As you can see from the chart, HDY is rebounding nicely after yesterday’s high volume sell off from the close on Thursday.
The AMEX decided to halt the stock for the entire day on Friday to allow the company time to get the news out, and their response to the events.
Those close to the company believe the problem in Guinea can be rectified in short order. I am not quite as trusting. My experience has been that anything political, international, or corrupt in nature takes a long time to work it’s way out. Sometimes outcomes can be favorable, sometimes not.
Just as I predicted in last Thursday’s BLOG, the stock made it’s low on the first trading day after the news came out. Personally, I had a limit order in to buy at $.50 if the stock had traded that low. It did not.
Now the stock is rebounding and trying to attain the $1.40 level. Coincidentally, this is almost the exact level at which we published our first edition on the company. It will be 2 years ago October.
The believers now have the upper hand. However, if the issue is not resolved in short order, as time goes on the believers will become impatient and the stock will start grinding down.
If you are going to give up on this idea, now would probably be the time to offload your position.
If you want to hang in there- good luck. I hope it does go favorably.
I will probably sell a percentage of our company’s holdings and keep a little in case HDY is able to work out the problem with the Guinea government.
In the interim, sources close to the company tell me all is not lost, and a quick resolution could be in the offing.
You can call Rob Gleckman at 800 277 9081 for more information. He is very close to the company, and can give you up to the minute information.
any way you shake it hdy is going to have lesser or no say in this deal. looks bad
Editor: As I have stated in the past, problems like this never seem to get resolved quickly. Company fans are rallying now. Let’s see how they are doing in two months if HDY still doesn’t have the drilling permits.
I believe that US Oil is the one that has created this problem. They probably realized that the Guinea Concession is a major find. I think that HDY has performed everything necessary under the PSA with Guinea. Then, in the bottom of the 9th inning, ready to pull permits, I think US Oil is trying to wedge their way back in. Just my thoughts.
Editor: A distinct possibility, and I heard rumors to that effect earlier today. Nevertheless, their ability to drill is still now in question. We have to see how it plays out. I just believe it is going to take a long time. Legal time frames and stock market time frames don’t have much to do with each other.
The fact of the matter is nothing is lost. The company is trying to resolve this on many fronts including the political and diplomatic fronts. My conversations with the company indicate that anyone trying to step into HDY’s shoes would take at least 3 years to get to the point where HDY is today because they have ALL the data. Do you really think Guinea wants to delay drilling by at least 3 years? Panicing never made anyone any money in the stock market and I believe that is what you are doing here. It’s really not that uncommon to run into stumbling blocks along the way when you are dealing with 3rd world countries. I believe a little patience is in order. I also believe that it is quite possible that drilling permits will be issued coincident with the resolution of this matter. That could take the stock to new highs. You may be paying a lot more for those shares you are giving up today. You also seem to indicate that HDY moved too slowly to the drilling phase. I believe that is garbage. Developing prospects in a concession this size takes time especially in that part of the world. I don’t believe anyone else could have performed this work much quicker. All the work has been completed well within the time frames originally anticipated when the PSA was first signed. I still think there is more upside in this stock than in any stock I have ever owned. That alone makes it worth holding onto through these difficulties. As a matter of fact I was able to add to my position yesterday at .88. I hope you continue to follow this stock.
Editor: There is no way I would quit following the stock. There is too much upside if they get this resolved. If I were panicking, I would have sold the stock on Monday in knee jerk reaction. Instead, I predicted the stock would make it’s low on the first trading day and then rebound. It did so.
I am drawing on years of experience and have living through similar situations. Ever hear of Crytalex (can’t remember the exact spelling) in South America. Mining situation, but similar. Government signed a deal with them, but they could never get the permits to mine.
As I have been saying, I don’t believe situations like this ever get resolved in stock market time. It could take months or years or never get resolved favorably. HDY might not be in the right position to funnel millions under the table, which might be what is required. Or, it might get resolved in a month.
