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As filed with the Securities and Exchange Commission on August 16, 2004

Registration Statement No. 333-          

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form N-2

REGISTRATION STATEMENT

UNDER

THE SECURITIES ACT OF 1933

¨ PRE-EFFECTIVE AMENDMENT NO.

¨ POST-EFFECTIVE AMENDMENT NO.

NGP CAPITAL RESOURCES COMPANY

(Exact name of registrant as specified in its charter)

125 East John Carpenter Freeway, Suite 600, Irving, Texas 75062

(Address of Principal Executive Offices)

Registrant’s Telephone Number, including Area Code: (972) 432-1440

John H. Homier

125 East John Carpenter Freeway, Suite 600

Irving, TX 75062

(Name and Address of Agent for Service)

Copies of information to:

Approximate Date of Proposed Public Offering:     As soon as practicable after the effective date of this Registration Statement.

If any securities being registered on this form will be offered on a delayed or continuous basis in reliance on Rule 415 under the Securities Act of 1933, other than securities offered in connection with a dividend reinvestment plan, check the following box.   ¨

It is proposed that this filing will become effective (check the appropriate box):

If appropriate, check the following boxes:

THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF THE SECURITIES ACT OF 1933, AS AMENDED, OR UNTIL THIS REGISTRATION STATEMENT SHALL BECOME EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SECTION 8(a), MAY DETERMINE.

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The information in this preliminary prospectus is not complete and may be changed. We may not sell these securities until the registration statement filed with the Securities and Exchange Commission becomes effective. This preliminary prospectus is not an offer to sell these securities and we are not soliciting an offer to buy these securities in any jurisdiction where such offer or sale is not permitted.

Subject to Completion, dated August 16, 2004

PRELIMINARY PROSPECTUS

17,000,000 Shares

NGP Capital Resources Company

Common Stock

We are offering 17,000,000 shares of our common stock. We are a newly organized Maryland corporation created to invest primarily in small and mid-size energy companies. Our investment objective is to generate both current income and capital appreciation through debt investments with certain equity components. We have filed an election to be treated as a business development company under the Investment Company Act of 1940. As a business development company, we will be classified as a closed-end, non-diversified management investment company.

Our operations will be externally managed and advised by our manager, NGP Investment Advisor, LP. NGP Administration, LLC will provide the administrative services necessary for us to operate.

Because we are newly organized, our shares have no history of public trading. We intend to apply to list shares of our common stock on the New York Stock Exchange under the symbol “NGC.”

You should consider the risks which we have described in “ Risk Factors ” beginning on page 12 before buying shares of our common stock . This prospectus contains important information you should know before investing in our common stock. Please read it before you invest and keep it for future reference. Shares of closed-end investment companies frequently trade at a discount to their net asset value. If our shares trade at a discount to our net asset value, the risk of loss for purchasers in this offering may increase.

The underwriters may purchase up to an additional 2,550,000 shares from us at the public offering price, less the sales load, within 30 days from the date of this prospectus to cover over-allotments. If the underwriters exercise this option in full, the total public offering price will be $293,250,000, the total sales load will be $20,527,500 and the total proceeds, before expenses, to us will be $272,722,500. The underwriters will reserve up to 850,000 shares for sale to our directors and officers and to certain other parties related to us.

Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or determined if this prospectus is truthful or complete. Any representation to the contrary is a criminal offense.

The underwriters expect to deliver the shares to purchasers on or before                     , 2004.

RAYMOND JAMES

The date of this prospectus is                     , 2004

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PROSPECTUS SUMMARY

This summary highlights some of the information in this prospectus. It is not complete and may not contain all of the information that you may want to consider. You should read carefully the more detailed information set forth under “Risk Factors” and the other information included in this prospectus. Except where the context suggests otherwise, the terms “we,” “us” and “our” refer to NGP Capital Resources Company; “our manager” refers to NGP Investment Advisor, L.P.; “our management team” refers to the investment professionals of our manager; and “our administrator” refers to NGP Administration, LLC. Unless otherwise indicated, this prospectus assumes that the underwriters’ over-allotment option will not be exercised.

Introduction

NGP Capital Resources Company

We are a newly organized financial services company created to invest primarily in small and mid-size energy companies, which we generally define as companies that have net asset values or annual revenues of less than $500 million. Our operations will be externally managed and advised by our manager, NGP Investment Advisor, LP, pursuant to an investment advisory agreement between us. Our manager is a newly formed investment advisor that is owned by Natural Gas Partners, L.L.C., or NGP, and an affiliate. Our investment objective is to generate both current income and capital appreciation primarily through debt investments with certain equity components.

We expect that a key focus area for our investments in the energy industry will be domestic oil and gas exploitation, development and production businesses, which we refer to as E&P businesses, and midstream businesses that gather, process and transport oil and gas, but we also anticipate evaluating investment opportunities outside of the oil and gas business, such as coal businesses, and businesses engaged in the downstream sector, including power and electricity investment opportunities. Our investments will generally range in size from $10 million to $50 million, although a few investments may be substantially in excess of this range. The types of investments that we will seek primarily consist of debt instruments, including senior and subordinated loans combined in one facility with an equity component, subordinated loans and subordinated loans with equity components and redeemable preferred stock or similar securities. We refer to these investments as our targeted investments. As of the date of this prospectus, we have not identified any specific investments meeting our investment objectives in which to invest the net proceeds of this offering.

We have filed an election to be treated as a business development company under the Investment Company Act of 1940, or the 1940 Act. As a business development company, we will be classified as a closed-end, non-diversified management investment company.

Our Manager

Our manager’s owner, NGP, manages the Natural Gas Partners private equity funds, which have specialized in providing equity capital to the energy industry since November 1988. Kenneth A. Hersh and David R. Albin, who will serve on our board of directors, are co-Chief Executive Officers of NGP and have directed the investment of the NGP funds during the sixteen year period since the inception of the initial fund. To date, there have been seven NGP private funds with aggregate committed capital of approximately $1.6 billion, obtained primarily from institutional investors, of which more than $1 billion has been invested in over 70 energy companies. The investment history of the NGP funds is among the longest, and their aggregate committed capital is among the largest, of the private equity funds that specialize in the energy industry.

Our manager’s day to day operations will be managed by our executive officers, John H. Homier and Richard A. Bernardy, who have combined experience of over 40 years in the energy finance industry. Their experience includes over 10 years working together at two separate major financial institutions at which they were responsible for building and managing successful energy finance businesses. Our manager intends to hire additional investment professionals and staff to build its energy finance business.

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Our manager’s investment decisions will be reviewed and approved by its investment committee, consisting of Mr. Homier, Mr. Hersh and two other senior NGP investment professionals. The investment committee will be supported by other members of NGP’s team of 12 investment professionals when needed. In addition, our manager should benefit from access to the extensive sourcing relationships and industry expertise of NGP and its investment professionals.

About Our Executive Officers

Mr. Homier is our President and Chief Executive Officer. He has over 25 years of corporate finance, engineering, credit analysis, business development and management experience in the energy sector. Mr. Homier’s experience includes engineering, evaluating, structuring, negotiating and managing business and investment opportunities, including energy investments similar to our targeted investments totaling approximately $400 million with Deutsche Bank and Bank of America.

Mr. Bernardy is our Secretary, Treasurer and Chief Financial Officer. He has over 18 years of corporate finance, commercial and investment banking and entrepreneurial management experience in the banking and energy sectors. Mr. Bernardy’s expertise includes arranging, structuring, negotiating, documenting and executing single and multi-party transactions for debt and equity instruments in the capital formation of micro-cap through large cap companies, including energy investments similar to our targeted investments totaling approximately $400 million with Deutsche Bank and Bank of America.

About NGP

NGP has traditionally focused on making equity investments in small to mid-size private North American upstream and midstream oil and gas companies, with an emphasis on firms that acquire and enhance producing oil and gas properties. NGP has developed a disciplined investment strategy based on:

NGP’s private equity funds focus on making common equity investments ranging from $15 million to $50 million. NGP actively manages its portfolio companies and believes that it has developed a reputation as a supportive financial partner. We believe that NGP’s reputation and longstanding presence in the energy finance market will provide us with substantial deal flow from which to make investment choices.

We believe that our targeted investments will offer the potential for attractive risk adjusted returns that will complement, but will not compete with, NGP’s private equity funds. Although NGP’s private equity funds may make investments in securities like our targeted investments, these funds seek rates of return substantially in excess of those we seek and focus primarily on investments in common equity or other junior securities in the capital structure in order to achieve their targeted rates of return. Consequently, to the extent that NGP encounters investment opportunities that are primarily in our targeted investments, the NGP private equity funds will not seek these opportunities and NGP will refer them to us for our evaluation. We are the only NGP-related investment vehicle with an investment focus in our targeted investments. See “Regulation—Co-Investments.”

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Our Energy Investment Focus

We intend to focus our investments in the energy industry in companies that have an existing asset base or that will acquire assets that are expected to provide security for our investments. The energy industry broadly includes three sectors, generally categorized as follows:

Within these broad sectors, we expect that our key area of focus will be small and mid-size energy companies engaged in the upstream and midstream sectors, with an emphasis on domestic E&P businesses and domestic midstream businesses that gather, process and transport oil and gas. However, we also anticipate seeking investment opportunities in the downstream sector, including investments related to coal, power and electricity, as well as other businesses outside of the oil and gas industry.

Domestic Upstream E&P Sector

We believe that the domestic E&P sector will provide attractive investment opportunities as a result of a variety of factors, including the following:

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Domestic Midstream and Downstream Sectors

We believe that the domestic midstream and downstream segments will also provide attractive investment opportunities as a result of a variety of factors, including the following:

Limited Capital Availability Creates Need for Our Targeted Investments

We believe that a number of factors will continue to create demand for investment products like our targeted investments among small and mid-size energy companies, including the following:

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Investment Structures

Our targeted investments will primarily consist of:

In many cases, we expect to receive an equity participation interest in the properties, projects and/or the companies that we finance as a part of our compensation for extending credit. These equity components may take a variety of forms. In many of our investments we anticipate that we will receive a property based equity interest. In addition, in certain investments we may also receive a right to acquire equity securities of the borrowing company, such as a warrant or option, or we may receive a direct preferred equity interest or other similar participating interest in the company’s equity.

Our Targeted Investment Characteristics

Energy Industry’s Attractive Risk Adjusted Returns

We believe that the risk adjusted returns for our targeted investments in the energy industry have the potential to be more attractive than those of many other industries. In general, energy companies offer greater asset security and more consistent cash flows than many other industries as evidenced by the energy industry’s ranking as the industry with the third lowest corporate bond default rate in 2003, as reported in a recent Moody’s Investors Service, Inc. survey of twenty-two industries.

Collateralized Investments

In general, our targeted investments will be secured by the same assets that would secure traditional senior bank debt, in either a first or second lien position. Usually these assets will be generating cash flow at the time of our investment. In instances where we are providing subordinated debt only and there is senior debt provided by another party, we will generally seek to obtain a second lien on the borrowing company’s assets behind that of the senior lender.

Property Based Equity Interests

The property based equity interests that we anticipate receiving in many of our investments would typically include a direct or indirect interest in the revenues or profits derived from specific assets of the borrowing company, which may be in the form of an overriding royalty or net profits interest, or may be structured as a part of our loan. In general, these interests would entitle us to receive additional payments on a regular basis through the term of the loan based upon the performance of the borrower’s assets and may be coupled with a right to require the borrower’s redemption of the interest at a specified date or we may have the right to sell the interest. We believe that these property based types of equity interests are desirable because they generally provide a regular source of income, such as a monthly royalty payment, that supplements the current income received from our loan. In addition, to the extent property based interests are producing a defined cash flow stream, they provide a more readily determinable basis for realizing value upon their disposition or redemption than would be typical for stock or warrants in small private companies (which typically do not produce income, are junior in the capital structure and are burdened by general and administrative overhead).

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Limited Technical and Credit Risk

We intend to target investment opportunities in which the type of technical risk that we will face will primarily consist of the uncertainties inherent in engineering estimates of the quantities of proved reserves of natural resources and in projections of future rates of production and the amount and timing of expenditures required to operate and develop energy assets. Our management team has substantial experience in evaluating these types of risks in the context of making investments. We do not intend to make investments that are solely for the purpose of financing oil and gas exploration, which involves a much higher degree of geological risk, nor do we plan to provide financing solely to support speculative trading in oil, gas, power and/or other commodities. However, some of the companies that we finance may engage in some exploration activities in connection with the normal development of their portfolios of oil and gas properties and will also likely use financial risk management products, such as commodity swaps, to mitigate exposure to commodity price swings.

Proven Management Teams with Focus

We intend to make investments in companies with management teams that have a proven track record of success but with limited access to capital markets. In general, these management teams will often have substantial knowledge and focus in particular regions or with respect to certain types of assets. We expect that our management team’s and NGP’s extensive experience and network of business relationships in the energy industry will allow us to identify management teams that fit these criteria.

Competitive Strengths

Extensive Small and Mid-Size Energy Company Sourcing Network

Because of the history, market presence and long term relationships with energy company management teams that NGP and our management team have developed, we believe that we will have greater access to investment opportunities in our target markets than many other providers. We intend to originate a substantial number of our investment opportunities, rather than merely invest as a participant in transactions originated by other firms, which we may do from time to time. Our emphasis on originating investments will increase as our manager builds its investment portfolio and adds additional investment personnel during the next 18 months. We believe that a focus on origination will provide access to targeted investments with premium pricing, and to sources of greater revenues, such as origination and syndication fees, administrative and monitoring fees and similar fees for ancillary services related to the financings, that are generally available to the lead financial sponsor.

Flexible Transaction Structuring Capabilities

We will not be subject to many of the regulatory limitations that govern traditional lending institutions such as commercial banks. As a result, we expect to be flexible in structuring investments and selecting the types of securities in which we invest. The members of our management team have substantial experience in seeking investments that balance the needs of energy company entrepreneurs with appropriate risk control. In particular, we believe we will be able to customize the investment structure to address entrepreneurs’ frequent concern with ownership dilution while at the same time managing risk through structural protections.

Efficient Tax Structure

As a regulated investment company, or RIC, we generally will not have to pay corporate-level federal income taxes on any ordinary income or capital gains that we distribute to our stockholders as dividends. By avoiding the payment of such taxes, we can price our investments on terms comparable to our corporate taxpaying competitors, and achieve net investment revenues that are greater than their after tax net revenues.

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Also, investors in our stock will not be subject to double taxation on dividends, unlike investors in typical corporations. Furthermore, investors in our stock will not be required to recognize unrelated business taxable income, or UBTI, unlike investors in public master limited partnerships.

Longer Investment Horizon than Private Fund Competitors

Unlike private equity and venture capital funds, we will not be subject to standard periodic capital return requirements. Such requirements typically stipulate that these funds, together with any capital gains on such investment, can only be invested once and must be returned to investors after a pre-determined time period. These provisions often force private equity and venture capital funds to seek returns on their investments through mergers, public equity offerings or other liquidity events more quickly than they otherwise might, potentially resulting in both a lower overall return to investors and an adverse impact on their portfolio companies. We believe our flexibility to make investments with a long-term view and without the capital return requirements of traditional private investment vehicles will provide us with the opportunity to generate attractive risk-adjusted returns on invested capital.

Operating and Regulatory Structure

Our investment activities will be supervised by our board of directors, a majority of whom are independent of our manager and its affiliates. Our manager is a newly-formed investment adviser that is registered under the Investment Advisers Act of 1940, or the Advisers Act. Under our investment advisory agreement, we will agree to pay our manager an annual fee based on the value of our total assets as well as an incentive fee based on our performance. See “Management—Investment Advisory Agreement.”

As a business development company, applicable law will generally prohibit us from acquiring assets other than “qualifying assets” unless, after giving effect to the acquisition, at least 70% of our total assets are qualifying assets. Qualifying assets include securities of privately-held or thinly-traded U.S. companies, certain high-quality debt and cash. Until we identify investments that meet our investment objectives, we will invest the net proceeds of this offering in cash, cash equivalents, U.S. government securities and high-quality debt maturing in one year or less. We may invest up to 30% of our assets in opportunities that are not subject to the limitations referenced above, in order to seek to enhance returns to stockholders. These investments may include investments in asset-backed securities, financial guarantees, high-yield bonds, distressed debt, bridge loans, lease assets, commercial loans, private equity, securities of public companies or secondary market purchases of otherwise eligible securities. Subject to regulatory limitations, we may elect to borrow funds as a part of our investment strategy.

While we are permitted to issue senior securities, such as debt or preferred stock, to finance investments, our ability to do so will be limited in certain significant respects. See “Regulation.” We intend to elect to be treated for federal income tax purposes as a RIC under Subchapter M of the Code. See “Material U.S. Federal Income Tax Considerations.”

Our Corporate Information

Our principal executive office is currently located at 125 East John Carpenter Freeway, Suite 600, Irving, Texas 75062, telephone number (972) 432-1440. Our principal executive office will be relocated to Houston, Texas shortly following the closing of this offering.

