Term Loan B(LIBOR
      + 8.00%, due 6/15/2011)Warrants
      (5)
                                                                                                                                  
                                                                                                                                  
                                                                                                                                  
                                                                                                                                  
                                                                                                                                  
                                                                                                                                  
                                                                                                                                  224
                                                                                                                                  
                                                                                                                                  
                                                                                                                                  
                                                                                                                                  100,000Piceance
      Basin Properties,
                                                                                                                                  
                                                                                                                                  Oil
      & Gas Production
                                                                                                                                  
                                                                                                                                  Senior
      Secured
                                                                                                                                  
                                                                                                                                  
                                                                                                                                  5,372,812
                                                                                                                                  
                                                                                                                                  
                                                                                                                                  
                                                                                                                                  5,414,994
                                                                                                                                  
                                                                                                                                  
                                                                                                                                  
                                                                                                                                  5,414,994LLC
                                                                                                                                  
                                                                                                                                  and
      Development
                                                                                                                                  
                                                                                                                                  Multiple-Advance
      Term Loan(11.3868%,
      due 10/31/2010)LLC
      Units (19,900 units)
                                                                                                                                  
                                                                                                                                  
                                                                                                                                  
                                                                                                                                  
                                                                                                                                  
                                                                                                                                  
                                                                                                                                  40,876
                                                                                                                                  
                                                                                                                                  
                                                                                                                                  
                                                                                                                                  30,631Warrants
      (5)
                                                                                                                                  
                                                                                                                                  
                                                                                                                                  
                                                                                                                                  
                                                                                                                                  
                                                                                                                                  
                                                                                                                                  25,000
                                                                                                                                  
                                                                                                                                  
                                                                                                                                  
                                                                                                                                  25,000Resaca
      Exploitation, LP
                                                                                                                                  
                                                                                                                                  Oil
      & Gas Production
                                                                                                                                  
                                                                                                                                  Senior
      Secured
                                                                                                                                  
                                                                                                                                  
                                                                                                                                  23,720,000
                                                                                                                                  
                                                                                                                                  
                                                                                                                                  
                                                                                                                                  23,375,184
                                                                                                                                  
                                                                                                                                  
                                                                                                                                  
                                                                                                                                  23,375,184and
      Development
                                                                                                                                  
                                                                                                                                  Multiple-Advance
      Tranche A Term Loan(LIBOR
      + 6.00%, due 5/01/2012)Overriding
      Royalty Interest
                                                                                                                                  
                                                                                                                                  
                                                                                                                                  
                                                                                                                                  
                                                                                                                                  
                                                                                                                                  
                                                                                                                                  30,000
                                                                                                                                  
                                                                                                                                  
                                                                                                                                  
                                                                                                                                  125,000Senior
      Secured Tranche B Term Loan
                                                                                                                                  
                                                                                                                                  
                                                                                                                                  6,000,000
                                                                                                                                  
                                                                                                                                  
                                                                                                                                  
                                                                                                                                  5,957,025
                                                                                                                                  
                                                                                                                                  
                                                                                                                                  
                                                                                                                                  5,957,025(LIBOR
      + 9.00%, due 8/01/2007)Overriding
      Royalty Interest
                                                                                                                                  
                                                                                                                                  
                                                                                                                                  
                                                                                                                                  
                                                                                                                                  
                                                                                                                                  
                                                                                                                                  30,000
                                                                                                                                  
                                                                                                                                  
                                                                                                                                  
                                                                                                                                  125,000Senior
      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
      & Gas Production
                                                                                                                                  
                                                                                                                                  Senior
      Secured
                                                                                                                                  
                                                                                                                                  
                                                                                                                                  6,943,853
                                                                                                                                  
                                                                                                                                  
                                                                                                                                  
                                                                                                                                  6,756,727
                                                                                                                                  
                                                                                                                                  
                                                                                                                                  
                                                                                                                                  6,756,727and
      Development
                                                                                                                                  
                                                                                                                                  Multiple-Advance
      Term Loan(LIBOR
      + 6.00%, due 2/28/2008)Overriding
      Royalty Interest
                                                                                                                                  
                                                                                                                                  
                                                                                                                                  
                                                                                                                                  
                                                                                                                                  
                                                                                                                                  
                                                                                                                                  99,194
                                                                                                                                  
                                                                                                                                  
                                                                                                                                  
                                                                                                                                  100,000Warrants
      (5)
                                                                                                                                  
                                                                                                                                  
                                                                                                                                  
                                                                                                                                  
                                                                                                                                  
                                                                                                                                  
                                                                                                                                  10,000
                                                                                                                                  
                                                                                                                                  
                                                                                                                                  
                                                                                                                                  10,000Tammany
      Oil & Gas, LLC
                                                                                                                                  
                                                                                                                                  Oil
      & Gas Production
                                                                                                                                  
                                                                                                                                  Senior
      Secured
                                                                                                                                  
                                                                                                                                  
                                                                                                                                  17,235,796
                                                                                                                                  
                                                                                                                                  
                                                                                                                                  
                                                                                                                                  16,739,603
                                                                                                                                  
                                                                                                                                  
                                                                                                                                  
                                                                                                                                  16,739,603and
      Development
                                                                                                                                  
                                                                                                                                  Multiple-Advance
      Term Loan(LIBOR
      + 6.00%, due 3/21/2010)Overriding
      Royalty Interest
                                                                                                                                  
                                                                                                                                  
                                                                                                                                  
                                                                                                                                  
                                                                                                                                  
                                                                                                                                  
                                                                                                                                  200,000
                                                                                                                                  
                                                                                                                                  
                                                                                                                                  
                                                                                                                                  200,000TierraMar
      Energy,
                                                                                                                                  
                                                                                                                                  Oil
      & Gas Production
                                                                                                                                  
                                                                                                                                  Senior
      Secured
                                                                                                                                  
                                                                                                                                  
                                                                                                                                  10,095,421
                                                                                                                                  
                                                                                                                                  
                                                                                                                                  
                                                                                                                                  9,970,546
                                                                                                                                  
                                                                                                                                  
                                                                                                                                  
                                                                                                                                  9,970,546LLC
                                                                                                                                  
                                                                                                                                  and
      Development
                                                                                                                                  
                                                                                                                                  Multiple-Advance
      Term Loan(LIBOR
      + 6.00% cash, +7.50% PIK, due 5/13/2008)Overriding
      Royalty Interest
                                                                                                                                  
                                                                                                                                  
                                                                                                                                  
                                                                                                                                  
                                                                                                                                  
                                                                                                                                  
                                                                                                                                  18,387
                                                                                                                                  
                                                                                                                                  
                                                                                                                                  
                                                                                                                                  200,000Warrants
      (5)
                                                                                                                                  
                                                                                                                                  
                                                                                                                                  
                                                                                                                                  
                                                                                                                                  
                                                                                                                                  
                                                                                                                                  10,000
                                                                                                                                  
                                                                                                                                  
                                                                                                                                  
                                                                                                                                  200,000Venoco,
      Inc.
                                                                                                                                  
                                                                                                                                  Oil
      & Gas Production
                                                                                                                                  
                                                                                                                                  Senior
      Notes (6)
                                                                                                                                  
                                                                                                                                  
                                                                                                                                  8,000,000
                                                                                                                                  
                                                                                                                                  
                                                                                                                                  
                                                                                                                                  7,962,383
                                                                                                                                  
                                                                                                                                  
                                                                                                                                  
                                                                                                                                  8,040,000and
      Development
                                                                                                                                  
                                                                                                                                  (8.75%,
      due 12/15/2011)Venoco,
      Inc.
                                                                                                                                  
                                                                                                                                  Oil
      & Gas Production
                                                                                                                                  
                                                                                                                                  Senior
      Notes (6)
                                                                                                                                  
                                                                                                                                  
                                                                                                                                  4,000,000
                                                                                                                                  
                                                                                                                                  
                                                                                                                                  
                                                                                                                                  3,937,641
                                                                                                                                  
                                                                                                                                  
                                                                                                                                  
                                                                                                                                  4,020,000and
      Development
                                                                                                                                  
                                                                                                                                  (8.75%,
      due 12/15/2011)Total
      Non-affiliate Investments - (Less than 5%
    owned)
                                                                                                                                  
                                                                                                                                  
                                                                                                                                  
                                                                                                                                  
                                                                                                                                  
                                                                                                                                  
                                                                                                                                  
                                                                                                                                  $
                                                                                                                                  192,984,846
                                                                                                                                  
                                                                                                                                  
                                                                                                                                  $
                                                                                                                                  195,718,591Subtotal
      Targeted Investments (65.9% of total investments)
                                                                                                                                  
                                                                                                                                  
                                                                                                                                  
                                                                                                                                  
                                                                                                                                  
                                                                                                                                  
                                                                                                                                  
                                                                                                                                  $
                                                                                                                                  230,137,339
                                                                                                                                  
                                                                                                                                  
                                                                                                                                  $
                                                                                                                                  234,871,084
 
 (See
accompanying notes to consolidated financial statements)


6




NGP
CAPITAL RESOURCES COMPANY
 CONSOLIDATED
SCHEDULE OF INVESTMENTS
 March
31, 2007
 (unaudited)
 (continued)
 
 Issuing
      Company
                                      
                                      Energy
      Industry Segment
                                      
                                      Investment
      (1) (2) (4)
                                      
                                      Principal
                                      
                                      
                                      Cost
                                      
                                      
                                      Fair
      Value (3)CORPORATE
      NOTESPioneer
      Natural Resources Co.
                                      
                                      Energy
                                      
                                      Senior
      Notes, 7.2%, due 2028
                                      
                                      $
                                      10,000,000
                                      
                                      
                                      $
                                      11,663,432
                                      
                                      
                                      $
                                      9,512,800XTO
      Energy, Inc.
                                      
