UNITED STATES DISTRICT COURT HOUSTON DIVISION Behalf of...

Case 4:12-cv-00999 Document 1 Filed in TXSD on 04/02/12 of 26

UNITED STATES DISTRICT COURT SOUTHERN DISTRICT OF TEXAS

HOUSTON DIVISION

CLINTON PARKER, Individually and on Behalf of All Others Similarly Situated,

Plaintiff,

vs.

HYPERDYNAMICS CORPORATION and RAY LEONARD,

Defendants.

§ Civil Action No. § § CLASS ACTION

§ § § § § § § § § DEMAND FOR JURY TRIAL

COMPLAINT FOR VIOLATION OF THE FEDERAL SECURITIES LAWS

INTRODUCTION

1. This is a securities class action on behalf of all persons who purchased or otherwise

acquired the publicly traded securities of Hyperdynamics Corporation ("Hyperdynamies" or the

"Company") between February 17, 2011 and February 15, 2012, inclusive (the "Class Period"),

naming as defendants Hyperdynamics and its President and Chief Executive Officer Ray Leonard

(collectively "defendants"), for violations of the Securities Exchange Act of 1934 ("1934 Act").

2. Hyperdynamics is an independent oil and gas exploration company which engages in

the development of prospects offshore the Republic of Guinea ("Guinea") in West Africa. The

Company is headquartered in Houston, Texas.

3. During the Class Period, defendants issued materially false and misleading statements

regarding the Company's business and financial results. As a result of defendants' false statements,

Hyperdynamics stock traded at artificially inflated prices during the Class Period, reaching a high of

$6.35 per share on March 4, 2011.

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4. On November 9, 2011, Hyperdynamics announced disappointing first quarter 2012

financial results.' The Company reported that it had increased the cost estimate for its first two

exploration wells from $80 million to $135 million due to an increased investment in its well logging

program, infrastructure bottlenecks in the Conakry region of Guinea, and operational issues with its

drill ship, the Jasper Explorer. The Company further announced that there were delays in the

progress of its Sabu-1 well and results would not be likely until late December/early January. The

Company further indicated that given the operational challenges with the Sabu-1 well, it may delay

its plans for drilling its Baraka- 1 well.

5. On this news, Hyperdynamics stock declined $1.33 per share to close at $4.06 per

share on November 9, 2011, a one-day decline of 25% on high volume. However, the stock

continued to trade at artificially inflated levels as the Company and its officers concealed the extent

of the problems with the Sabu-1 well.

6. On December 14, 2011, Hyperdynarnics issued a press release providing an

operational update of the Sabu-1 well. The Company stated that due to continuing mechanical and

operational issues it had only made limited progress on the drilling of the Sabu-1 well. The well was

currently at only 1,440 meters versus the 1,400 meters it was at in the prior month.


share on December 14, 2011, a one-day decline of 19% on high volume.

8. On January 30, 2012, Hyperdynarnics announced that due to higher-than-expected

costs of drilling the Sabu- 1 well, the Company had entered into an agreement with an institutional

investor to raise around $30 million through an offering of the Company's common stock.

1 Hyperdyna.mics' fiscal year ends June 30.

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share on January 30, 2012, a one-day decline of 23% on high volume.

10. Ultimately, on February 15, 2012, Hyperdynamics announced extremely

disappointing results from its Sabu-1 exploration well. The Company reported that its Sabu-1 well

was unsuccessful, as the Company only encountered non-commercial quantities of oil from its

exploration activities.

ii. On this news, Hyperdynamics stock declined $0.58 per share to close at $1.44 per

share on February 16, 2012, a one-day decline of 29% on high volume.

12. The true facts, which were known by defendants but concealed from the investing

public during the Class Period, were as follows:

(a) Due to numerous cost overruns and delays, including logistical delays

resulting from limited port facilities in Guinea as well as issues related to mechanical and operational

matters surrounding the spudding of the Sabu-1 well, the Company would be unable to commence

drilling on the Baraka- 1 well.

(b) The Company had far greater exposure to liquidity concerns than it had

previously disclosed. Despite the Company's March 2011 common stock offering, Hyperdynamics

did not have sufficient funds to be able to drill both the Sabu-1 well and the Baraka-1 well.

(c) Based on the foregoing, defendants lacked a reasonable basis for their positive

statements about the Company's drilling operations or the prospective value of the Company's oil

and gas concessions.

13. As a result of defendants' false statements and omissions, Hyperdynamics' publicly

traded securities traded at artificially inflated prices during the Class Period. However, after the

above revelations seeped into the market, the Company's shares were hammered by massive sales,

sending them down 77% from their Class Period high.

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JURISDICTION AND VENUE

14. Jurisdiction is conferred by §27 of the 1934 Act. The claims asserted herein arise

under §10(b) and 20(a) of the 1934 Act, 15 U.S.C. §78j(b) and 78t(a), and SEC Rule lOb-5, 17

C.F.R. §240.10b-5.

15. Venue is proper in this District pursuant to §27 of the 1934 Act. Hyperdynamics is

headquartered in Houston, Texas, and many of the false and misleading statements were

disseminated within this District.

16. In connection with the acts alleged in this complaint, defendants, directly or

indirectly, used the means and instrumentalities of interstate commerce, including, but not limited to,

the mails, interstate telephone communications and the facilities of the national securities markets.

PARTIES

17. Plaintiff Clinton Parker purchased the publicly traded securities of Hyperdynamics

during the Class Period as set forth in the certification attached hereto and was damaged as the result

of defendants' wrongdoing as alleged in this complaint.