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Example

The following example demonstrates the projected dollar amount of total cumulative expenses that would be incurred during various periods with respect to a hypothetical investment in our common stock. In calculating the following expense amounts, we have assumed we would have no indebtedness and that our annual operating expenses would remain at the levels set forth in the table above, with the exception of our annual management fee after Year 1 is assumed to be 1.8% of our total assets.

While the example assumes, as required by the SEC, a 5% annual return, our performance will vary and may result in a return greater or less than 5%. The incentive fee under the investment advisory agreement, which, assuming a 5% annual return, would either not be payable or have an insignificant impact on the expense amounts shown above, is not included in the example. This illustration assumes that we will not finance any of our investments using debt or realize any capital gains computed net of all realized capital losses and unrealized capital depreciation in any of the indicated time periods. If we borrow funds for investment purposes or achieve sufficient returns on our investments to trigger an incentive fee of a material amount, our expenses, and returns to our investors, would be higher. In addition, while the example assumes reinvestment of all dividends and distributions at net asset value, participants in our dividend reinvestment plan will generally receive a number of shares of our common stock, determined by dividing the total dollar amount of the dividend payable to a participant by the market price per share of our common stock at the close of trading on the valuation date for the dividend. See “Dividend Reinvestment Plan” for additional information regarding our dividend reinvestment plan.

This example and the expenses in the table above should not be considered a representation of our future expenses, and actual expenses (including the cost of debt, if any, and other expenses) may be greater or less than those shown.

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RISK FACTORS

You should carefully consider the risks described below before making an investment decision. Our business, financial condition or results of operations could be harmed by any of these risks. Similarly, these risks could cause the market price of our common stock to decline and you might lose all or part of your investment. Our forward-looking statements in this prospectus are subject to the following risks and uncertainties. Our actual results could differ materially from those anticipated by our forward-looking statements as a result of the risk factors below. The risks described below are not the only ones facing our company. Additional risks not presently known to us or that we currently deem immaterial might also impair our business operations.

Risks Related to Our Business and Investments

We are a new company with no operating history, and we might not be able to operate our business or implement our operating policies and strategies successfully, which could negatively impact our ability to pay dividends and cause you to lose all or part of your investment.

We were incorporated in Maryland in July 2004 and have not yet commenced investment operations. We are subject to all of the business risks and uncertainties associated with any new business, including the risk that we will not achieve our investment objectives and that the value of your investment could decline substantially. The results of our operations will depend on many factors, including the availability of opportunities for investment, readily accessible short and long-term funding alternatives in the financial markets and economic conditions. Furthermore, if we cannot successfully operate our business or implement our operating policies and strategies as described in this prospectus, it could negatively impact our ability to pay dividends and cause you to lose all or part of your investment.

We have not identified any specific investments meeting our investment objectives in which to invest the net proceeds of this offering.

As of the date of this prospectus, we have not identified any specific investments meeting our investment objectives in which to invest the net proceeds of this offering. As a result, you will not be able to evaluate the manner in which we invest or the economic merits of any investments we make with the net proceeds of this offering prior to your purchase of shares in this offering.

We may be unable to invest a significant portion of the net proceeds of this offering on acceptable terms or at all, which could harm our financial condition and operating results.

Delays in investing the net proceeds of this offering may cause our performance to be worse than that of other fully-invested business development companies or other lenders or investors pursuing comparable investment strategies. We cannot assure you that we will be able to identify any investments that meet our investment objectives or that any investment that we make will produce a positive return. We may be unable to invest the net proceeds of this offering on acceptable terms within the time period that we anticipate or at all, which could harm our financial condition and operating results.

Pending our identification and acquisition of securities meeting our investment objectives, we will invest the net proceeds of this offering primarily in cash, cash equivalents, U.S. government securities and high-quality debt maturing in one year or less, which may produce returns that are less than the management fees we pay to our manager, thus the initial return on your investment may be lower than when our portfolio is fully invested in securities meeting our investment objectives.

We anticipate it will take us approximately 18 months to invest substantially all of the net proceeds of this offering in securities meeting our investment objectives. During this period, we will invest primarily in temporary investments, such as cash, cash equivalents, U.S. government securities and high-quality debt maturing in one year or less, which may produce returns that are less than the management fees we pay to our

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manager. As a result, we may experience net losses during this period and may not be able to pay any dividends during this period or, if we are able to do so, any such dividends may be substantially lower than the dividends that we may be able to pay when our portfolio is fully invested in securities meeting our investment objectives. In addition, until such time as the net proceeds of this offering are invested in securities meeting our investment objectives, the market price for our shares may decline.

High oil and gas prices may increase the availability of alternative sources of capital and reduce demand for our targeted investments.

As a result of the current high prices for oil and natural gas relative to historical levels, energy companies are generally experiencing strong financial results and increased cash flows. Therefore, energy companies currently may have less financial need for borrowing than in a lower commodity price environment. At these higher commodity price levels, borrowers may use the additional cash flow to reduce outstanding debt under senior secured facilities, which typically makes future borrowing capacity available to such borrowers. In addition, to the extent senior lenders base borrowing capacity on reserve value calculations, higher commodity prices typically increase reserve values, thereby creating additional borrowing capacity. Because interest rates under senior secured facilities will generally be lower than the interest rates of our targeted investments, demand for our targeted investments may be reduced if energy companies have the ability to borrow additional amounts under their senior debt facilities. As a result, high commodity prices may have the effect of delaying the deployment of the net proceeds of this offering, reducing the number of energy companies seeking investments similar to our targeted investments or causing us to achieve lower total returns on our targeted investments.

We operate in a highly competitive market for investment opportunities with competitors who may have greater resources, a lower cost of capital and the ability to lend money to energy companies at rates lower than those that we will offer. This may cause us to lose investment opportunities or cause us to lend on less favorable terms, and, as a result, the value of the shares you purchase or the amount of any dividends you receive may decline.

A large number of entities will compete with us to make the types of investments that we plan to make in energy companies. We will compete with public and private funds, commercial and investment banks, commercial financing companies, and, to the extent they provide an alternative form of financing, private equity funds. Many of our competitors are substantially larger and have considerably greater financial, technical and marketing resources than we do. For example, some competitors may have a lower cost of funds and access to funding sources that are not available to us. In addition, some of our competitors may have higher risk tolerances or different risk assessments, which could allow them to consider a wider variety of investments and establish more relationships than us. Furthermore, many of our competitors are not subject to the regulatory restrictions that the 1940 Act will impose on us once we have elected to be treated as a business development company. The competitive pressures that we face may have a material adverse effect on our business, financial condition and results of operations. Also, as a result of this competition, we may not be able to take advantage of attractive investment opportunities from time to time, and we may not be able to identify and make investments that are consistent with our investment objectives.

We will not seek to compete solely based on the interest rates we will offer to prospective portfolio companies. However, we believe some of our competitors may make loans with interest rates that will be comparable to or lower than the rates we offer. We may lose investment opportunities if we do not match our competitors’ pricing, terms and structures. If we match our competitors’ pricing, terms and structures, we may experience decreased net interest income and increased risk of credit loss, and the value of the shares you purchase or the amount of any dividends you receive may decline.

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An investment in our shares is intended for investors seeking long-term capital growth and income.

Investing in shares of our common stock is intended for investors seeking long-term capital growth and income and is not meant to provide a vehicle for those who invest for short-term profit potential. The portfolio securities we seek will generally have a stated maturity of 3 to 7 years and generally are illiquid. An investment in our shares should not be considered a complete investment program. You should take into account your investment objectives as well as your other investments when considering the purchase of our shares.

Many of our portfolio investments will be recorded at fair value as determined in good faith by our board of directors. Because such valuations, and particularly valuations of private securities and private companies, are inherently uncertain, the prices at which we are able to dispose of these holdings may differ from the recorded fair value.

A large percentage of our portfolio investments (other than our short-term cash investments) will be in the form of securities that are not publicly traded. The fair value of securities and other investments that are not publicly traded may not be readily determinable. We will value these securities quarterly at fair value in accordance with procedures as determined in good faith by our board of directors. However, we may be required on a more frequent basis to value our securities to reflect significant events affecting the value of our securities. We expect that our board of directors and valuation committee will retain an independent valuation firm to help them on a selective basis in making fair value determinations. The types of factors that may be considered in fair value pricing of an investment include the nature and realizable value of any collateral, the portfolio company’s ability to make payments and its earnings, the markets in which the portfolio company does business, comparison to publicly traded companies, discounted cash flow and other relevant factors. Because such valuations, and particularly valuations of private securities and private companies, are inherently uncertain, may fluctuate during short periods of time and may be based on estimates, our determinations of fair value may differ materially from the values that would have been used if a ready market for these securities existed. As a result, we may not be able to dispose of our holdings at a price equal to or greater than our determined fair value. Our net asset value could be adversely affected if our determinations regarding the fair value of our investments are materially higher than the values that we ultimately realize upon the disposal of such securities. In addition, the subjective nature of such valuations may cause the shares of our common stock to trade at a discount to our net asset value.

The lack of liquidity in our investments might prevent us from disposing of them at opportune times and prices, which may cause us to suffer a loss and/or reduce our distributions to our stockholders.

We will primarily make investments in privately-held companies. Substantially all of these securities will be subject to legal and other restrictions on resale or will otherwise be less liquid than publicly-traded securities. The illiquidity of our investments may make it difficult for us to sell such investments at advantageous times and prices or in a timely manner. In addition, if we are required to liquidate all or a portion of our portfolio quickly, we may realize significantly less than the value at which we have previously recorded our investments. We may also face other restrictions on our ability to liquidate an investment in a portfolio company to the extent that we have or one of our affiliates has material non-public information regarding such portfolio company. If we are unable to sell our assets at opportune times, we might suffer a loss and/or reduce our distributions to our stockholders.

Investing in privately-held companies may be riskier than investing in publicly-traded companies due to the lack of available public information, which could negatively impact our ability to pay you dividends and cause you to lose all or part of your investment.

We will invest primarily in privately-held companies, which may be subject to higher risk than investments in publicly-traded companies. Generally, little public information exists about these companies, and we will be required to rely on the ability of our management team to obtain adequate information to evaluate the potential risks and returns involved in investing in these companies. If we are unable to uncover all material information

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about these companies, we may not make a fully-informed investment decision, and we may lose some or all of the money we invest in these companies. These factors could subject us to greater risk than investments in publicly-traded companies and negatively affect our investment returns, which could negatively impact our ability to pay you dividends and cause you to lose all or part of your investment.

Our equity investments may lose all or part of their value, causing us to lose all or part of our investment in those companies.

The equity interests in which we invest may not appreciate or may decline in value. Accordingly, we may not be able to realize gains from our equity interests, and any gains that we do realize on the disposition of any equity interests may not be sufficient to offset any other losses we experience. As a result, our equity interests may decline in value, causing us to lose all or part of our equity investment in those companies, and may negatively impact our ability to pay you dividends and cause you to lose all or part of your investment.

We may choose to waive or defer enforcement of covenants in the debt securities held in our portfolio, which may cause us to lose all or part of our investment in these companies.

We intend to structure the debt investments in our portfolio companies to include customary business and financial covenants placing affirmative and negative obligations on the operation of each company’s business and its financial condition. However, from time to time we may elect to waive breaches of these covenants, including our right to payment, or waive or defer enforcement of remedies, such as acceleration of obligations or foreclosure on collateral, depending upon the financial condition and prospects of the particular portfolio company. These actions may reduce the likelihood of us receiving the full amount of future payments of interest or principal and be accompanied by a deterioration in the value of the underlying collateral as many of these companies may have limited financial resources, may be unable to meet future obligations and may go bankrupt. This could negatively impact our ability to pay you dividends and cause you to lose all or part of your investment.

The energy industry is subject to many risks.

We intend to concentrate our investments in the energy industry. The revenues, income (or losses) and valuations of energy companies can fluctuate suddenly and dramatically due to any one or more of the following factors:

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Economic downturns could impair our access to capital and our portfolio companies’ operations and ability to satisfy obligations to their respective lenders, including us, which could negatively impact our ability to pay you dividends and cause you to lose all or part of your investment.

Our portfolio companies may be susceptible to economic downturns and may be unable to repay our loans during these periods. Therefore, our non-performing assets are likely to increase and the value of our portfolio is likely to decrease during these periods. Adverse economic conditions also may decrease the value of collateral securing some of our loans and the value of our equity investments. Economic downturns could lead to financial losses in our portfolio and a decrease in revenues, net income and assets. Unfavorable economic conditions also could increase our funding costs, limit our access to the capital markets or result in decisions by lenders not to extend credit to us. These events could prevent us from making additional investments and harm our operating results.

A portfolio company’s failure to satisfy financial or operating covenants imposed by us or other lenders could lead to defaults and, potentially, termination of its loans and foreclosure on the assets securing such loans, which could trigger cross-defaults under other agreements and jeopardize our portfolio company’s ability to meet its obligations under the debt securities that we hold. We may incur expenses to the extent necessary to seek recovery upon default or to negotiate new terms with a defaulting portfolio company. In addition, if one of our portfolio companies were to go bankrupt, even though we may have structured our interest as senior debt, depending on the facts and circumstances, including the extent to which we actually provided managerial assistance to that portfolio company, a bankruptcy court might recharacterize our debt holding and subordinate all or a portion of our claim to that of other creditors. This could negatively impact our ability to pay you dividends and cause you to lose all or part of your investment.

Our portfolio companies may incur debt that ranks equally with, or senior to, our investments in such companies. As a result, the holders of such debt may be entitled to payments of principal or interest prior to us, preventing us from obtaining the full value of our investment in the event of an insolvency, liquidation, dissolution, reorganization or bankruptcy of the relevant portfolio company.

We intend to invest a substantial amount of our assets in subordinated debt securities and mezzanine investments issued by our portfolio companies. The portfolio companies usually will have, or may be permitted to incur, other debt that ranks equally with, or senior to, the debt securities in which we invest. By their terms, such debt instruments may provide that the holders are entitled to receive payment of interest or principal on or before the dates on which we are entitled to receive payments in respect of the debt securities in which we invest. Also, in the event of insolvency, liquidation, dissolution, reorganization or bankruptcy of a portfolio company, holders of debt instruments ranking senior to our investment in that portfolio company would typically be entitled to receive payment in full before we receive any distribution in respect of our investment. After repaying such senior creditors, the portfolio company may not have any remaining assets to use for repaying its obligation

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to us. In the case of debt ranking equally with debt securities in which we invest, we would have to share on an equal basis any distributions with other creditors holding such debt in the event of an insolvency, liquidation, dissolution, reorganization or bankruptcy of the relevant portfolio company. As a result, we may be prevented from obtaining the full value of our investment in the event of an insolvency, liquidation, dissolution, reorganization or bankruptcy of the relevant portfolio company.

Our board of directors may change our operating policies and strategies without prior notice or stockholder approval, the effects of which may be adverse. This could negatively impact our ability to pay you dividends and cause you to lose all or part of your investment.

Our board of directors has the authority to modify or waive our current operating policies and our strategies without prior notice and without stockholder approval. We cannot predict the effect any changes to our current operating policies and strategies would have on our business, operating results and value of our stock. However, the effects might be adverse, which could negatively impact our ability to pay you dividends and cause you to lose all or part of your investment.

When we are a debt or minority equity investor in a portfolio company, we generally will not be in a position to control the entity, and management of the portfolio company may make decisions that could decrease the value of our portfolio holdings.

We anticipate making primarily debt and minority equity investments, therefore we will be subject to the risk that a portfolio company may make business decisions with which we disagree, and the shareholders and management of such company may take risks or otherwise act in ways that do not serve our interests. Due to the lack of liquidity in the markets for our investments in privately-held companies, we may not be able to dispose of our interests in our portfolio companies as readily as we would like. As a result, a portfolio company may make decisions that could decrease the value of our portfolio holdings.

We may experience fluctuations in our quarterly results.

We could experience fluctuations in our quarterly operating results due to a number of factors, including changes in the fair values of our portfolio investments, the interest rate payable on the debt securities we acquire, the default rate on such securities, the level of our expenses, variations in and the timing of the recognition of realized and unrealized gains or losses, the degree to which we encounter competition in our markets and general economic conditions. As a result of these factors, results for any period should not be relied upon as being indicative of performance in future periods.

If we issue senior securities, such as debt or preferred stock, we will be exposed to additional risks, which could negatively impact our ability to pay you dividends and cause you to lose all or part of your investment.

We may issue debt securities or preferred stock, and/or borrow money from banks or other financial institutions, which we refer to collectively as senior securities, up to the maximum amount permitted by the 1940 Act. We may issue senior securities to make new or follow-on investments, to maintain our RIC status or to pay contingencies and expenses. We will be permitted under the 1940 Act to issue senior securities if, immediately after the borrowing or issuance, we will have an asset coverage of at least 200%. That is, we may borrow funds in an amount up to 50% of the value of our assets (including investments made with borrowed funds). The amount and nature of any borrowings will depend on a number of factors over which we have no control, including general economic conditions and conditions in the financial markets. We can offer no assurance that we will achieve results that will permit the payment of any cash distributions. Further, if we issue senior securities, we will be prohibited from making distributions if doing so causes us to fail to maintain the asset coverage ratios stipulated by the 1940 Act or if distributions are limited by the terms of any of our borrowings.

