I can't reply to private messages. I only have the basic membership Sorry.
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Because there is a cap on the buy-out offer. The higher Aurora goes, the less shares they get. There is some risk involved in getting stuck accepting the offer and subsequently experiencing a drop in the Aurora share price.
There is also the risk of a substantial CMED price drop if the offer is rejected.
"If, on the earlier of the expiry time of the Offer and the date on which all conditions to the Offer have been satisfied, the 20-day volume weighted average price (the "Calculation Date VWAP") of Aurora Shares traded on the TSX is greater than $5.30 per Aurora Share, the number of Aurora Shares that a holder of CanniMed Shares will receive will be calculated by dividing the Cap Price of $24.00 by the Calculation Date VWAP."
More details on the CLNG deal and HDYN's cash position
From page 4 of the 10-K
"The Company intends to use the net proceeds of the stock purchase agreement to pay outstanding obligations."
From pg 12-13
We require additional financing to meet our general and administrative obligations and in order to fulfill our PSC commitments during an appraisal program. We are currently not in a position to predict when, if ever, we will be able to meet those obligations.
The Concession offshore Guinea is our principal asset and we do not have the funds necessary to fulfill the proposed appraisal program under the PSC. On November 14, 2017, we had $0.7 million in unrestricted cash and $9.9 million in current liabilities. In the absence of operating cash flows, in order to meet our current obligations as they become due over the next quarter and 12 months and, if the two-year appraisal period for which we have applied is granted, to be able to continue with our operations, we intend to rely exclusively on issuing equity or debt securities or, alternatively, divestiture of additional participating interests in the Concession.
"While the stock purchase agreement provides that Ray Leonard will remain President, Chief Executive Officer and a director of the Company, and Jason Davis will remain Chief Financial Officer, they may be removed as officers by the board (subject, in the case of Mr. Leonard, to the provisions of his employment agreement), and Mr. Leonard as a director can be removed by, or not re-elected by, the stockholders in accordance with our certificate of incorporation and bylaws and Delaware law. The Company intends to use the net proceeds of the stock purchase agreement to pay outstanding obligations."
Lots of praise in the PR (like any company is going to say anything negative about their purchase, regardless of the value of the company), combined with a comfortable exit for Ray if so desired by the new majority owner.
There's a lot of chatter about share price. To the point of distraction.
Let's say you invest $1000 into company A at a price of $10/share. Your original purchase is 100 shares. Let's say there are 100M shares outstanding, for a total market cap of $1B
Let's say you invest $1000 into company B at a price of $5/share. Your original purchase is 200 shares. Let's say there are 200M shares outstanding, for a total market cap of $1B
Let's say you invest $1000 into company C at a price of $2/share. Your original purchase is 500 shares. Let's say there are 500M shares outstanding, for a total market cap of $1B
Each company increases in value by 25%. Which investment earns you the most money?
Dilution is one method of raising capital to expand a growth company. It certainly has it's advantages and disadvantages. One advantage is it avoids the alternative of taking on a large debt load, which will need to be serviced from future profits (or worse, drain precious capital while the company executes it's growth plan).
Let's say Company A increases it's outstanding share count by 10M shares.
Let's say Company B increases it's outstanding share count by 20M shares.
Let's say Company C increases it's outstanding share count by 50M shares.
In which investment was the dilution of your investment the greatest?
Aurora is certainly not alone in terms of utilizing ongoing dilution to fund growth. Here's what Canopy Growth has been up to (closing share price for corresponding date shown in brackets):
June 30 2014: 37.647M (2.93)
June 30 2015: 50.875M (1.92)
June 30 2016: 103.664M (2.75)
June 30 2017: 163.884M (7.97)
Sources:
June 30 2015 consolidated financial statement (page 2)
June 30 2016 consolidated financial statement (page 3)
June 30 2017 consolidated financial statement (page 2)
Yahoo Finance
Here's what Aurora was up to during the same period:
June 30 2014: 16.146M (0.14)
June 30 2015: 76.936M ($0.30)
June 30 2016: 128.988M ($0.47)
June 30 2017: 279.029M ($2.16)
Sources:
June 30 2015 consolidated financial statement (page 2)
June 30 2016 consolidated financial statement (page 2)
June 30 2017 consolidated financial statement (page 2)
Rather than discuss the number of shares, why not look at what Aurora is doing with the funds they raise. Are they building future earnings potential? Or is the money being frittered away to support a business model with no potential to develop into a profitable company in the near to mid-term? In other words, are the effects of shareholder dilution being positively offset by the ongoing implementation of their growth strategy, or is the cumulative effect of the dilution a net negative?
