Tortoise Capital Resources Corp. Releases Fiscal 2009 Second Quarter Financial Results

LEAWOOD, Kan.--(BUSINESS WIRE)-- Tortoise Capital Resources Corp. (NYSE: TTO) (the company) today announced that it has filed its Form 10-Q for its second quarter ended May 31, 2009.

Recent Highlights

    --  Net assets of $80.2 million or $8.91 per share as of May 31, 2009
    --  Total assets of $100.9 million as of May 31, 2009
    --  Distributable cash flow of $1.3 million for the fiscal quarter ended May
        31, 2009
    --  Second quarter 2009 distribution of $0.13 per share paid June 01, 2009
    --  Credit facility balance of $11.7 million as of July 06, 2009

Performance Review

The company views distributable cash flow (DCF) as a key indicator of its core financial performance. The company determines the amount of distributions paid to stockholders based on DCF, which is distributions received from investments less total expenses. Credit constraints and liquidity concerns have been factors in the reduction or suspension of cash distributions of certain investments in the portfolio, including Eagle Rock Energy Partners, L.P., Quest Midstream Partners, L.P. and Abraxas Energy Partners, L.P., thus reducing the company's DCF. DCF for the fiscal quarter ended May 31, 2009, was approximately $1.3 million as shown below. On June 1, 2009, the company paid a distribution of $0.13 per common share, a decrease of $0.10 per share compared to the prior quarter.

Leverage

On June 19, 2009, the company entered into a 60-day extension of its amended credit facility effective June 20, 2009, through August 20, 2009. The company reduced the balance on its credit facility from $23.1 million at Feb. 28, 2009, to a current balance of $11.7 million. The amended credit facility retains the provision from the previous extension requiring the company to apply 100 percent of the proceeds from any private investment liquidation and 50 percent of the proceeds from the sale of any publicly traded portfolio assets to the outstanding balance of the facility. In addition, each prepayment of principal of the loans under the amended credit facility will permanently reduce the maximum amount of the loans under the amended credit agreement to an amount equal to the outstanding principal balance of the loans under the amended credit agreement immediately following the prepayment. During the extension, outstanding loan balances generally will accrue interest at a variable rate equal to the greater of (i) one-month LIBOR plus 3.00 percent, and (ii) 5.50 percent. The company continues to seek a longer-term lending arrangement and to reduce its leverage position through the sale of publicly traded securities. Additionally, the company may have opportunities to realize liquidity from private holdings in order to further reduce, or even eliminate, its leverage.

Net Asset Value

At May 31, 2009, the company's net asset value was $8.91 per share compared to $8.67 per share at Feb. 28, 2009. Total assets decreased from $103.5 million as of Feb. 28, 2009, to $100.9 million as of May 31, 2009. The decrease in total assets resulted from a $16.4 million increase in net unrealized appreciation of investments (before income taxes), offset by a reduction in assets due to sales of publicly traded securities and the utilization of those sales proceeds to reduce leverage. Total assets also decreased this quarter due to a decrease in the deferred tax asset (as a result of the increase in unrealized appreciation) to $5.2 million (net of a $5.3 million valuation allowance), or approximately $0.58 per share, compared to $9.3 million (net of a $4.0 million valuation allowance), or approximately $1.04 per share at Feb. 28, 2009 . The company does not include the deferred tax asset in the calculation of its management fee.

Portfolio Review

As of May 31, 2009, the fair value of the company's investment portfolio (excluding short-term investments) totaled $91.2 million, including equity investments of $82.4 million and debt investments of $8.8 million. The portfolio consists of 60 percent midstream and downstream investments, 8 percent upstream investments, and 32 percent in aggregates and coal. The weighted average yield-to-cost on the investment portfolio (excluding short-term investments) as of May 31, 2009, was 6.2 percent.

