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| 8-K - OHA Investment Corp | v194918_8k.htm |
Exhibit 99.1
The
Oil & Gas Conference August 25, 2010
2 Forward
Looking Statements This presentation may contain forward-looking
statements. These forward-looking statements are subject to various risks and
uncertainties, which could cause actual results and conditions to differ
materially from those projected, including the uncertainties associated with the
timing of transaction closings, changes in interest rates, availability of
transactions, the future operating results of our portfolio companies, changes
in regional, national, or international economic conditions and their impact on
the industries in which we invest, or changes in the conditions of the
industries in which we invest, and other factors enumerated in our filings with
the Securities and Exchange Commission. Words such as “anticipates,” “believes,”
“expects,” “intends,” “will,” “should,” “may” and similar expressions may be
used to identify forward-looking statements. Undue reliance should not be placed
on such forward-looking statements as such statements speak only as of the date
on which they are made. We do not undertake to update our forward-looking
statements unless required by law. Persons considering an investment in NGP
Capital Resources Company should consider the investment objectives, risks, and
charges and expenses of the company carefully before investing. Such information
and other information about the company is available in our annual report on
Form 10-K, our quarterly reports on Form 10-Q and in prospectuses we issue from
time to time in connection with our offering of securities. Such materials are
filed with the SEC and copies are available on the SEC's website, www.sec.gov.
Prospective investors should read such materials carefully before investing.
Past performance is not indicative of future results. NGPC an
affiliate of NGP Capital Resources Company NGPC CONFIDENTIAL:
NOT FOR REPRODUCTION OR DISTRIBUTION NOT FOR REPRODUCTION OR
DISTRIBUTION
3 The
NGPC Story NGPC Business Rationale • The energy industry
requires constant investment to maintain and grow capacity Our
Company • A specialty finance company providing capital to small and
mid-sized energy companies The Opportunity • Participation
at this inflection point in the market in a company that invests in a portfolio
of attractive energy investments that generate superior long term risk adjusted
returns NGPC an affiliate of NGP Capital Resources
Company NGPC CONFIDENTIAL: NOT FOR REPRODUCTION OR DISTRIBUTION NOT
FOR REPRODUCTION OR DISTRIBUTION
4 Agenda NGPC
overview Business philosophy Performance highlights Profitability
drivers NGPC an affiliate of NGP Capital Resources
Company NGPC CONFIDENTIAL: NOT FOR REPRODUCTION OR DISTRIBUTION NOT
FOR REPRODUCTION OR DISTRIBUTION
5 NGPC
at a Glance • Equity market cap ~$163million2 • Number of
portfolio companies: 151 • Total Return Orientation –
current yield plus – capital gains • Since 2004 IPO –
targeted investments of $684 million1; realizations and repayments of $447
million1; current portfolio of $237 million1 • Based in
Houston – 9 investment professionals1 Note 1: As of
06-30-10 Note 2: As of 08-03-10 NGPC an affiliate
of NGP Capital Resources Company NGPC CONFIDENTIAL: NOT FOR
REPRODUCTION OR DISTRIBUTION NOT FOR REPRODUCTION OR
DISTRIBUTION
6 A
Range of Financing Products Combined senior
& Subordinated debt subordinated
debt Convertible debt Preferred equity Project
equity Debt is often structured with equity
kickers: • overriding royalty or net profits interests • warrants •
conversion rights Portfolio Total Return Target:
12%-20% NGPC an affiliate of NGP Capital Resources
Company NGPC CONFIDENTIAL: NOT FOR REPRODUCTION OR DISTRIBUTION NOT