                                      Energy
                                      
                                      Senior
      Notes, 5.0%, due 2015
                                      
                                      
                                      6,000,000
                                      
                                      
                                      
                                      6,007,638
                                      
                                      
                                      
                                      5,751,240Subtotal
      Corporate Notes ( 4.28% of total investments)
                                      
                                      
                                      
                                      
                                      
                                      
                                      
                                      $
                                      17,671,070
                                      
                                      
                                      $
                                      15,264,040GOVERNMENT
      SECURITIESU.S.
      Treasury Bills
                                      
                                      Government
                                      
                                      U.S.
      Treasury Bills, 4.982%, due 05/24/2007
                                      
                                      $
                                      8,907,000
                                      
                                      
                                      $
                                      8,645,918
                                      
                                      
                                      $
                                      8,645,918U.S.
      Treasury Bills
                                      
                                      Government
                                      
                                      U.S.
      Treasury Bills, 4.982%, due 05/24/2007
                                      
                                      
                                      12,000,000
                                      
                                      
                                      
                                      11,913,080
                                      
                                      
                                      
                                      11,913,080U.S.
      Treasury Bills
                                      
                                      Government
                                      
                                      U.S.
      Treasury Bills, 4.982%, due 05/24/2007
                                      
                                      
                                      12,000,000
                                      
                                      
                                      
                                      11,913,080
                                      
                                      
                                      
                                      11,913,080U.S.
      Treasury Bills
                                      
                                      Government
                                      
                                      U.S.
      Treasury Bills, 4.982%, due 05/24/2007
                                      
                                      
                                      12,000,000
                                      
                                      
                                      
                                      11,913,080
                                      
                                      
                                      
                                      11,913,080U.S.
      Treasury Bills
                                      
                                      Government
                                      
                                      U.S.
      Treasury Bills, 4.982%, due 05/24/2007
                                      
                                      
                                      12,000,000
                                      
                                      
                                      
                                      11,913,080
                                      
                                      
                                      
                                      11,913,080U.S.
      Treasury Bills
                                      
                                      Government
                                      
                                      U.S.
      Treasury Bills, 4.982%, due 05/24/2007
                                      
                                      
                                      12,000,000
                                      
                                      
                                      
                                      11,913,080
                                      
                                      
                                      
                                      11,913,080U.S.
      Treasury Bills
                                      
                                      Government
                                      
                                      U.S.
      Treasury Bills, 4.982%, due 05/24/2007
                                      
                                      
                                      12,000,000
                                      
                                      
                                      
                                      11,913,080
                                      
                                      
                                      
                                      11,913,080U.S.
      Treasury Bills
                                      
                                      Government
                                      
                                      U.S.
      Treasury Bills, 4.982%, due 05/24/2007
                                      
                                      
                                      12,000,000
                                      
                                      
                                      
                                      11,913,080
                                      
                                      
                                      
                                      11,913,080U.S.
      Treasury Bills
                                      
                                      Government
                                      
                                      U.S.
      Treasury Bills, 4.982%, due 05/24/2007
                                      
                                      
                                      12,000,000
                                      
                                      
                                      
                                      11,913,080
                                      
                                      
                                      
                                      11,913,080Subtotal
      Government Securities (29.16% of total investments)
                                      
                                      
                                      
                                      
                                      
                                      $
                                      103,950,558
                                      
                                      
                                      $
                                      103,950,558CASHSubtotal
      Cash (0.66% of total investments)
                                      
                                      
                                      
                                      
                                      
                                      
                                      
                                      $
                                      2,367,150
                                      
                                      
                                      $
                                      2,367,150TOTAL
      INVESTMENTS, CASH AND CASH EQUIVALENTS
                                      
                                      
                                      
                                      
                                      
                                      
                                      
                                      $
                                      354,126,117
                                      
                                      
                                      $
                                      356,452,832LIABILITIES
      IN EXCESS OF OTHER ASSETS (7)
                                      
                                      
                                      
                                      
                                      
                                      
                                      
                                      
                                      
                                      
                                      
                                      $
                                      (110,389,401
                                      )NET
      ASSETS (7)
                                      
                                      
                                      
                                      
                                      
                                      
                                      
                                      
                                      
                                      
                                      
                                      
                                      
                                      $
                                      246,063,431
 
 (1)
              All
      investments are pledged as collateral for obligations under the Company's
      credit facilities.
 (2)
              Percentages
      represent interest rates in effect at March 31, 2007, 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)
              As
      restated.
 
 (See
accompanying notes to consolidated financial statements)




7




NGP
CAPITAL RESOURCES COMPANY
 CONSOLIDATED
SCHEDULE OF INVESTMENTS
 December
31, 2006
 
 Portfolio
      Company (1)
                                                                                                                  
                                                                                                                  Energy
      Industry Segment
                                                                                                                  
                                                                                                                  Investment
      (1) (2) (4)
                                                                                                                  
                                                                                                                  Principal
                                                                                                                  
                                                                                                                  
                                                                                                                  Cost
                                                                                                                  
                                                                                                                  
                                                                                                                  Fair
      Value (3)TARGETED
      INVESTMENTSControl
      Investments- Majority Owned (50% to 100%
    owned)Rubicon Energy Partners, LLC
                                                                                                                  
                                                                                                                  Oil
      & Gas Production
                                                                                                                  
                                                                                                                  Senior
      Secured
                                                                                                                  
                                                                                                                  $
                                                                                                                  32,595,949
                                                                                                                  
                                                                                                                  
                                                                                                                  $
                                                                                                                  32,136,463
                                                                                                                  
                                                                                                                  
                                                                                                                  $
                                                                                                                  32,136,463and
      Development
                                                                                                                  
                                                                                                                  Multiple-Advance
      Term Loan(LIBOR
      + 6.50%, due 7/26/2010)LLC
      Units (4,000 units )
                                                                                                                  
                                                                                                                  
                                                                                                                  
                                                                                                                  
                                                                                                                  
                                                                                                                  
                                                                                                                  4,000,000
                                                                                                                  
                                                                                                                  
                                                                                                                  
                                                                                                                  4,000,000Total
      Control Investments- Majority Owned (50% to 100%
      owned)
                                                                                                                  
                                                                                                                  
                                                                                                                  
                                                                                                                  
                                                                                                                  
                                                                                                                  $
                                                                                                                  36,136,463
                                                                                                                  
                                                                                                                  
                                                                                                                  $
                                                                                                                  36,136,463Non-affiliate
      Investments - (Less than 5% owned)Atchee
      CBM, LLC
                                                                                                                  
                                                                                                                  Oil
      & Gas Production
                                                                                                                  
                                                                                                                  Senior
      Secured
                                                                                                                  
                                                                                                                  
                                                                                                                  1,391,562
                                                                                                                  
                                                                                                                  
                                                                                                                  
                                                                                                                  1,369,123
                                                                                                                  
                                                                                                                  
                                                                                                                  
                                                                                                                  1,369,123and
      Development
                                                                                                                  
                                                                                                                  Multiple-Advance
      Term Loan(LIBOR
      + 5.50% cash, +7.50% PIK, due 4/25/2009)Overriding
      Royalty Interest (5)
                                                                                                                  
                                                                                                                  
                                                                                                                  
                                                                                                                  
                                                                                                                  
                                                                                                                  
                                                                                                                  5,000
                                                                                                                  
                                                                                                                  
                                                                                                                  
                                                                                                                  5,000Senior
      Secured
                                                                                                                  
                                                                                                                  
                                                                                                                  713,036
                                                                                                                  
                                                                                                                  
                                                                                                                  
                                                                                                                  705,373
                                                                                                                  
                                                                                                                  
                                                                                                                  
                                                                                                                  705,373Multiple-Advance
      Supplemental Term Loan(LIBOR
      + 5.50% cash, +7.50% PIK, due 2/28/2007)BSR
      Alto, LLC
                                                                                                                  
                                                                                                                  Oil
      & Gas Production
                                                                                                                  
                                                                                                                  Senior
      Secured
                                                                                                                  
                                                                                                                  
                                                                                                                  1,838,943
                                                                                                                  
                                                                                                                  
                                                                                                                  
                                                                                                                  1,708,559
                                                                                                                  
                                                                                                                  
                                                                                                                  
                                                                                                                  1,708,559and
      Development
                                                                                                                  
                                                                                                                  Multiple-Advance
      Term Loan(LIBOR
      + 5.50% Cash, +7.5% PIK - until 8/17/08, cash only thereafter, due
      8/17/2009)Overriding
      Royalty Interest
                                                                                                                  
                                                                                                                  
                                                                                                                  
                                                                                                                  
                                                                                                                  
                                                                                                                  
                                                                                                                  29,922
                                                                                                                  
                                                                                                                  
                                                                                                                  
                                                                                                                  75,000Warrants
      (5)
                                                                                                                  
                                                                                                                  
                                                                                                                  
                                                                                                                  
                                                                                                                  
                                                                                                                  
                                                                                                                  10,000
                                                                                                                  
                                                                                                                  
                                                                                                                  
                                                                                                                  100,000BSR
      Loco Bayou, LLC
                                                                                                                  
                                                                                                                  Oil
      & Gas Production
                                                                                                                  
                                                                                                                  Senior
      Secured
                                                                                                                  
                                                                                                                  
                                                                                                                  2,188,432
                                                                                                                  
                                                                                                                  
                                                                                                                  
                                                                                                                  2,010,533
                                                                                                                  
                                                                                                                  
                                                                                                                  
                                                                                                                  2,010,533and
      Development
                                                                                                                  
                                                                                                                  Multiple-Advance
      Term Loan(LIBOR
      + 5.50% Cash, +7.5% PIK - until 8/15/08, cash only thereafter, due
      8/15/2009)Overriding
      Royalty Interest  (5)
                                                                                                                  
                                                                                                                  
                                                                                                                  