If I am wrong and I have to pay up, I will gladly do so. If I don’t buy it back within 30 days, I can benefit from a tax loss and still own it, which would probably cover the difference in owning the stock at a higher level.
Nice trade at $.88. I was hoping to buy for $.50.
My comment is to Dennis– I am sitting here with a glass of wine in my hand trying to smell the roses. “The day of wine and roses are over” As far as HDY is concerned. Hope you do well Dennis. The more i read the 8K the more i am convinced it will take a long time to resolve.—–Warren
Editor: That is my view as well. Hope it’s a good glass of Cab. One of my weaknesses.
None of us invested in this company for its Louisiana production and I was even skeptical and opposed to it when the idea was first announced. However I now believe that these Louisiana properties are becoming a story which SHOULD NOT be ignored. After reading everything the company has published about its Louisiana properties and running some projections on potential revenues and earnings, I am now convinced that the company is undervalued based on its Louisiana properties alone. Will you get rich on HDY’s Louisiana properties, probably not. But I do believe we may be able to enjoy an above average return on our money while we wait and see how Guinea plays out. I honestly believe the Louisiana story has been totally lost in the furor over Guinea. If you have not looked at HDY as a fledgling US oil company which is growing very, very rapidly and has Guinea in the background as a potential grand slam, I would urge you to do so.
Editor: I believe the stock is worth somewhere between $.50 and $.75 per share based on the Lousianna properties. The rumored $3 to $5 million in annual revenues against a market valuation of over $50 million does little for me in terms of upside from here. In my view, the Louisianna properties allow them to continue to exist with some cash flow while they try to work out the Guinea situation. It mitigates the downside from here, but I am looking for home runs in microcaps.
Has there been any update from the company regarding Guinea field?
Editor: no, there has not. Could be a long road.
I realize you said you are getting out of this stock but do you have any comment about the latest filing??? Good, bad, or indifferent? http://biz.yahoo.com/e/050818/hdy8-k.html Thanks
Editor: In my view, bad. If they are doing so great in Lousianna, and for the time being aren’t spending any more money in W Africa, why do they need capital and further dillution? I am just about completely out.
Perhaps no one is more disappointed in the recent turn of events for HDY in Guinea than I am but it ain’t over yet. The recent financing deal can be looked at from this perspective—it will allow the company to get all their ducks in a row in regard to equipment, tools, casing, cement, drilling mud, site preparation,well heads, pipe lines, storage facilities, pay etc. etc. so they can drill the remaining wells in a timely, well coordinated effort and without interruptions. At least, that’s what I hope they’re planning. I would be. In the meantime, I’ll keep my fingers crossed for a rational and timely resolution to the recent display of human folly from the dark continent–any wonder it’s still dark in too many places.
Editor: In the meantime, the stock is doing exactly what I said it would do. Sell off, temporary rebound, then sell off. There will come a time when this stock is a buy again, but it has not arrived. In the interim, the need for capital is contrary to everything I have heard about their Louisianna operation, so I don’t view it as a positive. If it is used as you describe, perhaps it will work out for the best.
would hdy’s latest financing be considered as what they call “death spiral financing” ? Nathan
Editor: No, it is not. I personally know the group that is doing the financing, and they have a reputation for treating stocks properly. Also, the majority of the capital will come in based on the company’s exercising put options at a very reasonable discount to the market. It is not a classic death spiral.
Wow, what a decent upside spike. Haven’t seen any PR to support whats happening. Did I miss something?
Editor: There was news concerning a pipeline contract and BP buying their natural gas at market price. The market responded favorably, but I don’t see it as any big deal. Without the West Africa project, I just don’t see the upside here.
What happened to the LA drilling sites with respect to Katrina. Were they damaged. Online or Offline. More valuable or less valuable at this point in time.
Editor: According to their press release, their drilling sites were unaffected by Katrina. Just to clarify, I am no longer a believer in this one unless they revive the West Africa project. The stock is trading up right now on news concerning the purchase of their natural gas.
