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
      1934For
      the quarterly period ended September 30,
2007




OR





 ̈
            TRANSITION
      REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
      1934For
      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
            x
            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
June 22, 2010, there were 21,628,202 shares of the registrant’s common stock
outstanding.








TABLE OF
CONTENTS





PART
      I - FINANCIAL INFORMATION
                
                1Item
      1.  Consolidated Financial Statements
                
                1Item
      2.  Management’s Discussion and Analysis of Financial Condition
      and Results of Operations
                
                21Item
      3.  Quantitative and Qualitative Disclosures About Market
      Risk
                
                24Item
      4.  Controls and Procedures
                
                25PART
      II – OTHER INFORMATION
                
                26Item
      1.  Legal Proceedings
                
                26Item
      1A.  Risk Factors
                
                26Item
      2.  Unregistered Sales of Equity Securities and Use of
      Proceeds
                
                26Item
      3.  Defaults Upon Senior Securities
                
                26Item
      4.  Submission of Matters to a Vote of Security
      Holders
                
                26Item
      5.  Other Information
                
                26Item
      6.  Exhibits
                
                27


i


Explanatory
Note





We are filing this Amended Quarterly
Report on Form 10-Q/A to our Quarterly Report on Form 10-Q for the quarter ended
September 30, 2007, which we refer to as the Amended Filing, to restate our
unaudited consolidated financial statements and related disclosures for the
quarter ended September 30, 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 September 30, 2007, which we
refer to as the Original Filing, was filed with the Securities and Exchange
Commission on November 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. We have previously filed
amendments to our Quarterly Reports on Form 10-Q for each of the
quarters ended March 31 in the Affected Periods. With the filing of
this Amended Filing, we are concurrently filing amendments to our Quarterly
Reports on Form 10−Q for the quarters ended June 30 and September 30 in each of
the Affected Periods. For this reason, readers should no longer rely on
those previously issued financial statements and the related information
contained in such previously filed reports for the Affected
Periods.





For the convenience of the reader, this
Amended Filing sets forth the Original Filing, as modified and superseded where
necessary to reflect the amendment and restatement of our unaudited consolidated
financial statements and related disclosures.  The following items
have been amended principally as a result of, and to reflect, the
restatement:





·
            Part
      I – Item 1. Consolidated Financial
Statements;


·
            Part
      I – Item 2. Management’s Discussion and Analysis of Financial Condition
      and Results of Operations;


·
            Part
      I – Item 4. Controls and
Procedures;


·
            Part
      II –Item 1.A. Risk Factors; and


·
            Part
      II –Item 6. Exhibits.





In accordance with applicable rules of
the Securities and Exchange Commission, this Amended Filing includes
certifications from our Chief Executive Officer and Chief Financial Officer
dated as of the date of this filing.





The remaining items contained in this
Amended Filing consist of all other items originally contained in the Original
Filing and are included for the convenience of the reader.  The
sections of the Original Filing which were not amended are unchanged and
continue in full force and effect as originally filed.  This Amended
Filing speaks as of November 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)September 30, 2007
                  
                  
                  December 31, 2006(As Restated)AssetsInvestments in portfolio
      securities at fair value
                    Control investments - majority
      owned
                    (cost $18,752,216 and $36,136,463,
      respectively)
                  
                  $
                  26,933,857
                  
                  
                  $
                  36,136,463Non-affiliate
      investments
                    (cost $242,118,732 and
      $134,726,740, respectively)
                  
                  
                  240,548,530
                  
                  
                  
                  135,889,035Investments in corporate notes at
      fair value
                    (cost:  $11,642,328 and
      $17,681,646, respectively)
                  
                  
                  8,936,500
                  
                  
                  
                  15,116,080Investments in U.S. Treasury
      Bills, at amortized cost which approximates fair
    value
                  
                  
                  127,813,642
                  
                  
                  
                  142,669,579Total
      investments
                  
                  
                  404,232,529
                  
                  
                  
                  329,811,157Cash and cash
      equivalents
                  
                  
                  7,084,798
                  
                  
                  
                  12,334,329Accounts
      receivable
                  
                  
                  5,658
                  
                  
                  
                  452,916Interest
      receivable
                  
                  
                  1,340,766
                  
                  
                  
                  1,400,757Prepaid
    assets
                  
                  
                  933,981
                  
                  
                  
                  1,598,501Total
assets
                  
                  $
                  413,597,732
                  
                  
                  $
                  345,597,660Liabilities and stockholders'
      equity (net assets)Current
      liabilitiesAccounts
      payable
                  
                  $
                  709,406
                  
                  
                  $
                  965,105Management and incentive fees
      payable
                  
                  
                  2,061,266
                  
                  
                  
                  1,374,299Dividends
      payable
                  
                  
                  6,114,379
                  
                  
                  
                  -Income taxes
      payable
                  
                  
                  221,776
                  
                  
                  
                  -Deferred tax
      liabilities
                  
                  
                  2,770,924
                  
                  
                  
                  -Total current
      liabilities
                  
                  
                  11,877,751
                  
                  
                  
                  2,339,404Long-term
    debt
                  
                  
                  151,000,000
                  
                  
                  
                  100,000,000Total
      liabilities
                  
                  
                  162,877,751
                  
                  
                  
                  102,339,404Commitments and
      contingencies  (Note 8)Stockholders’ equity (net
      assets)Common stock, $.001 par value,
      250,000,000 shares authorized; 17,469,654 and 17,422,268 issued and
      17,469,654 and 17,422,268 outstanding, respectively
                  
                  
                  17,470
                  
                  
                  
                  17,422Paid-in capital in excess of
      par
                  
                  
                  245,441,929
                  
                  
                  
                  244,660,173Undistributed net investment
      income (loss)
                  
                  
                  (1,789,732
                  )
                  
                  
                  229,791Undistributed net realized capital
      gain  (loss)
                  
                  
                  5,915,627
                  
                  
                  
                  (245,859
                  )Net unrealized appreciation
      (depreciation) of portfolio securities and corporate
      notes
                  
                  
                  1,134,687
                  
                  
                  
                  (1,403,271
                  )Total stockholders’ equity (net
      assets)
                  
                  
                  250,719,981
                  
                  
                  
                  243,258,256Total liabilities and
      stockholders' equity (net assets)
                  
                  $
                  413,597,732
                  
                  
                  $
                  345,597,660Net asset value per
      share
                  
                  $
                  14.35
                  
                  
                  $
                  13.96





(See accompanying notes to consolidated
financial statements)


1





NGP CAPITAL RESOURCES
COMPANY


CONSOLIDATED STATEMENTS OF
OPERATIONS


(Unaudited)





For the Three Months Ended
                  
                  
                  For the Nine Months EndedSeptember 30, 2007
                  
                  
                  September 30, 2006
                  
                  
                  September 30, 2007
                  
                  
                  September 30, 2006(As Restated)
                  
                  
                  
                  
                  
                  (As Restated)Investment
      incomeInterest
      and dividend income:Control
      investments - majority owned
                  
                  $
                  (1,108
                  )
                  
                  $
                  492,704
                  
                  
                  $
                  2,245,677
                  
                  
                  $
                  492,704Non-affiliate
      investments
                  
                  
                  8,777,580
                  
                  
                  
                  6,825,705
                  
                  
                  
                  24,042,038
                  
                  
                  
                  17,358,886Royalty
      income, net of amortization:Control
      investments - majority owned
                  
                  
                  13,049
                  
                  
                  
                  -
                  
                  
                  
                  13,049
                  
                  
                  
                  -Non-affiliate
      investments
                  
                  
                  221,884
                  
                  
                  
                  60,911
                  
                  
                  
                  733,468
                  
                  
                  
                  249,915Other
      income
                  
                  
                  47,960
                  
                  
                  
                  177,634
                  
                  
                  
                  245,704
                  
                  
                  
                  451,261Total
      investment income
                  
                  
                  9,059,365
                  
                  
                  
                  7,556,954
                  
                  
                  
                  27,279,936
                  
                  
                  
                  18,552,766Operating
      expensesManagement
      fees
                  
                  
                  1,626,857
                  
                  
                  
                  1,128,304
                  
                  
                  
                  4,776,860
                  
                  
                  
                  3,363,428Incentive
      fees
                  
                  
                  (531,889
                  )
                  
                  
                  -
                  
                  
                  
                  522,469
                  
                  
                  
                  -Professional
      fees
                  
                  
                  209,231
                  
                  
                  
                  186,132
                  
                  
                  
                  537,813
                  
                  
                  
                  543,960Insurance
      expense
                  
                  
                  132,423
                  
                  
                  
                  144,234
                  
                  
                  
                  397,268
                  
                  
                  
                  432,823Interest
      expense and fees
                  
                  
                  1,737,202
                  
                  
                  
                  836,067
                  
                  
                  
                  4,913,624
                  
                  
                  
                  996,141Other
      general and administrative expenses
                  
                  
                  627,034
                  
                  
                  
                  523,084
                  
                  
                  
                  1,944,690
                  
                  
                  
                  1,599,028Total
      operating expenses
                  
                  
                  3,800,858
                  
                  
                  
                  2,817,821
                  
                  
                  
                  13,092,724
                  
                  
                  
                  6,935,380Net
      investment income before income taxes
                  
                  
                  5,258,507
                  
                  
                  
                  4,739,133
                  
                  
                  
                  14,187,212
                  
                  
                  
                  11,617,386Benefit
      (provision) for income taxes
                  
                  
                  (11,287
                  )
                  
                  
                  -
                  
                  
                  
                  (67,518
                  )
                  
                  
                  -Net
      investment income
                  
                  
                  5,247,220
                  
                  
                  
                  4,739,133
                  
                  
                  
                  14,119,694
                  
                  
                  
                  11,617,386Net
      realized capital gain (loss) on portfolio securities and corporate
      notesNon-affiliate
      investments
                  
                  
                  (351,114
                  )
                  
                  
                  (174,401
                  )
                  
                  
                  6,315,744
                  
                  
                  
                  (174,401
                  )Benefit
      (provision) for taxes on capital gain (loss)
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  (154,258
                  )
                  
                  
                  -Total
      net realized capital gain (loss) on
    investments
                  
                  
                  (351,114
                  )
                  
                  
                  (174,401
                  )
                  
                  
                  6,161,486
                  
                  
                  
                  (174,401
                  )Net
      unrealized appreciation (depreciation) on portfolio securities
      and corporate notesControl
      investments - majority owned
                  
                  
                  2,000,000
                  
                  
                  
                  -
                  
                  
                  
                  8,000,000
                  
                  
                  
                  -Non-affiliate
      investments
                  
                  
                  (2,712,268
                  )
                  
                  
                  775,859
                  
                  
                  
                  (2,691,118
                  )
                  
                  
                  (1,730,662
                  )Benefit
      (provision) for taxes on unrealized gain
    (loss)
                  
                  
                  (680,000
                  )
                  
                  
                  -
                  
                  
                  
                  (2,770,924
                  )
                  
                  
                  -Net
      increase (decrease) in unrealized appreciation (depreciation) on portfolio
      securities and corporate notes
                  
                  
                  (1,392,268
                  )
                  
                  
                  775,859
                  
                  
                  
                  2,537,958
                  
                  
                  
                  (1,730,662
                  )Net
      increase in stockholders' equity (net assets) resulting from
      operations
                  