The main difficulty with the current share value is that many institutional investors have price thresholds, below which they will not invest in a company. $5.00 is one of those thresholds. If Aurora was concerned about attracting institutional investors that are restricted by share price, they could simply invoke a reverse split to decrease the share count/increase the share price.
In the case of a growth company like Aurora, a reverse split is not likely to have any negative repercussions on the share price. In the sense of attracting a larger institutional investor base, it would be a successful strategy. Mind you, with institutional investors come the typical games played by those investors (increased share lending, hedging, etc.). Personally, I'd be quite happy to see Aurora continue it's present course.
10-K for year ending June 30th (due end of Sept) still not filed. 10-Q filing deadline for quarter ending Sept 30th is approaching.
Will the next SEC filing be a late filing notice for the 10-Q or will the 10-K actually appear first?
If both are filed by the 15th, investors will finally be able to see the state of the company after Fatala was drilled. If only the 10-K appears and the 10-Q is late, the financial picture will only be complete as of June 30th.
4 1/2 month old financial information is pretty stale. Mind you, the last financials that were filed date back to March 31st.
It will be a tragic comedy when the overdue 10K finally comes out and attempts are made to spin the June 30th numbers into some semblance of the current situation.
Deadlines come and deadlines go ... and HDYN is still experiencing difficulties getting out 3 1/2 month out of date financials ...
"The registrant is unable to file its Annual Report on Form 10-K for the fiscal year ended June 30, 2017 (the “Report”) by the prescribed date of September 28, 2017, without unreasonable effort or expense, because the registrant needs additional time to complete certain disclosures and analyses to be included in the Report. The registrant intends to file its Report on or prior to the fifteenth (15 th ) calendar day following the prescribed due date."
http://investors.hyperdynamics.com/secfiling.cfm?filingID=1104659-17-59642
The only filing that occurred within 15 calendar days was the following:
Item 1.01
Entry into a Material Definitive Agreement.
On October 6, 2017, Hyperdynamics Corporation’s (the “Company”) wholly owned subsidiary, SCS Corporation Ltd. (“SCS”), entered into a Termination, Settlement and Release Agreement (“Settlement and Release”) with South Atlantic Petroleum Limited (“SAPETRO”) with respect to the remaining outstanding liabilities under the ir Joint Operating Agreement (the “JOA”) and the Production Sharing Contract with the Republic of Guinea (the “PSC”), following SAPETRO’s withdrawal from the JOA. Under the terms of the Settlement and Release, SCS released all claims against SAPETRO under the JOA and the PSC in return for a cash payment of $4,923,931.54, which represents SAPETRO’s unpaid 50% share of estimated remaining expenses relating to the PSC and the JOA through SAPETRO’s withdrawal. SCS and SAPETRO agreed to continue to take all steps to implement SAPETRO’s withdrawal as soon as reasonably practicable and to execute and deliver all necessary instruments and documents to assign SAPETRO’s 50% participating interest in the PSC to SCS in accordance with the JOA.
Item 1.02
Termination of a Material Definitive Agreement.
The information set forth in Item 1.01 above is incorporated herein by reference. Upon SCS’s receipt of the payment referred to in Item 1.01 above, the JOA terminated.
http://investors.hyperdynamics.com/secfiling.cfm?filingID=1104659-17-62165
Just remember that any seismic Total is now examining that was previously shot by HDYN all became the property of the Gov't of Guinea when HDYN surrendered the lease areas. It no longer has any monetary value for HDYN. The same will happen with the seismic as well and well data for the remaining area HDYN held, should Guinea decide not to grant any additional extensions to HDYN.
As to the Total lease area, I overlaid the map provided by Guinea on top of the Map on the HDYN website. The area outlined in red is the area Total is interested in.
This link takes you to that image (sorry had trouble posting it into the message)
http://i64.tinypic.com/33lcto0.jpg
Total swoops in and scoops up the rights to examine the data for a year before making any decisions. Guinea has a new beau taking her to the ball, and his name isn't Ray.
http://www.total.com/en/media/news/press-releases/guinea-total-reinforces-its-exploration-in-west-africa
I thought all the eager new Hyper holders would have been all over this news on Monday.
Since Barchart has become such a popular go-to as an indicator for CorMedix of late, I suggest looking a little deeper into it.