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Certain risks apply to the issuance of senior securities, including the following:

The occurrence of any of these risks could negatively impact our ability to pay you dividends and cause you to lose all or part of your investment.

Increases in market interest rates may both reduce the value of our portfolio investments and increase our cost of capital.

We expect that a portion of our debt investments will bear interest at fixed rates and the value of these investments generally will be negatively affected by increases in market interest rates. In addition, an increase in interest rates would make it more expensive to use debt to finance our investments. As a result, a significant increase in market interest rates could both reduce the value of our portfolio investments and increase our cost of capital, which would reduce our net investment income.

We will be exposed to risks associated with changes in interest rates because any such changes will impact our portfolio companies. If we use debt to finance our investments, our exposure to interest rate fluctuations will be increased. These factors could negatively impact our results of operations.

General interest rate fluctuations may have a substantial negative impact on our investments, the performance of our portfolio companies and their cost of capital, and our investment opportunities and, accordingly, may have a material adverse effect on investment objectives and our rate of return on invested capital. In addition, an increase in interest rates would make it more expensive to use debt or other senior securities to finance our investments.

We may be unable to obtain a credit facility on terms that are acceptable to us, which could inhibit the growth of our business and adversely affect our performance.

We will have a continuing need for capital to finance our investments. In order to maintain RIC status, we will be required to distribute to our stockholders at least 90% of the sum of “investment company taxable income” (which generally consists of ordinary income and realized net short-term capital gains in excess of

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realized net long-term capital losses, if any) and net tax-exempt interest to our stockholders on an annual basis. Accordingly, such earnings will not be available to fund additional investments. We may also need to borrow funds to make qualifying investments to maintain our RIC status. Therefore, we may need to raise additional capital, which we may elect to finance in part through a credit facility. We may not be able to obtain a credit facility on terms that we find acceptable, if at all. The unavailability of funds from commercial banks or other sources on favorable terms could inhibit the growth of our business and have a material adverse effect on our performance.

Our portfolio investments may initially be concentrated in a limited number of portfolio companies, which would magnify the effect if one of those companies were to suffer a significant loss. This could negatively impact our ability to pay you dividends and cause you to lose all or part of your investment.

While we intend for the investments in our portfolio to be allocated among a substantial number of companies, there is no limit on the amount of our assets that we may invest in any one portfolio company and our investments may initially be concentrated in a limited number of companies. We will be classified as a “non-diversified” investment company under the 1940 Act, which means we are not limited by the 1940 Act in the proportion of our assets that may be invested in the securities of a single issuer. A consequence of this concentration is that the aggregate returns we initially realize may be adversely affected if a small number of our investments perform poorly or if we need to write down the value of any one such investment. Beyond the applicable federal income tax diversification requirements, we do not have fixed guidelines for diversification, and our investments could be concentrated in relatively few portfolio companies. Financial difficulty on the part of any single portfolio company will expose us to a greater risk of loss than would be the case if we were a “diversified” company holding numerous investments. To the extent that we take large positions in the securities of a small number of portfolio companies, our net asset value and the market price of our common stock may fluctuate as a result of changes in the financial condition or in the market’s assessment of such portfolio companies to a greater extent than that as a diversified investment company. These factors could negatively impact our ability to pay you dividends and cause you to lose all or part of your investment.

In addition our investments will be concentrated in the energy industry. Consequently, we will be exposed to the risks of adverse developments affecting the energy industry to a greater extent than if our investments were dispersed over a variety of industries. See “The energy industry is subject to many risks.”

We may choose to invest the unrestricted portion of our portfolio in highly speculative investments, which could negatively impact our ability to pay dividends and cause you to lose part of your investment.

The 1940 Act and rules governing business development companies permit us to invest up to 30% of our assets in a broad range of opportunistic situations. We anticipate that these investments may include, among other things, investments in asset-backed securities, financial guarantees, high-yield bonds, distressed debt, bridge loans, lease assets, commercial loans, private equity, securities of public companies that are not thinly-traded or secondary market purchases of otherwise eligible securities. Some of these investments may be of a highly speculative nature and may lose some or all of their value, which could negatively impact our ability to pay you dividends and cause you to lose part of your investment.

We may not have sufficient funds to make follow-on investments. Our decision not to make a follow-on investment may have a negative impact on a portfolio company in need of such an investment or may result in a missed opportunity for us.

After our initial investment in a portfolio company, we may be called upon from time to time to provide additional funds to such company or have the opportunity to increase our investment in a successful situation, e.g, the exercise of a warrant to purchase common stock. There is no assurance that we will make, or have sufficient funds to make, follow-on investments. Any decision we make not to make a follow-on investment or any inability on our part to make such an investment may have a negative impact on a portfolio company in need

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of such an investment or may result in a missed opportunity for us to increase our participation in a successful operation and may dilute our equity interest or reduce the expected yield on our investment .

Risks Related to Our Manager

Our manager and our management team have no experience managing a business development company and we cannot assure you that their past experience will be sufficient to manage our company as a business development company.

The 1940 Act imposes numerous complex constraints on the operations of business development companies. In order to maintain our status as a business development company, the 1940 Act prohibits us from acquiring any assets other than “qualifying assets” unless, after giving effect to the acquisition, at least 70% of our total assets are qualifying assets. We refer to this requirement as the 70% Test. Qualifying assets include securities of privately-owned or thinly-traded U.S. public companies, cash, cash equivalents, U.S. government securities and high quality debt instruments that mature in one year or less. The failure to comply with these provisions in a timely manner could prevent us from qualifying as a business development company or could force us to pay unexpected taxes and penalties, which could be material. The lack of experience of our management team in managing a portfolio of assets under such regulatory constraints may hinder their ability to take advantage of attractive investment opportunities and, as a result, achieve our investment objectives.

Our future success is dependent upon the members of our management team and their access to investment professionals of our manager’s affiliates and the loss of any of them could severely and detrimentally affect our operations.

We will depend on the diligence, experience, skill and network of business contacts of our management team. We will also depend, to a significant extent, on our manager’s access to the investment professionals of our manager’s affiliates and the information and deal flow generated by our management team in the course of their investment and portfolio management activities. Our management team will evaluate, negotiate, structure, close and monitor our investments. Our future success will depend on the continued service of our management team. Further, our manager has not yet filled some of its key management positions. There is competition for qualified management in our manager’s industry. If our manager or its affiliates are unable hire qualified management personnel, we may be unable to successfully implement our investment strategy and the value of your investment could decline. The departure of any of the senior members of our management team, or of a significant number of the investment professionals of our manager’s affiliates, could have a material adverse effect on our ability to achieve our investment objectives. We have not entered into employment agreements, nor do we have an employment relationship, with any of these individuals. In addition, we can offer no assurance that our manager will remain our manager or that we will continue to have access to the investment professionals of our manager’s affiliates or their information and deal flow. The loss of any member of our management team could severely and detrimentally affect our operations.

Our management team, including the members who are employees of NGP, will provide services to other investors, which could reduce the amount of time and effort that they devote to us, which could negatively impact our performance.

Our investment advisory agreement does not restrict the right of our manager, NGP, or any persons working on our behalf, to carry on their respective businesses, including providing advice to others with respect to the purchase of securities that would meet our investment objectives. Although the officers of our Manager will devote full time to the management of our structured finance business, the investment advisory agreement will not specify a minimum time period that representatives of NGP who are serving as directors or members of our manager’s investment committee must devote to managing our investments. These NGP representatives will continue to have substantial responsibilities in connection with their roles managing other NGP private equity funds. Our manager and its management team may also be called upon to provide managerial assistance to our

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portfolio companies. The ability of these parties to engage in these other business activities, including managing assets for third parties, could reduce the time and effort they spend managing our portfolio, which could negatively impact our performance. See “Management—Investment Advisory Agreement.”

We are a different vehicle from any other NGP-affiliated fund.

Our investment strategies will differ from those of other funds (including any NGP private equity fund) that are or have been managed by NGP or its affiliates. Investors in NGP Capital Resources Company are not acquiring any interest in NGP or in any other NGP-affiliated fund. The historical performance of NGP is not indicative of the results that our company will achieve, and you should not rely upon such historical performance in purchasing our common stock. Our targeted rate of return is lower than that of NGP’s private equity funds, and as a result we expect our rate of return to be lower than those sought by NGP’s private equity funds. We can provide no assurance that we will replicate the historical or future performance of NGP or its affiliated funds, and we caution you that our investment returns may be substantially lower than the returns achieved by those funds.

Our obligation to reimburse our manager for certain expenses could result in a conflict of interest, which could negatively impact our investment returns and the value of your investment.

In the course of our investing activities, we will pay management and incentive fees to our manager. Also, we will reimburse our manager and our administrator for certain expenses they incur, such as those payable to third parties in monitoring our financial and legal affairs and investments and performing due diligence on our prospective investments. As a result, investors in our common stock will invest on a “gross” basis and receive distributions on a “net” basis after expenses, resulting in, among other things, a lower rate of return than one might achieve through direct investments. Due to this arrangement, there may be times when our manager has interests that differ from those of our stockholders, giving rise to a conflict which could negatively impact our investment returns and the value of your investment.

We will pay our manager a base management fee based upon our total assets, which may lead our manager to cause us to incur more debt than is prudent in order to maximize its compensation. This could negatively impact our investment returns and the value of your investment.

We will pay our manager a quarterly base management fee based on the value of our total assets. During an initial start-up period that will end on the earlier of the first anniversary of this offering or the substantial investment of our assets in investments other than temporary investments, the asset value used to calculate the management fee will be our total assets less any outstanding amounts borrowed. After this initial period, the base management fee will be calculated based on our total assets. Accordingly, our manager will have an enhanced economic incentive to increase our leverage after this initial start-up period. If our leverage is increased, we will be exposed to increased risk of loss, bear the increased cost of issuing and servicing such senior securities, and will be subject to any additional covenant restrictions imposed in an indenture or by the applicable lender, which could negatively impact our business and results of operation.

We will pay our manager incentive compensation based on our portfolio’s performance. This arrangement may lead our manager to recommend riskier or more speculative investments in an effort to maximize its incentive compensation.

In addition to its base management fee, our manager earns incentive compensation in two parts. The first part, which is payable quarterly and is equal to a specified percentage of the amount by which our net investment income exceeds a hurdle rate. The second part of the incentive fee will be determined and payable in arrears as of the end of each calendar year and will equal a percentage of our realized capital gains for the fiscal year, if any, computed net of all realized capital losses and unrealized capital depreciation at the end of such year.

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The way in which the incentive fee payable to our manager is determined may encourage our manager to use leverage to increase the return on our investments. Under certain circumstances, the use of leverage may increase the likelihood of default, which would adversely affect our stockholders, including investors in this offering, because their interests would be subordinate to those of debtholders. In addition, our manager will receive the incentive fee based, in part, upon net capital gains realized on our investments. Unlike the portion of the incentive fee based on income, there is no hurdle rate applicable to the portion of the incentive fee based on net capital gains. As a result, our manager may have a tendency to invest more in investments that are likely to result in capital gains as compared to income-producing securities. Other key criteria related to determining appropriate investments and investment strategies, including the preservation of capital, might be under-weighted if our manager focuses exclusively or disproportionately on maximizing its income. Such a practice could result in our investing in more speculative securities than would otherwise be the case, which could result in higher investment losses.

The payment of part of the incentive compensation on a quarterly basis may lead our manager to accelerate or defer interest payable by our portfolio companies in a manner that could result in fluctuations in the timing and amount of dividends.

Our manager will receive a quarterly incentive fee based, in part, on our net investment income, if any, for the immediately preceding fiscal quarter. To the extent our manager exerts influence over our portfolio companies, the quarterly incentive fee may provide our manager with an incentive to induce our portfolio companies to accelerate or defer payments for interest or other obligations owed to us from one fiscal quarter to another. This could result in greater fluctuations in the timing and amount of dividends that we pay to you.

The manner in which the part of the capital gains portion of the incentive compensation is calculated may lead our manager to write down investments in years in which no such incentive compensation is otherwise payable, thereby potentially increasing such incentive compensation in future years.

Our manager will be eligible to receive an incentive fee each fiscal year based in part on our realized capital gains, less realized capital losses and less any increase in unrealized capital depreciation for the fiscal year. Based on the manner in which the incentive fee related to capital gains is calculated, our manager may have an incentive to write down an investment in a year in which our manager did not otherwise earn the capital gains portion of the incentive fee because such a write-down will not negatively impact future years’ capital gains related incentive fees and may in fact result in possible increases such incentive fees in future years. This could result in a greater amount of incentive fees being paid to our manager than would otherwise be the case.

We may be obligated to pay our manager incentive compensation even if we incur a loss.

Pursuant to the investment advisory agreement, our manager will be entitled to receive incentive compensation for each fiscal quarter in an amount equal to a percentage of the excess of our net investment income for that quarter above a hurdle rate. In addition, the investment advisory agreement further provides that our net investment income for incentive compensation purposes excludes unrealized capital losses that we may incur in the fiscal quarter, even if such capital losses result in a net loss on our statement of operations for that quarter. The calculation of the incentive fee will include any deferred interest accrued, but not yet received. As a result, we may be paying an incentive fee on interest, the collection of which may be uncertain or deferred. Thus, we may be required to pay our manager incentive compensation for a fiscal quarter even if there is a decline in the value of our portfolio or we incur a net loss for that quarter.

While our management team currently does not provide advisory services to other investment vehicles that may have common investment objectives with ours, our management team may do so in the future and may face conflicts of interest in allocating investments.

We do not anticipate that our management team will provide advisory services to other investment vehicles with common investment objectives to ours. However, they are not prohibited from doing so. In addition, the

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NGP private equity funds are not precluded from making investments in securities like our targeted investments, although they have not traditionally focused on such types of investments in the past. If our management team does provide such services to other investment vehicles in the future, or if the focus of the NGP private equity funds were to change to include securities like our targeted investments, our management team might allocate investment opportunities to other entities, and thus might divert attractive investment opportunities away from us. In addition, our executive officers and directors, and the members of our management team, serve or may serve as officers, directors or principals of entities that operate in the same or a related line of business as we do or of investment funds managed by our affiliates. These multiple responsibilities might create conflicts of interest for our management team and NGP if they are presented with opportunities that might benefit us and their other clients, investors or shareholders.

Our manager’s liability will be limited under the investment advisory agreement, and we will agree to indemnify our manager against certain liabilities, which may lead our manager to act in a riskier manner on our behalf than it would when acting for its own account.

Our manager has not assumed any responsibility to us other than to provide the services described in the investment advisory agreement, and it will not be responsible for any action of our board of directors in declining to follow our manager’s advice or recommendations. Pursuant to the investment advisory agreement, our manager and its managing members, officers and employees will not be liable to us for their acts, under the investment advisory agreement, absent willful misfeasance, bad faith, gross negligence or reckless disregard in the performance of their duties. We have agreed to indemnify, defend and protect our manager and its managing members, officers and employees with respect to all expenses, losses, damages, liabilities, demands, charges and claims arising from acts of our manager not constituting willful misfeasance, bad faith, gross negligence or reckless disregard in the performance of their duties. These protections may lead our manager to act in a riskier manner when acting on our behalf than it would when acting for its own account.

Legal and Tax Risks

Uncertainty as to the application of aspects of the federal margin rules may make it difficult for us to determine which companies would qualify as eligible portfolio companies that satisfy the statutory requirement for our investments. Therefore, unless the uncertainty is resolved favorably, whether by statutory amendment, through governmental rulemaking or otherwise, we may be hindered in identifying companies qualifying as eligible portfolio companies, delayed in investing our capital, or lose our status as a business development company, any of which could have a material adverse effect on our results of operations, our ability to pay dividends and the value of our common stock.

In order to maintain our status as a business development company, the 1940 Act prohibits us from acquiring any assets other than “qualifying assets” unless we meet the 70% Test. Qualifying assets include securities of privately-owned or thinly-traded U.S. public companies, cash, cash equivalents, U.S. government securities and high quality debt instruments that mature in one year or less. In general, we will seek to invest in companies that qualify as “eligible portfolio companies” under the 1940 Act. There are several requirements for a company to qualify as an eligible portfolio company, as set forth in detail under “Regulation—Qualifying Assets.” While some of these criteria are provided in the alternative, the criterion encompassing the greatest number of potentially eligible companies, and hence the one on which we expect to rely most frequently, is that the company not have any class of securities with respect to which a broker or dealer may extend margin credit.

In 1998, the Board of Governors of the Federal Reserve System, or the Federal Reserve Board, amended Regulation T (one of the federal regulations governing margin credit) to allow brokers and dealers to extend margin credit on a “non-equity security.” If the term “non-equity security” were to be interpreted to include any form of indebtedness, then companies with any outstanding debt would not qualify as eligible portfolio companies. As a further consequence of such an interpretation, if we were to lend money, whether in the form of senior debt or long term subordinated debt, to a company that previously had no outstanding debt, the issuer of that debt instrument would cease to be an “eligible portfolio company” immediately upon our acquisition of that debt instrument and arguably could not be counted by us toward compliance with the 70% Test.