                                                                                                                  
                                                                                                                  
                                                                                                                  
                                                                                                                  20,000
                                                                                                                  
                                                                                                                  
                                                                                                                  
                                                                                                                  20,000Warrants
      (5)
                                                                                                                  
                                                                                                                  
                                                                                                                  
                                                                                                                  
                                                                                                                  
                                                                                                                  
                                                                                                                  10,000
                                                                                                                  
                                                                                                                  
                                                                                                                  
                                                                                                                  10,000C-Gas,
      LLC
                                                                                                                  
                                                                                                                  Oil
      & Gas Production
                                                                                                                  
                                                                                                                  Senior
      Secured
                                                                                                                  
                                                                                                                  
                                                                                                                  17,749,511
                                                                                                                  
                                                                                                                  
                                                                                                                  
                                                                                                                  17,534,057
                                                                                                                  
                                                                                                                  
                                                                                                                  
                                                                                                                  17,534,057and
      Development
                                                                                                                  
                                                                                                                  Multiple-Advance
      Term Loan(LIBOR
      + 5.50% cash, +7.50% PIK, due 4/25/2009)Overriding
      Royalty Interest
                                                                                                                  
                                                                                                                  
                                                                                                                  
                                                                                                                  
                                                                                                                  
                                                                                                                  
                                                                                                                  44,651
                                                                                                                  
                                                                                                                  
                                                                                                                  
                                                                                                                  200,000Senior
      Secured
                                                                                                                  
                                                                                                                  
                                                                                                                  4,300,000
                                                                                                                  
                                                                                                                  
                                                                                                                  
                                                                                                                  4,251,351
                                                                                                                  
                                                                                                                  
                                                                                                                  
                                                                                                                  4,251,351Multiple-Advance
      Supplemental Term Loan(LIBOR
      + 5.50% cash, +7.50% PIK, due 2/28/2007)Chroma
      Exploration &
                                                                                                                  
                                                                                                                  Oil
      & Gas Production
                                                                                                                  
                                                                                                                  Tranche
      A - Senior Secured
                                                                                                                  
                                                                                                                  
                                                                                                                  15,000,000
                                                                                                                  
                                                                                                                  
                                                                                                                  
                                                                                                                  14,781,240
                                                                                                                  
                                                                                                                  
                                                                                                                  
                                                                                                                  14,781,240Production,
      Inc.
                                                                                                                  
                                                                                                                  and
      Development
                                                                                                                  
                                                                                                                  Multiple-Advance
      Term Loan(LIBOR
      + 7.75% until Tranche B payoff, +6.00% thereafter, due
      9/20/2008)Overriding
      Royalty Interest
                                                                                                                  
                                                                                                                  
                                                                                                                  
                                                                                                                  
                                                                                                                  
                                                                                                                  
                                                                                                                  82,687
                                                                                                                  
                                                                                                                  
                                                                                                                  
                                                                                                                  400,0008,628
      Shares Series A Participating
                                                                                                                  
                                                                                                                  
                                                                                                                  
                                                                                                                  
                                                                                                                  
                                                                                                                  
                                                                                                                  2,157,000
                                                                                                                  
                                                                                                                  
                                                                                                                  
                                                                                                                  2,157,000Convertible
      Preferred Stock8.11
      Shares Common Stock
                                                                                                                  
                                                                                                                  
                                                                                                                  
                                                                                                                  
                                                                                                                  
                                                                                                                  
                                                                                                                  -
                                                                                                                  
                                                                                                                  
                                                                                                                  
                                                                                                                  -Tranche
      B - Senior Secured
                                                                                                                  
                                                                                                                  
                                                                                                                  1,325,000
                                                                                                                  
                                                                                                                  
                                                                                                                  
                                                                                                                  1,300,609
                                                                                                                  
                                                                                                                  
                                                                                                                  
                                                                                                                  1,300,609Multiple-Advance
      Term Loan(LIBOR
      + 7.75%, due 4/04/2007)Crossroads
      Energy, LP
                                                                                                                  
                                                                                                                  Oil
      & Gas Production
                                                                                                                  
                                                                                                                  Senior
      Secured
                                                                                                                  
                                                                                                                  
                                                                                                                  1,723,533
                                                                                                                  
                                                                                                                  
                                                                                                                  
                                                                                                                  1,673,251
                                                                                                                  
                                                                                                                  
                                                                                                                  
                                                                                                                  1,673,251and
      Development
                                                                                                                  
                                                                                                                  Multiple-Advance
      Term Loan(LIBOR
      + 5.50% Cash, +7.5% PIK - until 12/29/07,cash
      only thereafter, due 6/29/2009)Overriding
      Royalty Interest
                                                                                                                  
                                                                                                                  
                                                                                                                  
                                                                                                                  
                                                                                                                  
                                                                                                                  
                                                                                                                  9,926
                                                                                                                  
                                                                                                                  
                                                                                                                  
                                                                                                                  70,000
 
 (See
accompanying notes to consolidated financial statements)
  8
 
 NGP
CAPITAL RESOURCES COMPANY
 CONSOLIDATED
SCHEDULE OF INVESTMENTS
 December
31, 2006
 (Continued)
 
 Portfolio
      Company (1)
                                                                                                      
                                                                                                      Energy
      Industry Segment
                                                                                                      
                                                                                                      Investment
      (1) (2) (4)
                                                                                                      
                                                                                                      Principal
                                                                                                      
                                                                                                      
                                                                                                      Cost
                                                                                                      
                                                                                                      
                                                                                                      Fair
      Value (3)Non-affiliate
      Investments - (Less than 5% owned) -
    ContinuedEnergy
      XXI Gulf Coast, Inc.
                                                                                                      
                                                                                                      Oil
      & Gas Production
                                                                                                      
                                                                                                      Second
      Lien Term Loan
                                                                                                      
                                                                                                      
                                                                                                      14,000,000
                                                                                                      
                                                                                                      
                                                                                                      
                                                                                                      14,000,000
                                                                                                      
                                                                                                      
                                                                                                      
                                                                                                      14,000,000and
      Development
                                                                                                      
                                                                                                      (LIBOR
      + 5.50%, due 4/04/2010)Nighthawk
      Transport I, LP
                                                                                                      
                                                                                                      Oilfield
      Services
                                                                                                      
                                                                                                      Senior
      Secured
                                                                                                      
                                                                                                      
                                                                                                      2,159,443
                                                                                                      
                                                                                                      
                                                                                                      
                                                                                                      2,128,317
                                                                                                      
                                                                                                      
                                                                                                      
                                                                                                      2,128,317Term
      Loan A(LIBOR
      + 3.50%, due 6/15/2010)Second
      Lien
                                                                                                      
                                                                                                      
                                                                                                      3,760,863
                                                                                                      
                                                                                                      
                                                                                                      
                                                                                                      3,686,628
                                                                                                      
                                                                                                      
                                                                                                      
                                                                                                      3,686,628Term
      Loan B(LIBOR
      + 8.00%, due 6/15/2011)Second
      Lien
                                                                                                      
                                                                                                      
                                                                                                      3,387,585
                                                                                                      
                                                                                                      
                                                                                                      
                                                                                                      3,320,190
                                                                                                      
                                                                                                      
                                                                                                      
                                                                                                      3,320,190Delayed
      Draw Term Loan B(LIBOR
      + 8.00%, due 6/15/2011)Warrants
      (5)
                                                                                                      
                                                                                                      
                                                                                                      
                                                                                                      
                                                                                                      
                                                                                                      
                                                                                                      224
                                                                                                      
                                                                                                      
                                                                                                      
                                                                                                      224Piceance Basin Properties, LLC
                                                                                                      
                                                                                                      Oil
      & Gas Production
                                                                                                      
                                                                                                      Senior
      Secured
                                                                                                      
                                                                                                      
                                                                                                      5,495,802
                                                                                                      
                                                                                                      
                                                                                                      
                                                                                                      5,540,185
                                                                                                      
                                                                                                      
                                                                                                      
                                                                                                      5,540,185and
      Development
                                                                                                      
                                                                                                      Multiple-Advance
      Term Loan(11.3868%,
      due 10/31/2010)LLC
      Units (19,900 units)
                                                                                                      
                                                                                                      
                                                                                                      
                                                                                                      
                                                                                                      
                                                                                                      
                                                                                                      40,876
                                                                                                      
                                                                                                      
                                                                                                      
                                                                                                      19,745Warrants
      (5)
                                                                                                      
                                                                                                      
                                                                                                      
                                                                                                      
                                                                                                      
                                                                                                      
                                                                                                      25,000
                                                                                                      
                                                                                                      
                                                                                                      
                                                                                                      25,000Resaca
      Exploitation, LP
                                                                                                      
                                                                                                      Oil
      & Gas Production
                                                                                                      
                                                                                                      Senior
      Secured
                                                                                                      
                                                                                                      
                                                                                                      21,800,000
                                                                                                      
                                                                                                      
                                                                                                      
                                                                                                      21,443,100
                                                                                                      
                                                                                                      
                                                                                                      
                                                                                                      21,443,100and
      Development
                                                                                                      
                                                                                                      Multiple-Advance
      Tranche A Term Loan(LIBOR
      + 6.00%, due 5/01/2012)Overriding
      Royalty Interest
                                                                                                      
                                                                                                      
                                                                                                      
                                                                                                      
                                                                                                      
                                                                                                      
                                                                                                      30,000
                                                                                                      
                                                                                                      
                                                                                                      
                                                                                                      125,000Senior
      Secured Tranche B Term Loan
                                                                                                      
                                                                                                      
                                                                                                      6,000,000
                                                                                                      
                                                                                                      
                                                                                                      
                                                                                                      5,926,736
                                                                                                      
                                                                                                      
                                                                                                      
