EXHIBIT 10.2 INDEMNITY AGREEMENT

EXHIBIT 10.2

INDEMNITY AGREEMENT

This Indemnity Agreement (this "Agreement") is entered into as of December

22, 2004, by and between PROSPECT ENERGY CORPORATION, a Maryland corporation

(the "Indemnitor"), and FIRST AMERICAN BANK, SSB, a state savings bank, as

Administrative Agent (in such capacity, the "Administrative Agent") for the

Lenders.

W I T N E S S E T H:

WHEREAS, Gas Solutions II Ltd., a Texas limited partnership and

successor-by-conversion to MNW Partners, LLC, a Texas limited liability company

(the "Borrower"), is engaged in the business of processing natural gas and

activities related or ancillary thereto and has purchased two natural gas

processing plants and related interests pursuant to the Gas Solutions

Acquisition Agreement as defined in the Credit Agreement referenced below;

WHEREAS, concurrently herewith, the Borrower is entering into that certain

Credit Agreement, dated as of even date herewith (the "Credit Agreement"), with

First American Bank, SSB, as administrative agent, and the lenders from time to

time parties thereto (the "Lenders"), pursuant to which the Lenders will make a

term loan to the Borrower in an aggregate principal amount not to exceed

$12,500,000 (the "Loan");

WHEREAS, the Borrower is an indirect wholly-owned Subsidiary of the

Indemnitor;

WHEREAS, as a condition precedent to the making of the Loan and to the

effectiveness of the Credit Agreement, the Administrative Agent has requested,

and the Indemnitor has agreed, to execute and deliver this Agreement;

WHEREAS, the Indemnitor has duly authorized the execution, delivery and

performance of this Agreement; and

WHEREAS, it is in the best interests of the Indemnitor to execute this

Agreement inasmuch as the Indemnitor will derive substantial direct and indirect

benefits from the Loan made to the Borrower by the Lenders pursuant to the

Credit Agreement.

NOW THEREFORE, in order to induce the Lenders to enter into the Credit

Agreement, the parties hereto, in consideration of the mutual agreements herein

set forth and for other good and valuable consideration, the receipt of which is

hereby acknowledged, agree as follows:

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ARTICLE 1

DEFINITIONS

Section 1.1 Certain Terms. The following terms (whether or not underscored)

when used in this Agreement, including its preamble, recitals, exhibits and

schedules shall have the following meanings (such definitions to be equally

applicable to the singular and plural forms thereof):

"Administrative Agent" is defined in the preamble.

"Agreement" is defined in the preamble.

"Applicable Law" means any applicable code, statute, law, common law, rule,

regulation, order, ordinance, judgment, decree, order, consent order, stipulated

agreement, writ or injunction of any Governmental Entity.

"Bankruptcy Event of Default" means an event of default of the type

described in clause (d) of the definition of "Event of Default" in the Security

Agreement.

"Borrower" is defined in the first recital.

"Control Agreement" means that certain Deposit Account Control Agreement

dated as of even date herewith, by and among the Indemnitor, the Administrative

Agent and U.S. Bank National Association, as account agent.

"Credit Agreement" is defined in the second recital.

"Governmental Entity" means any domestic or foreign court or tribunal in

any domestic or foreign jurisdiction or any federal, state, municipal or local

government or other governmental body, agency, authority, district, department,

commission, board, bureau, or other instrumentality, arbitrator or arbitral body

(domestic or foreign), including any joint action agency, public power

authority, public utility district, or other similar political subdivision.

"Indemnifiable Claim" means any Loss suffered or incurred by an Indemnitee

that meets both of the following conditions:

(a) the Borrower and/or an Indemnitee has been joined as a defendant in the

Prospect Lawsuit; and

(b) as a result of the entering of a judgment, or of a temporary

restraining order, injunction or other court order with respect to, or the

settlement of, or otherwise as a result of the Prospect Lawsuit, (1) the

Borrower fails to pay in full the Obligations; and (2) the Lender Parties are

unable to collect or receive

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or retain, following their good faith efforts to exercise their rights and

remedies as secured creditors under the Loan Documents, payment in full of the

Obligations;

provided, however, that, for purposes of clause (b), it will be presumed that,

if (i) the Borrower makes a payment in satisfaction of a judgment in, or

settlement of, the Prospect Lawsuit and (ii) the Borrower thereafter fails to

pay in full the Obligations, then an amount equal to the lesser of (y) such

payment and (z) the shortfall in Borrower's payment of the Obligations is deemed

to be "as a result" of the Prospect Lawsuit.

"Indemnitee" is defined in Section 2.1.

"Indemnitor" is defined in the preamble.

"Lenders" is defined in the second recital.

