HYPD has stabilized and appears to be on the rebound for the time being. The company was out with news last night after the close. HYPD described new results it was gleaning from old data. Using a new technology known as Prime View, HYPD has been able to determine that the first and only well ever drilled in the concession (1978) did in fact find natural gas. However, the new technology allowed HYPD to identify where the well should have been drilled for the best result, and a high probability the result would have been prolific.
Natural gas on the coast of West Africa is simply not as valuable as oil. However, it is anticipated there will be a tremendous local market developing for natural gas for regional customers. Two large bauxite mining operations are being developed in Guinea, and they will have an enormous appetite for the fuel.
Much is being made of the looming potential excess supply of stock which could be hitting the market on HYPD in the coming months. 960,000 shares came legible for sale in January, and 6.2 million become eligible between January and March. This stock has a cost basis of $.80.
Just because the stock is eligible to be free trading, doesn’t mean the holders plan to sell. In fact, shareholders have only filed to sell 74,000 shares so far this year. That’s far short of the 900,000 that are already eligible for sale. I plan to publish a comprehensive overview on this issue in a mid week edition.
The chart shows a stock that is trying to break above its recent newly established downtrend line. I would like to see the stock break above this downtrend line with conviction. This would help confirm a trend reversal.
I still believe the market is nervous about the potential excess supply, and hungry for news of exactly how the company plans to develop the Guinea Concession. However, the drop in the stock seems to be related to expectations of pending supplies of cheap stock, and the facts simply don’t support the expectations at this time.
I have always felt this was the risky company we cover, but also the company with the most upside potential. Lately we have been getting a taste of the risk side of the equation. Maybe’s it’s time to see a little of the upside come back to the stock.
How does one see this data: “960,000 shares came legible for sale in January, and 6.2 million become eligible between January and March”
Editor: It was published in an 8k filing- I believe it was last June. It takes a fair amount of research to dig this stuff out.
I think this is good news. They can drill some shallow gas wells and, if successful, they can sell off some of that to finance the deep oil wells. I think in the long run it means the company keeps a larger percentage of the production and less dilution of the stock will be required. What do you think?
Editor: I believe anything they do to get moving on the Guinea concession is great news. Less dillution is always great news. I agree.
Wednesday’s news makes it sound more and more like they’re thinking about trying to go it alone in exploiting the African concession. Do you still believe it’s impossible for them to pull it off?
Editor: They believe they can do it for some of the shallower targets. I can’t say for sure, but I know a major partner on some of the deeper targets would get the market excited. This is a multi-year investment.
No doubt it will take some time. But I still believe this could be the investment of a lifetime. This is a HUGE concession that has multiple drilling prospects. I have little doubt that there are hydrocarbons present. My biggest fear is that it is mostly gas, which would still be valuable but costly to develop and may have a limited market in that part of the world. My hope is that they hit some nice gas wells early on and then move QUICKLY to the deep plays and hit oil. I plan to stick it out for a long time until the prospect is fully explored. The seismic and other test results have been GREAT. The chief geologist has elected to take his full salary in stock!!!! This one is going to take some patience, but the potential rewards are enormous. Hang in and enjoy the ride. It could be wild.
Editor: If you take that point of view, then these short term ups and downs in the market should be of no concern other than perhaps providing opportunity to accumulate some cheap stock. On the slightly negative side, the company did tell me they would be a little further along by the end of 2004 then they are. However, the development of fields like this are multi year projects.
I spoke to investor relations a week or so ago, inquiring about a possible listing to a more senior market. He thought that they may have already (or were about to) filed with AMEX. do you have any sense as to the timing of such a listing?
Editor: I can’t say for sure whether they have or haven’t. If they have, it would be a good move. However, I don’t believe you should hang your hat on an AMEX listing. If you own the stock, own it because you like the company. An AMEX listing would improve the size of the audience if they are successful, but it has nothing to do with whether they succeed or fail. That is the crucial issue.
It looks obvious that this stock (HYPD) is going to try for the lower end. Do you have any info on the reason it gave-up on its rebound. I have a theory that maybe some more of those shares of stock broke loose. I noticed the volume was rather low for a drop if like today, 2-22-05, if the shorts are covering. Would love to hear your idea on it.
Editor: No, I can’t say why the rebound slowed. Perhaps it just wants to be a $2.50 stock for the time being while the market waits for either more insider filings or news out of West Africa. Since I last published, there have only been 2,000 shares filed for sale. A total non event. In my view, if you own this stock, you need to be long term.
I’m starting to believe this company is interested in going out on this alone for the time being instead of waiting on partners. Some may see that as a mistake, but it means greater revenues for the company, and ultimately investors. I wouldn’t be surprised if this project takes off sooner rather than later and we’ll get an announcement one of these days surprising us with independent contractors signing with the HYPD, IMHO.
Editor: I can only hope you are right in your assessment.
what are they waiting for,now is the time to be drilling.
Editor: Yup
Unusual volume today and it is headed in the right direction. This company has put out only good news for years now. Is there a new deal on the horizon ?
