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What made you decide to buy? I still see this going to 1.50 in a week or so. I completely forgot about delisting which could easily make this less than a buck if people panic there will be no liquidity.
FYI, you know Ray is a fraud if they continue spending $1M month in legal fees. There should have only been that burn during the DOJ/SEC's discovery phase. After that, there should be relative quiet except for follow up requests. It's almost as if Ray is paying the lawyers $500/hour to go through the company records and submitting them to DOJ/SEC instead of collecting the data himself (and then sending to lawyers). As some have alluded, he's probably using some friends' law firm.
Completely forgot about the listing requirements. That could be the next "bad news." Not like Ray is going to do his job and PR anything in the mean time.
LOL. Looks like a law firm has revised their lawsuit to include the BOD:
Levi & Korsinsky, LLP Notifies Investors of Class Action Against HYPERDYNAMICS CORPORATION and Its Board of Directors
So if I bought stock in November and sold in December for a gain, can I join in one of the lawsuits? :) I mean seriously, as a shareholder are you supposed to sign up for every single firm's lawsuit (if I even wanted to). Its such garbage those firms waste money PR'ing and filing those suits.
ERHE's took over 4 years and they didn't have to pay anything. I think it will be hard to assess damages when HDY hasn't derived income from the agreement. I'd expect a range from $0 fine to up to $5M.
BTW, THIS is where Ray royally fooked up (the event the DOJ/SEC is looking into..)
Sept 30, 2009
"The donation of 3 million shares and warrants to the American Friends of Guinea is an extraordinary gesture by Kent and Michael Watts to the people of Guinea," said Ray Leonard, President and Chief Executive Officer of Hyperdynamics. "We thank Kent for his dedicated service during his time at Hyperdynamics."
By the way, look at that date above again. So the DOJ opened up this investigation almost exactly 4 years after this transaction. Considering the statute of limitations is 5 years, its almost a given the DOJ and SEC are looking into this transaction specifically.
No. I think some fund liquidated early yesterday. And it appears the traders are now exiting. As I said yesterday, I've seen this too many times in many stocks after a big gap down: the stock goes up on money coming in and then it eventually goes back down and pierces that low in the following week(s).
Does Ray even go into the office to formulate a backup plan? And I seriously question why the legal costs are so high. I think ERHE was only spending a grand total of $4-5M a YEAR in G&A which included legal costs.
Ray shouldn't get a bonus this year, and the BOD shouldn't get a dime of comp or options.
Well the price action today supports there weren't many investors "margined." I really wouldn't be surprised if it was some Event Driven hedge fund that just decided to liquidate first thing yesterday which drove it to 1.13.
The only good thing with Tullow declaring Force Majeure is it may "slightly" impact the DOJ/SEC to pick up the pace of the investigations, but I doubt it. I owned LVS for the past 4 years and their FCPA investigation took 2.5 YEARS and they even admitted wrongdoing which I think would have sped things up!!!!
Let's hope that Guinea is smart and wants oil money as soon as possible. Ripping up the PSC would set this back quite a few years for first discovery which could make commercial production almost a decade from now!
If Tullow smelled smoke, why didn't they do this 5 months ago? They are doing it now IMHO because:
1) Tullow risk management is just now raising red flags at the last minute on this deal
and/or
2) Tullow needs the West Leo in Jubilee still
and/or
3) Tullow would like to sell down its interest and reduce rick and wants more time to do so.
Claiming force majeure now is just a last minute excuse.
I'm most bummed about not being able to buy Sept call options. That was my strategy from Day One that I didn't publicly disclose. I was going to buy thousands of the 10 strike, preferably below 50c. No point now as there is no catalyst to get above 10 by that time and the stock is $2 and not $5.50.
redacted
The traders that bought sub-2 could exit, but I don't see that causing it to get to $1.
There is no conspiracy. We are in the day and age where computers can drop bids in a thousandth of a second and someone dumping hundreds of thousands of shares at the market price will be punished (well, HFTs are a conspiracy in themselves, but thats another issue :).
Tullow stopping drilling severely jeopardizes a well even being drilled which justifies a 50%+ drop.
As for the timing of the PR, its likely Tullow had to make a call on tasking West Leo soon and pulled this BS at the last minute to keep it at Jubilee. Tullow has likely wanted to do this for a while, but it would be impossible to prove in a court of law (and you'd only piss off your operator which you don't want to do).
