To OTC Journal Members:
 

HyperDynamics (OTC BB: HYPD) More Seismic Evidence Continues to Mitigate Risk

You are looking at HYPD's west African offshore oil and gas concession as seen from the space shuttle Columbia. Friday, after the market closed, the company reported that another independent Geo-Service has reported the high probability of a major oil formation within the defined boundaries.

According to Friday's press release, Petroleum Geo-Services seismic interpretation project "interpreted that the potential exists for mature source rock in the Lower Cretaceous. Five main leads covering more than 700 square kilometers were identified and mapped within various stratigraphic intervals based on anomalous amplitudes. The size of one of the largest leads is undetermined because the lead continues beyond the existing 2D seismic coverage. The leads are at various depths, and in one location three leads can be tested with a single well."

This information is now coupled with the summer's coring program that yielded a very positive result in 55 of 57 core samples, and the fall's satellite program which showed oil slicks on just floating on the surface. An independent satellite consulting firm stated the oil slicks originated from the ocean's bottom.

All this evidence eventually has to lead to an inevitable starting point. When does someone step in a show shareholders when this project gets started? I know it takes years to develop a major oil field. I also know that the more data HYPD has before making any kind of a deal with a major development company, the better deal the company can make on behalf of shareholders.

However, speaking as a shareholder myself, I have one message for the company: Let's get going. Now, despite the sarcastic quip, I know the management is going to cut the best deal possible for shareholders, and will do it to maximize benefits for shareholders. But it's been over 18 months since they had data, so we should be closing in on some sort real beginning to this project.

The six month chart has one striking feature. Note the large gap in mid October. The gap occurred when the company announced the results of its coring program. The market now believes the eventual development of the concession in some form is a fait accompli.

You are also looking at a stock that has simply been grinding in a narrow range for four months. In general, the longer the stock grinds in the range, the more volatile the eventual move will be, whether it is up or down.

In my view the ongoing announcements concerning data interpretation serve an important purpose. They mitigate the risk associated with owning the stock. Each one of these positive results are like individual bricks in a wall. The more bricks that get placed, the more likely the wall will be finished eventually.

They are also keeping the stock at a level where the market believes there is a high probability the concession will eventually be developed. The stock is trading at a level where those who are losing patience can get out with a reasonable return, and those want to get on board are getting in when there is still some doubt, leaving a lot of upside.

This is the kind of investment that will test your patience. However, just when you are ready to give up, the big news will come and the stock will take off. Can you stick it out?

Here is the complete text of the news release for your review:
 

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