Tortoise Capital Resources Corp. Releases Fiscal 2010 Second Quarter Financial Results

LEAWOOD, Kan.--(BUSINESS WIRE)-- Tortoise Capital Resources Corp. (NYSE: TTO) (or the company) today announced that it has filed its Form 10-Q for its second quarter ended May 31, 2010.

Recent Highlights

    --  Net assets of $79.1 million or $8.69 per share as of May 31, 2010
    --  Second quarter 2010 distribution of $0.10 per share paid June 1, 2010

Performance Review

On June 1, 2010, the company paid a distribution of $0.10 per common share, a decrease of $0.03 per share compared to its prior quarter distribution of $0.13 per share. The company determines the amount of distributions paid to stockholders based on DCF, which is distributions received from investments less total expenses. In May, TTO received additional capital gain proceeds of $585,000 from Mowood, LLC as a result of a contingent payment from the February sale of its Timberline Energy subsidiary. TTO elected to include the capital gain proceeds from Mowood in its distribution this quarter and next, enabling a distribution of $0.10 per share this quarter.

Net Asset Value

At May 31, 2010, the company's net asset value was $8.69 per share compared to $9.60 per share at Feb. 28, 2010, a decrease of approximately 9 percent. The decrease in net asset value is largely attributable to a decrease in the fair value of our largest holding, High Sierra Energy, LP (High Sierra), as a result of the developments discussed below, as well as a significant decline in the market value of PostRock Energy Corporation (NASDAQ: PSTR), for which we received a substantial number of shares in exchange for our Quest Midstream units upon closing of the merger in March, partially offset by an increase in the value of International Resource Partners LP (IRP) due to strong performance relative to budget.

Portfolio Review

As of May 31, 2010, the fair value of the company's investment portfolio (excluding short-term investments) totaled $73.9 million, including equity investments of $68.6 million and debt investments of $5.3 million. The company's portfolio is approximately 49 percent midstream and downstream investments, 13 percent upstream, and 38 percent in aggregates and coal. The weighted average yield-to-cost on the investment portfolio (excluding short-term investments) as of May 31, 2010 was 5.1 percent.

As previously reported, High Sierra was unable to declare a cash distribution this quarter as a result of a credit agreement covenant default with its bank. High Sierra's results from operations were sufficient to support a distribution at or above the minimum quarterly distribution (MQD) level of $0.45 per share. High Sierra distributed $0.63 per common unit last quarter. The distribution suspension decreased TTO's distributable cash flow by approximately $0.07 per share. If High Sierra resumes cash distributions at the MQD level, TTO could maintain its $0.10-$0.11 per share quarterly distribution, absent any additional adjustments. TTO's fair value of High Sierra, inclusive of its interest in the general partner, declined by approximately $5.8 million this quarter.

PostRock Energy Corp (NASDAQ: PSTR), the new corporation formed for the purpose of wholly owning Quest Resource Corporation, Quest Energy Partners, L.P. and Quest Midstream Partners, L.P., announced on March 5, 2010 that shareholders had approved the merger. TTO received 490,769 freely tradable common units of PostRock in exchange for its 1,216,881 common units of Quest Midstream. PostRock began trading on the NASDAQ on March 8, 2010, at $19.00 per unit and closed that day at $16.36 per unit. Subsequently, the stock price declined significantly. TTO held 460,300 common units of PostRock as of May 31, 2010 at a fair value of $4.83 per unit, the NASDAQ closing price on that date.

TTO's fair value of IRP increased about $1.8 million this quarter. The strong met coal market and IRP improved production and cost controls have yielded year-to-date performance significantly above budget. IRP also announced a quarterly distribution increase from $0.40 per unit to $0.45 per unit effective this quarter.

Earnings Call

The company will host a conference call at 4 p.m. CDT on Thursday, July 8, 2010 to discuss its financial results for the fiscal quarter ended May 31, 2010. Please dial-in approximately five to 10 minutes prior to the scheduled start time.

U.S./Canada: (866) 225-8754

International: (480) 629-9692

The call will also be webcast in a listen-only format. A link to the webcast will be accessible at www.tortoiseadvisors.com.

