To OTC Journal Members:
 

Comments in the BLOG

There haven't been any BLOG entries so far this week, but your comments and questions are welcome on the three most recent: AMW, NWKI, and VTSI. There's some lively dialogue on the ZAPZ BLOG also.

To use the BLOG, simply go to the home page at www.otcjournal.com - the BLOG will scroll down automatically on the right side of your screen. The most current journal entries appear in the middle of your screen. Check back frequently for updates particularly when stocks are moving to overbought or oversold levels or in volatile markets. Your questions and postings do not automatically appear, so don't bother posting the same question multiple times. I personally go through to moderate and respond to every question. If not for the filter, our BLOG would be filled with invitations to online poker sites- a total waste of the resource.

There was a key reversal in the NASDAQ earlier this week, signaling that we might be in for rebound phase over the foreseeable future. We are certainly overdue for a bounce. In addition, oil prices dropped four days in a row this past week, indicating we may be in for a corrective phase in the parabolic rise of oil prices.

In the spirit of these two coinciding events, I'm planning an edition for early next week with a couple of ideas for a 30 day trade in the large cap arena. Please stay tuned.
 

HyperDynamics (OTC BB: HYPD) Announces First Steps on Guinea Concession

This past Thursday HYPD disclosed that the company had identified its initial two drilling sites in the West African concession you see pictured here. HYPD has started the process of preparing to drill its first two wells. 

The press release gave a lot of information about the characteristics of the first two sites, but very little hard information about how and when the wells will be financed and drilled.

Here's what we know:

• The wells are fairly shallow and therefore low cost.
• The formations are very similar to those found in the Gulf of Mexico and in other prolific delta formations world wide.
• Based on seismic data and other successful finds in the region, HYPD stands a very strong chance of uncovering significant seismic reserves.

• When the drilling will start 
• How much it will cost
• How it will be financed

This is a big step forward for HYPD, but we need a lot more disclosure before we're in a position to evaluate the potential impact on shareholders and stock price.

In my view, there are two other factors weighing far more heavily that suggest significant upside potential. Firstly- those in the know don't appear to be in a hurry to unload this stock. As previously chronicled, there is significant technical risk compliments of last year's 6 million share financing at $.80. Based on the current market price, those 6 million shares could be sold at a 170% profit by shareholders closest to the company. Yet, so far in 2005, investors have only filed to sell 257,750 of the 6 million shares. Clearly, investors close to the company believe the stock is going higher.

Secondly, an item towards the end of the press release caught my attention. This item bodes extremely well for potential price appreciation. If HYPD decides to go it alone, they will have to prove what they have for the stock to trade to significantly higher levels. If they team up with a major oil and gas company, the market should view the event as an "implied endorsement" of their potential, and the stock could go rocketing up the charts. President Kent Watts includes the following at the end of the news:

"Additionally, over the last three months we have been contacted by more than a half dozen oil and gas companies that are in the process of analyzing the opportunity to join our endeavor in some respect. As we move forward towards drilling on our own, we will continue to consider transactions with exploration, production, and/or drilling companies that are genuinely interested in our project."

If HYPD signs a deal with a major oil company, shareholders might not have long to wait.

I included a fairly long term look at the price history, as I believe in the current market environment only long term investors should be accumulating stocks. As you can see, since the big spike in March of '04, the stock has never really traded below $2 for any extended length of time. This would seem to be a favorable level for accumulation. Higher oil prices give HYPD much greater upside.

Here is the complete text of Thursday's press release for your review:
 

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