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If the term “non-equity security” were to be given a broad interpretation to encompass the types of debt instruments we seek to acquire, the number of companies that would qualify as eligible portfolio companies would be greatly reduced, and we may be forced to focus on investments in equity interests. As a result, our identification of appropriate investments would be more difficult and more time-consuming. This, in turn, could have a material adverse effect on the timing of our investment of the proceeds of this offering, our results of operations, our ability to pay dividends and the value of our common stock.

Additionally, if we make investments in senior debt or long-term subordinated debt and if such investments are determined by the SEC, courts or other regulatory authorities to be marginable securities within the meaning of Regulation T, the issuers of such indebtedness would likely no longer qualify as eligible portfolio companies, we may not satisfy the 70% Test and we could lose our status as a business development company. This, in turn, could cause us to lose our status as a RIC. Any of these results would have a material adverse effect on our ability to invest in the manner described in this prospectus, on our operating results, financial condition and ability to pay dividends, and on the value of our common stock. For information with respect to the consequences of failure to qualify as a RIC, see “—We will be subject to corporate level income tax if we are unable to qualify as a RIC.”

We do not believe that limiting the scope of potential eligible portfolio companies was intended by the Federal Reserve Board when it amended Regulation T. Instead, we believe that bank loans and the types of debt instruments in which we seek to invest do not constitute “securities” and therefore are not “non-equity securities” within the meaning of Regulation T.

We cannot assure you that the SEC, the courts or any other regulatory authority will agree with our position. The SEC has not taken a position on this matter and could take a position contrary to ours in the future. Similarly, we cannot assure you that our analysis would prevail in court or before any regulatory authority. A ruling or decision adverse to us could require that we dispose of investments that we made based on our interpretation of Regulation T. Any such dispositions could have a material adverse effect on our financial condition and results of operations because we may be required to consummate such dispositions quickly, which would make it more difficult to obtain favorable terms. In addition, because these types of investments will generally be illiquid, we may have difficulty finding a buyer and, even if we do find a buyer, we may have to sell the investments at a substantial loss. See “—Risks Related to our Business and Investments—The lack of liquidity in our investments might prevent us from disposing of them at opportune times and prices, which may cause us to suffer a loss and/or reduce our distributions to our stockholders.”

We intend to adjust our investment focus as needed to comply with and/or take advantage of any future administrative position, judicial decision or legislative action. See “—Changes in laws or regulations governing our operations and those of our portfolio companies, our manager or its affiliates may adversely affect our business or cause us to alter our business strategy.”

We will be subject to corporate-level income tax if we are unable to qualify as a RIC.

To qualify as a RIC under the Code, we must meet certain income source, asset diversification and annual distribution requirements. The annual distribution requirement for a RIC is satisfied if we distribute at least 90% of our “investment company taxable income” (which generally consists of ordinary income and realized net short-term capital gains in excess of realized net long-term capital losses, if any) and net tax-exempt interest to our stockholders on an annual basis. Because we may use debt financing in the future, we may be subject to certain asset coverage ratio requirements under the 1940 Act, once we have elected to be a business development company, and financial covenants under loan and credit agreements that could, under certain circumstances, restrict us from making distributions necessary to qualify as a RIC. If we are unable to obtain cash from other sources, we may fail to qualify as a RIC and, thus, may be subject to corporate-level income tax. To qualify as a RIC, we must also meet certain asset diversification requirements at the end of each calendar quarter. We may borrow funds if necessary to make qualifying investments to satisfy such diversification requirements. Failure to meet these tests may result in our having to dispose of certain investments quickly in order to prevent the loss of RIC status. Because most of our investments will be in private companies, any such dispositions could be made

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at disadvantageous prices and may result in substantial losses. If we fail to qualify as a RIC for any reason and remain or become subject to corporate income tax, the resulting corporate taxes could substantially reduce our net assets, the amount of income available for distribution and the amount of our distributions. In addition, our stockholders would be subject to income tax on distributions. Such a failure would have a material adverse effect on us and our stockholders.

We may have difficulty paying our required distributions if we recognize income before, or without, receiving cash representing such income. If we are unable to pay required distributions, we may fail to qualify as a RIC and thus be subject to corporate-level income tax.

For federal income tax purposes, we will include in income certain amounts that we have not yet received in cash, such as original issue discount, which may arise if we receive warrants in connection with the purchase of a loan or possibly in other circumstances, or contracted payment-in-kind interest, which represents contractual interest added to the loan balance and due at the end of the loan term. Such original issue discount, which could be significant relative to our company’s overall investment activities, or increases in loan balances as a result of contracted payment-in-kind arrangements, will be included in income before we receive any corresponding cash payments. We also may be required to include in income certain other amounts that we will not receive in cash.

Since in certain cases we may recognize income before or without receiving cash representing such income, we may have difficulty meeting the tax requirement to distribute at least 90% of the sum of our “investment company taxable income” (which generally consists of ordinary income and realized net short-term capital gains in excess of realized net long-term capital losses, if any) and net tax-exempt interest to our stockholders on an annual basis, if any, to maintain our status as a RIC. Accordingly, we may have to sell some of our investments at times we would not consider advantageous, raise additional debt or equity capital, borrow funds or reduce new investment originations to meet these distribution requirements. If we are not able to obtain cash from other sources, we may fail to qualify as a RIC and thus be subject to corporate-level income tax.

Regulations governing our operation as a business development company will affect our ability to, and the way in which we, raise additional capital.

We have elected to be treated as a business development company under the 1940 Act. The 1940 Act will impose numerous restrictions on our activities, including restrictions on the nature of our investments, our use of borrowed funds, our issuance of securities, options, warrants, or rights. Such restrictions may prohibit the purchase of certain investments that would otherwise be suitable for investment or render such purchases inadvisable.

Under the provisions of the 1940 Act, as a business development company, we will be permitted to issue senior securities only in amounts such that our asset coverage, as defined in the 1940 Act, equals at least 200% after each issuance of senior securities. If the value of our assets declines, we may be unable to satisfy this test. If that happens, we may be required to sell a portion of our investments and, depending on the nature of our leverage, repay a portion of our indebtedness at a time when such sales may be disadvantageous and result in unfavorable prices.

We generally will not be able to issue and sell our common stock at a price below net asset value per share. We may, however, sell our common stock, or warrants, options or rights to acquire our common stock, at prices below the current net asset value of the common stock if our board of directors determines that such sale is in the best interests of our company and its stockholders, and our stockholders approve such sale. In any such case, the price at which our securities are to be issued and sold may not be less than a price that, in the determination of our board of directors, closely approximates the market value of such securities (less any distributing commission or discount).

In addition to issuing securities to raise capital as described above, we may in the future seek to securitize our loans to generate cash for funding new investments. To securitize loans, we may create a wholly-owned subsidiary and contribute a pool of loans to the subsidiary. This could include the sale of interests in the

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subsidiary on a non-recourse basis (except for customary repurchase obligations for breach of representations and warranties) to purchasers whom we would expect to be willing to accept a lower interest rate to invest in investment grade loan pools, and we would expect that we would retain a subordinated interest in the assets and participate (most likely on a first loss basis) in losses related to the securitized assets to the extent of that interest. However, the exact structure and provisions of any securitization will be based upon then-current market conditions and may vary from the description in this prospectus. An inability to securitize our loan portfolio successfully could limit our ability to grow our business, fully execute our business strategy and decrease our earnings, if any. Moreover, the successful securitization of our loan portfolio might expose us to losses as the residual loans in which we do not sell interests will tend to be those that are riskier and more apt to generate losses.

Because there are no judicial and few administrative interpretations of the provisions of the 1940 Act pertaining to business development companies, there is no assurance that such provisions will be interpreted or administratively implemented in a manner consistent with our investment objectives and intended manner of operation. In the event that our board of directors determines that we cannot economically pursue our investment objective under the 1940 Act, they may at some future date decide to withdraw our election to be treated as a business development company and convert NGP to a management investment company or an operating company not subject to regulation under the 1940 Act, or cause NGP to liquidate. These changes may not be effected without approval of a majority of our shares.

The dividends we pay will be taxable to you.

On May 28, 2003, the Jobs and Growth Tax Relief Reconciliation Act of 2003 was signed into law, which, among other things, generally reduces the maximum tax rate applicable to corporate dividends paid to individuals and capital gains of individuals to 15%. This tax rate currently is subject to a sunset provision, pursuant to which capital gains will be taxed at a maximum tax rate of 20% and dividends will be taxed at the maximum rate applicable to ordinary income for taxable years beginning after December 31, 2008. The maximum rate for ordinary income currently is 35% for individual taxpayers. There can be no assurance that legislation will not be enacted prior to 2008 that raises the tax rate applicable to dividends and capital gains. An increased tax rate may reduce the value of the dividends and capital gain distributions that you receive from us and may adversely impact the value of your shares.

Delays in obtaining or a failure to obtain any necessary state lending licenses may impede our lending activities in such states.

Given our objective of investing, in part, in debt instruments, we may be required to apply for lending licenses or permits under applicable state laws. We cannot assure you that we will obtain these licenses and permits or, if we do, when we will obtain them. If we are unable to obtain these licenses or permits, our investment activities in those states may be impeded.

Changes in laws or regulations governing our operations and those of our portfolio companies, our manager or its affiliates may adversely affect our business or cause us to alter our business strategy.

We, our portfolio companies, our manager and its affiliates will be subject to regulation by laws and regulations at the local, state and federal level. New legislation may be enacted into law or new interpretations, rulings or regulations could be adopted, including those governing the types of investments we are permitted to make, any of which could harm us, our manager and our stockholders, potentially with retroactive effect.

Additionally, any changes to the laws and regulations governing our operations relating to permitted investments may cause us to alter our investment strategy in order to avail ourselves of new or different opportunities. For example, legislation currently pending in Congress would, if adopted, alter the criteria used to determine if a company is an eligible portfolio company under the 1940 Act by permitting qualifying investments to be made by business development companies in publicly-traded companies with market capitalizations of $250 million and less. We cannot assure you that this legislation will be enacted, or if enacted that it would not

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be materially different than what has been proposed. Nevertheless, if this or other legislation is enacted, new rules are adopted, or existing rules are materially amended, we may change our investment strategy. Such changes could result in material differences to the strategies and plans set forth in this prospectus and may result in our investment focus shifting from the areas of expertise of our manager to other types of investments in which our manager may have less expertise or little or no experience. Thus, any such changes, if they occur, could have a material adverse effect on our results of operations and the value of your investment.

Risks Related to this Offering

We have not established a minimum distribution payment level and we cannot assure you of our ability to make distributions to our stockholders in the future.

We intend to make quarterly distributions to our stockholders out of assets legally available for distribution. We cannot assure you that we will achieve investment results that will allow us to make a specified level of cash distributions or year-to-year increases in cash distributions. Our ability to make distributions might be harmed by, among other things, the risk factors described in this prospectus. In addition, the asset coverage test applicable to us as a business development company can limit our ability to make distributions. All distributions will be made at the discretion of our board of directors and will depend on our earnings, our financial condition, maintenance of our RIC status and such other factors as our board of directors may deem relevant from time to time. We cannot assure you of our ability to make distributions to our stockholders in the future.

Investing in our shares may involve a high degree of risk that may cause you to lose some or all of your investment.

The investments we make in accordance with our investment objectives may result in a higher amount of risk than alternative investment options, volatility or loss of principal. Our investments in portfolio companies may be highly speculative and aggressive. Additionally, the investments we make with the portion of our assets that is not restricted by the 1940 Act will likely be in higher risk investments. Therefore, an investment in our shares may not be suitable for someone with a low risk tolerance.

Future offerings of debt securities, which would be senior to our common stock upon liquidation, or equity securities, which could dilute our existing stockholders and may be senior to our common stock for the purposes of distributions, may harm the value of our common stock.

In the future, we may attempt to increase our capital resources by making additional offerings of debt or equity securities, including commercial paper, medium-term notes, senior or subordinated notes and classes of preferred stock or common stock subject to the restrictions of the 1940 Act. Upon the liquidation of our company, holders of our debt securities and shares of preferred stock and lenders with respect to other borrowings will receive a distribution of our available assets prior to the holders of our common stock. Additional equity offerings by us may dilute the holdings of our existing stockholders or reduce the value of our common stock, or both. Any preferred stock we may issue would have a preference on distributions that could limit our ability to make distributions to the holders of our common stock. Because our decision to issue securities in any future offering will depend on market conditions and other factors beyond our control, we cannot predict or estimate the amount, timing or nature of our future offerings. Thus, our stockholders bear the risk of our future offerings reducing the market price of our common stock and diluting their stock holdings in us.

A regular trading market for our common stock might not develop, which would harm the liquidity and value of our common stock.

There is no established trading market for our common stock. We intend to apply to have shares of our common stock listed on the New York Stock Exchange under the symbol “NGC.” However, we cannot assure you that regular trading of our common stock will develop on that exchange or elsewhere or, if developed, that any such market will be sustained. Accordingly, we cannot assure you of:

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The market price and trading volume of our common stock may be volatile following this offering, and you may be unable to resell your shares at or above the initial public offering price.

Even if active trading markets develop for our common stock after this offering, the market price of our common stock may be highly volatile and subject to wide fluctuations. In addition, the trading volume in our common stock may fluctuate and cause significant price variations to occur. If the market price of our common stock declines significantly, you may be unable to resell your shares at or above the initial public offering price. We cannot assure you that the market price of our common stock will not fluctuate or decline significantly in the future. Some of the factors that could negatively affect our stock price or result in fluctuations in the price or trading volume of our common stock include:

Shares of closed-end investment companies frequently trade at a discount from net asset value.

Shares of closed-end investment companies frequently trade at a discount from net asset value. This characteristic of a closed-end fund is a risk separate and distinct from the risk that our net asset value will decrease. The risk of purchasing shares of a closed-end fund that trades at a discount is more pronounced for investors who sell their shares in a relatively short period of time following completion of the offering because for those investors realization of a gain or loss on their investments is likely to be more dependent upon the existence of a premium or discount than upon portfolio performance. Our shares are not subject to redemption. Investors desiring liquidity may, subject to applicable securities laws, trade their shares of common stock on any exchange where such shares are then trading at current market value, which may differ from the then current net asset value. We cannot predict whether our common stock will trade at, above, or below net asset value.

Broad market fluctuations and failure to meet market expectations could harm the market price of our common stock.

The stock market has experienced extreme price and volume fluctuations that have affected the market prices of the stock of many companies in industries similar or related to ours and that have been unrelated to these companies’ operating performances. These broad market fluctuations could reduce the market price of our common stock. Furthermore, our operating results and prospects may be below the expectations of public market analysts and investors or may be lower than those of companies with comparable market capitalizations, which could harm the market price of our common stock.

We may allocate the net proceeds from this offering to investments with which you may not agree.

We will have significant flexibility in investing the net proceeds of this offering and may use the net proceeds from this offering in investments with which you may not agree. Although we have attempted to

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described our targeted investments and their expected characteristics, our goal is to allocate investments in compliance with the 1940 Act and to satisfy the demands of the energy finance market. If such rules and regulations change or if the energy finance market dictates that we vary our investment approach from that described in this prospectus, then we will adjust our investment allocations and strategy accordingly. See “Legal and Tax Risks—Changes in laws or regulations governing our operations and those of our portfolio companies, our manager or its affiliates may adversely affect our business or cause us to alter our business strategy.”

Shares of our common stock eligible for future sale may harm our share price.

We cannot predict the effect, if any, of future sales of shares of our common stock, or the availability of shares for future sales, on the market price of our common stock. Sales of substantial amounts of these shares of our common stock, or the perception that these sales could occur, may harm prevailing market prices for our common stock.

Investors in this offering will suffer immediate dilution upon the closing of this offering.

We expect the offering price of our shares to be higher than the book value per share of our common stock that will be outstanding immediately prior to the closing of this offering. Accordingly, investors purchasing shares in this offering will pay a price per share of common stock that exceeds the tangible book value per share of common stock after this offering.

Certain provisions of Maryland law and our amended and restated charter and bylaws could hinder, delay or prevent a change in control of our company.

Certain provisions of Maryland law, our amended and restated charter and our bylaws have the effect of discouraging, delaying or preventing transactions that involve an actual or threatened change in control of our company. Our charter and bylaws include the following provisions:

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Terrorist attacks and other acts of violence or war may affect any market for our common stock, impact the businesses in which we invest and harm our operations and our profitability.

Terrorist attacks may harm our results of operations and your investment. We cannot assure you that there will not be further terrorist attacks against the United States or U.S. businesses. Such attacks or armed conflicts in the U.S. or elsewhere may impact the businesses in which we invest directly or indirectly, by undermining economic conditions in the United States. Losses resulting from terrorist attacks are generally uninsurable.