A replay of the call will be available beginning at 6:00 p.m. CDT on July 8, 2010 and continuing until 11:59 p.m. CDT July 22, 2010, by dialing (800) 406-7325 (U.S./Canada). The replay access code is 4313836#. A replay of the webcast will also be available on the company's website at www.tortoiseadvisors.com through July 8, 2011.

About Tortoise Capital Resources Corp.

Tortoise Capital Resources invests primarily in privately-held and micro-cap public companies operating in the midstream and downstream segments, and to a lesser extent the upstream and coal/aggregate segments, of the U.S. energy infrastructure sector.

About Tortoise Capital Advisors

Tortoise is an investment manager specializing in listed energy infrastructure, such as pipeline and power companies. As of June 30, 2010, the adviser had approximately $3.6 billion of assets under management in five NYSE-listed investment companies and private accounts. For more information, visit our Web site at www.tortoiseadvisors.com.

Safe Harbor Statement

This press release shall not constitute an offer to sell or a solicitation to buy, nor shall there be any sale of these securities in any state or jurisdiction in which such offer or solicitation or sale would be unlawful prior to registration or qualification under the laws of such state or jurisdiction.

Forward-Looking Statement

This press release contains certain statements that may include "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. All statements, other than statements of historical fact, included herein are "forward-looking statements." Although the company and Tortoise Capital Advisors believe that the expectations reflected in these forward-looking statements are reasonable, they do involve assumptions, risks and uncertainties, and these expectations may prove to be incorrect. Actual results could differ materially from those anticipated in these forward-looking statements as a result of a variety of factors, including those discussed in the company's reports that are filed with the Securities and Exchange Commission. You should not place undue reliance on these forward-looking statements, which speak only as of the date of this press release. Other than as required by law, the company and Tortoise Capital Advisors do not assume a duty to update this forward-looking statement. Any distribution paid in the future to our stockholders will depend on the actual performance of the company's investments, its costs of leverage and other operating expenses and will be subject to the approval of the company's Board and compliance with asset coverage requirements of the Investment Company Act of 1940 and the leverage covenants.


Tortoise Capital Resources
Corporation

STATEMENTS OF ASSETS &
LIABILITIES

                                         May 31, 2010          November 30, 2009

                                         (Unaudited)

Assets

 Investments at fair value, control
 (cost $20,508,813 and $28,180,070,      $ 26,556,411          $ 33,458,046
 respectively)

 Investments at fair value,
 affiliated (cost $31,804,095 and          31,836,372            41,658,847
 $52,676,299, respectively)

 Investments at fair value,
 non-affiliated (cost $23,757,178          17,726,201            8,865,047
 and $9,568,566, respectively)

  Total investments (cost
  $76,070,086 and $90,424,935,             76,118,984            83,981,940
  respectively)

 Receivable for Adviser expense            51,617                49,843
 reimbursement

 Dividends                                 89                    87
 receivable

 Deferred tax                              4,258,358             5,429,391
 asset

 Prepaid expenses and other                98,919                16,792
 assets

  Total assets                             80,527,967            89,478,053

Liabilities

 Base management fees payable              309,703               299,060
 to Adviser

 Distribution payable to common            909,910               -
 stockholders

 Accrued expenses and other                219,927               282,408
 liabilities

 Short-term                                -                     4,600,000
 borrowings

  Total                                    1,439,540             5,181,468
  liabilities

   Net assets applicable to              $ 79,088,427          $ 84,296,585
   common stockholders

Net Assets Applicable to Common
Stockholders Consist of:

 Warrants, no par value;
 945,594 issued and outstanding
 at May 31, 2010 and November            $ 1,370,700           $ 1,370,700
 30, 2009 (5,000,000
 authorized)

 Capital stock, $0.001 par
 value; 9,099,037 shares issued
 and outstanding at May 31,
 2010 and 9,078,090 issued and             9,099                 9,078
 outstanding at November 30,
 2009 (100,000,000 shares
 authorized)

 Additional paid-in capital                99,983,975            101,929,307

 Accumulated net investment                (3,248,338  )         (3,304,416  )
 loss, net of income taxes

