Hyperdynamics Corp (HDYNQ)

[thirdcoaster]

ASM Notes
*On the technical piece Ray used words like "evidence" and "indicate". He did not use absolute words like "proof" that Rail inappropriately uses in his straw-man counter arguments to create geologic doubt.

Technical:

-No real new major news

-Improved eSeis interpretation and NSAI probabilities, which now include analysis on Bamboo. Ray said Bamboo eSeis was in process, but it was also later mentioned to be an improvement with probability listed in presentation (maybe a miss-speak, I dont see Bamboo eSeis number).

-Evidence of Oil Water Contact at 5200M that conforms with every other seismic indicator which puts field at an est. 600MB column with seal.

-Lower interval velocity indicating oil saturated sand vs water sat. sand.

-Despite all this evidence, other operators did not meet PSC timeline so it was a "non-starter".

-After Fatala, Bamboo is the next target as further exploration is pretty much contingent on success. Ray was finally transparent on this being a one shot play.

-Sierra Leon and Liberia contain metamorphic rock which degrades over time making a poor reservoir as opposed to the high quality quart sandstone offshore Guinea (as evidenced by 1977 well).

-Gas fields are present with elevated poor pressure visible in sands.

-Explained "amplitude vs offset" (AVO) referencing how the Fatala downdip shows a strong amplitude down to 5200M where it stops and is offset (distance between source and receiver) by the appearance of oil.

Operations:

-1 firm well, 3 optional wells

-Scirocco switch is beneficial with FULL dual activity plus an extra 2K FT in water depth capability.

-MSA awarded to SLB that covers 8 services over 9 contracts, and they were also the low bidder.

-LLI is enough for 2 wells, and is now stored at base in Guinea.

-On schedule to be in "Guinea Waters" next month per terms of "commence drilling ops" by May 30th per PSC 2nd amendment. (not "spud" by May)

-Aviation and Vessel contracting underway

-May finish mobilization in Guinea instead of Abidjan depending on funding and requirement to be in Guinea waters on time.

Funding:

-Mentioned prior shale expenditure challenge for partnering.

-Needs $11M more (78% funded)

-The firm SAPetro commitment, is a credit to Sergey

-Working on final convertible preferred equity raise, followed by initial straight equity raise for rest of funding.

-Expected to complete registration of conv. preferred with 1 week left in April.

-New issue of approx. $15-18M straight equity (cash value, not # of shares) expected to be registered and executed by end of May-early June (presumably when rig is offshore Guinea).

-Catalyst Securities and Sergey to work on underwriting and engagement with investors.

Q&A:

-Anticipate full 50% interest going into Fatala and relinquish interest in development if successful. Used Kosmos example (i.e. give up 80% int. to get $200M cash+ $200M exp. +$500M dev.) OR become a target for buyout at right price.

-Existing obstacles for Scirocco to set sail?

-staffing Guinea personnel

-complete remaining contracting and mobilization to meet May 30th deadline.

-When will equity raise happen?

-refer to comments above on funding

-complete by late May-early June

-Mentioned "immediate positive response" from. unnamed player.

-Mentioned formality of finalization of SAPetro deal by presidential decree being effectively a contingency for the future equity placements.

-Mentioned both Ray and Sergey have put a lot of own money on the line.

-One audience member questioned the math on remaining funds needed, Ray corrected to substantiate his original comments leaving $11M left.

-One audience member asked question about timeline to production and FPSO vs pipeline. Ray explained first oil was 4 years out, that pipeline would not be necessary for export, but that this venture would likely come to fruition in appraisal long before that if successful.

-When asked what the cost of Bamboo would be, Ray said $10M incurred on shore-base and rig infrastructure leaving $40M, i.e. $20M for HDYN. Also pointed out that sp would be much higher providing for much less dilutive offering. Sergey said it takes 1-2 weeks for that equity raise.

-Sergey mentioned multiple closings on the straight equity raise going forward, same process as the one coming up for Fatala.


http://files.shareholder.com/downloads/HDY/3819657246x0x937926/B1C0EEF1-EB51-4DCE-BFF9-320C9E53D4EA/AnnualShareholderMeeting2.pdf


My personal take is that we will hear about:
1) The presidential decree formalizing the SAPetro deal
2) Completion of the conv. pref. offering before end of April
3) Vessel/Aviation contracts
4) Scrirocco set sail towards ROG
5) Completion of offering for remaining Fatala funding
6) Spud