FOR REPRODUCTION OR DISTRIBUTION
7 Positioned
in the Mezzanine Investment Space IRR 30% +
Equity 20% Mezzanine 15% Sr. Sub
Loans NGP Capital Resources 10% Senior
Loans 5% Cash Flow Producing Risk Development Risk
Finding/Buying Risk NGPC an affiliate of NGP Capital
Resources Company NGPC CONFIDENTIAL: NOT FOR REPRODUCTION OR
DISTRIBUTION NOT FOR REPRODUCTION OR DISTRIBUTION
8 NGPC
is an Active Participant NGPC an affiliate of NGP
Capital Resources Company NGPC CONFIDENTIAL: NOT FOR REPRODUCTION OR
DISTRIBUTION NOT FOR REPRODUCTION OR DISTRIBUTION
9 NGPC
is Uniquely Positioned as a Mezzanine Provider Capital
Providers General Energy Public • 25 Business Development
Companies of size Company Structure • Mezzanine providers
are Private • Wide range of players generally divisions of larger
companies/private funds NGPC an affiliate of NGP
Capital Resources Company NGPC CONFIDENTIAL: NOT FOR REPRODUCTION OR
DISTRIBUTION NOT FOR REPRODUCTION OR DISTRIBUTION
10 Energy
Mezzanine Players 1992 1999 2002-2003 2004-2008 2010 NGP
Capital Resources Company NGP Capital Resources Company EnCap EnCap
Range Resources/Black Rock Black Rock/Blue Rock Blue Rock (TPH) RIMCP Energy
Income Fund TCW TCW TCW Associated Energy Managers Range Resources
Constellation Power Source AIG GECC Tenneco Ventures TCW GECC GECC
Macquarie Energy Capital Torch Energy UBS Prudential Capital Petrobridge
Investments Chambers Energy Capital TCW Enron North America Duke Capital
Partners Macquarie Energy Capital Wells Fargo AIG Stratum (Beacon) Lehman Energy
Fund Prudential Capital Prospect Capital Corp. JP Morgan Asset Management
Williams Lehman Energy Fund Guggenheim RPI Aquila Wells Fargo Laminar/D.E. Shaw
UBS GECC Royal Bank of Scotland Enron Finance Southern/Mirant Harvard Mgmt/
Sowood/Denham Louis Dreyfus Shell Capital Prospect Energy MG Trade
Finance Cargill D. B. Zwirn & Company General Atlantic Montauk (DQE) New
Stream Energy Fund Heller Financial Dominion (Cambrian) CIT Energy Deutsche Bank
Gas Rock Capital Laminar/D.E. Shaw UBOC ACAS Guggenheim Silver Point
Post Oak NGPC an affiliate of NGP Capital Resources
Company NGPC CONFIDENTIAL: NOT FOR REPRODUCTION OR DISTRIBUTION NOT
FOR REPRODUCTION OR DISTRIBUTION
11 NGPC
is a Business Development Company Parent pays no corporate Federal
Income Tax Distributes at least 90% of taxable income 1099 reporting No
unrelated business taxable income Tax rules impose various asset
diversification requirements Result: Compelling yield and tax
attributes NGPC an affiliate of NGP Capital
Resources Company NGPC CONFIDENTIAL: NOT FOR REPRODUCTION OR
DISTRIBUTION NOT FOR REPRODUCTION OR DISTRIBUTION
NGPC
is an Externally Managed BDC 12 Investment Committee Executive
Officers & Employees John Homier Ken Hersh (NGPECM) Steve Gardner
Billy Quinn (NGPECM) Kelly Plato Dick Covington (NGPECM) & John Homier 14
Employees NGP Investment Advisor, LP Investment Advisory
Agreement Board of Directors Executive
Officers John Homier Ken Hersh
(NGPECM) President/CEO Jim Latimer (Ind.) Steve
Gardner David Albin (NGPECM) CFO/Treasurer Edward Blessing (Ind.) Kelly Plato
Lon Kile (Ind.) Sr. VP & Managing Director NGPC an affiliate
of NGP Capital Resources Company NGPC CONFIDENTIAL: NOT FOR
REPRODUCTION OR DISTRIBUTION NOT FOR REPRODUCTION OR
DISTRIBUTION
13 Agenda NGPC
overview Business philosophy Performance highlights Profitability
drivers NGPC an affiliate of NGP Capital Resources
Company NGPC CONFIDENTIAL: NOT FOR REPRODUCTION OR DISTRIBUTION NOT
FOR REPRODUCTION OR DISTRIBUTION
14 Our
Business Philosophy 2. Disciplined 1. Clear investment industry
approach focus 4. Solid 3. Attractive results vehicle for
investors NGPC an affiliate of NGP Capital Resources
Company NGPC CONFIDENTIAL: NOT FOR REPRODUCTION OR DISTRIBUTION NOT
FOR REPRODUCTION OR DISTRIBUTION
1.