 Accumulated realized loss, net            (21,417,322 )         (14,041,614 )
 of income taxes

 Net unrealized appreciation
 (depreciation) of investments, net        2,390,313             (1,666,470  )
 of income taxes

   Net assets applicable to              $ 79,088,427          $ 84,296,585
   common stockholders

 Net Asset Value per common
 share outstanding (net assets
 applicable to common stock,             $ 8.69                $ 9.29
 divided by common shares
 outstanding)





Tortoise Capital
Resources
Corporation

Distributable Cash    For the three    For the three     For the six       For the six
Flow                  months ended     months ended      months ended      months ended
                      May 31, 2010     May 31, 2009      May 31, 2010      May 31, 2009

Total from
Investments

     Distributions
     from             $ 847,399        $ 1,852,148       $ 2,336,155       $ 4,543,782
     investments

     Distributions      20,972           -                 20,972            -
     paid in stock

     Interest
     income from        189,622          202,400           381,053           403,998
     investments

     Dividends from
     money market       233              420               450               1,145
     mutual funds

     Other income       8,688            15,000            19,080            30,000

Total from              1,066,914        2,069,968         2,757,710         4,978,925
Investments

Operating Expenses
Before Leverage
Costs

     Advisory fees
     (net of
     expense            258,087          281,821           516,355           609,129
     reimbursement
     by Adviser)

     Other
     operating          216,177          236,014           390,745           453,596
     expenses

Total Operating
Expenses, before        474,264          517,835           907,100           1,062,725
Leverage Costs

     Distributable
     cash flow          592,650          1,552,133         1,850,610         3,916,200
     before
     leverage costs

     Leverage costs     -                256,842           45,619            427,958

      Distributable   $ 592,650        $ 1,295,291       $ 1,804,991       $ 3,488,242
      Cash Flow

      Capital gain      292,500          -                 292,500           -
      proceeds

      Cash
      Available for   $ 885,150        $ 1,295,291       $ 2,097,491       $ 3,488,242
      Distribution

Distributions paid    $ 909,904        $ 1,170,247       $ 2,090,055       $ 3,231,540
on common stock

Payout percentage       103       %      90         %      100        %      93         %
for period(1)

DCF/GAAP
Reconciliation

     Distributable    $ 592,650        $ 1,295,291       $ 1,804,991       $ 3,488,242
     Cash Flow

     Adjustments to reconcile to
     Net Investment Income (Loss),
     before Income Taxes:

     Distributions
     paid in stock      (20,972   )      28,377            (20,972    )      56,514
     (2)

     Return of
     capital on
     distributions      (656,759  )      (2,864,138 )      (1,655,399 )      (4,717,386 )
     received from
     equity
     investments

     Non-recurring
     professional       (38,881   )      -                 (38,881    )      -
     fees

      Net
      Investment
      Income          $ (123,962  )    $ (1,540,470 )    $ 89,739          $ (1,172,630 )
      (Loss),
      before Income
      Taxes

(1 ) Distributions paid as a percentage of Cash
     Available for Distribution.

     Distributions paid in stock for the three and six months ended May 31, 2010 were
(2 ) paid as part of normal operations and are included in DCF. Distributions paid in
     stock for the three and six months ended May 31, 2009 were paid in stock as a result
     of credit constraints and therefore were not included in DCF.





Tortoise Capital Resources Corporation

STATEMENTS OF
OPERATIONS

(Unaudited)

                     For the three      For the three     For the six       For the six
                     months ended May   months ended      months ended      months ended
                     31, 2010           May 31, 2009      May 31, 2010      May 31, 2009

Investment
Income

Distributions
from
investments

 Control             $ 478,380          $ 579,215         $ 1,034,259       $ 1,158,430
 investments

 Affiliated            224,999            836,038           1,081,891         1,665,376
 investments

 Non-affiliated        144,020            465,272           220,005           1,776,490
 investments

Total
distributions          847,399            1,880,525         2,336,155         4,600,296
from
investments

Less return of
capital on             (656,759    )      (2,864,138 )      (1,655,399 )      (4,717,386 )
distributions

