Document and Entity Information
Document and Entity Information | 6 Months Ended |
Dec. 31, 2016 | |
Document and Entity Information [Abstract] | |
Entity Registrant Name | HYPERDYNAMICS CORP |
Entity Central Index Key | 937,136 |
Document Type | S-1/A |
Document Period End Date | Dec. 31, 2016 |
Amendment Flag | false |
Entity Filer Category | Smaller Reporting Company |
CONSOLIDATED BALANCE SHEETS
CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands | Jun. 30, 2016 | Jun. 30, 2015 |
Current assets: | ||
Cash and cash equivalents | $ 10,327 | $ 18,374 |
Prepaid expenses | 1,294 | 1,170 |
Other current assets | 6 | 81 |
Total current assets | 11,627 | 19,625 |
Property and equipment, net of accumulated depreciation of $2,075 and $1,983 | 51 | 160 |
Unproved oil and gas properties excluded from amortization (Full-Cost Method) | 14,311 | |
Total property and equipment and unproved oil and gas properties, net | 51 | 14,471 |
Total assets | 11,678 | 34,096 |
LIABILITIES AND SHAREHOLDERS' EQUITY | ||
Current Liabilities - Accounts payable and accrued expenses | 1,743 | 1,668 |
Commitments and contingencies (Note 8) | ||
Shareholders' equity: | ||
Preferred stock, $0.001 par value; 20,000,000 authorized, 0 shares issued and outstanding | ||
Common stock, $0.001 par value, 87,000,000 shares authorized; 21,201,536 and 21,046,591 shares issued and outstanding | 169 | 169 |
Additional paid-in capital | 317,757 | 317,404 |
Accumulated deficit | (307,991) | (285,145) |
Total shareholders' equity | 9,935 | 32,428 |
Total liabilities and shareholders' equity | $ 11,678 | $ 34,096 |
CONSOLIDATED BALANCE SHEETS (Pa
CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($) $ in Thousands | Dec. 31, 2016 | Jun. 30, 2016 | Jun. 30, 2015 |
CONDENSED CONSOLIDATED BALANCE SHEETS | |||
Property and equipment, accumulated depreciation (in dollars) | $ 2,097 | $ 2,075 | $ 1,983 |
Preferred stock, par value (in dollars per share) | $ 0.001 | $ 0.001 | $ 0.001 |
Preferred stock, shares authorized | 20,000,000 | 20,000,000 | 20,000,000 |
Preferred stock, shares issued | 0 | 0 | 0 |
Preferred stock, shares outstanding | 0 | 0 | 0 |
Common stock, par value (in dollars per share) | $ 0.001 | $ 0.001 | $ 0.001 |
Common stock, shares authorized | 87,000,000 | 87,000,000 | 43,750,000 |
Common stock, shares issued | 21,201,536 | 21,046,591 | 21,046,591 |
Common stock, shares outstanding | 21,201,536 | 21,046,591 | 21,046,591 |
CONSOLIDATED STATEMENTS OF OPER
CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($) | 12 Months Ended | |
Jun. 30, 2016 | Jun. 30, 2015 | |
Costs and expenses: | ||
Depreciation | $ 109,000 | $ 237,000 |
General, administrative and other operating | 8,406,000 | 13,157,000 |
Full impairment of unproved oil and gas properties | 14,331,000 | |
Loss from operations | (22,846,000) | (13,394,000) |
Other income (expense): | ||
Interest Income | 2,000 | |
Total other income (expense) | 2,000 | |
Loss before income tax | (22,846,000) | (13,392,000) |
Income tax | 0 | 0 |
Net loss | $ (22,846,000) | $ (13,392,000) |
Basic and diluted loss per common share (in dollars per share) | $ (1.09) | $ (0.64) |
Weighted average shares outstanding - basic and diluted (in shares) | 21,046,591 | 21,046,591 |
CONSOLIDATED STATEMENTS OF SHAR
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY - USD ($) $ in Thousands | Common Stock | Additional Paid-in Capital | Accumulated Deficit | Total |
Balance at Jun. 30, 2014 | $ 169 | $ 316,760 | $ (271,753) | $ 45,176 |
Balance (in shares) at Jun. 30, 2014 | 21,046,591 | |||
Increase (Decrease) in Shareholders' Equity | ||||
Net loss | (13,392) | (13,392) | ||
Amortization of fair value of stock options | 644 | 644 | ||
Balance at Jun. 30, 2015 | $ 169 | 317,404 | (285,145) | 32,428 |
Balance (in shares) at Jun. 30, 2015 | 21,046,591 | |||
Increase (Decrease) in Shareholders' Equity | ||||
Net loss | (22,846) | (22,846) | ||
Amortization of fair value of stock options | 353 | 353 | ||
Balance at Jun. 30, 2016 | $ 169 | 317,757 | (307,991) | 9,935 |
Balance (in shares) at Jun. 30, 2016 | 21,046,591 | |||
Increase (Decrease) in Shareholders' Equity | ||||
Net loss | (5,579) | (5,579) | ||
Amortization of fair value of stock options | 106 | 106 | ||
Balance at Dec. 31, 2016 | $ 169 | $ 317,938 | $ (313,570) | $ 4,537 |
Balance (in shares) at Dec. 31, 2016 | 21,201,536 |
CONSOLIDATED STATEMENTS OF CASH
CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) | 12 Months Ended | |
Jun. 30, 2016 | Jun. 30, 2015 | |
CASH FLOWS FROM OPERATING ACTIVITIES: | ||
Net loss | $ (22,846,000) | $ (13,392,000) |
Adjustments to reconcile net loss to net cash used in operating activities: | ||
Depreciation | 109,000 | 237,000 |
Full impairment of unproved oil and gas properties | 14,331,000 | |
Stock based compensation | 353,000 | 644,000 |
Changes in operating assets and liabilities: | ||
Increase in Prepaid expenses | (124,000) | (338,000) |
(Increase) decrease in Other current assets | 75,000 | (2,000) |
Increase (decrease) in Accounts payable and accrued expenses | 75,000 | (3,982,000) |
Net cash used in operating activities | (8,027,000) | (16,833,000) |
CASH FLOWS FROM INVESTING ACTIVITIES: | ||
Sale of property and equipment | 1,000 | |
Investment in oil and gas properties | (20,000) | (64,000) |
Net cash used in investing activities | (20,000) | (63,000) |
DECREASE IN CASH AND CASH EQUIVALENTS | (8,047,000) | (16,896,000) |
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD | 18,374,000 | 35,270,000 |
CASH AND CASH EQUIVALENTS AT END OF PERIOD | $ 10,327,000 | 18,374,000 |
NON-CASH INVESTING AND FINANCING TRANSACTIONS: | ||
Accounts payable for oil and gas property | $ (12,000) |
ORGANIZATION AND SIGNIFICANT AC
ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES | 6 Months Ended | 12 Months Ended |
Dec. 31, 2016 | Jun. 30, 2016 | |
ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES | ||
ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES | 1. ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES General Overview Hyperdynamics Corporation ("Hyperdynamics," the "Company," "we," "us," and "our") is a Delaware corporation formed in March 1996. Hyperdynamics has two wholly-owned subsidiaries, SCS Corporation Ltd ("SCS"), a Cayman corporation, and HYD Resources Corporation ("HYD"), a Texas corporation. Through SCS, Hyperdynamics focuses on oil and gas exploration offshore the coast of West Africa. Our exploration efforts are pursuant to a Hydrocarbon Production Sharing Contract, as amended (the "PSC"). We refer to the rights granted under the PSC as the "Concession." We began operations in oil and gas exploration, seismic data acquisition, processing, and interpretation in late fiscal 2002. As used herein, references to "Hyperdynamics," "Company," "we," "us," and "our" refer to Hyperdynamics Corporation and our subsidiaries, including SCS. The rights in the Concession offshore Guinea are held by SCS. Status of our Business, Liquidity and Going Concern We have no source of operating revenue and there is no assurance when we will, if ever. On December 31, 2016, we had $2.2 million in cash, and $1.5 million in accounts payable and accrued expense liabilities, all of which are current liabilities. We are currently pursuing several avenues to raise funds. We have no other material commitments other than ordinary operating costs and commitments relating to the PSC. As of April 27, 2017 the Company's trade accounts payable and accrued expenses exceeded its cash balances. In 2010 we sold a 23% gross interest in the Concession to Dana Petroleum, PLC ("Dana"), a subsidiary of the Korean National Oil Corporation. Later, at the end of 2012, we sold a 40% gross interest to Tullow Guinea Ltd. ("Tullow"). The Share Purchase Agreement ("Tullow SPA") was dated December 31, 2012. A few months later Tullow became the Operator of the Concession on April 1, 2013. We refer to Tullow, Dana and us in the Concession as the "Consortium". Pursuant to the Tullow SPA between Tullow and us, Tullow paid us $26.0 million in cash and Tullow agreed to pay our entire participating interest share of expenditures associated with joint operations in the Concession up to a gross expenditure cap of $100.0 million incurred during the period of our carried interest while drilling the initial exploratory well that began on September 21, 2013. Tullow also agreed to pay our participating interest share of future costs for the drilling of an appraisal well following the initial exploration well, if drilled, up to an additional gross expenditure cap of $100.0 million. The Consortium planned to drill the exploration well in the ultra-deepwater area (water depths of over 2,000 meters) of the Concession during the first half of calendar 2014, but Tullow declared Force Majeure in March of 2014 based on the mere existence of the Department of Justice ("DOJ") and Securities and Exchange Commission ("SEC") investigations pursuant to the Foreign Corrupt Practices Act of the United States ("FCPA Investigations"). Tullow withdrew its Force Majeure declaration in May of 2014, but did not resume petroleum operations citing the existence of the FCPA investigations and the Ebola outbreak in Guinea as the reason. The DOJ investigation ended last May 2015, the SEC investigation ended last September 2015, and the World Health Organization declared Guinea Ebola free on December 29, 2015. Notwithstanding the resolution of the FCPA investigations, Dana insisted on further specific title assurances from the Government of Guinea and at a Petroleum Operations Management Committee meeting with the Government of Guinea in Conakry on December 16 and 17, 2015, Tullow and SCS obtained a PSC Amendment that we believed provided such further assurances. Instead of signing the PSC Amendment both Tullow and Dana refused to execute the agreement. Unable to see a path forward, we filed legal actions against Tullow and Dana under our Joint Operating Agreement. On August 15, 2016, we entered into a Settlement and Release Agreement with Tullow and Dana ("Settlement Agreement") that returned to Hyperdynamics 100% of the interest under the PSC, long-lead item property useful in the drilling of an exploratory well, and $0.7 million in cash, in return for a mutual release of all claims. We also agreed to pay Dana a success fee based upon the certified reserves of the Fatala well if it results in a discovery. On August 19, 2016, we signed a non-binding Memorandum of Understanding with the Government of Guinea and executed a Second Amendment to the PSC ("2016 Amendment") on September 15, 2016. We also received a Presidential Decree that gave Hyperdynamics a one year extension to the second exploration period of the PSC to September 22, 2017 ("PSC Extension Period") and we also became the designated Operator with the receipt of the Presidential Decree. In addition to clarifying certain elements of the initial PSC, we agreed in the 2016 Amendment to drill one exploratory well to a minimum depth of 2,500 meters below the seabed within the PSC Extension Period with a projected commencement date of April 2017 (the "Extension Well") with the option of drilling additional wells. If the Extension Well is not drilled within the PSC Extension Period, we will owe the Government of Guinea, under Article 4.2 of the PSC, the difference between the actual expenditures in Guinea that are related to the well and $46.0 million. Fulfillment of the work obligations exempts us from the expenditure obligations during the PSC Extension Period. Failure to comply with the drilling and other obligations of the PSC as amended subjects us to financial penalties and a risk of loss of the Concession. In mid-January 2017 the Company requested and received a notification letter dated January 24, 2017 from the General Director of the National Petroleum Office of the Republic of Guinea, informing the Company that the Republic of Guinea granted a postponement of the Company's obligation to provide a mutually acceptable security of $5.0 million to February 20, 2017 (originally required by no later than January 21, 2017) as well as a clarification regarding the timing of the security under Article 4.2 of the 2016 PSC Amendment until the work on the Fatala-1 well is completed. On March 1, 2017, the Republic of Guinea has issued a reservation of rights letter asserting the Company has not satisfied its obligation to deposit mutually acceptable security of $5.0 million. See Note 7, "Subsequent Events" below. Absent cash inflows we will not have adequate capital resources to meet our current obligations as they become due and therefore there is substantial doubt about our ability to continue as a going concern. Our ability to meet our current obligations as they become due over the next twelve-months, and to be able to continue exploration, will depend on obtaining additional resources through sales of additional interests in the Concession, equity or debt financial offerings, or through other means. No assurance can be given that any of these actions can be completed. Principles of consolidation The accompanying unaudited condensed consolidated financial statements include the accounts of Hyperdynamics and its direct and indirect wholly-owned subsidiaries. All intercompany accounts and transactions have been eliminated in consolidation. The financial statements have been prepared in accordance with accounting principles generally accepted in the United States and the rules of the Securities and Exchange Commission, and should be read in conjunction with the audited financial statements and notes thereto for the fiscal year ended June 30, 2016 presented above. In the opinion of management, all adjustments, consisting of normal recurring adjustments, necessary for a fair presentation of financial position and the results of operations for the interim periods presented have been reflected herein. The results of operations for interim periods are not necessarily indicative of the results to be expected for the full year. Notes to the financial statements which would substantially duplicate the disclosures contained in the audited financial statements for the most recent fiscal year ended June 30, 2016, have been omitted. Use of estimates The preparation of the consolidated financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities and expenses at the balance sheet date and for the period then ended. We believe our estimates and assumptions are reasonable; however, such estimates and assumptions are subject to a number of risks and uncertainties that may cause actual results to differ materially from such estimates. Significant estimates and assumptions underlying these financial statements include: • estimates in the calculation of share-based compensation expense, • estimates made in our income tax calculations, • estimates in the assessment of current litigation claims against the Company, • estimates and assumptions involved in our assessment of unproved oil and gas properties for impairment, and • estimates and assumptions involved in our fair market value assessment of the well construction equipment received in the August 15, 2016 Settlement Agreement with Tullow and Dana. We are subject, from time to time, to legal proceedings, claims, and liabilities that arise in the ordinary course of business. We accrue for losses when such losses are considered probable and the amounts can be reasonably estimated. Cash and cash equivalents Cash equivalents are highly liquid investments with an original maturity of three months or less. For the periods presented, we maintained all of our cash in bank deposit accounts which, at times, exceed the federally insured limits. Earnings per share Basic loss per common share has been computed by dividing net loss by the weighted average number of shares of common stock outstanding during each period. In period of earnings, diluted earnings per common share are calculated by dividing net income available to common shareholders by weighted-average common shares outstanding during the period plus weighted-average dilutive potential common shares. Diluted earnings per share calculations assume, as of the beginning of the period, exercise of stock options and warrants using the treasury stock method. All potential dilutive securities, including potentially dilutive options, warrants and convertible securities, if any, were excluded from the computation of dilutive net loss per common share for the three and six month periods ended December 31, 2016 and 2015, respectively, because their effects in the computation are antidilutive due to our net loss for those periods. Stock options to purchase approximately 1.2 million common shares at an average exercise price of $4.08 were outstanding at December 31, 2016. Using the treasury stock method, had we had net income, approximately 298,700 common shares attributable to our outstanding stock options would have been included in the fully diluted earnings per share for the three month period ended December 31, 2016 while approximately 182,200 common shares attributable to our outstanding stock options would have been included in the fully diluted earnings per share for the six month period ended December 31, 2016. Stock options to purchase approximately 1.0 million common shares at an average exercise price of $5.67 were outstanding at December 31, 2015. Using the treasury stock method, had we had net income, approximately 101,600 common shares attributable to our outstanding stock options would have been included in the fully diluted earnings per share for the three month period ended December 31, 2015 while approximately 50,800 common shares attributable to our outstanding stock options would have been included in the fully diluted earnings per share for the six month period ended December 31, 2015. Contingencies We are subject to legal proceedings, claims and liabilities. We accrue for losses associated with legal claims when such losses are probable and can be reasonably estimated. These accruals are adjusted as additional information becomes available or circumstances change. Legal fees are charged to expense as they are incurred. See Note 6 for more information on legal proceedings and settlements. Fair Value Measurements The accounting standards define fair value, establish a three-level valuation hierarchy for disclosures of fair value measurements and enhance disclosure requirements for fair value measures. As discussed in Note 2, we determined a fair value of the well construction equipment material (Level 3 fair value measurement) that we received at the time of our legal settlement with Tullow and Dana. The fair value estimate was based on the combination of cost and market approaches taking into consideration a number of factors, which included but were not limited to the original cost and the condition of the material and demand for steel and tubulars at the time of measurement. | 1. ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES Nature of business Hyperdynamics Corporation ("Hyperdynamics," the "Company," "we," "us," and "our") is a Delaware corporation formed in March 1996. Hyperdynamics has two wholly-owned subsidiaries, SCS Corporation Ltd (SCS), a Cayman corporation, and HYD Resources Corporation (HYD), a Texas corporation. Through SCS and its wholly-owned subsidiary, SCS Guinea SARL (SCSG), which is a Guinea limited liability company formed under the laws of the Republic of Guinea ("Guinea") located in Conakry, Guinea, Hyperdynamics focuses on oil and gas exploration offshore the coast of West Africa. Our exploration efforts are pursuant to a Hydrocarbon Production Sharing Contract, as amended (the "PSC"). We refer to the rights granted under the PSC as the "Concession." We began operations in oil and gas exploration, seismic data acquisition, processing, and interpretation in late fiscal 2002. As used herein, references to "Hyperdynamics," "Company," "we," "us," and "our" refer to Hyperdynamics Corporation and our subsidiaries, including SCS Corporation Ltd ("SCS"). The rights in the Concession offshore Guinea are held by SCS. Status of our Business We have no source of operating revenue and there is no assurance when we will, if ever. On June 30, 2016, we had $10.3 million in cash, and $1.7 million in liabilities, all of which are current liabilities. We plan to use our existing cash to fund our general corporate needs and our expenditures associated with the Concession. On December 31, 2012, we closed a sale to Tullow, a subsidiary of Tullow Oil plc, of a 40% gross interest in the Concession. Through June 30, 2016, we held a 37% participating interest, with Dana Petroleum, PLC ("Dana"), which is a subsidiary of the Korean National Oil Corporation, holding the remaining 23% interest in the Concession. We refer to Tullow, Dana and us in the Concession as the "Consortium". Pursuant to the Share Purchase Agreement ("Tullow SPA") between Tullow and us, Tullow agreed to pay our entire participating interest share of expenditures associated with joint operations in the Concession up to a gross expenditure cap of $100 million incurred during the carry period that began on September 21, 2013. Additionally, Tullow agreed to pay our participating interest share of future costs for the drilling of an appraisal of the initial exploration well, if drilled, up to a gross expenditure cap of $100 million. We signed a non-binding Memorandum of Understanding with the Government of Guinea on August 19, 2016 and a second amendment to the PSC ("2016 Amendment") on September 15, 2016. As more fully described below, the 2016 Amendment gave us a one year extension to the PSC to September 22, 2017 ("PSC Extension Period"). During the PSC Extension Period, we agreed to drill an exploration well to a minimum depth of two thousand five hundred (2,500) meters below the seabed for an estimated amount of forty six million US Dollars ($46,000,000 USD). The projected commencement date of drilling of the exploration well is April 2017 with a currently estimated time to completion of 42 days. Additional exploration wells may be drilled during the PSC Extension Period. If the well is not drilled within the PSC Extension Period, we will owe the Government of Guinea the difference between the actual expenditures related to the well and U.S. $46,000,000. Failure to comply with the drilling and other obligations of the PSC as amended subjects us to financial penalties and a risk of loss of the Concession. The continued delays have affected adversely the ability to explore the Concession and reduces the attractiveness of the Concession to prospective industry participants and financing sources. While we currently hold 100% of the Concession, it is unknown whether we will be able to raise the necessary funds to drill the exploratory well during the PSC Extension Period. As described in Note 8, SCS filed parallel actions on January 11, 2016, in the United States District Court for the Southern District of Texas and before the American Arbitration Association ("AAA") against Tullow and Dana. The legal actions sought (1) a determination that Tullow and Dana are in breach of their contractual obligations and (2) orders requiring Tullow and Dana to move forward with well drilling activities offshore Guinea. In addition, the arbitration action seeks the damages caused by the repeated delays in well drilling resulting from the activities of Tullow and Dana. On January 28, 2016, the action in the Federal District Court was voluntarily dismissed by us and refiled in District Court in Harris County, Texas (the "Texas District Court"). On February 8, 2016 Tullow and Dana removed the case to Federal District Court. On February 2, 2016, SCS filed an Application for Emergency Arbitrator and Interim Measures of Protection and requested the following relief: (a) expedite discovery prior to the constitution of the arbitral tribunal; (b) provide that the time period permitted by the parties' arbitration agreement for the selection of the arbitrators and the filing of any responsive pleadings or counterclaims be accelerated; (c) require Tullow, as the designated operator under the JOA, to maintain existing "well-planning activities"; (d) require Tullow to undertake and complete certain planning activities; and (e) require Tullow and Dana to join with SCS in completing the negotiation of an acceptable amendment to the PSC and to agree to a process that will result in the execution of the amendment. With the exception of limited relief regarding discovery and agreement by Tullow to maintain certain well plan readiness, the Emergency Arbitrator ruled on February 17, 2016 that SCS is not entitled to the emergency injunctive relief it requested. Further, the Emergency Arbitrator enjoined all parties to the dispute from pursuing parallel Federal District Court proceeding. The Federal District Court action was voluntarily stayed by us on February 12, 2016. Subsequently, on August 15, 2016, we entered into a Settlement and Release Agreement with Tullow and Dana ("Settlement and Release") with respect to our dispute in arbitration (American Arbitration Association, Case No: 01-16-0000-0679, styled SCS Corporation Ltd v. Tullow Guinea Ltd. and Dana Petroleum (E&P) Ltd.). Under the Settlement and Release, we released all claims against Tullow and Dana and Tullow and Dana (i) issued to the Government of Guinea a notice of withdrawal from the Concession and PSC effective immediately, (ii) transferred their interest in the long lead items previously purchased by the Consortium in preparation for the drilling of the Fatala well, and agreed to pay net cash of $686,570 to us. We also agreed to pay Dana a success fee based upon the certified reserves of the Fatala well if it results in a discovery. We will record the long lead items and a gain once they have been inspected and appropriately valued. The timing and amount of our cash outflows are dependent on a number of factors including: a negative outcome related to any of our legal proceedings, inability to resume petroleum operations or drilling delays, well costs exceeding our carry, or if we have unfavorable well results. As a result, absent cash inflows, there is substantial doubt as to whether we will have adequate capital resources to meet our current obligations as they become due and therefore be able to continue as a going concern. Our ability to meet our current obligations as they become due over the next twelve-months, and to be able to continue exploration, will depend on obtaining additional resources through sales of additional interests in the Concession, equity or debt financings, or through other means, although no assurance can be given that any of these actions can be completed. Principles of Consolidation The accompanying consolidated financial statements include the accounts of Hyperdynamics and its direct and indirect wholly-owned subsidiaries. All intercompany accounts and transactions have been eliminated in consolidation. The financial statements have been prepared in accordance with accounting principles generally accepted in the United States and the rules of the Securities and Exchange Commission (SEC). Use of Estimates The preparation of the consolidated financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities and expenses at the balance sheet date and for the period then ended. We believe our estimates and assumptions are reasonable; however, such estimates and assumptions are subject to a number of risks and uncertainties that may cause actual results to differ materially from such estimates. Significant estimates and assumptions underlying these financial statements include: • estimates in the calculation of share-based compensation expense, • estimates made in our income tax calculations, • estimates in the assessment of current litigation claims against the company, and • estimates and assumptions involved in our assessment of unproved oil and gas properties for impairment. We are subject to legal proceedings, claims, and liabilities that arise in the ordinary course of business. We accrue for losses when such losses are considered probable and the amounts can be reasonably estimated. Cash and cash equivalents Cash equivalents are highly liquid investments with an original maturity of three months or less. For the years presented, we maintained all of our cash in bank deposit accounts which, at times, exceed the federally insured limits. Oil and Gas Properties Full-Cost Method We account for oil and natural gas producing activities using the full-cost method of accounting as prescribed by the SEC. Accordingly, all costs incurred in the acquisition, exploration, and development of oil and natural gas properties, including the costs of abandoned properties, dry holes, geophysical costs and annual lease rentals are capitalized. All selling, general and administrative corporate costs unrelated to drilling activities are expensed as incurred. Sales or other dispositions of oil and natural gas properties are accounted for as adjustments to capitalized costs, with no gain or loss recorded unless the ratio of capitalized costs to proved reserves would significantly change, or to the extent that the sale proceeds exceed our capitalized costs. Depletion of evaluated oil and natural gas properties would be computed on the units of production method based on proved reserves. The net capitalized costs of proved oil and natural gas properties are subject to quarterly impairment tests. Costs Excluded from Amortization Costs associated with unproved properties are excluded from amortization until it is determined whether proved reserves can be assigned to the properties. We review our unproved properties at the end of each quarter to determine whether the costs incurred should be transferred to the amortization base. We assess unproved property on a quarterly basis for possible impairment or reduction in value. We assess properties on an individual basis or as a group if properties are individually insignificant. The assessment includes consideration of the following factors, among others: intent to drill; remaining lease term under our concession; geological and geophysical evaluations; drilling results and activity; the assignment of proved reserves; and the economic viability of development if proved reserves are assigned. We assess our unproved properties on a country-by-country basis. During any period in which these factors indicate an impairment, the adjustment is recorded through earnings of the period. Full-Cost Ceiling Test At the end of each quarterly reporting period, the capitalized costs less accumulated amortization and deferred income taxes shall not exceed an amount equal to the sum of the following items: (i) the present value of estimated future net revenues of oil and gas properties (including future development and abandonment costs of wells to be drilled) using prices based on the preceding 12-months' average price based on closing prices on the first day of each month, or prices defined by existing contractual arrangements, discounted at 10%, (ii) the cost of properties not being amortized, and (iii) the lower of cost or estimated fair value of unproved properties included in the costs being amortized, less related income tax effects ("Full-Cost Ceiling Test"). The calculation of the Full-Cost Ceiling Test is based on estimates of proved reserves. There are numerous uncertainties inherent in estimating quantities of proved reserves and in projecting the future rates of production, timing, and plan of development. The accuracy of any reserves estimate is a function of the quality of available data and of engineering and geological interpretation and judgment. Results of drilling, testing, and production subsequent to the date of the estimate may justify revision of such estimates. Accordingly, reserves estimates are often different from the quantities of oil and natural gas that are ultimately recovered. We have no proved reserves. We recognized a $14.3 million Full-Cost Ceiling test write-down in the year ended June 30, 2016. No Full-Cost Ceiling test write-down was recognized in the year ended June 30, 2015. Property and Equipment, other than Oil and Gas Property and equipment are stated on the basis of historical cost less accumulated depreciation. Depreciation is provided using the straight-line method over the estimated useful lives of the assets, generally three to five years. Income Taxes We account for income taxes in accordance with FASB Accounting Standards Codification ("ASC") 740, "Income Taxes," which requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of temporary differences between the tax and financial reporting basis of assets and liabilities and for loss and credit carryforwards. Valuation allowances are provided when recovery of deferred tax assets is not considered likely. Tax benefits are recognized only for tax positions that are more likely than not to be sustained upon examination by tax authorities. The amount recognized is measured as the largest amount of benefit that is greater than 50 percent likely to be realized upon ultimate settlement. Unrecognized tax benefits are tax benefits claimed in our tax returns that do not meet these recognition and measurement standards. As of June 30, 2016 and 2015, the Company has unrecognized tax benefits totaling $5.5 million. Our policy is to recognize potential accrued interest and penalties related to unrecognized tax benefits within income tax expense. For the years ended June 30, 2016 and 2015, we did not recognize any interest or penalties in our consolidated statements of operations, nor did we have any interest or penalties accrued on our consolidated balance sheets at June 30, 2016 and 2015 relating to unrecognized benefits. The tax years 2011-2015 remain open to examination for federal income tax purposes and by the other major taxing jurisdictions to which we are subject. Stock-Based Compensation ASC 718, "Compensation-Stock Compensation" requires recognition in the financial statements of the cost of employee services received in exchange for an award of equity instruments over the period the employee is required to perform the services in exchange for the award (presumptively the vesting period). We measure the cost of employee services received in exchange for an award based on the grant-date fair value of the award. We account for non-employee share-based awards based upon ASC 505-50, "Equity-Based Payments to Non-Employees." Earnings Per Share Basic loss per common share has been computed by dividing net loss by the weighted average number of shares of common stock outstanding during each period. In a period of earnings, diluted earnings per common share are calculated by dividing net income available to common shareholders by weighted-average common shares outstanding during the period plus weighted-average dilutive potential common shares. Diluted earnings per share calculations assume, as of the beginning of the period, exercise of stock options and warrants using the treasury stock method. All potential dilutive securities, including potentially dilutive options, warrants and convertible securities, if any, were excluded from the computation of dilutive net loss per common share for the years ended June 30, 2016, and 2015, respectively, as their effects are antidilutive due to our net loss for those periods. Stock options to purchase approximately 1.0 million common shares at an average exercise price of $5.03 were outstanding at June 30, 2016. Using the treasury stock method, had we had net income, approximately 25 thousand common shares attributable to our outstanding stock options would have been included in the fully diluted earnings per share for the year ended June 30, 2016. Stock options to purchase approximately 1.2 million common shares at an average exercise price of $7.43 and warrants to purchase approximately 0.03 million shares of common stock at an average exercise price of $12.64 were outstanding at June 30, 2015. Using the treasury stock method, had we had net income, approximately four hundred common shares attributable to our outstanding stock options would have been included in the fully diluted earnings per share calculation for the year ended June 30, 2015. There would have been no dilution attributable to our outstanding warrants to purchase common shares. Had we had net income, approximately four thousand common shares attributable to restricted stock awards would have been included in the fully diluted earnings per share for the year ended June 30, 2015. Contingencies We are subject to legal proceedings, claims and liabilities. We accrue for losses associated with legal claims when such losses are probable and can be reasonably estimated. These accruals are adjusted as additional information becomes available or circumstances change. Legal fees are charged to expense as they are incurred. See Note 8 for more information on legal proceedings. Foreign currency gains and losses from current operations In accordance with ASC Topic 830, Foreign Currency Matters , the functional currency of our international subsidiaries is the U.S. Dollar. Gains and losses from foreign currency transactions arising from operating assets and liabilities are included in general, administrative and other operating expense, have not been significant. Net foreign currency transaction gains (losses) were ($3) thousand and ($0.1) million for the years ended June 30, 2016 and 2015, respectively. Subsequent Events The Company evaluated all subsequent events from June 30, 2016 through the date of issuance of these financial statements. |
