NEW YORK, NY — (MARKET WIRE) — 11/01/06 — Prospect Energy Corporation(NASDAQ: PSEC) (“Prospect”) announced today that it has made a $15.5million senior secured investment in TLOGH, L.P. (“TLOGH”), a gasdevelopment company based in Dallas, Texas.
Led by Samuel Dabney Ware, a real estate developer and investor based inDallas since 1980, TLOGH holds a majority working interest in mineralleases totaling more than 1,918 acres in the Lakes of Bird’s Fort areawithin the city limits of Arlington, Texas, in Tarrant County, which isconsidered one of the most productive “core” counties for production fromthe Barnett Shale. The Barnett Shale is one of the largest unconventionalgas plays in North America. TLOGH’s acreage position, on whichthree-dimensional seismic has been shot, has more than 400 feet of BarnettShale thickness, at least 20 horizontal well drilling locations, and readypipeline access.
TLOGH has entered into an operating agreement with Star of Texas EnergyServices, Inc. (“Star”). Led by Ray Ledesma, Star has drilled and completedapproximately 80 Barnett Shale wells. Star has contracted with leadingservice providers for a multiple well drilling and completion program,including Nick Steinsberger of Steinsberger Tight Gas Consultants, whohelped to pioneer drilling and completion techniques in the Barnett Shalewhile at Mitchell Energy.
Prospect’s senior debt investment in TLOGH, which is being invested in amultiple well drilling and completion program, is secured by all assets ofTLOGH. Prospect received an overriding royalty interest in TLOGH as part ofits investment. Petro Capital VII, L.P., an affiliate of Dallas merchantbank, Petro Capital Advisors, LLC, also co-invested with Prospect in thetransaction. Prospect expects to fund an additional $14.5 million intoTLOGH upon successful completion of target milestones by TLOGH.
“Prospect has the expertise and track record to be the ideal financingpartner for our company,” said Mr. Ware, Chief Executive Officer of TLOGH.
“We have a continuing interest in funding unconventional gas developmentprojects in resource plays such as the Barnett Shale and elsewhere,” saidDavid Belzer, a senior investment professional with Prospect CapitalManagement. “TLOGH meets our stringent investment criteria, which startswith an experienced operating team.”
Separately, Prospect announced today that it has invested an additional$5.0 million for drilling purposes into Conquest Cherokee LLC, an oil andgas production company focused on coalbed methane production in theCherokee Basin in Kansas.
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:Grier EliasekPresident and Chief Operating Officergrier@prospectstreet.com(212) 448-9577