On June 30, 2009, Abraxas Petroleum Corporation (NASDAQ: AXAS) ("Abraxas Petroleum") and Abraxas Energy Partners, L.P. ("Abraxas Energy") announced that they had entered into a definitive merger agreement pursuant to which Abraxas Energy will merge into Abraxas Petroleum. The agreement provides for Abraxas Petroleum to acquire the outstanding common units of Abraxas Energy not currently held by a wholly-owned subsidiary of Abraxas Petroleum for $6.00 per common unit payable in shares of Abraxas Petroleum common stock. The number of shares of Abraxas Petroleum common stock will be not less than 4.25 shares, and not more than 6.0 shares, per common unit of Abraxas Energy. The final number of shares will be determined by dividing $6.00 by the volume weighted average closing price of Abraxas Petroleum on the NASDAQ during the 20 trading days ending three business days prior to a special meeting of Abraxas Petroleum stockholders. Holders of 96% of the common units of Abraxas Energy not held by a wholly-owned subsidiary of Abraxas Petroleum have executed a voting, registration rights and lock-up agreement with Abraxas Petroleum and Abraxas Energy. The voting agreement provides an automatic vote, or proxy to vote, by the unaffiliated unitholders of Abraxas Energy in favor of the merger and for a 90-day lock-up period followed by a multi-year staggered lock-up period. The voting agreement also provides for a standstill by the private investors on their rights under the existing exchange and registration rights agreement and a standstill by Abraxas Energy on its initial public offering. The merger is subject to approval by the holders of a majority of the outstanding Abraxas Petroleum common stock and 80% of the outstanding Abraxas Energy common units, and other usual and customary closing conditions.

On July 6, 2009, Quest Resource Corporation (NASDAQ: QRCP) ("QRCP"), Quest Energy Partners, L.P. (NASDAQ: QELP) ("QELP") and Quest Midstream Partners, L.P. ("QMLP") announced that they had entered into a definitive merger agreement pursuant to which the three companies would recombine. The recombination would be effected by forming a new, yet to be named, publicly traded corporation that, through a series of mergers and entity conversions, would wholly-own all three entities. The completion of a recombination is subject to the satisfaction of a number of conditions, including the arrangement of one or more satisfactory credit facilities for the new entity, the approval of the transaction by the stockholders of QRCP and the unit holders of QELP and QMLP, and consents from each entity's existing lenders. There can be no assurance that the definitive documentation will be agreed to or that a recombination will occur.

Earnings Call

The company will host a conference call at 4 p.m. CST on Thursday, July 09, 2009, to discuss its financial results for the fiscal quarter ended May 31, 2009. Please dial-in approximately five to 10 minutes prior to the scheduled start time.

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

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 7:00 p.m. CST on July 09, 2009, and continuing until 11:59 p.m. CST July 23, 2009, by dialing 800-406-7325 (U.S./Canada). The replay access code is 4075823#. A replay of the webcast will also be available on the company's Web site at www.tortoiseadvisors.com through July 09, 2010.

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 segment, of the U.S. energy infrastructure sector.

About Tortoise Capital Advisors

Tortoise Capital Advisors, LLC is a pioneer in capital markets for master limited partnership (MLP) investment companies and a leader in closed-end funds and separately managed accounts focused on MLPs in the energy sector. As of June 30, 2009, the adviser had approximately $2.0 billion of assets under management. 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, 2009     November 30, 2008

                                              (Unaudited)

Assets

Investments at fair value, control (cost      $ 32,264,166     $ 30,213,280
$29,312,205 and $30,418,802, respectively)

Investments at fair value, affiliated (cost   40,682,061       48,016,925
$54,231,519 and $56,662,500, respectively)

Investments at fair value, non-affiliated
(cost $39,046,320 and $49,760,304,            22,402,239       27,921,025
respectively)

Total investments (cost $122,590,044 and      95,348,466       106,151,230
$136,841,606, respectively)

Cash                                          68,200           -

Income tax receivable                         -                212,054

Receivable for Adviser expense reimbursement  56,364           88,925

Interest receivable from control investments  -                76,609

Dividends receivable                          94               696

Deferred tax asset, net                       5,243,357        5,683,747

Prepaid expenses and other assets             157,945          107,796

Total assets                                  100,874,426      112,321,057

Liabilities

Base management fees payable to Adviser       338,187          533,552

Distribution payable to common stockholders   1,170,247        -

Accrued expenses and other liabilities        340,055          362,205

Short-term borrowings                         18,800,000       22,200,000

Total liabilities                             20,648,489       23,095,757

Net assets applicable to common stockholders  $ 80,225,937     $ 89,225,300

Net Assets Applicable to Common Stockholders
Consist of:

