NGP Capital Resources Co. Q1 2008 Earnings Call Transcript

May. 5.08 | About: OHA Investment (OHAI)

NGP Capital Resources Co. (NGPC) Q1 2008 Earnings Call May 5, 2008 11:00 AM ET

Executives

John Homier - President and CEO

Steve Gardner - CFO

Kelly Plato - SVP

Analysts

Greg Mason - Stephen Nicholas

Carl Drake - SunTrust Robinson Humphrey

Vernon Plack - BB&T

John Stilmar - FBR

Pavel Molchanov - Raymond James

Operator

Good day, ladies and gentlemen. Welcome to your NGP Capital Resources Company first quarter 2008 conference call. (Operator Instructions).

I would now like to turn the call over to your host, NGPC President and CEO, Mr. John Homier.

John Homier

Thanks Kathy. Good morning, everyone. Thanks for being here with us once again to discuss our results for the quarter ending March 31, 2008. With me today are Steve Gardner our Chief Financial Officer and Kelly Plato our Senior Vice President who heads our investment team.

After my opening remarks today, Steve is going to summarize our financial results for the first quarter of 2007, and provide a summary of our recent secondary offering, and our near-term capital strategy. When Steve is finished, I will give you an update on the performance of the company and our investment portfolio, after that Steve, Kelly, and I will answer any questions that you may.

During the first quarter of this year we funded targeted investments of $27.5 million, including one new portfolio of company. We also sold a $20 million senior participation in our APC investment, as a means of managing and maintaining our RIC diversification requirements.

As of March 31, our funded targeted investments totaled $279 million and our total committed and available for funding was approximately $306 million. We'll talk more about our portfolio and subsequent portfolio activity later in our remarks.

Our earnings release was distributed this morning before the market opened and for those of you that did not receive the copy of the release, you can call us or you can download it, as always, from our website, which as you know is www.ngpcrc.com. Also for anyone wishing to listen to a recording of our prepared comments today, we will have a replay available by phone through next Friday. The call will also be available through a link on the Investor Relations page of our website.

I'd like to remind everyone at this point that our remarks today may include comments, which could be considered forward-looking statements, and as such, statements are subject to many factors that could cause actual results to differ materially from our expectations as expressed in those forward-looking statements. These factors are described in our SEC filings, and I refer you to our website or to the SEC website to review those filings. We undertake no obligation to publicly update or revise any forward-looking statements.

With that, I will turn the call over to Steve.

Steve Gardner

Thanks, John. Good morning and welcome to everybody. During the first quarter as John stated we funded one new transaction and made additional investments in existing portfolio of companies for total funding of $27.5 million. We had repayments, sales and realization of $28 million. So, we ended the quarter with commitments of approximately $306 million and our targeted investment portfolio of $279 million had a fair value of approximately $283 million, as of end of the quarter.

For the quarter, we had net investment income of $4.1 million or $0.24 per share. We did not realize any capital gains or losses during the quarter. The detailed results for the first quarter are in the earnings release and also in our 10-Quarter, which we expect to file later this week.

We will be happy to address any comments or questions you might have during the Q&A period.

As of March 31st, 2008, the weighted average yield on our targeted investment portfolio was 10.7%. Historically, this has ranged from roughly 10% to 13%. And we expect that the current income portion of the return on our targeted portfolio to remain in this range for the foreseeable future.

In March, our Board declared a dividend of $0.40 per share for the first quarter, which exceeds our quarter’s net investment income of $0.24 per share and we want to be clear that this does not reflect a change in dividend policy. As we stated before, we manage the company with an eye towards total return, comprised of both investment income and capital gains, realized capital gains that is.

As we did in the first quarter of 2007, we set our dividend for the first quarter of this year, based on our expectation of the total return on the portfolio for the entire year. As many of you know, we completed a secondary offering of common shares in early April. Where we issued, approximately $4.1 million shares at $0.16 per share, raising net proceeds of approximately $62 million. We were pleased to have been able to issue the shares at an approximate 14% premium to NAV. The proceeds were used to retire the outstanding balance on our investment credit facility. Immediately, following the offering we had our entire investment facility available to fund new investments giving us $100 million of dry powder. Over the coming months, we will be working to increase the level of our investment facility to at least $150 million to give us additional capacity to keep pace with our growing portfolio.

