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Profit Alert
- HyperDynamics (OTC BB: HYPD) |
|
Shareholders in HyperDynamics
have enjoyed an exciting ride over the past 10 days. I first featured this
company in the September
20th edition. The stock closed at $1.76 that day, and reopened the
next trading day at about the $1.90 level. It closed Friday at $3.44
on about 600,000 shares of volume, for a net 95% return above the
original featured level. Since that first edition, you could have accumulated
the stock both above and below $1.76.
I have always presented this company
as a high risk/high return microcap. The company is in the process of developing
a 64,000 square kilometer concession of the coast off West Africa. HyperDynamics'
wholly owned subsidiary obtained the rights to explore and develop the
offshore oil reserves from the Republic of Guinea, one of the more peaceful
and stable West African countries. The company has zero revenues at this
time.
According to a press release that
came out after the close on Friday, HyperDynamics has completed
phase I of the seismic studies required to eventually drill the first test
wells in the concession. Read the press release below. This company is
extremely optimistic they are sitting on the proverbial mother lode, and
the market is casting its vote in support of their claim.
The last time I reported on HyperDynamics,
I asked members to contribute comments. I promised to publish both positive
and negative sides of the story. Since the stock is trading at a multi
year high, negative comments were tough to come by. Most members complained
they didn't own enough. Hindsight is always 20/20. Here are two comments;
the most positive and the most negative contribution from members:
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OTC Journal Members' Forum on HyperDynamics
Positive Contribution:
Sir,
I went to visit the offices of
HyperDynamics a few weeks ago to see for myself what the scoop of this
concession had to offer. Let me tell you this, they are being conservative
as to what they have put out in public. It is beyond comprehension. They
have only looked at one line of seismic and off that line, they are finding
new structures that eclipse the previous ones. And that was a $460BB potential
find. I always look forward to your coverage on the stock, but I know they
are holding back on you. Neil Moore seems to think this has the potential
to be the largest hydrocarbon reserve in the world, although he won't come
right out and say it.
One area to note is the political
environment of West Africa. President Conte wants to eradicate corruption
in his country and leave this find as his legacy. It appears, right now,
that is the last remaining hurdle in some investors minds, but Guinea wants
to improve relations with the U.S. and the timing couldn't be better. If
you would like me to answer any questions for you, within my own DD, I
would be happy to help out as much as I can. I really liked the idea you
consulted with a geologist in this article, it just added more merit to
what us Hyper shareholders already knew. Please keep up the good work and
insightful articles. This IS going to be an exciting year.
Respectfully,
Tony M
On the Negative Side:
I have two main concerns about
the company and your report.
1) There are only 5 employees
at last report.
2) MarketByte LLC has been paid
a fee of 116,000 free trading shares
of Hyperdynamics
by a third party for reporting on the company.
Any comments?
D. K
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There's both sides of the story,
republished verbatim. I have no idea if Tony M is telling the truth, and
I have no disclosure on his relationship or ownership in the company. No
doubt he is a shareholder and you should view his comment as a conflict
of interest. On DK's comment- I only cover companies I believe have a good
chance to provide superior returns in the microcap arena. We get compensated
for the size of the audience, not for opinions. If the companies turn south,
so will the coverage.
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A
Classic Study in Persistence Breaking Down Resistance |
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This HYPD chart provides a
classic study in persistence breaking down resistance. From last July until
this past week there was resistance in the $2.10 to $2.25 range. The white
circles indicate four attempts to break through the $2.25 barrier, only
to be repelled each time. Like water building up behind a dam, it finally
burst through last week, and the stock simply tore up the charts. It took
eight months to make the move from $1.50 to $2.25. It took eight days to
make the move from $2 to $3.25.
Support was as important as resistance.
If you believed, you also had four opportunities to accumulate this stock
in the $1.50 range before the big breakthrough came. If you want to improve
your trading skills, look at this chart and consider support levels for
other stocks you own. The best microcap investors I know find four or five
ideas they like, and accumulate them when they are cheap and no one wants
them. This positions you to either hold or sell when the stock is hot and
everyone is buying.
You only see charts like this happen
when companies live up to their potential. The market is demonstrating
its belief that HyperDynamics will develop its Guinea concession,
and it could yield billions in hydrocarbon revenues. No doubt the recent
run up in oil prices is helping to fuel this move. The United States, under
an accommodating Bush administration policy, is encouraging new international
development of hydrocarbon resources. Analysts are likening West Africa
to emerging Russian resources of three years ago. Early buyers made fortunes
in those stocks.
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Where
To From Here? |
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I have no idea whether the stock
will continue to rocket up the charts. It will simply keep going up until
it stops going up, and I can't predict where it will be a day, a week,
or a month from now. As many of you know, I am a big believer in keeping
the winners and selling the losers. Most individual investors do the opposite.
The longer term picture is far more
interesting. Investors would do well to remember this project is still
in its infancy. 2D seismic studies have been completed and evaluated. More
studies will no doubt need to be completed before the first test wells
are drilled.