PROPERTY AND EQUIPMENT
PROPERTY AND EQUIPMENT | 12 Months Ended |
Jun. 30, 2016 | |
PROPERTY AND EQUIPMENT | |
PROPERTY AND EQUIPMENT | 2. PROPERTY AND EQUIPMENT A summary of property and equipment as of June 30, 2016 and 2015 is as follows: June 30, (in thousands) Useful Life 2016 2015 Computer equipment and software 3 years $ $ Office equipment and furniture 5 years Leasehold improvements 3 years Total Cost Less—Accumulated depreciation ) ) $ $ We review assets for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. As of June 30, 2016 and 2015, there were no impairments of property and equipment. |
INVESTMENT IN OIL AND GAS PROPE
INVESTMENT IN OIL AND GAS PROPERTIES | 6 Months Ended | 12 Months Ended |
Dec. 31, 2016 | Jun. 30, 2016 | |
INVESTMENT IN OIL AND GAS PROPERTIES | ||
INVESTMENT IN OIL AND GAS PROPERTIES | 2. INVESTMENT IN OIL AND GAS PROPERTIES Investment in oil and gas properties consists entirely of our Concession in offshore Guinea, West Africa. We previously owned a 37% participating interest in our Guinea Concession on June 30, 2016. On August 19, 2016, we signed a non-binding Memorandum of Understanding with the Government of Guinea and executed a Second Amendment to the PSC ("2016 Amendment") on September 15, 2016 and received a Presidential Decree on September 21, 2016 giving us a one year extension to the second exploration period of the PSC to September 22, 2017 ("PSC Extension Period") and reaffirming that we now own 100% of the Concession. One part of our settlement with Tullow and Dana included the relinquishments of their respective 40% and 23% participating interests in the Concession. Hyperdynamics now owns 100% of the participating interests in the Concession. In addition to clarifying certain elements of the PSC, we agreed in the 2016 Amendment to drill one (1) exploratory well to a minimum depth of 2,500 meters below the seabed within the PSC Extension Period with a projected commencement date of April 2017 (the "Extension Well") with the option of drilling additional wells. If the Extension Well is not drilled within the PSC Extension Period, we will owe the Government of Guinea the difference between the actual expenditures in Guinea related to the well and $46.0 million. Fulfillment of the work obligations exempts us from the expenditure obligations during the PSC Extension Period. In the event a discovery is made, the terms of the PSC make us eligible for a two-year appraisal period during which we are obliged either to declare that the reserves are commerciality viable or that we decide that the PSC shall terminate. In turn, we will retain only an area equivalent to approximately 5,000 square kilometers in the Guinea offshore and will provide the Government of Guinea: (1) A parent company guarantee for the well obligation, (2) monthly progress reports and a reconciliation of budget to actual expenditures, (failure to provide the reports and assurances on a timely basis could result in a notice of termination with a 30 day period to cure), and (3) guarantees to the Guinea Government that (a) no later than January 21, 2017 we will provide a mutually acceptable security for $5.0 million on terms customary in international petroleum operations, provided that this security is to be released at the time the drilling rig for the Extension Well is on location offshore Guinea, and (b) no later than April 12, 2017, we will deliver a mutually acceptable security for the difference between $46.0 million and the amount spent to date on the Extension Well. For the purposes of calculation for this clause, however, only costs spent for services and goods provided in Guinea shall be taken into account until the drilling rig to be used in the drilling of the Extension Well is located in the territorial waters of the Republic of Guinea. On January 24, 2017 the Company requested and received a notification letter from the General Director of the National Petroleum Office of the Republic of Guinea, informing the Company that the Republic of Guinea granted a postponement to provide a mutually acceptable security of $5.0 million to February 20, 2017 as well as a clarification regarding the timing of the $46.0 million security payment under Article 4.2 of the 2016 PSC Amendment until the work on the Fatala well is completed. On March 1, 2017, the Republic of Guinea has issued a reservation of rights letter asserting the Company has not satisfied its obligation to deposit mutually acceptable security of $5.0 million. Additionally, we agreed to limit the cost recovery pool to date to our share of expenditures in the PSC since 2009 (estimated to be approximately $150,000,000) and move into the territory of Guinea the long lead items we received in the Settlement Agreement that are currently in Takoradi, Ghana for the drilling of the Extension Well by January 31, 2017. The movement of approximately $1.6 million of the $4.1 million of equipment was started on January 29, 2017 and was completed on February 5, 2017. The balance of the material still in Ghana will be moved at a later date. Finally, we agreed to allocate and administer a training budget during the PSC Extension Period for the benefit of the Guinea National Petroleum Office of $250,000 in addition to any unused portion of the training program under Article 10.3 of the PSC, estimated to be approximately $500,000. Failure to comply with the drilling and other obligations of the PSC as amended subjects us to financial penalties and a risk of loss of the Concession. The continued delays have affected adversely the ability to explore the Concession and reduce the attractiveness of the Concession to prospective industry participants and financing sources. While we currently hold 100% of the Concession, it is unknown whether we will be able to raise the necessary funds to drill the exploratory well during the PSC Extension Period. We follow the "Full-Cost" method of accounting for oil and natural gas property and equipment costs. Under this method, internal costs incurred that were directly identified with exploration, development, and acquisition activities undertaken by us for our own account, and which were not related to production, general corporate overhead, or similar activities, are capitalized. Capitalization of internal costs was discontinued April 1, 2013 when Tullow became the operator. Hyperdynamics became the operator after the signing of the Second Amendment of the PSC on September 15, 2016 and thus capitalization of certain internal, project related costs had resumed. For the three and six month periods ended December 31, 2016, we capitalized $1.3 million and $1.5 million of such costs, respectively. Capitalized internal costs of $ 0.2 million from the previous quarter were written off and recorded as Full-cost ceiling test write-down expenses, and capitalized internal costs of $ 1.3 million in the current quarter were written off and recorded as General, administrative and other operating costs. Geological and geophysical costs incurred that are directly associated with specific unproved properties are capitalized in "Unproved properties excluded from amortization" and evaluated as part of the total capitalized costs associated with a prospect. The cost of unproved properties not being amortized is assessed to determine whether such properties have been impaired. In determining whether such costs should be impaired, we evaluate current drilling plans and drilling results and available geological and geophysical information. No reserves have been attributed to the Concession. The following table provides detail of total capitalized costs for the Concession which remain unproved and unevaluated and are excluded from amortization as of December 31, 2016 and June 30, 2016 (in thousands): December 31, June 30, Oil and Gas Properties: Unproved properties not subject to amortization $ $ — During the six month period ended December 31, 2016, our oil and gas property balance increased by $4.1 million as a result of the fair value of the material received in our settlement with Tullow and Dana. The fair value of the material, for the most part well construction material, at the time of the settlement was approximately $4.4 million, of which we reduced by approximately $0.4 million during the second quarter of fiscal year 2017 based on additional information that we determined reduced the original fair market value. We engaged an independent outside party with expertise in valuing oil and gas equipment to conduct an appraisal and provide a fair valuation determination for our initial recording and reporting purposes. During the quarter ended December 31, 2016 we impaired $0.8 million of unproved oil and gas property costs capitalized during the current quarter ($0.5 million) and previous quarter ($0.3 million) and the internal costs described above. That impairment assessment was based on our liquidity position, and the possibility that we may not reach an agreement with the Government of Guinea regarding the requirement under the PSC to provide a mutually acceptable security of $5.0 million, and the possibility that the Government of Guinea may at any time and without prior notice terminate our Concession. As of June 30, 2016 at the close of our last fiscal year we fully impaired the $14.3 million of previously capitalized unproved oil and gas property costs. That impairment assessment was based on the continued impasse at the time by our members of the Consortium to resume petroleum operations and drill the next exploration obligation well, which needed to be commenced at that time by the end of September 2016, and our inability at the time to get interim injunctive relief from the American Arbitration Association requiring Tullow and Dana to join with SCS in the negotiation of an acceptable amendment to the PSC and to agree to a process that would result in the execution of the amendment which we hoped would have led to the resumption of petroleum operations by the Consortium. Thus, we believed all legal measures to require Tullow and Dana to drill the planned exploration well had been exhausted. | 3. INVESTMENT IN OIL AND GAS PROPERTIES Investment in oil and gas properties consists entirely of our Guinea Concession in offshore West Africa. We owned a 77% participating interest in our Guinea Concession prior to the sale of a 40% gross interest to Tullow which closed on December 31, 2012. We now own a 37% interest in the Concession. Guinea Concession We have been conducting exploration work related to the area off the coast of Guinea since 2002. On September 22, 2006 we entered into the PSC with Guinea. Under that agreement, we were granted certain exclusive contractual rights by Guinea to explore and exploit offshore oil and gas reserves, if any, off the coast of Guinea. We are conducting our current work in Guinea under the PSC, as amended on March 25, 2010 (the "PSC Amendment"). The PSC Amendment clarified that we retained a Contract Area of approximately 25,000 square kilometers, which is approximately equivalent to 9,650 square miles or 30% of the original Contract Area under the PSC, following a December 31, 2009 relinquishment of approximately 70% of the original Contract Area. The PSC Amendment required that the Consortium relinquish an additional 25% of the retained Contract Area by September 30, 2013. The Contract Area is currently 18,750 square kilometers. Under the terms of the PSC Amendment, the first exploration period ended and the Consortium entered into the second exploration period on September 21, 2010. The second exploration period ran until September 2013, at which point it was renewed to September 2016 and may be extended for up to one (1) additional year to allow the completion of a well in process and for up to two (2) additional years to allow the completion of the appraisal of any discovery made. The PSC Amendment required the drilling of an exploration well, which had to be commenced by the year-end 2011, to a minimum depth of 2,500 meters below seabed. This requirement was satisfied with the drilling of the Sabu-1 well which was commenced during October of 2011 and reached the minimum depth of 2,500 meters below the seabed in February of 2012. The Consortium is required to drill an additional exploration well, which is to be commenced by the end of September 2016, to a minimum depth of 2,500 meters below seabed. The PSC Amendment requires the expenditure of $15 million on each of the exploration wells ($30 million in the aggregate). The Consortium was also required to acquire a minimum of 2,000 square kilometers of 3D seismic by September 2013 with a minimum expenditure of $12 million. This requirement was satisfied with the first 3D seismic survey acquired in 2010. Fulfillment of work obligations exempts us from expenditure obligations and exploration work in excess of minimum work obligations for each exploration period may be carried forward to the following exploration period. If the Consortium does not fulfil the work requirement under the PSC, it is required to pay to Guinea the difference between the amounts actually spent on work realized in fulfillment of the obligations of the work program and the amounts estimated for the total work program. Under the PSC Amendment, Guinea may participate in development of any discovery at a participating interest of up to 15% of costs being carried for its share. The cost of that carry is to be recovered out of 62.5% of Guinea's share of cost and profit oil. The PSC Amendment clarified that only those eligible expenditures, which were made following the date the PSC was signed, on September 22, 2006, are eligible for cost recovery. We are required to establish an annual training budget of $200,000 for the benefit of Guinea's oil industry personnel, and we are also obligated to pay an annual surface tax of $2.00 per square kilometer on our retained Concession acreage. The PSC Amendment also provides that should the Guinea government note material differences between provisions of the PSC Amendment and international standards or the Petroleum Code, the parties will renegotiate the relevant articles. Under the PSC and PSC Amendment our Guinea Concession is subject to a 10% royalty interest to Guinea. Of the remaining 90% of the first production, we will receive 75% of the revenue for recovery of the cost of operations, and Guinea will receive 25%. After recovery cost of operations, revenue will be split as outlined in the table below: Daily production (b/d) Guinea Share Contractor Share From 0 to 2,000 % % From 2,001 to 5,000 % % From 5,001 to 100,000 % % Over 100,001 % % The Guinea Government may elect to take a 15% working interest in any exploitation area. On May 20, 2010, we completed a 23% assignment to Dana following the receipt of the final approvals from the Government of Guinea, which were in the form of a Presidential Decree approving the PSC and a document, referred to as an Arrêté, from the Guinea Ministry of Mines and Geology. On December 27, 2012, we received an Arrêté which formally authorized our 40% assignment of a participating interest to Tullow. Sale of Interest to Tullow On December 31, 2012, we closed a sale to Tullow of a 40% gross interest in the Concession. As consideration, we received $27 million from Tullow as reimbursement of our past costs in the Concession and, as additional consideration, Tullow agreed to: (i) pay our participating interest share of future costs associated with joint operations in the Concession, up to a gross expenditure cap of $100 million incurred during the carry period that began on September 21, 2013; and (ii) pay our participating interest share of costs associated with an appraisal well of the initial exploration well, if drilled, subject to a gross expenditure cap on the appraisal well of $100 million. Tullow will continue to pay our costs, subject to the gross expenditure cap of $100 million, until 90 days following the date on which the rig contracted to drill the exploration well moves off the well location. We are responsible for our share of any costs exceeding the gross expenditure cap of $100 million per well. The $27 million payment was received by us on December 31, 2012 and was recorded as a reduction in unproved oil and gas properties, net of transaction costs of approximately $3.3 million. In connection with the transaction, SCS, Tullow and Dana entered