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Hyperdynamics Corporation (OTCMKTS:HDYN) Is Today's Oil & Gas Focus Stock

Hyperdynamics Corporation (OTCMKTS:HDYN) Is Today's Oil & Gas Focus Stock
Written by
Jarrod Wesson
Published on
September 6, 2017
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Hyperdynamics Corporation (OTCMKTS:HDYN) drew the attention of the market at the end of August 2017, when its share price spiked sharply from $1.5 to over $2 a share. The astonishing move was accompanied by large volume; more than 200,000 shares changed hands some days. Have a look at the share price action: 1 year chart for HDYNWhat happened?The reason for the share price increase was an announcement regarding the drilling status on the Fatala-1 exploration well offshore the Republic of Guinea. The good news was that the test provided positive confirmation that the geologic model being utilized in the well planning and design is accurate. We will provide you all the details in this article.BusinessHDYN is an exploration firm involved in drilling for oil and natural gas. It is a Houston, Texas based firm started in 1983. For over 35 years, the firm has managed to run its business successfully and is expanding into various subsidiaries. By exploring internationally for new sources of oil and gas, the company has earned an international reputation over the years.In the past few month, HDYN struck a deal with SAPETRO to drill with the approval from the Government of Guinea. This will be a joint venture with SAPETRO. The joint objective of the Protocol is to drill the Fatala well in the most efficient manner and, in the case of discovery and with unanimous agreement, to proceed with drilling an optimal number of follow-up exploration wells within the terms of the PSC Second Amendment. Drilling of the Fatala well commenced on May 30, 2017.Recent DevelopmentsWe believe that the most interesting announcements made recently are the following.On March 13, 2017, the company announced that its wholly owned subsidiary, SCS Corporation Ltd. ("SCS"), executed on March 10, 2017, in Conakry, a Tri-party Protocol "Protocol" with the Government of the Republic of Guinea and South Atlantic Petroleum ("SAPETRO"). Mr Leonard, stated:

"I am delighted that all parties involved have agreed to move forward with drilling the Fatala well for the benefit of the Republic of Guinea and all other stakeholders. I am also thankful for the Government of Guinea's continued confidence in Hyperdynamics, and all parties involved look forward to the opportunity to drill the Fatala well. The commitment by SAPETRO to the Guinea project represents a big step forward in sharing project-related costs and risks with a prominent industry player who recognizes SCS' Guinea concession's economic attractiveness and geologic prospectively." Source

It also revealed that upon completion of transaction documents and receipt of the requisite approvals by the Government of Guinea, SAPETRO would provide $5 million Security Instrument as required under the PSC Second Amendment.On Aug 28, 2017, the company provided an update on the drilling status on the Fatala-1 exploration well offshore the Republic of Guinea. The recent drilling on the Republic of Guinea is potentially set above the hydrocarbon-bearing interval at a total depth of approximately 4,900 meters. As we said, the geologic model designed has been finally validated. Ray Leonard, President and Chief Executive Officer of Hyperdynamics, quoted:

"I am pleased with our excellent operational progress as well as with early indications that support the geophysical model of the prospect. I am also happy to report that we are finished with the top portion of the Fatala-1 well, which is the deepest water well ever drilled offshore Africa”. Source

Insider buyingWe had a look at the most recent acquisitions made by insiders. We found that the CEO and President acquired a large amount of shares on August 11, 2017. Additionally, other shareholders, such as PACIFIC DRILLING S.A., also acquired shares on August 29, 2017. Furthermore, several market participants also acquired share by private placement offering. In total, the company received an aggregate of $2,599,531.46 in gross cash proceeds before deducting placement agent fees and expenses. Solid Financial SituationWe had a look at the balance sheet of the company and found that the company has a large amount of cash.Period Ending6/30/20166/30/20156/30/2014Current Assets (All numbers in thousands)Cash And Cash Equivalents10,32718,37435,270Short Term Investments---Net Receivables--65Inventory---Other Current Assets1,3001,251846Total Current Assets11,62719,62536,181Long Term Investments---Property Plant and Equipment5114,47114,657Goodwill---Intangible Assets---Accumulated Amortization---Other Assets---Deferred Long Term Asset Charges---Total Assets11,67834,09650,838SourceAdditionally, the company does not have long term debt and very little liabilities.Accounts Payable (All numbers in thousands)1,7431,6685,662Short/Current Long Term Debt---Other Current Liabilities---Total Current Liabilities1,7431,6685,662Long Term Debt---Other Liabilities---Deferred Long Term Liability Charges---Minority Interest---Negative Goodwill---Total Liabilities1,7431,6685,662SourceConclusionCurrently trading with a market cap of $35 million, HDYN is an exciting story among small caps. The company is releasing good news regarding its project in Republic of Guinea. The project is still in an exploratory stage, thus we believe that the company will provide more updates in near future. For this reason, we believe that following the company's news will be very beneficial. We will be updating our subscribers as soon as we know more. For the latest updates on HDYN, sign up below!Image courtesy of Karen Chappell via FlickrDisclosure: We have no position in HDYN and have not been compensated for this article.

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