18. Hyperdynarnics is an oil and gas exploration company with prospects offshore Guinea

in West Africa. The Company's principal executive offices are located at 12012 Wickchester Lane,

Suite 475, Houston, Texas.

19. Defendant Ray Leonard ("Leonard") was, at all relevant times, President, Chief

Executive Officer ("CEO") and a director of Hyperdynamics.

20. Defendant Leonard, because of his position with the Company, possessed the power

and authority to control the contents of Hyperdynamics' quarterly reports, press releases and

presentations to securities analysts, money and portfolio managers and institutional investors, i.e.,

the market. Defendant Leonard was provided with copies of the Company's reports and press

releases alleged herein to be misleading prior to or shortly after their issuance and had the ability and

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opportunity to prevent their issuance or cause them to be corrected. Because of his position with the

Company, and his access to material non-public information available to them but not to the public,

defendant Leonard knew that the adverse facts specified herein had not been disclosed to and were

being concealed from the public and that the positive representations being made were then

materially false and misleading. Defendant Leonard is liable for the false statements pleaded herein.

FRAUDULENT SCHEME AND COURSE OF BUSINESS

21. Defendants are liable for: (i) making false statements; or (ii) failing to disclose

adverse facts known to them about Hyperdynamics. Defendants' fraudulent scheme and course of

business that operated as a fraud or deceit on purchasers ofHyperdynamics publicly traded securities

was a success, as it: (i) deceived the investing public regarding Hyperdynamics' prospects and

business; (ii) artificially inflated the prices of Hyperdynamics publicly traded securities; and (iii)

caused plaintiff and other members of the Class to purchase Hyperdynamies publicly traded

securities at inflated prices.

BACKGROUND

22. Hyperdynamics is an early-stage oil and gas exploration and production company.

The Company's primary asset is a large exploration license located offshore Guinea in West Africa.

To date, Hyperdynamics has no reserves or production. Hyperdynarnics was initially a software

company. In May 2001, the Company acquired SCS Corporation, which focused on geophysical

data management. Thereafter, the Company discontinued its prior business lines and shifted its

focus to seismic and related services for the oil and gas industry. In 2002, Hyperdynamics acquired

the rights to a concession for the entire Guinea shelf. The Company entered into a Production

Sharing Agreement ("PSA") with the government of Guinea in 2006. Despite holding the

exploration license, by 2009, Hyperdynamics had still not drilled any wells on the license and was at

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risk of losing the entire position. As a result, in May 2010, Hyperdynamics entered into an amended

PSA with the Guinea government and relinquished 70% of its original concession.

23. In January 2010, Hyperdynamics sold a 23% working interest in the concession to

Dana Petroleum plc. Hyperdynamics continues to hold the remaining 77% interest.

24. Under pressure from its shareholders and from the Guinea government to begin

exploration on the license, the Company began conducting 2-dimensional ("2-D") and 3-dimensional

("3-D") surveys of a portion of the concession starting in mid-2009 and continuing throughout 2010.

The Company further analyzed 3-D seismic on its acreage and planned a multiple well drilling

program to be completed by the end of 2011. Investors closely watched Hyperdynamics' progress

on the drilling program.

DEFENDANTS' FALSE AND MISLEADING STATEMENTS ISSUED DURING THE CLASS PERIOD

25, On February 17, 2011, Hyperdynamics held its Annual Meeting of Stockholders

webcast with analysts, media representatives and investors during which defendant Leonard

represented the following:

We've had a very good year, and we've cleared a lot of hurdles technically, operationally and in our commercial relationship with the government of Guinea....

It's also extremely gratifying that our efforts and our solid accomplishment in moving the Guinea exploration project forward has been recognized and valued in the market. This time last year, as we were preparing for the shareholder meeting, our stock price was $0.88. It closed yesterday at $5.04, and this is very much a moving target, but I'm told the current price is something over $6 a share.

* * *

As 2011 unfolds, we're several steps closer to our goal of testing the offshore Guinea prospect as the operator of the project and the majority interest owner. First, the political situation in Guinea has stabilized, and our relationship with the new government is strong and positive.

* * *

On the technical front, the 3D seismic survey that we began shooting in August of last year of the two prospective areas is complete. We have an early

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version of the processed data in house, we've completed the first part of the evaluation, and we're now beginning a more detailed study of the data. The quality of the data we've received from the seismic contractor, Petroleum Geo-Services, or PGS, is excellent.

From it we've identified multiple new prospects that we hadn't seen on the earlier and less detailed 21) data. So, we believe that using PGS and the 31) survey has been an extremely productive investment for us.

* * *

On the operation side, we're in the process of tendering for drilling rigs through our project manager AGR Peak Well Management Limited, which is based in Aberdeen, Scotland. As I've indicated in the past, our goal is to begin drilling the first of at least two wells near the end of the year, and possibly a third well depending on what we see when the 31) seismic is fully evaluated.

* * *

Our cash balance remains at about $35 million, with the conversion of some warrants and options. We'll need additional funding of about $50 million for letters of credit to back the contract we expect to sign for the drilling rig and associated supplies in April.

We continue to consider various options for raising additional capital.

* * *

Our priority is to secure the funding we need for the Guinea drilling program. When those funding requirements are satisfied, however, we will be looking at opportunities to diversify our asset portfolio.

* * *

In terms of the drilling program, I think you all understand the situation very well. We're tendering two wells with an option for a third, and the plan now is that if we hit something on those first two wells, that we'll have the option to go back and drill an appraisal well, a third well. So, we'll have to move very quickly obviously, but we want to have that option to be able to move forward as fast as possible.

