Tortoise Capital Resources Corp. Releases Fiscal 2008 Second Quarter Financial Results

LEAWOOD, Kan.--(BUSINESS WIRE)--

Tortoise Capital Resources Corp. (NYSE: TTO) today announced that it has filed its Form 10-Q for the second quarter ended May 31, 2008.

    Recent Highlights

    --  Second quarter distribution of $0.2625 per share paid June 02,
        2008, representing achievement of the targeted annualized
        yield of 7 percent (based on initial offering price of $15.00
        per share)

    --  Net assets at quarter end of $121.5 million or $13.69 per
        share, an increase of $3.8 million or $0.41 per share over
        last quarter

    --  LONESTAR Midstream Partners LP entered into a definitive
        agreement for the sale of its gas gathering and transportation
        assets

    Portfolio and Investment Activity

Net assets increased from $117.7 million or $13.28 per share at February 29, 2008 to $121.5 million or $13.69 per share at May 31, 2008. As of May 31, 2008, the fair value of the company's investment portfolio (excluding short-term investments) totaled $165.7 million including equity investments of $154.9 million and debt investments of $10.8 million. The portfolio represents a mix of 70 percent midstream and downstream investments, 14 percent aggregates and coal investments and 16 percent upstream investments. The weighted average yield-to-cost on the investment portfolio (excluding short-term investments) as of May 31, 2008 was 8.9 percent.

On June 17, 2008, LONESTAR Midstream Partners LP, entered into a definitive agreement with Penn Virginia Resource Partners, L.P. (NYSE: PVR) for the sale of the gas gathering and transportation assets of Lone Star Gathering LP (an affiliate of LONESTAR Midstream Partners, LP). LONESTAR Midstream Partners, LP plans to distribute substantially all of the sales proceeds to its limited partners, including TTO. We expect our portion of the proceeds to be approximately $13.5 million in cash and 494,191 unregistered common units of PVR at closing and approximately $1 million in cash payable on Dec. 31, 2009. Additionally, we may receive contingent payments totaling approximately $9.7 million based on the achievement of specific revenue targets for the Barnett Shale region by or before June 30, 2013. The company intends to use the cash proceeds from the transaction to pay down debt or make additional investments in accordance with its investment objective.

The company closely monitors portfolio performance and rates each investment's risk profile on a scale of one to three. As of May 31, 2008, all portfolio companies achieved a rating of one, indicating portfolio performance is at or above expectations with trends and risk factors that are generally favorable to neutral.

"Our strong portfolio performance this quarter was fueled by distribution increases from six of our portfolio companies, improved financial performance of several portfolio companies and the sale by LONESTAR Midstream Partners, LP of its gas gathering and transportation assets," said Tortoise Capital Resources' President, Ed Russell. "The LONESTAR transaction will provide us additional liquidity and a position in Penn Virginia Resource Partners, L.P. which we believe has an attractive combination of midstream and coal assets."

Capital Resources

On March 28, 2008, the company secured a $10 million increase to its credit facility allowing a maximum borrowing capacity of $50 million. On April 08, 2008, the company filed an initial shelf registration statement with the Securities and Exchange Commission and filed the first amendment on June 19. When effective, the shelf registration will allow the company to prudently raise additional capital. There are no plans currently to raise additional capital.

Performance Review

The company views distributable cash flow (DCF) as the best indicator of its operating performance and distribution-paying capacity. The Board of Directors determines the amount of distributions paid to stockholders based on DCF which is defined as distributions received from investments less total expenses. DCF for the three months ended May 31, 2008 was approximately $2.4 million, an increase over the prior quarter of approximately $0.2 million.

Distributions

In the second quarter of 2008, the Board of Directors declared a distribution of $0.2625 per share which was paid on June 02, 2008. The distribution represents achievement of the company's targeted annualized yield of 7 percent based upon the initial public offering price of $15.00 per share. The company expects to continue to focus on providing its stockholders with a high level of total return, with an emphasis on distribution growth.