into a Joint Operating Agreement Novation and Amendment Agreement reflecting that as a result of the sale to Tullow, the interest of the parties in the Concession are SCS 37%, Dana 23%, and Tullow 40%, and that Tullow agreed to be bound by the PSC and the JOA previously entered into between SCS and Dana. Tullow assumed all the respective liabilities and obligations of SCS in respect of the assigned 40% interest. SCS and Tullow executed a Deed of Assignment. The Assignment was approved by Guinea's Ministry of Mines and Geology by issuing an Arrêté on December 27, 2012 which formally authorized our assignment of a participating interest to Tullow. SCS, Dana and Tullow have elected Tullow as the Operator of the Concession beginning April 1, 2013. Accounting for oil and gas property and equipment costs We follow the "Full-Cost" method of accounting for oil and natural gas property and equipment costs. Under this method, internal costs incurred that are directly identified with exploration, development, and acquisition activities undertaken by us for our own account, and which were not related to production, general corporate overhead, or similar activities, are capitalized. Capitalization of internal costs was discontinued April 1, 2013 when Tullow became the operator. Geological and geophysical costs incurred that are directly associated with specific unproved properties are capitalized in "Unproved properties excluded from amortization" and evaluated as part of the total capitalized costs associated with a prospect. The cost of unproved properties not being amortized is assessed to determine whether such properties have been impaired. In determining whether such costs should be impaired, we evaluate current drilling results and available geological and geophysical information. If petroleum operations are not commenced soon, our ability to obtain additional financing and our financial condition will be adversely affected, which will likely impact our ability to conduct exploration. No reserves have been attributed to the concession. We exclude capitalized costs of unproved oil and gas properties from amortization until evaluated. Geological and geophysical information pertaining to the Guinea concession was collected and evaluated and no reserves have been attributed to the Concession. In February 2012, we completed the drilling of the Sabu-1 well, which was determined to be non-commercial. As a result, we evaluated certain geological and geophysical related costs in unproved properties along with the drilling costs of the Sabu-1 well totaling $116.8 million and determined that these properties were subject to the Full-Cost Ceiling Test. As we have no proved reserves to include in the Full-Cost Ceiling Test, the entire $116.8 million resulted in a Full-Cost Ceiling Test write-down of our unproved oil and gas properties. As of March 31, 2016, based on our impairment assessment, we fully impaired the $14,331,000 of unproved oil and gas properties. This impairment assessment was based on the continued impasse by our members of the Consortium to resume petroleum operations and drill the next exploration obligation well, which needs to be commenced by the end of September 2016, and our inability to get interim injunctive relief from the American Arbitration Association requiring Tullow and Dana to join with SCS in the negotiation of an acceptable amendment to the PSC and to agree to a process that would result in the execution of the amendment which we hoped would have led to the resumption of petroleum operations. Thus, we believe all legal measures to require Tullow and Dana to drill the planned exploration well have been exhausted. Despite this impairment, we continued to pursue any avenues in order to begin drilling activities in our Concession. The following table provides detail of total capitalized costs for our Guinea Concession as of June 30, 2016 and 2015 (in thousands): June 30, 2016 June 30, 2015 Oil and Gas Properties: Unproved oil and gas Properties $ — $ Other Equipment Costs — — Unproved properties not subject to amortization $ — $ During the year ended June 30, 2016, our oil and gas property balance increased by $20 thousand to $14,331,000 as a result of additional geological and geophysical costs incurred. Subsequently on August 19, 2016, we signed a non-binding Memorandum of Understanding with the Government of Guinea and executed a Second Amendment to the PSC ("2016 Amendment") on September 15, 2016. The 2016 Amendment, upon receipt of a Presidential Decree, will give us a one year extension to the second exploration period of the PSC to September 22, 2017 ("PSC Extension Period"). In addition to clarifying certain elements of the PSC, we agreed in the 2016 Amendment to drill one (1) exploratory well to a minimum depth of 2,500 meters below the seabed within the PSC Extension Period with a projected commencement date of April 2017 (the "Extension Well") with the option of drilling additional wells. If the Extension Well is not drilled within the PSC Extension Period, we will owe the Government of Guinea the difference between the actual expenditures in Guinea related to the well and $46,000,000. Fulfillment of the work obligations exempts us from the expenditure obligations during the PSC Extension Period. In turn, we will retain only an area equivalent to approximately 5,000 square kilometers in the Guinea offshore and will provide the Government of Guinea: (1) A parent company guarantee for the well obligation, (2) monthly progress reports and a reconciliation of budget to actual expenditures, (failure to provide the reports and assurances on a timely basis in a notice of termination with a 30 day period to cure), and (3) guarantees to Guinea that (a) no later than January 21, 2017 we will provide a mutually acceptable security for $5,000,000 on terms customary in international petroleum operations, provided that this security is to be released at the time the drilling rig for the Extension Well is on location offshore Guinea, and (b) no later than April 12, 2017, we will deliver a mutually acceptable security for the difference between $46,000,000 and the amount spent to date on the Extension Well. For the purposes of calculation for this clause, however, only costs spent for services and goods provided in Guinea shall be taken into account until the drilling rig to be used in the drilling of the Extension Well is located in the territorial waters of the Republic of Guinea. If we do not provide either security by the specified dates, the Government of Guinea may terminate the PSC immediately and without prior notice to remedy such deficiency. Additionally, we agreed to limit the cost recovery pool to date to our share of expenditures in the PSC since 2009 (estimated to be approximately $150,000,000) and move into the territory of Guinea the long lead items we received in the Settlement Agreement that are currently in Takoradi, Ghana for the drilling of the Extension Well by January 31, 2017. Finally, we agreed to allocate and administer a training budget during the PSC Extension Period for the benefit of the Guinea National Petroleum Office of $250,000 in addition to any unused portion of the training program under Article 10.3 of the PSC, estimated to be approximately $500,000. Failure to comply with the drilling and other obligations of the PSC as amended subjects us to financial penalties and a risk of loss of the Concession. The continued delays have affected adversely the ability to explore the Concession and reduces the attractiveness of the Concession to prospective industry participants and financing sources. While we currently hold 100% of the Concession, it is unknown whether we will be able to raise the necessary funds to drill the exploratory well during the PSC Extension Period. |
ACCOUNTS PAYABLE AND ACCRUED EX
ACCOUNTS PAYABLE AND ACCRUED EXPENSES | 6 Months Ended | 12 Months Ended |
Dec. 31, 2016 | Jun. 30, 2016 | |
ACCOUNTS PAYABLE AND ACCRUED EXPENSES | ||
ACCOUNTS PAYABLE AND ACCRUED EXPENSES | 3. ACCOUNTS PAYABLE AND ACCRUED EXPENSES Accounts payable and accrued expenses as of December 31, 2016 and June 30, 2016 include the following (in thousands): December 31, June 30, Accounts payable—trade and oil and gas exploration activities $ $ Accounts payable—legal costs Accrued payroll Liability for legal settlement (Note 6) — $ $ | 4. ACCOUNTS PAYABLE AND ACCRUED EXPENSES Accounts payable and accrued expenses as of June 30, 2016 and 2015 include the following (in thousands): 2016 2015 Accounts payable—trade $ $ Accounts payable—legal costs Accrued payroll $ $ The single largest payable in the Accounts payable trade balances is for the yearly Director & Officer Insurance renewal and was $1.3 million and $1.1 million for 2016 and 2015, respectively. |
INCOME TAXES
INCOME TAXES | 6 Months Ended | 12 Months Ended |
Dec. 31, 2016 | Jun. 30, 2016 | |
INCOME TAXES | ||
INCOME TAXES | 5. INCOME TAXES Federal income taxes are not due as we have had losses since inception. Our effective tax rate for the six month periods ended December 31, 2016 and 2015 is 0%. This rate is lower than the U.S. statutory rate of 35% primarily due to the valuation allowance applied against our net deferred tax assets. | 5. INCOME TAXES Federal Income taxes are not currently due since Hyperdynamics has had losses since inception. Components of deferred tax assets as of June 30, 2016 and 2015 are as follows (in thousands): 2016 2015 Current deferred tax assets: Other current deferred tax assets $ — $ — Total current temporary differences — — Less: valuation allowance — — Net current deferred tax assets $ — $ — Non-current deferred tax assets Stock compensation $ $ Property and Equipment Oil and gas properties Capital loss Total non-current deferred tax assets $ $ Non-current deferred tax liabilities Property and Equipment — — Net operating losses Less: valuation allowance ) ) Net non-current deferred tax assets (liabilities) $ — $ — Deferred tax assets have been fully reserved due to determination that it is more likely than not that the Company will not be able to realize the benefit from them. In accordance with generally accepted accounting principles, no deferred income tax asset has been recognized for the $118 million excess of the income tax basis in SCS, the Company's Cayman Island operating subsidiary, over the book basis of the subsidiary. This potential tax benefit will only be fully realized if the subsidiary or the Concession is sold at a taxable gain, subject to potential tax limitations. Hyperdynamics has U.S. net operating loss carryforwards of approximately $115.8 million at June 30, 2016. The U.S. net operating losses contain excess tax benefits related to stock compensation in the amount of $2.2 million which have not been included in the financial statements. Internal Revenue Code Section 382 restricts the ability to use these carryforwards whenever an ownership change, as defined, occurs. Hyperdynamics incurred such an ownership change on January 14, 1998 and again on June 30, 2001. As a result of the first ownership change, Hyperdynamics' use of net operating losses as of January 14, 1998, of $949,000, is restricted to $151,000 per year. The availability of losses from that date through June 30, 2001 of $3,313,000 is restricted to $784,000 per year. The Company underwent a restructuring during fiscal 2012 that removed approximately $13.2 million of net operating losses from the U.S. consolidated tax return. It is unlikely that the entity where these net operating losses reside will ever generate U.S. taxable income sufficient to utilize any of these losses. Due to the existence of the valuation allowance, it is not expected that any possible limitation will have an impact on the results of operations or financial position of the Company. The U.S. net operating loss carryforwards expire from 2020 to 2035. The difference between the statutory tax rates and our effective tax rate is primarily due to the valuation allowance applied against our deferred tax assets generated by net operating losses. A reconciliation of the actual taxes to the U.S. statutory tax rate for the years ended June 30, 2016 and 2015 is as follows (in thousands): 2016 2015 Income tax (benefit) at the statutory federal rate (35%) $ ) $ ) Increase (decrease) resulting from nondeductible stock compensation Foreign Rate Differential Other, net Change in valuation allowance Net income tax expense $ — $ — The following table summarizes the activity related to our gross unrecognized tax benefits from July 1, 2014 to June 30, 2016 (in thousands): Federal, State and (In thousands) Balance at July 1, 2014 $ Additions to tax positions related to the current year — Additions to tax positions related to prior years — Statute expirations — Balance at June 30, 2015 $ Additions to tax positions related to the current year — Additions to tax positions related to prior years — Statute expirations — Balance at June 30, 2016 $ The total unrecognized tax benefits that, if recognized, would affect our effective tax rate was $5,485,000 for the years ended June 30, 2016 and June 30, 2015. We file income tax returns, including tax returns for our subsidiaries, with federal, state, local, and foreign jurisdictions. Our tax returns are subject to routine compliance review by the taxing authorities in the jurisdictions in which we file tax returns in the ordinary course of business. We consider the United States to be our most significant tax jurisdiction; however, the taxing authorities in Guinea may audit various tax returns. We currently have no ongoing federal or state audits. The normal statute of limitations for tax returns being available for IRS audit is three years from the filing date of the return. However, net operating losses are subject to adjustment upon utilization of the loss to offset taxable income regardless of when the net operating loss was generated. Therefore, all of our historic losses are subject to adjustment until they are utilized or expire. We do not believe there will be any decreases to our unrecognized tax benefits within the next twelve months. |
SHAREHOLDERS' EQUITY
SHAREHOLDERS' EQUITY | 12 Months Ended |
Jun. 30, 2016 | |
SHAREHOLDERS' EQUITY | |
SHAREHOLDERS' EQUITY | 6. SHAREHOLDERS' EQUITY Common Stock issuances There were no stock options or warrants exercised during the years ended June 30, 2016 or 2015. |
SHARE-BASED COMPENSATION
SHARE-BASED COMPENSATION | 6 Months Ended | 12 Months Ended |
Dec. 31, 2016 | Jun. 30, 2016 | |
SHARE-BASED COMPENSATION | ||
SHARE-BASED COMPENSATION | 4. SHARE-BASED COMPENSATION On February 18, 2010, at our annual meeting of stockholders, the board of directors and stockholders approved the 2010 Equity Incentive Plan (the "2010 Plan"). Prior to the 2010 stockholder meeting, we had two stock award plans: the Stock and Stock Option Plan, which was adopted in 1997 ("1997 Plan") and the 2008 Restricted Stock Award Plan ("2008 Plan"). In conjunction with the approval of the 2010 Plan at the annual meeting, the 1997 Plan and the 2008 Plan were terminated as of February 18, 2010. Subsequently, on February 17, 2012, the 2010 Plan was amended to increase the maximum shares issuable under the 2010 Plan and again on January 27, 2016, at our annual meeting of stockholders, the stockholders approved amending the 2010 Plan to increase the number of shares available for issuance by 750,000 shares. The 2010 Plan provides for the awards of shares of common stock, restricted stock units or incentive stock options or nonqualified stock options to purchase our common stock to selected employees, directors, officers, agents, consultants, attorneys, vendors and advisors of ours' or of any parent or subsidiary thereof. Shares of common stock, options, or restricted stock can only be awarded under the 2010 Plan within 10 years from the effective date of February 18, 2010. A maximum of 2,000,000 shares are issuable under the 2010 Plan and at December 31, 2016, 783,460 shares remained available for issuance. The 2010 Plan provides a means to attract and retain the services of participants and also to provide added incentive to such persons by encouraging stock ownership in the Company. Plan awards are administered by the Compensation, Nominating, and Corporate Governance Committee, who has substantial discretion to determine which persons, amounts, time, price, exercise terms, and restrictions, if any. From time to time we issue non-compensatory warrants, such as warrants issued to investors. Stock Options The fair value of stock option awards is estimated using the Black-Scholes valuation model. For market-based pricing of stock option awards, those options where vesting terms are dependent on achieving a specified stock price, the fair value was estimated using a Black-Scholes option pricing model with inputs adjusted for the probability of the vesting criteria being met and the median expected term for each award as determined by utilizing a Monte Carlo simulation. Expected volatility is based solely on historical volatility of our common stock over the period commensurate with the expected term of the stock options. We rely solely on historical volatility because we do not have options that are traded. The expected term calculation for stock options is based on the simplified method as described in the Securities and Exchange Commission Staff Accounting Bulletin No. 107. We use this method because we do not have sufficient historical information on exercise patterns to develop a model for expected term. The risk-free interest rate is based on the U. S. Treasury yield in effect at the time of award for an instrument with a maturity that is commensurate with the expected term of the stock options. The dividend yield rate of 0% is based on the fact that we have never paid cash dividends on our common stock and we do not expect to pay cash dividends on our common stock during the expected term of the options. The following table provides information about options