On the financial side, I think it was clear from Jason in terms ofjust what our financial position is right now. It's very strong. There's no debt, and we have $35 million in the bank, but also we are going to need additional funds, for the drilling program.

* * *

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There was a question regarding the expense for the seismic work: Hyperdynamics spent over $30 million on the 2D and the 3D work. Has this helped clarify the prospects and affected our valuation? Has it been worth the money? Yes!

26, On March 4, 2011, Hyperdynamics stock reached its Class Period high, closing at

$6.35 per share.

27. On or about March 25, 2011, Hyperdynamics conducted a public offering, selling

28.75 million shares of Hyperdynamics common stock to the public at $5.00 per share, raising nearly

$144 million in gross proceeds. According to Hyperdynamics, the intended use of the net proceeds

from the offering was for "general corporate purposes and working capital, including an exploratory

well drilling program offshore Guinea beginning in 2011,"

28. On April 7, 2011, Hyperdynamics issued a press release entitled "Hyperdynamics

Selects Drill Ship for Offshore Guinea Exploration Project," which stated in part:

Hyperdynamics Corporation announced today that AGR Peak Well Management Ltd. (AGR) has signed a letter of intent on behalf of Hyperdynamics with Jasper Drilling Pte. Ltd. of Singapore to contract the drill ship Jasper Explorer for exploration drilling in Hyperdynamics' concession offshore the Republic of Guinea.

* * *

"Selecting a drilling contractor is a crucial element of our preparations for launching a drilling campaign later this year on our offshore Guinea concession," said Ray Leonard, Hyperdynamics president and chief executive officer.

"The Jasper Explorer is capable of drilling in a wide range of water depths, which gives us significant flexibility in selecting the initial drilling locations," he said.

29. On April 11, 2011, Hyperdynamics attended an Independent Petroleum Association

of America ("IPAA") Oil & Gas Investment Symposium ("OGIS") in New York with analysts,

media representatives and investors, during which defendant Leonard represented the following:

So we clearly have the operational capability. One decision we made very early on was that we were going to operate this project. We weren't going to pretty it up and then have an auction and farm out and try to hold on to a 20% carried interest. One of the reasons BlackRock joined us as a 13% interest holder was they said we invest in companies that do it themselves, not in companies that are promoters. And that clearly is our intention.

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On securing of funding, as Ijust mentioned a minute ago, J3lackRock joined with the 30% - excuse me - $30 million purchase of shares in October. Then last month, we raised $144 million. A large proportion of that was through four large key investors, one of which was BlackRock. And the Company now is fully funded through the drilling program. We also are seriously considering an additional 3D seismic program in the deeper water portion of the block.

30. On April 27, 2011, Hyperdynamics held a business update investor conference call

with analysts, media representatives and investors, during which defendant Leonard represented the

following:

Since our last call, which was conducted as part of our annual meeting of shareholders in February in Houston, I am pleased to report that we have achieved a number of key milestones. The net result of these important milestones is that we have removed virtually all of the major remaining hurdles that we had to clear to be able to drill our first well by the end of this year, including financially with our recent equity raise, operationally through the selection of a drilling rig, and in addition, we received a new resource engineering report covering the deepwater portion of our offshore Guinea concession that increased the unrisked oil potential by more than 150% from 2.3 billion to 6 billion barrels recoverable, the earlier estimate covering just the shallow-water portions.

Through these key steps that we have achieved just in the last 10 weeks since our annual meeting, we've added to the prospective value of the Company and significantly derisked the Guinea exploration project. It certainly feels good to have reached this point in the project where we've solidified our relationship in commercial contract with the government of Guinea, we've gradually built a world-class staff of technical professionals, we've collected and analyzed most of the additional geophysical data we need to select the best prospects to drill, we signed a Letter of Intent and are in the process of contracting the drill ship that will do the work, and have raised the money to pay for all of these activities while maintaining a 77% ownership interest in the Guinea asset.

Now that all these pieces are in place and we've hopefully removed any doubt that our exploration project is in a position to go forward as planned, we are focusing our efforts on two main areas at the moment.

31. On May 18, 2011, Hyperdynamics issued a press release announcing the signing of

the Guinea drilling contract, which stated in part:

AGR Petroleum Services today signed a drilling contract, on behalf of Hyperdynamics Corporation, with Jasper Drilling Private Limited of Singapore to contract the drill ship Jasper Explorer for drilling in Hyperdynarnics' concession

EMH1197884 - 9 -


offshore the Republic of Guinea. The Jasper Explorer is a modem Pelican Class self-propelled drill ship capable of operating in water depths up to 5,000 feet.

"The conclusion of a drilling contract with Jasper Drilling Private Limited is a crucial step in preparations for our drilling campaign. We are on track to spud the first well in the fourth quarter of this year offshore Guinea," said Ray Leonard, Hyperdynamics president and chief executive officer.

32. On June 30, 2011, Hyperdynamics held a business update investor conference call

with analysts, media representatives and investors, during which defendant Leonard represented the

following:

Based on these results, we've chosen our first well location on an anticlinal and fault trap. We've named the first well the Sabu I, which means goodwill in the Guinean languages Fulani, Mandingo and Susu....

We chose this location because we believe it has the best chance of yielding a commercial discovery. It's the first prospect up-dip from the generating basin. It targets the highest quality reservoirs in a simple and well-defined structure, and has clear Type 3 anomalies in the major target reservoir zones.

We've also chosen a second structure to test in Well 2, which will be an anticlinal fault trap also. The second location is a little larger structure and a little higher risk than the first one. We haven't yet decided on the exact spot to drill on that structure, and we expect to talk more about Well Number 2 on our next conference call. Our prime focus right now, obviously, is on the Sabu Number 1, and we're working through all the preparatory details.