Warrants, no par value; 945,594 issued and
outstanding                                   $ 1,370,700      $ 1,370,700
at May 31, 2009 and November 30, 2008
(5,000,000 authorized)

Capital stock, $0.001 par value; 9,001,902
shares issued and
outstanding at May 31, 2009 and 8,962,147     9,002            8,962
issued and outstanding at
November 30, 2008 (100,000,000 shares
authorized)

Additional paid-in capital                    103,868,927      106,869,132

Accumulated net investment loss, net of       (3,809,797   )   (2,544,267   )
income taxes

Accumulated realized gain (loss), net of      (2,091,430   )   6,364,262
income taxes

Net unrealized depreciation of investments,   (19,121,465  )   (22,843,489  )
net of income taxes

Net assets applicable to common stockholders  $ 80,225,937     $ 89,225,300

Net Asset Value per common share outstanding
(net assets applicable                        $ 8.91           $ 9.96
to common stock, divided by common shares
outstanding)




               For the three For the three For the six months For the six months
               months ended  months ended  ended              ended

Distributable  May 31, 2009  May 31, 2008  May 31, 2009       May 31, 2008
Cash Flow

Total from
Investments

 Distributions $             $             $                  $
 from          1,852,148     2,773,933     4,543,782          5,394,648
 investments

 Distributions
 paid in stock -             484,200       -                  937,720
 (1)

 Interest
 income from   202,400       301,944       403,998            615,353
 investments

 Dividends
 from money    420           817           1,145              3,127
 market mutual
 funds

 Other income  15,000        -             30,000             28,987

Total from     2,069,968     3,560,894     4,978,925          6,979,835
Investments

Operating
Expenses
Before
Leverage Costs

 Advisory fees
 (net of
 expense       281,821       485,768       609,129            979,374
 reimbursement
 by Adviser)

 Other
 operating
 expenses
 (excluding    236,014       262,515       453,596            512,796
 capital gain
 incentive
 fees)

Total
Operating      517,835       748,283       1,062,725          1,492,170
Expenses

 Distributable
 cash flow
 before        1,552,133     2,812,611     3,916,200          5,487,665
 leverage
 costs

 Leverage      256,842       435,594       427,958            933,498
 Costs

 Distributable $             $             $                  $
 Cash Flow     1,295,291     2,377,017     3,488,242          4,554,167

Distributions  $             $             $                  $
paid on common 1,170,247     2,330,092     3,231,540          4,544,679
stock

Payout
percentage for 90         %  98         %  93         %       100        %
period(2)

DCF/GAAP
Reconciliation

Distributable  $             $             $                  $
Cash Flow      1,295,291     2,377,017     3,488,242          4,554,167

Adjustments to
reconcile to
Net Investment
Income, before
Income Taxes

 Distributions
 paid in stock 28,377        (484,200   )  56,514             (937,720   )
 (1)

 Return of
 capital on
 distributions (2,864,138 )  (2,330,564 )  (4,717,386 )       (4,190,305 )
 received from
 equity
 investments

 Capital gain
 incentive     -             (1,367,168 )  -                  (1,087,503 )
 fees

 Net
 Investment    $             $             $                  $
 Income,       (1,540,470 )  (1,804,915 )  (1,172,630 )       (1,661,361 )
 before Income
 Taxes

 (1) The only distributions paid in stock for the three and six months ended May
 31, 2009 were from Abraxas Energy Partners, L.P. which were paid in stock as a
 result of credit constraints and therefore were not included in DCF.
 Distributions paid in stock for the three and six months ended May 31, 2008
 represent paid-in-kind distributions from LONESTAR Midstream Partners, LP

 (2) Distributions paid as a percentage of Distributable Cash Flow.




