NGP Capital Resources Company (NGPC, Financial) filed Quarterly Report for the period ended 2009-03-31.
NGP Capital Resources Company is a new financial services company organized by Natural Gas Partners to invest primarily in debt securities of small and mid-size energy companies. NGP Capital Resources Company's investment objective is to generate both current income and capital appreciation primarily through debt investments with certain equity components. Natural Gas Partners is a leading provider of private equity capital and sponsorship to the energy industry. NGP Capital Resources Company has a market cap of $165 million; its shares were traded at around $7.63 with a P/E ratio of 6.1 and P/S ratio of 4.4. The dividend yield of NGP Capital Resources Company stocks is 10.5%.
At March 31, 2009, the weighted average yield on targeted portfolio investments, exclusive of capital gains, was 6.51%. The weighted average yield of our corporate notes was 5.82%. The weighted average yield of our U.S. Treasury Bills and cash equivalents was 0.13% and 0.31%, respectively. The weighted average yield on our total capital invested at March 31, 2009 was 6.05%. The primary cause of the decline in the weighted average yield on targeted portfolio investments as of March 31, 2009 is that the calculation includes a negative yield on our investment in the ATP Limited Term Royalty, which had a cost basis of $22.5 million as of quarter end. The negative yield is the result of amortization on the investment being substantially higher than the income earned for the month of March 2009 due to lower oil and natural gas prices. In addition, though the investment is substantially hedged and such hedges produced substantial income for the month of March 2009, such income is not included in the yield calculation for targeted portfolio investments as the investment in commodity hedges is not included in the targeted investment portfolio. Further, we continue to maintain our investments in Formidable ($37.9 million cost basis), BSR Loco Bayou, LLC ($2.4 million cost basis) and Chroma Exploration & Production, Inc. ($4.2 million cost basis) on non-accrual status.
For the quarter ended March 31, 2009, operating expenses were $4.0 million compared to $5.4 million for the quarter ended March 31, 2008. The 2009 amount consisted of investment advisory and management fees of $1.8 million, insurance expenses, administrative services fees, professional fees, directors fees and other general and administrative expenses of $1.2 million and credit facility interest and fees of $1.0 million. In comparison, for the quarter ended March 31, 2008, investment advisory and management fees were $1.8 million, insurance expenses, administrative services fees, professional fees, directors fees and other general and administrative expenses were $1.2 million and credit facility interest and fees were $2.4 million.
For the quarter ended March 31, 2009, we had a net decrease in stockholders equity (net assets) resulting from operations of $18.7 million, or $0.86 per share, compared to a net increase of $2.4 million, or $0.14 per share for the quarter ended March 31, 2008. The $21.1 million, or $1.00 per share net decrease is attributable to the $22.8 million increase in unrealized depreciation on our investments during the first quarter of 2009, compared to the first quarter of 2008.
During the quarter ended March 31, 2009, we generated cash from operations, including interest earned on our portfolio securities, as well as our investments in corporate notes and U.S. government securities. We received cash redemptions of investments in portfolio securities and commodity derivative instruments of $5.8 million. At March 31, 2009, we had cash and cash equivalents of $26.9 million, investments in U.S. Treasury Bills of $76.1 million and investments in corporate notes of $6.1 million. Our Treasury Credit Facility, which as of March 31, 2009 had $75 million drawn, will mature on August 31, 2009. On or before the maturity, we expect to retire the facility in full with the proceeds of the sale of our U.S. Treasury Bills. As of March 31, 2009, we had investments in or commitments to fund loan facilities to nineteen portfolio companies totaling $349.6 million, of which $300.5 million was drawn. We expect to fund our investments in 2009 from income earned on our portfolio and temporary investments, repayments or realizations of existing investments and from borrowings under our Investment Facility. In the future, we may also fund a portion of our investments with issuances of equity or senior debt securities. We may also securitize a portion of our investments in mezzanine or senior secured loans or other assets. We expect our primary use of funds to be investments in portfolio companies, cash distributions to holders of our common stock and payment of fees and other operating expenses.
The combined decrease in targeted portfolio and commodity derivative instrument fair value of $24.4 million is primarily due to changes in the estimated current market values of underlying assets of $21.3 million, and the reversal of prior year unrealized appreciation of commodity derivative instruments, due to first quarter 2009 realizations. The $21.2 million decrease in targeted portfolio fair value consisted primarily of increases on TierraMar Energy LP preferred LP units, $4.1 million, and Formidable Senior Secured Note, $17.5 million. The increase in unrealized depreciation on TierraMar s preferred LP units was primarily due to changes in our forecast of oil and natural gas prices. The increase in unrealized depreciation on the Formidable Senior Secured Note is primarily due to deterioration in the market for Powder River Basin natural gas assets.