Again, I will answer any questions you might have about our financial performance when we get to the Q&A. And now, I'll turn the call back over to John.

John Homier

Thank you. Steve. To pick up on Steve's comments regarding our plans to continue to extend the capital base. We believe that there are many benefits to a larger portfolio of targeted investments. As I mentioned in an earlier call, we believe that the current dislocation in the capital markets should result in expanded opportunities for us, as this year develops.

Also, a larger portfolio allows us more flexibility in managing our RIC diversification requirements. And it allows us the ability to hold more, larger deals, in a more diverse population of transactions. Thus we feel generating better risk-adjusted returns on the entire portfolio. It also provides a mechanism to spread fixed cost, giving the company better operational efficiency, and we expect better metrics.

And finally, a larger portfolio should allow us to see realization events on a more regular basis, as smoothing what could otherwise be a lumpy pattern of capital gains realizations.

Looking at our performance, and as Steve said, we declared and paid a $0.40 dividend for the first quarter of 2008. This is in comparison to $0.515 for the fourth quarter of 2007, and $0.265 for the first quarter of 2007. We will be announcing the dividend for the second quarter of 2008 in mid-June.

As 2008 began, we believe, we have seen acceleration in better quality, potential transactions. During the quarter, we reviewed 40 potential transactions. Our current backlog has approximately 30 transactions that have targeted a hold potential of approximately $600 million, and a least expected closed transaction value of approximately $100 million.

To recap the targeted investment portfolio, at the end of 2007, we had investments in 15 portfolio companies. Our outstanding funding were $279 million, with an additional $42 million committed and available for a total of $321 million. Through the end of the first quarter of 2008, we funded an additional $13 million of those commitments, had one repayment, BSR Alto of $2.4 million, and have made one new commitment, fully drawn, of $15 million to BioEnergy International, a private, alternative fuels and specialty chemicals company, located in Quincy, Massachusetts.

Also during the quarter, we sold $20 million participation in the Anadarko Petroleum Company 2007-III Drilling Fund to another financial institution, as a means of managing our RIC diversification requirements. That put us at the end of the quarter, with outstanding funding of $279 million, with an additional $27 million committed and available for a total of $306 million.

During April, we added a new portfolio company, when we closed the $30 million Senior Secured Credit Facility with Greenleaf Investments LLC, a private E&P company based in Victoria, Texas. Initial availability under the facility is $12.5 million, with approximately $10.5 million funded at closing.

Also in April, we made a follow-on investment in an existing portfolio of company, Tammany Oil & Gas, LLC. Availability under its facility was increased to $34 million, with approximately $29.5 million outstanding. $6.2 million of which was used to acquire additional properties in the Gulf of Mexico. This puts us today, having investments in 16 portfolio companies, with outstanding funding of $296 million, with an additional $26 million committed and available for a total of $322 million.

We anticipate that just as we have done with APC Grow Fund and with other investments in the past, we may need to continue to sell participations in some portions of these outstandings and commitments in order to maintain our compliance with RIC diversification requirements.

As we’ve discussed on our previous calls, we maintain a system to evaluate the credit quality of our investments. While incorporating a quantitative analysis this system is a qualitative assessment. The system is intended to reflect the overall performance of the portfolio of company’s business, the collateral coverage of an investment and other relevant factors. Based on this system, the overall credit quality of our targeted investment portfolio remains satisfactory, as of the end of the year.

Of the 20 rated investments and 15 portfolio companies, as of March 31, 2008, when compared to the fourth quarter of 2007, two investments declined in rating, 16 retained the same rating with two new investments, that were not previously rated, five investments totaling approximately $36.4 million, or approximately 13% of the $279 million of cost basis are targeted investments, are carried in our watch list, due to slower than expected development of the assets holding the investments or deterioration in asset coverage.

