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                          [Clifford Chance Letterhead]

June 28, 2006

Securities and Exchange Commission
Judiciary Plaza
100 F Street, NE
Washington, D.C. 20549
Attention: Vincent Di Stefano, Division of Investment Management

RE:  PROSPECT ENERGY CORPORATION
     FILE NOS. 333-132575 AND 814-659

Dear Mr. Di Stefano:

     Thank you for your comments dated April 28, 2006, and additional comments
provided orally on May 11, 2006, regarding the registration statement on Form
N-2 (the "Registration Statement") for Prospect Energy Corporation (the "Fund")
filed with the Securities and Exchange Commission (the "Commission") on March
20, 2006. The Registration Statement relates to the shelf offering of the Fund.
Below, we describe the changes made to the Registration Statement in response to
the Staff's comments and provide any responses to or any supplemental
explanations of such comments, as requested.

     The Fund has considered the Staff's comments and has authorized us to make
on its behalf the responses and changes discussed below to the Registration
Statement. These changes are reflected in the pre-effective amendment No. 1 to
the Registration Statement, which will be filed via EDGAR on or about June 28,
2006.

COMMENTS TO PROSPECTUS
----------------------

COMMENTS TO COVER
-----------------

COMMENT 1.  PLEASE CLEARLY DISTINGUISH THE FUND, ITS SHAREHOLDERS AND INVESTMENT
            ADVISER THROUGHOUT THE DOCUMENT.

                    Response 1. We respectfully acknowledge this comment, but
                    defined terms for the Fund and the Investment Adviser are
                    currently set forth on the cover and page 1 of the
                    prospectus. Shareholders and potential investors are
                    identified as "you" or clearly identified as such.

COMMENT 2.  PLEASE CONFIRM THAT THE BOLDED TEXT ON THE FIRST PAGE OF THE
            PROSPECTUS IS LOCATED ON THE OUTSIDE FRONT COVER PAGE. ALSO, PLEASE
            UN-BOLD ALL BUT THE FIRST TWO SENTENCES OF THE TEXT CURRENTLY
            BOLDED.

                    Response 2. The applicable text has been unbolded
                    accordingly and we confirm that the bolded text appears on
                    the front cover of the prospectus.

COMMENT 3.  PLEASE INCLUDE THE PRICING TABLE REQUIRED BY ITEM 1.g. OF FORM N-2

                    Response 3. As currently disclosed on the cover of the
                    prospectus, material terms relating to the offering of the
                    subject securities, such as the pricing table required by
                    Item 1.g of Form N-2, will be included in the prospectus
                    supplement to be subsequently filed for each "take-down"
                    registration of securities.

COMMENT 4.  PLEASE DISCLOSE THAT AN INVESTMENT IN THE FUND PRESENTS A HEIGHTENED
            RISK OF TOTAL LOSS OF INVESTMENT AND MAKE PROMINENT THE DISCLOSURE
            THAT THE INVESTMENT FUNDS ARE SUBJECT TO SPECIAL RISKS. SEE
            ITEM 1.1.j. OF FORM N-2.

                    Response 4. The language has been clarified, and made
                    prominent, accordingly.

COMMENT 5.  PLEASE CONFIRM THAT ANY WARRANTS THE FUND MAY ISSUE MEET THE
            REQUIREMENTS OF SECTION 61(a)(3) (A) OF THE INVESTMENT COMPANY ACT
            OF 1940.

                    Response 5. Any warrants that the Fund may issue will meet
                    the requirements of Section 61(a)(3)(A) of the Investment
                    Company Act of 1940 (the "1940 Act").

COMMENT 6.  THE REGISTRATION STATEMENT PERTAINS TO A SHELF OFFERING, WHICH MAY
            BE COMMON STOCK, PREFERRED STOCK, WARRANTS OR DEBT SECURITIES, BUT
            DOES NOT DISCLOSE THE MATERIAL TERMS OF THESE SECURITIES. PLEASE
            REVISE THE DISCLOSURE TO INCLUDE THE MATERIAL TERMS OF THE SUBJECT
            SECURITIES. PLEASE EXPLAIN TO US HOW THE FUND IS ELIGIBLE TO MAKE A
            SHELF OFFERING PURSUANT TO RULE 415 UNDER THE SECURITIES ACT OF
            1933.