during the six months ended December 31, 2016 and 2015: 2016 2015 Number of options awarded Compensation expense recognized $ $ Weighted average award-date fair value of options outstanding $ $ The following table details the significant assumptions used to compute the fair values of employee and director stock options awarded during the six month periods ended December 31, 2016 and 2015: 2016 2015 Risk-free interest rate 0.47 - 1.86% % Dividend yield 0% % Volatility factor 109 - 157% % Expected life (years) 1.0 - 4.73 Summary information regarding employee and director stock options issued and outstanding under all plans as of December 31, 2016 is as follows: Options Weighted Aggregate Weighted Options outstanding at July 1, 2016 $ $ — Awarded Exercised ) Forfeited — — Expired ) Options outstanding at December 31, 2016 $ $ Options exercisable at December 31, 2016 $ $ Options outstanding and exercisable as of December 31, 2016 Exercise Price Outstanding Remaining Life Exercisable $0.41 - 4.00 Less than1 year $0.41 - 4.00 1 year $0.41 - 4.00 2 years $0.41 - 4.00 3 years $0.41 - 4.00 4 years $0.41 - 4.00 5 years — $4.01 - 10.00 Less than 1 year $4.01 - 10.00 1 year $4.01 - 10.00 2 years $4.01 - 10.00 3 years $10.01 - 20.00 Less than 1 year $10.01 - 20.00 4 years $20.01 - 30.00 Less than 1 year $20.01 - 30.00 4 years $30.01 - 40.00 Less than 1 year $30.01 - 40.00 5 years $40.01 - 48.72 4 years At December 31, 2016, there were $177 thousand of unrecognized compensation costs related to non-vested share based compensation arrangements awarded to employees and directors under the plans. During the six months ended December 31, 2016, a total of 76,404 options, with a weighted average award date fair value of $0.57 per share, vested in accordance with the underlying agreements. Unvested options at December 31, 2016 totaled 199,697 with a weighted average award date fair value of $4.72, an amortization period of one year and a weighted average remaining life of 0.93 years. Restricted Stock The fair value of restricted stock awards classified as equity awards is based on the Company's stock price as of the date of grant. During the year ended June 30, 2015, all such awards were forfeited. No new grants have been issued, and none are outstanding at December 31, 2016. | 7. SHARE-BASED COMPENSATION On February 18, 2010, at our annual meeting of stockholders, the board of directors and stockholders approved the 2010 Equity Incentive Plan (the "2010 Plan"). Prior to the 2010 stockholder meeting, we had two stock award plans: the Stock and Stock Option Plan, which was adopted in 1997 ("1997 Plan") and the 2008 Restricted Stock Award Plan ("2008 Plan"). In conjunction with the approval of the 2010 Plan at the annual meeting, the 1997 Plan and 2008 Plan were terminated as of February 18, 2010. Subsequently, on February 17, 2012, the 2010 Plan was amended to increase the maximum shares issuable under the 2010 Plan and again on January 27, 2016, at our annual meeting of stockholders, the stockholders approved amending the 2010 Plan to increase the number of shares available for issuance by 750,000 shares. The 2010 Plan provides for the grants of shares of common stock, restricted stock or incentive stock options and/or nonqualified stock options to purchase our common stock to selected employees, directors, officers, agents, consultants, attorneys, vendors and advisors of ours' or of any parent or subsidiary thereof. Shares of common stock, options, or restricted stock can only be granted under this plan within 10 years from the effective date of February 18, 2010. A maximum of 2,000,000 shares are issuable under the 2010 Plan and at June 30, 2016, 945,710 shares remained available for issuance. The 2010 Plan provides a means to attract and retain the services of participants and also to provide added incentive to such persons by encouraging stock ownership in the Company. Plan grants are administered by the Compensation, Nominating, and Corporate Governance Committee, who has substantial discretion to determine which persons, amounts, time, price, exercise terms, and restrictions, if any. Additionally, from time to time, we issue non-compensatory warrants, such as warrants issued to investors. Stock Options The fair value of stock option awards is estimated using the Black-Scholes valuation model. For market based stock option awards, those options where vesting terms are dependent on achieving a specified stock price, the fair value was estimated using a Black-Scholes option pricing model with inputs adjusted for the probability of the vesting criteria being met and the median expected term for each grant as determined by utilizing a Monte Carlo simulation. Expected volatility is based solely on historical volatility of our common stock over the period commensurate with the expected term of the stock options. We rely solely on historical volatility as we do not have traded options. The expected term calculation for stock options is based on the simplified method as described in the Securities and Exchange Commission Staff Accounting Bulletin number 107. We use this method because we do not have sufficient historical information on exercise patterns to develop a model for expected term. The risk-free interest rate is based on the U. S. Treasury yield in effect at the time of grant for an instrument with a maturity that is commensurate with the expected term of the stock options. The dividend yield rate of zero is based on the fact that we have never paid cash dividends on our common stock and we do not expect to pay cash dividends on our common stock during the expected term of the options. The following table provides information about options during the years ended June 30: 2016 2015 Number of options granted Compensation expense recognized $ $ Compensation cost capitalized — — Weighted average grant-date fair value of options outstanding $ $ The following table details the significant assumptions used to compute the fair market values of employee and director stock options granted during the years ended June 30: 2016 2015 Risk-free interest rate 0.36 - 1.01 % 0.07 - 0.93 % Dividend yield % % Volatility factor 109 - 148 % 65 - 216 % Expected life (years) 0.5 - 2.875 0.5 - 2.875 Summary information regarding employee stock options issued and outstanding under all plans as of June 30, 2016 is as follows: Options Weighted Aggregate Weighted Options outstanding at July 1, 2014 $ $ Granted Exercised — — Forfeited ) Expired ) Options outstanding at June 30, 2015 $ $ — Granted Exercised — — Forfeited ) Expired ) Options outstanding at June 30, 2016 $ $ — Options exercisable at June 30, 2016 $ $ — Options outstanding and exercisable as of June 30, 2016 Exercise Price Outstanding Remaining Life Exercisable $0.42 - 4.00 1 year $0.42 - 4.00 2 years $0.42 - 4.00 3 years $0.42 - 4.00 4 years $0.42 - 4.00 5 years — $4.01 - 10.00 1 year $4.01 - 10.00 2 years $4.01 - 10.00 3 years $4.01 - 10.00 4 years $10.01 - 20.00 1 year $10.01 - 20.00 4 years $20.01 - 30.00 1 year $20.01 - 30.00 4 years $30.01 - 40.00 1 year $30.01 - 40.00 5 years $40.01 - 50.00 5 years Options outstanding and exercisable as of June 30, 2015 Exercise Price Outstanding Remaining Life Exercisable $0.90 - 4.00 1 year $0.90 - 4.00 3 years $0.90 - 4.00 4 years $0.90 - 4.00 5 years — $4.01 - 10.00 1 year $4.01 - 10.00 2 years $4.01 - 10.00 3 years $4.01 - 10.00 5 years $10.01 - 20.00 1 year $10.01 - 20.00 2 years $10.01 - 20.00 5 years $20.01 - 30.00 1 year $20.01 - 30.00 2 years $20.01 - 30.00 5 years $30.01 - 40.00 1 year $30.01 - 40.00 6 years $40.01 - 50.00 1 year $40.01 - 50.00 6 years At June 30, 2016, there was $31 thousand of unrecognized compensation costs related to non-vested share based compensation arrangements granted to employees under the plans. During 2016, a total of 449,904 options, with a weighted average grant date fair value of $1.10 per share, vested in accordance with the underlying agreements. Unvested options at June 30, 2016 totaled 97,601 with a weighted average grant date fair value of $5.50, an amortization period of one to two years and a weighted average remaining life of 4.91 years. At June 30, 2015, there was $0.4 million of unrecognized compensation costs related to non-vested share based compensation arrangements granted to employees under the plans. During 2015, a total of 377,274 options, with a weighted average grant date fair value of $3.76 per share, vested in accordance with the underlying agreements. Unvested options at June 30, 2015 totaled 427,826 with a weighted average grant date fair value of $10.95, an amortization period of one to two years and a weighted average remaining life of 4.83 years. Restricted Stock The fair value of restricted stock awards classified as equity awards is based on the Company's stock price as of the date of grant. Such awards do not grant any rights as a shareholder of the company until a certificate for the vested shares of common stock has been issued. During the year ended June 30, 2015, all such awards were forfeited with compensation expense forfeiture credits of approximately $46 thousand recorded. No new grants have been issued, and none are outstanding at June 30, 2016. Warrants The exercise price of the warrants may be adjusted in the case of stock splits, stock dividends or combinations of shares, or in the event the Company issues rights, options or warrants to all holders of the Company's common stock with an exercise or purchase price less than the volume weighted average price of the Company's shares on the record date. The warrants are considered indexed to our common stock and therefore are not considered a derivative. The fair value of the warrants was determined using the Black-Scholes option pricing model. The last of the previously granted outstanding warrants expired in October 2015, and there were no warrants granted or exercised in the years ended June 30, 2016 and 2015. Accordingly, there were no warrants outstanding at the year ended June 30, 2016 Summary information regarding common stock warrants issued and outstanding as of June 30, 2015 is as follows: Warrants Weighted Aggregate Weighted Outstanding at year ended June 30, 2014 $ $ — Granted — — Exercised — — Expired ) Outstanding at year ended June 30, 2015 $ $ — Warrants outstanding and exercisable as of June 30, 2015 Exercise Outstanding Remaining Life Exercisable $12.64 0.30 year |
COMMITMENTS AND CONTINGENCIES
COMMITMENTS AND CONTINGENCIES | 6 Months Ended | 12 Months Ended |
Dec. 31, 2016 | Jun. 30, 2016 | |
COMMITMENTS AND CONTINGENCIES | ||
COMMITMENTS AND CONTINGENCIES | 6. COMMITMENTS AND CONTINGENCIES LITIGATION AND OTHER LEGAL MATTERS From time to time, we and our subsidiaries are involved in disputes. We review the status of on-going proceedings and other contingent matters with legal counsel. Liabilities for such items are recorded if and when it is probable that a liability has been incurred and when the amount of the liability can be reasonably estimated. If we are able to reasonably estimate a range of possible losses, an estimated range of possible loss is disclosed for such matters in excess of the accrued liability, if any. Liabilities are periodically reviewed for adjustments based on additional information. Iroquois Lawsuit On May 9, 2012, a lawsuit was filed in the Supreme Court of the State of New York against us and all of our directors. The plaintiffs, five hedge funds that invested in us in early 2012, alleged that we breached an agreement with the plaintiffs, and that we and the directors made certain negligent misrepresentations relating to our drilling operations. Among other claims, the plaintiffs alleged that we misrepresented the status of our drilling operations and the speed with which the drilling would be completed. The plaintiffs' advanced claims for breach of contract and negligent misrepresentation and sought damages in the amount of $18.5 million plus pre-judgment interest. On July 12, 2012, we and the directors moved to dismiss the suit for failure to state a claim as to all defendants and for lack of personal jurisdiction over the director defendants. On June 19, 2013, the court dismissed the negligent misrepresentation claim but declined to dismiss the breach of contract claim. The negligent misrepresentation claim was dismissed without prejudice, meaning plaintiffs could attempt to refile it. On August 12, 2013, the plaintiffs filed an amended complaint. That complaint named only the Company and sought recovery for alleged breaches of contract. We filed an answer to the plaintiffs' amended complaint on September 9, 2013, and the court entered a scheduling order governing pre-trial proceedings in the matter. On December 31, 2016 we entered into a settlement agreement with the plaintiffs whereby Hyperdynamics will issue to the plaintiffs a total of 600,000 new shares of common stock, and it will cause a payment to be made of $1.35 million in cash that will be covered under its directors' and officers' insurance policy.The liability for the issuance of the shares was recorded to "liability for legal settlement" in the amount of $1.3 million based on the $2.18 December 30, 2016 closing price of our common stock. The plaintiffs are restricted from selling the shares before April 1, 2017 under the terms of the agreement. The shares of common stock were issued on February 2, 2017, whereby the issuance of those shares will be recorded to "Common Stock" and "Additional paid in capital" and the liability for legal settlement will be cleared. Shareholder Lawsuits Beginning on March 13, 2014, two lawsuits styled as class actions were filed in the U.S. District Court for the Southern District of Texas against us and several then-current officers of the Company alleging that the Company made false and misleading statements that artificially inflated the Company's stock prices. The lawsuits alleged, among other things, that the Company misrepresented its compliance with the Foreign Corrupt Practices Act and anti-money laundering statutes and that it lacked adequate internal controls. The lawsuits sought damages based on Sections 10(b) and 20 of the Securities Exchange Act of 1934, although the specific amount of damages is not specified. On May 12, 2014, a shareholder filed a motion for appointment as lead plaintiff. Both of the March 2014 lawsuits were dismissed voluntarily. One was dismissed during the quarter ended September 30, 2016 and the second on October 6, 2016. Tullow and Dana Legal Actions On January 11, 2016, we filed legal actions against members of the Consortium under the Joint Operating Agreement governing the oil and gas exploration rights offshore Guinea ("JOA") in the United States District Court for the Southern District of Texas and before the American Arbitration Association ("AAA") against Tullow for their failure to meet their obligations under the JOA. On January 28, 2016, the action in the Federal District Court was voluntarily dismissed by us and refiled in District Court in Harris County, Texas. On February 8, 2016 Tullow and Dana removed the case to Federal District Court. On February 2, 2016, SCS filed an Application for Emergency Arbitrator and Interim Measures of Protection and requested the following relief: (a) expedite discovery prior to the constitution of the arbitral tribunal; (b) provide that the time period permitted by the parties' arbitration agreement for the selection of the arbitrators and the filing of any responsive pleadings or counterclaims be accelerated; (c) require Tullow, as the designated operator under the JOA, to maintain existing "well-planning activities"; (d) require Tullow to undertake and complete certain planning activities; and (e) require Tullow and Dana to join with SCS in completing the negotiation of an acceptable amendment to the PSC and to agree to a process that will result in the execution of the amendment. With the exception of limited relief regarding discovery and agreement by Tullow to maintain certain well plan readiness, the Emergency Arbitrator ruled on February 17, 2016, that SCS was not entitled to the emergency injunctive relief it requested. Further, the Emergency Arbitrator enjoined all parties to the dispute from pursuing parallel District Court proceedings. On February 12, 2016, the case was voluntarily stayed by us. The AAA action sought (1) a determination that Tullow and Dana was in breach of their contractual obligations and (2) the damages caused by the repeated delays in well drilling caused by the activities of Tullow and Dana. We determined to bring the legal actions only after it became apparent that Tullow and Dana would not move forward, despite many opportunities to do so, with petroleum operations. SCS believed that it had exhausted all of its options for the pursuit of legal measures to require Tullow and Dana to drill the planned exploration well. On August 15, 2016, we subsequently entered into a Settlement and Release Agreement with Tullow and Dana ("Settlement and Release") with respect to our dispute in arbitration. Under the Settlement and Release, we released all claims against Tullow and Dana and Tullow and Dana (i) issued to the Government of Guinea a notice of withdrawal from the Concession and PSC effective immediately, (ii) transferred their interest in the long lead items of well construction material previously purchased by the Consortium in preparation for the initial drilling of the Fatala well, and agreed to pay net cash of $686,570 to us. The net cash received was recorded as a part of the gain on the legal settlement. We also agreed to pay Dana a success fee based upon the certified reserves of the Fatala well if it results in a discovery of commercially producible oil and gas reserves. The $4.8 million gain on legal settlement also includes the estimated fair value of $4.1 million for the well construction material we received from Tullow as a part of our Settlement and Release Agreement. COMMITMENTS AND CONTINGENCIES Operating Leases We lease