*

Now, in looking at our financial position, I'm extremely pleased to say that we remain in excellent condition financially. We have more than $150 million in the bank; we have no debt. Our proportionate share of the two-well drilling program, net of what we've already paid out to AGR and other suppliers, is less than $50 million. Our share of the proposed deepwater 3-D survey that we've proposed to partners will be less - would be about $21 million.

I'd like to close my prepared comments this morning with a recap of the strategy that's driving the operational and financial decisions we've made over recent quarters, and how that positions us for the future. As we're moving closer and closer to the actual drilling phase of the project, we've been, on one hand, cautious technically, but aggressive strategically.

Now what do I mean by that? When I say we've been cautious technically, I mean that our initial well will be on the lower end of the risk spectrum - a simple

EMH1197884 _10-


anticline in moderate water depth. We expect it to be very economic, but the prospect size is smaller than it would be if we went into the 2,500-meters water depth for a larger, complex, higher-risk, but with higher-reward geologic feature.

The shallower prospect we've chosen for the first well is half the cost of the deeper, higher-risk/reward well, And that's where we think it makes the most sense to start in order to increase our chance as a long-term success.

Once we've identified and verified the existence of a strong petroleum system by drilling these lower-risk prospects, it will give us a stronger basis to up the ante and explore some of the stratigraphic traps that we've identified in the turbidite sand channels and deeper water, where it's expensive to play, but where also the prospects are larger.

With the funding we've raised this year, we do not need to bring on another partner to fund the projects and activities we've - that I've described. If we do bring in another partner, it will be at market value, and they will need to bring something else to the table besides money, such as exploration development or political added expertise and value. However, in any case, we will retain operatorship and a majority interest. Given our bank balance and the fact that all our overhead and currently anticipated drilling-related needs can be funded with cash at hand, I want to make it clear that we have no plans and do not expect to issue any additional equity for the remainder of this year.

33. On July 8, 2011, Hyperdynamics issued a press release entitled "Hyperdynamics to

List on New York Stock Exchange," which stated in part:

Hyperdynamics Corp. announced today that it will transfer the listing of its common stock to the New York Stock Exchange (NYSE) from the NYSE Amex. The Company expects to begin trading on the NYSE on or about Monday, July 11, under its current ticker symbol, "HDY."

"Our move to the New York Stock Exchange is an important next step in our progress as a company and in our drive to build shareholder value for the long term," said Ray Leonard, Flyperdynamics President and Chief Executive Officer. "We expect this transition to benefit our growing slate of both institutional and retail shareholders through increased liquidity and visibility, not only in North America, but also Europe and across the globe.

"The NYSE is one of the world's premier exchanges and home to many other oil and gas exploration and production companies. We are very proud to be joining those companies in trading on the world's largest stock market. We enjoyed the service and support while listed on the NYSE Amex platform," Leonard added.

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34. On July 18, 2011, Hyperdynamics attended a Global Hunter Securities Energy, China

Metals and Mining Conference with media representatives, analysts and investors, during which

defendant Leonard represented the following:

You have two different types of prospects. You have the deepwater fan play, and then you have a series of smaller prospects. By smaller prospects we are talking about the 200- to 500-million-barrel size. These are billion-barrel type prospects.

What we have opted to do is start drilling in the shallower water areas. Again, by shallower waters I am talking about 1,000 meters water depth. These are areas where you can drill a well for $35 million to $40 million as compared to the $90 million approximately for the deepwater area.

They are also more straightforward structures. Four-way anticlines or fault-bounded structures, as compared to the stratigraphic traps in the deepwater fans.

So really what we are looking for is the less-expensive, lower risk wells to start. And in doing so we are able to hold on to a higher proportion of the percentage, higher percentage of the acreage until we can find oil.

The first two wells, which will be spudded in October - they will be back-to-back wells, October and then the middle of November - are the Sabu and the Baraka prospects shown right here. The Sabu is a gentle four-way anticline with the upper Cretaceous sands, and the Baraka is a faulted anticline looking at the middle Cretaceous or deeper sands.

35. On August 22, 2011, Hyperdynamics issued apress release entitled "Jasper Explorer

Drill Ship En Route to Hyperdynamics' First Exploration Drilling Site Offshore Guinea," which

stated in part:

Hyperdynamics Corporation announced today that the Jasper Explorer drill ship has left its home port in Singapore and is now being mobilized to Hyperdynamics' first exploration drilling site offshore the Republic of Guinea in Northwest Africa.

The initial well, the Sabu- 1, is scheduled to begin drilling in October at a site in approximately 700 meters of water. The Sabu- 1 will target a four-way anticline prospect with upper Cretaceous sands and is anticipated to be drilled to a total depth of 3,600 meters.

"With the drill ship now on its way to West Africa and the majority of the other equipment and services needed for the first two wells contracted for, we are moving closer to testing the resource potential of our shallower-water objectives through the drill bit this fall," said Ray Leonard, Hyperdynamics' President and Chief Executive Officer.

