otcjournal.com
September 29, 2003
Volume VI, Issue 97
Email : info@otcjournal.com
URL : otcjournal.com
To OTC Journal Members:
HyperDynamics (OTC BB: HYPD)- Completes Analysis of 2002 Data
I was hoping Hyperdynamics would provide some additional disclosure on the results of the seismic data in their 16 million acre concession off the coast of Guinea in West Africa. Today, just after the market closed, the company disclosed information on the data they compiled from the 2002 2D seismic readings. This new information allows me to publish a follow up edition, which is helpful for those who really want to understand this situation.
For those of you who may have missed my initial presentation on this company, go back to the September 20th edition entitled "Oil & Gas on the Dark Continent".
The remaining studies (discussed in today's news release) were taken from the Northern part of the concession. Neil Moore, President of wholly owned subsidiary SCS Corp. states the following in the press release:
“my calculations show that the zones are capable of holding billions of barrels of oil and significant amounts of associated natural gas. This new prospect, which is one of many being investigated in the area, is in addition to SCS’s current studies reported earlier this month."
Moore is a 42 year veteran of the international oil & gas exploration industry. He and Robert Bearnth (47 years; Exxon 1953 to 1980) believe they may have found the mother lode with this Guinea concession, and the excitement level at the company is breaking the needle off the meter.
The continued exploration of the concession is proceeding in the following manner:
2002 2D Seismic data has now been fully analyzed, and the company is using the data to identify zones from which they will get further data.
A boat will be assigned (it may be out already) to capture further 2D seismic data in the areas identified as high probability zones. That data will require about 60 days to gather. The boat will be using a 6,000 meter cable to capture very deep readings.
Once acquired the data gathered over that 60 days will be analyzed, requiring about 30 days for completion.
The knowledge acquired from that data will be used further narrow down target zones.
Once new high probability zones are identified, 3D seismic readings will be taken from a boat (about 30 days). This data will be analyzed and used to identify the target zones for the first test wells.
The first test wells are expected to be drilled in the 1st Quarter of 2004.
Share Price Stable- Poised For Next Level
The chart indicates the stock is now comfortable at its current level, digesting recent gains. It is in a solid uptrend, and a pullback to the trendline would be an ideal entry level. However, it might not drop back after today's news.
As you can see from the top red line, last Monday's gap up and surge took the stock to a new multi year high. Therefore, the "bar" for the stock price has now been set considerably higher. Since last Monday, the stock briefly dipped and "filled the gap", suggesting higher levels are just around the corner.
The next volume surge could take this stock on to new all time highs. If so, today's resistance line will become tomorrow's support line.
West African Oil&Gas Exploration Receiving Major Coverage in the Media
As I alluded to in the first edition on HyperDynamics, despite all the negative risk factors associated with the West African political climate, oil and gas exploration is beginning to gain traction. The Bush administration seems focused on encouraging international development away from the powder keg Middle East, and West Africa is receiving quite a bit of attention.
In fact, one OTC Journal member wrote me that he was buying the stock, and expected to make money even if they failed to find any major oil and gas reserves in the concession. He concluded the development and the hype in the region would be enough to carry the stock higher regardless of the exploration outcome. He figured a major discovery would simply produce greater profits (sounds like the old dot-com bubble).
I'd prefer it happened the old fashioned way; through a major fundamental breakthrough.
Thanks to another of our faithful members, I learned there was an article published about West African development in the NY Times on September 23rd. Click Here to go directly to the article.
This article is very important for your understanding of what is happening in West Africa and why I am so excited about the potential for Houston based Hyperdynamics. If you want to read today's press release, click here. Here is a reprint of the NY Times September 23rd article for your review:
September 23, 2003- NY Times
Energy of Africa Draws the Eyes of Houston
By SIMON ROMERO
HOUSTON, Sept. 22 - When Angola recently opened its only consulate outside New York, few people here were surprised that Houston was chosen.
Texas already leads the nation in trade and commerce with Africa. More than 1,000 Houston companies do business there, and 60 have significant subsidiaries on the continent, according to the city of Houston.
The city may have a way to go before it becomes a de facto commercial capital to Africa the way Miami is for much of Latin America, but it is becoming increasingly important to African commerce and diplomacy. And the city is becoming a significant starting point for affluent Africans seeking to do business in the United States.
The reason is oil. This is the energy capital of the United States, and West African countries like Angola, Equatorial Guinea and Nigeria are increasingly important suppliers of oil. They already account for about 14 percent of all American oil imports, and are forecast to supply 20 percent soon.
That has drawn giant energy corporations like Exxon Mobil and ChevronTexaco to the region, as well as midsize companies in related fields, like Bivac International, a company that inspects cargo at ports, and the Hanover Compressor Company, a provider of natural gas compression equipment.
"We already have a presence in Nigeria, but we want to be in Angola," said Steve Russom, Hanover's vice president for product development and technology. "The domestic oil and gas market is kind of flat, but Houston's still the epicenter for the energy industry, essentially the place where we can put together deals anywhere."
The interest of energy companies in West Africa is encouraging ventures in a variety of fields. EDI Architecture, like dozens of other companies here, is betting its future on strengthening ties to Africa. It designed the Angolan consulate here, a luxurious corporate suite discreetly decorated with the burgundy and gold colors of the nation's flag.