                    Response 6. We respectfully acknowledge the comment, but
                    believe the current disclosure on the cover of the
                    prospectus, clearly states that a prospectus supplement
                    relating to any offering of the subject securities will
                    contain all the material terms of the subject securities.

                         As a business development company ("BDC"), the Fund is
                    required to register its securities on Form N-2 and is not
                    permitted to file a registration statement or any other
                    form. However, Rule 415(a)(1)(x) does not require the
                    subject securities to be registered on Form S-3; it is
                    sufficient that securities be "qualified" to be registered
                    on Form S-3. Accordingly, a BDC, such as the Fund, that
                    meets the requirements of Form S-3 is permitted to offer and
                    sell its securities pursuant to Rule 415(a)(1)(x) even
                    though it is required to register its securities on Form N-2
                    and a number of BDCs have done so. Further, the Staff of the
                    Commission has permitted a closed-end investment company to
                    conduct a shelf offering on Form N-2 in accordance with Rule
                    415(a)(1)(x) if such company's common stock is "qualified to
                    be registered" on Form S-3. See SEC No-Action letter,
                    Pilgrim America Prime Rate Trust (available May 1, 1998).
                    The Fund confirms that its common stock is qualified to be
                    registered on Form S-3.

                                       2

COMMENTS TO SUMMARY
-------------------

COMMENT 7.  PLEASE SUMMARIZE THE RISKS OF INVESTING IN THE ENERGY SECTOR.

                    Response 7. The language has been added accordingly.

COMMENT 8.  DISCLOSURE IN THE SECTION TITLED "THE INVESTMENT ADVISER" INDICATES
            THE FUND WILL PAY THE ADVISER AN INVESTMENT MANAGEMENT FEE BASED ON
            GROSS ASSETS "(INCLUDING ANY AMOUNTS BORROWED)." PLEASE CLARIFY THAT
            AMOUNTS BORROWED TO PAY CURRENT LIABILITIES, RATHER THAN FOR
            LEVERAGE, WILL NOT BE INCLUDED IN THE CALCULATION OF THE INVESTMENT
            MANAGEMENT FEE.

                    Response 8. The language has been revised to be consistent
                    with the Fund's management agreement.

COMMENTS TO FEES AND EXPENSES
-----------------------------

COMMENT 9.  SINCE THE FUND MAY BORROW DURING THE CURRENT FISCAL YEAR, PLEASE
            MOVE THE CURRENT ANNUAL EXPENSES INFORMATION FROM THE FEE TABLE TO
            FOOTNOTE (7), AND INSERT IN ITS PLACE THE ANNUAL EXPENSES
            INFORMATION NOW FOUND IN FOOTNOTE (7).

                    Response 9. The table has been modified accordingly.

COMMENT 10. PLEASE DELETE FROM THE FIRST SENTENCE OF FOOTNOTE (8) THE TERM
            "FUTURE ANNUAL EXPENSES" AND INSERT IN ITS PLACE "EXPENSES DURING
            CURRENT FISCAL YEAR."

                    Response 10. The language has been changed accordingly.

COMMENT 11. THE LAST SENTENCE OF FOOTNOTE (9) STATES THAT IN THE EVENT THE TOTAL
            ANNUAL EXPENSE PERCENTAGE WAS CALCULATED AS A PERCENT OF TOTAL
            ASSETS, TOTAL ANNUAL EXPENSES WOULD BE 5.25% OF NET ASSETS. THIS
            DOES NOT MAKE SENSE. PLEASE CLARIFY.

                    Response 11. The language has been changed to reflect "total
                    annual expenses would be 7.06% of total assets."

COMMENT 12. PLEASE REMOVE THE FOOTNOTES FROM BETWEEN THE FEE TABLE AND EXAMPLE
            AND INSERT THEM IMMEDIATELY AFTER THE EXAMPLE.