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36. On September 7, 2011, Hyperdynamics hosted a conference call with investors,

media representatives and analysts to discuss the Company's plans, during which defendant Leonard

represented the following:

At the time of our last call in June, we pretty well-defined the first well, Sabu-1, which is a faulted anticline with prospective horizons throughout the upper cretaceous section. The water depth is 700 meters. The planned total depth is 3,600 meters, so the depth of the well below mud line will be about 2,900 meters, or slightly less than 10,000 feet. The P-50 recoverable sources which represent the midrange estimate from the Netherland Sewell report is 258 million barrels of oil. We like this prospect for several reasons. First of all, it's the best place location geochemically, immediately updip from the mature source rock. Second of all, it's expected to encounter the best quality sands in the trapping position which is these sands we are seeing in the existing offshore well which was drilled in 1977. Operationally, it's a very straightforward well, and it also will provide updip information on the Cenomanian sandstone that could significantly de-risk that very large trap. The Cenomanian sandstones on this prospect are in a trapping four way closure position. We chose this well location because we think it has the best chance of yielding a commercial discovery. It's not the biggest prospect, but we think it provides the best balance of risk and rewardfor our first well.

The drilling cost of the two wells is budgeted at $80 million total, of which $14 million has been spent to date. Our 77% share of this cost is about $62 million. Following the lead of other operators in this expensive high-risk province, we don't plan to conduct a drill stem test of the initial expiration wells. Instead, we will acquire the necessary data through log, fluid and sample evaluation. And then if appropriate, we will follow it up with an appraisal and testing program. We are encouraged by the data that we've developed on these initial prospects to date, and we believe that the drilling of these first two wells has the potential to significantly dc-risk our acreage and provide value to shareholders.

Can you give us additional color on statement you made previously? This will not end well for the short-sellers. I think the answer for that is very simple. Short-sellers, to some extent, are betting against success of the Company. We are very confident in our program and in the prospectivity of this acreage. I guess you can put two and two together on that.

37. On September 28, 2011, Hyperdynamics attended an JPAA OGIS with media

representatives, analysts and investors, during which defendant Leonard represented the following:

Looking in a little more detail at the southern hinge of the acreage, we first shot about 3,600 square kilometers of 31) seismic, the area that's surrounded by the

EMH1197884 _13-


green, and we came up with a whole string of new prospects that we hadn't even seen on the 21) seismic. And two of those prospects, the Sabu-1 and the Baraka-1, which in the native Fulani language means goodwill and hope, will be spudded. The Sabu-1 will be spudded the first week of October. And the Baraka- 1 will be spudded in the following month. It will be just about a month to drill to TD from spudding.

*

On the funding side, we have $150 million in the bank, zero debt. As I'll show you in just a minute, even after the initial two wells are drilled and the 3D is done, we're going to have to at least half of that amount still in the bank. So we're entirely funded and solid with no financial difficulties and ready to move forward.

*

What's our timeline? The rig was mobilized. As I said, it should be arriving in Guinea this weekend and spudding next week. The two wells, our budget is $40 million. We have a 77% interest, The Korean National Oil Company has [a] 23% interest. So we've got a solid, financially secure partner. At the same time, we'll be doing the deepwater 3D seismic. The line in the black shows our bank account over this time. And as I've mentioned before when the two wells and the 3D seismic is done, we're still going to have about half of the money left to plan what is - what's the next step. And obviously, the next step will be very much dictated by the results of these initial wells.

*

So in summary, we have we believe the largest, most prospective piece of acreage in West Africa. We've got a first-class team. We've been able to work our plan out to keep the maximum amount of interest through the initial drilling of wells. I was interviewed recently by Fox Business and we talked about a small independent holding an entire geologic basis with 77% interest and they said, well, gee, this kind of sounds like a moon shot, doesn't it? And it does, but as you'll all recall, we actually made it to the moon.

So, for those shareholders who have been with us to this point, thank you for our support. And for those who want to join us on the ride, the time is short. We're starting to spud and you have a limited window to join us.

38. On October 13, 2011, Hyperdynamics issued a press release entitled "Hyperdynamies

Spuds First Exploration Well, Sabu-1 Offshore Guinea," which stated in part:

Hyperdynamics Corporation announced the commencement of drilling operations today at its initial exploration well in its concession offshore the Republic of Guinea. The Sabu-1 well will be drilled by the Jasper Explorer drill ship. The water depth at this location is approximately 700 meters. The target is a four-way anticline oil prospect with upper Cretaceous sands. Total well depth is anticipated to be 3,600 meters.

EMI-I/197884 -14-


Sabu-1 is the first of two exploration wells planned to be drilled by the Jasper Explorer for Hyperdynamics in 2011 in the concession. The second well, Baraka- 1, is scheduled to begin immediately after Sabu-1. The Jasper Explorer is an enhanced modern Pelican Class self-propelled drill ship capable of operating in water depths up to 1,524 meters. AGR Peak Well Management Ltd. is providing management services during the drilling phase of the project.

39. On November 9, 2011, Hyperdynamics held a conference call announcing its first

quarter 2012 financial results with media representatives, analysts and investors, during which

defendant Leonard represented:

[LEONARD:] Now, I'd like to be able to report that everything has gone off without a hitch. But the drilling, to this point, has not gone as quickly or as economically as we'd hoped. Offshore operations like these are extremely complicated, particularly in a country where no well has been drilled since 1977. With many moving pieces and a lot of players involved, that makes it difficult to budget from both from a time and money standpoint with a lot of precision.

We've had a couple of logistical and operational issues affect the progress of the well, some of which were largely outside of our control. One is that we've encountered some infrastructure bottlenecks mechanically.

We're competing for dock space and priority over existing shipment activity at a relatively congested seaport. This problem has been recognized but unfortunately, initiation of a port expansion programs [sic] starts with construction, which ironically temporarily increases the congestion.

So, as the new kid on the block, we've had to push hard to get access to the port to unload our supplies and equipment and then move them to the rig. In some cases, this has resulted in delays in getting the drill shift fully equipped in supply, and delays result in increased costs.