Tortoise
Capital
Resources
Corporation

STATEMENTS OF
OPERATIONS
(Unaudited)

                For the three  For the three  For the six       For the six
                months         months         months            months
                ended May 31,  ended May 31,  ended May 31,     ended May 31,
                2009           2008           2009              2008

Investment
Income

Distributions
from
investments

Control         $ 579,215      $ 344,597      $                 $ 627,501
investments                                   1,158,430

Affiliated      836,038        1,709,792      1,665,376         3,359,680
investments

Non-affiliated  465,272        719,544        1,776,490         1,407,467
investments

Total
distributions   1,880,525      2,773,933      4,600,296         5,394,648
from
investments

Less return of
capital on      (2,864,138 )   (2,330,564 )   (4,717,386 )      (4,190,305 )
distributions

Net
distributions   (983,613   )   443,369        (117,090   )      1,204,343
from
investments

Interest
income from     202,400        301,944        403,998           615,353
control
investments

Dividends from
money market    420            817            1,145             3,127
mutual funds

Fee income      15,000         -              30,000            -

Other income    -              -              -                 28,987

Total
Investment      (765,793   )   746,130        318,053           1,851,810
Income

Operating
Expenses

Base
management      338,186        589,996        730,955           1,175,249
fees

Capital gain    -              1,367,168      -                 1,087,503
incentive fees

Professional    145,017        164,131        274,109           315,882
fees

Administrator   15,782         27,408         34,111            54,558
fees

Directors'      22,080         22,083         43,737            44,746
fees

Reports to      15,408         13,056         30,481            25,971
stockholders

Fund
accounting      8,735          8,550          16,740            17,038
fees

Registration    7,891          7,458          15,610            14,834
fees

Custodian fees  4,673          4,684          7,760             9,369
and expenses

Stock transfer  3,403          3,403          6,584             6,769
agent fees

Other expenses  13,025         11,742         24,464            23,629

Total
Operating       574,200        2,219,679      1,184,551         2,775,548
Expenses

Interest        256,842        435,594        427,958           933,498
expense

Total Expenses  831,042        2,655,273      1,612,509         3,709,046

Less expense
reimbursement   (56,365    )   (104,228   )   (121,826   )      (195,875   )
by Adviser

Net Expenses    774,677        2,551,045      1,490,683         3,513,171

Net Investment
Loss, before    (1,540,470 )   (1,804,915 )   (1,172,630 )      (1,661,361 )
Income Taxes

Deferred tax
benefit         8,283          685,869        (92,900    )      631,318
(expense)

Net Investment  (1,532,187 )   (1,119,046 )   (1,265,530 )      (1,030,043 )
Loss

Realized and
Unrealized
Gain (Loss) on
Investments

Net realized
loss on
investments,    (7,335,157 )   -              (7,834,975 )      -
before income
taxes

Deferred tax    (758,204   )   -              (620,717   )      -
expense

Net realized
loss on         (8,093,361 )   -              (8,455,692 )      -
investments

Net unrealized
appreciation
(depreciation)  3,029,773      (1,257,164 )   3,157,483         3,336
of control
investments

Net unrealized
appreciation
(depreciation)  3,374,165      10,055,991     (4,903,883 )      9,749,617
of affiliated
investments

Net unrealized
appreciation
(depreciation)  9,978,917      2,646,187      5,195,197         (1,755,646 )
of
non-affiliated
investments

Net unrealized
appreciation,   16,382,855     11,445,014     3,448,797         7,997,307
before income
taxes

Deferred tax
benefit         (3,284,590 )   (4,349,106 )   273,227           (3,038,977 )
(expense)

Net unrealized
appreciation    13,098,265     7,095,908      3,722,024         4,958,330
of investments

Net Realized
and Unrealized  5,004,904      7,095,908      (4,733,668 )      4,958,330
Gain (Loss) on
Investments

Net Increase
(Decrease) in
Net Assets
Applicable to   $              $              $          )      $
Common          3,472,717      5,976,862      (5,999,198        3,928,287
Stockholders
Resulting from
Operations

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

Basic and       $ 0.39         $ 0.67         $ (0.67    )      $ 0.44
Diluted

Weighted
Average Shares
of Common
Stock
Outstanding:

Basic and       9,000,174      8,876,540      8,981,369         8,858,213
Diluted




    Source: Tortoise Capital Resources Corporation