                                                                                                      5,926,736(LIBOR
      + 9.00%, due 8/01/2007)Overriding
      Royalty Interest
                                                                                                      
                                                                                                      
                                                                                                      
                                                                                                      
                                                                                                      
                                                                                                      
                                                                                                      30,000
                                                                                                      
                                                                                                      
                                                                                                      
                                                                                                      125,000Senior
      Subordinated
                                                                                                      
                                                                                                      
                                                                                                      4,000,000
                                                                                                      
                                                                                                      
                                                                                                      
                                                                                                      4,000,000
                                                                                                      
                                                                                                      
                                                                                                      
                                                                                                      4,000,000Secured
      Convertible Term Loan(6.00%
      Cash, 8.00% PIK, due 05/01/2012)Sonoran
      Energy, Inc.
                                                                                                      
                                                                                                      Oil
      & Gas Production
                                                                                                      
                                                                                                      Senior
      Secured
                                                                                                      
                                                                                                      
                                                                                                      6,000,000
                                                                                                      
                                                                                                      
                                                                                                      
                                                                                                      5,763,781
                                                                                                      
                                                                                                      
                                                                                                      
                                                                                                      5,763,781and
      Development
                                                                                                      
                                                                                                      Multiple-Advance
      Term Loan(LIBOR
      + 6.00%, due 2/28/2008)Overriding
      Royalty Interest
                                                                                                      
                                                                                                      
                                                                                                      
                                                                                                      
                                                                                                      
                                                                                                      
                                                                                                      100,000
                                                                                                      
                                                                                                      
                                                                                                      
                                                                                                      100,000Warrants
      (5)
                                                                                                      
                                                                                                      
                                                                                                      
                                                                                                      
                                                                                                      
                                                                                                      
                                                                                                      10,000
                                                                                                      
                                                                                                      
                                                                                                      
                                                                                                      10,000TierraMar
      Energy, LLC
                                                                                                      
                                                                                                      Oil
      & Gas Production
                                                                                                      
                                                                                                      Senior
      Secured
                                                                                                      
                                                                                                      
                                                                                                      9,183,372
                                                                                                      
                                                                                                      
                                                                                                      
                                                                                                      9,054,033
                                                                                                      
                                                                                                      
                                                                                                      
                                                                                                      9,054,033and
      Development
                                                                                                      
                                                                                                      Multiple-Advance
      Term Loan(LIBOR
      + 6.00% cash, +7.50% PIK, due 5/13/2008)Overriding
      Royalty Interest
                                                                                                      
                                                                                                      
                                                                                                      
                                                                                                      
                                                                                                      
                                                                                                      
                                                                                                      18,623
                                                                                                      
                                                                                                      
                                                                                                      
                                                                                                      200,000Warrants
      (5)
                                                                                                      
                                                                                                      
                                                                                                      
                                                                                                      
                                                                                                      
                                                                                                      
                                                                                                      10,000
                                                                                                      
                                                                                                      
                                                                                                      
                                                                                                      200,000Non-affiliate
      Investments - (Less than 5% owned) -
    ContinuedVenoco,
      Inc.
                                                                                                      
                                                                                                      Oil
      & Gas Production
                                                                                                      
                                                                                                      Senior
      Notes (6)
                                                                                                      
                                                                                                      
                                                                                                      8,000,000
                                                                                                      
                                                                                                      
                                                                                                      
                                                                                                      7,960,772
                                                                                                      
                                                                                                      
                                                                                                      
                                                                                                      7,900,000and
      Development
                                                                                                      
                                                                                                      (8.75%,
      due 12/15/2011)Venoco,
      Inc.
                                                                                                      
                                                                                                      Oil
      & Gas Production
                                                                                                      
                                                                                                      Senior
      Notes (6)
                                                                                                      
                                                                                                      
                                                                                                      4,000,000
                                                                                                      
                                                                                                      
                                                                                                      
                                                                                                      3,934,993
                                                                                                      
                                                                                                      
                                                                                                      
                                                                                                      3,950,000and
      Development
                                                                                                      
                                                                                                      (8.75%,
      due 12/15/2011)Total
      Control Investments- Majority Owned (50% to 100%
      owned)
                                                                                                      
                                                                                                      
                                                                                                      
                                                                                                      
                                                                                                      
                                                                                                      
                                                                                                      134,726,740
                                                                                                      
                                                                                                      
                                                                                                      
                                                                                                      135,889,035Subtotal
      Targeted Investments (50.28% of total investments)
                                                                                                      
                                                                                                      
                                                                                                      
                                                                                                      
                                                                                                      
                                                                                                      
                                                                                                      
                                                                                                      $
                                                                                                      170,863,203
                                                                                                      
                                                                                                      
                                                                                                      $
                                                                                                      172,025,498
 
 (See
accompanying notes to consolidated financial statements)
  9
 
 NGP
CAPITAL RESOURCES COMPANY
 CONSOLIDATED
SCHEDULE OF INVESTMENTS
 December
31, 2006
 (Continued)
 
 Issuing
      Company
                                      
                                      Industry
      Segment
                                      
                                      Investment
      (1) (2) (4)
                                      
                                      Principal
                                      
                                      
                                      Cost
                                      
                                      
                                      ValueCORPORATE
      NOTESPioneer Natural Resources Co.
                                      
                                      Energy
                                      
                                      Senior
      Notes, 7.2%, due 2028
                                      
                                      $
                                      10,000,000
                                      
                                      
                                      $
                                      11,673,809
                                      
                                      
                                      $
                                      9,418,600XTO
      Energy, Inc.
                                      
                                      Energy
                                      
                                      Senior
      Notes, 5.0%, due 2015
                                      
                                      
                                      6,000,000
                                      
                                      
                                      
                                      6,007,837
                                      
                                      
                                      
                                      5,697,480Subtotal
      Corporate Notes ( 4.42% of total investments)
                                      
                                      
                                      
                                      
                                      
                                      
                                      
                                      $
                                      17,681,646
                                      
                                      
                                      $
                                      15,116,080GOVERNMENT
      SECURITIESU.S.
      Treasury Bills
                                      
                                      Government
                                      
                                      U.S.
      Treasury Bills, 4.967%, due 02/22/2007
                                      
                                      $
                                      7,407,000
                                      
                                      
                                      $
                                      7,355,217
                                      
                                      
                                      $
                                      7,355,217U.S.
      Treasury Bills
                                      
                                      Government
                                      
                                      U.S.
      Treasury Bills, 4.967%, due 02/22/2007
                                      
                                      
                                      12,000,000
                                      
                                      
                                      
                                      11,916,107
                                      
                                      
                                      
                                      11,916,107U.S.
      Treasury Bills
                                      
                                      Government
                                      
                                      U.S.
      Treasury Bills, 4.967%, due 02/22/2007
                                      
                                      
                                      12,000,000
                                      
                                      
                                      
                                      11,916,107
                                      
                                      
                                      
                                      11,916,107U.S.
      Treasury Bills
                                      
                                      Government
                                      
                                      U.S.
      Treasury Bills, 4.967%, due 02/22/2007
                                      
                                      
                                      12,000,000
                                      
                                      
                                      
                                      11,916,107
                                      
                                      
                                      
                                      11,916,107U.S.
      Treasury Bills
                                      
                                      Government
                                      
                                      U.S.
      Treasury Bills, 4.967%, due 02/22/2007
                                      
                                      
                                      12,000,000
                                      
                                      
                                      
                                      11,916,107
                                      
                                      
                                      
                                      11,916,107U.S.
      Treasury Bills
                                      
                                      Government
                                      
                                      U.S.
      Treasury Bills, 4.967%, due 02/22/2007
                                      
                                      
                                      12,000,000
                                      
                                      
                                      
                                      11,916,107
                                      
                                      
                                      
                                      11,916,107U.S.
      Treasury Bills
                                      
                                      Government
                                      
                                      U.S.
      Treasury Bills, 4.967%, due 02/22/2007
                                      
                                      
                                      12,000,000
                                      
                                      
                                      
                                      11,916,107
                                      
                                      
                                      
                                      11,916,107U.S.
      Treasury Bills
                                      
                                      Government
                                      
                                      U.S.
      Treasury Bills, 4.967%, due 02/22/2007
                                      
                                      
                                      12,000,000
                                      
                                      
                                      
                                      11,916,107
                                      
                                      
                                      
                                      11,916,107U.S.
      Treasury Bills
                                      
                                      Government
                                      
                                      U.S.
      Treasury Bills, 4.967%, due 02/22/2007
                                      
                                      
                                      12,000,000
                                      
                                      
                                      
                                      11,916,107
                                      
                                      
                                      
                                      11,916,107U.S.
      Treasury Bills
                                      
                                      Government
                                      
                                      U.S.
      Treasury Bills, 4.250%, due 01/04/2007
                                      
                                      
                                      10,000,000
                                      
                                      
                                      
                                      9,996,458
                                      
                                      
                                      
                                      9,996,458U.S.
      Treasury Bills
                                      
                                      Government
                                      
                                      U.S.
      Treasury Bills, 4.380%, due 01/04/2007
                                      
                                      
                                      30,000,000
                                      
                                      
                                      
                                      29,989,048
                                      
                                      
                                      
                                      29,989,048Subtotal
      Government Securities (41.7% of total investments)
                                      
                                      
                                      
                                      
                                      
                                      
                                      
                                      $
                                      142,669,579
                                      
                                      
                                      $
                                      142,669,579CASHSubtotal
      Cash (3.6% of total investments)
                                      
                                      
                                      
                                      
                                      
                                      
                                      
                                      $
                                      12,334,329
                                      
                                      
                                      $
                                      12,334,329TOTAL
      INVESTMENTS, CASH AND CASH EQUIVALENTS
                                      
                                      
                                      
                                      
                                      
                                      
                                      
                                      $
                                      343,548,757
                                      
                                      
                                      $
                                      342,145,486LIABILITIES
      IN EXCESS OF OTHER ASSETS
                                      
                                      
                                      
                                      
                                      
                                      
                                      
                                      
                                      
                                      
                                      
                                      $
                                      (98,887,230
                                      )NET
      ASSETS
                                      
                                      
                                      
                                      
                                      
                                      
                                      
                                      
                                      
                                      
                                      
                                      
                                      
                                      $
                                      243,258,256
 
 (1)
              All
      investments are pledged as collateral for obligations under the Company's
      credit facilities.
 (2)
              Percentages
      represent interest rates in effect at December 31, 2006, 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.
 