1. Click on the link to go to the Barchart page
https://www.barchart.com/stocks/quotes/CRMD/opinion
2. Click on the "Strength and Direction" button to the right of INDICATOR
3. Ask how anything can be scored as 96% BUY with all those "weak" "weakening" "weakest" and "minimum" indicators.
Not that they published a whole lot, but keep in mind that the well had not yet been drilled as of the end of that reporting period. The real financial damage will show up in the Q1 10-Q. The heavy costs were incurred from July through to the 1st week of September.
Orders to sell into the bid price don't show on L2 because they are filled instantly. There isn't any nefarious motive behind it. Selling into the bid is generally a strong indication that people are exiting. Just as people buying into the ask indicates people are coming on board.
There's been a lot of traders in this stock since the Fatala news broke, playing any bounces. I highly suspect most are now exiting any position they may have still held.
Looks like mostly exiting to me
https://ih.advfn.com/stock-market/USOTC/hyperdynamics-corp-HDYN/trades
I'm not seeing a whole lot of anything based on L2
Free Level 2 if you don't have it
"we believe we have made a petroleum discovery that implies the presence of commercially exploitable resources as specifically defined in our Production Sharing Contract"
Am implication" is not a discovery.
"Hyperdynamics' current 50% partner, South Atlantic Petroleum Ltd., (SAPETRO) notified the Company that it will not apply for an appraisal period extension with the Company and will withdraw from the Joint Operating Agreement (JOA) and the PSC and will assign its 50% interest to the Company free of cost"
SAPetro thinks it's not worth pursuing.
"Hyperdynamics earlier reported that the well did not yield oil shows above oil-based mud signature during drilling or from an analysis of the cuttings taken from the well."
They didn't find oil.
Hopefully enough chase this that any long term investors can get at least a portion of their money out. Good luck to the flippers/bounce players.
Considering that Guinea is holding an offshore auction of exploration blocks which opens to bids in October, the incentive might well be for Guinea to put up the HDYN concession for bid at the same time.
Since the rights for the seismic revert to Guinea once the current concession expires, it would potentially increase the value of any bids. Guinea already has considerable 2D and 3D seismic that was carried out by HDYN on the concession area they already surrendered, in addition to the seismic that was shot as part of North West African Atlantic Margin, independent of the HDYN seismic.
The well log data from Sabu and Fatala, along with the data from the earlier well drilled in the 70's would complete the data package Guinea would be able to include for all bidders. If they extend the lease, the log data from Sabu and Fatala would not be available to potential bidders.
https://newsbase.com/topstories/guinea-launches-offshore-bid-round
It would also allow Guinea to auction off regular-sized blocks, as the current remaining concession contains partial chunks of three different blocks.
If I were Guinea, I'd tell Hyperdynamics to queue up to bid in the upcoming round like any other potential suitor.
We'll know soon enough. The concession lease expires in another 23 hours.
https://www.timeanddate.com/worldclock/guinea/conakry
You're saying that Hyperdynamics is in discussions with the Ministry of Energy? That's not good. It's the Ministry of Mines and Geology and ONAP who have authority over oil exploration.
Maybe that's why you can't find out any details.
Remember when Guinea was talking to the Chinese behind Hyperdynamic's back? Well, China hasn't gone away. Currently they're bestowing large cash rewards to Guinea in exchange for bauxite mining rights.
Here's an article from Aujourd'hui en Guinee (translated into English thanks to Google Translate).
Guinea: President Conde describes as exceptional mining agreement signed with China (Xinhua)
2017/9/18
Today in GuineaCONAKRY, (Xinhua) - "This is the first time that Guinea has signed a unique agreement with China for the construction of road, rail and port infrastructure in the interest of our people", said Saturday the Guinean President Alpha Conde, at a press conference to inform the benefits of a mining agreement recently signed between Guinea and China.
This is an agreement nature of win-win "mines against the financing of infrastructure projects," M. Condé said.
Under the terms of the agreement in the amount of 20 billion dollars over 20 years, every year, a budget of one billion dollars will be available for projects
President Condé said the mining agreements signed between Guinea and other countries represented significant resources to the coffers of the Guinean State. However, he added, a long time, these funds have not been used in a transparent and have always been the diversion of object by Guinean executives.
The framework agreement with China will get revenue to be used solely to build infrastructure (roads, railways, universities, agricultural and port infrastructure), stressed the head of the Guinean State.
He also noted with satisfaction that China's investment in the mining sector would help Guinea achieve double-digit growth in 20 years, with about 1 billion dollars of investment each year. Indeed, the country needs 1.5 billion dollars of annual investment to achieve this goal.
The fund also will leverage to support the development of the educational sector and the modernization of agriculture in the country, the president added.