The second operating issue is the Jasper Explorer was newly refitted and re-staffed with a new crew, and in some of our initial operations, this revealed shortcomings and caused additional delays. The shortcomings in investment have been recognized by Jasper and our drilling manager, AGR, and are currently being addressed, And we are now seeing improved performance in the rig.

Our contract stipulates that we do not pay the daily rate if downtime is due to equipment failure, but we still have to pay other costs incurred during the delay period for things like port access, supply shifts, helicopter support and all other aspects of the operation. Again, delays result in increased costs.

I should also mention a third item that's not related to operations completed to-date, but will add to the final cost of drilling [the] well and that's the decision that we made to invest in more extensive logging program on the well when we find oil and this will cost an additional $4 million per well.

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The additional procedure is in our planned logging program will enable us to sample the oil, measure the permeability of the reservoir rock and measure the pressure draw down, which ultimately will effect the flow rate of the well.

When you combine the impact of these items, our current estimate for [the] planned two-well program [is] now about $135 million gross, but $104 million net to 1-TyperDynamics as a 77% working owner and operator, of which, as of November 1, we have spend [sic] $44 million gross and $34 million net.

* * *

[ANALYST:] And then I guess jumping over to the Baraka well, could you talk to me a little bit about your kind of decision tree for whether or not you kind of move forward with it right after completing the Sabu- 1 drilling. What are some of the variable[s] in play there and how should we kind of think about that?

[LEONARD:] Okay. Well, there are three major variables in the decision making process. Number one is the performance of the Jasper Explorer. And as I mentioned before as they work through some of the initial issues, the performance is getting better, but let's see if that continues. I hope it does. Everybody will be happy if it does.

The second point is the port question. Again, we have certainly made the government aware of it. And as I said before, some of the things that are done to fix the situation in the short term, make it worse, [for example,] some of the construction

such as dredging to give yourself additional space and berth at the port. In the short term the construction has - gives more congestion. But there is acknowledgement that this is a problem. It's just a question of how quickly it can be fixed.

And the third is the results of the well. And so you put those three things in the mix. And then you'll come out with your answer. I can't tell you what that answer is because we don't have those three pieces yet. But at least its clear what those three pieces are that we'll have in front of us when we make that decision.


share on November 9, 2011, a one-day decline of 25% on high volume. However, the stock

continued to trade at artificially inflated levels as the Company and its officers concealed the extent

of the problems with the Sabu-1 well.

41. On December 14, 2011, Hyperdynamics issued a press release providing an

operational update on the Sabu- 1 well. The release stated in part:

Hyperdynamics Corporation today announced an operational update of the Sabu-1 exploration well in its concession offshore the Republic of Guinea.

EMH1197884 -16-


The Sabu-1 exploration well has drilled to its current depth of 1,440 meters, which we discussed in our operational update on November 9th. Since that update, the 20-inch casing has been set, and there have been several mechanical and operational issues that have curtailed drilling activities. We believe the issues are being resolved and we expect resumption of drilling activities in approximately 10 days.

Ray Leonard, Hyperdynamics President and CEO, commented, "Although these repairs have delayed the Sabu- 1, they are necessary for the safe and efficient completion of the well. We look forward to the results of our first exploration well in the New Year."


share on December 14, 2011, a one-day decline of 19% on high volume.

43. On December 28, 2011, Hyperdynamics issued a press release entitled

"Hyperdynamics Resumes Drilling Offshore Guinea," which stated in part:

Hyperdynamics Corporation today announced it has resumed drilling operations on the Sabu- 1 exploration well in its concession offshore the Republic of Guinea in West Africa.

Drilling recommenced from a point 1,440 meters subsea and is planned to continue to a total depth of 3,600 meters. Hyperdynamics plans to continue to provide progress updates.

44. On January 23, 2012, Hyperdynamics issued a press release providing a drilling

update on the Sabu- 1 well, which stated in part:

Hyperdynamics Corporation today announced the Sabu- 1 exploration well offshore Republic of Guinea was drilled to a total subsea depth of 2,224 meters, putting the well near the top of Cretaceous age sediments, and that the next string of 13-3/8 inch casing was successfully set. Following retesting of the blowout preventer, the well was drilled to a depth of 2,304 meters. Drilling equipment problems were encountered, and drilling has been suspended while repairs are made. The delay is estimated to be approximately one week.

45. On January 30,2012, Hyperdynamics issued a press release entitled "Hyperdynamics

Resumes Drilling Offshore Guinea," which stated in part:

Hyperdynamics Corporation today announced it resumed drilling operations on the Sabu-1 exploration well on January 29th in its concession offshore the Republic of Guinea in West Africa.

EMH1197884 -17-


Drilling recommenced from a point 2,304 meters subsea. The well is expected to encounter prospective upper Cretaceous sandstone reservoirs while drilling to a total subsea depth of 3,600 meters.

46. Additionally on January 30, 2012, Hyperdynamics issued a press release entitled

"Hyperdynamics to Raise $30 Million in Registered Direct Offering," which stated in part:

Hyperdynamics Corporation today announced that it has entered into a definitive agreement with institutional investors in a registered direct offering of its common stock with gross proceeds of approximately $30 million. Hyperdynamics plans to use the net proceeds from the offering for general corporate purposes and working capital, including ongoing drilling costs on the Sabu- 1 exploratory well offshore Guinea and a 3-D deep water seismic survey.

47. On this news, Flyperdynamics stock declined $0.77 per share to close at $2.60 per

share on January 30, 2012, a one-day decline of 23% on high volume.