At the end of the first quarter of 2008, unrealized depreciation in our targeted investment portfolio totaled $4.6 million. And this breaks down as follows; approximately $1 million of unrealized depreciation on our December, 2011, Venoco bonds, as based on current market quotation, $900,000 of unrealized depreciation on our investment in BSR Loco, based on weak development performance of that company. And $2.7 million of our investment in Chroma, also based on weak development performance of the company.

Given the relative strength of Venoco, in today's commodity price environment and the relatively short maturity of our investment, we feel this investment should not ultimately result in realized loss unless we liquidate it prior to maturity.

In the case of our BSR Loco and our Chroma investments, we continue to work with the management to these companies to improve their performance and to develop long-term, value maximizing strategies. All of our valuation methodology leads us to record and carry the unrealized depreciation that we have at this time.

I should note here that in January, 2008 our term-loan facility to based our BSR Alto, a sister transaction to BSR Loco was repaid at par from proceeds from the sale of its assets to a third party. We had previously recorded unrealized depreciation of $500,000 on that investment and upon repayment that term-loan was recovered in full.

Also at the end of the first quarter of 2008, unrealized appreciation on targeted investment portfolio companies totaled $9.4 million, reflecting the fair value of expected future income and gains from those investments. At the end of the quarter our target investments had an average risk rating of 3.8 on a dollar weighted basis, which is flat with 3.8 for the end of the fourth quarter 2007.

Our distribution of rankings is as follows, RES ranking one to renew investments, RES ranking two, that was one investment for $5 million, RES ranking three, there was four investment for $91.9 million, RES ranking four, ten investments for $135.4 million, RES ranking five, two investments for $18 million, and RES ranking six, three investments for $18.5 million. And those numbers of course are all on a cost basis. No investments were rated seven.

In summary, our portfolio continues to remain solid, with good potential for an appropriate risk adjusted returns. That concludes our prepared comments and I will now turn the call back to our operator, Kathy, to facilitate Q&A.

Steve, Kelly and I will be fielding your calls and your questions.

Question-and-Answer Session

Operator

(Operator Instructions) We will go first to Greg Mason with Stephen Nicholas

Greg Mason - Stephen Nicholas

Good morning. Could you give us a little more color on the $9.4 million in appreciation in the quarter? What were the couple of investments that really drove that?

Steve Gardner

Greg, it wasn't a $9.4 appreciation during that particular quarter, the first quarter, that's just the total that we were carrying on the books, it is principally been write-ups from prior years, the prior quarters. But the composition of it is principally our investment in Rubicon, which has being written-up for total of $8 million. We have also written-up the Resaca overrides and our investment in Nighthawk and our override write-up in our Crossroads investment, as well. So, it's not a net change of $9.4 million in the first quarter, but it’s the continuing carrying value of our written up assets.

Greg Mason - Stephen Nicholas

All right. And could you talk about growth with the diversification requirements, with the equity offering you got, of more than $300 million in equity, and the new Greenleaf facility was a $30 million, so fixing that 5% bucket. Are you limited right now to kind of that $30 million threshold?

John Homier

No we are not. But that is the sweet spot for a lot of transactions that we see, in the space in which we operate, as we talked about before Greg, it is, the $25 million to $45 million type transactions seem to be the highest density of good transactions out there, if you look across the whole spectrum of what we see in the market place.

Greg Mason - Stephen Nicholas

How does your appetite change though when looking at, call it the $40 million to 45 million investments, when those put you at a little of a bind due to a RIC diversification?

Steve Gardner

Greg, basically our large basket, so to speak, the greater than 5% pool of assets that we have is really full, we don’t have a lot of capacity there. And so, if tomorrow we were to close a deal, that was a $50 million transaction, we would be bringing in partners to help fund, like we have clubbed a number of deals. So, it wouldn’t stop us, and it never has stopped us or turned us away from an attractive larger transaction. It just means that we will only fund up to the small basket level, and we would bring in partners. We have several financial institutions that we have traded deals with, and partnered in deals before, and it's something I expect will continue.