 (See
accompanying notes to consolidated financial statements)
  10




NGP
CAPITAL RESOURCES COMPANY
 CONSOLIDATED
FINANCIAL HIGHLIGHTS
 (Unaudited)
 
 For the Three Months
      EndedMarch 31, 2007
                          
                          
                          March 31, 2006Per
      Share Data
                          
                          (As restated)Net
      asset value, beginning of period
                          
                          $
                          13.96
                          
                          
                          $
                          14.02Net
      investment income
                          
                          
                          0.25
                          
                          
                          
                          0.17Net
      realized and unrealized gain (loss) on portfolio securities and corporate
      notes
                          
                          
                          0.17
                          
                          
                          
                          (0.07
                          )Net
      increase in stockholders' equity (net assets) resulting from
      operations
                          
                          
                          0.42
                          
                          
                          
                          0.10Dividends
      declared
                          
                          
                          (0.27
                          )
                          
                          
                          (0.16
                          )Net
      asset value, end of period
                          
                          $
                          14.11
                          
                          
                          $
                          13.96Market
      value, beginning of period
                          
                          $
                          16.75
                          
                          
                          $
                          13.13Market
      value, end of period
                          
                          $
                          15.81
                          
                          
                          $
                          13.60Market
      value return  (1)
                          
                          
                          (4.03
                          )%
                          
                          
                          4.85
                          %Net
      asset value return (1)
                          
                          
                          2.76
                          %
                          
                          
                          0.79
                          %Ratios
      and Supplemental Data($
      and shares in thousands)Net
      assets, end of period
                          
                          $
                          246,063
                          
                          
                          $
                          242,958Average
      net assets
                          
                          
                          244,661
                          
                          
                          
                          243,428Common
      shares outstanding at end of period
                          
                          
                          17,422
                          
                          
                          
                          17,400Total
      operating expenses/average net assets (2)
                          
                          
                          6.73
                          %
                          
                          
                          3.34
                          %Total
      operating expenses less management fees/average net assets (2)
      (3)
                          
                          
                          4.14
                          %
                          
                          
                          1.48
                          %Net
      investment income/average net assets (2)
                          
                          
                          7.30
                          %
                          
                          
                          4.98
                          %Net
      increase in net assets resulting from operations/average net assets
      (2)
                          
                          
                          12.30
                          %
                          
                          
                          3.07
                          %Portfolio
      turnover rate
                          
                          
                          0.24
                          %
                          
                          
                          0.00
                          %
 
 (1)
Return calculations assume reinvestment of dividends and are not
annualized.
 (2)
Annualized.
 (3)
Includes interest expense. Excluding interest expense results in a ratio of
1.55%.
 
 (See
accompanying notes to consolidated financial statements)




11





NGP CAPITAL RESOURCES
COMPANY


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS


March 31, 2007


(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 treated as a business
development company under the Investment Company Act of 1940, as amended (the
“1940 Act”). In addition, for 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”) for 2005 and later years. The Company has several
subsidiaries that are single member limited liability companies and wholly owned
limited partnerships established to hold certain portfolio investments or
provide services to the Company in accordance with specific rules prescribed for
a company operating as a RIC. These subsidiaries are: NGPC Funding GP, LLC, a
Texas limited liability company; NGPC Nevada, LLC, a Nevada limited liability
company; NGPC Funding, LP, a Texas limited partnership; NGPC Asset Holdings GP,
LLC, a Texas limited liability company; NGPC Asset Holdings, LP, a Texas limited
partnership; NGPC Asset Holdings II, LP, a Texas limited partnership; and NGPC
Asset Holdings III, LP, a Texas limited partnership. 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 are generally defined as companies that have net asset values
or annual revenues of less than $500 million and are not issuers of securities
listed on a national exchange. The Company’s investment objective is to generate
both current income and capital appreciation through debt and equity investments
or a combination thereof.




The
Company is managed and advised, subject to the overall supervision of the
Company’s 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.
 
 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.
 
 12
 The
effects of the restatement on the unaudited consolidated balance sheets at March
31, 2007 are summarized in the following table:
 
 As PreviouslyReported
                        
                        
                        Reclassifications
                        
                        
                        As Reclassified
                        
                        
                        Restatement
                        
                        
                        As RestatedConsolidated
      Balance Sheets:For
      the Three Months Ended March 31, 2007Investments
      in portfolio securities at fair value
                        
                        $
                        234,871,084
                        
                        
                        $
                        (234,871,084
                        )
                        
                        $
                        -
                        
                        
                        $
                        -
                        
                        
                        $
                        -Control
      investments - majority owned
                        
                        
                        -
                        
                        
                        
                        39,152,493
                        
                        
                        
                        39,152,493
                        
                        
                        
                        -
                        
                        
                        
                        39,152,493Non-affiliate
      investments
                        
                        
                        -
                        
                        
                        
                        195,718,591
                        
                        
                        
                        195,718,591
                        
                        
                        
                        -
                        
                        
                        
                        195,718,591Income
      tax payable
                        
                        
                        -
                        
                        
                        
                        -
                        
                        
                        
                        -
                        
                        
                        
                        11,471
                        
                        
                        
                        11,471Deferred
      tax liabilities - current
                        
                        
                        -
                        
                        
                        
                        -
                        
                        
                        
                        -
                        
                        
                        
                        713,924
                        
                        
                        
                        713,924Total
      current liabilities
                        
                        
                        6,992,614
                        
                        
                        
                        -
                        
                        
                        
                        6,992,614
                        
                        
                        
                        725,395
                        
                        
                        
                        7,718,009Total
      liabilities
                        
                        
                        112,277,614
                        
                        
                        
                        -
                        
                        
                        
                        112,277,614
                        
                        
                        
                        725,395
                        
                        
                        
                        113,003,009Undistributed
      net investment income (loss)
                        
                        
                        30,375
                        
                        
                        
                        -
                        
                        
                        
                        30,375
                        
                        
                        
                        (11,471
                        )
                        
                        
                        18,904Net
      unrealized appreciation (depreciation) of portfolio securities, corporate
      notes
                        
                        
                        2,326,715
                        
                        
                        
                        -
                        
                        
                        
                        2,326,715
                        
                        
                        
                        (713,924
                        )
                        
                        
                        1,612,791Total
      stockholders’ equity (net assets)
                        
                        
                        246,788,826
                        
                        
                        
                        -
                        
                        
                        
                        246,788,826
                        
                        
                        
                        (725,395
                        )
                        
                        
                        246,063,431Net
      asset value per share
                        
                        
                        14.16
                        
                        
                        
                        -
                        
                        
                        
                        14.16
                        
                        
                        
                        (0.05
                        )
                        
                        
                        14.11
 
 The
effects of the restatement on the unaudited consolidated statements of
operations for the three month period ended March 31, 2007 are summarized in the
following table:
 
 As PreviouslyReported
                    
                    
                    Reclassifications
                    
                    
                    As Reclassified
                    
                    
                    Restatement
                    
                    
                    As RestatedConsolidated
      Statements of Operations:For
      the Three Months Ended March 31, 2007Investment
      incomeInterest
      income:
                    
                    $
                    8,421,255
                    
                    
                    $
                    (8,421,255
                    )
                    
                    $
                    -
                    
                    
                    $
                    -
                    
                    
                    $
                    -Control
      investments - majority owned
                    
                    
                    -
                    
                    
                    
                    1,007,278
                    
                    
                    
                    1,007,278
                    
                    
                    
                    -
                    
                    
                    
                    1,007,278Non-affiliate
      investments
                    
                    
                    -
                    
                    
                    
                    7,213,226
                    
                    
                    
                    7,213,226
                    
                    
                    
                    -
                    
                    
                    
                    7,213,226Royalty
      income:Non-affiliate
      investments
                    
                    
                    -
                    
                    
                    
                    200,751
                    
                    
                    
                    200,751
                    
                    
                    
                    -
                    
                    
                    
                    200,751Benefit
      (provision) for income taxes
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    (11,471
                    )
                    
                    
                    (11,471
                    )Net
      investment income
                    
                    
                    4,417,485
                    
                    
                    
                    -
                    
                    
                    
                    4,417,485
                    
                    
                    
                    (11,471
                    )
                    
                    
                    4,406,014Net
      unrealized gain (loss) on investmentsNet
      increase (decrease) in unrealized appreciation
                      (depreciation)
      on portfolio securities, corporate notes:
                    
                    
                    3,729,986
                    
                    
                    
                    (3,729,986
                    )
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    -Control
      investments - majority owned
                    
                    
                    -
                    
                    
                    
                    2,110,662
                    
                    
                    
                    2,110,662
                    
                    
                    
                    -
                    
                    
                    
                    2,110,662Non-affiliate
      investments
                    
                    
                    -
                    
                    
                    
                    1,619,324
                    
                    
                    
                    1,619,324
                    
                    
                    
                    -
                    
                    
                    
                    1,619,324Benefit
      (provision) for taxes on unrealized gain
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    (713,924
                    )
                    
                    
                    (713,924
                    )Total
      net unrealized gain (loss) on investments
                    
                    
                    3,729,986
                    
                    
                    
                    -
                    
                    
                    
                    3,729,986
                    
                    
                    
                    (713,924
                    )
                    