                  $
                  3,503,838
                  
                  
                  $
                  5,340,591
                  
                  
                  $
                  22,819,138
                  
                  
                  $
                  9,712,323Net
      increase in stockholders' equity (net assets) resulting from operations
      per common share
                  
                  $
                  0.20
                  
                  
                  $
                  0.31
                  
                  
                  $
                  1.32
                  
                  
                  $
                  0.56





(See accompanying notes to consolidated
financial statements)


2





NGP CAPITAL RESOURCES
COMPANY


CONSOLIDATED STATEMENT OF CHANGES IN
STOCKHOLDERS' EQUITY (NET ASSETS)





Net Unrealized
                    
                    
                    TotalPaid-in Capital
                    
                    
                    Undistributed
                    
                    
                    Undistributed
                    
                    
                    Appreciation (Depreciation)
                    
                    
                    Stockholders'Common Stock
                    
                    
                    in Excess
                    
                    
                    Net Investment
                    
                    
                    Net Realized
                    
                    
                    of Portfolio Securities,
      and
                    
                    
                    EquityShares
                    
                    
                    Amount
                    
                    
                    of Par
                    
                    
                    Income (Loss)
                    
                    
                    Capital Gain (Loss)
                    
                    
                    Corporate 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
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    14,119,694
                    
                    
                    
                    6,161,486
                    
                    
                    
                    2,537,958
                    
                    
                    
                    22,819,138Dividends
      declared
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    (16,139,217
                    )
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    (16,139,217
                    )Issuance
      of common stock under dividend reinvestment
      plan
                    
                    
                    47,386
                    
                    
                    
                    48
                    
                    
                    
                    781,756
                    
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    781,804Balance
      at September 30, 2007 (unaudited and as
      restated)
                    
                    
                    17,469,654
                    
                    
                    $
                    17,470
                    
                    
                    $
                    245,441,929
                    
                    
                    $
                    (1,789,732
                    )
                    
                    $
                    5,915,627
                    
                    
                    $
                    1,134,687
                    
                    
                    $
                    250,719,981





(See accompanying notes to consolidated
financial statements)


3





NGP CAPITAL RESOURCES
COMPANY


CONSOLIDATED STATEMENTS OF CASH
FLOWS


(Unaudited)





For the Nine Months EndedSeptember 30, 2007
                
                
                September 30, 2006(As Restated)Cash flows from operating
      activitiesNet increase in stockholders'
      equity (net assets) resulting from operations
                
                $
                22,819,138
                
                
                $
                9,712,323Adjustments to reconcile net
      increase in stockholders' equity (net assets) resulting from operations to
      net cash used in operating activitiesPayment-in-kind
      interest
                
                
                (2,966,423
                )
                
                
                (161,942
                )Payment-in-kind
      dividend
                
                
                (93,710
                )
                
                
                (60,998
                )Net amortization of premiums,
      discounts and fees
                
                
                (2,168,463
                )
                
                
                (581,676
                )Net change in unrealized
      appreciation (depreciation) on portfolio securities and corporate
      notes
                
                
                (5,308,882
                )
                
                
                1,730,662Effects of changes in operating
      assets and liabilitiesAccounts
      receivable
                
                
                447,258
                
                
                
                37,045Interest
      receivable
                
                
                59,991
                
                
                
                (523,241
                )Prepaid
    assets
                
                
                664,520
                
                
                
                (740,395
                )Accounts
      payable
                
                
                431,268
                
                
                
                1,238,078Income taxes
      payable
                
                
                221,776
                
                
                
                -Current portion of deferred income
      taxes
                
                
                2,770,924
                
                
                
                -Purchase of investments in
      portfolio securities
                
                
                (194,255,244
                )
                
                
                (116,814,029
                )Redemption of investments in
      portfolio securities
                
                
                109,508,043
                
                
                
                12,502,402Sale of investments in corporate
      notes
                
                
                6,007,370
                
                
                
                2,002,737Net sale of investments in U.S.
      Treasury Bills
                
                
                14,855,937
                
                
                
                425,709Net cash used in operating
      activities
                
                
                (47,006,497
                )
                
                
                (91,233,325
                )Cash flows from financing
      activitiesBorrowings under revolving credit
      facility
                
                
                51,000,000
                
                
                
                100,000,000Dividends
    paid
                
                
                (9,243,034
                )
                
                
                (10,701,062
                )Net cash provided by financing
      activities
                
                
                41,756,966
                
                
                
                89,298,938Net decrease in cash and cash
      equivalents
                
                
                (5,249,531
                )
                
                
                (1,934,387
                )Cash and cash equivalents,
      beginning of the period
                
                
                12,334,329
                
                
                
                13,350,588Cash and cash equivalents, end of
      period
                
                $
                7,084,798
                
                
                $
                11,416,201





(See accompanying notes to consolidated
financial statements)


4





NGP CAPITAL RESOURCES
COMPANY


CONSOLIDATED SCHEDULE OF
INVESTMENTS


September 30, 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, LLC
                                                                                                                                      
                                                                                                                                      Oil
      & Natural Gas
                                                                                                                                      
                                                                                                                                      LLC
      Units (4,000 units) (5)
                                                                                                                                      
                                                                                                                                      
                                                                                                                                      
                                                                                                                                      
                                                                                                                                      $
                                                                                                                                      4,000,000
                                                                                                                                      
                                                                                                                                      
                                                                                                                                      $
                                                                                                                                      12,000,000Production
      and DevelopmentTierraMar
      Energy LP
                                                                                                                                      
                                                                                                                                      Oil
      & Natural Gas
                                                                                                                                      
                                                                                                                                      Overriding
      Royalty Interest
                                                                                                                                      
                                                                                                                                      
                                                                                                                                      
                                                                                                                                      
                                                                                                                                      
                                                                                                                                      18,359
                                                                                                                                      
                                                                                                                                      
                                                                                                                                      
                                                                                                                                      200,000Production
      and Development
                                                                                                                                      
                                                                                                                                      Class
      A Preferred LP Units (5)
                                                                                                                                      
                                                                                                                                      
                                                                                                                                      
                                                                                                                                      
                                                                                                                                      
                                                                                                                                      14,733,857
                                                                                                                                      
                                                                                                                                      
                                                                                                                                      
                                                                                                                                      14,733,857Total
      Control Investments- Majority Owned (50% to 100%
      owned)
                                                                                                                                      
                                                                                                                                      
                                                                                                                                      
                                                                                                                                      
                                                                                                                                      $
                                                                                                                                      18,752,216
                                                                                                                                      
                                                                                                                                      
                                                                                                                                      $
                                                                                                                                      26,933,857Non-affiliate
      Investments - (Less than 5% owned)Alden
      Resources, LLC
                                                                                                                                      
                                                                                                                                      Coal
      Production
                                                                                                                                      
                                                                                                                                      Senior
      Secured
                                                                                                                                      
                                                                                                                                      $
                                                                                                                                      35,000,000
                                                                                                                                      
                                                                                                                                      
                                                                                                                                      $
                                                                                                                                      31,974,099
                                                                                                                                      
                                                                                                                                      
                                                                                                                                      $
                                                                                                                                      31,974,099Multiple-Advance
      Term Loan(LIBOR
      + 8.00% cash, +10.00% PIK - until 1/05/2008,cash
      only thereafter, due 1/05/2013)Royalty
      Interest
                                                                                                                                      
                                                                                                                                      
                                                                                                                                      
                                                                                                                                      
                                                                                                                                      
                                                                                                                                      
                                                                                                                                      2,639,711
                                                                                                                                      
                                                                                                                                      
                                                                                                                                      
                                                                                                                                      2,660,000Warrants
      (5)
                                                                                                                                      
                                                                                                                                      
                                                                                                                                      
                                                                                                                                      
                                                                                                                                      
                                                                                                                                      
                                                                                                                                      100,000
                                                                                                                                      
                                                                                                                                      
                                                                                                                                      
                                                                                                                                      100,000Anadarko
      Petroleum Corporation
                                                                                                                                      
                                                                                                                                      Oil
      & Natural Gas
                                                                                                                                      
                                                                                                                                      Multiple-Advance
      Net Profits Interest
                                                                                                                                      
                                                                                                                                      
                                                                                                                                      49,325,351
                                                                                                                                      
                                                                                                                                      
                                                                                                                                      
                                                                                                                                      49,347,154
                                                                                                                                      
                                                                                                                                      
                                                                                                                                      
                                                                                                                                      49,347,1542007-III
      Drilling Fund
                                                                                                                                      
                                                                                                                                      Production
      and Development
                                                                                                                                      
                                                                                                                                      (Due
      4/23/2032)BSR
      Alto, LLC
                                                                                                                                      
                                                                                                                                      Oil
      & Natural Gas
                                                                                                                                      
                                                                                                                                      Senior
      Secured
                                                                                                                                      
                                                                                                                                      
                                                                                                                                      2,431,546
                                                                                                                                      
                                                                                                                                      
                                                                                                                                      
                                                                                                                                      2,332,908
                                                                                                                                      
                                                                                                                                      
                                                                                                                                      
                                                                                                                                      1,832,908Production
      and 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
                                                                                                                                      
                                                                                                                                      
                                                                                                                                      
                                                                                                                                      
                                                                                                                                      
                                                                                                                                      
                                                                                                                                      29,102
                                                                                                                                      
                                                                                                                                      
                                                                                                                                      
                                                                                                                                      75,000Warrants
      (5)
                                                                                                                                      
                                                                                                                                      
                                                                                                                                      
                                                                                                                                      
                                                                                                                                      
                                                                                                                                      
                                                                                                                                      10,000
                                                                                                                                      
                                                                                                                                      
                                                                                                                                      
                                                                                                                                      -BSR
      Loco Bayou, LLC
                                                                                                                                      
                                                                                                                                      Oil
      & Natural Gas
                                                                                                                                      
                                                                                                                                      Senior
      Secured
                                                                                                                                      
                                                                                                                                      
                                                                                                                                      4,127,191
                                                                                                                                      
                                                                                                                                      
                                                                                                                                      
                                                                                                                                      3,862,088
                                                                                                                                      
                                                                                                                                      
                                                                                                                                      
                                                                                                                                      3,000,000Production
      and 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
                                                                                                                                      
                                                                                                                                      
                                                                                                                                      
                                                                                                                                      
                                                                                                                                      
                                                                                                                                      
                                                                                                                                      20,000
                                                                                                                                      
                                                                                                                                      
                                                                                                                                      
                                                                                                                                      20,000Warrants
      (5)
                                                                                                                                      
                                                                                                                                      
                                                                                                                                      
                                                                                                                                      
                                                                                                                                      
                                                                                                                                      
                                                                                                                                      10,000
                                                                                                                                      
                                                                                                                                      
                                                                                                                                      
                                                                                                                                      -Chroma
      Exploration &
                                                                                                                                      
                                                                                                                                      Oil
      & Natural Gas
                                                                                                                                      
                                                                                                                                      8,887
      Shares Series A Participating
                                                                                                                                      
                                                                                                                                      
                                                                                                                                      
                                                                                                                                      
                                                                                                                                      
                                                                                                                                      
                                                                                                                                      2,221,710
                                                                                                                                      
                                                                                                                                      
                                                                                                                                      
                                                                                                                                      1,221,710Production,
      Inc.
                                                                                                                                      