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FORWARD-LOOKING STATEMENTS

Certain statements in this prospectus under the captions “Summary,” “Risk Factors,” “Business,” and elsewhere, may be forward-looking. When used in this prospectus, the words “anticipate,” “believe,” “estimate,” “expect” and similar expressions are generally intended to identify forward-looking statements, such as statements relating to:

Such forward-looking statements involve known and unknown risks, uncertainties and other important factors that could cause our actual results, performance or achievements, or industry results, to differ materially from any future results, performance or achievements expressed or implied by such forward-looking statements. Such risks, uncertainties and other important factors include, among others:

We have based the forward-looking statements included in this prospectus on information available to us on the date of this prospectus, and we assume no obligation to update any such forward-looking statements. Although we undertake no obligation to revise or update any forward-looking statements, whether as a result of new information, future events or otherwise, you are advised to consult any additional disclosures that we may make directly to you or through reports that we in the future may file with the SEC, including annual repots on Form 10-K, quarterly reports on Form 10-Q and current reports on Form 8-K. You should note that the safe harbor for forward-looking statements under the Private Securities Litigation Reform Act of 1995 does not apply to issuers that are not required to file reports under Section 13(a) or 15(d) of the Securities Exchange Act of 1934, or the “Exchange Act,” at the time a statement is made.

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Market data and forecasts used in this prospectus have been obtained from independent industry sources as well as from research reports prepared for other purposes. We have not independently verified the data obtained from these sources and we cannot assure you of the accuracy or completeness of the data. Forecasts and other forward-looking information obtained from these sources are subject to the same qualifications and the additional uncertainties regarding the other forward-looking statements in this prospectus.

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DISCUSSION OF MANAGEMENT’S EXPECTED OPERATING PLANS

Overview

We were incorporated under the Maryland General Corporation Law on July 15, 2004. We have filed an election to be treated as a business development company under the 1940 Act. As such, we will be required to comply with certain regulatory requirements. For instance, we will be required to invest at least 70% of our total assets in “qualifying assets,” which, generally, include securities of privately-held U.S. companies, thinly-traded public U.S. companies, cash, cash equivalents, U.S. government securities and high-quality debt maturing in one year or less. We will also be required to make available significant managerial assistance to certain of these issuers. This offering will significantly increase our capital resources.

Revenues

We plan to generate revenue in the form of interest payable on the debt securities that we hold, and capital gains, if any, on overriding royalty or net profits interests (or a contract right with terms similar to such interests), warrants or other equity interests that we may acquire in portfolio companies or their assets. We currently expect our investments generally to have a term of three to seven years and to bear interest at either a fixed or floating rate. We currently intend to structure our debt investments with interest that is payable quarterly or semi-annually, but in some cases, we may structure the investment to provide that interest is not payable in cash but is payable in securities or is added to the principal of the loan. The principal amortization of a substantial amount of our investments will generally be deferred for several years from the date of the initial investment or in some cases will not be due until maturity. In addition, we may generate revenue in the form of commitment, origination, structuring or diligence fees, fees for providing managerial assistance and possibly consulting fees.

Expenses

Our primary operating expenses will include the payment of management and administrative fees and overhead expenses, including overhead under the administration agreement. Our management fee will compensate our manager for its investment advisory and management services. Our administration fee will reimburse our administrator for providing services and facilities necessary to conduct our operations. See “Management—Investment Advisory Agreement,” and “—Administration Agreement.” In addition, we will bear all other costs and expenses of our operations and transactions, including those relating to the following:

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We may, but are not required to, enter into interest rate hedging agreements. Such hedging activities, which will be in compliance with applicable legal requirements, may include the use of futures, options and forward contracts. We will bear any costs incurred in entering into such contracts or in settling them. There is no assurance that any hedging strategy we may employ will be successful.

Financial Condition, Liquidity and Capital Resources

Immediately after this offering, we expect to have cash resources in excess of $234 million and no indebtedness. This amount does not take into account the exercise of the over-allotment option. See “Use of Proceeds.” We will generate cash primarily from the net proceeds of this offering and any future offerings of securities and cash flows from operations, including interest earned from the temporary investment of our assets in U.S. government securities and other high-quality debt maturing in one year or less. In the future, we may also fund a portion of our investments through borrowings from banks and issuances of senior securities. We currently intend to enter into a credit facility in the future in order to finance some portfolio investments. We will seek to enter into an agreement on at least customary market terms; however, we cannot assure you that we will be able to do so. Our primary use of funds will be investments in portfolio companies and cash distributions to holders of our common stock.

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Contractual Arrangements

We intend to enter into the following three contracts under which we have material future rights and/or commitments:

See “Management—Investment Advisory Agreement,” “—Administration Agreement” and “—License Agreement.” Each of these contracts may be terminated by either party without penalty upon not more than 60 days’ written notice to the other. Further, although our president and chief executive officer and our secretary, treasurer and chief financial officer will have certain primary duties and responsibilities to us, they may also perform duties for our affiliates.

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USE OF PROCEEDS

We estimate that the net proceeds we will receive from the sale of 17,000,000 shares of our common stock in this offering will be approximately $234.5 million (or $270.0 million if the underwriters fully exercise their over-allotment option), in each case assuming an initial public offering price of $15.00 per share, after deducting underwriting discounts and commissions and estimated organization and offering expenses of approximately $2.7 million payable by us. Approximately $             of the organizational and offering expenses have been advanced by our manager on our behalf. A portion of the net proceeds of this offering also will be used to reimburse our manager for this amount.

We plan to invest the net proceeds of this offering in portfolio companies in accordance with our investment objectives and strategies as described in this prospectus. We anticipate that substantially all of the net proceeds of this offering will be used for the above purposes in approximately 18 months, depending on the availability of appropriate investment opportunities consistent with our investment objectives and market conditions. Pending such investments, we will invest the net proceeds primarily in cash, cash equivalents, U.S. government securities and other high-quality debt maturing in one year or less from the date of investment. The management fee that we will be required to pay our manager will be lower prior to October 1, 2005 than it will be after such date, but it will not be reduced as a result of our investments in such short-term securities. We may also invest up to 30% of the net proceeds in a broad range of opportunistic investments in order to seek to enhance returns to stockholders. These investments may include, but are not limited to, investments in asset-backed securities, financial guarantees, high-yield bonds, distressed debt, bridge loans, lease assets, commercial loans, private equity securities, securities of public companies that are not thinly-traded or secondary market purchases of otherwise eligible securities. See “Regulation—Temporary Investments” for additional information about temporary investments we may make while waiting to make longer-term investments in pursuit of our investment objectives.

DIVIDENDS

We intend to pay quarterly dividends to our stockholders out of assets legally available for distribution. Our quarterly dividends, if any, will be determined by our board of directors.

As a business development company, we intend to elect to be treated as a RIC under Subchapter M of the Code. To maintain our RIC status, we must distribute at least 90% of our “investment company taxable income” (which generally consists of ordinary income and realized net short-term capital gains in excess of realized net long-term capital losses, if any) and net tax-exempt interest out of the assets legally available for distribution. In order to avoid certain excise taxes imposed on RICs, we must distribute during each calendar year an amount at least equal to the sum of (1) 98% of our ordinary income for the calendar year, (2) 98% of our capital gains in excess of capital losses for the one-year period ending on October 31 in that calendar year (unless we have a November or December year end and elect to use the last day of our taxable year for this purpose) and (3) any ordinary income and net capital gains for preceding years that were not distributed during such years. We currently intend to make sufficient distributions to satisfy the annual distribution requirement and to avoid the excise taxes.

Although we currently intend to distribute realized net capital gains (i.e., net long-term capital gains in excess of short-term capital losses), if any, at least annually, out of the assets legally available for such distributions, we may in the future decide to retain such capital gains for investment and designate such retained amount as a deemed distribution. In such event, the consequences of our retention of net capital gains are as described under “Material U.S. Federal Income Tax Considerations.”

If we issue senior securities, we will be prohibited from making distributions if doing so causes us to fail to maintain the asset coverage ratios stipulated by the 1940 Act or if distributions are limited by the terms of any of our borrowings.

After completion of this offering and the subsequent registration of our shares for public resale, we plan to establish an “opt out” dividend reinvestment plan for our common stockholders. As a result, if we declare a dividend, then stockholders’ cash dividends will generally be automatically reinvested in additional shares of our common stock, unless they specifically “opt out” of the dividend reinvestment plan to receive cash dividends. See “Dividend Reinvestment Plan.” For tax consequences associated with the dividend reinvestment plan, see “Material U.S. Federal Income Tax Considerations.”

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CAPITALIZATION

The following table sets forth:

The as adjusted column does not include the exercise of the underwriters’ over-allotment option of 2,550,000 shares. You should read this table together with “Use of Proceeds.”

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BUSINESS

Introduction

NGP Capital Resources Company

We are a newly organized financial services company created to invest primarily in small and mid-size energy companies, which we generally define as companies that have net asset values or annual revenues of less than $500 million. Our operations will be externally managed and advised by our manager, NGP Investment Advisor, LP, pursuant to an investment advisory agreement between us. Our manager is a newly formed investment advisor that is owned by NGP and an affiliate. Our investment objective is to generate both current income and capital appreciation primarily through debt investments with certain equity components.

We expect that a key focus area for our targeted investments in the energy industry will be domestic E&P businesses, and midstream businesses that gather, process and transport oil and gas, but we also anticipate evaluating investment opportunities outside of the oil and gas business, such as coal businesses, and businesses engaged in the downstream sector, including power and electricity investment opportunities. Our investments will generally range in size from $10 million to $50 million, although a few investments may be substantially in excess of this range. Our targeted investments primarily consist of debt instruments, including senior and subordinated loans combined in one facility with an equity component, subordinated loans and subordinated loans with equity components and redeemable preferred stock or similar securities. As of the date of this prospectus, we have not identified any specific investments meeting our investment objectives in which to invest the net proceeds of this offering.

We have filed an election to be treated as a business development company under the 1940 Act. As a business development company, we will be classified as a closed-end, non-diversified management investment company.

Our Manager

Our manager’s owner, NGP, manages the Natural Gas Partners private equity funds, which have specialized in providing equity capital to the energy industry since November 1988. Kenneth A. Hersh and David R. Albin, who will serve on our board of directors, are co-Chief Executive Officers of NGP and have directed the investment of the NGP funds during the sixteen year period since the inception of the initial fund. To date, there have been seven NGP private funds with aggregate committed capital of approximately $1.6 billion, obtained primarily from institutional investors, of which more than $1 billion has been invested in over 70 energy companies. The investment history of the NGP funds is among the longest, and their aggregate committed capital is among the largest, of the private equity funds that specialize in the energy industry.

Our manager’s day to day operations will be managed by our executive officers, John H. Homier and Richard A. Bernardy, who have combined experience of over 40 years in the energy finance industry. Their experience includes over 10 years working together at two separate major financial institutions at which they were responsible for building and managing successful energy finance businesses. Our manager intends to hire additional investment professionals and staff to build its energy finance business.

Our manager’s investment decisions will be reviewed and approved by its investment committee, consisting of Mr. Homier, Mr. Hersh and two other senior NGP investment professionals. The investment committee will be supported by other members of NGP’s team of 12 investment professionals when needed. In addition, our manager should benefit from access to the extensive sourcing relationships and industry expertise of NGP and its investment professionals.

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About Our Executive Officers

Mr. Homier is our President and Chief Executive Officer. He has over 25 years of corporate finance, engineering, credit analysis, business development and management experience in the energy sector. Mr. Homier’s experience includes engineering, evaluating, structuring, negotiating and managing business and investment opportunities, including energy investments similar to our targeted investments totaling approximately $400 million with Deutsche Bank and Bank of America.

Mr. Bernardy is our Secretary, Treasurer and Chief Financial Officer. He has over 18 years of corporate finance, commercial and investment banking and entrepreneurial management experience in the banking and energy sectors. Mr. Bernardy’s expertise includes arranging, structuring, negotiating, documenting and executing single and multi-party transactions for debt and equity instruments in the capital formation of micro-cap through large cap companies, including energy investments similar to our targeted investments totaling approximately $400 million with Deutsche Bank and Bank of America.

About NGP

NGP has traditionally focused on making equity investments in small to mid-size private North American upstream and midstream oil and gas companies, with an emphasis on firms that acquire and enhance producing oil and gas properties. NGP has developed a disciplined investment strategy based on:

NGP’s private equity funds focus on making common equity investments ranging from $15 million to $50 million. NGP actively manages its portfolio companies and believes that it has developed a reputation as a supportive financial partner. We believe that NGP’s reputation and longstanding presence in the energy finance market will provide us with substantial deal flow from which to make investment choices.

We believe that our targeted investments will offer the potential for attractive risk adjusted returns that will complement, but will not compete with, NGP’s private equity funds. Although NGP’s private equity funds may make investments in securities like our targeted investments, these funds seek rates of return substantially in excess of those we seek and focus primarily on investments in common equity or other junior securities in the capital structure in order to achieve their targeted rates of return. Consequently, to the extent that NGP encounters investment opportunities that are primarily in our targeted investments, the NGP private equity funds will not seek these opportunities and NGP will refer them to us for our evaluation. We are the only NGP-related investment vehicle with an investment focus in our targeted investments. See “Regulation—Co-Investments.”

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The following table sets forth selected information with respect to prior NGP investment entities, none of which is currently soliciting new investors. Prospective investors will not acquire an interest in any of these entities. In addition, investments made and investment results achieved by these entities are not necessarily indicative of those that may be made or achieved by us. Differences between such investments and results may be material. You should not rely on the following information as indicative of our future performance.

Our Energy Investment Focus

We intend to focus our investments in the energy industry in companies that have an existing asset base or that will acquire assets that are expected to provide security for our investments. The energy industry broadly includes three sectors, generally categorized as follows:

Within these broad sectors, we expect that our key area of focus will be small and mid-size energy companies engaged in the upstream and midstream sectors, with an emphasis on domestic E&P businesses and domestic midstream businesses that gather, process and transport oil and gas. However, we also anticipate seeking investment opportunities in the downstream sector, including investments related to coal, power and electricity, as well as other businesses outside of the oil and gas industry.

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Domestic Upstream E&P Sector

We believe that the domestic E&P sector will provide attractive investment opportunities as a result of a variety of factors, including the following:

Domestic Midstream and Downstream Sectors

We believe that the domestic midstream and downstream segments will also provide attractive investment opportunities as a result of a variety of factors, including the following:

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Limited Capital Availability Creates Need for Our Targeted Investments

We believe that a number of factors will continue to create demand for investment products like our targeted investments among small and mid-size energy companies, including the following:

Investment Structures

Once we have determined that a prospective portfolio company is suitable for investment, we will work with the management of that company and its other capital providers, including other senior, junior and equity capital providers, if any, to structure an investment. We will negotiate among these parties to agree on how our investment is expected to perform relative to the other capital in the portfolio company’s capital structure. Our primary consideration when structuring an investment will be requiring a total return on our investments, including interest income, royalty or other similar income and potential equity appreciation, that appropriately compensates us for our risk. The targeted investments that will comprise the substantial majority of our portfolio will generally fall within one of the following three types of investments:

These investments will consist of a senior secured loan tranche and a subordinated loan tranche. The senior tranche will produce a current cash yield and will typically be secured by a first lien on cash flow producing assets. The subordinated loan tranche will typically include a current cash yield component coupled with a property based equity participation right that may be structured as an overriding royalty or net profits interest (or a contract right with terms similar to such interests) in specific assets of the company. In some cases, a warrant or option in the company may be obtained in addition to, or in lieu of, a property based equity participation right. The subordinate tranche will generally be secured by a second lien on the company’s assets. Additionally, these loans may have indirect asset coverage through a series of covenants that prohibit additional liens on the company’s assets, limit additional debt or require maintenance of minimum asset coverage ratios. We anticipate that these loans will usually have a term of from 3 to 5 years, but we expect that in many cases these loans will be prepaid before maturity.

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We anticipate that a primary source for these investments will be energy companies with assets that provide cash flow that is sufficient to support a typical senior secured debt facility but not sufficient to support the extra senior debt needed to acquire or develop non-cash flowing assets.

We anticipate that the senior tranche will either serve as a source of leverage for us, with the expectation that we could borrow a significant portion of the principal of such tranche, or alternatively, that we will sell a majority of the senior tranche to other banking and other financial institutions after closing the investment, allowing us to earn origination and syndication fees from the financing in the process.

We anticipate that these investments will consist of subordinated loans with relatively high, fixed interest rates. Generally, we expect these loans to be collateralized by a subordinated lien on some or all of the assets of the portfolio company, or in some cases, a first priority lien on assets not otherwise securing senior debt of the borrower. Additionally, these loans may have indirect asset coverage through a series of covenants that prohibit additional liens senior to ours on the company’s assets, limit additional debt senior to ours or require maintenance of minimum asset coverage ratios.

We anticipate that these loans will likely be made to energy companies that possess assets that produce sufficient current cash flow and that have sufficient asset value to avoid the issuance of any equity rights that would be dilutive to the equity owners. For example, such loans could be made to a company that needs to access capital to develop non-producing oil and gas reserves but that has sufficient cash flow from its other assets to provide for the payment of the higher recurring cash payments required by this type of instrument. We anticipate that these loans will usually have a term of from 5 to 7 years, but we expect that in many cases these loans will be prepaid before maturity. We expect that in a number of these loans there may be amortization of principal during the life of the loan.