John Homier

Or alternatively we could sell a participation in one of our existing large basket deals, as I mentioned in the prepared comments.

Greg Mason - Stephen Nicholas

Okay. And could you talk about the formidable debt long which was supposed to mature at the end of the year, you extended it through the first quarter, have you extended it through the second quarter and what’s going on there?

Kelly Plato

Yeah. In the first quarter, they started a process of marketing the company and/or its assets and we’ve extended it till the end of this month, May 30th. They are in the process of getting all their offers together and trying to decide on, whom to pick, but we expect them to be selling their assets fairly shortly.

Greg Mason - Stephen Nicholas

Okay. And can you walk us through the Greenleaf investment, it’s a $30 million credit facility, but only $12.5 million is available right now, is that correct and how does that work to get up to the $30 million?

Kelly Plato

That’s correct. It’s a $30 million facility. About $12.5 million is available. They needed approximately $10.5 million to acquire some assets and then the company put a couple of million dollars of cash and property in to the deal as well. And then there is $2 million of availability, that’s dedicated to some capital projects that are identified now. The company intends to look at some additional acquisitions and also look at additional capital projects in the assets, the existing assets that they contributed and the acquired assets. And so, we sized up the facility, just so, as new capital projects became available, we will be able to evaluate them, and as if to the facility, if necessary without having to amendment notes and do all the legal work over.

John Homier

Greg, the facility is governed by what would amount to a volume basis. What we called collateral related calculations, and it's very similar to a volume based calculation. So even though there is a larger facility size, as Kelly said, to have the notes and documentation in place, its still governed by our periodic calculation of a volume base for the company.

Greg Mason - Stephen Nicholas

Okay. And then one more question, and I'll hop back in at the end of the queue. The yield decline in the portfolio, what are you attributing that too?

Steve Gardner

That's entirely a function of the drop in LIBOR from roughly 4.5% at the end of the year to about 2.7% at the end of the quarter. We do have a number of transactions that have LIBOR floors and then as it stands a little less than half of our target investment portfolio actually floats downwards in that case. The balance is either fixed or has floors.

John Homier

And also, that current yield calculations have royalty in it, which of course is a subject to the fluctuations of LIBOR. So would also tend to dampen to some extent the sensitivity of entire debt investments in terms bring to changes in LIBOR.

Greg Mason - Stephen Nicholas

Great. Thank you.

Operator

Thank you. We will take our next question from Carl Drake with SunTrust Robinson Humphrey

Carl Drake - SunTrust Robinson Humphrey

Good morning. I have follow-up on the yield question. As most of the lagging affected the reset affect in first quarter is that mostly played out or will that spilled over in to the second quarter with further pressure on yields?

Steve Gardner

No, I mean right now LIBOR is just about right where it was at the end of the quarter. Its right, just under 270. There is no lag effect, if and as of March 31st calculation, and so all things being equal, we won't see it drag down further unless LIBOR continues to fall. It's held pretty steadily in the 2.5 to 3 range here the last couple months.

Carl Drake - SunTrust Robinson Humphrey

Okay. In terms of potential spread widening on the portfolio going forward, are you seeing the opportunity to increase that spread over LIBOR all in with new investments opportunities?

Steve Gardner

It's a mix, and I would let Kelly follow-up on this. It's a mix there, whenever we are negotiating a transaction. There is always a bounce between equity kicker ups and the actual cost of portfolio. What we have done, is new deals that we are doing and in some of the new renegotiation or additional extensions or making additional capital available, through putting in floors, typically 4.5% or 5% LIBOR floors. And so, I guess you could say, from my impression we are having some negotiating, flexibility in that direction. I don't see why that would change, but Kelly I mean.

Kelly Plato

Yeah I think that' suits us better, we are seeing a little bit of the ability to negotiate maybe, higher payment portions of the investments, with slighter higher spreads and then we haven't been able to get LIBOR floors in the 4% to 5% range.