                    
                    3,016,062Net
      increase (decrease) in stockholders' equity (net assets) resulting from
      operations
                    
                    
                    8,147,471
                    
                    
                    
                    -
                    
                    
                    
                    8,147,471
                    
                    
                    
                    (725,395
                    )
                    
                    
                    7,422,076Net
      increase (decrease) in stockholders' equity (net assets) resulting from
      operations per common share
                    
                    
                    0.47
                    
                    
                    
                    -
                    
                    
                    
                    0.47
                    
                    
                    
                    (0.05
                    )
                    
                    
                    0.42
 
 The
effects of the restatement on the unaudited consolidated statements of cash
flows for the three-month period ended March 31, 2007 are summarized in the
following table:
 
 As PreviouslyReported
                    
                    
                    Reclassifications
                    
                    
                    As Reclassified
                    
                    
                    Restatement
                    
                    
                    As RestatedConsolidated
      Statements of Cash Flows:For
      the Three Months Ended March 31, 2007Cash
      flows from operating activitiesNet
      increase (decrease) in stockholders' equity (net assets) resulting from
      operations
                    
                    $
                    8,147,471
                    
                    
                    $
                    -
                    
                    
                    $
                    8,147,471
                    
                    
                    $
                    (725,395
                    )
                    
                    $
                    7,422,076Effects
      of changes in operating assets and liabilitiesIncome
      taxes payable
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    11,471
                    
                    
                    
                    11,471Current
      portion of deferred income taxes
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    713,924
                    
                    
                    
                    713,924


Note 3: Significant Accounting
Policies




The
consolidated financial statements include the accounts of the Company and its
subsidiaries. All intercompany accounts and transactions have been eliminated in
consolidation. The
unaudited consolidated financial statements have been prepared in accordance
with U.S. Generally Accepted Accounting Principles (“GAAP”) for interim
financial information. Accordingly, certain information and footnote disclosures
normally included in the annual financial statements prepared in accordance with
GAAP have been omitted from the accompanying unaudited interim consolidated
financial statements. The unaudited consolidated financial statements in this
quarterly report have been prepared consistent with the accounting policies
reflected in the Company’s annual financial statements included in the Company’s
Form 10-K for the year ended December 31, 2006, filed with the SEC and should be
read in conjunction therewith. In management’s opinion, the unaudited
consolidated financial statements include all adjustments, consisting of normal
recurring adjustments, considered necessary for a fair presentation of such
consolidated financial statements. 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
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 consolidated financial statements and the accompanying
notes to the consolidated financial statements. Actual results could differ from
these estimates.




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.




13





Prepaid
Assets




Prepaid
assets consist of premiums paid for directors’ and officers’ insurance and
fidelity bonds with a policy term of one year and fees associated with the
establishment of the credit facility. Such premiums and fees are amortized
monthly on a straight line basis over the term of the policy or credit facility.




Concentration of Credit Risk




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




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 Manager prepares valuations for all of the
assets in the Company’s portfolio and presents the valuations to the Company’s
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 Manager prepares valuation analyses, as
generally described below.





Using the
most recently available financial statements, forecasts and, when applicable,
comparable transaction data, 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, third party valuations of the
portfolio company’s assets (such as engineering reserve reports of oil and gas
properties) or multiples from transactions involving the sale of comparable
assets. 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 the portfolio
company and the asset valuation methodologies described above. The Manager
considers some or all of the above valuation methods to determine the estimated
enterprise value of a portfolio company.





Debt Securities: The
Company values its investments in non-convertible debt securities at its
original net book value 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 values
convertible debt securities at 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.





Equity
Securities: The
Company values its investments in preferred and common equity securities
(including warrants or options to acquire equity securities) 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 values investments in overriding royalty and net profits interests 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.




14




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.




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. Collectibility 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 company’s assets. For investments with payment-in-kind (PIK) interest, the
Manager bases income accruals on the valuation of the PIK notes or securities
received from the borrower. If the portfolio company’s asset valuation indicates
a value that is not sufficient to cover the contractual interest due on the PIK
notes, management will not accrue interest income on the notes.




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.




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. In the first
quarter of 2007, the Company accreted approximately $387,000 of fee income into
interest income, compared to accreted income of approximately $93,000 during the
first quarter of 2006.




15




Dividends




Dividends
to stockholders are recorded on the ex-dividend date. For tax purposes the
Company intends to continue to qualify as a RIC under the Code for 2005 and
later years. In order to maintain the Company’s status as a RIC, the Company is
required to distribute at least 90% of its investment company taxable income. In
addition, the Company must distribute at least 98% of its taxable income (both
ordinary income and net capital gains) to avoid excise tax. The Company intends
to make distributions to stockholders on a quarterly basis of substantially all
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 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 the 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.




For the
period ended December 31, 2004, the Company was treated as a “C” corporation and
had no taxable income and therefore did not declare a dividend for that period.
The following table summarizes the Company’s dividend history:




Dividend
      HistoryDeclaration
      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, 2007




The
Company has established an “opt out” dividend reinvestment plan for its common
stockholders. As a result, if the Company declares a cash dividend, 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 March 31, 2007, holders of 1,355,671 shares, or
approximately 7.8% of outstanding shares, were participants in the Company’s
dividend reinvestment plan.





The
Company’s 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. Through the third quarter of 2006, all shares credited to participants’
accounts were purchased in the open market. On December 29, 2006, the Company
issued 22,168 shares of common stock to participants in the dividend
reinvestment plan with respect to the $0.33 per share dividend declared on
December 7, 2006. On April 13, 2007, the Company issued 22,692 shares of common
stock to participants in the dividend reinvestment plan with respect to the
$0.265 per share dividend declared on March 19, 2007. The table below summarizes
participation in the Company’s dividend reinvestment plan:




16




Dividend Reinvestment Plan
      ParticipationPercentage
      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
              
              
              22,692
              (1)(1)
      Shares were issued on 4/13/07 for the March 2007 dividend. See above and
      Note 4 for futher detail.




Income Taxes





The
Company adopted the Financial Accounting Standards Board’s Interpretation
(“FIN”) No. 48, Accounting for Uncertainty in Income
Taxes—an interpretation of FASB Statement No. 109 (“FIN 48”), effective
January 1, 2007.  FIN 48
establishes a single model to address accounting for uncertain tax positions.
FIN 48 clarifies the accounting for income taxes by prescribing a minimum
recognition threshold a tax position is required to meet before being recognized
in the financial statements. FIN 48 also provides guidance on derecognition,
measurement classification, interest and penalties, accounting in interim
periods, disclosure and transition. The adoption of FIN 48 did not have a
material effect on the Company’s consolidated financial position or results of
operations. (See Note 6 for additional information.)





In
conjunction with the adoption of FIN 48, the Company implemented its policy to
record estimated interest and penalties related to the underpayment of income
tax as a component of General and administrative expenses in the
Consolidated Statement of Operations. However, there were no amounts for tax
related interest or penalties incurred for the quarter ended March 31, 2007.





Note 4: Credit Facility




On August
31, 2006, the Company simultaneously repaid its original credit facility and
entered into an Amended and Restated Revolving Credit Agreement (the “Investment
Credit Agreement”), among the Company, the syndicated lenders party thereto and
SunTrust Bank, as administrative agent for the lenders. Also on August 31, 2006,
the Company entered into a Treasury Secured Revolving Credit Agreement (the
“Treasury Credit Agreement”), among the Company, the syndicated lenders party
thereto and SunTrust Bank, as administrative agent for the lenders.





Under the
Investment Credit Agreement, the lenders have agreed to extend revolving credit
to the Company in an amount not to exceed $80 million, which includes a $10
million letter of credit subfacility; however, the Company has the ability to
increase the credit available under the Investment Credit Agreement to an amount
not to exceed $175 million by obtaining additional commitments from existing
lenders or new lenders. The Investment Credit Agreement 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 25 to 75 basis points, based on the degree of leverage of the Company.
Proceeds from the Investment Credit Agreement will be used to supplement the
Company’s equity capital to make portfolio investments. As of March 31, 2007,
the interest rate was 6.57% (LIBOR rate of 5.32% plus 125 basis points) on the
Company’s $5,285,000 outstanding balance under the Investment Credit Agreement.





The
obligations under the Investment Credit Agreement are collateralized by
substantially all of the Company’s assets, except certain assets that
collateralize the Treasury Credit Agreement and are guaranteed by the Company’s
existing and future subsidiaries, other than special purpose subsidiaries and
certain other subsidiaries. The Investment Credit Agreement 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 collateral under the Treasury Credit
Agreement) plus interest, taxes, depreciation and amortization expenses
(“EBITDA”) to interest expense (excluding interest on loans under the Treasury
Credit Agreement) 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.




17




The
Company has borrowed $5,285,000 as of March 31, 2007 under the Investment Credit
Agreement. From time to time, certain of the lenders may provide customary
commercial and investment banking services to the Company.





Under the
Treasury Credit Agreement, the lenders have agreed to extend revolving credit
loans to the Company in an amount not to exceed $100 million. Proceeds from the
Treasury Credit Agreement will be used to facilitate the growth of the Company’s
investment portfolio and provide flexibility in the sizing of its portfolio
investments. The Treasury Credit Agreement 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 March 31, 2007, the interest rate was 5.57% (LIBOR
rate of 5.32% plus 25 basis points) on the Company’s $100 million outstanding
balance under the Treasury Credit Agreement. Prepayments of loans under the
Treasury Credit Agreement made during the first year are subject to a premium
equal to 1% of the amount so prepaid.





The
obligations under the Treasury Credit Agreement are collateralized by certain
securities accounts assets and are guaranteed by the Company’s existing and
future subsidiaries, other than special purpose subsidiaries and certain other
subsidiaries. The Treasury Credit Agreement 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 cash collateral) to interest expense (excluding interest
on loans under the Treasury Credit Agreement) 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 Credit Agreement 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.