Editor: I am hearing rumors the company is doing extremely well with it’s Louisianna property. News at 11.
Following cut and pasted from most recent quarterly report: ” We also have three contingent notes payable totaling $856,000 to be paid in installments of 25% of HYD’s net income over the next five years.” Can HYPD pay the $856,000 in cash if net revenues exceed this figure, or is half of the next five years net income already spoken for, and common shareholders will not benefit from it?
Editor: HYD refers to the company’s Louisiana oil properties. Since it’s a contingent liability, it would mean it only gets paid if they are generating revenues. It must be related to a partner in the property, which is typical in these types of drilling and exploration programs. The company probably won’t be paying anything if they don’t have revenues.
$2.68 –hypd The volume of purchases has increased up sharply on no new. Believe that a annoucement is coming in the near future. $3.00 a share should be reached shortly.
Editor: I’ve been hearing some rumors about good results in their Lousianna properties, but no public disclosure yet.
Purely charting- HYPD breaks out of an ascending triangle which started on 2/11, easily visible on the 60 m/daily charts. Triangle measures .75 to 1.00 upside from breakout point. Any thoughts?
Editor: Is this what you are seeing- if so, a break above the upper trend line would be very bullish technically- I would have to agree.
I’m not sure if the chart will post- I have to hit the button and find out.
Well, so much for that chart pattern. HYPD retested the triangle breakout point yesterday, as would be expected, but failed and traded down thru the gap zone and ultimately below the up trend line started 6 weeks ago. That now appears to be near-term resistance. Thoughts?
Editor: I attempted to upload a chart in this software, and it doesn’t work. My comment on HYPD is that $2.50 seems to be support. It doesn’t look like a traders delight at this time. If you own the stock, you should do so because of their fundamentals and upside potential with the West Africa and Gulf properties.
Having found more oil and gas than they anticipated could this help the stock move and generate more income-may sound like a stupid question.
Editor: It could help the stock move up, but I think the stock is suffering more from a buyers strike than anything. I don’t believe buyers are convinced those 6 million shares at $.80 aren’t for sale yet. Sooner or later, if there are no filings, we could have a breakout again.
I’m having a hard time understanding why the market is not recognizing the enormnity of the last PR. This allows HYPD to gain a larger profit in going at it alone initially in West Africa. It also means they’ll take the highest prospects first and start sinking wells. Instead of waiting on a major to cut them in for a small percentage, they’ll call the shots as to when the start drilling and MAYBE cut the big boys in for the deep water wells. They can also claim the reserves to their bottom line after defining the field parameters. Can’t help but admire the moves management is making.
Editor: I see a lot of stocks trading very poorly right now. If you don’t understand it, perhaps it is more of a buying opportunity than anything if you believe.
many investors are looking at this stock in a very emotional and non pramatic perspective. this stock needs to cross and hold key moving averaqes in oder for this to be considered a scuccesful investments- comments sound no different then oil speculators down in Texas
Editor: Your observations are probably true. They have given some raw data to support the market’s belief. June quarterly numbers will give us some idea where we are without the West African concession.
Is this Louisana site accessable? Can the product be delivered without a great deal of difficulty or cost?
Editor: I am told that is the case. However, we won’t really see any related SEC filings until the June quarter, which is unfortunately their year end. This means they will have to do the annual audit, and we won’t see the hard numbers until the end of September. The company does have the ability to publish some interim cash flow numbers, and I hope they will do so.
Why has the stock dropped off this week?
Editor: I believe it is 100% driven by more market conditions and light volume. Nothing related to the company. There has only been one more filing by a shareholder to sell about 100,000 shares. Pretty much a non event.
the gangs at RB and buyb4therush on pins and needles for your comments on the latest announcement
Editor: Sorry for the delay- check the weekend edition.
how much of a stock price jump are you referring to when you say “the stock could go rocketing up the charts”? from $2 to $10? from $2 to $20?
Editor: That’s a very good question- $2 to $5 is entirely possible- $2 to $10 is possible- $2 to $20 is possible, and $2 to $.50 is also possible. I know the mangement at the company believes they are sitting on the motherlode. They are thinking towards the higher end of the range. In order to see anything like $20, you are looking at a fully developed program generating serious cash flow. In order to achieve this, it will take several years to build out the infrastructure and prove out the reserves. In order to see a pop to $4 or $5, you just need an event like a partnership with a major.
…anyone know or talk to mgmt about this court case?? I’d not heard about it. Is this potentially significant bad news?…or just a nuisance?? 3.8M shares @ 0.40 would definitely not be good news. Anyone?
Editor: Seems like a non event to me.
In your latest comments on Hypd you say that investors have filed to sell only 257,750 of the possible 6.2 million. Where did you (where could I) get that information from? thanks
Editor: From a service I pay for that provides non-Edgar filings online. http://www.10kwizard.com.
Have they started any drilling in the areas they feel there is oil? Is there any real interest from a major?
Editor: Anectodaly I hear they are doing great. I would like to have them put out more 411, but I don’t control them.