office space under long-term operating leases with varying terms. Most of the operating leases contain renewal and purchase options. We expect that in the normal course of business, most of the operating leases will be renewed or replaced by other similar leases. During the three months period ended December 31, 2016 and as a part of our program to begin drilling operations in Guinea, we entered into a lease for in-country offices and nearby apartments. The leases are for six months with options to renew as necessary and collectively cost about $30 thousand per month. The following is a schedule by years of minimum future rental payments required under operating leases that have initial or remaining non-cancellable lease terms in excess of one year (in thousands): Years ending June 30: 2017 $ 2018 2019 2020 2021 and thereafter — Total minimum payments required $ Rent expense included in net loss from operations for the three month periods ended December 31, 2016 and 2015 was $0.1 million in each period. Rent expense included in net loss from operations for the six month periods ended December 31, 2016 and 2015 was $0.2 million and $0.3 million respectively, in each period. | 8. COMMITMENTS AND CONTINGENCIES LITIGATION AND OTHER LEGAL MATTERS From time to time, we and our subsidiaries are involved in disputes. We are unable to predict the outcome of such matters when they arise. We review the status of on-going proceedings and other contingent matters with legal counsel. Liabilities for such items are recorded if and when it is probable that a liability has been incurred and when the amount of the liability can be reasonably estimated. If we are able to reasonably estimate a range of possible losses, an estimated range of possible loss is disclosed for such matters in excess of the accrued liability, if any. Liabilities are periodically reviewed for adjustments based on additional information. Tullow and Dana Legal Actions On January 11, 2016, we filed legal actions against members of the Consortium under the Joint Operating Agreement governing the oil and gas exploration rights offshore Guinea ("JOA") in the United States District Court for the Southern District of Texas and before the AAA against Tullow for their failure to meet their obligations under the JOAC. On January 28, 2016, the action in the Federal District Court was voluntarily dismissed by us and refiled in District Court in Harris County, Texas. On February 8, 2016 Tullow and Dana removed the case to Federal District Court. On February 2, 2016, SCS filed an Application for Emergency Arbitrator and Interim Measures of Protection and requested the following relief: (a) expedite discovery prior to the constitution of the arbitral tribunal; (b) provide that the time period permitted by the parties' arbitration agreement for the selection of the arbitrators and the filing of any responsive pleadings or counterclaims be accelerated; (c) require Tullow, as the designated operator under the JOA, to maintain existing "well-planning activities"; (d) require Tullow to undertake and complete certain planning activities; and (e) require Tullow and Dana to join with SCS in completing the negotiation of an acceptable amendment to the PSC and to agree to a process that will result in the execution of the amendment. With the exception of limited relief regarding discovery and agreement by Tullow to maintain certain well plan readiness, the Emergency Arbitrator ruled on February 17, 2016, that SCS is not entitled to the emergency injunctive relief it requested. Further, the Emergency Arbitrator enjoined all parties to the dispute from pursuing parallel District Court proceedings. On February 12, 2016, the case was voluntarily stayed by us. The AAA action sought (1) a determination that Tullow and Dana are in breach of their contractual obligations and (2) the damages caused by the repeated delays in well drilling caused by the activities of Tullow and Dana. We determined to bring the legal actions only after it became apparent that Tullow and Dana would not move forward, despite many opportunities to do so, with petroleum operations. Subsequently, on August 15, 2016, we entered into a Settlement and Release Agreement with Tullow and Dana ("Settlement and Release") with respect to our dispute in arbitration (American Arbitration Association, Case No: 01-16-0000-0679, styled SCS Corporation Ltd v. Tullow Guinea Ltd. and Dana Petroleum (E&P) Ltd.). Under the Settlement and Release, we released all claims against Tullow and Dana and Tullow and Dana (i) issued to the Government of Guinea a notice of withdrawal from the Concession and PSC effective immediately, (ii) transferred their interest in the long lead items previously purchased by the Consortium in preparation for the drilling of the Fatala well, and agreed to pay net cash of $686,570 to us. We also agreed to pay Dana a success fee based upon the certified reserves of the Fatala well if it results in a discovery. We will record the long lead items and a gain once they have been inspected and appropriately valued. Shareholder Lawsuits Beginning on March 13, 2014, two lawsuits styled as class actions were filed in the U.S. District Court for the Southern District of Texas against us and several then-current officers of the Company alleging that we made false and misleading statements that artificially inflated our stock prices. The lawsuits allege, among other things, that we misrepresented our compliance with the Foreign Corrupt Practices Act and anti-money laundering statutes and that we lacked adequate internal controls. The lawsuits seek damages based on Sections 10(b) and 20 of the Securities Exchange Act of 1934, although the specific amount of damages is not specified. On May 12, 2014, a shareholder filed a motion for appointment as lead plaintiff, which remains pending. One of the March 2014 lawsuits has now been dismissed voluntarily, and the parties to the remaining suit await the issuance of a scheduling order in that matter. We have assessed the status of the remaining March 2014 lawsuit and have concluded that an adverse judgment remains reasonably possible, but not probable. As a result, no provision has been made in the consolidated financial statements. We are unable to estimate a range of possible loss; however, in our opinion, the outcome of this dispute will not have a material effect on our financial condition and results of operations. In addition, we have received demands from shareholders to inspect our books and records. Iroquois Lawsuit On May 9, 2012, a lawsuit was filed in the Supreme Court of the State of New York against us and all of our directors. The plaintiffs, five hedge funds that invested in us in early 2012, allege that we breached an agreement with the plaintiffs, and that we and the directors made certain negligent misrepresentations relating to our drilling operations. Among other claims, the plaintiffs allege that we misrepresented the status of our drilling operations and the speed with which the drilling would be completed. The plaintiffs advance claims for breach of contract and negligent misrepresentation and seek damages in the amount of $18.5 million plus pre-judgment interest. On July 12, 2012, we and the directors moved to dismiss the suit for failure to state a claim as to all defendants and for lack of personal jurisdiction over the director defendants. On June 19, 2013, the court dismissed the negligent misrepresentation claim but declined to dismiss the breach of contract claim. The negligent misrepresentation claim was dismissed without prejudice, meaning plaintiffs could attempt to refile it. On August 12, 2013, the plaintiffs filed an amended complaint. That complaint names only us and seeks recovery for alleged breaches of contract. We filed an answer to the plaintiffs' amended complaint on September 9, 2013, and the court has entered a scheduling order governing pre-trial proceedings in the matter. The maximum possible loss is the full amount of $18.5 million plus interest accrued thereon until judgment. We, however, have assessed the status of this matter and have concluded that although an adverse judgment is reasonably possible, it is not probable. As a result, no provision has been made in the consolidated financial statements. In our opinion, the outcome of this dispute will not have a material effect on our financial condition and results of operations. COMMITMENTS AND CONTINGENCIES Operating Leases We lease office space under long-term operating leases with varying terms. Most of the operating leases contain renewal and purchase options. We expect that in the normal course of business, the majority of operating leases will be renewed or replaced by other leases. The following is a schedule by years of minimum future rental payments required under operating leases that have initial or remaining non-cancellable lease terms in excess of one year as of June 30, 2016 (in thousands): Years ending June 30: 2017 $ 2018 2019 2020 Total minimum payments required $ Rent expense included in loss from operations for the years ended June 30, 2016 and 2015 was $0.4 million and $0.3 million, respectively in each year. |
SUBSEQUENT EVENTS
SUBSEQUENT EVENTS | 6 Months Ended | 12 Months Ended |
Dec. 31, 2016 | Jun. 30, 2016 | |
SUBSEQUENT EVENTS | ||
SUBSEQUENT EVENTS | 7. SUBSEQUENT EVENTS Issuance of Common Stock and Payment of Cash by Insurers: Settlement of Iroquois Lawsuit On January 11, 2017 a payment of $1.35 million was made by the insurance underwriters of the Company's directors' and officers' insurance policy to the hedge funds in the Iroquois lawsuit on behalf of the Company. On February 2, 2017 the Company issued 600,000 shares of its common stock to the hedge funds named in the settlement agreement. On December 31, 2016 we had entered into a settlement agreement with the five hedge funds in the Iroquois lawsuit. Under the terms of the settlement agreement, Hyperdynamics would issue to the plaintiffs a total of 600,000 shares of new common stock, and it would cause a payment to be made of $1.35 million in cash that would be covered under its directors' and officers' insurance policy. The plaintiffs are restricted from selling the shares of common stock before April 1, 2017 under the terms of the agreement. Certain requirements under the PSC On January 24, 2017 the Company requested and received a notification letter from the General Director of the National Petroleum Office of the Republic of Guinea, informing the Company that the Republic of Guinea granted a postponement to provide a mutually acceptable security of $5.0 million to February 20, 2017 as well as a clarification regarding the timing of the $46.0 million security payment under Article 4.2 of the 2016 PSC Amendment until the work on the Fatala well is completed. On March 1, 2017, the Republic of Guinea has issued a reservation of rights letter asserting the Company has not satisfied its obligation to deposit mutually acceptable security of $5.0 million. On March 30, 2017, SCS entered into a Farmout Agreement (the "Farmout Agreement") with SAPETRO, pursuant to the terms of which, and subject to certain conditions therein, SCS will assign and transfer to SAPETRO 50% of its 100% gross participating interest in the PSC and the Joint Operating Agreement (as defined below). Pursuant to the terms of the Farmout Agreement, upon closing, SAPETRO will (i) reimburse SCS its proportional share of past costs associated with the preparations for the drilling of the Fatala-1 well, and (ii) pay its participating interest's share of future costs in the Concession. Currently the total amount of costs spent by SCS after the date of the Second PSC Amendment in relation to the preparation of drilling of the Fatala-1 well is estimated at approximately $8-10 million depending on the timing of the completion of the Farmout Agreement and upon approval of the Guinea government. The parties have agreed to close on or before May 31, 2017, unless the Farmout Agreement is previously terminated due to parties' failure to satisfy the closing conditions, by mutual agreement of the parties. On April 12, 2017 SCS, SAPETRO and Guinea executed a Third Amendment to the PSC (the "Third PSC Amendment") that was subject to the receipt of a Presidential Decree and the closing of the Farmout Agreement. We received a Presidential Decree on April 21, 2017 approving the assignment of 50% of SCS' participating interest in the Guinea concession to SAPETRO, and it confirms the two companies' rights to explore for oil and gas on our 5,000-square-kilometer Concession offshore the Republic of Guinea. The contract requires that drilling operations in relation to the obligation well Fatala-1 (the "Extension Well") shall begin no later than May 30, 2017 and provides that additional exploration wells may be drilled within the exploration period at the companies' option. The Third PSC Amendment further reaffirms clear title of SAPETRO and SCS to the Concession as well as amends the security instrument requirements under the PSC. SCS and SAPETRO agreed to a US $5 million security instrument to be put in place within 30 days from the date of the Presidential Decree. The security instrument will be released at such time that the drilling rig to be used in the drilling of the extension well is located in the shelf waters of the Republic of Guinea, including its territorial waters. Pursuant to the terms of the Protocol, SAPETRO will provide the $5 million security instrument upon Government of Guinea approval to enter the Concession and completion of the Farmout Agreement. SCS and SAPETRO agreed to joint and several liability to the Government of Guinea in respect to the PSC. In addition SCS and SAPETRO separately agreed that SCS's "sufficient financing for the Obligation Well Costs" as defined in the Farmout Agreement will be $15 million in "cash and committed financing to the satisfaction of SAPETRO acting reasonably" in addition to costs already incurred. SAPETRO and SCS further agreed that SAPETRO may elect to pay for a portion of SCS's Fatala-1 well costs so long as SCS is not in default of either the PSC or the Farmout Agreement and requires credit support. In case SAPETRO makes such payments for a share of SCS's costs of, SCS shall assign to SAPETRO 2% of its participating interest in the Concession for each $ 1 million of SCS's costs paid by SAPETRO. OTC Markets Group Listing Requirements and Delinquency Notice On February 27, 2017 the OTC Markets Group determined that the Company was delinquent in filing its SEC Form 10-Q for the Quarter ended December 31, 2016. The Company was advised that it had until March 29, 2017, a thirty day period, to correct the deficiency. If the Company is unable to correct the deficiency or provide an acceptable plan to comply with the requirement to timely file its ongoing disclosure obligations, the OTC Markets Group will remove the Company from OTCQX U.S. to OTC Pink on March 30, 2017. The filing of Form 10-Q on March 3, 2017 cured this delinquency. Series A Preferred Stock Offering Between March 17 and April 26, 2017, the Company held four closings of a private placement offering (the "Series A Offering") of an aggregate of 1,951 Units of its securities, at a purchase price of $1,000 per Unit. Each "Unit" consisted of (i) one share of the Company's Series A Preferred Stock, with a Stated Value of $1,040 per share, and (ii) a warrant (the "Investor Warrant") to purchase 223 shares of the Company's common stock, exercisable from issuance until March 17, 2019, at an exercise price of $3.50 per share (subject to adjustment in certain circumstances). At the closings, the Company issued to the subscribers an aggregate of: (i) 1,951 shares of Series A Preferred Stock and (ii) Investor Warrants to purchase an aggregate of 435,073 shares of common stock. The Company received an aggregate of $1,951,000 in gross cash proceeds, before deducting placement agent fees and expenses, and legal, accounting and other fees and expenses, in connection with the sale of the Units. Subscribers in the Series A Offering have an option (the "Subscriber Option") to purchase, at the same purchase price of $1,000 per Unit, their pro rata share of up to an aggregate of $3,000,000 in additional Units following the effective date of the registration statement registering for resale the shares of common stock issuable upon conversion of the Series A Preferred Stock and exercise of the Investor Warrants and Placement Agent Warrants (as defined below), which the Company have agreed to file as described below (the "Registration Statement"). The Company also agreed in the Subscription Agreements that until March 17, 2018, the Company will not create or allow to be created any security interest, lien, charge or other encumbrance on any of its or its subsidiaries' rights under or interests in the PSC that secures the repayment of indebtedness of the Company or any of its subsidiaries for money borrowed. The Certificate of Designation for the Series A Preferred Stock provides that: • Each holder of Series A Preferred Stock is entitled to receive dividends payable on the Stated Value of such Series A Preferred Stock at the rate of 1% per annum, which shall be cumulative and be due and payable in common stock on the applicable conversion date or in cash in the case of a redemption of the Series A Preferred Stock by the Company. • Shares of Series A Preferred Stock are redeemable, in whole or in part, at the option of the Company, in cash, at a price per share equal to 115% of the Stated Value plus 115% of accrued but unpaid dividends. • In the event of any liquidation, dissolution or winding up of the Company, holders of Series A Preferred Stock will be entitled to receive, out of assets available therefor, an amount equal to 115% of the Stated Value of their shares plus 115% of any accrued but unpaid dividends. • The Series A Preferred Stock is convertible at the option of the holder, in whole or in part, into shares