Earnings Call

The company will host a conference call at 4:00 p.m. CDT on July 09, 2008 to discuss its second quarter financial results. Please dial-in approximately five to 10 minutes prior to the scheduled start time.

    U.S./Canada: 800-218-8862

    International: 303-262-2190

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 09, 2008 and continuing until 11:59 p.m. CDT July 23, 2008, by dialing 303-590-3000 (U.S./Canada). The replay access code is 11116396#. A replay of the webcast will also be available on the company's Web site at www.tortoiseadvisors.com through July 09, 2009.

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. Tortoise Capital Resources seeks to provide stockholders a high level of total return, with an emphasis on distributions and distribution growth.

About Tortoise Capital Advisors, LLC

Tortoise Capital Advisors, LLC, the adviser to Tortoise Capital Resources Corp., is a pioneer in the 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 infrastructure sector. As of June 30, 2008, the adviser had approximately $2.7 billion of assets under management.

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.

Tortoise Capital Resources Corporation
----------------------------------------------------------------------
STATEMENTS OF ASSETS & LIABILITIES


                                              May 31,    November 30,
                                               2008          2007
                                           ------------- -------------
                                            (Unaudited)
Assets
 Investments at fair value, control (cost
  $22,191,839 and $20,521,816,
  respectively)                             $24,966,263   $23,292,904
 Investments at fair value, affiliated
  (cost $94,225,138 and $95,507,198,
  respectively)                             106,237,490    98,007,275
 Investments at fair value, non-
  affiliated (cost $30,547,112 and
  $31,716,576, respectively)                 34,648,388    37,336,154
                                           ------------- -------------
   Total investments (cost $146,964,089
    and $147,745,590, respectively)         165,852,141   158,636,333
 Income tax receivable                          218,935       218,935
 Receivable for Adviser expense
  reimbursement                                  98,333        94,181
 Interest receivable from control
  investments                                   125,280        68,686
 Dividends and distributions receivable         133,034         1,419
 Prepaid expenses and other assets              223,124       154,766
                                           ------------- -------------
   Total assets                             166,650,847   159,174,320
                                           ------------- -------------

Liabilities
 Base management fees payable to Adviser        589,995       565,086
 Accrued capital gain incentive fees
  payable to Adviser                          1,395,113       307,611
 Distribution payable to common
  stockholders                                2,330,092             -
 Payable for investments purchased                    -     1,235,994
 Accrued expenses and other liabilities         427,307       419,744
 Short-term borrowings                       33,800,000    30,550,000
 Deferred tax liability                       6,590,578     4,182,919
                                           ------------- -------------
   Total liabilities                         45,133,085    37,261,354
                                           ------------- -------------
     Net assets applicable to common
      stockholders                         $121,517,762  $121,912,966
                                           ============= =============

Net Assets Applicable to Common
 Stockholders Consist of:
 Warrants, no par value; 945,594 issued
  and outstanding at May 31, 2008 and
  945,774 issued and outstanding at
  November 30, 2007 (5,000,000
  authorized)                                $1,370,700    $1,370,957
 Capital stock, $0.001 par value;
  8,876,540 shares issued and outstanding
  at May 31, 2008 and 8,858,168 issued
  and outstanding at November 30, 2007
  (100,000,000 shares authorized)                 8,858         8,858
 Additional paid-in capital                 110,863,178   115,186,412
 Accumulated net investment loss, net of
  deferred tax benefit                       (2,595,817)   (1,565,774)
 Accumulated realized gain, net of
  deferred tax expense                          160,474       160,474
 Net unrealized appreciation of
  investments, net of deferred tax
  expense                                    11,710,369     6,752,039
                                           ------------- -------------
     Net assets applicable to common
      stockholders                         $121,517,762  $121,912,966
                                           ============= =============

 Net Asset Value per common share
  outstanding (net assets applicable to
  common stock, divided by common shares
  outstanding)                                   $13.69        $13.76
                                           ============= =============