Carl Drake - SunTrust Robinson Humphrey

Okay. It's helpful. Second question on FAS 157, was there any impact in terms of the $1.5 million net depreciation a quarter that was based on looking at absorbable inputs?

Steve Gardner

As it stands, we haven't changed our evaluation methodologies at all, yet we did it up 157, and along with PWC, our independent auditors we determined there should not be any material change and none of the revaluations or the evaluation changes were attributable to the 157 effect, it all really changes, as how we lay it out in the Q.

Carl Drake - SunTrust Robinson Humphrey

Okay. We'll look for that and then the last question is on the dividend, at $0.40 significantly above the NII, that's obviously a positive signal on total returns on the portfolio, as you mentioned gain opportunities, is that a level that is a run-rate level to grow upon?

Steve Gardner

Well part of that $0.40 we had about $0.03 left over from last year of taxable distributable link, so what we will say is, we haven't really provided specific guidance going forward, what we will say is that we are comfortable at $0.40, based on what we expect to happen over the balance for the year. Our general practice has been to not at least hold or increase dividends with exception of the clean up dividends for the first quarter. So you can conclude what you wish from there, but we rather would not provide specific guidance.

Carl Drake - SunTrust Robinson Humphrey

Okay. Thank you.

Operator

We will take our next question from Vernon Plack with BB&T.

Vernon Plack - BB&T

Hi, John and Steve. Most of my questions have been answered, just one follow-up question, as it relates to the dropping LIBOR, I am curious in terms of how quickly your long-term debt resets and could we expect that to actually be cheaper?

Steve Gardner

Yes. We typically run our debt facility on 30 day LIBOR, we reset on a 30 day basis. We tend not to go out any further than that, so it’s a pretty quick reset and we haven’t seen some benefits from that obviously.

Vernon Plack - BB&T

Okay. Thank you.

Operator

(Operator Instructions) We will go next to John Stilmar with FBR.

John Stilmar - FBR

Good morning, gentlemen. Thank you for

Steve Gardner

Hi, John.

John Stilmar - FBR

Hi. How are you guys doing?

Steve Gardner

Good, doing well.

John Stilmar - FBR

Good, great. Listen, most of my questions have been answered, and at the risk of being cliché, I wanted to have you guys talk a little bit more, sort of the standard question, of what you are seeing in terms of lending in this market? And not so much as to the general question, but have you seen changes between last quarter that we talked and today. Are there any differences in the market with regards to competition, pricing, just sort of the general competitive landscape. I am interested in the sort of inflection points or changes.

John Homier

Its hard to put two points, put two quarters and then draw a straight line between them, and project from it, John. But I think what we said last time is that this market, this particular market, the energy market, from mezzanine finance remains in our view, very competitive. And there are many consistent long-term mezzanine players in that space, that continue to be very active, and do not seem to be necessarily played but some of the credit dislocation issues that have affected others in the more general market. So, we are continuing to see the usual kind of intense competition for deals. Having said that in general as we talked about before given the way that the various players in mezzanine energy finance arena are constituted and they are owned idiosyncrasies and the way that they are organized and the way they are funded and that’s the deal we like to do. For any given transaction, we may find ourselves that we are interested in doing. We may find ourselves in competition with only one or two or three other consistent mezzanine players.

Kelly do you want to add anything to that?

Kelly Plato

No the only thing is on the competition front, it's very similar to what we saw last quarter and previous quarters. Although, there is one of our competitors that did the things in other parts of their fund, they are not doing new investments now and another one of the more active competitors again do the things that are going on in other parts of their organization have changed their focus a lot, and are looking at a lot smaller deals with a lot more true conforming senior debt risk characteristics than what they were looking at before. And, I think those two groups are less competition to us now.

John Stilmar - FBR

Is there a part of the capital structure that has changed? For instance, I mean you talked about the Mezz continuing to be competitive, as we have seen in other more lets call it diversified channels, it's the senior part of the capital structure that seems to be most vacated, is there a part of the capital structure that maybe similarly vacated at least in the energy market that you guys are lending it?