Citing financial partners such as the International Monetary Fund (IMF), the head of the Guinean State has sought reassurance, indicating that the IMF had been informed of all stages of the negotiation between Guinea and China, given the volume of investment announced.
For the first phase of the agreements, China will realize a route of more than 337 km from Coyah in Dabola (geographical center of Guinea), through the Mamou region, for a total cost of 400 million.
Then the port of Conakry, Guinea's capital, will be carried out with a plan of expansion and modernization for a total cost of 700 million.
In Conakry, the project realization and modernization of urban roads covers about 200 km of roads to be built for 220 million.
According to the Minister of Mines and Geology, Abdoulaye Magassouba, it is a "historic and unprecedented agreement for Guinea and for Africa".
Ms. Malado Kaba, Minister of Economy and Finance has meanwhile estimated that this agreement is doubly beneficial for Guinea.
According to the minister, the funds will allow Guinea to achieve double-digit growth target and also have an attractive local content for populations in mining by China.
Several mining companies - American, Russian, French, British, Indian and UAE - already operating in the Guinean mining sector.
Link to original article
If there actually still is any interest by the Chinese, now that the lease is about to expire, Hyperdynamics wouldn't have a snowball's chance in hell of competing. I personally don't think it's very likely, but with all the "what if's" being thrown out there, it's just one more on the list.
This company is going to fall a lot more in price before any bankruptcy happens. Any such action, if it occurs, is at least weeks if not a few months away. A 10 bagger at $0.01 or $0.001 still leaves every purchaser in the current range high and dry.
Actually, there are numerous claims contending this to be a long term play. Let's be serious, claims they will renew the lease, raise funds, and go on to drill another well, imply anything but a short term horizon.
Short term some are gambling on a good news PR. That may or may not happen. Personally, I would not hold this stock overnight banking on that happening, as the value will continue to erode as it has since the Friday hype. This stock has lost 60% of the price reached on Friday and again early Monday. Hype can't carry a stock facing the situation HDYN is facing. Anyone who bought into it above 14 cents and then and continuing to hold is now down. Some quite considerably.
One more factor: Every renegotiation with Guinea has resulted in HDYN surrendering a large position of the concession. They shot a lot of 2D seismic of areas that are no longer encompassed in the existing lease area. If by some means they renegotiate an exploration lease, I would again expect it to be a considerably smaller area than the current one.
Among other things, that will force them to select an area to retain far ahead of any chance to re-calibrate any exploration targets based on the new well data. Until that happens, they might as well put a map on the wall and throw darts to pick targets.
I seriously doubt they will file for bankruptcy any time soon. What's more likely to happen is they will first of all lose their only business asset, which is the exploration lease. When that happens, the price will likely crater from where it is presently. It's quite possible the share price will go sub-penny. Especially given the only other assets they will have remaining will be office furniture, computers, and possibly some cash remaining in the bank.
In the event they actually renew the lease/negotiate a new one, keep in mind that they're still essemtiallyu cashless. There will be a lot of dilution in one form or the other before they ever become an explorer with a viable option of drilling another well.
They may try to resurrect the company in some form. Who knows, they used to be software company. They could emerge in any form. The success of that new venture, if they do, will determine their long term fate.
If they have debts still owing from the drilling campaign, it's possible they'll file for Chapter 11 or Chapter 7 bankruptcy at some point. I certainly would not buy now on the gambit the stock might be churned when that happens, as the share value has a very good probability of being a lot lower than it is now if/when that occurs.
Be cautious when the 10-K comes out. The year end report numbers will be effective as of June 30th. A lot has happened since then, including the expenditure to drill the well. Any cash on hand as of June 30 will be meaningless post-well, as will any drilling suppliers (which would be categorized as assets). Unless they provide substantial commentary with numbers on their financial situation as of the filing date, as opposed to the reporting date, be very cautious of any hype that gets posted that attempt to promote there finances as of June 30th. They're simply not relevant as of late September, after the well was drilled.
Ever done a calculation of the cost to keep the Pacific Scirocco on standby while HDYN continued to attempt to raise funds? It's not pretty and ended up eating up a lot of cash.
May 21 to July 17 was a total of 58 days at a cost of $100,000/day ($5.6M).
July 18 to August 2 was a total of 16 days at a cost of $225,000/day ($3.6M).
Total cost incurred: $8.9M
They spent so much of their funding effort just to meet mounting costs due to the delays while HDYN struggled to raise enough cash. It's not going to be a very pleasant Q1 10-Q. Wonder how much of the financial reality HDYN will gloss over in the 10-K, which only covers up until June 30th?