Nah, the ambulance chasers usually have no effect on the stock. I don't think it will go sub $1 any time soon. They'll be a drawn out bleed to mid $1s. Its not getting sub $1 IMHO unless more bad news comes out.
Those purchases at 1.49 and 1.50 are commendable and I wish I did the same. I'm just saying its not worth buying at 2.25 with all the potential bad news that can take it back sub 1.50.
Actually thirdcoaster's post was terrible. It's all unfounded conjecture and written by someone with no experience in the industry.
"There has been an extraordinary effort to disconnect the polarizing name "George Soros" from Blackrock. If you know anything about their history together, you know that it is not a coincidence that Blackrock came knocking on the door of an unknown small cap exploration company who happpend to own 77% of a gigantic offshore concession in Guinea. BR approached HDY after reviewing Guinea assets, it wasnt because of one of Ray's powerpoint presentations, sorry to disappoint."
Blackrock and Soros continue to jointly invest, and BR investing in HDY has nothing to do with Soros. And I'd bet the farm BR didn't approach HDY. I'd bet HDY/Ray hired a professional capital raising operation that reached out to BR.
"HDY is whatever Blackrock wants them to be. If BR wants retail shareholders to be eating at the dinner table with them when a discovery is made, they will be. If BR wants a DOJ/SEC ruling that destroys common stockholders and allows them to ride off into the sunset, they will get that."
That's laughable. To think BR could get a favorable ruling from the DOJ/SEC with the scrutiny the industry has undergone with Frank-Dodd and the media in general is hilarious. Hmmm, I don't see JPM escaping billions in fines.
"BR has had its way with HDY lending shares to shorts and collecting interest via "ishares". They will continue to have their way with HDY."
Complete made up baloney that people investing in penny stocks with no industry knowledge complain ridiculously about. I guarantee BR owns these shares via an alternative investment fund. These funds don't loan out shares and almost nil they'd be shorting as a hedge. If anything, they could be providing liquidity in the options market but that is such small potatoes its not likely.
"Very few people even know what really resulted from the 08-09 credit crisis/financial collapse. BR was the primary beneficiary when the dust settled. Its shocking to know how influential they were/are with our elected officials and how well they made out. If you have doubts about how influential BR is among gov agencies etc, I would read up."
Uhmm, anyone in the industry would say '07 when Frank-Dodd and the DOJ/SEC wasn't as active was a much better time. And you could argue that Blankfein and Damon have much more influence with the Obama administration. Fink just doesn't exert as much influence.
Why buy now? The stock has serious risk of reaching the lows from yesterday again if Guinea opens up a review of the PSC or any other bad news comes out.
You got that right. Ray gets $700k plus options to do what exactly? Give presentations that help the company a trival amount????? That @## clown should be getting not much over a quarter mil for what he actually does.
You raise good points about getting the DOJ/SEC cleared first. Who's to say they wouldn't assess a $50M fine if HDY had found oil as compared to a $1-2M slap on the wrist?
I'd expect the Feds to take another six months. They have no incentive to do a good job with their job security, and they practically get work days off in D.C. when a single snowflake hits the ground. They've gotten what, 25 paid office shutdowns in the past 6 months (gov't shutdown, 3-4 winter closings)????
I wouldn't be worried about Tullow. I'd be worried now about Guinea saying they are opening up a review of the PSC agreement.
No one disagrees that HDY is being investigated because of the Watts.
However, Ray has done a piss poor job handling the relationship with Tullow. He has one job: to make sure the well gets drilled and he failed. Yes, Tullow could have pulled a fast one, but they obviously think nothing of Ray to have done this without warning and at the last minute.
I said it earlier. It's a flat out excuse as they now don't want to move West Leo out of Jubilee and they are getting cold feet (hence talk of opening up data room to interested parties). They've known about investgation for what, 5 months???
It sucks that we can't sue them as that would just strain the relationship.
"The only upside for no dilution is their selling more of their concession stake after this gets resolved"
Exactly. This is what I was hoping for. That they find oil in the summer and sell part or all of the stake rather than diluting.