HyperDynamics does not have
the resources to fully develop the concession, and probably never will.
At some point the company will need to enter into some sort of partnership
arrangement with a major developer who has deep pockets.
If you're only a trader, the stock
is probably a sell. If you are an investor, you are far closer to the beginning
than the end. If you model your style after Warren Buffet or Peter Lynch,
continue to accumulate with a one to five year time horizon.
According to the last 10Q filing,
HYPD had 31 million shares issued and outstanding. At $3.44, the market
cap has now risen to $106 million. The financial community generally defines
companies with market caps less than $100 million as microcaps. Congratulations
are in order. HYPD is the first OTC Journal idea in 2004
to graduate from microcap to small cap. I hope there are many more to follow.
Here is the complete text of Friday's
news release for your review:
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HyperDynamics' SCS Reports Highly
Prospective Trends as Spectrum Completes Processing
Friday March 19, 4:00 pm ET
Robert Bearnth, SCS vice president, reports
growing support for many traps and more than adequate source rock to provide
major sources for hydrocarbons
HOUSTON--(BUSINESS WIRE)--March 19,
2004-- HyperDynamics Corp. (OTCBB: HYPD - News) announced today that SCS
Corp., the company's wholly owned energy subsidiary, has reached a major
milestone with the completion of the reprocessing work performed by Spectrum
Energy and Information Technology Inc. SCS' state-of-the-art data acquisition
and processing work on 5,000 kilometers of digital long-array seismic has
been completed together with initial interpretations by SCS' geoscientists.
This milestone represents a culmination of work that began offshore the
Republic of Guinea, West Africa in early 2002.
Neil Moore, president of SCS, stated,
"Prior to our work, the basic view of geologists worldwide was that the
area offshore Guinea was considered to lack petroleum potential. We believe
we have evidence to completely turn that view upside down. To date, we
have uncovered four highly prospective trends that are being mapped to
help us pinpoint numerous potential drilling prospects. Our work increasingly
supports the viability of commercial hydrocarbons offshore Guinea. The
existence of gas is now confirmed as seeping into the ocean in 'plumes'
at significant locations within the concession. We have also observed that
the surface trends that have been found are consistent with fault 'chimneys'
on the latest seismic coverage. These 'chimneys' reach depths that are
favorable for oil. Furthermore, the subsurface features being mapped tie
exactly with surface features of satellite photos reported on earlier.
It is genuinely exciting to watch this picture being painted frame by frame."
SCS' work provides clear evidence
of major Delta Fans in extensive trends offshore Guinea. Such Deltaic features
around the world are normally rich in deposits favorable for hydrocarbon
reservoir development. In addition to the gas seep trends that are in 50
to 100 meter water depths, SCS geoscientists have evidence that rapid sedimentation
of major tributaries across the Delta has weighted the outer shelf. Robert
Bearnth, senior vice president of SCS, stated, "This has created massive
residual structures at the shelf edge. These features are set along the
current Guinea continental shelf in an extended semi-circular ring. The
seismic data indicate that a carbonate reef developed at an earlier age
in this zone. It is now situated 4,000 meters below the surface along at
least 50 kilometers of an ancient shoreline. The indications are growing
that there are many traps at different ages and more than adequate source
rock to create major sources for hydrocarbons."
Kent Watts, HyperDynamics' chairman
and CEO, said, "We now have an abundance of quality data that geoscientists
can sink their teeth into. We believe that the processing, reprocessing,
analysis and interpretation of this data will be ongoing and continue to
benefit us for years to come. This major accomplishment lays the foundation
necessary for us to move forward toward drilling the first exploratory
wells offshore Guinea."
About HyperDynamics
HyperDynamics is a provider of integrated
information technology services. HyperDynamics' wholly owned subsidiary,
SCS Corp., develops geophysical data services for the oil and gas industry
including its integrated SCS NuData(SM) services while its No. 1 focused
priority is exploring and developing new regions of Africa for energy production.
Safe Harbor Statement under the Private
Securities Litigation Reform Act of 1995: The statements contained herein
that are not historical are forward-looking statements that are subject
to risks and uncertainties that could cause actual results to differ materially
from those expressed in the forward-looking statements, including, but
not limited to, certain delays beyond the company's control with respect
to market acceptance of new technologies or products, delays in testing
and evaluation of products and other risks detailed from time to time in
the company filings with the SEC.
--------------------------------------------------------------------------------
Contact:
HyperDynamics
Corp., Houston
Kent Watts,
713-353-9400
kent@hypd.com
or
Investor
Relations
Stock Enterprises
Jim Stock,
702-274-5400
stockenter@aol.com
or
Ashland
Capital
800-277-9081
ashcap@adelphia.net
--------------------------------------------------------------------------------
Source: HyperDynamics Corp. |
Charts Provided Courtesy
Of TradePortal.com |
