Empower Capital With Support of Other Leading Shareholders to Nominate Three Experienced and Proven Directors for Election to the Board of Hyperdynamics Corporation

New York, December 1, 2015 (Newswire.com) -
Long-term focused shareholder group recommends replacing CEO and certain legacy board members which has overseen almost $1 billion in value destruction, totaling more than 97% of Hyperdynamics' market value, during the past five years.
 

Calls for new strategy focused on growing the Company, addressing capital allocation issues, and creating significant value for shareholders led by a reconfigured board and leadership with proven expertise, the right relationships, and a clear plan.
 

Dear Fellow Hyperdynamics Shareholders:

We have a deep understanding of Hyperdynamics Corporation (OTCQX: HDYN) and have engaged with the Company's global partners and stakeholders and we believe that the future of the company is at stake.  We are very troubled by the extent of the mistakes, questionable actions, and unaccountability of the CEO and certain legacy board members.  This is a situation where the problems are extensive and real change is urgently needed.

We recently informed the Company about our plan to nominate a slate of three experienced and proven oil & gas and Africa focused business leaders to the Board of Directors of the Company at the annual shareholder meeting, including Dr. Gerald Bailey, Mr. William Hayden, and Mr. James Wilson. 

However, instead of working with us to improve the situation at the Company, the CEO and certain members of the legacy board have responded by postponing the shareholder meeting from its original date of December 15, 2015 to January 27, 2016 and by increasing the size of the board to include a medical malpractice attorney who appears to have no business, capital markets, natural resources, or Africa experience.  The effect of this is to further delay the opportunity for shareholders to have our voices heard and address the legacy and current problems, as well as unnecessarily increasing corporate costs.

Thus, we are writing to ask you to support our slate of director nominees, which will have a mandate to replace the current CEO with an experienced and focused oil & gas executive and together with the reconfigured board pursue a refocused strategy to successfully take the Company to a new level of growth while addressing the historical capital allocation and other issues. 

We have shared a comprehensive presentation with other shareholders who we were able to contact detailing our proposal for change and the compelling case for the election of our slate of three highly qualified oil & gas and Africa-focused business leaders to the Board of Directors of the Company and the results of our discussions are very telling.  We will officially file this presentation shortly.

In our over 40 page presentation, we analyze the Company's situation, provide a detailed background of our nominees and explain our plan to position Hyperdynamics for long-term growth that will unlock transformational value for all shareholders.
 

Numerous compelling reasons to replace the CEO and certain legacy board members

When you think about how to vote at this year's annual meeting, we ask that you remember the value destruction and multiple questionable actions of the current CEO and certain legacy board members which shows they lack the credibility and competence to run the Company, while having no strategy or vision to unlock growth and create substantial value for shareholders:

• Lost substantial shareholder value every year for the past five years, totaling almost $1 billion or 97% in value destruction
    
  • This dismal result is primarily related to factors other than the decline in oil prices or the previous DOJ & SEC FCPA investigation as most of this value destruction occurred before then
• Spent almost $50 million in administrative and general expenses since 2012
   
  • This is especially questionable when the operatorship of their only asset was farmed out in December 2012, there were no growth initiatives executed during this time, and this amount excludes the costs incurred during the FCPA cases
• Costly failed and unexplained attempt to "diversify asset base" with two separate down payments totaling $10 million that were then completely lost within 5 months, which at the time was over 20% of the company's cash balance
   
  • Shareholders were also not informed as to the country or company the investment was to be made in nor the strategic benefit this investment was going to provide
• Overspent to drill only one well for $125 million, more than 3.5x original cost estimate, when consistently stating that it would be easy to drill two wells for only $80 million

• Publicly antagonized and acted aggressively with their key operating partner, at a time when cooperation was needed, as well as showing consistent disregard for the Company and shareholders

• Sued in 3 separate instances by different sets of shareholders for misleading shareholders and also for misrepresentation

• Spent almost $13 million on fees relating to the FCPA cases, when our research and also a Wall Street Journal report has shown that for a company like Hyperdynamics and with only one asset in one country the cost should be no more than $5 million if not lower

• Changed the company's by-laws to require 50% more shares for shareholders to initiate a shareholder meeting just before they announced the unexplained lose of the $10 million in down payments and a number of other negative news

• Multiple internal and reporting control issues almost every year since 2009 which culminated in the independent auditor, Deloitte, declining to continue as such this year

• Have not had a shareholder meeting in almost two years, which appears to be in violation of the Company's by-laws that require a shareholder meeting every year
   
  • Now has delayed the current shareholder meeting, thus further displaying a disregard for shareholders

Even with the destruction of shareholder value, the missing of multiple growth opportunities that would have positioned the Company for the future, and the squandering of the Company's cash reserves that the CEO and certain legacy board members have led, we still believe in the potential of the Company to grow and also in the potential of the oil block in Guinea.  However, this growth and value can only be achieved by replacing the CEO and certain legacy board members with a proven, experienced, and focused group.
 

Overview of our proven, experienced, and focused director nominees

Our nominees are highly qualified and known value creators: 

Dr. Gerald Bailey is a former Exxon President with over 40 years of experience in the international petroleum industry in all aspects, both upstream and downstream with specific Middle East and Africa skills and U.S. onshore/offshore sectors.  Dr. Bailey has served in a senior leadership or executive capacity in Abu Dhabi, Qatar, Libya, amongst other countries.  Dr. Bailey has a PhD, has written multiple papers and studies on the oil industry, and has appeared as a keynote speaker at a number of industry conferences. 

