NEW YORK, NY — (MARKET WIRE) — 05/09/06 — Prospect Energy Corporation (NASDAQ: PSEC)(“Prospect”) announced today that it has made an initial $3.5 millionsenior secured debt investment in Conquest Cherokee LLC (“Conquest”), anoil and gas company based in Nashville, Tennessee, and Independence,Kansas.
Conquest focuses on shallow coalbed methane (“CBM”) production in theCherokee Basin in Southeastern Kansas, including Wilson, Montgomery,Neosho, Labette, and Chautauqua counties. Conquest has a proprietarysoftware mapping and database system allowing it to select drilling targetsthroughout the Cherokee Basin.
Prospect’s investment, secured by existing wells, infrastructure, andacreage, is being deployed for development drilling. Third party juniorequity is also being invested. Prospect is receiving an overriding royaltyinterest in Conquest’s properties in conjunction with Prospect’s debtinstrument. Prospect’s investment is expected to grow as Conquest’sdrilling and acquisition activities increase.
Conquest is led by Phil Hayden, Terry Carroll, and Jack Gilbert. Mr.Hayden, a former bank president with 34 years of experience, helped foundGastar Exploration, Ltd., a publicly traded oil and gas company. Mr.Carroll is the former Chief Executive Officer of United States Exploration,Inc., a previously publicly traded company. He has operated in the oil andgas business in Kansas and Oklahoma for more than 20 years. Mr. Gilbert isthe former Director of Business Development of Harpeth Capital, aninvestment banking company, and he has founded and led several companies inhis career.
“The professionals at Prospect are deeply experienced in resource-basedinvesting, and they bring value beyond capital to the relationship,” saidGilbert.
“The Conquest investment marks our fourth oil and gas investment and ourfirst investment in the Cherokee Basin,” said David Belzer, a seniorinvestment professional with Prospect Capital Management. “Developmentdrilling is an ideal marriage with our capital. We look forward to growingour investment relationship with the experienced team at Conquest.”
ABOUT PROSPECT ENERGY CORPORATION
Prospect Energy Corporation (www.prospectenergy.com) is a closed-endinvestment company that lends to and invests in energy-related businesses.Prospect Energy’s investment objective is to generate both current incomeand capital appreciation through debt and equity investments.
Prospect Energy has elected to be treated as a business development companyunder the Investment Company Act of 1940 (“1940 Act”). We are required tocomply with a series of regulatory requirements under the 1940 Act as wellas applicable NASDAQ, federal and state laws and regulations. We haveelected to be treated as a regulated investment company under the InternalRevenue Code of 1986. Failure to comply with any of the laws andregulations that apply to Prospect Energy could have a material adverseeffect on Prospect Energy and its shareholders.
This press release contains forward-looking statements within the meaningof the Private Securities Litigation Reform Act of 1995. Any suchstatements, other than statements of historical fact, are likely to beaffected by other unknowable future events and conditions, includingelements of the future that are or are not under the Company’s control, andthat the Company may or may not have considered; accordingly, suchstatements cannot be guarantees or assurances of any aspect of futureperformance. Actual developments and results are highly likely to varymaterially from these estimates and projections of the future. Suchstatements speak only as of the time when made, and the Company undertakesno obligation to update any such statement now or in the future.
Please send investment proposals to:Prospect Energy CorporationJohn BarryChairman and Chief Executive Officerjbarry@prospectstreet.comGrier EliasekPresident and Chief Operating Officergrier@prospectstreet.com(212) 448-0702