John Homier

I will be interested in source of your question, John because I am not sure that we are seeing it.

John Stilmar - FBR

Okay

John Homier

We see, I mean from a private equity standpoint. The equity funds have raised, there're many very large new funds including our own affiliate NGP Energy Capital Management recently closing Fund 9 at $4 billion. And also, we see a lot of interest in investors that run smaller amounts of money to come in and induce smaller types of transaction.

We regularly get calls from knowledgeable long-term energy investors who still want to place relatively small amount of equity capital, $1 millions, to a few $10 millions in equity type transactions in the energy space. Mezzanine player, as we talked about remains pretty well populated with consistent players.

On the senior side, that's always traditionally of course been the commercial banks and I guess the anecdotal story I have for you there is that while there are some banks that have said that they are really looking to husband their cash presumably because they have issues some where else in the portfolio.

Now there are other consistent energy banks who have said that they remain very open and very active for business and are eager to continue to put money out. So, throughout the spectrum, we have continued to see lots of appetite from consistent knowledgeable players. I think, just to round out your question, I think we have seen the casual players back out but that's been a going on trend for several months or year even and maybe even longer. People who're still very smart guys, but just don't have the experience in the energy space have backed off over a period of several months and so, we've not seen as much competition or pricing pressure around the edges of the space as we have historically saying say two to three years ago.

John Stilmar - FBR

Wonderful. Thank you guys very much for a very detailed answer.

Steve Gardner

You're welcome.

Operator

Thank you. Our next question comes from Pavel Molchanov with Raymond James.

Pavel Molchanov - Raymond James

Good morning, guys.

Steve Gardner

Hey, Pavel.

John Homier

Good morning, Pavel.

Pavel Molchanov - Raymond James

Question about what you said at the beginning regarding your backlog, you said $600 million unrest is that right?

Steve Gardner

That's right.

Pavel Molchanov - Raymond James

And, of that what percentage relates to the E&P space?

John Homier

Good question. Most of it.

Pavel Molchanov - Raymond James

Is that less than percentage of the E&P in your existing portfolio companies?

Steve Gardner

We can get the number Pavel. It's probably less than what is in the portfolio right now, but it's, I would imagine it's 70% of the cost.

John Homier

Right.

Pavel Molchanov - Raymond James

Okay. And, can you just remind me what the number of transactions is with or the number of companies within this $600 million?

Steve Gardner

30.

Pavel Molchanov - Raymond James

30, and the risk number is $100 million.

Steve Gardner

At about a 100 yes.

Pavel Molchanov - Raymond James

At about a $100, okay. That's great everything else has been answered. Thanks very much.

Steve Gardner

Thanks, Pavel.

John Homier

Thanks, Pavel.

Operator

(Operator Instructions). We'll go to Greg Mason for a follow-up.

Greg Mason - Stifel Nicolaus

Good morning. One point of clarification, could you give us the gross appreciation and gross depreciation just in this quarter? The net was 1.7 but…

Steve Gardner

Hold on just a second, yes we can give you that number.

Greg Mason - Stifel Nicolaus

Okay, while you are looking that up, wanted to talk about a little more about Rubicon, as we look at consensus estimates versus your dividend about $0.40 shortfall, it looks like Rubicon’s really the only investment that can plug that gap, can you talk about what your thoughts are with Rubicon?