                                                                                                                                      Production
      and Development
                                                                                                                                      
                                                                                                                                      Convertible
      Preferred Stock8,116
      Shares Series AA Participating
                                                                                                                                      
                                                                                                                                      
                                                                                                                                      
                                                                                                                                      
                                                                                                                                      
                                                                                                                                      
                                                                                                                                      2,029,000
                                                                                                                                      
                                                                                                                                      
                                                                                                                                      
                                                                                                                                      2,029,000Convertible
      Preferred Stock8.11
      Shares Common Stock (5)
                                                                                                                                      
                                                                                                                                      
                                                                                                                                      
                                                                                                                                      
                                                                                                                                      
                                                                                                                                      
                                                                                                                                      -
                                                                                                                                      
                                                                                                                                      
                                                                                                                                      
                                                                                                                                      -Warrants
      (5)
                                                                                                                                      
                                                                                                                                      
                                                                                                                                      
                                                                                                                                      
                                                                                                                                      
                                                                                                                                      
                                                                                                                                      -
                                                                                                                                      
                                                                                                                                      
                                                                                                                                      
                                                                                                                                      -Crossroads
      Energy, LP
                                                                                                                                      
                                                                                                                                      Oil
      & Natural Gas
                                                                                                                                      
                                                                                                                                      Senior
      Secured
                                                                                                                                      
                                                                                                                                      
                                                                                                                                      3,473,767
                                                                                                                                      
                                                                                                                                      
                                                                                                                                      
                                                                                                                                      3,410,615
                                                                                                                                      
                                                                                                                                      
                                                                                                                                      
                                                                                                                                      3,410,615Production
      and 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
                                                                                                                                      
                                                                                                                                      
                                                                                                                                      
                                                                                                                                      
                                                                                                                                      
                                                                                                                                      
                                                                                                                                      8,913
                                                                                                                                      
                                                                                                                                      
                                                                                                                                      
                                                                                                                                      150,000DeanLake
      Operator, LLC
                                                                                                                                      
                                                                                                                                      Oil
      & Natural Gas
                                                                                                                                      
                                                                                                                                      Senior
      Secured
                                                                                                                                      
                                                                                                                                      
                                                                                                                                      12,178,910
                                                                                                                                      
                                                                                                                                      
                                                                                                                                      
                                                                                                                                      11,913,480
                                                                                                                                      
                                                                                                                                      
                                                                                                                                      
                                                                                                                                      11,913,480Production
      and Development
                                                                                                                                      
                                                                                                                                      Multiple-Advance
      Term Loan(LIBOR
      + 7.00%, due 6/25/2010)Overriding
      Royalty Interest
                                                                                                                                      
                                                                                                                                      
                                                                                                                                      
                                                                                                                                      
                                                                                                                                      
                                                                                                                                      
                                                                                                                                      20,000
                                                                                                                                      
                                                                                                                                      
                                                                                                                                      
                                                                                                                                      20,000Warrants
      (5)
                                                                                                                                      
                                                                                                                                      
                                                                                                                                      
                                                                                                                                      
                                                                                                                                      
                                                                                                                                      
                                                                                                                                      10,000
                                                                                                                                      
                                                                                                                                      
                                                                                                                                      
                                                                                                                                      10,000Excel
      Mining Systems, LLC
                                                                                                                                      
                                                                                                                                      Coal
      Mining Services
                                                                                                                                      
                                                                                                                                      Second
      Lien Term Loan
                                                                                                                                      
                                                                                                                                      
                                                                                                                                      5,000,000
                                                                                                                                      
                                                                                                                                      
                                                                                                                                      
                                                                                                                                      4,950,593
                                                                                                                                      
                                                                                                                                      
                                                                                                                                      
                                                                                                                                      5,050,000(LIBOR
      + 7.25%, due 7/30/2015)





(See accompanying notes to consolidated
financial statements)


5





NGP CAPITAL RESOURCES
COMPANY


CONSOLIDATED SCHEDULE OF
INVESTMENTS


September 30, 2007


(Unaudited)


(Continued)





PortfolioCompany
                                                                                                                
                                                                                                                EnergyIndustrySegment
                                                                                                                
                                                                                                                Investment(1)(2)(4)
                                                                                                                
                                                                                                                Principal
                                                                                                                
                                                                                                                
                                                                                                                Cost
                                                                                                                
                                                                                                                
                                                                                                                FairValue(3)TARGETED
      INVESTMENTS - ContinuedNon-affiliate
      Investments - (Less than 5% owned)-
ContinuedFormidable,
      LLC
                                                                                                                
                                                                                                                Oil
      & Natural Gas
                                                                                                                
                                                                                                                Senior
      Secured
                                                                                                                
                                                                                                                $
                                                                                                                30,218,834
                                                                                                                
                                                                                                                
                                                                                                                $
                                                                                                                29,840,685
                                                                                                                
                                                                                                                
                                                                                                                $
                                                                                                                29,840,685Production
      and Development
                                                                                                                
                                                                                                                Multiple-Advance
      Term Loan(LIBOR
      + 5.50% cash, +7.50% PIK due 12/31/2007)Warrants
      (5)
                                                                                                                
                                                                                                                
                                                                                                                
                                                                                                                
                                                                                                                
                                                                                                                
                                                                                                                500,000
                                                                                                                
                                                                                                                
                                                                                                                
                                                                                                                500,000Nighthawk
      Transport I, LP
                                                                                                                
                                                                                                                Energy
      Services
                                                                                                                
                                                                                                                Second
      Lien
                                                                                                                
                                                                                                                
                                                                                                                15,474,609
                                                                                                                
                                                                                                                
                                                                                                                
                                                                                                                14,434,253
                                                                                                                
                                                                                                                
                                                                                                                
                                                                                                                14,434,253Term
      Loan B(LIBOR
      + 8.00%, due 10/03/2010)LP
      Units (5)
                                                                                                                
                                                                                                                
                                                                                                                
                                                                                                                
                                                                                                                
                                                                                                                
                                                                                                                224
                                                                                                                
                                                                                                                
                                                                                                                
                                                                                                                150,000Warrants
      (5)
                                                                                                                
                                                                                                                
                                                                                                                
                                                                                                                
                                                                                                                
                                                                                                                
                                                                                                                850,000
                                                                                                                
                                                                                                                
                                                                                                                
                                                                                                                850,000Second
      Lien
                                                                                                                
                                                                                                                
                                                                                                                1,187,698
                                                                                                                
                                                                                                                
                                                                                                                
                                                                                                                1,158,349
                                                                                                                
                                                                                                                
                                                                                                                
                                                                                                                1,158,349Delayed
      Draw Term Loan B(LIBOR
      + 8.00%, due 10/03/2010)Resaca
      Exploitation, LP
                                                                                                                
                                                                                                                Oil
      & Natural Gas
                                                                                                                
                                                                                                                Senior
      Secured
                                                                                                                
                                                                                                                
                                                                                                                26,993,572
                                                                                                                
                                                                                                                
                                                                                                                
                                                                                                                26,471,808
                                                                                                                
                                                                                                                
                                                                                                                
                                                                                                                26,471,808Production
      and Development
                                                                                                                
                                                                                                                Multiple-Advance
      Tranche A Term Loan(LIBOR
      + 6.00%, due 5/01/2012)Overriding
      Royalty Interest (5)
                                                                                                                
                                                                                                                
                                                                                                                
                                                                                                                
                                                                                                                
                                                                                                                
                                                                                                                30,000
                                                                                                                
                                                                                                                
                                                                                                                
                                                                                                                125,000Senior
      Secured Tranche B Term Loan
                                                                                                                
                                                                                                                
                                                                                                                6,000,000
                                                                                                                
                                                                                                                
                                                                                                                
                                                                                                                5,979,752
                                                                                                                
                                                                                                                
                                                                                                                
                                                                                                                5,979,752(LIBOR
      + 9.00%, due 11/30/2007)Overriding
      Royalty Interest (5)
                                                                                                                
                                                                                                                
                                                                                                                
                                                                                                                
                                                                                                                
                                                                                                                
                                                                                                                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
      & Natural Gas
                                                                                                                
                                                                                                                Senior
      Secured
                                                                                                                
                                                                                                                
                                                                                                                6,943,853
                                                                                                                
                                                                                                                
                                                                                                                
                                                                                                                6,856,475
                                                                                                                
                                                                                                                
                                                                                                                
                                                                                                                6,856,475Production
      and Development
                                                                                                                
                                                                                                                Multiple-Advance
      Term Loan(LIBOR
      + 6.00%, due 2/28/2008)Overriding
      Royalty Interest
                                                                                                                
                                                                                                                
                                                                                                                
                                                                                                                
                                                                                                                
                                                                                                                
                                                                                                                95,801
                                                                                                                
                                                                                                                
                                                                                                                
                                                                                                                100,000Warrants
      (5)
                                                                                                                
                                                                                                                
                                                                                                                
                                                                                                                
                                                                                                                
                                                                                                                
                                                                                                                10,000
                                                                                                                
                                                                                                                
                                                                                                                
                                                                                                                10,000Tammany
      Oil & Gas, LLC
                                                                                                                
                                                                                                                Oil
      & Natural Gas
                                                                                                                
                                                                                                                Senior
      Secured
                                                                                                                
                                                                                                                
                                                                                                                25,285,796
                                                                                                                
                                                                                                                
                                                                                                                
                                                                                                                24,863,242
                                                                                                                
                                                                                                                
                                                                                                                
                                                                                                                24,863,242Production
      and Development
                                                                                                                
                                                                                                                Multiple-Advance
      Term Loan(LIBOR
      + 6.00%, due 3/21/2010)Overriding
      Royalty Interest (5)
                                                                                                                
                                                                                                                
                                                                                                                
                                                                                                                
                                                                                                                
                                                                                                                
                                                                                                                200,000
                                                                                                                
                                                                                                                
                                                                                                                
                                                                                                                300,000Venoco,
      Inc.
                                                                                                                
                                                                                                                Oil
      & Natural Gas
                                                                                                                
                                                                                                                Senior
      Notes (6)
                                                                                                                
                                                                                                                
                                                                                                                8,000,000
                                                                                                                
                                                                                                                
                                                                                                                
                                                                                                                7,965,691
                                                                                                                
                                                                                                                
                                                                                                                
                                                                                                                7,980,000Production
      and Development
                                                                                                                
                                                                                                                (8.75%,
      due 12/15/2011)Venoco,
      Inc.
                                                                                                                
                                                                                                                Oil
      & Natural Gas
                                                                                                                
                                                                                                                Senior
      Notes (6)
                                                                                                                
                                                                                                                
                                                                                                                4,000,000
                                                                                                                
                                                                                                                
                                                                                                                
                                                                                                                3,943,079
                                                                                                                
                                                                                                                
                                                                                                                
                                                                                                                3,990,000Production
      and Development
                                                                                                                
                                                                                                                (8.75%,
      due 12/15/2011)Subtotal
      Non-affiliate Investments- (Less than 5%
    owned)
                                                                                                                
                                                                                                                
                                                                                                                
                                                                                                                
                                                                                                                
                                                                                                                $
                                                                                                                242,118,732
                                                                                                                
                                                                                                                
                                                                                                                $
                                                                                                                240,548,530Subtotal
      Targeted Investments (65.07% of total
      investments)
                                                                                                                
                                                                                                                
                                                                                                                