of common stock at any time after the earlier of (i) the date the Registration Statement is declared effective by the SEC or (ii) September 17, 2017. If no conversion has taken place by December 17, 2017, the Series A Preferred Stock, plus any accrued but unpaid dividends, will automatically convert into shares of common stock. The conversion price per share of common stock in either event is the lesser of (i) $2.75 per share (subject to adjustment in certain circumstances), or (ii) 80% of the lowest closing price during 21 consecutive trading days ending on the trading day immediately prior to the conversion date, subject to a floor of $0.25 per share (which floor is subject to "full ratchet" adjustment in certain circumstances if the Company issues common stock (or common stock equivalents) in the aggregate amount of not less than $1,000,000 at a price below $0.25 per share of common stock, and to proportionate adjustment in certain other circumstances). • Except in certain limited circumstances affecting the rights of the holders of Series A Preferred Stock or as required by law, holders of the Series A Preferred Stock will not have voting rights. • Until September 17, 2017, the Company will not authorize or create any class of stock ranking as to dividends, redemption or distribution of assets upon a liquidation senior to the Series A Preferred Stock, without the consent of holders of no less than 66 2 / 3 % of the then-outstanding shares of Series A Preferred Stock. A U.S. registered broker-dealer (the "Placement Agent") was engaged by the Company as placement agent for the Series A Offering, on a reasonable best effort basis. The Company agreed to pay to the Placement Agent (and any sub agent) a cash commission of 9% of the gross purchase price paid by the Subscribers for the Units (including for Units that may be issued upon exercise of the Subscriber Option), and to issue to the Placement Agent (and any sub agent) warrants to purchase a number of shares of common stock equal to 7% of the number of shares of common stock initially issuable upon conversion of the shares of Series A Preferred Stock contained in the Units sold in Series A Offering (including Units that may be issued upon exercise of the Subscriber Option), at the exercise price of $3.00 per share (the "Placement Agent Warrants"). The Company also agreed to reimburse the Placement Agent for certain expenses related to the Series A Offering. The Company paid the Placement Agent a total of $175,590 of cash fees and issued to the Placement Agent or its designees Placement Agent Warrants to purchase an aggregate of 51,650 shares of common stock. The Investor Warrants and the Placement Agent Warrants have provisions for the "weighted average" adjustment of their exercise price in the event that the Company issue shares of common stock (or common stock equivalents) for a consideration per share less than the exercise price then in effect, subject to certain exceptions. In connection with the Series A Offering, the Company entered into a Registration Rights Agreement with each of the subscribers for the Series A Preferred Stock and the holders of the Placement Agent Warrants, which requires the Company to file a Registration Statement with the SEC by May 1, 2017, registering for resale (i) all shares of common stock issued or issuable upon conversion of the Series A Preferred Stock (including any shares of Series A Preferred Stock issued pursuant to the Subscriber Option described under "Management's Discussion and Analysis of Financial Condition and Results of Operations—Series A Preferred Stock Offering" above), and (ii) all shares of common stock issued or issuable upon exercise of the Investor Warrants (including any Investor Warrants issued pursuant to the Subscriber Option described above) and the Placement Agent Warrants (including any that may be issued upon exercise of the Subscriber Option), and to use its commercially reasonable efforts to cause the Registration Statement to be declared effective no later than July 29, 2017. If the Registration Statement is not declared effective by, the SEC within the specified deadline set forth above, or the Registration Statement ceases to be effective or otherwise cannot be used for a period specified in the Registration Rights Agreement, or trading of the common stock on the Company's principal market is suspended or halted for more than three consecutive trading days (each, a "Registration Event"), monetary penalties payable by the Company to the holders of registrable shares that are affected by such Registration Event will commence to accrue at a rate equal to 12% per annum of the purchase price paid for each Unit purchased, for the period that such Registration event continues, but not exceeding in the aggregate 5% of such purchase price. The Company has agreed to use its commercially reasonable efforts to keep the Registration Statement effective until the earliest of (a) the date that is two years from the date it is declared effective by the SEC, (b) the date on which all the securities registered hereunder have been transferred other than to certain permitted assignees, and (c) the date as of which all of the selling stockholders may sell all of the securities registered hereunder without restriction pursuant to SEC Rule 144 (including, without limitation, volume restrictions) and without the need for current public information required by Rule 144(c)(1) or Rule 144(i)(2), if applicable. The Company also granted to the holders of the registrable shares certain "piggyback" registration rights until two years after the effectiveness of the Registration Statement. | 9. SUBSEQUENT EVENTS On August 15, 2016, we entered into a Settlement and Release Agreement with Tullow and Dana ("Settlement Agreement") that gave us 100% of the interest under the PSC, property useful in the drilling of an exploratory well, and cash, in return for a mutual release of all claims. We will record the property received and a gain once they have been inspected and appropriately valued. On August 19, 2016, we signed a non-binding Memorandum of Understanding with the Government of Guinea and executed a Second Amendment to the PSC ("2016 Amendment") on September 15, 2016. As more fully described below, upon receipt of a Presidential Decree, the 2016 Amendment will give us a one year extension to the second exploration period of the PSC to September 22, 2017 ("PSC Extension Period"). In addition to clarifying certain elements of the PSC, we agreed in the 2016 Amendment to drill one (1) exploratory well to a minimum depth of 2,500 meters below the seabed within the PSC Extension Period with a projected commencement date of April 2017 (the "Extension Well") with the option of drilling additional wells. If the Extension Well is not drilled within the PSC Extension Period, we will owe the Government of Guinea the difference between the actual expenditures in Guinea related to the well and $46,000,000. Fulfillment of the work obligations exempts us from the expenditure obligations during the PSC Extension Period. In turn, we will retain only an area equivalent to approximately 5,000 square kilometers in the Guinea offshore and will provide the Government of Guinea: (1) A parent company guarantee for the well obligation, (2) monthly progress reports and a reconciliation of budget to actual expenditures, (failure to provide the reports and assurances on a timely basis in a notice of termination with a 30 day period to cure), and (3) guarantees to Guinea that (a) no later than January 21, 2017 we will provide a mutually acceptable security for $5,000,000 on terms customary in international petroleum operations, provided that this security is to be released at the time the drilling rig for the Extension Well is on location offshore Guinea, and (b) no later than April 12, 2017, we will deliver a mutually acceptable security for the difference between $46,000,000 and the amount spent to date on the Extension Well. For the purposes of calculation for this clause, however, only costs spent for services and goods provided in Guinea shall be taken into account until the drilling rig to be used in the drilling of the Extension Well is located in the territorial waters of the Republic of Guinea. If we do not provide either security by the specified dates, the Government of Guinea may terminate the PSC immediately and without prior notice to remedy such deficiency. Additionally, we agreed to limit the cost recovery pool to date to our share of expenditures in the PSC since 2009 (estimated to be approximately $150,000,000) and move into the territory of Guinea the long lead items we received in the Settlement Agreement that are currently in Takoradi, Ghana for the drilling of the Extension Well by January 31, 2017. Finally, we agreed to allocate and administer a training budget during the PSC Extension Period for the benefit of the Guinea National Petroleum Office of $250,000 in addition to any unused portion of the training program under Article 10.3 of the PSC, estimated to be approximately $500,000. Failure to comply with the drilling and other obligations of the PSC as amended subjects us to financial penalties and a risk of loss of the Concession. The continued delays have affected adversely the ability to explore the Concession and reduces the attractiveness of the Concession to prospective industry participants and financing sources. While we currently hold 100% of the Concession, it is unknown whether we will be able to raise the necessary funds to drill the exploratory well during the PSC Extension Period. |
QUARTERLY RESULTS (UNAUDITED)
QUARTERLY RESULTS (UNAUDITED) | 12 Months Ended |
Jun. 30, 2016 | |
QUARTERLY RESULTS (UNAUDITED) | |
QUARTERLY RESULTS (UNAUDITED) | 10. QUARTERLY RESULTS (UNAUDITED) Shown below are selected unaudited quarterly data for the years ended June 30, 2016 and 2015 (in thousands, except per share data): First Second Third Fourth 2016: Depreciation $ $ $ $ General, administrative and other operating Full impairment of unproved oil and gas properties — — — Loss from operations ) ) ) ) Net loss ) ) ) ) Basic and diluted loss per common share: $ ) $ ) $ ) $ ) First Second Third Fourth 2015: Depreciation $ $ $ $ General, administrative and other operating Loss from operations ) ) ) ) Net loss ) ) ) ) Basic and diluted loss per common share: $ ) $ ) $ ) $ ) The sum of the individual quarterly net loss per share amounts may not agree with year-to-date net loss per share as each quarterly computation is based on the weighted average number of common shares outstanding during that period. In addition, certain potentially dilutive securities were not included in any of the quarterly computations of diluted net loss per share because to do so would have been antidilutive. |
SUPPLEMENTAL OIL AND GAS INFORM
SUPPLEMENTAL OIL AND GAS INFORMATION (UNAUDITED) | 12 Months Ended |
Jun. 30, 2016 | |
SUPPLEMENTAL OIL AND GAS INFORMATION (UNAUDITED) | |
SUPPLEMENTAL OIL AND GAS INFORMATION (UNAUDITED) | 11. SUPPLEMENTAL OIL AND GAS INFORMATION (UNAUDITED) Estimates of reserve quantities and related standardized measure of discounted net cash flows are estimates only, and are not intended to reflect realizable values or fair market values of reserves. Reserve estimates are inherently imprecise and estimates of new discoveries are more imprecise than producing oil and gas properties. Additionally, the price of oil has been very volatile and downward changes in prices can significantly affect quantities that are economically recoverable. Accordingly, estimates are expected to change as future information becomes available and these changes may be significant. Proved reserves are estimated reserves of crude oil and natural gas that geological and engineering data demonstrate with reasonable certainty to be recoverable in future years from known reservoirs under existing economic and operating conditions. Proved developed reserves are those expected to be recovered through existing wells, equipment and operating methods. The standardized measure of discounted future net cash flows are computed by applying average price for the year (with consideration of price changes only to the extent provided by contractual arrangements) to the estimated future production of proved oil and gas reserves, less estimated future expenditures (based on year-end costs) to be incurred in developing and producing the proved reserves, less estimated future income tax expenses. The estimated future net cash flows are then discounted using a rate of 10% per year to reflect the estimated timing of the future cash flows. Capitalized Costs Related to Oil and Gas Activities Aggregate capitalized costs relating to our crude oil and natural gas producing activities, including asset retirement costs and related accumulated depreciation, depletion & amortization are shown below (in thousands): United Republic of Total June 30, 2016 Unproved properties $ — $ — $ — Proved properties — — — — — — Less accumulated DD&A — — — Net capitalized costs $ — $ — $ — June 30, 2015 Unproved properties $ — $ $ Proved properties — — — — Less accumulated DD&A — — — Net capitalized costs $ — $ $ As of March 31, 2016, based on our impairment assessment, we fully impaired the $14,331,000 of unproved oil and gas properties. This impairment assessment was based on the continued impasse by our members of the Consortium to resume petroleum operations and drill the next exploration obligation well, which needs to be commenced by the end of September 2016, and our inability to get interim injunctive relief from the American Arbitration Association requiring Tullow and Dana to join with SCS in the negotiation of an acceptable amendment to the PSC and to agree to a process that would result in the execution of the amendment which we hoped would have led to the resumption of petroleum operations. Despite this impairment, we continued to pursue any avenues in order to begin drilling activities in our Concession. Costs Incurred in Oil and Gas Activities Costs incurred in connection with our crude oil and natural gas acquisition, exploration and development activities are shown below (in thousands): United Republic of Total June 30, 2016 Property acquisition: Unproved $ — $ — $ — Exploration — Development — — — Total costs incurred $ — $ $ June 30, 2015 Property acquisition: Unproved $ — $ — $ — Exploration — Development — — — Total costs incurred $ — $ $ Proved Reserves We do not hold any proved reserves as of June 30, 2016 and 2015. |
ORGANIZATION AND SIGNIFICANT 18
ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES (Policies) | 6 Months Ended | 12 Months Ended |
Dec. 31, 2016 | Jun. 30, 2016 | |
ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES | ||
Principles of consolidation | Principles of consolidation The accompanying unaudited condensed consolidated financial statements include the accounts of Hyperdynamics and its direct and indirect wholly-owned subsidiaries. All intercompany accounts and transactions have been eliminated in consolidation. The financial statements have been prepared in accordance with accounting principles generally accepted in the United States and the rules of the Securities and Exchange Commission, and should be read in conjunction with the audited financial statements and notes thereto for the fiscal year ended June 30, 2016 presented above. In the opinion of management, all adjustments, consisting of normal recurring adjustments, necessary for a fair presentation of financial position and the results of operations for the interim periods presented have been reflected herein. The results of operations for interim periods are not necessarily indicative of the results to be expected for the full year. Notes to the financial statements which would substantially duplicate the disclosures contained in the audited financial statements for the most recent fiscal year ended June 30, 2016, have been omitted. | Principles of Consolidation The accompanying consolidated financial statements include the accounts of Hyperdynamics and its direct and indirect wholly-owned subsidiaries. All intercompany accounts and transactions have been eliminated in consolidation. The financial statements have been prepared in accordance with accounting principles generally accepted in the United States and the rules of the Securities and Exchange Commission (SEC). |
Use of estimates | Use of estimates The preparation of the consolidated financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities and expenses at the balance sheet date and for the period then ended. We believe our estimates and assumptions are reasonable; however, such estimates and assumptions are subject to a number of risks and uncertainties that may cause actual results to differ materially from such estimates. Significant estimates and assumptions underlying these financial statements include: • estimates in the calculation of share-based compensation expense, • estimates made in our income tax calculations, • estimates in the assessment of current litigation claims against the Company, • estimates and assumptions involved in our assessment of unproved oil and gas properties for impairment, and • estimates and assumptions involved in our fair market value assessment of the well construction equipment received in the August 15, 2016 Settlement Agreement with Tullow and Dana. We are subject, from time to time, to legal proceedings, claims, and liabilities that arise in the ordinary course of business. We accrue for losses when such losses are considered probable and the amounts can be reasonably estimated. | Use of Estimates The preparation of the consolidated financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities and expenses at the balance sheet date and for the period then ended. We believe our estimates and assumptions are reasonable; however, such estimates and assumptions are subject to a number of risks and uncertainties that may cause actual results to differ materially from such estimates. Significant estimates and assumptions underlying these financial statements include: • estimates in the calculation of share-based compensation expense, • estimates made in our income tax calculations, • estimates in the assessment of current litigation claims against the company, and • estimates and assumptions involved in our assessment of unproved oil and gas properties for impairment. We are subject to legal proceedings, claims, and liabilities that arise in the ordinary course of business. We accrue for losses when such losses are considered probable and the amounts can be reasonably estimated. |