Net
distributions          190,640            (983,613   )      680,756           (117,090   )
from
investments

Interest income
from control           189,622            202,400           381,053           403,998
investments

Dividends from
money market           233                420               450               1,145
mutual funds

Fee income             8,688              15,000            19,080            30,000

 Total
 Investment            389,183            (765,793   )      1,081,339         318,053
 Income

Operating
Expenses

Base management        309,704            338,186           619,626           730,955
fees

Professional           153,693            145,017           238,855           274,109
fees

Directors' fees        33,271             22,080            59,432            43,737

Reports to             16,174             15,408            31,877            30,481
stockholders

Administrator          14,456             15,782            28,916            34,111
fees

Fund accounting        7,039              8,735             14,011            16,740
fees

Registration           6,496              7,891             12,851            15,610
fees

Stock transfer         3,462              3,403             6,592             6,584
agent fees

Franchise tax          4,958              -                 7,530             -
expense

Custodian fees         2,755              4,673             4,330             7,760
and expenses

Other expenses         12,754             13,025            25,232            24,464

 Total
 Operating             564,762            574,200           1,049,252         1,184,551
 Expenses

Interest               -                  256,842           45,619            427,958
expense

 Total Expenses        564,762            831,042           1,094,871         1,612,509

Less expense
reimbursement by       (51,617     )      (56,365    )      (103,271   )      (121,826   )
Adviser

 Net Expenses          513,145            774,677           991,600           1,490,683

Net Investment
Income, before         (123,962    )      (1,540,470 )      89,739            (1,172,630 )
Income Taxes

Deferred tax
benefit                (967        )      8,283             (33,661    )      (92,900    )
(expense)

Net Investment         (124,929    )      (1,532,187 )      56,078            (1,265,530 )
Income (Loss)

Realized and
Unrealized Gain
(Loss) on
Investments

Net realized
gain on control        585,000            -                 2,163,001         -
investments

Net realized
loss on                (9,607,112  )      -                 (9,624,557 )      (173,145   )
affiliated
investments

Net realized
loss on                (1,239,501  )      (7,335,157 )      (1,211,889 )      (7,661,830 )
non-affiliated
investments

 Net realized
 loss, before          (10,261,613 )      (7,335,157 )      (8,673,445 )      (7,834,975 )
 income taxes

  Deferred tax
  benefit              1,540,708          (758,204   )      1,297,737         (620,717   )
  (expense)

   Net realized
   loss on             (8,720,905  )      (8,093,361 )      (7,375,708 )      (8,455,692 )
   investments

Net unrealized
appreciation
(depreciation) of      (765,835    )      3,029,773         769,622           3,157,483
control
investments

Net unrealized
appreciation
(depreciation) of      9,841,655          3,374,165         11,049,729        (4,903,883 )
affiliated
investments

Net unrealized
appreciation
(depreciation) of      (5,525,233  )      9,978,917         (5,327,459 )      5,195,197
non-affiliated
investments

 Net unrealized
 appreciation,         3,550,587          16,382,855        6,491,892         3,448,797
 before income
 taxes

  Deferred tax
  benefit              (1,985,123  )      (3,284,590 )      (2,435,109 )      273,227
  (expense)

   Net unrealized
   appreciation        1,565,464          13,098,265        4,056,783         3,722,024
   of investments

Net Realized and
Unrealized Gain        (7,155,441  )      5,004,904         (3,318,925 )      (4,733,668 )
(Loss) on
Investments

Net Increase
(Decrease) in Net
Assets Applicable
to Common            $ (7,280,370  )    $ 3,472,717       $ (3,262,847 )    $ (5,999,198 )
Stockholders
Resulting from
Operations

Net Increase
(Decrease) in
Net Assets
Applicable to
Common
Stockholders
Resulting from
Operations Per
Common Share:

 Basic and           $ (0.80       )    $ 0.39            $ (0.36      )    $ (0.67      )
 Diluted

Weighted Average
Shares of Common
Stock
Outstanding:

 Basic and             9,099,037          9,000,174         9,088,679         8,981,369
 Diluted




    Source: Tortoise Capital Resources Corp.