                     For the      For the      For the      For the
Distributable Cash    three        three         six          six
 Flow                 months       months       months       months
                    ended May    ended May    ended May    ended May
                     31, 2008     31, 2007     31, 2008     31, 2007
                   ------------------------- -------------------------

Total
 Distributions
 Received from
 Investments
 Distributions
  from investments  $2,773,933   $1,425,467   $5,394,648   $2,029,154
 Distributions
  paid in stock        484,200            -      937,720            -
 Interest income
  from investments     301,944      162,404      615,353      290,876
 Dividends from
  money market
  mutual funds             817      442,126        3,127      581,659
 Other income                -            -       28,987            -
                   ------------------------- -------------------------
   Total from
    Investments      3,560,894    2,029,997    6,979,835    2,901,689

Operating Expenses
 Before Leverage
 Costs and Current
 Taxes
 Advisory fees
  (net of expense
  reimbursement by
  Adviser)             485,768      468,012      979,374      848,079
 Other operating
  expenses
  (excluding
  capital gain
  incentive fees)      262,515      247,084      512,796      363,019
                   ------------------------- -------------------------
   Total Operating
    Expenses           748,283      715,096    1,492,170    1,211,098
                   ------------------------- -------------------------
 Distributable
  cash flow before
  leverage costs
  and current
  taxes              2,812,611    1,314,901    5,487,665    1,690,591
 Leverage Costs        435,594       (5,771)     933,498      346,460
                   ------------------------- -------------------------
   Distributable
    Cash Flow       $2,377,017   $1,320,672   $4,554,167   $1,344,131
                   ------------------------- -------------------------

DCF/GAAP
 Reconciliation
  Distributable
   Cash Flow        $2,377,017   $1,320,672   $4,554,167   $1,344,131
  Adjustments to
   reconcile to
   Net Investment
   Loss, before
   Income Taxes
 Distributions
  paid in stock       (484,200)           -     (937,720)           -
 Return of capital
  on distributions
  received from
  equity
  investments       (2,330,564)  (1,484,141)  (4,190,305)  (1,964,198)
 Capital gain
  incentive fees    (1,367,168)  (1,008,867)  (1,087,503)  (1,496,494)
 Loss on
  redemption of
  preferred stock                    33,346                  (731,713)
                   ------------------------- -------------------------
   Net Investment
    Loss, before
    Income Taxes   $(1,804,915) $(1,138,990) $(1,661,361) $(2,848,274)
Tortoise Capital Resources Corporation
----------------------------------------------------------------------
STATEMENTS OF OPERATIONS (Unaudited)

                         For the     For the     For the     For the
                          three       three        six         six
                         months      months      months      months
                        ended May   ended May   ended May   ended May
                        31, 2008    31, 2007    31, 2008    31, 2007
                       ----------- ----------- ----------- -----------
Investment Income
 Distributions from
  investments
  Control investments    $344,597          $-    $627,501          $-
  Affiliated
   investments          1,709,792   1,078,025   3,359,680   1,333,282
  Non-affiliated
   investments            719,544     347,442   1,407,467     695,872
                       ----------- ----------- ----------- -----------
 Total distributions
  from investments      2,773,933   1,425,467   5,394,648   2,029,154
 Less return of
  capital on
  distributions        (2,330,564) (1,484,141) (4,190,305) (1,964,198)
                       ----------- ----------- ----------- -----------
   Net distributions
    from investments      443,369     (58,674)  1,204,343      64,956
 Interest income from
  control investments     301,944     162,404     615,353     290,876
 Dividends from money
  market mutual funds         817     442,126       3,127     581,659
 Other income                   -           -      28,987           -
                       ----------- ----------- ----------- -----------
  Total Investment
   Income                 746,130     545,856   1,851,810     937,491
                       ----------- ----------- ----------- -----------