                                                                                                                
                                                                                                                
                                                                                                                $
                                                                                                                260,870,948
                                                                                                                
                                                                                                                
                                                                                                                $
                                                                                                                267,482,387





(See accompanying notes to consolidated
financial statements)


6





NGP CAPITAL RESOURCES
COMPANY


CONSOLIDATED SCHEDULE OF
INVESTMENTS


September 30, 2007


(Unaudited)


(Continued)





IssuingCompany
                                                        
                                                        EnergyIndustrySegment
                                                        
                                                        Investment(1)(2)(4)
                                                        
                                                        Principal
                                                        
                                                        
                                                        Cost
                                                        
                                                        
                                                        FairValue(3)CORPORATE
      NOTESPioneer
      Natural Resources Co.
                                                        
                                                        Oil
      and Natural Gas Production and Development
                                                        
                                                        Senior
      Notes, 7.2%, due 2028
                                                        
                                                        $
                                                        10,000,000
                                                        
                                                        
                                                        $
                                                        11,642,328
                                                        
                                                        
                                                        $
                                                        8,936,500Subtotal
      Corporate Notes ( 2.17% of total
investments)
                                                        
                                                        
                                                        
                                                        
                                                        
                                                        $
                                                        11,642,328
                                                        
                                                        
                                                        $
                                                        8,936,500GOVERNMENTSECURITIESU.S.
      Treasury Bills
                                                        
                                                        Government
                                                        
                                                        U.S.
      Treasury Bills, 3.890%, due 12/13/2007
                                                        
                                                        $
                                                        5,991,000
                                                        
                                                        
                                                        $
                                                        5,944,836
                                                        
                                                        
                                                        $
                                                        5,944,836U.S.
      Treasury Bills
                                                        
                                                        Government
                                                        
                                                        U.S.
      Treasury Bills, 3.890%, due 12/13/2007
                                                        
                                                        
                                                        12,000,000
                                                        
                                                        
                                                        
                                                        11,907,534
                                                        
                                                        
                                                        
                                                        11,907,534U.S.
      Treasury Bills
                                                        
                                                        Government
                                                        
                                                        U.S.
      Treasury Bills, 3.890%, due 12/13/2007
                                                        
                                                        
                                                        12,000,000
                                                        
                                                        
                                                        
                                                        11,907,534
                                                        
                                                        
                                                        
                                                        11,907,534U.S.
      Treasury Bills
                                                        
                                                        Government
                                                        
                                                        U.S.
      Treasury Bills, 3.890%, due 12/13/2007
                                                        
                                                        
                                                        12,000,000
                                                        
                                                        
                                                        
                                                        11,907,533
                                                        
                                                        
                                                        
                                                        11,907,533U.S.
      Treasury Bills
                                                        
                                                        Government
                                                        
                                                        U.S.
      Treasury Bills, 3.890%, due 12/13/2007
                                                        
                                                        
                                                        12,000,000
                                                        
                                                        
                                                        
                                                        11,907,533
                                                        
                                                        
                                                        
                                                        11,907,533U.S.
      Treasury Bills
                                                        
                                                        Government
                                                        
                                                        U.S.
      Treasury Bills, 3.890%, due 12/13/2007
                                                        
                                                        
                                                        12,000,000
                                                        
                                                        
                                                        
                                                        11,907,533
                                                        
                                                        
                                                        
                                                        11,907,533U.S.
      Treasury Bills
                                                        
                                                        Government
                                                        
                                                        U.S.
      Treasury Bills, 3.890%, due 12/13/2007
                                                        
                                                        
                                                        12,000,000
                                                        
                                                        
                                                        
                                                        11,907,533
                                                        
                                                        
                                                        
                                                        11,907,533U.S.
      Treasury Bills
                                                        
                                                        Government
                                                        
                                                        U.S.
      Treasury Bills, 3.890%, due 12/13/2007
                                                        
                                                        
                                                        12,000,000
                                                        
                                                        
                                                        
                                                        11,907,533
                                                        
                                                        
                                                        
                                                        11,907,533U.S.
      Treasury Bills
                                                        
                                                        Government
                                                        
                                                        U.S.
      Treasury Bills, 3.890%, due 12/13/2007
                                                        
                                                        
                                                        12,000,000
                                                        
                                                        
                                                        
                                                        11,907,533
                                                        
                                                        
                                                        
                                                        11,907,533U.S.
      Treasury Bills
                                                        
                                                        Government
                                                        
                                                        U.S.
      Treasury Bills, 3.524%, due 12/13/2007
                                                        
                                                        
                                                        26,796,000
                                                        
                                                        
                                                        
                                                        26,608,540
                                                        
                                                        
                                                        
                                                        26,608,540Subtotal
      Government Securities (31.04% of total
      investments)
                                                        
                                                        
                                                        
                                                        
                                                        
                                                        $
                                                        127,813,642
                                                        
                                                        
                                                        $
                                                        127,813,642CASH
      AND CASH EQUIVALENTSSubtotal
      Cash and Cash Equivalents (1.72% of total
      investments)
                                                        
                                                        
                                                        
                                                        
                                                        
                                                        $
                                                        7,084,798
                                                        
                                                        
                                                        $
                                                        7,084,798TOTAL
      INVESTMENTS, CASH AND CASH EQUIVALENTS
                                                        
                                                        
                                                        
                                                        
                                                        
                                                        $
                                                        407,411,716
                                                        
                                                        
                                                        $
                                                        411,317,327LIABILITIES
      IN EXCESS OF OTHER ASSETS (7)
                                                        
                                                        
                                                        
                                                        
                                                        
                                                        
                                                        
                                                        
                                                        
                                                        $
                                                        (160,597,346
                                                        )NET
      ASSETS (7)
                                                        
                                                        
                                                        
                                                        
                                                        
                                                        
                                                        
                                                        
                                                        
                                                        $
                                                        250,719,981





NOTES TO
CONSOLIDATED SCHEDULE OF INVESTMENTS





(1)
            All investments are pledged as
      collateral for obligations under the Company's credit
      facilities.


(2)
            Percentages represent interest
      rates in effect at September 30, 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
      becamecollateralized 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)





FortheNineMonthsEndedSeptember30,2007
                      
                      
                      September30,2006(AsRestated)Per Share
    DataNet asset value, beginning of
      period
                      
                      $
                      13.96
                      
                      
                      $
                      14.02Net investment
      income
                      
                      
                      0.82
                      
                      
                      
                      0.67Net realized and unrealized gain
      (loss) on portfolio securities andcorporate notes
      (3)
                      
                      
                      0.50
                      
                      
                      
                      (0.11
                      )Net increase in stockholders'
      equity (net assets)resulting from
      operations
                      
                      
                      1.32
                      
                      
                      
                      0.56Dividends
      declared
                      
                      
                      (0.93
                      )
                      
                      
                      (0.59
                      )Net asset value, end of
      period
                      
                      $
                      14.35
                      
                      
                      $
                      13.99Market value, beginning of
      period
                      
                      $
                      16.75
                      
                      
                      $
                      13.13Market value, end of
      period
                      
                      $
                      16.23
                      
                      
                      $
                      14.59Market value
      return  (1)
                      
                      
                      2.38
                      %
                      
                      
                      15.83
                      %Net asset value return
      (1)
                      
                      
                      8.61
                      %
                      
                      
                      4.02
                      %Ratios and Supplemental
      Data($ and shares in
      thousands)Net assets, end of
      period
                      
                      $
                      250,720
                      
                      
                      $
                      243,345Average net
      assets
                      
                      $
                      246,989
                      
                      
                      $
                      243,622Common shares outstanding at end
      of period
                      
                      
                      17,470
                      
                      
                      
                      17,400Total operating expenses/average
      net assets (2)
                      
                      
                      7.09
                      %
                      
                      
                      3.81
                      %Total operating expenses less
      management andincentive fees and interest
      expense/average net assets (2)
                      
                      
                      1.56
                      %
                      
                      
                      1.41
                      %Total operating expenses less
      managementand incentive fees/average net
      assets (2)
                      
                      
                      4.22
                      %
                      
                      
                      1.96
                      %Net investment income/average net
      assets (2)
                      
                      
                      7.64
                      %
                      
                      
                      6.38
                      %Net increase in net assets
      resulting fromoperations/average net assets
      (2)
                      
                      
                      12.35
                      %
                      
                      
                      5.33
                      %Portfolio turnover
      rate
                      
                      
                      44.34
                      %
                      
                      
                      5.13
                      %





(1) Return calculations assume
reinvestment of dividends and are not annualized.


(2) Annualized.


(3) Calculated as a balancing amount
necessary to reconcile the change in net assets value per share with the other
per shareinformation presented.  This
amount may not agree with the aggregate gains and losses for the period because
the differencein the net asset value at the beginning
and end of year may not equal the per share changes of the line items
disclosed.





(See accompanying notes to consolidated
financial statements)


11




NGP
CAPITAL RESOURCES COMPANY


NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS


September
30, 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 regulated as a business
development company (“BDC”) under the Investment Company Act of 1940, as amended
(the “1940 Act”).  In addition, for federal income tax purposes the
Company has elected to be treated as a regulated investment company (“RIC”)
under the Internal Revenue Code of 1986, as amended (the “Code”).  The
Company has several subsidiaries that are single member limited liability
companies and wholly owned limited partnerships established to hold certain
portfolio investments or provide services to the Company in accordance with
specific rules prescribed for a company operating as a RIC.  These
subsidiaries are: NGPC Funding GP, LLC, a Texas limited liability company; NGPC
Nevada, LLC, a Nevada limited liability company; NGPC Funding, LP, a Texas
limited partnership; NGPC Asset Holdings GP, LLC, a Texas limited liability
company; NGPC Asset Holdings, LP, a Texas limited partnership; NGPC Asset
Holdings II, LP, a Texas limited partnership; NGPC Asset Holdings III, LP, a
Texas limited partnership and NGPC Asset Holdings IV, 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.  This item does not affect the periods presented in
this Amended Filing.


12





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.