According to the Hyperdynamics Investor Blog the company has responded to the PR with saying, At the time we have 20 wells. And several of them hold large quantities of natural gas (NG). At this moment in time, we are not producing any NG, however we are currently working on updating our operations too handle the sells and production of NG. They are saying “large quantities of NG” and they made a deal with BP to buy their gas. Why are you saying, “this is no big deal”. If they are saying “large quantities”, sounds like a big deal to me. BTW, always appreciate your input and insight.
Editor: I am saying making a deal to sell natural gas to BP is no big deal. There is a shortage of natural gas, and anyone will buy it. As they say, they have zero revenues and have never had any revenues. Yet, at the current price, investors are willing to pay $75 million for this company. Until there are some cash flows and proven reserve numbers from their wells, which they admit are not yet producing one dime of revenue, I don’t believe it is worth paying $75 million for this company. If you added in the upside potential of the West Africa project along with the data they gathered, now you have something worth speculating on. If you have some hard data on cash flows of natural gas, then you can put a valuation on it. Believers will hang in there in denial. I believe they current surge in the price is a selling opportunity.
I agree that the NG wells are not producing one dime of revenue. They just discovered they had large quantities of NG, and expect to be online in the near future. However, the shallow oil wells are producing $. I bet HDY will be a ten bagger (without Guinea) before any of the other stocks you follow. I believe there is plenty of upside without Guinea and a nice story that is unfolding.
Editor: That is why I have this BLOG- so that people can share varying points of view. You might very well be right, so I hope everyone reads your thoughts. However, I cannot quantfiy the number “large quantities”. In the oil and gas business they use the phrase “proven reserves”, and then quantify it. Until there are some hard numbers, I cannot put a pencil to it. Since this company has just remained a “story” for so long, I believe the market is going to wait for hard numbers before it buys into the story. If you believe the company will be worth nearly $1 billion off some Lousianna natural gas finds, more power to you. In addition, there is no disclosed evidence to support the fact the there are any revenues from shallow wells. We will have to wait for June numbers to see it for real.
We’re do you get $75 million? The current marketcap is $56 million (@ $1.35). Do you think the company is worth $56 million?
Editor: Quite right, but you are not accounting for the additional shares to be added from the financing they have entered into, which will show up sooner or later, or any options or warrants that remain unexercised. Those probably range into the 10 to 20 million share range. Within one year, I believe it will be safe to assume there will be dillution. Perhaps I am over guessing a bit.
any comment on the latest news from hdy ???
Editor: Sounds promising. Might make me pick up a few shares just in case they get the deal revived.
I think OTB should write an update on this, seems to be gathering steam.
Editor: Nice to see it rebound a little. I hope the believers do well with it.
Per the editor’s response in #16, are you not going to cover HDY to the extent you did before? I think a call into mgmt, and an update from you is long overdue.
Editor: Sure, now that it’s going up again everyone wants more coverage. Looks like the Guinea thing might be back on.
Still thinking this is going to take awhile to resolve? I’m betting otherwise. I would guess within 1 month with multiple partners announced by December. Glad I didn’t take your advice and accumulated.
Editor: Happy for you. You should be doing quite well now. If they pull this off, there is a lot more upside in the stock.
options and warrants apply to the number of outstanding shares because they can be converted to stock. so the 10 -20 million share number above is inaccurate.
Editor: There you go. Thanks for the contribution.
NEWS! What say you? Are you a believer again? Now that things are back on track with Guinea, is this good for the company? Are you going to start covering this company again like before?
Editor: Planning a BLOG today.
I think I’ll throw away the cheap cab and break out the Dom. I hope after your recent blunders on this stock you won’t have to drink wine out of a box or out of a bottle with a screw on cap. Obviously the proper strategy was to buy more when there was blood in the street rather than to sell in a panic. Hope you get back in to enjoy the great future of HDY with the rest of us.
Editor: I hope the stock goes to $10.