Focus 15 A Clear Industry Focus • Small and mid-size
companies in energy and related businesses • Private companies and
Small Cap public companies • Capital for growth •
Investments range from $5 to $100 million • Target investment size is
$10 to $45 million NGPC an affiliate of NGP Capital
Resources Company NGPC CONFIDENTIAL: NOT FOR REPRODUCTION OR
DISTRIBUTION NOT FOR REPRODUCTION OR DISTRIBUTION
2.
Disciplined Investment Approach 16 Conservative Underwriting and
Investment Philosophy Strong management Emphasis on total return with
current yield Engineering oriented Appropriate return for the risk assumed
Collateral security Exit strategy Rigorous Screening
Process 30 1 We look at 30 deals to do 1 NGPC
an affiliate of NGP Capital Resources Company NGPC
CONFIDENTIAL: NOT FOR REPRODUCTION OR DISTRIBUTION NOT FOR
REPRODUCTION OR DISTRIBUTION
2.
Disciplined Investment Approach 17 Subordinated Debt
Solution • Producer with existing assets desired to purchase an asset
package having significant redevelopment potential (PDNP, PUD, operational
improvements) • Purchase price was approximately $120
million • Senior debt capacity was approximately $60
million • Solution: NGPC provided a $50 million subordinated debt
facility and a $10 million bridge loan • Conclusion: Our client
completed the acquisition, successfully developed its assets and ultimately
refinanced NGPC’s with conventional senior debt NGPC an affiliate
of NGP Capital Resources Company NGPC CONFIDENTIAL: NOT FOR
REPRODUCTION OR DISTRIBUTION NOT FOR REPRODUCTION OR
DISTRIBUTION
2.
Disciplined Investment Approach 18 Combined Senior and Sub Debt
Solution • Producer desired to purchase producing properties with
significant development potential • The Company needed to
approximately $95 million of capital to fund the acquisition and to fund capital
expenditures for development of the properties • Senior debt capacity
was approximately $25 million • Solution: NGPC arranged capital for
the acquisition and development through the issuance of three securities: (i)
$70 million Term Loan A, (ii) $15 million Term Loan B and (iii) $10 million
Convertible Sub-Debt • Conclusion: NGPC’s financing enabled our
client to complete the acquisition and begin development of the properties. In
3Q08, the Company successfully completed an IPO on the London Stock Exchange’s
Alternative Investment Market and retired our investments. The Company
subsequently refinanced NGPC’s debt with conventional senior
debt NGPC an affiliate of NGP Capital Resources
Company NGPC CONFIDENTIAL: NOT FOR REPRODUCTION OR DISTRIBUTION NOT
FOR REPRODUCTION OR DISTRIBUTION
2.
Disciplined Investment Approach 19 Integrated Balance Sheet
Solution • Engineering and management team needed $30 million to
acquire and develop several producing oil and gas fields • The team
needed additional equity to complete the transaction and wanted a one-stop
financing source • Senior debt capacity was approximately $17
million • Solution: In 3Q06, NGPC provided a $22 million
combined senior and subordinated facility and made a $4 million common equity
investment in the new company • Conclusion: Our client
completed the acquisition, made follow-on acquisitions, successfully developed
its assets and ultimately refinanced our debt facility with conventional senior
debt. In 3Q08, the Company sold its assets and distributed the proceeds to its
members, resulting in a 4.5x return on equity NGPC an affiliate
of NGP Capital Resources Company NGPC CONFIDENTIAL: NOT FOR
REPRODUCTION OR DISTRIBUTION NOT FOR REPRODUCTION OR
DISTRIBUTION
3.
Attractive Vehicle 20 Advantages for
Investors Energy-specific focus Efficient tax
structure – regulated investment company a no corporate federal
income tax at parent level Attractive fee structure – 20%
over 8% hurdle and no catch-up provision – 20% of realized capital
gains net of realized and unrealized capital losses Liquid
Investment Total return investment with current yield NGPC
an affiliate of NGP Capital Resources Company NGPC
CONFIDENTIAL: NOT FOR REPRODUCTION OR DISTRIBUTION NOT FOR
REPRODUCTION OR DISTRIBUTION
3.