Those that bought below $1.50 did a helluva a job. I don't like this stock above $2 though. Dilution or more bad Tullow news drives it back below $1.50.
Dilution is not priced in. You are assuming the market is rationale and the current price reflects all current and pending news. That is never the case. The current price reflects the price it took for someone to dump all their shares this morning with an increase due to buying.
If Ray wanted to dilute, he's not going to get over $2/share. It's going to be less than $1.50/share.
The best time would have been at market open. The Sept 3's were 25c on the ask then!!! Really kicking myself on that one for not putting a couple K on it.
You don't want to sell that stock you bought this morning? Ray has opened up the dilution concerns now as spud date is Q3 at earliest.
No, but its freaked the market out because:
1) HDY will now have liquidity issues with the delay in drilling. The legal costs are burning cash and they could run out by year end.
2) Any hesitation by Tullow could be a sign they want to scrap the deal altogether. If they are using this b.s. excuse six months later, who knows what they will do. My guess, they don't want to move the West Leo rig because they'd rather it drill in Jubilee + Tullow has gotten cold feet recently (they announced the data room was open to sell down their investment).
3) Risk of Guinea getting upset and HDY/Tullow not meeting the timelines. It's game over if the PSC gets pulled.
I thought about pulling the trigger at 1.60 but couldn't do it. I actually have no position now as I was going to buy call options next month when the drill was onsite. I've seen this plenty of times where there is a huge gap down, buyers come in, and then the shorts take it back down.
If they aren't raising equity above $6, why would they do it in a month before the run-up? Any drill cost overruns wouldn't occur until May/June at the earliest and I'm sure Tullow would grant some time for HDY to pay. I'd rather the stock go to $50 and dilute only a 1mm shares.
Agree on pre-drill, but I'm thinking $40-60 on a successful drill which would give us a $1B market cap. If that happens, I'm out. I'm not sticking around to find out the well isn't commercial as initially thought.
LOL. The yahoo MB is useless since that tool posts on it all the time.
Agreed. At least he confirmed April spud date. Looks like were are looking at a July discovery date and Fall for an appraisal well.
Wow, 90 days drill time? I thought someone said 45 days, but as its their deepest drill it makes sense to be 90.
Hopefully, they'll find some commercial oil and HDY can tap the equity market at a much higher share price to minimize dilution. Or perhaps HDY could sell an additional 2-3% chunk of the concession and not be liable for any future cost overruns in any future wells. I know that sounds outlandish, but Tullow might view 2-3% as more valuable than $10-20M a well for overruns in all future wells.
That could happen this year if the appraisal well showed a 1bboe field. Assuming a $4/barrel unrisked value = Approx. $181/share. Unlikely it happens this year, but I can dream. :)
Don't expect much about Guinea. Its a results call and they have enough going on elsewhere.
Mike, I'd hope the legal fees would take a lull before the AGR lawsuit in June. Typically the DOJ (and now the SEC) will send a document request for which HDY would respond. Except for questions here and there from the DOJ, I would expect the legal costs to go down since its based on billable hours.
If you could short, this would be one of the greatest investments of all time.
1) shady execs
2) dilution
3) paying bills with shares valued in cents or a fraction thereof
4) lost it's only real asset (Belize)
5) TRRC infractions up the kazoo
6) lawsuits
I could go on...,
The DOJ investigation shouldn't affect operations. It's really only a slap on the wrist. I think we'd all be happy with only a $2M fine. If anyone would go to jail, it would probably be Watts. I owned LVS from 2009 to 2012 and they even admitted breaking the FCPA and only had fines.
Penalties
Penalties for violations of the FCPA are strict, and the federal government has shown its willingness to impose them. Through the criminal process, corporations and other business entities are subject to fines of up to $2 million and their directors, officers, stockholders, employees and agents are subject to fines of up to $100,000 and imprisonment for up to five years. These fines are imposed per occurrence, and individuals fined for violations of the Act may not be indemnified by their employer.
The attorney general or the SEC may also bring a civil action for violation of the FCPA resulting in fines of up to $10,000 per violation against any firm, its directors, officers, employees, agents and stockholders. In addition, the SEC may seek to impose fines not to exceed (1) the gross amount of the pecuniary gain to the defendant as a result of the violation, or (2) an amount of up to $100,000 for individuals and $500,000 for business entities.