"Lender Party" means, as the context may require, the Administrative Agent

or any Lender, and each of its successors, transferees and assigns.

"Loan" is defined in the second recital.

"Loan Documents" shall have the meaning given to such term in the Credit

Agreement.

"Loss" is defined in Section 2.1.

"Obligations" shall have the meaning given to such term in the Credit

Agreement, and means the amounts owed and owing by the Borrower to the Lender

Parties under the Credit Agreement and other Loan Documents. For sake of

clarity, the term "Obligations" shall include the costs and expenses (including

reasonable attorneys' fees) incurred by an Indemnitee as a result of such

Indemnitee being joined in the Prospect Lawsuit.

"Prospect Lawsuit" means that certain action styled Dallas Gas Partners, LP

v. Prospect Energy Corporation, Case No. G-04-669, filed on November 30, 2004,

and now pending in the United States District Court for the Southern District of

Texas, Galveston Division, and any other lawsuit asserting claims that are

raised or could be raised in such action.

"Security Agreement" means that certain Deposit Account Security Agreement

dated as of even date herewith, made by the Indemnitor in favor of the

Administrative Agent and the Lender Parties.

Section 1.2 Terminology. Unless the context of this Agreement clearly

requires otherwise, (a) pronouns, wherever used herein, and of whatever gender,

shall include natural persons and corporations and associations of every kind

and character, (b) the singular shall include the plural and the plural shall

include the singular wherever and as often as may be appropriate, (c) the word

"include"

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or "includes" or "including" shall mean "including without limitation", and (d)

the words "hereof", "herein", "hereunder", and similar terms in this Agreement

shall refer to this Agreement as a whole and not any particular section or

article in which such words appear. The section, article and other headings in

this Agreement are for reference purposes and shall not control or affect the

construction of this Agreement or the interpretation hereof in any respect.

Article, section, subsection, schedule and exhibit references are to this

Agreement unless otherwise specified. All accounting terms not specifically

defined herein shall be construed in accordance with GAAP.

ARTICLE 2

INDEMNIFICATION

Section 2.1 Indemnification by Indemnitor. Subject to the other terms and

limitations of this Agreement, the Indemnitor hereby agrees to indemnify and

hold each Lender Party and their respective directors, officers and employees

(individually, an "Indemnitee" and collectively, the "Indemnitees") harmless

from and against any and all claims, liabilities, losses, damages, costs or

expenses, including reasonable attorneys' fees (individually, a "Loss" and

collectively, the "Losses") that are suffered or incurred by any of them as a

result of an Indemnifiable Claim. THE INDEMNITIES BY THE INDEMNITOR IN FAVOR OF

THE INDEMNITEES IN THIS SECTION 2.1 SHALL BE APPLICABLE NOTWITHSTANDING THAT AN

INDEMNIFIABLE CLAIM OTHERWISE COVERED BY THIS SECTION 2.1 IS ATTRIBUTABLE TO THE

NEGLIGENCE (OTHER THAN GROSS NEGLIGENCE) OF AN INDEMNITEE (WHETHER SUCH

NEGLIGENCE IS SOLE, JOINT, CONCURRENT, ACTIVE OR PASSIVE), ANY PRE-EXISTING

CONDITION OR DEFECT OR ANY FORM OF STRICT LIABILITY. If and to the extent that

the foregoing undertaking may be unenforceable for any reason, the Indemnitor

hereby agrees to make the maximum contribution to the payment and satisfaction

of each of the Indemnifiable Claims which is permissible under Applicable Law.

Section 2.2 Notification to Indemnifiable Claims.

(a) In the event any Indemnitee proposes to assert the right to be

indemnified pursuant to Section 2.1 above with respect to any Indemnifiable

Claim, the Administrative Agent will notify the Indemnitor in writing

thereof, which notification shall include: a certification that (i) such

claim is or may be an Indemnifiable Claim, (ii) a copy of all papers served

or demands received from the plaintiff in the Prospect Lawsuit, and (iii)

the then-estimated amount of the Indemnifiable Claim, together with a

reasonably detailed explanation and calculation of such Indemnifiable

Claim, if such amount can then be calculated.

(b) Notwithstanding the foregoing clause (a), in the event that the

Administrative Agent shall fail to deliver such notice or shall not deliver

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such notice in a timely manner so as to allow the Indemnitor to perform its

obligations hereunder, such failure shall not operate to excuse the

Indemnitor from its obligations under this Agreement but shall reduce the

amount of the Indemnitor's liability under this Agreement to the extent and

only to the extent that such failure shall have resulted in prejudice to

the ability of the Indemnitor to perform its obligations under this

Agreement or in a material increase in the costs thereof to the Indemnitor.

Section 2.3 Optional Assumption of Defense.

(a) At any time after receiving no