The
effects of the restatement on the unaudited consolidated balance sheet at
September 30, 2007 are summarized in the following table:





AsPreviouslyReported
                        
                        
                        Reclassifications
                        
                        
                        AsReclassified
                        
                        
                        Restatement
                        
                        
                        AsRestatedConsolidated
      Balance Sheet:As
      of September 30, 2007Investments
      in portfolio securities at fair value
                        
                        $
                        267,482,387
                        
                        
                        $
                        (267,482,387
                        )
                        
                        $
                        -
                        
                        
                        $
                        -
                        
                        
                        $
                        -Control
      investments - majority owned
                        
                        
                        -
                        
                        
                        
                        26,933,857
                        
                        
                        
                        26,933,857
                        
                        
                        
                        -
                        
                        
                        
                        26,933,857Non-affiliate
      investments
                        
                        
                        -
                        
                        
                        
                        240,548,530
                        
                        
                        
                        240,548,530
                        
                        
                        
                        -
                        
                        
                        
                        240,548,530Income
      taxes payable
                        
                        
                        -
                        
                        
                        
                        -
                        
                        
                        
                        -
                        
                        
                        
                        221,776
                        
                        
                        
                        221,776Deferred
      tax liabilities- current
                        
                        
                        -
                        
                        
                        
                        -
                        
                        
                        
                        -
                        
                        
                        
                        2,770,924
                        
                        
                        
                        2,770,924Total
      current liabilities
                        
                        
                        8,885,051
                        
                        
                        
                        -
                        
                        
                        
                        8,885,051
                        
                        
                        
                        2,992,700
                        
                        
                        
                        11,877,751Total
      liabilities
                        
                        
                        159,885,051
                        
                        
                        
                        -
                        
                        
                        
                        159,885,051
                        
                        
                        
                        2,992,700
                        
                        
                        
                        162,877,751Undistributed
      netinvestment income
    (loss)
                        
                        
                        (1,722,214
                        )
                        
                        
                        -
                        
                        
                        
                        (1,722,214
                        )
                        
                        
                        (67,518
                        )
                        
                        
                        (1,789,732
                        )Umdistributed
      net realized capital gain (loss)
                        
                        
                        6,069,885
                        
                        
                        
                        -
                        
                        
                        
                        6,069,885
                        
                        
                        
                        (154,258
                        )
                        
                        
                        5,915,627Net
      unrealized appreciation (depreciation) ofportfolio
      securities and corporate notes
                        
                        
                        3,905,611
                        
                        
                        
                        -
                        
                        
                        
                        3,905,611
                        
                        
                        
                        (2,770,924
                        )
                        
                        
                        1,134,687Total
      stockholders’ equity (net assets)
                        
                        
                        253,712,681
                        
                        
                        
                        -
                        
                        
                        
                        253,712,681
                        
                        
                        
                        (2,992,700
                        )
                        
                        
                        250,719,981Net
      asset value per share
                        
                        
                        14.52
                        
                        
                        
                        -
                        
                        
                        
                        14.52
                        
                        
                        
                        (0.17
                        )
                        
                        
                        14.35


13


The
effects of the restatement on the unaudited consolidated statements of
operations for the three and nine-month periods ended September 30, 2007 are
summarized in the following table:


AsPreviouslyReported
                        
                        
                        Reclassifications
                        
                        
                        AsReclassified
                        
                        
                        Restatement
                        
                        
                        AsRestatedConsolidated
      Statements of Operations:For
      the Three Months Ended September 30, 2007Investment
      incomeInterest
      and dividend income:
                        
                        $
                        9,011,405
                        
                        
                        $
                        (9,011,405
                        )
                        
                        $
                        -
                        
                        
                        $
                        -
                        
                        
                        $
                        -Control
      investments - majority owned
                        
                        
                        -
                        
                        
                        
                        (1,108
                        )
                        
                        
                        (1,108
                        )
                        
                        
                        -
                        
                        
                        
                        (1,108
                        )Non-affiliate
      investments
                        
                        
                        -
                        
                        
                        
                        8,777,580
                        
                        
                        
                        8,777,580
                        
                        
                        
                        -
                        
                        
                        
                        8,777,580Royalty
      income, net of amortization:Control
      investments - majority owned
                        
                        
                        -
                        
                        
                        
                        13,049
                        
                        
                        
                        13,049
                        
                        
                        
                        -
                        
                        
                        
                        13,049Non-affiliate
      investments
                        
                        
                        -
                        
                        
                        
                        221,884
                        
                        
                        
                        221,884
                        
                        
                        
                        -
                        
                        
                        
                        221,884Benefit
      (provision) for income taxes
                        
                        
                        -
                        
                        
                        
                        -
                        
                        
                        
                        -
                        
                        
                        
                        (11,287
                        )
                        
                        
                        (11,287
                        )Net
      investment income
                        
                        
                        5,258,507
                        
                        
                        
                        -
                        
                        
                        
                        5,258,507
                        
                        
                        
                        (11,287
                        )
                        
                        
                        5,247,220Net
      realized capital gain (loss) on portfolio securities andcorporate
      notes
                        
                        
                        (351,114
                        )
                        
                        
                        351,114
                        
                        
                        
                        -
                        
                        
                        
                        -
                        
                        
                        
                        -Non-affiliate
      investments
                        
                        
                        -
                        
                        
                        
                        (351,114
                        )
                        
                        
                        (351,114
                        )
                        
                        
                        -
                        
                        
                        
                        (351,114
                        )Net
      increase (decrease) in unrealized appreciation(depreciation)
      on portfolio securities and corporate
      notes:
                        
                        
                        (712,268
                        )
                        
                        
                        712,268
                        
                        
                        
                        -
                        
                        
                        
                        -
                        
                        
                        
                        -Control
      investments - majority owned
                        
                        
                        -
                        
                        
                        
                        2,000,000
                        
                        
                        
                        2,000,000
                        
                        
                        
                        -
                        
                        
                        
                        2,000,000Non-affiliate
      investments
                        
                        
                        -
                        
                        
                        
                        (2,712,268
                        )
                        
                        
                        (2,712,268
                        )
                        
                        
                        -
                        
                        
                        
                        (2,712,268
                        )Benefit
      (provision) for taxes on unrealized gain
    (loss)
                        
                        
                        -
                        
                        
                        
                        -
                        
                        
                        
                        -
                        
                        
                        
                        (680,000
                        )
                        
                        
                        (680,000
                        )Net
      increase (decrease) in unrealized appreciation(depreciation)
      on portfolio securities and corporate notes
                        
                        
                        (712,268
                        )
                        
                        
                        -
                        
                        
                        
                        (712,268
                        )
                        
                        
                        (680,000
                        )
                        
                        
                        (1,392,268
                        )Net
      increase (decrease) in stockholders' equity(net
      assets) resulting from operations
                        
                        
                        4,195,125
                        
                        
                        
                        -
                        
                        
                        
                        4,195,125
                        
                        
                        
                        (691,287
                        )
                        
                        
                        3,503,838Net
      increase (decrease) in stockholders' equity (net assets)resulting
      from operations per common share
                        
                        
                        0.24
                        
                        
                        
                        -
                        
                        
                        
                        0.24
                        
                        
                        
                        (0.04
                        )
                        
                        
                        0.20For
      the Nine Months Ended September 30, 2007Investment
      incomeInterest
      and dividend income:
                        
                        $
                        27,034,232
                        
                        
                        $
                        (27,034,232
                        )
                        
                        $
                        -
                        
                        
                        $
                        -
                        
                        
                        $
                        -Control
      investments - majority owned
                        
                        
                        -
                        
                        
                        
                        2,245,677
                        
                        
                        
                        2,245,677
                        
                        
                        
                        -
                        
                        
                        
                        2,245,677Non-affiliate
      investments
                        
                        
                        -
                        
                        
                        
                        24,042,038
                        
                        
                        
                        24,042,038
                        
                        
                        
                        -
                        
                        
                        
                        24,042,038Royalty
      income, net of amortization:Control
      investments - majority owned
                        
                        
                        -
                        
                        
                        
                        13,049
                        
                        
                        
                        13,049
                        
                        
                        
                        -
                        
                        
                        
                        13,049Non-affiliate
      investments
                        
                        
                        -
                        
                        
                        
                        733,468
                        
                        
                        
                        733,468
                        
                        
                        
                        -
                        
                        
                        
                        733,468Benefit
      (provision) for income taxes
                        
                        
                        -
                        
                        
                        
                        -
                        
                        
                        
                        -
                        
                        
                        
                        (67,518
                        )
                        
                        
                        (67,518
                        )Net
      investment income
                        
                        
                        14,187,212
                        
                        
                        
                        -
                        
                        
                        
                        14,187,212
                        
                        
                        
                        (67,518
                        )
                        
                        
                        14,119,694Net
      realized capital gain (loss) on portfolio securities andcorporate
      notes
                        
                        
                        6,315,744
                        
                        
                        
                        (6,315,744
                        )
                        
                        
                        -
                        
                        
                        
                        -
                        
                        
                        
                        -Non-affiliate
      investments
                        
                        
                        -
                        
                        
                        
                        6,315,744
                        
                        
                        
                        6,315,744
                        
                        
                        
                        -
                        
                        
                        
                        6,315,744Benefit
      (provision) for taxes on capital gain (loss)
                        
                        
                        -
                        
                        
                        
                        -
                        
                        
                        
                        -
                        
                        
                        
                        (154,258
                        )
                        
                        
                        (154,258
                        )Total
      net realized capital gain (loss) on
    investments
                        
                        
                        6,315,744
                        
                        
                        
                        -
                        
                        
                        
                        6,315,744
                        
                        
                        
                        (154,258
                        )
                        
                        
                        6,161,486Net
      increase (decrease) in unrealized appreciation(depreciation)
      on portfolio securities and corporate
      notes:
                        
                        
                        5,308,882
                        
                        
                        
                        (5,308,882
                        )
                        
                        
                        -
                        
                        
                        
                        -
                        
                        
                        
                        -Control
      investments - majority owned
                        
                        
                        -
                        
                        
                        
                        8,000,000
                        
                        
                        
                        8,000,000
                        
                        
                        
                        -
                        
                        
                        
                        8,000,000Non-affiliate
      investments
                        
                        
                        -
                        
                        
                        
                        (2,691,118
                        )
                        
                        
                        (2,691,118
                        )
                        
                        
                        -
                        
                        
                        
                        (2,691,118
                        )Benefit
      (provision) for taxes on unrealized gain
    (loss)
                        
                        
                        -
                        
                        
                        
                        -
                        
                        
                        
                        -
                        
                        
                        
                        (2,770,924
                        )
                        
                        
                        (2,770,924
                        )Net
      increase (decrease) in unrealized appreciation(depreciation)
      on portfolio securities and corporate notes
                        
                        
                        5,308,882
                        
                        
                        
                        -
                        
                        
                        
                        5,308,882
                        
                        
                        
                        (2,770,924
                        )
                        
                        
                        2,537,958Net
      increase (decrease) in stockholders' equity(net
      assets) resulting from operations
                        
                        
                        25,811,838
                        
                        
                        
                        -
                        
                        
                        
                        25,811,838
                        
                        
                        
                        (2,992,700
                        )
                        
                        
                        22,819,138Net
      increase (decrease) in stockholders' equity (net assets)resulting
      from operations per common share
                        
                        
                        1.49
                        
                        
                        
                        -
                        
                        
                        
                        1.49
                        
                        
                        
                        (0.17
                        )
                        
                        
                        1.32


14





The
effects of the restatement on the unaudited consolidated statement of cash flows
for the nine-month period ended September 30, 2007 are summarized in the
following table:





AsPreviouslyReported
                  
                  
                  Reclassifications
                  
                  
                  AsReclassified
                  
                  
                  Restatement
                  
                  
                  AsRestatedConsolidated
      Statement of Cash Flows:For
      the Nine Months Ended September 30, 2007Cash
      flows from operating activitiesNet
      increase (decrease) in stockholders' equity (net assets) resulting from
      operations
                  
                  $
                  25,811,838
                  
                  
                  $
                  -
                  
                  
                  $
                  25,811,838
                  
                  
                  $
                  (2,992,700
                  )
                  
                  $
                  22,819,138Effects
      of changes in operating assets and
    liabilitiesIncome
      taxes payable
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  221,776
                  
                  
                  
                  221,776Current
      portion of deferred income taxes
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  2,770,924
                  
                  
                  
                  2,770,924





Note
3: Significant Accounting Policies





The
interim unaudited consolidated financial statements include the accounts of the
Company and its subsidiaries. All significant intercompany accounts and
transactions have been eliminated. The interim consolidated financial statements
have been prepared by management of the Company, without audit, pursuant to the
rules and regulations of the Securities and Exchange
Commission.  Certain information and footnote disclosures normally
included in financial statements prepared in accordance with accounting
principles generally accepted in the United States of America have been omitted
pursuant to such rules and regulations, although the Company believes the
disclosures included herein are adequate to make the information presented not
misleading.  In the opinion of management, all adjustments which are
of a normal recurring nature considered necessary for presentation of the
information have been included.  These unaudited consolidated
financial statements should be read in conjunction with the consolidated
financial statements and related notes included in the Company’s Annual Report
on Form 10-K for the year ended December 31, 2006. Interim results are not
necessarily indicative of results for a full year.





