To OTC Journal Members:

Despite a lackluster market over the course of this week, a number of the OTC Journal's nine core microcap ideas are starting to come off the canvas after the severe body blows we all suffered through this summer. The three N's are all doing well. NWKI, which I covered on October 11th, is indeed breaking out. Today, the stock traded to the highest level it has been since last May. NWAV is $.15 below an all time high. NTDL is solidly back in the mid $.30s and trying to work higher. Preliminary results have the company delivering 42% revenue growth over '03- more in a future edition. BPTR, after just two weeks, is hitting multi month highs. VTSI is delivering outstanding corporate developments, but technically was a major disappointment this week. FMLY is stable. I will be reporting on that one first thing next week. AMW and AGSI continue to appear to be problematic, but that could change tomorrow with the right event.

Today's edition concerns a company we haven't heard from recently. HYPD is finally publishing the 411 on the core samples which were derived from it's offshore West African concession, and these results could light a fire on the stock.
 

HyperDynamics (OTC BB: HYPD) Releases Results From Core Sampling

The OTC Journal has now been covering Hyperdynamics for about a year, and we could finally be getting to the most exciting part. For those who need a refresher course, here are the facts.

Hyperdynamics, through wholly owned subsidiary SCS Exporation, has the rights for oil & gas exploration and production on 16 million acres located just off the Guinea coast. Referred to as the "concession", it is showing early signs of having natural gas reserves in the "trillions" of cubic feet, and potentially hundreds of millions of barrels of oil. 

I first introduced readers to the stock on September 20, 2003. The stock closed that day at $1.76, and has since seen a high of $3.72. At the current $2.40, the net return from the first edition after one year is about 36%. Not bad, but far from what we're looking for. 

The development of new offshore oil and gas fields in remote locations around the world is a long process. Over the course of the past year, HYPD has achieved four major goals:

• The company completed 4,000 kilometers of 2D seismic studies which indicated a high likely hood of significant hydrocarbon reserves.
• The company raised the capital it required to continue seismic studies and complete the work it needs to do to acquire the data to bring in a major partner.
• The company added Harold "Red" Poling to it Board Of Directors. Mr. Poling is the former CEO and Chairman of Ford Motor Company, and a former board member at Kellogg's and Shell Oil.
• The company completed its coring studies, the results of which were announced today.

Today, just after the market closed, HYPD released preliminary results from its core sampling program. 57 core samples were extracted from various locations throughout the concession. The locations were determined by identifying high probability locations using the 2D seismic results. 

TDI Brooks laboratory in College Station, Texas, has been analyzing the samples for HYPD. The results of the analyses revealed that 55 of the 57 core samples contained thermogenic petroleum components in varying degrees of concentration. 

Here is the most exciting statement contained in the press release: "Mr. Robert Bearnth, Executive Vice President of Exploration for SCS explained, “numerous shows indicated statistical evidence of a deep petroleum system dominated by oil."

HYPD now has conclusive evidence there is oil in the concession, which is far more valuable than natural gas in this remote region of the world. The next step will be to take 3D seismic readings, which will eventually reveal where the first test wells will be drilled.

I cannot say how soon this will happen, and if/when the company will bring in a major partner with deep pockets. 

A glance at that chart brings up the following thoughts. The stock has completed a near perfect 50% retracement from the August low to the September high. If the stock trades above $2.72, it would trade at a multi month high. A a break towards the $3 level would be extremely bullish, similar to what is happening with both NWKI and BPTR right now.

Remember the theme I have been repeating for the last month- Seasonally, it is the best time of the year to be in the stock market. HYPD is completing all the steps required to bring this project to fruition. I still believe this stock has the most upside of any we cover, and as positive results are reported, the risk is diminished.

Discovering oil is like developing a new drug. The final FDA Approval is the long term goal, but good clinical evidence along the way will yield increasing valuations in the stock market.

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

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