Mr. William Hayden is a geologist with over 35 years of experience in the mineral, energy, and exploration industry focused primarily in Africa and Asia.  Mr. Hayden currently serves as a Chairman or director of a number of public and private resources exploration companies and has consistently been a successful first mover in Africa, including having discovered two of the most prolific natural resource finds in southern Africa since the 1990's.  Mr. Hayden was also a co-founding director of Ivanhoe Agadem Petroleum, which was one of the first western oil exploration groups to re-enter the now prolific Agadem oil basin in Niger. 

 Mr. James Wilson is a merchant banker with over 15 years experience in financing and    developing companies and projects globally and is a Senior Advisor to leading global 500 companies operating in Africa's petroleum, resources, and development sectors.  Mr. Wilson is a director of a Republic of Guinea focused exploration and resources company where he was an integral part of the group that led the company through to its successful     and over-subscribed IPO.  Mr. Wilson is a former investment banker with JP Morgan, Morgan Joseph, and Standard Chartered and has an MBA from the Wharton Business School.  He is considered a thought leader and innovative deal-maker in Africa and other emerging growth regions, where he maintains deep and close relationships with key decision makers across multiple countries in Africa, China, and globally.

Further background on the director nominees is available in our presentation and forth coming filings.
 

Strategic plan for sustainable growth and unlocking substantial shareholder value

We believe that Hyperdynamics should implement a refocused strategy that leverages the current low oil price environment to grow substantially, reengage with the global investment community and other key partners to gain needed support, and fix its capital allocation issues.

Opportunistically acquire low cost world-class assets: Hyperdynamics has a sizable working interest in one of the largest concessions in West Africa, which is fully funded for the next stage of exploration. However, this is the Company’s only asset.  We believe the current low oil price environment creates a unique opportunity to leverage Hyperdynamics' position and public company status as well as the support indicated to our director nominees by potential future investors and partners to create a very focused high impact Africa oil explorer with targeted world-class assets.  With support of shareholders, our proven nominees will look to selectively acquire high potential and already de-risked assets in established regions that have low economic break-even prices in a country where we have strong relationships and only in an opportunistic scenario.

Reengage with the global investment community and other key stakeholders: Over the past several years the CEO has not engaged or communicated well with shareholders, the Company's only operating partner, the host government of the Company's only asset, and the global investment community.  Even with the recent challenges that the Company faced, there is no excuse for not effectively communicating with key stakeholders or for taking actions that shows disdain for the Company, shareholders, and partners.  The actions of the CEO and the legacy board have caused the Company to lose complete credibility and undermined the trust in the Company and its current leadership thus putting the future of Hyperdynamics in jeopardy.  Without the support of current shareholders, the global investment community, and other current and future partners, Hyperdynamics will not be able to raise capital in the future nor garner the support to continue as a significant working interest partner in the Guinea concession. It is imperative that the Company reengages with and uses effective communication with these important stakeholders as a matter of immediate urgency led by a reconfigured board that is experienced and trusted.

Fix capital allocation issues: Over the past several years, the Company has operated in a disastrous way where overspending has been the norm and the use of capital has not been carried out in a prudent and strategic manner.  This has led to significant questionable actions and mistakes across multiple areas which have been under explained or not explained at all.  In this current environment, the Company is in a position to secure world-class assets which presents significant opportunities for those who understand how to identify and act on them.  However, this can only be done with the right allocation of capital in a strategic way.
 

Your vote is important

We believe that Hyperdynamics needs a reconfigured board with strong directors and a proven ability to create value in oil & gas and in Africa.  Hyperdynamics needs a reconfigured board with a mandate to put in place a CEO with the right exploration experience and shareholder focus. Hyperdynamics needs a reconfigured board with the ability to position the Company for significant long-term growth.

Your vote is important,  no matter how many or how few shares you own.  We ask that you vote for our slate of three director nominees to lead the reconfigured board.  Let's work together to make the necessary changes that are urgently needed.
 

About Empower Capital

Empower Capital is an emerging natural resource and development projects sponsor and investor.  Empower Capital has partnered with some of the largest international infrastructure and resource development companies for growth projects in multiple countries in Africa.
 

Additional Information

Empower Capital and James Wilson intends to make a filing with the Securities and Exchange Commission of a proxy statement and an accompanying proxy card to be used to solicit proxies in connection with the 2015 Annual Meeting of Stockholders (including any adjournments or postponements thereof or any special meeting that may be called in lieu thereof) (the "2015 Annual Meeting") of the Company.  Information relating to the participants in such proxy solicitation will be included in materials filed with the Securities and Exchange Commission.  Stockholders are advised to read the definitive proxy statement and other documents related to the solicitation of stockholders of the Company for use at the 2015 Annual Meeting when they become available because they will contain important information, including additional information relating to the participants in such proxy solicitation.  When completed and available, the definitive proxy statement and a form of proxy will be mailed to shareholders of the Company.  These materials and other materials filed in connection with the solicitation of proxies will be available at no charge at the Securities and Exchange Commission's website at www.sec.gov. 
 

Cautionary Statement Regarding Forward-Looking Statements

The information herein contains "forward-looking statements." Specific forward-looking statements can be identified by the fact that they do not relate strictly to historical or current facts and include, without limitation, words such as "may," "will," "expects," "believes," "anticipates," "plans," "estimates," "projects," "targets," "forecasts," "seeks," "could" or the negative of such terms or other variations on such terms or comparable terminology. Similarly, statements that describe our objectives, plans or goals are forward-looking. Our forward-looking statements are based on our current intent, belief, expectations, estimates and projections regarding the Company and projections regarding the industry in which it operates. These statements are not guarantees of future performance and involve risks, uncertainties, assumptions and other factors that are difficult to predict and that could cause actual results to differ materially.  Accordingly, you should not rely upon forward-looking statements as a prediction of actual results and actual results may vary materially from what is expressed in or indicated by the forward-looking statements.