Attractive Vehicle – A Closer Look 21 No “Catch Up” Provision
Increases Yield 1.6% Improvement in Total Yield w/o
Catch-Up Fee 14.0 Incentive 12.0 Assets)
10.0 Without Catch-Up Net of 8.0 Income of
Net 6.0 (%
Investors' 4.0 With Catch-Up
2.0 0.0 2 4 6 8 10 12 14 Net Investment Income
(% of Net Assets) NGPC an affiliate of NGP Capital
Resources Company NGPC CONFIDENTIAL: NOT FOR REPRODUCTION OR
DISTRIBUTION NOT FOR REPRODUCTION OR DISTRIBUTION
3.
Attractive Vehicle – A Closer Look 22 Strong Management
Team An affiliate of NGP Energy Capital Management Nine
investment professionals Energy, engineering, and financial
experience and expertise for this specialized investment
focus Located in Houston, Texas, the hub of the energy
business Strong brand name, expertise and deal flow NGPC
an affiliate of NGP Capital Resources Company NGPC
CONFIDENTIAL: NOT FOR REPRODUCTION OR DISTRIBUTION NOT FOR
REPRODUCTION OR DISTRIBUTION
23 Agenda NGPC
overview Business philosophy Performance highlights Profitability
drivers NGPC an affiliate of NGP Capital Resources
Company NGPC CONFIDENTIAL: NOT FOR REPRODUCTION OR DISTRIBUTION NOT
FOR REPRODUCTION OR DISTRIBUTION
Long
Term Performance 24 Net Investment Income Per Share $1.09
$0.95 $0.84 $0.46 $0.26 $0.06 2005 2006 2007 2008 2009
2Q2010 NGPC an affiliate of NGP Capital Resources
Company NGPC CONFIDENTIAL: NOT FOR REPRODUCTION OR DISTRIBUTION NOT
FOR REPRODUCTION OR DISTRIBUTION
Long
Term Performance 25 Capital Gains and Unrealized
Appreciation $0.68 $0.38 $0.16
$0.07 ($0.01) ($0.66) 2005 2006 2007 2008 2009
2Q2010 NGPC an affiliate of NGP Capital Resources
Company NGPC CONFIDENTIAL: NOT FOR REPRODUCTION OR DISTRIBUTION NOT
FOR REPRODUCTION OR DISTRIBUTION
Long
Term Performance 26 Dividends Per Share $1.61
$1.44 $0.92 $0.66 $0.64 $0.34 2005 2006 2007 2008 2009
2Q2010 Note: Total dividends paid through 2Q2010 = $107.0
million NGPC an affiliate of NGP Capital Resources
Company NGPC CONFIDENTIAL: NOT FOR REPRODUCTION OR DISTRIBUTION NOT
FOR REPRODUCTION OR DISTRIBUTION
27 Current
Portfolio (as of 6/30/2010) Fair Value ($million) •Control
Investments 77.0 -Equity position between 50% and
100% •Affiliate Investments -Equity position between 5%
and 25% 33.6 •Non-Affiliate Investments -Equity position
less than 5% 76.9 Corporate Notes 9.6 Cash (Net) 44.6
Total 241.7 NAV per Share $11.18 NGPC an affiliate
of NGP Capital Resources Company NGPC CONFIDENTIAL: NOT FOR
REPRODUCTION OR DISTRIBUTION NOT FOR REPRODUCTION OR
DISTRIBUTION
28 Control
Investments (as of 6/30/2010) Fair Value ($million) •Alden Resources,
LLC 54.6 –80% Ownership Interest & Loans –Producer of specialty
metallurgical coal •BSR Holdings, LLC 0.4 –100% Ownership Interest –Working and
Royalty Interests in East Texas O&G production •DeanLake Operator, LLC 10.1
–80% Ownership Interest & Loans –Working and Royalty Investments in South
Texas O&G production •Formidable, LLC 5.6 –100% Ownership Interest –Working
Interests in Wyoming gas production •TierraMar Energy, LP 6.3 –67% Ownership
Interest –Working Interest in South Texas gas production TOTAL
77.0 NGPC an affiliate of NGP Capital Resources
Company NGPC CONFIDENTIAL: NOT FOR REPRODUCTION OR DISTRIBUTION NOT
FOR REPRODUCTION OR DISTRIBUTION
29 Affiliate
Investments (as of 6/30/2010) Fair Value
($million) •Bio-Energy Holding, LLC/Bional Clearfield, LLC 19.9
–11.5% Ownership Interests, Loans & Warrants –Producer of alternative fuels
and specialty chemicals •Resaca Exploitation, Inc. (RSOX.L) 13.7 –Sr.
