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Prospect Energy Corporation Makes Senior Secured Debt Investment in Barnett Shale Gas Development Company TLOGH, L.P. and Announces Follow-on Financing
| Source: Prospect Energy Corporation
NEW YORK, NY -- (MARKET WIRE) -- November 1, 2006 -- Prospect Energy Corporation
(NASDAQ : PSEC ) ("Prospect") announced today that it has made a $15.5
million senior secured investment in TLOGH, L.P. ("TLOGH"), a gas
development company based in Dallas, Texas.
Led by Samuel Dabney Ware, a real estate developer and investor based in
Dallas since 1980, TLOGH holds a majority working interest in mineral
leases totaling more than 1,918 acres in the Lakes of Bird's Fort area
within the city limits of Arlington, Texas, in Tarrant County, which is
considered one of the most productive "core" counties for production from
the Barnett Shale. The Barnett Shale is one of the largest unconventional
gas plays in North America. TLOGH's acreage position, on which
three-dimensional seismic has been shot, has more than 400 feet of Barnett
Shale thickness, at least 20 horizontal well drilling locations, and ready
pipeline access.
TLOGH has entered into an operating agreement with Star of Texas Energy
Services, Inc. ("Star"). Led by Ray Ledesma, Star has drilled and completed
approximately 80 Barnett Shale wells. Star has contracted with leading
service providers for a multiple well drilling and completion program,
including Nick Steinsberger of Steinsberger Tight Gas Consultants, who
helped to pioneer drilling and completion techniques in the Barnett Shale
while at Mitchell Energy.
Prospect's senior debt investment in TLOGH, which is being invested in a
multiple well drilling and completion program, is secured by all assets of
TLOGH. Prospect received an overriding royalty interest in TLOGH as part of
its investment. Petro Capital VII, L.P., an affiliate of Dallas merchant
bank, Petro Capital Advisors, LLC, also co-invested with Prospect in the
transaction. Prospect expects to fund an additional $14.5 million into
TLOGH upon successful completion of target milestones by TLOGH.
"Prospect has the expertise and track record to be the ideal financing
partner for our company," said Mr. Ware, Chief Executive Officer of TLOGH.
"We have a continuing interest in funding unconventional gas development
projects in resource plays such as the Barnett Shale and elsewhere," said
David Belzer, a senior investment professional with Prospect Capital
Management. "TLOGH meets our stringent investment criteria, which starts
with 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 and
gas production company focused on coalbed methane production in the
Cherokee Basin in Kansas.
ABOUT PROSPECT ENERGY CORPORATION
Prospect Energy Corporation (www.prospectenergy.com) is a closed-end
investment company that lends to and invests in energy-related businesses.
Prospect Energy's investment objective is to generate both current income
and capital appreciation through debt and equity investments.
Prospect Energy has elected to be treated as a business development company
under the Investment Company Act of 1940 ("1940 Act"). We are required to
comply with a series of regulatory requirements under the 1940 Act as well
as applicable NASDAQ, federal and state laws and regulations. We have
elected to be treated as a regulated investment company under the Internal
Revenue Code of 1986. Failure to comply with any of the laws and
regulations that apply to Prospect Energy could have a material adverse
effect on Prospect Energy and its shareholders.
This press release contains forward-looking statements within the meaning
of the Private Securities Litigation Reform Act of 1995. Any such
statements, other than statements of historical fact, are likely to be
affected by other unknowable future events and conditions, including
elements of the future that are or are not under the Company's control, and
that the Company may or may not have considered; accordingly, such
statements cannot be guarantees or assurances of any aspect of future
performance. Actual developments and results are highly likely to vary
materially from these estimates and projections of the future. Such
statements speak only as of the time when made, and the Company undertakes
no obligation to update any such statement now or in the future.