John Homier

Well, let me say something before we focus on Rubicon. The valuation, let me just talk about the valuation methodology that we use a little bit. Look, when we are assigning fair values, we are looking at transactions and looking at mean median and mode types of valuations on the individual investments. In other words, we are looking at comparables, we are looking at discounted cash flows, and so on and we are, and if you assume that the outcomes of, let’s say a sale or liquidation of the company or log normally distributed, the valuations that we are focused on in our fair market valuation assessments are really, really centered in mean median mode territory. That said, I think, like anyone one who sells a property, will always looking for outlier and while we have really good visibility on Rubicon from this mean medium mode kind of approach, and having increased value in the portfolio, there are many other transactions that we have that we have visibility on, in terms of a sale, that while the mechanic of coming up with a fair value doesn’t lend itself to assigning outlier value to it. The possibility of having a good outlier value is very real and tangible. And so, I wouldn't want just simply focused on Rubicon has been the only potential gain, but certainly a gain that we have, that we think is a possibility in the portfolio, is something that will happen in and the company has engaged in a process to sell our significant portion of its asset sometime next year. And, Kelly you may want to talk a little more about that just whatever is basically covered by nature of the fact that they are engaged in a public process.

Kelly Plato

Yeah, Rubicon is -- look we had actually, when we started this year, we thought that we would explore the idea of an exit towards the end of the year with Rubicon and they were approached by a couple of different parties on an unsolicited basis. And we, talked about some things and so they have engaged an investment banking group Energy Spectrum advisors out of Dallas to explore different alternatives for them including a sale and they are working through that now. We are working with management of Rubicon and we would expect an exit there this year, but at this point it's still a little early on and we are not sure what form it would take or when we will it get complete, but we should know in the next few weeks where the direction is in the line.

And there is a lot of interest from financial buyers as well as industry buyers in Rubicon. We've got a nice portfolio from permanent base o properties and North Texas properties with good production and good reserves

Greg Mason - Stifel Nicolaus

And it would seem logical then that those expectations are driving where your dividend policy is for this year?

John Homier

There are portion of it.

Kelly Plato

A big piece of the pie.

John Homier

But we also have visibility on other dynamics that may not be captured. Let me just say it that way, that may not be captured in the fair market valuation metrics that may happen during the year as well.

Greg Mason - Stifel Nicolaus

Okay. Great

Steve Gardner

Greg, and to answer your question about the ups and downs for the quarter. So, we had unrealized depreciation during the first quarter, that were little less than $1.8 million that was principally the Venco bonds. They are mark-to-market have brought them down about a $1 million pioneer bonds that we have were off slightly and then we were down our investment in Chroma little over half million dollars. We have slightly less than a $100,000 of revision upward or upward reevaluations. So, the net is roughly 1.7.

Greg Mason - Stifel Nicolaus

Okay great. And, then one last question you talked about Chroma and BSR and the performance issues there. What exactly you are doing and more importantly what is your long-term outlook for those investments?

Kelly Plato

With the BSR, we have sold, I guess, in the last, in the fourth quarter, we sold a portion of the assets to an offset operator and maintained a carried interest in certain pieces of those assets. We are working with the offset operator who purchase the interest has drilled one well that we are waiting some test data on and they're in the process of drilling the second well that we are carried in as well that we should see some results on sometimes then but we are working with the management of BSR Alto to see what can be done with the remainder of the assets and trying to look at way to maximize the recovery on that deal.

John Homier

And, that maybe through a short-term sale or it may be through a longer term strategy of continuing to hold and judiciously develop those assets.

Kelly Plato

With respect to Chroma, they are looking at different outcomes including raising a new round of equity capital and looking at acquisition of alternatives, sales of some asset and we are pretty small piece of the Chroma deal and we are constantly in contact with them and are trying to find ways to maximize our recovery there as well, but we have a little less control on that situation.

Greg Mason - Stifel Nicolaus

Hi great, thanks guys.

John Homier

Thank you, Greg.

Kelly Plato

And then I get a one last follow-up to Pavel's question. We went through the numbers and it's about 90% of our current deal, while I guess it will be about 10% is in others.

Operator

Thank you. And we've no additional questions at this time. I would like to turn the conference back over to John Homier.

John Homier

Ladies and gentlemen thank you for being with us today. And it's always a pleasure to host the call and to summarize the results for the quarter and we look forward to doing it again with you here very shortly, hopefully in about three months. Thank you again for joining us today.

Operator

Thank you. This will conclude our conference call today. We appreciate your participation. You may disconnect at this time.

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