The chatter about a white knight coming along makes me laugh. SAPetro WAS HDYN's white knight.
Do you see any problems in that article?
Financials
On the Yahoo Finance website, we found the following information about the balance sheet:
Total Cash (mrq) 701k
Total Cash Per Share (mrq) 0.03
Total Debt (mrq) N/A
Total Debt/Equity (mrq) N/A
Current Ratio (mrq) 0.47
Book Value Per Share (mrq) 0.15
Source
What did we see?
The company has large amount of cash and its book value per share is almost equal to share price in the market; $0.17
Since when is the 701K total cash they claim to be a large amount of cash even remotely significant for a deep water oil exploration company? That wouldn't even cover one quarter of office rent and salaries, let alone fund anything.
The more important point is that it's all based on the situation prior to costs incurred to drill the well. One of the biggest mistakes is pointing to the lead equipment they had on hand to drill the well (well casings and BOP), which has now all been used, save for any casing remaining from the last hundred metres that ultimately wasn't drilled because they stopped short of the total planned depth when the last reservoir proved up dry.
There's a story that's apparent to those who have followed this long term that JUST CAN'T BE NEGATED BY TYPING IN CAPS or any other strategy to try to make a sows ear look like a silk purse.
Bottom line: Dry well. Expiring lease. Lack of interest by any oil majors.
How much would they have to dilute to raise the funds to re-process the data, based on the current well findings? How much would they have to dilute to raise another $40M to plan drill another well after reprocessing all the data? How much would they have to dilute just to meet payroll and rent for the years it would take to put together a campaign to drill another well? The last one took 5 1/2 years.
It doesn't appear that there's much shorting currently going on, other than intraday activity by the MM's in the normal course of business. That would suggest those positions are all closed out by the end of each day.
For example, the poster who said their order was having a hard time filling @ $0.1575 early this morning probably had their order filled by an MM who held back the order, eventually shorted to complete the transaction and then covered for a couple cents less. I can't think of any other reason an order would have been hard to fill in that time frame of 9:38 to 9:48 when the highest reported trade was for 14 cents.
The last heavy shorting appears to have occurred when the price was still in the $1.90 range. I suspect those traders already covered.
If you click on the Equity Short Interest tab, you can see the historical short interest and shorting patterns, going back to 2015.
http://otcshortreport.com/?index=HDYN&action=view
Questrade. I'm in Canada. Makes it even stranger as to why anyone should have to wait for trades to "clear" because most of mine are not only in the US, but in US dollars.
The only reason I can see for anything to take 3 days to clear any more is to enable the broker to use either the shares or the capital in some way to profit from it. Of course most margin account agreements sign over a lot of rights to the broker if you utilize margin, including the right to lend out your shares for their own profit.
The chart suggests that the longer you wait, the cheaper it will be. Anyone with funds tied up waiting to clear their last sell of HDYN today has a very good chance of buying it for less than the current price. I'd weight those odds as well above 50%, given the trend since yesterday morning.
I've got a very good broker. They never hold my funds to clear. I always have immediate access. Too bad the rest of the market can't seem to get with the digital age. There's no excuse for 3-day holds any more.
Today's trades on a 15 min delayed feed. You might want to think about changing brokers.
https://ih.advfn.com/stock-market/USOTC/hyperdynamics-corp-HDYN/trades
THE GOLD STANDARD Tuesday, 09/19/17 09:48:19 AM
Re: None
Post # of 20656
Took 10 minutes to fill a buy at .1575. And it is still partially filled
Actually, this stock HAS been very liquid and the company has been in excellent financial shape in the past.
Prior to delistng from the NYSE in 2015 (where it was listed as HDY), the reverse split in 2013, the corruption investigations by the DOJ and SEC, multiple lawsuits and the Sabu failure there were up to 160M shares in play.
In July of 2011 the market cap reached $870M. It was in excess of $700M in early November of 2011. Then the problems began. Most long term posters here could tell you the series of events that began to unfold after that. After the ill-fated cash raise on the eve of the release of the Sabu well results, the market cap took a hard hit. Since then a series of events, combined with the steady ticking of the clock for the time left on the lease brought the market cap to where it is today.
Understand, it's not just the lease expiration. It's a disinterest in the basin by major explorers despite HDY shopping the seismic data around for years, the two dry wells now all but invalidating the risk assessment on any remaining targets, not to mention a number of other factors that have occurred.