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





Use
of Estimates





The
interim consolidated financial statements have been prepared in accordance with
U.S. Generally Accepted Accounting Principles 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.





Prepaid
Assets





Prepaid
assets consist of premiums paid for directors’ and officers’ insurance and
fidelity bonds with policy terms 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 investment team of our manager
prepares valuations for all of the assets in our portfolio companies 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 investment team prepares valuation
analyses, as generally described below.


15





Using the
most recently available financial statements, forecasts and, when applicable,
comparable transaction data, the investment team 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.  Some or all of the above valuation methods are considered 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 in the above
section.  Some or all of the above valuation methods are considered 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. The Company derives appropriate cash flow multiples from the review
of comparable transactions involving similar assets. The Company derives the
discounted value of future net cash flows, when appropriate, from third party
valuations of a portfolio company’s assets, such as engineering reserve reports
of oil and gas properties.





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





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.


16





Payment-in-Kind
Interest and Dividends





The
Company may have investments in its portfolio that contain a payment-in-kind
(“PIK”) provision. PIK interest or dividends, computed at the contractual rate
specified in each investment agreement, are added to the principal balance of
the investment and recorded as interest or dividend income.  For
investments with PIK interest or dividends, the Company bases income accruals on
the principal balance including any PIK.  If the portfolio company’s
asset valuation is not sufficient to cover the contractual interest, management
will not accrue interest or dividend income on the investment.  To
maintain our RIC status, this non-cash source of income must be paid out to
stockholders in the form of dividends, even though we have not yet collected the
cash.  For the three and nine months ended September 30, 2007, we
earned approximately $1,030,891 and $2,966,423 in PIK interest income,
respectively, and $0 and $93,710 in PIK dividend income,
respectively.





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 period
the commitment is outstanding. Prepayment and loan administration fees are
recognized as they are received.  In the third quarter of 2007, the
Company accreted approximately $681,000 of fee income into interest income,
compared to accreted income of approximately $311,000 during the third quarter
of 2006.  For the nine months ended September 30, 2007, the Company
accreted approximately $2.2 million of fee income into interest income, compared
to accreted income of approximately $585,000 during the same period of
2006.  The increase is primarily due to overall higher fee income
balances and accelerated recognition due to early transaction
repayments.





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 Company’s Board of
Directors each quarter and is based on the annual taxable earnings estimated by
the Manager. Based on that estimate, a dividend is declared each quarter and
paid shortly thereafter.


17





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, 2007June
      13, 2007
                    
                    $
                    0.310
                    
                    June
      29, 2007
                    
                    July
      13, 2007September
      12, 2007
                    
                    $
                    0.350
                    
                    September
      28, 2007
                    
                    October
      12, 2007





The
Company has established an “opt out” dividend reinvestment plan, operated by its
transfer agent, 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.   Stockholders whose shares are registered in his or
her name are eligible for the dividend reinvestment plan through our stock
transfer agent.  Stockholders whose shares are held in a brokerage
account or registered in street name can contact their broker regarding drip
plan eligibility.  As of September 30, 2007, holders of 1,438,143
shares, or approximately 8.2% 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.  The table below
summarizes participation in the Company’s dividend reinvestment
plan:





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
                    
                    
                    
                    22,692June
      2007
                    
                    
                    1,363,066
                    
                    
                    
                    7.8
                    %
                    
                    $
                    5,407,938
                    
                    
                    $
                    4,985,387
                    
                    
                    $
                    -
                    
                    
                    $
                    422,550
                    
                    
                    
                    24,694September
      2007
                    
                    
                    1,438,143
                    
                    
                    
                    8.2
                    %
                    
                    $
                    6,114,379
                    
                    
                    $
                    5,611,029
                    
                    
                    $
                    -
                    
                    
                    $
                    503,350
                    
                    
                    
                    30,678
                    
                    (1)





(1)  Shares
were issued on October 12, 2007 for the September 2007 dividend.  See
above and Note 5 for further detail.





Income
Taxes





The
Company adopted the Financial Accounting Standards Board’s Interpretation 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 7 for additional
information.


18





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 Other 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
September 30, 2007.





Note
4: Credit Facility





On August
31, 2007, the Company entered into a First Amendment to Treasury Secured
Revolving Credit Agreement, effective as of August 31, 2006, which amended
certain provisions of the Company’s Treasury Secured Revolving Credit Agreement,
dated as of August 31, 2006 and entered into a First Amendment to Amended and
Restated Revolving Credit Agreement, effective as of August 31, 2006, which
amended certain provisions of the Company’s Amended and Restated Revolving
Credit Agreement, dated as of August 31, 2006.  These amendments clarified
certain (i) covenants relating to the maximum permitted amount of the Company’s
unfunded commitments to provide loans, advances or guarantees with respect to
certain of its investments, (ii) covenants relating to the Company’s use of
proceeds under the Amended and Restated Revolving Credit Agreement and (iii)
defined terms.  The Treasury Credit Agreement was also amended on
October 18, 2007.  See Note 10 for additional
information.





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 (as amended, restated, supplemented or otherwise modified from time to
time, 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 0 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 September 30, 2007, the Company has borrowed $51
million under the Investment Credit Agreement.  The interest rates
were 7.75% (Prime) on $30 million, 6.37875% (LIBOR rate of 5.12875% plus 125
basis points) on $11 million, and 7.0025% (LIBOR rate of 5.7525% plus 125 basis
points) on $10 million.





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. 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.  See
Note 10 for additional information.  Proceeds from the Treasury Credit
Agreement have been 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 September 30, 2007, the interest
rate was 6.0025% (LIBOR rate of 5.7525% 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 account 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.  From
time to time, certain of the lenders may provide customary commercial and
investment banking services to the Company.


19





Note
5: Issuance of Common Stock





On August
6, 2004, the Company, in its initial capitalization transaction, sold 100 shares
of common stock 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’s dividend reinvestment plan provides for the plan agent to purchase
shares in the open market for credit to the accounts of plan participants unless
the average of the closing sales prices for the shares for the five days
immediately preceding the payment date exceeds 110% of the most recently
reported net asset value per share. Through the third quarter of 2006, all
shares credited to participants’ accounts were purchased in the open
market.  See Note 3, Dividends, for a table summary
of  Dividend Reinvestment Plan Participation.





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.  The investment advisory agreement
was originally approved by the Company’s Board of Directors on November 9, 2004,
and 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 provides that unless terminated earlier as described below, the
agreement shall remain in effect from year-to-year 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.  See Note 10 for additional
information.





As a
result of the accounting errors that necessitated the restatement of our
financial statements for the fiscal years ended December 31, 2007 and 2008,
between 2007 and 2009, the Company overpaid the Manager’s management and
incentive fees by approximately $34,600. The Company overpaid the base
management fee to the Manager in 2008 and 2009 by approximately $33,400 as
detailed by quarter below. These errors resulted principally from the incorrect
reporting of Total Assets and Net Assets. In the quarters ended June 30, 2007
and December 31, 2007, the Company underpaid the Manager’s investment income
incentive fee by approximately $4,400 and $9,100, respectively and overpaid the
capital gains fee as of December 31, 2007 by approximately $14,700. The
approximate $34,600 net overpayment to the Manager was settled in the first
quarter of 2010.





Summary
of (Over)/ Under Payment of Management Fee by Quarter


AverageTotal
      Assets
                                                  
                                                  
                                                  Change
      from
                                                  
                                                  
                                                  0.45%
      Fee
                                                  
                                                  
                                                  FeeAs
      Reported
                                                  
                                                  
                                                  As
      Restated
                                                  
                                                  
                                                  Change
                                                  
                                                  
                                                  Prior
      Quarter
                                                  
                                                  
                                                  Correction
                                                  
                                                  
                                                  Quarter3Q
      2007
                                                  
                                                  $
                                                  413,597,732
                                                  
                                                  
                                                  $
                                                  413,597,732
                                                  
                                                  
                                                  $
                                                  -
                                                  
                                                  
                                                  $
                                                  -
                                                  
                                                  
                                                  $
                                                  -4Q
      2007
                                                  
                                                  
                                                  478,232,876
                                                  
                                                  
                                                  
                                                  478,276,626
                                                  
                                                  
                                                  
                                                  43,750
                                                  
                                                  
                                                  
                                                  21,875
                                                  
                                                  
                                                  
                                                  100
                                                  
                                                  
                                                  
                                                  1Q
      20081Q
      2008
                                                  
                                                  
                                                  446,563,953
                                                  
                                                  
                                                  
                                                  446,607,703
                                                  
                                                  
                                                  
                                                  43,750
                                                  
                                                  
                                                  
                                                  43,750
                                                  
                                                  
                                                  
                                                  200
                                                  
                                                  
                                                  
                                                  2Q
      20082Q
      2008
                                                  
                                                  
                                                  539,759,446
                                                  
                                                  
                                                  
                                                  539,803,196
                                                  
                                                  
                                                  
                                                  43,750
                                                  
                                                  
                                                  
                                                  43,750
                                                  
                                                  
                                                  
                                                  200
                                                  
                                                  
                                                  
                                                  3Q
      20083Q
      2008
                                                  
                                                  
                                                  505,800,049
                                                  
                                                  
                                                  
                                                  506,521,583
                                                  
                                                  
                                                  
                                                  721,534
                                                  
                                                  
                                                  
                                                  382,642
                                                  
                                                  
                                                  
                                                  1,700
                                                  
                                                  
                                                  
                                                  4Q
      20084Q
      2008
                                                  
                                                  
                                                  400,748,657
                                                  
                                                  
                                                  
                                                  398,994,441
                                                  
                                                  
                                                  
                                                  (1,754,216
                                                  )
                                                  
                                                  
                                                  (516,341
                                                  )
                                                  
                                                  
                                                  (2,300
                                                  )
                                                  
                                                  
                                                  1Q
      20091Q
      2009
                                                  
                                                  
                                                  353,330,559
                                                  
                                                  
                                                  
                                                  350,284,110
                                                  
                                                  
                                                  
                                                  (3,046,449
                                                  )
                                                  
                                                  
                                                  (2,400,333
                                                  )
                                                  
                                                  
                                                  (10,800
                                                  )
                                                  
                                                  
                                                  2Q
      20092Q
      2009
                                                  
                                                  
                                                  333,449,837
                                                  
                                                  
                                                  
                                                  331,199,409
                                                  
                                                  
                                                  
                                                  (2,250,428
                                                  )
                                                  
                                                  
                                                  (2,648,439
                                                  )
                                                  
                                                  
                                                  (11,900
                                                  )
                                                  
                                                  
                                                  3Q
      20093Q
      2009
                                                  
                                                  
                                                  295,823,883
                                                  
                                                  
                                                  
                                                  293,370,642
                                                  
                                                  
                                                  
                                                  (2,453,241
                                                  )
                                                  
                                                  
                                                  (2,351,835
                                                  )
                                                  
                                                  
                                                  (10,600
                                                  )
                                                  
                                                  
                                                  4Q
      2009$
                                                  (7,424,931
                                                  )
                                                  
                                                  $
                                                  (33,400
                                                  )





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


20





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.  Of the $2,061,266 management and incentive fees payable as
of September 30, 2007, $1,626,857 was payable to the Manager for the base
management fee for the third quarter of 2007.  See Note 10 for
additional information.





