Hyperdynamics Corporation (AMEX: HDY) takes a break after a move up

Hyperdynamics Corporation (AMEX: HDY) , the oil and gas exploration company, has announced on April 25, 2008, the discovery of very large structural traps to exist offshore The Republic of Guinea, West Africa. The discovery adds to the potential properties the company plans to add to their acquisition portfolio. Hyperdynamics has already acquired several 2-D seismic grids and still look forward for the 3-D seismic grid of the property before the start of drilling activities.

The company's stock has surged up by more than 50% after the news announcement. However the trajectory has currently stopped as the exploitation possibilities still remain uncertain. Hyperdynamic is in tight financial position which could adversely affect their exploitation plans.

To date, the company's increasing revenues from exploration activities have been negated by the huge costs of revenue. Hyperdynamics has incurred losses from operations for the last several fiscal years. The company's financial situation appears even worse considering they had just over $400 thousand in cash on December 31, 2006, according to the latest SEC filing.

In relation to their week financial position, on April 22, 2008, the company has signed an agreement with SMH Capital, the Investment Banking Division of Sanders Morris Harris Group Inc. Following this agreement the SMH will assist the company in obtaining technical, strategic and maybe even financial joint venture partners.

Hyperdynamics holds exclusive rights to explore and exploit 31,000 square mile of oil and gas concession offshore the Republic of Guinea. The company also engages in shallow oil production in central and northeast Louisiana in known productive areas. Hyperdynamics has also recently announced oil reserves in these properties to have increased to 121,513 barrels as of February 29, 2008. The CEO of Hyperdynamics, Kent Watts , has expressed positive expectations: "We continue to strengthen our company with domestic oil reserves and production as our West African exploration activity accelerates forward. Our strategy stays intact and is strengthening along these two fronts. <...> there are no PDP reserves calculated or yet reflected from our new Deville #1 well and the associated Big Island Field, we are still expecting a substantial increase to these new reserve numbers over the next few months. We are extremely pleased with this progress."

It looks like despite their thin financial position the company might hold a huge growth potential. They still have a few hurdles to overcome. The biggest hurdle we foresee is them securing the right partner, and we remain doubtful until we see that happen. But we are definitely not overlooking what might become of this.