The
Company has borrowed $100 million as of March 31, 2007 under the Treasury Credit
Agreement. From time to time, certain of the lenders may provide customary
commercial and investment banking services to the Company.




Note 5: Issuance of Common Stock




On August
6, 2004, the Company, in its initial capitalization transaction, sold 100 shares
to Natural Gas Partners, LLC for $15.00 per share. On November 9, 2004, the
Company’s Registration Statement (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 registered, 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 the initial public offering of the shares of common stock, after
deducting expenses of approximately $2,308,000 and underwriting discounts and
commissions of $0.825 per share, were approximately $244,337,000.





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 the Company’s 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’s 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. Through the third quarter of 2006, all shares credited to participants’
accounts were purchased in the open market. On December 29, 2006, the Company
issued 22,168 shares of common stock to participants in the dividend
reinvestment plan with respect to the $0.33 per share dividend declared on
December 7, 2006. On April 13, 2007, the Company issued 22,692 shares of common
stock to participants in the dividend reinvestment plan with respect to the
$0.265 per share dividend declared on March 19, 2007.




18




Note 6: Investment Management




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. On October 25, 2006, the Company’s Board of
Directors, including all of the independent directors, approved an extension of
the investment advisory agreement through November 9, 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.  These items do not affect the periods in this
Amended Filing.
  Summary
of (Over)/ Under Payment of Management Fee by Quarter
  Total Assets
                                                  
                                                  
                                                  
                                                  
                                                  
                                                  Average
                                                    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
                                                  )


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. The base management fee is payable quarterly in arrears. The
$1,564,509 payable to the Manager as of March 31, 2007 was for the base
management fee for the first quarter of 2007.





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). Net investment income includes, in the case of investments with a deferred
interest feature (such as premium and 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 are calculated as follows:




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




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





There
were no investment income incentive fees earned for the first quarters of 2006
and 2007.





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, but not less than zero) 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. Capital Gains Fees are
estimated as of the end of the each fiscal quarter based on the gains realized
during such quarter and the unrealized losses as of the end of such quarter. To
the extent that Capital Gains Fees are earned by the investment advisor, an
accrual is made in the amount of the estimated Capital Gains Fee. Because
unrealized losses may fluctuate from quarter to quarter, the accrual, if any,
may fluctuate as well. There
were no capital gains incentive fees earned for the first quarters of 2006 and
2007.




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.




19




The
Manager has agreed that, beginning on November 9, 2006, and 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. Any sales of such stock will
comply with any applicable six-month holding period under Section 16(b) of the
Securities Act of 1933 and all other restrictions contained in any law or
regulation, to the fullest extent applicable to any such sale. Any change in
this voluntary agreement will not be implemented without at least 90 days prior
notice to stockholders and compliance with all applicable laws and regulations.
No shares have been repurchased under this agreement.





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 through October 31, 2006, and from year-to-year thereafter provided such
continuance is approved at least annually by the Board of Directors or by the
affirmative vote of the holders of a majority of the Company’s outstanding
voting securities, including, in either case, approval by a majority of the
Company’s directors who are not interested persons. On October 25, 2006, the
Company’s Board of Directors, including all of the independent directors,
approved an extension of the investment advisory agreement through November 9,
2007.





The
investment advisory 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
investment advisory agreement provides 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, its partners and
the Managers’ and its partners’ respective officers, managers, partners, 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 out of or otherwise based
upon any of the Manager’s duties or obligations under the investment advisory
agreement or otherwise as the Company’s investment adviser.





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 the Company’s
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.




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 and performs, or oversees the performance of, 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 Manager 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.
Payments under the administration agreement are equal to amounts based upon the
allocable portion of the Administrator’s costs and expenses in performing its
obligations under the administration agreement. The Administrator bills the
Company for charges under the administration agreement monthly in arrears.




20




Of the
$811,204 in accounts payable as of March 31, 2007, $187,442 is due to the
Administrator for expenses incurred on the Company’s behalf for the month of
March 2007.





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 as described below, 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 Company’s directors who are not
parties to the administration agreement or “interested persons” of any such
party. On October 25, 2006, the Board of Directors, including all of the
independent directors, approved an extension of the administration agreement
through November 9, 2007.





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: Federal Income Taxes




The
Company adopted the Financial Accounting Standards Board’s Interpretation
(“FIN”) No. 48, Accounting for Uncertainty in Income
Taxes—an interpretation of FASB Statement No. 109 (“FIN 48”), effective
January 1, 2007.  FIN 48
establishes a single model to address accounting for uncertain tax positions.
FIN 48 clarifies the accounting for income taxes by prescribing a minimum
recognition threshold a tax position is required to meet before being recognized
in the financial statements. FIN 48 also provides guidance on derecognition,
measurement classification, interest and penalties, accounting in interim
periods, disclosure and transition. The adoption of FIN 48 did not have a
material effect on the Company’s consolidated financial position or results of
operations. As a result, there was no cumulative effect related to adopting FIN
48. For federal income tax purposes, as of March 31, 2007, the tax years ended
December 31, 2004, 2005 and 2006 remain subject to examination.




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 year ended December 31,
2006.  Thus, the Company did not incur any federal income tax
liability for this period.
  The
following Company consolidated subsidiaries are subject to federal income taxes
for the period ended March 31, 2007: NGPC Asset Holdings, LP, NGPC Asset
Holdings II, LP and NGPC Asset Holdings III, LP.  The difference between
the effective income tax rate of 8.9% and the statutory federal tax rate of 34%
for the three months ended March 31, 2007 is primarily attributable to RIC
investment company taxable income that generally will not be subject to federal
income tax.




21





Note 8: Commitments and Contingencies




As of
March 31, 2007, the Company had investments in or commitments to fund loan
facilities to sixteen portfolio companies totaling $275 million, on which $232
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.




22




Note 9: 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. During the year ended
December 31, 2006, $15,710 has been reclassified to Undistributed net
investment income (loss) from Paid-in capital in excess of
par.




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.


Note 10: Subsequent
Events





On April
5, 2007, Chroma Exploration & Production, Inc. repaid substantially all of
its $17.5 million balance outstanding on its Senior Secured Term Loan. Chroma’s
$17.1 million balance as of March 31, 2007, represented approximately 5% of the
Company’s total investments at that time. In addition, Chroma repurchased the
Company’s overriding royalty interest in its properties resulting in a capital
gain of approximately $1.6 million, which will be recognized in the second
quarter of 2007. Additionally, the Company purchased $2 million of Series AA
Participating Convertible Preferred Stock issued by Chroma.





On April
12, 2007, Rubicon Energy Partners, LLC repaid in full the $33.6 million balance
outstanding on its Senior Secured Term Loan, which represented approximately 9%
of the Company’s total investments as of March 31, 2007. The
Company continues to hold its membership units, which represent a 50% ownership
interest in Rubicon.





On April
26, 2007, the Company closed an investment in the 2007-III Drilling Fund of
Anadarko Petroleum Corporation of Houston, Texas. The investment is in the form
of a term net profits interest and the Company’s commitment is for a total of
approximately $95 million with the expected initial funding of approximately $23
million occurring in the latter part of May. The Company expects the remainder
of the commitment to fund over the next nine to twelve months.





On April
27, 2007, the Company made a follow-on investment with an existing portfolio
company, TierraMar Energy, LP to acquire additional oil and gas properties and
accelerate its development drilling program.  In connection with the
transaction, the Company exchanged its $10 million Senior Secured Note and
Warrants for preferred limited partnership interests in TierraMar and
contributed an additional $3.1 million of preferred equity capital that was used
to acquire additional oil and gas properties. The Company maintained its
overriding royalty interest in the properties and has committed to make
additional capital contributions up to $7.9 million to be used for capital
expenditures.





In May
2007, the Company expanded its commitment in an amended and restated $190.0
million Senior Secured Credit Facility with Nighthawk Transport I, LP, an
existing portfolio company. The Company’s portion of the availability under the
amended and restated facility is $18.3 million, with approximately $9.6 million
outstanding at closing.





Note 11: New Accounting
Interpretations and Standards




In
September 2006, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards (“SFAS”) No. 157 , Fair Value
Measurements , which
defines fair value, establishes a framework for measuring fair value in
generally accepted accounting principles (GAAP), and expands disclosures about
fair value measurements. SFAS 157 is effective for financial statements issued
for fiscal years beginning after November 15, 2007, although earlier application
is encouraged. The Company is currently reviewing the requirements of SFAS 157
to determine the effect, if any, on its financial position or results of
operations.




23




In
February 2007, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards (“SFAS”) No. 159, The Fair Value Options for Financial
Assets and Financial Liabilities, which
gives entities the option to measure eligible financial assets and financial
liabilities at fair value on an instrument by instrument basis that are
otherwise not permitted to be accounted for at fair value under other accounting
standards. The election to use the fair value option is available when an entity
first recognizes a financial asset or financial liability. Subsequent changes in
fair value must be recorded in earnings. SFAS 159 is effective as of the
beginning of a company’s first fiscal year after November 15, 2007. The Company
is currently reviewing the requirements of SFAS 159 to determine the effect, if
any, on its consolidated financial position or results of operations.





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 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 three-month period ended March 31, 2007.  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




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





·
            uncertainties
      associated with the timing of transaction
  closings;


·
            changes
      in the prospects of our portfolio
companies;


·
            changes
      in interest rates;


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


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


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


·
            the
      adequacy of our cash resources and working
  capital;


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


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


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





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




Overview




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





Our
investment objective is to generate both current income and capital appreciation
primarily through debt and equity investments or a combination thereof. 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 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, although a few investments may be substantially in excess of this
range. Our targeted investments primarily consist of debt instruments, including
senior and subordinated loans combined in one facility with an equity component,
subordinated loans and subordinated loans with equity components and preferred
stock and other similar securities.