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 third quarter of 2006
and 2007.  Investment income incentive fees were $88,060 and $0 for
the nine months ended September 30, 2007 and 2006, respectively.





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 Manager, 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 Fees earned or accrued for the
three and nine month periods ended September 30, 2006.   The
balance of the estimated Capital Gains Fee accrual account as of September 30,
2007 was $434,409.





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





The
Manager has agreed that, 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, as amended, and all other restrictions contained in any
law or regulation, to the fullest extent applicable to any such sale. Any change
in this voluntary agreement will not be implemented without at least 90 days’
prior notice to stockholders and compliance with all applicable laws and
regulations.  No shares have been repurchased under this
agreement.





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.


21





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, as amended.





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 Administrator assists in determining and publishing the Company’s
net asset value, oversees the preparation and filing of the Company’s tax
returns and the printing and dissemination of reports to the Company’s
stockholders and generally oversees the payment of the Company’s expenses and
the performance of administrative and professional services rendered to the
Company by others. 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.





Of the
$709,406 in accounts payable as of September 30, 2007, $208,611 is due to the
Administrator for expenses incurred on the Company’s behalf for the month of
September 2007. As of September 30, 2006, $156,041 of the $916,528 in accounts
payable was due to the Administrator for expenses incurred on the Company’s
behalf for the month of September 2006.





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
from year-to-year 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.   See Note
10 for additional information.





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 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 September 30, 2007: NGPC Asset Holdings, LP, NGPC Asset
Holdings II, LP, NGPC Asset Holdings III, LP and NGPC Asset Holdings IV,
LP.  The difference between the effective income tax rate of 11.59% and the
statutory federal tax rate of 34% for the nine months ended September 30, 2007
is primarily attributable to RIC investment company taxable income that
generally will not be subject to federal income tax.  The difference
between the effective income tax rate of 16.48% and the statutory federal tax
rate of 34% for the three months ended September 30, 2007 is attributable to RIC
investment company taxable income that generally will not be subject to federal
income tax.




22




Note 8: Commitments and
Contingencies





As of
September 30, 2007, the Company had investments in or commitments to fund loan
facilities to 16 portfolio companies totaling $331 million, on which $262
million was drawn. In addition, the Company has continuing obligations under the
investment advisory agreement with the Manager and the administration agreement
with the Administrator. The agreements provide that, absent willful misfeasance,
bad faith or gross negligence in the performance of its duties or by reason of
the reckless disregard of its duties and obligations, the Manager, the
Administrator and its officers, managers, agents, employees, controlling
persons, members and any other person or entity affiliated with them will be
entitled to indemnification from the Company for any damages, liabilities, costs
and expenses (including reasonable attorneys’ fees and amounts reasonably paid
in settlement) arising from the rendering of the Manager’s or Administrator’s
services under the agreements or otherwise as the Company’s investment adviser
or administrator. The agreements also provide that the Manager, the
Administrator and their affiliates will not be liable to the Company or any
stockholder for any error of judgment, mistake of law, any loss or damage with
respect to any of the Company’s investments or any action taken or omitted to be
taken by the Manager or the Administrator in connection with the performance of
any of their duties or obligations under the agreements or otherwise as
investment adviser or administrator to the Company, except to the extent
specified in Section 36(b) of the 1940 Act concerning loss resulting from a
breach of fiduciary duty with respect to the receipt of compensation for
services. In the normal course of business, the Company enters into a variety of
undertakings containing a variety of representations that may expose the Company
to some risk of loss. The amount of future loss, if any, arising from such
undertakings, while not quantifiable, is not expected to be
significant.





Note
9: 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. For the years ended
December 31, 2006 and December 31, 2005, $15,710 and $586,225 respectively, were
reclassified to Undistributed net investment income (loss) from
Paid-in capital in excess of par.  These reclassifications were
primarily due to non-deductible meal expenses, organization costs, and income
and expenses from a wholly owned subsidiary.





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





Note
10: Subsequent Events





On
October 18, 2007, the Company entered into a Second Amendment to Treasury
Secured Revolving Credit Agreement (the “Second Amendment”), among the Company,
the lenders party thereto and SunTrust Bank, as administrative agent for the
lenders.  Pursuant to the Second Amendment, the Company has the
ability to increase the credit available under the Treasury Credit Agreement to
an amount not to exceed $175 million by obtaining additional commitments from
existing lenders or new lenders.  The Second Amendment was made
effective as of September 28, 2007.  The Company has borrowed $126.25
million as of November 9, 2007 under the Treasury Secured Revolving Credit
Agreement.  The Manager has agreed to waive permanently, subsequent to
September 30, 2007, that portion of the management fee attributable to U.S.
Treasury securities acquired with borrowings under our credit facilities to the
extent the amount of such securities exceeds $100 million.





Also on
October 18, 2007, commitments on the Company’s Amended and Restated Revolving
Credit Agreement increased from $80 million to $100
million.   The Company has borrowed $34.75 million as of November
9, 2007 under the Amended and Restated Revolving Credit Agreement.





On
October 26, 2007, Excel Mining Systems LLC (“Excel”) redeemed in its entirety
the Company’s $5 million investment in the Second Lien Term Loan.  The
redemption included a prepayment premium and acceleration of OID totaling
$149,000, which will be recognized in the fourth quarter of 2007.





On
November 1, 2007, the Company’s Board of Directors, including all of the
independent directors, approved an extension of the investment advisory
agreement and the administration agreement through November 9,
2008.





Note
11: New Accounting Interpretations and Standards





In
September 2006, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 157 , Fair Value Measurements
(“SFAS 157”), 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 No. 159, The Fair Value Options for Financial
Assets and Financial Liabilities (“SFAS 159”),  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 quarter ended September 30, 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 SEC.





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





Overview





We are a
financial services company created to invest primarily in debt securities of
small and mid-size private energy companies, which we generally define as
companies that have net asset values or annual revenues of less than $500
million and are not issuers of publicly traded securities. We have elected to be
regulated as a business development company, or BDC under the 1940 Act and, as
such, we are required to comply with certain regulatory requirements. For
instance, we generally have to invest at least 70% of our total assets in
“qualifying assets,” which are securities of private or thinly traded public
U.S. companies, cash, cash equivalents, U.S. government securities and
high-quality debt investments that mature in one year or less. In addition, for
federal income tax purposes we operate so as to be treated as a 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 with certain equity or property
components.  A key focus area for our targeted investments in the
energy industry is domestic exploration and production businesses and midstream
businesses that gather, process and transport oil and natural gas. We also
evaluate investment opportunities in such businesses as coal, power,
electricity, energy services and alternative energy. Our investments will
generally range in size from $10 million to $50 million; however, we may invest
more or less depending on market conditions and our manager’s view of a
particular investment opportunity.  Our targeted investments primarily
consist of debt instruments, including senior and subordinated loans combined in
one facility, sometimes with an equity component, and subordinated loans with
equity or property components.  We may also invest in preferred stock
and other equity 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, the availability of
debt 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
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 September 30, 2007, we added one company to our
portfolio.  On August 1, 2007, the Company purchased $5 million of the
$85 million Second Lien Term Loan (the “Second Lien TL”) for Excel Mining
Systems LLC (“Excel”), a private company headquartered in Bowerston,
Ohio.  The Second Lien TL earns interest at LIBOR plus 725 basis
points and is secured by second liens on substantially all of Excel’s
assets.    Proceeds from the Second Lien TL will be used
primarily to refinance existing indebtedness and pay a dividend.  See
Note 10 for additional information.





Following
this transaction, as of September 30, 2007, our investment portfolio consisted
of 16 portfolio companies invested as follows: 36.5% in senior secured term
loans, 9.2% in senior subordinated secured notes, 0.8% in participating
convertible preferred stock, 2.2% in corporate notes, 6.6% in member and
partnership units and  12.0% in net profits interests.  The
balance of our investment portfolio (as a percentage of the whole portfolio) was
comprised 31.0% in U.S. Treasury Bills, and 1.7% in cash and cash equivalents.
At September 30, 2007, the weighted average yield on targeted portfolio
investments, exclusive of capital gains, was 12.2%.  The weighted
average yield of our corporate notes was 5.8%. The weighted average yield of our
U.S. Treasury Bills and cash equivalents was 3.9%.  The weighted
average yield on our total capital invested at September 30, 2007 was
9.3%.  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 September 30, 2007 was $9.1 million with $7.7
million attributable to targeted investments in thirteen portfolio companies,
$0.2 million from corporate notes and $1.2 million attributable to investments
in cash equivalents. This compares to investment income for the quarter ended
September 30, 2006 of $7.6 million with $5.7 million attributable to targeted
investments in fourteen portfolio companies, $0.3 million from corporate notes,
$0.2 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.





For the
nine months ended September 30, 2007, investment income increased by $8.7
million, or approximately 47%, to $27.3 million from $18.6 million for the same
period in 2006.  For the nine months ended September 30, 2007, we
recorded $21.9 million of investment income attributable to targeted investments
in portfolio companies, $0.7 million from corporate notes, $4.4 million
attributable to investments in cash equivalents, and $0.3 million in fee income
from third parties and affiliates.  This compares to investment income
of $13.5 million attributable to targeted investments in portfolio companies,
$0.9 million from corporate notes, $0.4 million in fee income from third parties
and affiliates, and $3.8 million attributable to investments in cash equivalents
and auction rate securities for the same period in 2006.  The increase
in investment income is primarily due to the 58% increase in the average
quarterly balance of targeted investments as of September 30, 2007 compared to
September 30, 2006.





Operating
Expenses





For the
quarter ended September 30, 2007, operating expenses were $3.8 million compared
to $2.8 million for the quarter ended September 30, 2006. The 2007 amount
consisted of investment advisory and management and incentive fees of $1.1
million, insurance expenses, administrative services fees, professional fees,
directors’ fees and other general and administrative expenses of $1.0 million
and credit facility interest and fees of $1.7 million.  In comparison,
for the quarter ended September 30, 2006, investment advisory and management
fees were $1.1 million, insurance expenses, administrative services fees,
professional fees, directors’ fees and other general and administrative expenses
were $0.9 million and credit facility fees were $0.8 million.


25





For the
nine months ended September 30, 2007, operating expenses were $13.1 million
compared to $6.9 million for the same period of 2006. The 2007 amount consisted
of investment advisory and management and incentive fees of $5.3 million,
insurance expenses, administrative services fees, professional fees, directors’
fees and other general and administrative expenses of $2.9 million and credit
facility interest and fees of $4.9 million.  In comparison, for the
nine months ended September 30, 2006, investment advisory and management fees
were $3.4 million, insurance expenses, administrative services fees,
professional fees, directors’ fees and other general and administrative expenses
were $2.5 million and credit facility fees were $1.0 million.  The
increase in operating expenses from 2006 compared to 2007 is attributable to
higher investment advisory and management fees resulting from higher average
total assets, increased interest expenses and fees due to higher borrowings, and
increased incentive fees resulting from favorable  portfolio
performance.





