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


FOR IMMEDIATE RELEASE

LEAWOOD, Kan.– July 09, 2008 – 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% (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% 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.

Contact information
Tortoise Capital Advisors, LLC Pam Kearney, Investor Relations, (866) 362-9331, www.tortoiseadvisors.com.


Tortoise Capital Resources Corporation
STATEMENTS OF ASSETS & LIABILITIES
             
             
   
May 31, 2008
    
November 30, 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
  
                 
                 
                 
           
 
 
                         
Distributable Cash Flow
  
For the three months
    
For the three months
    
For the six months
    
For the six months
  
   
ended May 31, 2008
    
ended May 31, 2007
    
ended May 31, 2008
    
ended May 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 three months ended May 31, 2008
    
For the three months ended May 31, 2007
    
For the six months ended May 31, 2008
    
For the six months ended May 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