                    Response 12. We respectfully acknowledge the comment, but
                    believe the current placement of the footnote is
                    appropriate. We believe that to move the footnotes to below
                    the Example would diminish the impact of the information and
                    would make it more difficult for a shareholder to locate the
                    footnotes.

                                       3

COMMENT 13. THE PROSPECTUS IN NARRATIVE TEXT DISCLOSES THAT THE CAPITAL GAIN
            INCENTIVE FEE IS CALCULATED BY TAKING THE NET PROCEEDS FROM THE SALE
            OF AN ASSET MINUS THE PURCHASE PRICE. THE EXAMPLES OF HOW THE
            INCENTIVE FEE IS DETERMINED, HOWEVER, DEDUCT FROM THE SALES PRICE
            THE MOST RECENT FAIR MARKET VALUATION (NOT THE PURCHASE PRICE).
            PLEASE RECONCILE THE DISCLOSURE.

                    Response 13. The disclosure in the examples has been revised
                    to make it clear that, when a security is sold for a gain in
                    a circumstance in which the Fund experiences an unrealized
                    loss on that security in a fiscal year prior to the fiscal
                    year of the sale, the base upon which the incentive fee is
                    calculated is increased by two elements: first, the amount
                    of the gain realized on that sale (i.e., the difference
                    between the purchase price and the sale price of the
                    security), and second, the amount, if any, of the unrealized
                    loss incurred on the security in a prior fiscal year but
                    only to the extent that that unrealized loss was used to
                    offset realized gains in that prior fiscal year in computing
                    the incentive fee. We believe that this change to the
                    disclosure in the examples will provide a better
                    understanding of the elements that go into the incentive fee
                    calculation, consistent with the narrative disclosure
                    regarding the incentive fee calculation that indicates that
                    the incentive fee is based on the aggregate realized gains,
                    less the aggregate realized losses and less the aggregate
                    unrealized losses of the Fund.

COMMENT 14. PLEASE DISCLOSE THAT THE DETERMINATION OF FAIR VALUE, AND THUS THE
            AMOUNT OF UNREALIZED LOSSES THE FUND MAY INCUR IN ANY YEAR, IS TO A
            DEGREE SUBJECTIVE, AND THE ADVISOR HAS A CONFLICT OF INTEREST IN
            MAKING THE DETERMINATION. SPECIFICALLY, THE AMOUNT OF THE ADVISOR'S
            COMPENSATION UNDER THE INCENTIVE FEE IS DUE, IN PART, TO THE AMOUNT
            OF UNREALIZED DEPRECIATION ACCRUED BY THE FUND. PLEASE ADVISE THE
            STAFF WHETHER THE BOARD WILL ACTIVELY MONITOR THIS CONFLICT OF
            INTEREST AND THE OPERATION OF THE PERFORMANCE FEE.

                    Response 14. The disclosure has been added accordingly in
                    the sections "Risk Factors -- Potential conflicts of
                    interest could impact our investment returns" and "Most of
                    our portfolio investments are recorded at fair value as
                    determined in good faith by our Board of Directors and, as a
                    result, there is uncertainty as to the value of our
                    portfolio investment." The Fund's board of directors
                    monitors this conflict of interest by valuing the securities
                    quarterly and relies on input from a third party valuation
                    firm and the audit committee, as well as the adviser. In
                    addition, the board monitors the calculation of the
                    incentive fee quarterly. See also, Response 17.

COMMENT 15. PLEASE NOTE THAT THE STAFF ANTICIPATES PROVIDING ADDITIONAL COMMENTS
            PERTAINING TO THE FUND'S FINANCIAL STATEMENTS UNDER SEPARATE COVER.
            THE FOLLOWING COMMENTS WERE PROVIDED ORALLY BY MR. DESTEFANO ON
            BEHALF OF THE ACCOUNTING DIVISION:

                                       4

COMMENT 15A. REGARDING FOOTNOTE (5) OF THE FEE TABLE, PLEASE CLARIFY HOW THE
             BASE MANAGEMENT FEE THAT IS BASED ON "GROSS" ASSETS, IS IDENTIFIED
             ON THE FEE TABLE AS A CALCULATION OF "NET" ASSETS.