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NGP Capital Resources Company is a new financial services company organized by Natural Gas Partners to invest primarily in debt securities of small and mid-size energy companies. NGP Capital Resources Company's investment objective is to generate both current income and capital appreciation primarily through debt investments with certain equity components. Natural Gas Partners is a leading provider of private equity capital and sponsorship to the energy industry. NGP Capital Resources Company has a market cap of $165 million; its shares were traded at around $7.63 with a P/E ratio of 6.1 and P/S ratio of 4.4. The dividend yield of NGP Capital Resources Company stocks is 10.5%.
Highlight of Business Operations:
Investment income for the quarter ended March 31, 2009 was $8.5 million with $6.0 million attributable to interest from targeted investments in eleven portfolio companies, $3.2 million attributable to income from commodity derivative instruments, a $0.9 million net loss attributable to royalty income net of amortization, and $0.2 million from corporate notes and investments in cash equivalents. This compares to investment income for the quarter ended March 31, 2008 of $9.5 million with $7.7 million attributable to interest from targeted investments in thirteen portfolio companies, $0.5 million attributable to royalty income net of amortization, $0.2 million from corporate notes and $1.1 million attributable to investments in cash equivalents.At March 31, 2009, the weighted average yield on targeted portfolio investments, exclusive of capital gains, was 6.51%. The weighted average yield of our corporate notes was 5.82%. The weighted average yield of our U.S. Treasury Bills and cash equivalents was 0.13% and 0.31%, respectively. The weighted average yield on our total capital invested at March 31, 2009 was 6.05%. The primary cause of the decline in the weighted average yield on targeted portfolio investments as of March 31, 2009 is that the calculation includes a negative yield on our investment in the ATP Limited Term Royalty, which had a cost basis of $22.5 million as of quarter end. The negative yield is the result of amortization on the investment being substantially higher than the income earned for the month of March 2009 due to lower oil and natural gas prices. In addition, though the investment is substantially hedged and such hedges produced substantial income for the month of March 2009, such income is not included in the yield calculation for targeted portfolio investments as the investment in commodity hedges is not included in the targeted investment portfolio. Further, we continue to maintain our investments in Formidable ($37.9 million cost basis), BSR Loco Bayou, LLC ($2.4 million cost basis) and Chroma Exploration & Production, Inc. ($4.2 million cost basis) on non-accrual status.
For the quarter ended March 31, 2009, operating expenses were $4.0 million compared to $5.4 million for the quarter ended March 31, 2008. The 2009 amount consisted of investment advisory and management fees of $1.8 million, insurance expenses, administrative services fees, professional fees, directors fees and other general and administrative expenses of $1.2 million and credit facility interest and fees of $1.0 million. In comparison, for the quarter ended March 31, 2008, investment advisory and management fees were $1.8 million, insurance expenses, administrative services fees, professional fees, directors fees and other general and administrative expenses were $1.2 million and credit facility interest and fees were $2.4 million.
For the quarter ended March 31, 2009, we had a net decrease in stockholders equity (net assets) resulting from operations of $18.7 million, or $0.86 per share, compared to a net increase of $2.4 million, or $0.14 per share for the quarter ended March 31, 2008. The $21.1 million, or $1.00 per share net decrease is attributable to the $22.8 million increase in unrealized depreciation on our investments during the first quarter of 2009, compared to the first quarter of 2008.
During the quarter ended March 31, 2009, we generated cash from operations, including interest earned on our portfolio securities, as well as our investments in corporate notes and U.S. government securities. We received cash redemptions of investments in portfolio securities and commodity derivative instruments of $5.8 million. At March 31, 2009, we had cash and cash equivalents of $26.9 million, investments in U.S. Treasury Bills of $76.1 million and investments in corporate notes of $6.1 million. Our Treasury Credit Facility, which as of March 31, 2009 had $75 million drawn, will mature on August 31, 2009. On or before the maturity, we expect to retire the facility in full with the proceeds of the sale of our U.S. Treasury Bills. As of March 31, 2009, we had investments in or commitments to fund loan facilities to nineteen portfolio companies totaling $349.6 million, of which $300.5 million was drawn. We expect to fund our investments in 2009 from income earned on our portfolio and temporary investments, repayments or realizations of existing investments and from borrowings under our Investment Facility. In the future, we may also fund a portion of our investments with issuances of equity or senior debt securities. We may also securitize a portion of our investments in mezzanine or senior secured loans or other assets. We expect our primary use of funds to be investments in portfolio companies, cash distributions to holders of our common stock and payment of fees and other operating expenses.
The combined decrease in targeted portfolio and commodity derivative instrument fair value of $24.4 million is primarily due to changes in the estimated current market values of underlying assets of $21.3 million, and the reversal of prior year unrealized appreciation of commodity derivative instruments, due to first quarter 2009 realizations. The $21.2 million decrease in targeted portfolio fair value consisted primarily of increases on TierraMar Energy LP preferred LP units, $4.1 million, and Formidable Senior Secured Note, $17.5 million. The increase in unrealized depreciation on TierraMar s preferred LP units was primarily due to changes in our forecast of oil and natural gas prices. The increase in unrealized depreciation on the Formidable Senior Secured Note is primarily due to deterioration in the market for Powder River Basin natural gas assets.
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