Some have pointed to the past partnership with Tullow. What long term investors know is that the Tullow deal was crap for HDYN. A desperation deal was struck after a very lengthy attempt to reel in a partner after the Sabu results (at least they produced "oil shows"), with Ray Leonard doing his best to put lipstick on the pig after the deal after the fact. Keep in mind that Tullow, along with Dana, ultimately walked.
Yes, this company has been very liquid in the past. That was in a different time, when the price of oil was king, offshore deep water exploration on the West Coast of Africa was hot, and a company could drive a lot of speculative excitement with 2D seismic results.
There's an entire world of oil explorers out there who missed or made insignificant finds of sub-commercial value. Few who once rode a wave of investor excitement ever make their way back. Especially in this oil climate. Especially when it comes to deep water exploration.
The conversion conditions on the preferred shares include a clause that allows the holders to convert their preferred shares into common shares at "80% of the lowest closing price during 21 consecutive trading days ending on the trading day immediately prior to the conversion date, subject to a floor of $0.25 per share."
Each preferred share has a convertable value of $1040.00. The lowest closing price in the past 21 days is well below $0.25, meaning that a preferred share holder can currently convert each of their preferred shares into 4160 common shares.
So, just for argument's sake, let's say they short today at 30 cents. That's 4160 x $0.30 = $1248.00 against each preferred share they hold.
If the stock subsequently drops below $0.25 they have two options:
1) cover the short on the open market and retain their preferred shares. This would allow them to repeat at a later date. As an example, if they shorted @ $0.30 today and subsequently covered @ $0.17 they gross $0.13 x 4160 ($540.80) against each preferred share they continue to hold. Wash Rinse Repeat.
2) cover the short by converting their preferred shares. This would allow then to recoup the original purchase price of $1000 per unit they paid for each preferred share. They profit a gross of $248 per preferred share and recoup their original investment. Keep in mind they would still retain the warrants that were also part of the purchase of each $1000.00 unit.
If the stock continues to rise, their short is already covered. Of course if the stock price were to increase and maintain a higher price, they'd need to convert their preferred shares within 21 days of the last close at or below the floor price.
As for whether you should trade or not, only you can make that decision. My only advice would be to make sure you're extremely nimble if you do.
I lost a considerable amount back in the Sabu days. I've been in and out since, and made a few small profits. Ever since the financing on the eve of announcing the Sabu results and the subsequent hedge fund lawsuit against them, I've been extremely cautious. Personally I will definitely not hold this overnight at this point. I did make one trade on Friday during the insanity-infused run. And no, I don't short in case you're wondering. Never have. Not in my risk-tolerance.
The reason I'm posting the information I have is to ensure those who walk into this blind are aware that the current situation is anything but all rainbows and buttercups. This company is all but down for the count. Could they manage to finagle some kind of lifeline? Anything's possible, but even if they do, the massive dilution that would be required to fund another well, especially given all the gymnastics they performed to finance the last one, is nothing short of mindboggling.
Registration Rights
The Series A Registration Rights Agreement
In connection with the Series A Offering, we entered into the Series A Registration Rights Agreement with each of the subscribers for the Series A Preferred Stock and the holders of the Series A Placement Agent Warrants, which required the Company to file a Registration Statement with the SEC by May 1, 2017, registering for resale (i) all shares of common stock issued or issuable upon conversion of the Series A Preferred Stock (including any shares of Series A Preferred Stock issued pursuant to the Subscriber Option described under "Management's Discussion and Analysis of Financial Condition and Results of Operations—Series A Preferred Stock Offering" above), and (ii) all shares of common stock issued or issuable upon exercise of the Series A Investor Warrants (including any Investor Warrants issued pursuant to the Subscriber Option described above) and the Series A Placement Agent Warrants (including any that may be issued upon exercise of the Subscriber Option), and to use our commercially reasonable efforts to cause the Registration Statement to be declared effective no later than July 29, 2017. On May 1, 2017, we filed a registration statement in compliance with the agreement, which became effective on June 22, 2017.
It would appear that the conditions for converting the preferred shares @ $0.25 has been met.
At $0.25 they represent a dilution of approx. 11.3M shares. Given the current shares outstanding is now approx 31M shares, those shares represent a potential dilution of 36%
Ownership of those preferred shares includes a number of HDYN insiders. Interesting given the last PR right after they announced a dry well.
The holders of the preferred shares have no restrictions against short selling.
A potential 11.3M shares in play. Now what kind of play might they try, given they have the capacity to short at will with the cover already in the bag? Run it up and then short the living hell out of it?