                    Response 15a. Footnote (5) has been revised to reflect that
                    the base management fee is based on gross assets, which
                    includes any amount borrowed, i.e., total assets without
                    deduction for any liabilities.

COMMENT 15B. REGARDING FOOTNOTE (5) OF THE FEE TABLE, PLEASE DELETE THE LAST TWO
             SENTENCES AND MOVE THEM TO THE TEXT OF THE PROSPECTUS, WHERE
             APPLICABLE, AS WE BELIEVE IT IS MISLEADING AS IT SEEMS UNLIKELY AT
             THE PRESENT TIME THAT THE FUND WILL REACH THE REQUISITE THRESHOLD.

                    Response 15b. The disclosure has been deleted accordingly
                    and is already described in the section "Investment Advisory
                    Agreement."

COMMENT 15C. REGARDING FOOTNOTE (6) OF THE FEE TABLE, IN LIGHT OF THE STATEMENT
             "IN JANUARY 2006, WE PAID AN INCENTIVE FEE OF $507,864," PLEASE
             REFLECT PAYMENT OF SUCH INCENTIVE FEE IN THE FEE TABLE (IT
             CURRENTLY STATES 0.00%).

                    Response 15c. The disclosure has been revised accordingly.

COMMENT 15D. REGARDING FOOTNOTE (6) OF THE FEE TABLE, PLEASE CLARIFY THE MEANING
             OF THE FIFTH SENTENCE. IS THE VOLUNTARY AGREEMENT A WAIVER? PLEASE
             CONFIRM THAT THE INCENTIVE FEE DISCLOSED IN THE FEE TABLE IS
             "GROSS" OF ANY WAIVERS.

                    Response 15d. The voluntary agreement referred to in
                    footnote (6) is not a fee waiver but rather, as described, a
                    different hurdle rate which may be greater or lesser than
                    the 1.75% rate depending on prevailing interest rates from
                    time to time. We confirm that the incentive fee set forth in
                    the body of the fee table is not net of any fee waivers.

COMMENTS 15E. REGARDING FOOTNOTE (6) OF THE FEE TABLE, PLEASE PRESENT THE
              EXAMPLES OF HOW THE INCENTIVE FEE IS CALCULATED, USING ACTUAL
              NUMBERS.

                    Response 15e. The disclosure has been revised accordingly.

COMMENTS 15F. REGARDING THE FEE TABLE GENERALLY, THE FINANCIAL HIGHLIGHTS SHOW
              EXPENSES OF 6.95%, PLEASE EXPLAIN HOW TOTAL ANNUAL EXPENSES
              (ESTIMATED) IN THE FEE TABLE ARE ONLY 3.47%.

                    Response 15f. The revised fee table shows expenses of 9.18%;
                    greater than the 6.96% expense ratio shown in the financial
                    highlights for the nine months ended March 31, 2006
                    primarily due to the inclusion of interest expense in the
                    fee table. The expense ratio in the financial highlights
                    does not reflect interest expense as the Fund had not
                    borrowed any amount as of March 31, 2006.

                                       5

COMMENTS 15G. REGARDING FOOTNOTE (7) OF THE FEE TABLE, IF THERE IS AN INTENT TO
              INCUR INDEBTEDNESS, YOU MUST DISCLOSE INTEREST PAYMENTS ON
              BORROWED FUNDS AS AN ANNUAL EXPENSE IN THE FEE TABLE (CURRENTLY
              STATES 0.00%).

                    Response 15g. The revised fee table discloses interest
                    payments. The table in footnote (7) as been revised to
                    assume that the Fund did not incur indebtedness, therefore
                    it shows interest expenses of "none."

COMMENTS 15H. REGARDING APPENDIX F-7 (STATEMENT OF OPERATIONS) THE LINE ITEM FOR
              "NET UNREALIZED APPRECIATION (DEPRECIATION) FOR THE 3 MONTHS EN