The hunger for additional deals is not lost on Houston's leaders. Mayor Lee P. Brown, for instance, led the first trade mission of any American city to Luanda, the Angolan capital, this month. He went with 20 executives interested in reaching business agreements in Angola, a southwestern African country about twice the size of Texas and rich in oil.
Mr. Brown also visited neighboring Namibia, a mineral-rich former German colony of two million people. The port of Houston concluded the trip with an agreement to provide consulting advice to the Namibian port of Walvis Bay.
EDI Architecture was among the more experienced participants, having already built American-style residential compounds in Angola for Exxon Mobil and Angola's national petroleum company. It is currently building a 20-story office tower in Luanda.
"It's not like there are Wal-Marts or Home Depots in Africa where people with money can consume," said Darcy Garneau, associate principal at EDI, which has opened an office in Luanda. "When we build a residential compound there we bring in everything down to the forks and knives, and that's an opportunity for us."
Whetting the appetite for more opportunities are expectations that the expansion of West Africa's oil industry is just beginning. It is expected to account for one of every five barrels of growth in global oil production capacity in the next decade, according to Cambridge Energy Research Associates.
New ventures in smaller countries like Chad, the Congo Republic, Gabon, São Tomé and Príncipe, and Niger are expected to account for much of the growth.
"Conducting business in the region requires a healthy appetite for risk," said Rogers Beall, a businessman here with a contract to help negotiate oil exploration agreements for Guinea-Bissau, a West African country of 1.3 million whose president, Kumba Yala, was ousted in a bloodless coup last week. Mr. Beall said he expected the military officers in charge of the government, led by Gen. Veríssimo Correia Seabra, or other transitional leaders to continue to use his advice on moving forward with oil exploration plans.
Despite such complications along the way, prospects in Africa are drawing many companies in Houston that are not in the energy business but are related to it. Charter airlines, construction companies, port inspectors and transportation companies based here are trying to seize on Africa-related opportunities.
Among the companies represented in the Angola mission were large energy concerns like Exxon Mobil, ChevronTexaco and Devon Energy. But so were smaller companies, including Hanover Compressor, Bivac and Houston Express, a new airline that is offering nonstop service from Houston to Malabo, the capital of Equatorial Guinea, and to Luanda.
The airline is backed by Sonair, the aviation subsidiary of Angola's national oil company. The Luanda flights are not cheap, running $3,615 for a round-trip ticket in coach, $5,915 for business class and $8,240 for first class. The airline is clearly focused on business travelers, with its MD-11's outfitted with 12 first-class seats, 78 business-class seats and 21 coach seats.
There are several other reasons Houston, the nation's fourth-largest city, has been quick to establish ties with Africa. Largely because of the need for employees of energy companies to travel back and forth from drilling areas, Houston has some of the nation's best transportation links to Africa, including direct flights to African capitals like Johannesburg and Lagos, Nigeria, as well as the service to Malabo and Luanda.
At the same time, the port of Houston, the leading American port in terms of foreign tonnage, exported more goods to Africa last year, 33,374 tons, than to Asia, 23,346 tons. Over all, Africa accounted for 5 percent of the port's total trade in 2002, more than the Middle East, Central America and or the Caribbean.
Influential émigrés like Kase L. Lawal, a Nigerian-born businessman and owner of Camac Holdings, a Houston-based oil company with interests in Nigeria and South Africa, are another reason Houston's influence in Africa is growing. There are about 20,000 people from just one country - Nigeria - here already, for example. More are attracted each year by Houston's warm climate and its reputation as a relatively easy place to establish a business.
While the African immigrant community is still dwarfed by the larger communities of Latinos and Asians who poured into Houston in the last 20 years, the Africans are for the most part better educated than other immigrants - and even native-born Americans in the city. Nearly 35 percent of Africans in Houston have college degrees and 28 percent have postgraduate degrees, compared with 28 percent of American-born whites with college degrees and 16 percent with postgraduate degrees, said Stephen Klineberg, a professor of sociology at Rice University.
This has allowed some Africans to advance in areas like banking and publishing as well as energy. And that suits Chido Nwangwu, the publisher of USAfrica, the nation's largest African-owned newspaper, just fine.
"The main problem with the relationship between Houston and Africa is that it is predominantly based on the energy industry," said Mr. Nwangwu, a native of Nigeria who recently created a magazine called Class for affluent Africans in the United States. "We're at risk of becoming too dependent on one area if we don't achieve a wider mix of transactional interchanges."
To be sure, most of the investments in Africa by companies from Houston are focused on extracting natural resources like oil, gas and timber. Few involve direct investment in factories or manufacturing plants that create jobs and lay the foundation for sustained economic growth.
Still, such efforts are part of Houston's aspiration to become a global city like New York and Los Angeles. Mr. Klineberg said Houston's best chance of achieving this was through a "realization that our location near depleting oil fields won't cut it anymore."
"Houston was a biracial city dominated by white men for much of its history," Mr. Klineberg said. "If we're to get beyond that system and capitalize on our diversity, it has to be done by thinking internationally."
Copyright 2003 The New York Times Company
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