Secured Loan and 6.86% of outstanding common stock –Producer of oil and
gas TOTAL 33.6 NGPC an affiliate of NGP
Capital Resources Company NGPC CONFIDENTIAL: NOT FOR REPRODUCTION OR
DISTRIBUTION NOT FOR REPRODUCTION OR DISTRIBUTION
30 Non-Affiliate
Investments (as of 6/30/2010) Fair Value ($million) •Anadarko
Petroleum 2007-III Drilling Fund 10.3 –Net Profits Interest in oil and gas
production in Texas, Mid-Continent & Rocky Mountains •ATP Oil and Gas
Corporation 12.6 –Limited Term Overriding Royalty Interests –Production of oil
and gas in the Gulf of Mexico •Black Pool Energy Partners, LLC 18.2 –Sr. Secured
Loan, Overriding Royalty Interests & Warrants –Producer of oil and gas,
off-shore Texas •Chroma Exploration & Production, Inc. 0.7 –Preferred Stock
–Producer of oil and gas in South Texas •Greenleaf Investments, LLC 9.7 –Sr.
Secured Loan and Overriding Royalty Interests –Producer of oil and gas in South
Texas •Tammany Oil & Gas, LLC 25.4 –Sr. Secured Loan and Overriding Royalty
Interest –Producer of oil and gas in the Gulf of Mexico TOTAL
76.9 NGPC an affiliate of NGP Capital Resources
Company NGPC CONFIDENTIAL: NOT FOR REPRODUCTION OR DISTRIBUTION NOT
FOR REPRODUCTION OR DISTRIBUTION
31 Composition
of Investment Portfolio As of June 30, 2010 Limited Term
Royalty Interest 7% Net Profits Interests 5% Other Senior
Secured Loans 42% Preferred Equity 1% Common Equities 3% Equity Kickers(1)
1% Control Investments 41% Note 1: Overriding royalty
interests, warrants, puts and similar assets NGPC an affiliate
of NGP Capital Resources Company NGPC CONFIDENTIAL: NOT FOR
REPRODUCTION OR DISTRIBUTION NOT FOR REPRODUCTION OR
DISTRIBUTION
32 Agenda NGPC
overview Business philosophy Performance highlights Profitability
drivers NGPC an affiliate of NGP Capital Resources
Company NGPC CONFIDENTIAL: NOT FOR REPRODUCTION OR DISTRIBUTION NOT
FOR REPRODUCTION OR DISTRIBUTION
33 Profitability
Drivers 5 Portfolio growth and diversification 44
Continued maturation of existing portfolio 3 Active deal
pipeline 2 Realignment of mezzanine marketplace 1
Continued long term need for development capital NGPC an affiliate
of NGP Capital Resources Company NGPC CONFIDENTIAL: NOT FOR
REPRODUCTION OR DISTRIBUTION NOT FOR REPRODUCTION OR
DISTRIBUTION
34 NGPC
– The Next Steps • $500 to $750 million portfolio •
Reestablish originations at $100 to $150 million per year • Continue
investment discipline and diversification for best risk adjusted
returns • Continue focus on total return • Continue long
term growth of earnings and dividends NGPC an affiliate
of NGP Capital Resources Company NGPC CONFIDENTIAL: NOT FOR
REPRODUCTION OR DISTRIBUTION NOT FOR REPRODUCTION OR
DISTRIBUTION
35 Why
Invest in NGPC • Uniquely positioned BDC in attractive energy market
segment – continual financing needs, large market •
Successful business model – clear focus, unique capabilities,
disciplined approach, proven results • Many opportunities and
continued demand for development capital – well positioned,
active pipeline, maturing investments, portfolio growth NGPC an
affiliate of NGP Capital Resources Company NGPC CONFIDENTIAL:
NOT FOR REPRODUCTION OR DISTRIBUTION NOT FOR REPRODUCTION OR
DISTRIBUTION
www.ngpcrc.com
877-438-0360 713-752-0062 John Homier Steve Gardner Kelly
Plato Dan Schockling Hans Hubbard Chris Ryals Robert
Sheffey