We anticipate that these investments will generally provide us with the highest amount of current income, but the least amount of capital gains of any of the targeted investment structures.

These investments will generally be in the form of subordinated debt or preferred equity, such as redeemable preferred stock, with a meaningful property based equity participation right that may take the form of an overriding royalty, net profits or other direct interest in properties of the portfolio company (or a contract right with terms similar to such interests). In some cases, a warrant or option to purchase equity securities of the portfolio company, or the right to convert into such equity securities, may be obtained in addition to, or in lieu of, a property based equity participation right. In some cases, the property based equity participation right may be detachable, but may also be subject to redemption by the portfolio company at the time of the payment or prepayment of the corresponding subordinated debt. In some cases, the mezzanine investments may be structured as loans that, by their terms, provide us with the option to convert into equity or additional debt securities or defer payments of interest for a number of years after our investment.

We anticipate that these investments will likely be made in energy companies that possess assets that do not produce sufficient current cash flow to amortize the principal throughout the life of a loan, but are sufficient collateral to support the amount of a loan. For example, such an investment could be made in a company that owns proved non-producing oil and gas reserves and requires capital to finance development drilling to initiate the production of the reserves and generate cash flow.

We anticipate that these loans will usually have a term of from 3 to 5 years, but we expect that in many cases these loans will be prepaid before maturity. We expect that amortization of principal will generally be deferred to the later years of these loans or the loans may be structured as non-amortizing.

We anticipate that these investments will generally provide us with the least amount of current income, but the highest amount of capital gains of any of the targeted investment structures.

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We will seek to implement or design investment structures that maximize investment returns on a risk-adjusted basis. We will seek to negotiate a structure that protects our rights and manages our risk, while creating incentives for the portfolio company to achieve its business plan and improve its profitability. For example, in addition to obtaining a position in the capital structure of our portfolio companies senior to the underlying equity, we will seek to structure an alignment of interests with the management team of the portfolio company through a meaningful equity ownership by such management team and incorporate structural elements that attempt to further minimize the risk of our investments. The typical structural elements that we would seek to negotiate in connection with our investments are covenants that afford portfolio companies as much flexibility in managing their businesses as possible, while also seeking to preserve our invested capital. Such restrictions may include affirmative and negative covenants, collateral value covenants, default penalties, lien protection, change of control provisions and governance rights, including either board seats or observation rights. Additionally, we may from time to time elect to offer co-investment opportunities to third parties. We expect to hold most of our investments to maturity or repayment, but will sell our investments earlier if circumstances warrant or if a liquidity event takes place, such as the sale or recapitalization of a portfolio company.

Our Targeted Investment Characteristics

Energy Industry’s Attractive Risk Adjusted Returns

We believe that the risk adjusted returns for our targeted investments in the energy industry have the potential to be more attractive than those of many other industries. In general, energy companies offer greater asset security and more consistent cash flows than many other industries as evidenced by the energy industry’s ranking as the industry with the third lowest corporate bond default rate in 2003, as reported in a recent Moody’s Investors Service, Inc. survey of twenty-two industries.

Collateralized Investments

In general, our targeted investments will be secured by the same assets that would secure traditional senior bank debt, in either a first or second lien position. Usually these assets will be generating cash flow at the time of our investment. In instances where we are providing subordinated debt only and there is senior debt provided by another party, we will generally seek to obtain a second lien on the borrowing company’s assets behind that of the senior lender.

Property Based Equity Interests

The property based equity interests that we anticipate receiving in many of our investments would typically include a direct or indirect interest in the revenues or profits derived from specific assets of the borrowing company, which may be in the form of an overriding royalty or net profits interest, or may be structured as a part of our loan. In general, these interests would entitle us to receive additional payments on a regular basis through the term of the loan based upon the performance of the borrower’s assets and may be coupled with a right to require the borrower’s redemption of the interest at a specified date or we may have the right to sell the interest. We believe that these property based types of equity interests are desirable because they generally provide a regular source of income, such as a monthly royalty payment, that supplements the current income received from our loan. In addition, to the extent property based interests are producing a defined cash flow stream, they provide a more readily determinable basis for realizing value upon their disposition or redemption than would be typical for stock or warrants in small private companies (which typically do not produce income, are junior in the capital structure and are burdened by general and administrative overhead).

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Limited Technical and Credit Risk

We intend to target investment opportunities in which the type of technical risk that we will face will primarily consist of the uncertainties inherent in engineering estimates of the quantities of proved reserves of natural resources and in projections of future rates of production and the amount and timing of expenditures required to operate and develop energy assets. Our management team has substantial experience in evaluating these types of risks in the context of making investments. We do not intend to make investments that are solely for the purpose of financing oil and gas exploration, which involves a much higher degree of geological risk, nor do we plan to provide financing solely to support speculative trading in oil, gas, power and/or other commodities. However, some of the companies that we finance may engage in some exploration activities in connection with the normal development of their portfolios of oil and gas properties and will also likely use financial risk management products, such as commodity swaps, to mitigate exposure to commodity price swings.

Proven Management Teams with Focus

We intend to make investments in companies with management teams that have a proven track record of success but with limited access to capital markets. In general, these management teams will often have substantial knowledge and focus in particular regions or with respect to certain types of assets. We expect that our management team’s and NGP’s extensive experience and network of business relationships in the energy industry will allow us to identify management teams that fit these criteria.

Investments

We will seek to create a varied portfolio of targeted investments. We expect most of our investments will be between approximately $10 million to $50 million of capital, on average, in the securities of small and mid-size energy companies. However, we may invest more or less depending on market conditions and our manager’s view of the particular investment opportunity. See “Investment Structure” below for a brief description of the types of targeted investments on which we will focus once we have fully invested the proceeds of this offering in investments meeting our investment objectives.

In addition to our targeted investments, we may invest up to 30% of our portfolio in asset-backed securities, financial guarantees, high-yield bonds, distressed debt, bridge loans, lease assets, commercial loans, private equity, securities of public energy companies that are not thinly-traded or secondary market purchases of otherwise eligible securities.

Additionally, any changes to the laws and regulations governing our operations relating to permitted investments may cause us to alter our investment strategy in order to avail ourselves of new or different opportunities. For example, legislation currently pending in Congress would, if adopted, alter the criteria used to determine if a company is an eligible portfolio company under the 1940 Act by permitting qualifying investments to be made by business development companies in publicly-traded companies with market capitalizations of $250 million and less. We cannot assure you that this legislation will be enacted, or if enacted that it would not be materially different than what has been proposed. Nevertheless, if this or other legislation is enacted, new rules are adopted, or existing rules are materially amended, we may change our investment strategy. Such changes could result in material differences to the strategies and plans set forth in this prospectus and may result in our investment focus shifting.

Our Investment Approach

Our investment approach will seek to limit loss potential, while also seeking attractive risk adjusted returns enhanced by participation in the equity upside of our portfolio companies. This is the same investment approach that Messrs. Homier and Bernardy have used in their previous energy finance experience.

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In the process of screening and evaluating potential investment opportunities our manager will consider the following general criteria. However, not all of these criteria may be met by each prospective investment.

Our manager intends to structure investments having collateral coverage from underlying asset values and cash flows. We intend to perform extensive due diligence, exercise discipline with respect to company valuation and institute appropriate structural protections in our investment agreements. We believe that our management team’s experience in utilizing fundamental engineering and technical analysis of energy assets and experience in dealing with the fundamental dynamics of the energy finance market will allow us to:

We believe that this approach should also enable our manager to identify attractive investment opportunities throughout the economic cycle.

Competitive Strengths

We believe we have the following competitive strengths:

Extensive Small and Mid-Size Energy Company Sourcing Network

Because of the history, market presence and long term relationships with energy company management teams that NGP and our management team have developed, we believe that we will have greater access to investment opportunities in our target markets than many other providers. We intend to originate a substantial number of our investment opportunities, rather than merely invest as a participant in transactions originated by

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other firms, which we may do from time to time. Our emphasis on originating investments will increase as our manager builds its investment portfolio and adds additional investment personnel during the next 18 months. We believe that a focus on origination will provide access to targeted investments with premium pricing, and to sources of greater revenues, such as origination and syndication fees, administrative and monitoring fees and similar fees for ancillary services related to the financings, that are generally available to the lead financial sponsor.

Flexible Transaction Structuring Capabilities

We will not be subject to many of the regulatory limitations that govern traditional lending institutions such as commercial banks. As a result, we expect to be flexible in structuring investments and selecting the types of securities in which we invest. The members of our management team have substantial experience in seeking investments that balance the needs of energy company entrepreneurs with appropriate risk control. In particular, we believe we will be able to customize the investment structure to address entrepreneurs’ frequent concern with ownership dilution while at the same time managing risk through structural protections.

Efficient Tax Structure

As a RIC, we generally will not have to pay corporate-level federal income taxes on any ordinary income or capital gains that we distribute to our stockholders as dividends. By avoiding the payment of such taxes, we can price our investments on terms comparable to our corporate taxpaying competitors, and achieve net investment revenues that are greater than their after tax net revenues. Also, investors in our stock will not be subject to double taxation on dividends, unlike investors in typical corporations. Furthermore, investors in our stock will not be required to recognize UBTI, unlike investors in public master limited partnerships.

Longer Investment Horizon than Private Fund Competitors

Unlike private equity and venture capital funds, we will not be subject to standard periodic capital return requirements. Such requirements typically stipulate that these funds, together with any capital gains on such investment, can only be invested once and must be returned to investors after a pre-determined time period. These provisions often force private equity and venture capital funds to seek returns on their investments through mergers, public equity offerings or other liquidity events more quickly than they otherwise might, potentially resulting in both a lower overall return to investors and an adverse impact on their portfolio companies. We believe our flexibility to make investments with a long-term view and without the capital return requirements of traditional private investment vehicles will provide us with the opportunity to generate attractive risk-adjusted returns on invested capital.

Due Diligence

Our manager will conduct diligence on prospective portfolio companies consistent with the approach used currently by NGP and consistent with the past practices and experience of our management team. In conducting their due diligence, our manager’s investment professionals will use available public information and information obtained from their extensive relationships with former and current management teams, vendors/suppliers to portfolio companies, consultants, competitors, investment bankers and the information obtained from the investment professionals of NGP.

Our manager’s due diligence process will be detailed and highly iterative. Our manager’s investment committee will be informed at the conclusion of the diligence process of critical findings and conclusions. The process will typically include:

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Additional due diligence with respect to any investment may be conducted on our behalf by our legal counsel and accountants, as well as by other outside advisers, as appropriate.

Ongoing Relationships With Portfolio Companies

Managerial Assistance

As a business development company, we will make available, and must provide upon request, significant managerial assistance to certain of our portfolio companies. This assistance may involve, among other things, monitoring the operations of our portfolio companies, participating in board and management meetings, consulting with and advising officers of portfolio companies and providing other organizational and financial consultation. Our officers (and to the extent permitted under the 1940 Act, our manager) will provide such managerial assistance on our behalf to portfolio companies that request this assistance, recognizing that our involvement with each investment will vary based on factors including the size of the company, the nature of our investment, the company’s overall stage of development and our relative position in the capital structure. We expect to be a resource for advice in the following areas: developing strategic plans, designing capital structures, managing finite resources and identifying acquisitions.

Monitoring

Our manager will monitor the development and financial trends of each portfolio company to determine progress relative to meeting the company’s development and business plans and to assess the strength and status of our investment and, if appropriate, institute necessary corrective actions. To accomplish this, we will employ the following processes:

Meetings. We will meet with management regularly during each year.

Periodic Review and Analysis of Financial and Reserve Information. Financial and operating statements will be required monthly or quarterly. Additionally, semi-annual reserve reports will be required for E&P and certain midstream investments. This information will be reviewed and analyzed as follows:

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Periodic Review by Specialists. Periodic reviews of the portfolio company and its assets by engineers, geologists, accountants, lawyers, investment bankers or other specialists may be necessary from time to time.

Comparisons with Other Benchmark Companies. The performance of the company will be periodically compared to performance of similarly sized companies with comparable assets and businesses to assess performance relative to peers.

Our manager will monitor the financial trends of each portfolio company to determine progress relative to meeting the company’s business plan and to assess the appropriate strategic and tactical courses of action for the company.

As part of the monitoring process, our manager will continually assess the risk profile of each of our investments and will rate them based on categories similar to the following:

For any investment rated 4 to 7, our manager will increase its level of focus and prepare monthly updates for the investment committee summarizing current operating results, material impending events and recommended actions.

Valuation Process

We will follow a disciplined approach to valuing our portfolio, which will be done in accordance with generally accepted accounting principles and will rely on multiple valuation techniques, reviewed on a quarterly basis by the board of directors. Investments for which market quotations are readily available will be recorded in our financial statements at such market quotations adjusted for appropriate liquidity discounts. However, few of our investments will have market quotations, in which case our board of directors will undertake a multi-step valuation process each quarter for our investments that are not publicly traded, as described below:

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Competition

We believe that we are entering the finance market for small and mid-size energy companies at a favorable time following the exit of a significant number of finance providers during the last three years. At this time, we believe that our primary competitors in this market will consist of fewer than fifteen firms, which include public and private funds, commercial and investment banks, and commercial financing companies. Although these competitors regularly provide finance products to energy companies similar to our targeted investments, a number of them focus on different aspects of this market. We may also face competition from other firms that do not specialize in energy finance but which are substantially larger and have considerably greater financial and marketing resources than we do. Some of our competitors may have a lower cost of funds and access to funding sources that are not available to us. In addition, some of our competitors may have higher risk tolerances or different risk assessments, which could allow them to consider a wider variety of investments and establish more relationships than us. Furthermore, many of our competitors are not subject to the regulatory restrictions that the 1940 Act will impose on us as a business development company.

Our manager will have access to NGP’s investment professionals should it desire any assistance in assessing investment risks and determining appropriate pricing for our investments in portfolio companies. In addition, we expect that the relationship maintained by NGP and our manager will continue to enable us to identify, and compete effectively for, attractive financing opportunities with small and mid-size energy companies. For additional information concerning the competitive risks we face, see “Risk Factors—Risks Relating to Our Business and Investments—We operate in a highly competitive market for investment opportunities.”

Our Executive Offices

Our principal executive office is currently located at 125 East John Carpenter Freeway, Suite 600, Irving, Texas 75062, telephone number (972) 432-1440. Our principal executive office will be relocated to Houston, Texas shortly following the closing of this offering.

Staffing

John H. Homier, our President and Chief Executive Officer and Richard A. Bernardy, our Secretary, Treasurer and Chief Financial Officer comprise our senior management. Each of our officers also serves as an officer of our manager and our administrator. Our day-to-day investment operations will be managed by our manager. In addition, we will reimburse our manager or our administrator for expenses incurred by them in connection with administering our business. See “Management—Administration Agreement.” Our manager is presently seeking additional personnel to fill some of its key management positions.

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Lending License

Given our objective of investing, in part, in debt instruments, we may be required to apply for lending licenses or permits under applicable state laws. We do not presently have, and are not presently seeking, lending licenses in any jurisdiction.

Legal Proceedings

Neither we nor our manager are currently subject to any legal proceedings.

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MANAGEMENT

Our business and affairs are managed under the direction of our board of directors. The board of directors consists of five members, three of whom are not “interested persons” of NGP Capital Resources Company as defined in Section 2(a)(19) of the 1940 Act. We refer to these individuals as our independent directors. Our board of directors elects our officers, who serve at the discretion of the board of directors.

Board of Directors

Under our amended and restated charter, upon the closing of this offering our directors will be divided into three classes. Each class of directors will hold office for a three-year term. However, the initial members of the three classes have initial terms of one, two and three years, respectively. At each annual meeting of our stockholders, the successors to the class of directors whose terms expire at such meeting will be elected to hold office for a term expiring at the annual meeting of stockholders held in the third year following the year of their election. Each director will hold office for the term to which he or she is elected and until his or her successor is duly elected and qualifies.

The address for each director is c/o NGP Capital Resources Company, 125 East John Carpenter Freeway, Suite 600, Irving, Texas 75062.

Executive officers who are not directors

Information regarding our executive officers who are not directors is as follows:

The address for each executive officer is c/o NGP Capital Resources Company, 125 East John Carpenter Freeway, Suite 600, Irving, Texas 75062.

Biographical Information

Directors

Our directors are divided into two groups—independent directors and interested directors. Interested directors are “interested persons” as defined in the 1940 Act.

Interested Directors

Kenneth A. Hersh . Mr. Hersh is co-Chief Executive Officer of NGP having been involved with the Natural Gas Partners investment funds since the inception of the initial fund in 1988. Mr. Hersh leads NGP from its

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principal office in Irving, Texas, and is responsible for co-managing the investment portfolio of the NGP funds and investment sourcing and monitoring with Mr. Albin. Prior to joining NGP, Mr. Hersh was employed by the Energy Group within Morgan Stanley & Company’s investment banking division, where he specialized in oil and gas financing and merger and acquisition transactions. Mr. Hersh is a member of the Independent Petroleum Association of America and serves on its Capital Markets Committee. Mr. Hersh serves on the board of Energy Transfer Partners, L.P. and numerous private oil and gas companies. He graduated with a B.A., magna cum laude , from Princeton University in 1985 and earned an M.B.A. from Stanford University in 1989.