Operating Expenses
 Base management fees     589,996     468,012   1,175,249     848,079
 Capital gain
  incentive fees        1,367,168   1,008,867   1,087,503   1,496,494
 Professional fees        164,131     157,467     315,882     214,848
 Administrator fees        27,408      20,063      54,558      30,736
 Directors' fees           22,083      25,205      44,746      48,373
 Reports to
  stockholders             13,056      11,847      25,971      16,305
 Fund accounting fees       8,550       8,428      17,038      14,277
 Registration fees          7,458       6,395      14,834       8,063
 Custodian fees and
  expenses                  4,684       2,545       9,369       5,145
 Stock transfer agent
  fees                      3,403       3,680       6,769       7,280
 Other expenses            11,742      11,454      23,629      17,992
                       ----------- ----------- ----------- -----------
  Total Operating
   Expenses             2,219,679   1,723,963   2,775,548   2,707,592
                       ----------- ----------- ----------- -----------
 Interest expense         435,594      (5,771)    933,498     117,710
 Preferred stock
  distributions                 -           -           -     228,750
 Loss on redemption of
  preferred stock               -     (33,346)          -     731,713
                       ----------- ----------- ----------- -----------
  Total Interest
   Expense, Preferred
   Stock Distributions
   and Loss on
   Redemption of
   Preferred Stock        435,594     (39,117)    933,498   1,078,173
                       ----------- ----------- ----------- -----------
  Total Expenses        2,655,273   1,684,846   3,709,046   3,785,765
 Less expense
  reimbursement by
  Adviser                (104,228)          -    (195,875)          -
                       ----------- ----------- ----------- -----------
  Net Expenses          2,551,045   1,684,846   3,513,171   3,785,765
                       ----------- ----------- ----------- -----------
Net Investment Loss,
 before Income Taxes   (1,804,915) (1,138,990) (1,661,361) (2,848,274)
 Deferred tax benefit     685,869     432,817     631,318     747,257
                       ----------- ----------- ----------- -----------
Net Investment Loss    (1,119,046)   (706,173) (1,030,043) (2,101,017)
                       ----------- ----------- ----------- -----------

Realized and
 Unrealized Gain on
 Investments
 Net realized gain on
  investments, before
  deferred tax expense          -      13,712           -      13,712
  Deferred tax expense          -      (5,211)          -      (5,211)
                       ----------- ----------- ----------- -----------
   Net Realized Gain
    on Investments              -       8,501           -       8,501
 Net unrealized
  appreciation
  (depreciation) of
  control investments  (1,257,164)     40,435       3,336     173,954
 Net unrealized
  appreciation of
  affiliated
  investments          10,055,991   1,505,983   9,749,617   1,965,951
 Net unrealized
  appreciation
  (depreciation) of
  non-affiliated
  investments           2,646,187   5,179,360  (1,755,646)  7,507,863
                       ----------- ----------- ----------- -----------
 Net unrealized
  appreciation, before
  deferred taxes       11,445,014   6,725,778   7,997,307   9,647,768
  Deferred tax expense (4,349,106) (2,555,796) (3,038,977) (3,666,151)
                       ----------- ----------- ----------- -----------
   Net Unrealized Gain
    on Investments      7,095,908   4,169,982   4,958,330   5,981,617
                       ----------- ----------- ----------- -----------
Net Realized and
 Unrealized Gain on
 Investments            7,095,908   4,178,483   4,958,330   5,990,118
                       ----------- ----------- ----------- -----------

Net Increase in Net
 Assets Applicable to
 Common Stockholders
 Resulting from
 Operations            $5,976,862  $3,472,310  $3,928,287  $3,889,101
                       =========== =========== =========== ===========

Net Increase in Net
 Assets Applicable to
 Common Stockholders
 Resulting from
 Operations Per Common
 Share:
  Basic                     $0.67       $0.39       $0.44       $0.58
  Diluted                   $0.67       $0.35       $0.44       $0.51

Weighted Average
 Shares of Common
 Stock Outstanding:
  Basic                 8,876,540   8,830,580   8,858,213   6,653,445
  Diluted               8,876,540   9,785,726   8,858,213   7,587,209

Source: Tortoise Capital Resources Corp.