48. On February 13, 2012, Hyperdynamics issued a press release entitled

"Hyperdynamics Completes Drilling of Sabu-1 Well Offshore Guinea-Conakry - Company

Awaiting Results of Final Tests," which stated in part:

Hyperdynamics Corporation today announced it has completed the drilling of the Sabu-1 exploration well on its concession offshore Guinea-Conakry. The Sabu-1 well was drilled to a depth of 11,844 feet in a water depth of 2,329 feet. Results of real-time hydrocarbon chromatograph measurements and Schiumberger petrophysical wireline analysis warranted collection of downhole fluid samples. These samples, together with sidewall cores taken, are being sent to Core Lab for analysis.

49. Ultimately, on February 15, 2012, Hyperdynamics issued a press release announcing

the results from its Sabu- 1 exploration well. The release stated in part:

Hyperdynamics Corporation today announced that the Hyperdynamics-operated Sabu- 1 exploration well reached the planned total depth of 11,844 feet in a water depth of 2,329 feet, approximately 90 miles southwest of Conakry, Guinea. The well encountered oil shows while drilling the targeted Upper Cretaceous section. Petrophysical analysis of electric logs indicates the presence of hydrocarbons in non-commercial concentrations in multiple layers of sandstones distributed throughout a 1,300-foot interval of Santonian to Turonian age sediments. The indicated oil saturation appears to be residual, suggesting that larger volumes of oil formerly were present in the reservoirs but subsequently leaked out or that these rocks lay on a hydrocarbon migration pathway.

EMI-11197884 -18-


"The Sabu-1 results provide evidence that hydrocarbon generation has taken place in the basin and enhances the prospectivity of our 9,650-square-mile concession, one of the largest in West Africa," commented Ray Leonard, Hyperdynamics' President and Chief Executive Officer. "The oil and sandstone reservoirs encountered in the Santonian and Turonian age sediments in the well are particularly encouraging in the development of the turbidite fan plays further down dip on the concession."


share on February 16, 2012, a one-day decline of 29% on high volume.

51. The true facts, which were known by defendants but concealed from the investing

public during the Class Period, were as follows:

(a) Due to numerous cost overruns and delays, including logistical delays

resulting from limited port facilities in Guinea as well as issues related to mechanical and operational

matters surrounding the spudding of the Sabu-1 well, the Company would be unable to commence

drilling on the Baraka-1 well.

(b) The Company had far greater exposure to liquidity concerns than it had

previously disclosed. Despite the Company's March 2011 common stock offering, Hyperdynamics

did not have sufficient funds to be able to drill both the Sabu-1 well and the Baraka-1 well.

(c) Based on the foregoing, defendants lacked a reasonable basis for their positive

statements about the Company's drilling operations or the prospective value of the Company's oil

and gas concessions.

52. As a result of defendants' false statements and omissions, Hyperdynamics publicly

traded securities traded at artificially inflated prices during the Class Period. However, after the

above revelations seeped into the market, the Company's shares were hammered by massive sales,

sending them down 77% from their Class Period high.

EMH1197884 _19-


LOSS CAUSATION/ECONOMIC LOSS

53. During the Class Period, as detailed herein, the defendants made false and misleading

statements and engaged in a scheme to deceive the market and a course of conduct that artificially

inflated the prices of Hyperdynamics publicly traded securities and operated as a fraud or deceit on

Class Period purchasers of Hyperdynamics publicly traded securities by misrepresenting the

Company's business and prospects. Later, when the defendants' prior misrepresentations and

fraudulent conduct became apparent to the market, the prices of Hyperdynamics publicly traded

securities fell precipitously, as the prior artificial inflation came out of the prices over time. As a

result of their purchases of Hyperdynamics publicly traded securities during the Class Period,

plaintiff and other members of the Class suffered economic loss, i.e., damages, under the federal

securities laws.

NO SAFE HARBOR

54. Hyperdynamies' verbal "Safe Harbor" warnings accompanying its oral forward-

looking statements ("FLS") issued during the Class Period were ineffective to shield those

statements from liability.

55. The defendants are also liable for any false or misleading FLS pleaded because, at the

time each FLS was made, the speaker knew the FLS was false or misleading and the FLS was

authorized and/or approved by an executive officer of Hyperdynamics who knew that the FLS was

false. None of the historic or present tense statements made by defendants were assumptions

underlying or relating to any plan, projection or statement of future economic performance, as they

were not stated to be such assumptions underlying or relating to any projection or statement of future

economic performance when made, nor were any of the projections or forecasts made by defendants

expressly related to or stated to be dependent on those historic or present tense statements when

made.

EMW197854 -20-


CLASS ACTION ALLEGATIONS

56. Plaintiff brings this action as a class action pursuant to Rule 23 of the Federal Rules

of Civil Procedure on behalf of all persons who purchased or otherwise acquired Hyperdynamics

publicly traded securities during the Class Period (the "Class"). Excluded from the Class are

defendants and their families, the officers and directors of the Company, at all relevant times,

members of their immediate families and their legal representatives, heirs, successors or assigns and

any entity in which defendants have or had a controlling interest.

57. The members of the Class are so numerous that joinder of all members is

impracticable. The disposition of their claims in a class action will provide substantial benefits to

the parties and the Court. Hyperdynamics has over 166.8 million shares of stock outstanding, owned

by hundreds if not thousands of persons.