Well, there are a number of posts over the past several days explaining the reality of the situation. Among other factors:
No oil discovered
Exploration lease expires in 3 days
Company is broke
Drill ship left for Tenerife
It could be a long time before the offshore waters of Guinea see any more exploration. It was over 5 years between wells this time around.
Don't invest more money in this stock than you can afford to lose.
Correct. Ray Leonard clearly stated they only need a 50m thick, well defined reservoir with good permeability for a find to be significant enough to present commercial potential with Fatala (I posted that statement in an earlier post).
That would be 50m or oil. What they claimed in the follow-up PR is 5m of undefined hydrocarbons in a section of poor permeability.
This is a well in very deep water. Development costs are off the chart for water this deep. 5m of undefined hydrocarbons (they did not call it oil for a reason) does not present as good of results as Sabu hit, and it was a bust. Plugged and abandoned.
With a drill ship still on site, if they thought those 5m were worth further investigation, they would have drilled a sidetrack well. They didn't. They plugged the well and sent the drill ship away. Pray for miracles, but don't invest more than you're prepared to lose.
Something to be aware of - from the June 22, 2018 Prospectus (pg. 5):
About This Offering
This prospectus relates to the public offering, which is not being underwritten, by the selling stockholders listed in this prospectus, of up to 8,663,754 shares of our common stock. Of the shares being offered, (i) 8,177,031 represent a good faith estimate of the number of shares that may be issuable upon conversion of 1,951 outstanding shares of our 1% Series A Convertible Preferred Stock (the "Series A Preferred Stock"), (ii) 435,073 may be issuable upon exercise of outstanding common stock purchase warrants issued to purchasers of the Series A Convertible Preferred Stock, and (iii) 51,650 may be issuable upon exercise of outstanding common stock purchase warrants issued to the placement agent for the Series A Convertible Preferred Stock and its designees. (Such 8,177,031 shares represent a good faith estimate of the number of shares that may be issuable upon conversion of all such Series A Preferred Stock at a conversion price of $0.25 per share, the current "floor" on the conversion price of the Series A Preferred Stock.)
The shares offered by this prospectus may be sold by the selling stockholders from time to time in the open market, through negotiated transactions or otherwise at market prices prevailing at the time of sale or at negotiated prices. We will receive none of the proceeds from the sale of the shares by the selling stockholders. We will bear all expenses of registration incurred in connection with this offering, but all selling and other expenses incurred by the selling stockholders will be borne by them.
http://investors.hyperdynamics.com/secfiling.cfm?filingID=1047469-17-4240
To date there has been no subsequent information as to whether any of the above 1,951 units Convertible Preferred Stock have been converted into stock (other than the additional units above and beyond the given to the underwriters, who did convert theirs). There was, however, on August 4th 2017, a subsequent announcement that an additional 756 units of Series A Preferred Stock had been issued as per the Subscriber Option (see below).
That brings the total to 2,707 Series A Preferred stock, with a value of $1,040 per share. At a worst case floor conversion price of $0.25 they collectively represent a dilution of approx. 11.3M shares. That's in addition to the approx. 31M outstanding once all the smoke clears from the common shares + warrants offerings. HDYN will not receive any additional funds from those conversions. They already received their cash and that's gone to pay for the well.
From the Aug 4th 2017 8-K (pg. 3):
Item 1.01. Entry into a Material Definitive Agreement.
As previously reported, between March 17 and April 26, 2017, Hyperdynamics Corporation, a Delaware corporation (the “Company,” “we,” “us” or “our”) held four closings of a private placement offering (the “Series A Offering”) of an aggregate of 1,951 Units of our securities, at a purchase price of $1,000 per Unit. The Units were sold to certain accredited investors (as such term is defined in the Rule 501 under the Securities Act of 1933, as amended (the “Securities Act”)) (the “Subscribers”). Each “Unit” consisted of (i) one share of our 1% Series A Convertible Preferred Stock, par value $0.001 per share, with a Stated Value of $1,040 per share (the “Series A Preferred Stock”), and (ii) a common stock purchase warrant to purchase 223 shares of our common stock, exercisable from issuance until March 17, 2019 at an exercise price of $3.50 per share (subject to adjustment in certain circumstances) (the “Investor Warrants”). At the closings, we issued to the Subscribers an aggregate of: (i) 1,951 shares of Series A Preferred Stock and (ii) Investor Warrants to purchase an aggregate of 435,073 shares of common stock.
Under the subscription agreements for the Series A Offering, Subscribers were given an option (the “Subscriber Option”) to purchase, at the same purchase price of $1,000 per Unit, their pro rata share of up to an aggregate of $3,000,000 in additional Units.