David R. Albin . Mr. Albin is co-Chief Executive Officer of NGP having been involved with the Natural Gas Partners investment funds since the inception of the initial fund in 1988. He is responsible for co-managing the investment portfolio of the NGP funds and investment sourcing and monitoring with Mr. Hersh. Prior to joining NGP, Mr. Albin was a partner in the Bass Investment Limited Partnership. Prior to that time, Mr. Albin was a member of the oil and gas group in the investment banking division of Goldman, Sachs & Co. Mr. Albin serves on the board of Energy Transfer Partners, L.P. and numerous private oil and gas companies. He graduated with a B.S. in Physics in 1981 and an M.B.A. in 1985, both from Stanford University.

Independent Directors

Edward W. Blessing . Mr. Blessing is the managing director and an initial founder of Blessing Petroleum Group LLC, a strategic holding company that develops and finances domestic and international petroleum exploration and development prospects, and has been involved with the firm since its formation in 1989. Prior to that time, Mr. Blessing led the formation of Dallas-based Strategic Petroleum Inc., where he served as a director and chief executive officer. During the 1980s, Mr. Blessing led Blessing Petroleum Corporation, an independent oil and gas firm located in Oklahoma City. He served as executive vice president and director of Oklahoma Oil and Gas Company from 1978 to 1980. Prior to that time, Mr. Blessing served as a consultant with McKinsey & Company, Inc. in the company’s New York, Los Angeles and San Francisco offices. Mr. Blessing is active in energy industry affairs, currently serving in numerous positions on committees within the Independent Petroleum Association of America (IPAA). Mr. Blessing received a B.A. in Political Science and Economics from San Diego State University in 1960 and an M.B.A. from Harvard University in 1965.

C. Kent Conine . Mr. Conine is president of Conine Residential Group, a Dallas firm specializing in multi-family development, single-family home building and single-family subdivision development. He is also the Immediate Past President of the 220,000 member National Association of Homebuilders, one of the nation’s largest trade associations. Since 1981, Mr. Conine has been responsible for the construction, management and development of more than 4,000 apartment units and the development of several residential communities with a total of more than 2,500 single-family lots. Mr. Conine is presently a board member of the Home Builders Association of Greater Dallas and a board Member of the Texas Association of Builders. Mr. Conine was recently re-appointed to a six-year term as a board member of the Texas Department of Housing and Community Affairs where he serves as the vice chairman of the board. He also sits on the boards of the National Council of State Housing Agencies, the National Association of Realtors and the Fannie Mae Advisory Board. Mr. Conine received a B.A. in Finance from Texas Tech University in 1976 and is a licensed real estate broker in Texas.

James R. Latimer, III . Mr. Latimer serves as a director of Magnum Hunter Resources, Inc. where he chairs the audit committee and serves on the nominating and corporate governance committee. Previously he was a director of Prize Energy and its audit committee chairman from October 2000 until its acquisition by Magnum Hunter in March 2002. For the past eleven years he has headed Explore Horizons, Incorporated, a privately-held exploration and production company based in Dallas, Texas. He is also a partner in Blackhill Partners, a Dallas-based financial advisory firm serving clients in the energy and technology businesses. Previously, Mr. Latimer was co-head of the regional office of what is now The Prudential Capital Group in Dallas, Texas, which handled energy and other financing for The Prudential Insurance Company. In addition, Mr. Latimer’s prior experience includes senior executive positions with several private energy companies, consulting with the firm of McKinsey & Co., service as an officer in the United States Army Signal Corps, and several corporate directorships.

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Mr. Latimer received a B.A. in Economics from Yale University in 1968 and an M.B.A. from Harvard University in 1970. He has received the Chartered Financial Analyst and Certified Public Accountant designations.

Our Manager

Management Team

John H. Homier . Mr. Homier is our President and Chief Executive Officer. He has over 25 years of corporate finance, engineering, credit analysis, business development and management experience in the energy sector. Mr. Homier’s experience includes engineering, evaluating, structuring, negotiating and managing business and investment opportunities, including energy investments totaling approximately $400 million. Prior to joining us, Mr. Homier was a partner in M1 Energy Capital Securities, a broker-dealer specializing in engineering and financial analysis, planning, structuring, and fund raising for oil and gas exploration and production businesses. Mr. Homier founded and led a successful structured/mezzanine oil and gas investment program for Deutsche Bank from 1999 to 2002. During a 13-year period prior to that, Mr. Homier held various management positions with Bank of America Securities and its predecessors. His responsibilities included the initiation and building of a successful structured capital program for investment in oil and gas projects within the bank. Mr. Homier graduated with a B.S. in Civil Engineering from Oklahoma State University in 1973, a M.S. in Geotechnical Engineering from the University of California, Berkeley in 1977 and earned an M.B.A. in Finance and Management from the University of Southern California in 1981. Mr. Homier is a Professional Petroleum Engineer and a CFA Charterholder.

Richard A. Bernardy. Mr. Bernardy is our Secretary, Treasurer and Chief Financial Officer. He has over 18 years of corporate finance, commercial and investment banking and entrepreneurial management experience in the banking and energy sectors. Mr. Bernardy’s expertise includes arranging, structuring, negotiating, documenting and executing single and multi-party transactions for debt and equity instruments in the capital formation of micro-cap through large cap companies, including energy investments totaling approximately $400 million. Prior to joining us, Mr. Bernardy was senior vice president of finance for USBuild Corporation, a private e-commerce company focused on the residential homebuilding sector. Mr. Bernardy was also a partner in M1 Energy Capital Securities, a broker-dealer specializing in engineering and financial analysis, planning, structuring and fund raising for oil and gas exploration and production businesses. Mr. Bernardy was instrumental in creating a successful structured/mezzanine oil and gas investment program for Deutsche Bank from 2000 to 2002. During a 14 year period prior to that, Mr. Bernardy held various positions with Bank of America Securities and its predecessors, in which he was involved in originating, evaluating, and executing senior and mezzanine loans, single bank and syndicated credit facilities, structured transactions, derivatives, high yield debt and private equity. He graduated with a B.S. in Finance and Accounting from Northern Illinois University in 1984 and earned an M.B.A. from DePaul University in 1991.

Investment Committee

The members of our manager’s investment committee are Messrs. Hersh, Homier, Richard L. Covington and William J. Quinn.

Richard L. Covington . Mr. Covington, 46, is a Managing Director of NGP. Mr. Covington joined NGP in 1997. Prior to joining NGP, Mr. Covington was a senior shareholder at the law firm of Thompson & Knight, LLP, in Dallas, Texas. Mr. Covington’s practice at Thompson & Knight was concentrated in corporate and finance transactions, and he served as the primary legal representative on most of NGP’s investments since 1989. Mr. Covington serves on the boards of numerous private energy companies. He graduated from Southern Methodist University with a B.B.A. degree, magna cum laude , in 1980 and a Juris Doctor degree in 1983.

William J. Quinn . Mr. Quinn, 33, is a Managing Director of NGP. Mr. Quinn rejoined NGP in 1998, after obtaining his M.B.A. having previously been an associate from 1995 to 1996. Prior to joining NGP in 1995,

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Mr. Quinn was an analyst in the investment banking divisions of Bear Stearns & Co. and BT Securities Corporation. Mr. Quinn serves on the board of numerous private energy companies. He graduated with a B.S.E. in Finance in 1992 from the Wharton School of Business at the University of Pennsylvania and earned an M.B.A. from Stanford University in 1998.

Our manager’s investment decisions will be reviewed and approved by its investment committee prior to consummation, except in situations in which a prospective investment involves a potential conflict of interest with our manager or its affiliates, in which case our independent directors will review the investment decision for us.

Committees of the Board of Directors

Audit Committee

The members of the audit committee are Messrs. Blessing, Conine and Latimer, each of whom is independent for purposes of the 1940 Act and the New York Stock Exchange corporate governance regulations. The audit committee is responsible for approving our independent accountants, reviewing with our independent accountants the plans and results of the audit engagement, approving professional services provided by our independent accountants, reviewing the independence of our independent accountants and reviewing the adequacy of our internal accounting controls.

Valuation Committee

The members of the valuation committee are Messrs. Hersh and Latimer. The valuation committee is responsible for aiding our board of directors in fair value pricing debt and equity securities that are not publicly traded or for which current market values are not readily available. We anticipate that the valuation committee will, from time to time, retain an independent valuation firm to help them on a selective basis in making fair value determinations.

Compensation Committee

The members of the compensation committee are Messrs. Blessing, Conine and Latimer, each of whom is independent for purposes of the 1940 Act and the New York Stock Exchange corporate governance regulations. The compensation committee is responsible for approving the compensation of our officers allocable to us under the administration agreement.

Nominating and Corporate Governance Committee

The members of the nominating and corporate governance committee are Messrs. Blessing, Conine and Latimer, each of whom is independent for purposes of the 1940 Act and the New York Stock Exchange corporate governance regulations. The nominating and corporate governance committee is responsible for selecting, researching and nominating directors for election by our stockholders, selecting nominees to fill vacancies on our board of directors or a committee thereof, developing and recommending to the board of directors a set of corporate governance principles and overseeing the evaluation of the board of directors and our management.

The nominating and corporate governance committee will consider candidates for board membership suggested by its members and other board members, as well as management and stockholders. A stockholder who wishes to recommend a prospective nominee for the board should notify the Corporate Secretary or any member of the nominating and corporate governance committee in writing in care of NGP Capital Resources Company, 125 E. John Carpenter Freeway, Suite 600, Irving, Texas 75062. To be considered by the committee, stockholder nominations must be submitted before our fiscal year-end and must be accompanied by a description of the qualifications of the proposed candidate and a written statement from the proposed candidate that he or she is willing to be nominated and desires to serve if elected. The committee will also consider whether to nominate

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any person nominated by a stockholder pursuant to the provisions of our bylaws relating to stockholder nominations as described in “Description of Our Capital Stock—Advance Notice Provisions for Stockholder Nominations and Stockholder Proposals.” Nominees for director who are recommended by stockholders will be evaluated in the same manner as any other nominee for director.

Executive Compensation

We have not paid, but may in the future pay, annual compensation to our executive officers for their services as executive officers.

Compensation of Directors

The following table shows information regarding the compensation expected to be received by the independent directors for the calendar year ending December 31, 2004, assuming that prior to that date the board will meet three times and each committee will meet twice. No compensation is paid to directors who are “interested persons.”

Each independent director will receive an annual fee of $45,000 in quarterly payments. They will also receive $5,000 plus reimbursement of reasonable out-of-pocket expenses incurred in connection with participating in each board meeting and will receive $1,000 plus reimbursement of reasonable out-of-pocket expenses incurred in connection with participating in each committee meeting. In addition, the Chairman of the Audit Committee will receive an annual fee of $10,000 in quarterly payments and each chairman of any other committee will receive an annual fee of $5,000 in quarterly payments for their additional services in these capacities. In addition, we will purchase directors and officers’ liability insurance on behalf of our directors and officers. Independent directors will have the option to receive up to 50% of their directors’ fees paid in shares of our common stock issued at a price per share equal to the greater of net asset value or the market price at the time of payment.

Investment Advisory Agreement

Management Services

NGP Investment Advisor, LP will serve as our manager. Our manager is a newly formed investment adviser that is registered under the Advisers Act. Subject to the overall supervision of our board of directors, our

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manager will act as investment adviser to us and will manage, or arrange for suitable third parties to manage, the investment and reinvestment of our assets in accordance with our investment objectives and policies. Under the terms of the investment advisory agreement, our manager will provide any and all management and investment advisory services necessary for the operation and conduct of our business and will:

Our manager’s services under the investment advisory agreement will not be exclusive, and it is free to furnish the same or similar services to other entities, including businesses which may directly or indirectly compete with us and directly compete with us for particular investments, so long as its services to us are not impaired by the provision of such services to others. Under the investment advisory agreement and to the extent permitted by the 1940 Act, our manager will also provide on our behalf managerial assistance to those portfolio companies to which we are required to provide such assistance under the 1940 Act and who require such assistance from us.

Management Fee

Pursuant to the investment advisory agreement, we will pay our manager a fee for management services consisting of two components—a base management fee and an incentive fee.

Beginning on October 1, 2005 and thereafter, the base management fee will be calculated quarterly as 0.45% of our total assets. Prior to October 1, 2005, the quarterly base management fee will be equal to the lesser of $900,000 or 0.375% of our total assets.

For services provided under the investment advisory agreement during the period commencing from the closing of this offering through and including September 30, 2005, the base management fee will be payable monthly in arrears. For services provided under the investment advisory agreement after that time, the base management fee will be payable quarterly in arrears. Until completion of two full fiscal quarters after the closing of this offering, the total assets upon which the quarterly base management fee will be calculated will be equal to the net proceeds of this offering. Thereafter, the base management fee will be calculated based on the average value of our total assets at the end of the two most recently completed fiscal quarters. Base management fees for any partial month or quarter will be appropriately pro rated.

The incentive fee consists of two parts. The first part, which is calculated and payable quarterly in arrears, will equal 20% of the excess, if any, of our net investment income for the quarter that exceeds a quarterly hurdle rate equal to 2% (8% annualized) of our net assets (defined as our total assets less total liabilities, determined in accordance with generally accepted accounting principles).

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For this purpose, net investment income, means interest income, dividend income and any other income (including any other fees, such as commitment, origination, syndication, structuring, diligence, monitoring and consulting fees or other fees that we receive from portfolio companies) accrued during the fiscal quarter, minus our operating expenses for the quarter (including the base management fee, expenses payable under the administration agreement, any interest expense and dividends paid on issued and outstanding preferred stock, if any, but excluding the incentive fee). Accordingly, we may pay an incentive fee based partly on accrued interest, the collection of which is uncertain or deferred. Net investment income includes, in the case of investments with a deferred interest feature (such as original issue discount, debt instruments with payment-in-kind interest and zero coupon securities), accrued income that we have not yet received in cash. Net investment income does not include any realized capital gains, realized capital losses or unrealized capital appreciation or depreciation. The calculations will be appropriately pro rated for any period of less than three months.

The payment of part of the incentive compensation on a quarterly basis may lead our manager to accelerate or defer interest payable by our portfolio companies in a manner that could result in fluctuations in the timing and amount of dividends. We will pay our manager an incentive fee with respect to our net investment income in each fiscal quarter, except that our manager has agreed that payment of the investment income related portion of the incentive fee will not commence until October 1, 2005. The incentive fees due in any fiscal quarter thereafter will be calculated as follows:

These calculations will be appropriately pro rated for any period of less than three months.

The second part of the incentive fee will be determined and payable in arrears as of the end of each fiscal year (or upon termination of the investment advisory agreement, as of the termination date), and will equal 20.0% of the following amounts: (1) our realized capital gains for the fiscal year, if any, minus (2) all realized capital losses for such year and minus (3) any increase in unrealized capital depreciation at the end of such year from the prior year. Our manager has agreed that payment of the capital gains related portion of the incentive fee will not commence until 2007 for the fiscal year ending December 31, 2006.

Realized capital gains on a security will be calculated as the excess of the net amount realized from the sale or other disposition of such security over the lesser of (a) the fiscal year-end valuation of the security at the end of the previous fiscal year or (b) our original cost for the security. Realized capital losses on a security will be calculated as the amount by which the net amount realized from the sale or other disposition of such security is less than the lesser of (a) the fiscal year-end valuation of the security at the end of the previous fiscal year or (b) our original cost for the security. The calculation of realized capital losses for any fiscal year will not take into account capital losses realized in prior years. All fiscal year-end valuations will be determined by us in accordance with generally accepted accounting principals and the 1940 Act.

With respect to unrealized capital depreciation, the amount on which the capital gains incentive fee for any year is calculated will be reduced by any increase during that year in the aggregate unrealized depreciation of our securities (exclusive of any increase in unrealized appreciation of our assets). The investment advisory agreement provides that unrealized capital depreciation on a security will be calculated as the amount by which our original cost of such security exceeds the fair value of such security at the end of a fiscal year. We have been advised that the staff of the SEC has recently taken the position that applicable law requires the inclusion in such calculation of all depreciation, whether above or below our original cost. We believe that only depreciation below our original cost should be included in the calculation. We will comply with the final administrative, legislative or judicial determination of this issue.

Our manager has agreed that, beginning two years after the closing of this offering and to the extent permissible under federal securities laws and regulations, including Regulation M, it will use 30% of the fees it

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receives from the capital gains portion of the incentive fee (up to a maximum of $5 million in the aggregate) to purchase shares of our common stock in open market purchases through an independent trustee or agent. Any sales of such stock will comply with any applicable six-month holding period under Section 16(b) of the Securities Act and all other restrictions contained in any law or regulation, to the fullest extent applicable to any such sale. Any change in this voluntary agreement will not be implemented without at least 90 days’ prior notice to stockholders and compliance with all applicable laws and regulations.

