SEC Company Response from HYPERDYNAMICS CORP (CIK 0000937136) — Mar 24, 2005
HYPERDYNAMICS CORP (CIK 0000937136)
Date: March 24, 2005 · CIK: 0000937136 · Accession: 0001015402-05-001491
AI Filing Summary & Sentiment
Referenced dates: March 8, 2005
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HYPERDYNAMICS
Westwood Technology Center
9700 Bissonet, Suite 1700
Houston, Texas 77036
Ph. 713-353-9400 Fax 713-353-9421
email: kent@hypd.com website: www.hypd.com
March 24, 2005
Ms. Linda van Doorn
Mr. Matthew Dowling
Securities and Exchange Commission
Division of Corporation Finance
Mail Stop 0409
Washington, DC 20549
Re: Comment letter dated March 8, 2005
Via: Edgar filing
Dear Ms. Van Doorn and Mr. Dowling;
We have received your comments on our form 10-KSB for the year ended June 30,
2004 and Form 10-QSB for the quarters ended December 31, 2004 and 2003. We have
attached responses to the comments to this letter.
With this letter, we acknowledge that
1) Hyperdynamics is responsible for the adequacy and accuracy of the
disclosure in our filings;
2) SEC Staff comments or changes to disclosure in response to staff
comments do not forclose the Commission from taking any action with
respect to the filings; and
3) Hyperdynamics may not assert staff comments as a defense in any
proceeding initiated by the Commission or any person under the federal
securities laws of the United States.
We are happy to cooperate in this matter. Please contact me should you have any
further questions, comments, or concerns.
Sincerely,
HYPERDYNAMICS CORPORATION
Kent P. Watts
President & CEO
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Attachment: Responses to comment letter received March 8, 2005
Form 10-KSB for the year ended June 30, 2004
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Financial Statements and Notes
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Note 1 - Significant Accounting Policies
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1. Noted.
Note 2 - Acquisition of HYD Resources Corporation, page F-11
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2. HYD Resources was formed on April 12, 2004 when its two owners, Sam Spears
Jr. and Phillip Steven Ahlberg, contributed oilfield equipment that they owned
in return for their stock in this company. Hyperdynamics purchased 100 % of the
stock in HYD Resources on April 23, 2004. HYD Resources had no operations prior
to its acquisition by Hyperdynamics. From the perspective of Hyperdynamics the
acquisition was routine and essentially the purchase of a collection of assets
and not the purchase of a business. As such, we did not consider the provisions
of Item 310(c) and (d) relevant to this acquisition.
We realize that the investment in HYD at the time of the acquisition, a
commitment to issue shares worth approximately $375,000, is between 20% and 40%
of the total consolidated assets of Hyperdynamics as of June 30, 2003, the most
recently filed annual statement as of the date of the acquisition. Additionally,
at the time of the acquisition, HYD's owners estimated the value of the assets
acquired as $300,000, which also is between 20% and 40% of the total
consolidated assets of Hyperdynamics at that date. This would seem to indicate
that, were HYD Resources an acquired business, audited financial statements and
pro forma disclosures for HYD Resources would be required. However, we do not
think that audited financial statements and pro forma disclosures would in this
case provide meaningful or useful additional information to our investors,
because HYD Resources experienced no cash flows, no income, no expenses, and the
balance sheet would reflect only the assets, with an offsetting entry to
capital.
Note 4 - Unproved Oil and Gas Properties, page F-12 to F-13
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3. Disclosure requirement noted. In connection with the acquisition of USOil's
interest in GHRC, GHRC transferred all of its assets and liabilities to SCS
Corporation, and as such it is no longer an active corporation. If this transfer
had not been made, GHRC would be consolidated into the reporting entity.
4. Noted.
Note 5 - Oil and Gas Accounting Policies, page F-13
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5. Noted.
Note 14 - Stock Options and Warrants / 2003 Restatement, page F-18 to F-20
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6. Noted.
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Item 2. Description of Property, page 8
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7. Noted.
Item 13. Exhibits, page 25
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8. We plan to revise our Form 10-KSB filing to add the following exhibits:
Exhibit 2 Stock Exchange Agreement dated April 23, 2004 for acquisition of
HYD Resources Corporation
Exhibit 3.1.1 Articles of Incorporation
Exhibit 3.1.2 Amendment Number 1 to Articles of Incorporation
Exhibit 3.1.3 Amendment Number 2 to Articles of Incorporation
Exhibit 3.1.4 Amendment Number 3 to Articles of Incorporation
Exhibit 3.2 Bylaws
Exhibit 10.1 Employment Agreement dated April 23, 2004 between HYD Resources
Corporation and Phillip Steven Ahlberg
Exhibit 10.2 Employment Agreement dated April 23, 2004 between HYD Resources
Corporation and Sam Spears, Jr.
Exhibit 21 Subsidiaries of the registrant
Form 10-QSB for the period ended December 31, 2004
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Item 2. Management's Discussion and Analysis of Financial Condition and Results
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of Operation
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Liquidity and Capital Resources, page 10
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9. The lease in which we plan to sell working interest was acquired in October -
subsequent to the acquisition of Trendsetter Production Company - from an
unrelated third party. We paid a bonus of $25 per acre for this lease and the
property owner will receive a 1/6 royalty: both the bonus and the royalty
interest are reasonable terms for the geographical area and the characteristics
of the property involved. As of December 31, 2004 we had incurred about $105,000
of costs in drilling the first well on this lease and we had begun drilling a
second well on this lease. The property also contained several shut-in wells
which we have been working over during the current quarter. We consider that the
gain on the sale of working interest to non-operators is possible based upon
initial engineering reserve reports relating to the property's potential, and
after incurring more than nominal exploration and development costs. Working
interests in this property are currently being marketed to potential purchasers.
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