On August 2, 2017, we consummated a closing (the “Option Closing”) of the Subscriber Option. At this Option Closing we issued to the Subscribers that exercised their Subscriber Option an aggregate of (i) 756 shares of Series A Preferred Stock and (ii) Investor Warrants to purchase an aggregate of 168,588 shares of Common Stock.
http://investors.hyperdynamics.com/secfiling.cfm?filingID=1104659-17-49570
That's an old description. HDYN no longer has any ties with either Tullow Oil or Dana Petroleum.
HDYN does not survive on contracts. HDYN does not do contract work for Guinea or anyone else. The PSC (Production Sharing Contract) defines what Guinea receives in the way of taxes and royalties if oil were to be found and commercially exploited.
HDYN has survived primarily on cash raises (secondary offerings and private placements) on the back of their exploration lease in offshore Guinea waters. The fact that the lease expires in 4 days will make it extremely difficult to raise any funds at this point.
In 2010 and 2011 they were a going concern. Oil was also $80+ a barrel, making ultra-deep oil feasible. The lease area was also considerabley larger then (at one point it encompassed most of the Guinea offshore waters). Now, two wells and an oil crash later, not so much. It took 5 1/2 years to progress from drilling Sabu (completed in early 2012 with Dana as a partner) to raising the cash and signing another partner to drill Fatala.
After the Sabu failure the stock crashed hard, even though there was a considerable amount of time still left on the lease. There were also multiple lawsuits filed. As time continued to tick down on the lease, the stock value continued to decline. Optimism for the Fatala well kept the stock somewhat buoyant the past 6 months, although continual dilution pressure from ongoing offerings to raise cash for the well prevented any real pre-drilling run-up.
Post from another board (Railfan) who has an extensive background in oil exploration. While many tagged him as bearish or a short shill (I thought he was), questioned his knowledge and did not heed his cautions about not investing more than you can afford to lose in HDYN, he was spot on about Fatala. This is what he has to say about the latest PR:
What the second HDYN PR said is log calculations indicated hydrocarbon saturation in rather poor quality reservoir rock. It also said there were minor mud gas increases in this interval. No mention was made of oil shows in cuttings samples. In my mind there is a high level of uncertainty if there is in fact hydrocarbon saturation in this rock at the level calculated.
They made no mention of the specific levels of gas shows. Please note the words mud gas should not indicate that only methane of CH4 is the hydrocarbon in the rock. Mud logging units have typically samples for C1 methane, C2 ethane. C3 propane, C4 butane, and C5 pentane. Some newer unit will also sample for C5 thru C8.
Even zones that produce natural gas and no oil will also have C2 thru C5 unless the gas is biogenic, then it is usually 99% C1 or methane.
Bottom line, the 5 meter zone discussed in the second PR has no value, it is useless. It does not point to a future drill location. I am not sure why this was even worthy of a PR except to create a bit of interest from investors who do not understand how insignificant this little interval really is in the grand scheme of things.
Be careful if you join the stampede. Don't invest more than you can afford to lose. One PR can send this right down to zero and there's nothing of substance left in the company at this point. The well was a failure, the exploration lease expires in 4 more days, the drill ship has left Guinea waters and the company has no funds, nor does it have any other exploration prospects or sources of income.
Correction: The last insider transaction with anyone serving with HDYN was August 11th.
By "insiders" are you referring to Pacific Drilling? While some transactions were reported as late as Sept 8th, look carefully at the filings. The last transaction date with Pacific Drilling was August 29th. The last insider transaction with anyone serving with HDYN was August 8th.
https://www.sec.gov/cgi-bin/own-disp?action=getissuer&CIK=0000937136
As for Blackrock, they were simply filing an update to their 13G reportable holdings. The recent dilution meant their total holdings are now less then the 5% threshold. If you actually check the BlackRock filings page, you'll see they updated their holdings for 20 or 30 other stocks on the same day. Standard end of the month updates for them.
https://www.sec.gov/cgi-bin/browse-edgar?action=getcompany&CIK=0001364742&type=&dateb=&owner=include&start=40&count=40
If you followed the drilling progress, you know that as of August 29th the drill bit had not yet reached any of the prospective targets. The fate of the well was an unknown to all as of August 29th.
Whatever the hydrocarbons are, Ray acknowledged in the PR that it isn't a commercial discovery. Had it been oil, they would have been very clear about it. At least with Sabu they PR'd "oil shows."
I hope HDYN doesn't end up seeing a repeat of the Iroquois fiasco
Hyperdynamics Reaches Settlement Agreement