24




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, capital from banks,
mezzanine providers and alternative investment vehicles such as hedge funds
continues to be readily available.  Competition for deals remains strong
with continued downward pressure on spreads. However, we do not expect this
intensely competitive market to impair our ability to make good 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 or
similar 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 three months ended March 31, 2007, we added two companies to our portfolio,
bringing our total number of portfolio companies to sixteen. In January, we
closed a $36.5 million senior secured credit facility with Alden Resources, LLC,
to refinance its existing debt, acquire additional coal properties and to
acquire a coal preparation plant. Initial availability under the facility was
$32 million, and as of March 31, 2007, availability was $35 million and
approximately $33.7 million was drawn. Additionally, as partial consideration
for providing the facility, NGPC received warrants in Alden and a royalty
interest in revenues generated from all aspects of its operations. In March
2007, we closed a $60 million senior secured credit facility with Tammany Oil
& Gas LLC to acquire and develop additional oil and gas properties and fund
capital expenditures in state and federal waters of Louisiana and Texas. As part
of the transaction, NGPC received an overriding royalty interest in most of
Tammany’s properties. Initial availability was $30 million, and as of March 31,
2007, approximately $17.2 million was drawn on the facility.





As of
March 31, 2007, our portfolio was invested as follows: 53.1% in senior secured
term loans, 10.4% in senior subordinated secured notes, 0.6% in participating
convertible preferred stock, 4.3% in corporate notes, 1.7% in LLC units, 29.2%
in U.S. Treasury Bills, and 0.7% in cash and cash equivalents. At March 31,
2007, the weighted average yield on targeted portfolio investments, exclusive of
capital gains, was 12.5%. 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 5.0%. The weighted average yield on our total capital invested at March 31,
2007 was 9.9%. 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, weighted by their respective costs when
averaged.




Results of Operations




Investment Income




Investment
income for the quarter ended March 31, 2007 was $8.5 million with $6.7 million
attributable to targeted investments in sixteen portfolio companies, $0.2
million from corporate notes, $1.5 million attributable to investments in cash
equivalents, and $0.1 million in fee income from third parties and affiliates.
This compares to investment income for the quarter ended March 31, 2006 of $5.0
million with $3.2 million attributable to targeted investments in eight
portfolio companies, $0.3 million from corporate notes, $0.1 million in fee
income from third parties and affiliates, and $1.4 million attributable to
investments in cash equivalents, agency notes and auction rate securities.




25




Operating Expenses




For the
quarter ended March 31, 2007, operating expenses were $4.1 million compared to
$2.0 million for the quarter ended March 31, 2006. The 2007 amount consisted of
investment advisory and management fees of $1.6 million, insurance expenses,
administrative services fees, professional fees, directors’ fees, organization
costs and other general and administrative expenses of $0.9 million and credit
facility interest and fees of $1.6 million. In comparison, for the quarter ended
March 31, 2006, investment advisory and management fees were $1.1 million,
insurance expenses, administrative services fees, professional fees, directors’
fees, organization costs and other general and administrative expenses were $0.8
million and credit facility fees were $0.1 million. There were no amounts drawn
on the credit facilities until the second quarter of 2006.





Operating
expenses for the three month periods include our allocable portion of the total
organizational and operating expenses incurred by us, our Manager, and 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 the total assets of the Company as of the end of the two previous
quarters, an increase from the lesser of $900,000 or 0.375% of such average.




Net Investment Income Before Income
Taxes




For the
first quarter of 2007, net investment income before income taxes was $4.4
million compared to $3.0 million for the first quarter of 2006, primarily due to
increased interest on the higher portfolio balances partially offset by higher
management fees, general and administrative expenses and interest and credit
facility fees.




Unrealized Appreciation or
Depreciation on Investments




For the
quarter ended March 31, 2007, as restated, net unrealized appreciation before
income taxes of $0.7 million was $3.7 million, compared to ($1.1) million net
unrealized depreciation for the first quarter of 2006. The $4.8 million increase
is attributable to $3.6 million in changes in the fair values of our targeted
investments and $1.2 million in changes in market prices of our corporate notes.




Net Realized Gains




No net
realized capital gains or losses were recorded for the quarters ended March 31,
2007 or March 31, 2006.





Net Increase in Stockholders’ Equity
from Operations




For the
quarter ended March 31, 2007, as restated, we had a net increase in
stockholders’ equity (net assets) resulting from operations of $7.4 million, or
$0.42 per share, compared to a net increase of $1.8 million, or $0.10 per share
for the quarter ended March 31, 2006.




Financial Condition, Liquidity and
Capital Resources




During
the first quarter of this fiscal year, 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 March 31, 2007, we
had cash and cash equivalents of $2.4 million, investments in U.S. Treasury
Bills of $104.0 million and investments in corporate notes of $15.3 million.




As of
March 31, 2007, we had investments in or commitments to fund loan facilities to
sixteen portfolio companies totaling $274.8 million, of which $232.4 million was
drawn. We expect to fund our investments in 2007 from income earned on our
portfolio and temporary investments and from borrowings under our Credit
Agreement. (See description under “Note 3: Credit Facility” above.) 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.





On August
31, 2006, we simultaneously repaid our original credit facility and entered into
two new syndicated credit facilities totaling $180 million, with SunTrust Bank
as the administrative agent, each with a three year term. The first facility,
the Senior Secured Revolving Credit Facility (the “Investment Facility”) has an
initial availability of $80 million with the ability to increase availability to
$175 million over time. Proceeds from the Investment Facility will be used to
supplement the Company’s equity capital in making portfolio investments.
Interest on the Investment Facility will be charged at either (i) LIBOR plus 125
to 225 basis points, based on the Company’s outstanding borrowings, or (ii) the
higher of the lender prime rate plus 25 to 75 basis points or the federal funds
rate plus 50 basis points. The second facility, the Senior Treasury Secured
Revolving Credit Facility (the “Treasury Facility”) permits the Company to
borrow up to $100 million. Proceeds from the Treasury Facility will be used to
facilitate the growth of the Company’s investment portfolio and provide
flexibility in the sizing of its portfolio investments. Interest on the Treasury
Facility will be charged at either (i) LIBOR plus 25 basis points, or (ii) the
higher of the lender prime rate or the federal funds rate plus 50 basis points.
The credit facilities are collateralized by substantially all of our assets. As
of March 31, 2007, the Company had $100 million outstanding under the Treasury
Facility and $5,285,000 outstanding under the Investment Facility. In the
future, we may also fund a portion of our investments with issuances of equity
or senior debt securities. We may also securitize a portion of our investments.
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.




26




Dividends




We intend
to be taxed as a regulated investment company under Subchapter M of the Code for
2005 and later years. As a RIC, we will be required to distribute annually at
least 90% of our investment company taxable income and at least 98% of our
capital gain net income to avoid excise tax. We intend to make distributions to
our stockholders on a quarterly basis of amounts required to maintain our status
as a RIC. We also currently 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.




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 business development company 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 regulated investment company. 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 loans. This system is
intended to reflect the performance of a portfolio company’s business, the
collateral coverage of a loan, and other factors considered relevant. As of
March 31, 2007, all of our investments in portfolio companies were performing
satisfactorily. Investments approximating $40 million, or approximately 17% of
the $234.9 million in targeted investments, have been placed on the Company’s
watch list due to slower than expected development of the assets supporting the
investments. We expect the assets to eventually perform as planned and believe
there is adequate collateral coverage and little to no risk of loss of capital.





Recently Issued Accounting
      PronouncementsSee
      Note 11: New Accounting Interpretations and Standards in the
      accompanying notes to consolidated financial statements for details of
      recently issued accounting pronouncements and their expected impact on the
      Company’s 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 the
Company’s Annual Report on Form 10-K for the year ended December 31, 2006.


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.
 
 27
  In
connection with the preparation of this Quarterly Report on Form 10-Q, as of the
end of the fiscal period covered by this Quarterly Report on Form 10-Q (March
31, 2007), 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 March 31, 2007, 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 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 March 31, 2007 that have materially affected or are reasonably likely to
materially affect, the Company’s internal control over financial
reporting.




28





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, 2006.
 
 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.


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.
  Not
applicable.


Item 5. Other Information.




Not
applicable.




29





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 Natural Gas Partners, LLC (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
              -
              Joint
      Code of Ethics (filed as Exhibit (r) to the Company’s Registration
      Statement on Form N-2 dated November 9, 2004 (Registration No. 333-118279)
      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
              -
              Revolving
      Credit Agreement dated as of May 16, 2005, by and between NGP Capital
      Resources Company, the lenders from time to time party thereto and
      SunTrust Bank (filed as Exhibit 10.4 to the Company’s Quarterly Report on
      Form 10-Q for the quarterly period ended June 30, 2005, and incorporated
      herein by reference)10.7
              -
              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)10.8
              -
              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)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




30





SIGNATURES




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


NGP CAPITAL RESOURCES
      COMPANYDate: May 10,
      2010
              By:
              /s/ John H.
      HomierJohn H. HomierPresident
      and Chief Executive Officer




NGP CAPITAL RESOURCES
      COMPANYDate: May 10,
      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 Natural Gas Partners, LLC (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
                -
                Joint
      Code of Ethics (filed as Exhibit (r) to the Company’s Registration
      Statement on Form N-2 dated November 9, 2004 (Registration No. 333-118279)
      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
                -
                Revolving
      Credit Agreement dated as of May 16, 2005, by and between NGP Capital
      Resources Company, the lenders from time to time party thereto and
      SunTrust Bank (filed as Exhibit 10.4 to the Company’s Quarterly Report on
      Form 10-Q for the quarterly period ended June 30, 2005, and incorporated
      herein by reference)10.7
                -
                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)10.8
                -
                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)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