Hyperdynamics (HDY) and its big selloff

I love oil and gas deals.  On the surface, they seem pretty straightforward.  Drill a hole in the ground and pull oil out….simple!  Right?  Not exactly.  That is the dilemna that HDY is in now.  They have been trying to pull oil out of the ground since 1996.  They will tell you of their great potential (and raising over $10 MM means they must have some promise), but everyone is still waiting for them to strike oil.

Hyperdynamics Corporation ( HDY) had a bad day yesterday when traders sold them down over 20% on news that the company raised $10.5 million through the issue of approx. eight million shares at $1.30 per share. The attached warrants had an exercise price of $1.58.

Traders and investors hammered the shares of this oil and gas exploration company.   The question for me is will we see a recovery in the share price sooner rather than later.  I think that traders and investors will bid it back up eventually.  HDY has too much momentum right now to stay down for long.  The stock may  dip a bit in the near term, but I expect it to resume its climb soon.

Their oil prospect is an offshore license with the Republic of Guinea (West Africa) and their exploration area is more than 20,000,000 acres.  They claim to hold the “Largest Unexplored License from Gibraltar to Cape Point”.  They are saying all the right things in their PR’s.  The Dana Petroleum deal isn’t hurting, either.  HDY sold off a 23% interest to a leading oil and gas company.  Dana is traded on the London Exchange and is an impressive company in its own right.

Here is my annotated chart:

Watch this one closely.  I could see a bounceback coming as soon as today.

Good luck and good trading,

Jeffrey Dean