58. There is a well-defined community of interest in the questions of law and fact

involved in this case. Questions of law and fact common to the members of the Class which

predominate over questions which may affect individual Class members include:

(a) whether the 1934 Act was violated by defendants;

(b) whether defendants omitted and/or misrepresented material facts;

(c) whether defendants' statements omitted material facts necessary to make the

statements made, in light of the circumstances under which they were made, not misleading;

(d) whether defendants knew or deliberately disregarded that their statements

were false and misleading;

(e) whether the prices of Hyperdynamics publicly traded securities were

artificially inflated; and

(f) the extent of damage sustained by Class members and the appropriate measure

of damages.

EMH1197884 -21-


59. Plaintiff's claims are typical of those of the Class because plaintiff and the Class

sustained damages from defendants' wrongful conduct.

60. Plaintiff will adequately protect the interests of the Class and has retained counsel

who are experienced in class action securities litigation. Plaintiff has no interests which conflict

with those of the Class.

61. A class action is superior to other available methods for the fair and efficient

adjudication of this controversy.

COUNT I

For Violation of §10(b) of the 1934 Act and Rule lOb-S Against All Defendants

62. Plaintiff incorporates ¶Jl-61 by reference.

63. During the Class Period, defendants disseminated or approved the false statements

specified above, which they knew or deliberately disregarded were misleading in that they contained

misrepresentations and failed to disclose material facts necessary in order to make the statements

made, in light of the circumstances under which they were made, not misleading.

64. Defendants violated § 10(b) of the 1934 Act and Rule lOb-5 in that they employed

devices, schemes and artifices to defraud; made untrue statements of material facts or omitted to

state material facts necessary in order to make the statements made, in light of the circumstances

under which they were made, not misleading; or engaged in acts, practices and a course of business

that operated as a fraud or deceit upon plaintiff and others similarly situated in connection with their

purchases of Hyperdynamics publicly traded securities during the Class Period.

65. Plaintiff and the Class have suffered damages in that, in reliance on the integrity of

the market, they paid artificially inflated prices for Hyperdynamics publicly traded securities.

Plaintiff and the Class would not have purchased Hyperdynamics publicly traded securities at the

EMH1197884 -22-


prices they paid, or at all, if they had been aware that the market prices had been artificially and

falsely inflated by defendants' misleading statements.

COUNT II

For Violation of §20(a) of the 1934 Act Against All Defendants

66. Plaintiff incorporates ¶1J1 -65 by reference.

67. Defendant Leonard acted as a controlling person of Hyperdynamics within the

meaning of § 20(a) of the 1934 Act. By reason of his position with the Company, and his ownership

of Hyperdynamics stock, defendant Leonard had the power and authority to cause Hyperdynamics to

engage in the wrongful conduct complained of herein. Hyperdynamics controlled defendant

Leonard and all of its employees. By reason of such conduct, defendants are liable pursuant to

§20(a) of the 1934 Act.

PRAYER FOR RELIEF

WHEREFORE, plaintiff prays for judgment as follows:

A. Declaring this action to be a proper class action pursuant to Fed. R. Civ. P. 23;

B. Awarding plaintiff and the members of the Class damages, including interest;

[Si

Awarding plaintiff's reasonable costs and attorneys' fees; and

LI:

Awarding such equitable/injunctive or other relief as the Court may deem just and

proper.

JURY DEMAND

Plaintiff demands a trial by jury.

EMH/197884 -23-


Respectfully Submitted,

EDISON, MCDOWELL & HETHERINOTON LLP

By: Is/Andrew M. Edison Andrew M. Edison Attorney-in-Charge Southern District Bar No. 18207 [email protected]

Phoenix Tower 3200 Southwest Freeway, Suite 2100 Houston, Texas 77027 Telephone: 713.337.5581 Facsimile: 713.337.8841

ATTORNEYS FOR PLAINTIFF

Of counsel:

ROBB1NS GELLER RUDMAN & DOWD LLP DARREN J. ROBBINS DAVID C. WALTON CATHERINE J. KOWALEWSKI 655 West Broadway, Suite 1900 San Diego, CA 92101 Telephone: 619/231-1058 619/231-7423 (fax)

CIJAPIN FITZGERALD SULLIVAN & BOTTINI LLP FRANCIS A. BOTTINI 550 West C Street, Suite 2000 San Diego, CA 92101 Telephone: 619/241-4810 619/955-5318 (fax)

EMH1197884 -24-


CERTIFICATION OF LEAD PLAINTIFF PURSUANT TO FEDERAL SECURITIES LAWS

CLINTON PARKER ("Plaintiff") declares:

1. Plaintiff has reviewed a complaint and authorized its filing.

2. Plaintiff did not acquire the security that is the subject of this action at the

direction of plaintiff's counsel or in order to participate in this private action or any

other litigation under the federal securities laws.

3. Plaintiff is willing to serve as a representative party on behalf of the

class, including providing testimony at deposition and trial, if necessary.

4. Plaintiff has made the following transaction(s) during the Class Period in

the securities that are the subject of this action:

Acquisitions: Number of Shares Acquisition Price Per Date Acquired Acquired Share

02/13/12 1,500 shares $2.38

Sales: Number of Shares Selling Price Per

Date Sold Sold Share

' 3 (

5. Plaintiff has not sought to serve or served as a representative party in a

class action that was flied under the federal securities laws within the three-year

period prior to the date of this Certification except as detailed below:

NYPERDYNAMICS


6. The Plaintiffwill not accept any payment for serving as a representative

party on behalf of the class beyond the Plaintiff's pro rata share of any recovery,

except such reasonable costs and expenses (including lost wages) directly relating to

the representation of the class as ordered or approved by the court.

I declare under penalty of perjury that the foregoing is true and correct.

Executed this 2c2 day of 7'9, 2012.

CLtNTON PARKER

-2 - IJYFERDYNAMICS

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