Investment income includes interest, dividends and fees (see “Management—Investment Advisory Agreement—Management Fee”) for the fiscal quarter and is expressed as a rate of return on the value of our net assets at the end of the immediately preceding fiscal quarter. Net investment income does not include any realized capital gains, realized capital losses or unrealized capital appreciation or depreciation.

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Capital Gains Portion of Incentive Fee:

Summary

The hypothetical amounts of realized capital gains, realized capital losses and the change in unrealized capital depreciation in the following example are shown as percentages of net asset value.

Assumptions and Descriptions

Year-end 1—no realized capital gains, 1% realized capital losses and 2% unrealized capital depreciation

Year-end 2—6% realized capital gains, 1% realized capital losses and 1% increase in unrealized capital depreciation from prior year end

Capital gains portion of incentive fee = 20% x (realized capital gains for year - (realized capital losses + increase in unrealized capital depreciation at year end))

Payment of Our Expenses

All investment professionals of our management team and their respective staffs, when and to the extent engaged in providing management and investment advisory services necessary for the operation and conduct of our business, and the compensation and routine overhead expenses of such personnel allocable to such services, will be provided and paid for by our manager.

We will bear all other costs and expenses of our operations and transactions, including those relating to:

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Duration and Termination

The investment advisory agreement was approved by our board of directors at in-person meetings held on July 16, 2004 and August 12, 2004. Unless terminated earlier as described below, it will continue in effect for a period of two years from its effective date. It will remain in effect from year to year thereafter if approved annually by our board of directors or by the affirmative vote of the holders of a majority of our outstanding voting securities, including, in either case, approval by a majority of our directors who are not interested persons. The investment advisory agreement will automatically terminate in the event of its assignment. The investment advisory agreement may be terminated by either party without penalty upon not more than 60 days’ written notice to the other.

Indemnification

The investment advisory agreement provides that, absent willful misfeasance, bad faith or gross negligence in the performance of its duties or by reason of the reckless disregard of its duties and obligations, our manager and its officers, managers, agents, employees, controlling persons, members and any other person or entity affiliated with it will be entitled to indemnification from us for any damages, liabilities, costs and expenses (including reasonable attorneys’ fees and amounts reasonably paid in settlement) arising from the rendering of our manager’s services under the investment advisory agreement or otherwise as our investment adviser. The investment advisory agreement also provides that our manager and its affiliates (including our administrator) will not be liable to us or any stockholder for any error of judgment, mistake of law, any loss or damage with respect to any of our investments, or any action taken or omitted to be taken by our manager in connection with the performance of any of its duties or obligations under the investment advisory agreement or otherwise as an

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investment adviser to us, except to the extent specified in Section 36(b) of the 1940 Act concerning loss resulting from a breach of fiduciary duty with respect to the receipt of compensation for services.

Organization of Our Manager

Our manager is a newly formed Delaware limited partnership that is registered as an investment adviser under the Advisers Act. The principal executive office of our manager is currently located at 125 East John Carpenter Freeway, Suite 600, Irving, Texas 75062. The principal executive office of our manager will be relocated to Houston, Texas shortly following the closing of this offering. Our manager is controlled by Natural Gas Partners, L.L.C.

Administration Agreement

Pursuant to a separate administration agreement, our administrator, NGP Administration, LLC, will furnish us with office facilities, equipment and clerical, bookkeeping and record keeping services at such facilities. Under the administration agreement, our administrator also will perform, or oversee the performance by third parties of, our required administrative services, which include being responsible for the financial records that we are required to maintain and preparing reports to our stockholders and reports filed with the SEC. In addition, our administrator will assist us in determining and publishing our net asset value, oversee the preparation and filing of our tax returns and the printing and dissemination of reports to our stockholders and generally oversee the payment of our expenses and the performance of administrative and professional services rendered to us by others. To the extent permitted under the 1940 Act, our administrator may also provide, on our behalf, significant managerial assistance to our portfolio companies. Payments under the administration agreement will be equal to the costs and expenses incurred by our manager or our administrator in connection with administering our business. The administration agreement may be terminated by either party without penalty upon 60 days’ written notice to the other party. Our board of directors approved the administration agreement on July 16, 2004. See “—Investment Advisory Agreement—Board Approval of Investment Advisory Agreement and Administration Agreement.”

Indemnification

The administration agreement will provide that, absent willful misfeasance, bad faith or negligence in the performance of its duties or by reason of the reckless disregard of its duties and obligations, our manager and its officers, managers, agents, employees, controlling persons, members and any other person or entity affiliated with it will be entitled to indemnification from us for any damages, liabilities, costs and expenses (including reasonable attorneys’ fees and amounts reasonably paid in settlement) arising from the rendering of our administrator’s services under the administration agreement or otherwise as our administrator. The administration agreement also provides that our administrator and its affiliates (including our manager) will not be liable to us or any stockholder for any error of judgment, mistake of law, any loss or damage with respect to any of our investments, or any action taken or omitted to be taken by our administrator in connection with the performance of any of its duties or obligations under the administration agreement or otherwise as our administrator.

Board Approval of the Investment Advisory Agreement and the Administration Agreement

Our board of directors, including a majority of our independent directors, at an in-person meeting held on July 16, 2004, reviewed and approved the investment advisory agreement and the administration agreement. In reviewing the agreements, the board received information and considered a variety of factors with respect to the fairness and reasonableness of the compensation to be paid to our manager. Based upon its review of the information provided by our manager and legal counsel, and following extensive discussions, the board of directors, including all of the independent directors, concluded that it was satisfied with the nature, extent and quality of the services proposed to be provided by our manager, that the amount and structure of the management

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fee proposed to be paid was reasonable with respect to the services to be provided and that approving the investment advisory agreement and the administration agreement was in our best interests and those of our stockholders, and approved the investment advisory agreement and the administration agreement.

In considering the approval of the investment advisory agreement and the administration agreement, the board evaluated information and considered various factors, including the following:

Because of the inherent uncertainties involved in the start-up nature of our business, the board did not consider the costs incurred by our manager to provide services to us and the profit our manager may realize or the extent to which economies of scale may be realized.

Based on the information reviewed and the discussions among the board members, the board of directors, including all of the independent directors who were present at the meeting (representing a majority of all of our independent directors), approved the investment advisory agreement and the administration agreement and concluded that the management fee rates were reasonable in relation to the services to be provided.

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License Agreement

We intend to enter into a license agreement with Natural Gas Partners L.L.C. that owns the rights to the “NGP” and “Natural Gas Partners” names pursuant to which we will receive a non-exclusive, royalty-free license to their use in our company name and in connection with our business. Under this agreement, we will have the right to use the “NGP” and “Natural Gas Partners” names so long as NGP Investment Advisors, LP or one of its affiliates remains our manager. Other than with respect to this limited license, we will have no legal right to the “NGP” and “Natural Gas Partners” names. This license agreement will remain in effect for so long as the investment advisory agreement with our manager is in effect and will automatically terminate if the investment advisory agreement were to terminate for any reason, including upon its assignment.

CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

We intend to enter into the investment advisory agreement with our manager, in which our management team will have ownership and financial interests. Our manager’s services under the investment advisory agreement will not be exclusive, and it is free to furnish the same or similar services to other entities, including businesses which may directly or indirectly compete with us and directly compete with us for particular investments, so long as its services to us are not impaired by the provision of such services to others. In addition, NGP’s private equity funds are permitted to make investments similar to our targeted investments. We do not anticipate that our management team will provide advisory services to other investment vehicles with common investment objectives to ours, and it is our understanding that NGP’s private equity funds have no current intention of making investments similar to our targeted investments. However, if our management team does provide such services to other investment vehicles in the future, our management team and the investment professionals of our manager and its affiliates, including NGP’s private equity funds, might allocate investment opportunities to other entities, and thus might divert attractive investment opportunities away from us. In addition, our executive officers and directors serve or may serve as officers, directors or principals of entities that operate in the same or a related line of business as we do or of investment funds managed by our affiliates. We may not be given the opportunity to participate in certain investments made by investment funds managed by advisers affiliated with our manager. However, our management team intends to allocate investment opportunities in a fair and equitable manner consistent with our investment objectives and strategies, so that we are not disadvantaged in relation to any other client.

Our independent directors will review any investment decisions that may present potential conflicts of interest among our manager and its affiliates and us in accordance with specific procedures and policies adopted by the board. See “Management—Our Manager.”

We intend to enter into a license agreement with Natural Gas Resources, pursuant to which NGP will grant to us a non-exclusive, royalty-free license to use the “Natural Gas Partners” and “NGP” names. In addition, pursuant to the terms of the administration agreement, our administrator will provide us with the office facilities and administrative services necessary to conduct our day-to-day operations. NGP is the sole member of, and controls, our administrator.

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CONTROL PERSONS AND PRINCIPAL STOCKHOLDERS

Immediately prior to the completion of this offering, there will be 100 shares of common stock outstanding and one stockholder of record. At that time, we will have no other shares of capital stock outstanding. The following table sets forth certain ownership information with respect to our common stock for those persons who directly or indirectly own, control or hold with the power to vote, 5% or more of our outstanding common stock and all officers and directors, as a group.

The following table sets forth the dollar range of our equity securities beneficially owned by each of our directors. We are not part of a “family of investment companies,” as that term is defined in the 1940 Act.

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DETERMINATION OF NET ASSET VALUE

The net asset value per share of our outstanding shares of common stock will be determined quarterly by dividing the value of total assets minus liabilities by the total number of shares outstanding. Our board of directors, in its sole discretion may decide to determine and publish our net asset value on a more frequent basis.

Value, as defined in the 1940 Act, is (a) the market price for those securities for which a market quotation is readily available and (b) for all other securities and assets, fair value as determined in good faith by our board of directors. Since there will typically be no readily available market value for investments in our portfolio, we will value substantially all of our investments at fair value as determined by our board of directors pursuant to our valuation policy and consistently applied valuation process. Because of the inherent uncertainty of determining the fair value of investments that do not have a readily available market value, the fair value of our investments determined in good faith by our board of directors may differ significantly from the values that would have been used had a ready market existed for the investments, and differences could be material.

There is no single standard for determining fair value in good faith. As a result, determining fair value requires that judgment be applied to the specific facts and circumstances of each portfolio investment while employing a consistently applied valuation process for the types of investments we make. We are not permitted to provide a general reserve for anticipated loan losses. Instead, we are required to specifically value each individual investment on a quarterly basis. We will record unrealized depreciation on investments when we believe that an investment has become impaired, including where collection of a loan or realization of an equity security is doubtful, or when the enterprise value of the portfolio company does not currently support the cost of our debt or equity investment. Enterprise value means the entire value of the company to a potential buyer, including the sum of the values of debt and equity securities used to capitalize the enterprise at a point in time. We will record unrealized appreciation if we believe that the underlying portfolio company has appreciated in value and, therefore, our equity security has also appreciated in value. Changes in fair value will be recorded in our statement of operations as net change in unrealized appreciation or depreciation.

We will follow a disciplined approach to valuing our portfolio, which will be done in accordance with generally accepted accounting principles and will rely on multiple valuation techniques and independent appraisals reviewed on a quarterly basis by the board of directors. Investments for which market quotations are readily available will be recorded in our financial statements at such market quotations adjusted for appropriate liquidity discounts. Our board of directors will undertake a multi-step valuation process each quarter for our investments that are not publicly traded, as described below:

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The types of factors that we may take into account in fair value pricing our investments include, as relevant, the nature and realizable value of any collateral; the portfolio company’s enterprise value, historical and projected financial results, ability to make payments, net income, revenue, discounted cash flow, and book value; the markets in which the portfolio company does business; comparison to a peer group of publicly traded securities; the size and scope of the portfolio company and its specific strengths and weaknesses; recent purchases or sales of securities by the portfolio company; recent offers to purchase the portfolio company; and other relevant factors.

Determination of fair values involves subjective judgments and estimates not susceptible to substantiation by auditing procedures. Accordingly, under current auditing standards, the notes to our financial statements will refer to the uncertainty with respect to the possible effect of such valuations, and any change in such valuations, on our financial statements.

DIVIDEND REINVESTMENT PLAN

We intend to establish a dividend reinvestment plan that provides for reinvestment of our dividends and distributions on behalf of our stockholders, unless a stockholder elects to receive cash as provided below. As a result, if our board of directors authorizes, and we declare, a cash dividend, then our stockholders who have not “opted out” of our dividend reinvestment plan will have their cash dividends automatically reinvested in additional shares of our common stock, rather than receiving the cash dividends.

No action will be required on the part of a registered stockholder to have the stockholder’s cash dividend reinvested in shares of our common stock. The plan administrator will set up an account for shares acquired through the plan for each stockholder, a participant, who has not elected to receive dividends in cash and hold such shares in non-certificated form. A registered stockholder may terminate participation in the plan at any time and elect to receive dividends in cash by notifying the plan administrator and our transfer agent and registrar in writing so that such notice is received by the plan administrator no later than 10 days prior to the record date for dividends to stockholders. Within 20 days following receipt of a termination notice by the plan administrator and according to a participant’s instructions, the plan administrator will either: (a) maintain all shares held by such participant in a plan account designated to receive all future dividends and distributions in cash; (b) issue certificates for the whole shares credited to such participant’s plan account and issue a check representing the value of any fractional shares to such participant; or (c) sell the shares held in the plan account and remit the proceeds of the sale, less any brokerage commissions that may be incurred and a $15.00 transaction fee, to such participant at his or her address of record at the time of such liquidation. A stockholder who has elected to receive dividends in cash may re-enroll in the plan at any time by providing notice to the plan administrator.

Those stockholders whose shares are held by a broker or other financial intermediary may receive dividends in cash by notifying their broker or other financial intermediary of their election.

We intend to primarily use newly issued shares to implement the plan. However, we reserve the right to purchase shares in the open market in connection with our implementation of the plan. The number of newly issued shares to be issued to a stockholder is determined by dividing the total dollar amount of the dividend payable to such stockholder by the average market price per share of our common stock at the close of regular

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trading on the exchange or market on which our shares of common stock are listed for the five trading days preceding the valuation date for such dividend. The number of shares of our common stock to be outstanding after giving effect to payment of the dividend cannot be established until the value per share at which additional shares will be issued has been determined and elections of our stockholders have been tabulated.

We may not use newly issued shares to pay a dividend if the market price of our shares is less than our net asset value per share. In such event, the cash dividend will be paid to the plan administrator who will purchase shares in the open market. The allocation of shares to the participants’ plan accounts will be based on the average cost of the shares so purchased, including brokerage commissions. The plan administrator will reinvest all dividends and distributions as soon as practicable, but no later than the next ex-dividend date, except to the extent necessary to comply with applicable provisions of the federal securities laws. Interest will not be paid on any uninvested cash payment.

There will be no brokerage charges or other charges to stockholders who participate in the plan. The plan administrator’s fees under the plan will be paid by us.

The plan may be terminated by us upon notice in writing mailed to each participant at least 30 days prior to any record date for the payment of any dividend by us. When a plan participant withdraws from the plan or when the plan is terminated, the participant will receive a cash payment for any fractional shares of our common stock based on the market price on the date of withdrawal or termination. All correspondence concerning the plan should be directed to the plan administrator by mail at American Stock Transfer & Trust Company, 59 Maiden Lane, New York, New York 10038.

The automatic reinvestment of dividends and distributions will not relieve a participant of any income liability associated with such dividend or distribution. A U.S. Stockholder participating in the plan will be treated for U.S. federal income tax purposes as having received, on the dividend payment date, a dividend or distribution in an equal amount to the cash that the participant could have received instead of shares. The tax basis of such shares will equal the amount of such cash. A participant will not realize any taxable income upon receipt of a certificate for whole shares credited to the participant’s account whether upon the participant’s request for a specified number of shares or upon termination of enrollment in the plan. Each participant will receive each year a Form 1099 with respect to the U.S. federal income tax status of all dividends and distributions during the previous year. For tax consequences associated with the dividend reinvestment plan, see the discussion under “Material U.S. Federal Income Tax Considerations.”

MATERIAL U.S. FEDERAL INCOME TAX CONSIDERATIONS

The following discussion is a general summary of the material U.S. federal income tax considerations applicable to us and to an investment in our shares. This summary does not purport to be a complete description of the income tax considerations applicable to such an investment. For example, we have not included certain considerations that may be relevant to certain types of holders subject to special treatment under U.S. federal income tax laws, including stockholders subject to the alternative minimum tax, tax-exempt organizations, insurance companies, dealers in securities, pension plans and trusts and financial institutions. This summary assumes that investors hold our common stock as capital assets within the meaning of the Code. The discussion is based upon the Code, Treasury regulations and administrative and judicial interpretations, each as of the date of this prospectus and all of which are subject to change, possibly retroactively, which could affect the continuing validity of this discussion. We have not sought and will not seek any ruling from the Internal Revenue Service regarding this offering. This summary does not discuss any aspects of U.S. estate or gift tax or foreign, state or local tax. It does not discuss the special treatment under U.S. federal income tax laws that could result if we invested in tax-exempt securities or certain other investment assets.

A “U.S. stockholder” generally is a beneficial owner of shares of our common stock who is for U.S. federal income tax purposes:

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