Operating
expenses for the three and nine 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.





Net
Investment Income Before Income Taxes





For the
third quarter of 2007, net investment income before income taxes was $5.3
million compared to $4.7 million for the third quarter of 2006, primarily due to
increased interest income on the higher portfolio balances partially offset by
higher management and incentive fees, general and administrative expenses and
interest and credit facility fees.   Net investment income before
income taxes for the nine months ended September 30, 2007 was $14.2 million
compared to $11.6 million for nine months ended September 30, 2006 primarily due
to increased interest income on the higher portfolio balances partially offset
by higher management and incentive fees, general and administrative expenses and
interest and credit facility fees.





Unrealized
Appreciation or Depreciation on Investments





For the
quarter ended September 30, 2007, as restated, net unrealized depreciation
before income taxes of $0.7 million was $0.7 million, compared to $0.8 million
net unrealized appreciation for the third quarter of 2006.  The $1.5
million decrease is attributable to a $0.7 million net decrease in the fair
values of our targeted investments and a $0.8 million decrease in market prices
of our corporate notes.  For the nine months ended September 30, 2007,
as restated, net unrealized appreciation before income taxes of $2.8 million was
$5.3 million, compared to $1.7 million net unrealized depreciation for the same
period of 2006.  The $7.0 million increase is attributable to a $6.0
million increase in the fair values of our targeted investments and a $1.0
million increase in market prices of our corporate notes.





Net
Realized Gains





For
the quarter ended September 30, 2007, as restated, we realized a capital loss of
$0.4 million from the sale of $6 million in corporate notes.  For the
nine months ended September 30, 2007, as restated, we realized a net capital
gain before taxes of $0.2 million of $6.3 million from the sale of client
warrants, overriding royalty interests and corporate notes.  For the
quarter and nine months ended September 30, 2006, we realized a capital loss of
$174,401 on the sale of $2 million in corporate notes.





Net
Increase in Stockholders’ Equity from Operations





For the
quarter ended September 30, 2007, as restated, we had a net increase in
stockholders’ equity (net assets) resulting from operations of $3.5 million, or
$0.20 per share, compared to $5.3 million, or $0.31 per share for the quarter
ended September 30, 2006.  For the nine months ended September 30,
2007, as restated, the net increase in stockholders’ equity (net assets)
resulting from operations was $22.8 million, or $1.32 per share, compared to
$9.7 million, or $0.56 per share for the nine months ended September 30,
2006.  The $13.1 million, or $0.76 per share net increase in
stockholders’ equity (net assets) resulting from operations is attributable to
overall increased investment income and $6.3 million in net realized capital
gains during the nine months ended September 30, 2007.





Financial
Condition, Liquidity and Capital Resources





During
the first nine months 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 September
30, 2007, we had cash and cash equivalents of $7.1 million, investments in U.S.
Treasury Bills of $127.8 million and investments in corporate notes of $8.9
million.





As of
September 30, 2007, we had investments in or commitments to fund loan facilities
to 16 portfolio companies totaling $331 million, of which $262 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
Facilities.  (See description under “Note 4: 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.


26





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 0 to 75
basis points or the federal funds rate plus 50 basis points. The second
facility, the Senior Treasury Secured Revolving Credit Facility (as amended,
restated, supplemented or otherwise modified from time to time, the “Treasury
Facility”) permits the Company to borrow up to $100 million.  See Note
10 for additional information.  Proceeds from the Treasury Facility
have been 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 September 30, 2007, the Company had $100 million outstanding under the
Treasury Facility and $51 million outstanding under the Investment
Facility.





Dividends





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





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





Portfolio
Credit Quality





We
maintain a system to evaluate the credit quality of our investments. While
incorporating quantitative analysis, this system is a qualitative
assessment.  This system is intended to reflect the overall
performance of a portfolio company’s business, the collateral coverage of an
investment, and other relevant factors. Based on this system, the overall credit
quality of our targeted investment portfolio remained satisfactory in the
quarter ended September 30, 2007.  Of the nineteen rated investments
as of September 30, 2007, six improved in rating, five declined in rating, and
eight retained the same rating when compared to the prior quarter
end.  Investments approximating $28 million, or approximately 10% of
the $267.5 million in targeted investments, are carried on the Company’s watch
list due to slower than expected development of the assets supporting the
investments or deterioration in asset coverage.





During
the quarter ended September 30, 2007, we recorded additional unrealized
appreciation of $2.1 million on our targeted investments, reflecting the fair
value of expected future income and gains from those
investments.  Also during the third quarter of 2007, we recorded
aggregate unrealized depreciation of $2.9 million in the fair value of targeted
investments to reflect the potential for loss of capital inherent in those
investments.  We placed one of these investments on non-accrual status
effective July 1, 2007.  The net change to the value of our portfolio
resulting from these changes is a $0.8 million increase in unrealized
depreciation for the quarter ended September 30, 2007.





Recently
Issued Accounting Pronouncements





See
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.


27





Item
4. Controls and Procedures.





We
maintain disclosure controls and procedures (as defined in 13a-15(e) and
15d-15(e) of the Securities Exchange Act of 1934, as amended, which we refer to
as the Exchange Act), designed to ensure that information required to be
disclosed in our reports under the Exchange Act is recorded, processed,
summarized and reported on a timely basis and accumulated and made known to
management, including our Chief Executive Officer and our Chief Financial
Officer, to allow timely decisions regarding required disclosures.





In
connection with the preparation of this Quarterly Report on Form 10-Q/A, as of
the end of the fiscal period covered by this Quarterly Report on Form 10-Q/A
(September 30, 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 September 30, 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 of the 2007, 2008 and 2009 financial statements to ensure the
completeness and accuracy of the Company’s calculation of its income tax
provision and deferred income tax assets and liabilities. This deficiency
resulted in the restatement of the Company’s consolidated financial statements
for the years ended December 31, 2007 and 2008 (and the unaudited selected
quarterly data for each of the quarters in 2007 and 2008 and the first three
quarters in 2009), and results in a reasonable possibility that a material
misstatement of the Company’s annual or interim financial statements would not
be prevented or detected on a timely basis.





Remediation
Efforts





The
remediation efforts, as outlined below, are designed to address the material
weakness identified by management and to strengthen the Company’s internal
control over financial reporting.





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





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


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


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





We
believe that these remediation actions will represent ongoing improvement
measures. While we have taken steps to remediate the material weakness,
additional measures may be required. The Company anticipates that it will
complete its testing of the additional internal control processes designed to
remediate the previously disclosed material weakness in 2010.  We will
continue to assess the effectiveness of our remediation efforts in connection
with our management’s tests of internal control over financial reporting in
conjunction with our annual and quarterly reports.




28


Changes
in Internal Control Over Financial Reporting





There
were no changes in internal control over financial reporting during the quarter
ended September 30, 2007 that have materially affected or are reasonably likely
to materially affect, the Company’s internal control over financial
reporting.





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
              -
              Amended
      and Restated Revolving Credit Agreement dated as of August 31, 2006, by
      and between NGP Capital Resources Company, the lenders from time to time
      party thereto and SunTrust Bank (filed as Exhibit 10.6 to the Company’s
      Quarterly Report on Form 10-Q for the quarterly period ended September 30,
      2006, and incorporated herein by reference)10.7
              -
              First
      Amendment to Amended and Restated Revolving Credit Agreement effective as
      of August 31, 2006, by and between NGP Capital Resources Company, the
      lenders from time to time party thereto and SunTrust Bank (filed
      as Exhibit 10.7 to the Company’s Quarterly Report on Form 10-Q for the
      quarterly period ended September 30, 2007, and incorporated herein by
      reference)10.8
              -
              Treasury
      Secured Revolving Credit Agreement dated as of August 31, 2006, by and
      between NGP Capital Resources Company, the lenders from time to time party
      thereto and SunTrust Bank (filed as Exhibit 10.7 to the Company’s
      Quarterly Report on Form 10-Q for the quarterly period ended September 30,
      2006, and incorporated herein by reference)10.9
              -
              First
      Amendment to Treasury Secured Revolving Credit Agreement effective as of
      August 31, 2006, by and between NGP Capital Resources Company, the lenders
      from time to time party thereto and SunTrust Bank (filed
      as Exhibit 10.9 to the Company’s Quarterly Report on Form 10-Q for the
      quarterly period ended September 30, 2007, and incorporated herein by
      reference)10.10
              -
              Second
      Amendment to Treasury Secured Revolving Credit Agreement effective as of
      September 28, 2007, by and between NGP Capital Resources Company, the
      lenders from time to time party thereto and SunTrust Bank (filed as
      Exhibit 10.1 to the Company’s Current Report on Form 8-K on October 24,
      2007, and incorporated herein by reference)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
      Officer




32.1*
                -
                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:
      June 24, 2010
                  By:
                  /s/ John H. HomierJohn
      H. HomierPresident
      and Chief Executive
Officer





Date:
      June 24, 2010
                        By:
                        /s/ Stephen K. GardnerStephen
      K. GardnerChief
      Financial Officer, Treasurer and
Secretary




31





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
                  -
                  Amended
      and Restated Revolving Credit Agreement dated as of August 31, 2006, by
      and between NGP Capital Resources Company, the lenders from time to time
      party thereto and SunTrust Bank (filed as Exhibit 10.6 to the Company’s
      Quarterly Report on Form 10-Q for the quarterly period ended September 30,
      2006, and incorporated herein by reference)10.7
                  -
                  First
      Amendment to Amended and Restated Revolving Credit Agreement effective as
      of August 31, 2006, by and between NGP Capital Resources Company, the
      lenders from time to time party thereto and SunTrust Bank (filed
      as Exhibit 10.7 to the Company’s Quarterly Report on Form 10-Q for the
      quarterly period ended September 30, 2007, and incorporated herein by
      reference)10.8
                  -
                  Treasury
      Secured Revolving Credit Agreement dated as of August 31, 2006, by and
      between NGP Capital Resources Company, the lenders from time to time party
      thereto and SunTrust Bank (filed as Exhibit 10.7 to the Company’s
      Quarterly Report on Form 10-Q for the quarterly period ended September 30,
      2006, and incorporated herein by reference)10.9
                  -
                  First
      Amendment to Treasury Secured Revolving Credit Agreement effective as of
      August 31, 2006, by and between NGP Capital Resources Company, the lenders
      from time to time party thereto and SunTrust Bank (filed
      as Exhibit 10.9 to the Company’s Quarterly Report on Form 10-Q for the
      quarterly period ended September 30, 2007, and incorporated herein by
      reference)10.10
                  -
                  Second
      Amendment to Treasury Secured Revolving Credit Agreement effective as of
      September 28, 2007, by and between NGP Capital Resources Company, the
      lenders from time to time party thereto and SunTrust Bank (filed as
      Exhibit 10.1 to the Company’s Current Report on Form 8-K on October 24,
      2007, and incorporated herein by reference)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
      Officer





32.1*
                  -
                  Section
      1350 Certification by the Chief Executive Officer32.2*
                  -
                  Section
      1350 Certification by the Chief Financial
  Officer








32