History
Hyperdynamics bet everything on one Guinea offshore concession, spent heavily on a costly first well, lost its partners and listing, and saw its last rescue deal collapse in December 2017.
2001-2008: A shell and a concession
In June 2001 DJX Ltd, a Belize company owned by relatives of chairman Kent Watts, took majority voting control of Hyperdynamics by swapping preferred stock for SCS Corporation. The American Stock Exchange cleared the company's securities for listing in May 2005. In September 2006 SCS signed a Hydrocarbon Production Sharing Contract with the Republic of Guinea, an offshore exploration concession that came to define the company.
Money came mostly from lenders. In June 2007 the company bought 85% of the working interest in about 1,150 acres of Louisiana oil leases from Rabb Resources, which stayed on as operator. In July 2007 it converted all its 2006 Cornell Capital debt to equity, becoming debt-free, and a warrant-repricing offer brought in $5.25 million. By February 2008 it had turned to a costlier lender, Yorkville/YA Global, for a 20%-interest loan secured against the Louisiana leases.
2009-2010: Finding partners
NYSE Amex warned in March 2009 that the company was out of compliance with listing requirements. In September 2009 Guinea and SCS agreed that Hyperdynamics must spud (start drilling) at least one exploration well by the end of 2011 and surrender 64% of its contract area.
To share costs, the company sold Dana Petroleum a 23% interest in the concession. The deal was agreed in December 2009 and closed in January 2010, and SCS became operator. In May 2010 it collected $19.6 million from Dana and paid $3 million to settle a dispute with seismic contractor GSI. A second possible partner, Repsol, was in exclusive talks over a 37% farm-in, but the beats record no deal. Guinea signed Amendment No. 1 to the contract in March 2010. The company then contracted PGS Geophysical for a $21 million 3D seismic survey, and in November BlackRock-managed funds agreed to buy 15 million shares at $2.00 in a $30 million placement.
2011-2012: Sabu-1 and the cost blowout
In March 2011 the company raised about $137 million by selling 28.75 million shares at $5.00 through Rodman & Renshaw, its largest raise. It hired AGR to manage drilling, contracted the Jasper Explorer drillship, and commissioned a second, roughly $29 million seismic survey from CGG Veritas. It moved to the New York Stock Exchange in July 2011. Shares on issue rose from 156.8 million at the end of 2011 to 167.7 million at the end of 2012.
The first well, Sabu-1, ran into mechanical problems. In January 2012 its estimated cost reached $125 million ($96 million net to Hyperdynamics), and the company deferred a second well. It raised about $30 million in stock and warrants in February 2012. In May the NYSE warned that the share price was below its $1.00 minimum average. In June 2012 SCS also sued AGR Well Management in the English High Court over the well.
2013-2015: Selling down and delisting
In November 2012 the company agreed to sell Tullow Oil a 40% interest, with Tullow taking over as operator and covering up to $100 million of future costs. The deal closed in January 2013, with Tullow paying $27 million, well short of what had been spent on Sabu-1, leaving Hyperdynamics with 37%. Shares on issue fell from 167.7 million to 21.0 million over 2013. The beats do not explain this change.
In April 2014 the NYSE said market capitalization and equity were below its $50 million thresholds. In May 2014 the AGR litigation settled, with about $15.6 million recovered net from escrow. Further warnings followed in early 2015, and in March 2015 the NYSE suspended trading and moved to delist. The shares began trading over the counter as HDYN.
2016-2017: Restarting alone, then a partner and a rescue
In August 2016 Tullow and Dana settled their arbitration with the company and withdrew from the concession, returning $8.1 million of drilling equipment plus a modest cash payment. No well was drilled under Tullow's operatorship. Guinea approved a Second Amendment in September, and in December the company signed Pacific Drilling for a drillship to spud a new well in mid-2017.
In March 2017 the company, Guinea and South Atlantic Petroleum (SAPETRO) agreed to spud the Fatala well by May 30, 2017. In April SAPETRO took 50% of the concession, and Guinea approved a Third Amendment. Shares on issue rose from 21.2 million to 35.6 million during 2017, with no raising detailed in the beats.
In October 2017 SAPETRO withdrew before drilling, paying $4.9 million to settle its share of costs. In November the company agreed to sell 40 million shares at $0.15 ($6 million, about 53% of the stock) to Hong Kong's CLNG Limited, subject to due diligence, a waiver from Series A preferred holders and cuts to liabilities. On 15 December 2017 Guinea verbally refused a two-year appraisal extension and CLNG walked away. As of that date Fatala had never been drilled, and the company had lost its rescue financing.
Written from the 43 story beats below (2001 to 15 Dec 2017), which come from the company's own announcements and filings.