Cash and cash equivalents | Cash and cash equivalents Cash equivalents are highly liquid investments with an original maturity of three months or less. For the periods presented, we maintained all of our cash in bank deposit accounts which, at times, exceed the federally insured limits. | Cash and cash equivalents Cash equivalents are highly liquid investments with an original maturity of three months or less. For the years presented, we maintained all of our cash in bank deposit accounts which, at times, exceed the federally insured limits. |
Oil and Gas Properties | Oil and Gas Properties Full-Cost Method We account for oil and natural gas producing activities using the full-cost method of accounting as prescribed by the SEC. Accordingly, all costs incurred in the acquisition, exploration, and development of oil and natural gas properties, including the costs of abandoned properties, dry holes, geophysical costs and annual lease rentals are capitalized. All selling, general and administrative corporate costs unrelated to drilling activities are expensed as incurred. Sales or other dispositions of oil and natural gas properties are accounted for as adjustments to capitalized costs, with no gain or loss recorded unless the ratio of capitalized costs to proved reserves would significantly change, or to the extent that the sale proceeds exceed our capitalized costs. Depletion of evaluated oil and natural gas properties would be computed on the units of production method based on proved reserves. The net capitalized costs of proved oil and natural gas properties are subject to quarterly impairment tests. Costs Excluded from Amortization Costs associated with unproved properties are excluded from amortization until it is determined whether proved reserves can be assigned to the properties. We review our unproved properties at the end of each quarter to determine whether the costs incurred should be transferred to the amortization base. We assess unproved property on a quarterly basis for possible impairment or reduction in value. We assess properties on an individual basis or as a group if properties are individually insignificant. The assessment includes consideration of the following factors, among others: intent to drill; remaining lease term under our concession; geological and geophysical evaluations; drilling results and activity; the assignment of proved reserves; and the economic viability of development if proved reserves are assigned. We assess our unproved properties on a country-by-country basis. During any period in which these factors indicate an impairment, the adjustment is recorded through earnings of the period. Full-Cost Ceiling Test At the end of each quarterly reporting period, the capitalized costs less accumulated amortization and deferred income taxes shall not exceed an amount equal to the sum of the following items: (i) the present value of estimated future net revenues of oil and gas properties (including future development and abandonment costs of wells to be drilled) using prices based on the preceding 12-months' average price based on closing prices on the first day of each month, or prices defined by existing contractual arrangements, discounted at 10%, (ii) the cost of properties not being amortized, and (iii) the lower of cost or estimated fair value of unproved properties included in the costs being amortized, less related income tax effects ("Full-Cost Ceiling Test"). The calculation of the Full-Cost Ceiling Test is based on estimates of proved reserves. There are numerous uncertainties inherent in estimating quantities of proved reserves and in projecting the future rates of production, timing, and plan of development. The accuracy of any reserves estimate is a function of the quality of available data and of engineering and geological interpretation and judgment. Results of drilling, testing, and production subsequent to the date of the estimate may justify revision of such estimates. Accordingly, reserves estimates are often different from the quantities of oil and natural gas that are ultimately recovered. We have no proved reserves. We recognized a $14.3 million Full-Cost Ceiling test write-down in the year ended June 30, 2016. No Full-Cost Ceiling test write-down was recognized in the year ended June 30, 2015. | |
Property and Equipment, other than Oil and Gas | Property and Equipment, other than Oil and Gas Property and equipment are stated on the basis of historical cost less accumulated depreciation. Depreciation is provided using the straight-line method over the estimated useful lives of the assets, generally three to five years. | |
Income Taxes | Income Taxes We account for income taxes in accordance with FASB Accounting Standards Codification ("ASC") 740, "Income Taxes," which requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of temporary differences between the tax and financial reporting basis of assets and liabilities and for loss and credit carryforwards. Valuation allowances are provided when recovery of deferred tax assets is not considered likely. Tax benefits are recognized only for tax positions that are more likely than not to be sustained upon examination by tax authorities. The amount recognized is measured as the largest amount of benefit that is greater than 50 percent likely to be realized upon ultimate settlement. Unrecognized tax benefits are tax benefits claimed in our tax returns that do not meet these recognition and measurement standards. As of June 30, 2016 and 2015, the Company has unrecognized tax benefits totaling $5.5 million. Our policy is to recognize potential accrued interest and penalties related to unrecognized tax benefits within income tax expense. For the years ended June 30, 2016 and 2015, we did not recognize any interest or penalties in our consolidated statements of operations, nor did we have any interest or penalties accrued on our consolidated balance sheets at June 30, 2016 and 2015 relating to unrecognized benefits. The tax years 2011-2015 remain open to examination for federal income tax purposes and by the other major taxing jurisdictions to which we are subject. | |
Stock-Based Compensation | Stock-Based Compensation ASC 718, "Compensation-Stock Compensation" requires recognition in the financial statements of the cost of employee services received in exchange for an award of equity instruments over the period the employee is required to perform the services in exchange for the award (presumptively the vesting period). We measure the cost of employee services received in exchange for an award based on the grant-date fair value of the award. We account for non-employee share-based awards based upon ASC 505-50, "Equity-Based Payments to Non-Employees." | |
Earnings per share | Earnings per share Basic loss per common share has been computed by dividing net loss by the weighted average number of shares of common stock outstanding during each period. In period of earnings, diluted earnings per common share are calculated by dividing net income available to common shareholders by weighted-average common shares outstanding during the period plus weighted-average dilutive potential common shares. Diluted earnings per share calculations assume, as of the beginning of the period, exercise of stock options and warrants using the treasury stock method. All potential dilutive securities, including potentially dilutive options, warrants and convertible securities, if any, were excluded from the computation of dilutive net loss per common share for the three and six month periods ended December 31, 2016 and 2015, respectively, because their effects in the computation are antidilutive due to our net loss for those periods. Stock options to purchase approximately 1.2 million common shares at an average exercise price of $4.08 were outstanding at December 31, 2016. Using the treasury stock method, had we had net income, approximately 298,700 common shares attributable to our outstanding stock options would have been included in the fully diluted earnings per share for the three month period ended December 31, 2016 while approximately 182,200 common shares attributable to our outstanding stock options would have been included in the fully diluted earnings per share for the six month period ended December 31, 2016. Stock options to purchase approximately 1.0 million common shares at an average exercise price of $5.67 were outstanding at December 31, 2015. Using the treasury stock method, had we had net income, approximately 101,600 common shares attributable to our outstanding stock options would have been included in the fully diluted earnings per share for the three month period ended December 31, 2015 while approximately 50,800 common shares attributable to our outstanding stock options would have been included in the fully diluted earnings per share for the six month period ended December 31, 2015. | Earnings Per Share Basic loss per common share has been computed by dividing net loss by the weighted average number of shares of common stock outstanding during each period. In a period of earnings, diluted earnings per common share are calculated by dividing net income available to common shareholders by weighted-average common shares outstanding during the period plus weighted-average dilutive potential common shares. Diluted earnings per share calculations assume, as of the beginning of the period, exercise of stock options and warrants using the treasury stock method. All potential dilutive securities, including potentially dilutive options, warrants and convertible securities, if any, were excluded from the computation of dilutive net loss per common share for the years ended June 30, 2016, and 2015, respectively, as their effects are antidilutive due to our net loss for those periods. Stock options to purchase approximately 1.0 million common shares at an average exercise price of $5.03 were outstanding at June 30, 2016. Using the treasury stock method, had we had net income, approximately 25 thousand common shares attributable to our outstanding stock options would have been included in the fully diluted earnings per share for the year ended June 30, 2016. Stock options to purchase approximately 1.2 million common shares at an average exercise price of $7.43 and warrants to purchase approximately 0.03 million shares of common stock at an average exercise price of $12.64 were outstanding at June 30, 2015. Using the treasury stock method, had we had net income, approximately four hundred common shares attributable to our outstanding stock options would have been included in the fully diluted earnings per share calculation for the year ended June 30, 2015. There would have been no dilution attributable to our outstanding warrants to purchase common shares. Had we had net income, approximately four thousand common shares attributable to restricted stock awards would have been included in the fully diluted earnings per share for the year ended June 30, 2015. |
Contingencies | Contingencies We are subject to legal proceedings, claims and liabilities. We accrue for losses associated with legal claims when such losses are probable and can be reasonably estimated. These accruals are adjusted as additional information becomes available or circumstances change. Legal fees are charged to expense as they are incurred. See Note 6 for more information on legal proceedings and settlements. | Contingencies We are subject to legal proceedings, claims and liabilities. We accrue for losses associated with legal claims when such losses are probable and can be reasonably estimated. These accruals are adjusted as additional information becomes available or circumstances change. Legal fees are charged to expense as they are incurred. See Note 8 for more information on legal proceedings. |
Foreign currency gains and losses from current operations | Foreign currency gains and losses from current operations In accordance with ASC Topic 830, Foreign Currency Matters , the functional currency of our international subsidiaries is the U.S. Dollar. Gains and losses from foreign currency transactions arising from operating assets and liabilities are included in general, administrative and other operating expense, have not been significant. Net foreign currency transaction gains (losses) were ($3) thousand and ($0.1) million for the years ended June 30, 2016 and 2015, respectively. | |
Subsequent events | Subsequent Events The Company evaluated all subsequent events from June 30, 2016 through the date of issuance of these financial statements. |
PROPERTY AND EQUIPMENT (Tables)
PROPERTY AND EQUIPMENT (Tables) | 12 Months Ended |
Jun. 30, 2016 | |
PROPERTY AND EQUIPMENT | |
Summary of property and equipment | June 30, (in thousands) Useful Life 2016 2015 Computer equipment and software 3 years $ $ Office equipment and furniture 5 years Leasehold improvements 3 years Total Cost Less—Accumulated depreciation ) ) $ $ |
INVESTMENT IN OIL AND GAS PRO20
INVESTMENT IN OIL AND GAS PROPERTIES (Tables) | 6 Months Ended | 12 Months Ended |
Dec. 31, 2016 | Jun. 30, 2016 | |
Investments in oil and gas properties | ||
Schedule of allocation of revenue after recovery cost of operations | Daily production (b/d) Guinea Share Contractor Share From 0 to 2,000 % % From 2,001 to 5,000 % % From 5,001 to 100,000 % % Over 100,001 % % | |
Schedule of total capitalized costs of oil and gas properties | The following table provides detail of total capitalized costs for the Concession which remain unproved and unevaluated and are excluded from amortization as of December 31, 2016 and June 30, 2016 (in thousands): December 31, June 30, Oil and Gas Properties: Unproved properties not subject to amortization $ $ — | Aggregate capitalized costs relating to our crude oil and natural gas producing activities, including asset retirement costs and related accumulated depreciation, depletion & amortization are shown below (in thousands): United Republic of Total June 30, 2016 Unproved properties $ — $ — $ — Proved properties — — — — — — Less accumulated DD&A — — — Net capitalized costs $ — $ — $ — June 30, 2015 Unproved properties $ — $ $ Proved properties — — — — Less accumulated DD&A — — — Net capitalized costs $ — $ $ |
Guinea concession | ||
Investments in oil and gas properties | ||
Schedule of total capitalized costs of oil and gas properties | The following table provides detail of total capitalized costs for our Guinea Concession as of June 30, 2016 and 2015 (in thousands): June 30, 2016 June 30, 2015 Oil and Gas Properties: Unproved oil and gas Properties $ — $ Other Equipment Costs — — Unproved properties not subject to amortization $ — $ |
ACCOUNTS PAYABLE AND ACCRUED 21
ACCOUNTS PAYABLE AND ACCRUED EXPENSES (Tables) | 6 Months Ended | 12 Months Ended |
Dec. 31, 2016 | Jun. 30, 2016 | |
ACCOUNTS PAYABLE AND ACCRUED EXPENSES | ||
Summary of accounts payable and accrued expenses | Accounts payable and accrued expenses as of December 31, 2016 and June 30, 2016 include the following (in thousands): December 31, June 30, Accounts payable — trade and oil and gas exploration activities $ $ Accounts payable — legal costs Accrued payroll Liability for legal settlement (Note 6) — $ $ | Accounts payable and accrued expenses as of June 30, 2016 and 2015 include the following (in thousands): 2016 2015 Accounts payable—trade $ $ Accounts payable—legal costs Accrued payroll $ $ |
INCOME TAXES (Tables)
INCOME TAXES (Tables) | 12 Months Ended |
Jun. 30, 2016 | |
INCOME TAXES | |
Components of deferred tax assets | Components of deferred tax assets as of June 30, 2016 and 2015 are as follows (in thousands): 2016 2015 Current deferred tax assets: Other current deferred tax assets $ — $ — Total current temporary differences — — Less: valuation allowance — — Net current deferred tax assets $ — $ — Non-current deferred tax assets Stock compensation $ $ Property and Equipment Oil and gas properties Capital loss Total non-current deferred tax assets $ $ Non-current deferred tax liabilities Property and Equipment — — Net operating losses Less: valuation allowance ) ) Net non-current deferred tax assets (liabilities) $ — $ — |
Reconciliation of actual taxes | A reconciliation of the actual taxes to the U.S. statutory tax rate for the years ended June 30, 2016 and 2015 is as follows (in thousands): 2016 2015 Income tax (benefit) at the statutory federal rate (35%) $ ) $ ) Increase (decrease) resulting from nondeductible stock compensation Foreign Rate Differential Other, net Change in valuation allowance Net income tax expense $ — $ — |
Summary of activity related to gross unrecognized tax benefits | The following table summarizes the activity related to our gross unrecognized tax benefits from July 1, 2014 to June 30, 2016 (in thousands): Federal, State and (In thousands) Balance at July 1, 2014 $ Additions to tax positions related to the current year — Additions to tax positions related to prior years — Statute expirations — Balance at June 30, 2015 $ Additions to tax positions related to the current year — Additions to tax positions related to prior years — Statute expirations — Balance at June 30, 2016 $ |
SHARE-BASED COMPENSATION (Table
SHARE-BASED COMPENSATION (Tables) | 6 Months Ended | 12 Months Ended |
Dec. 31, 2016 | Jun. 30, 2016 | |
SHARE-BASED COMPENSATION | ||
Schedule of information about options | 2016 2015 Number of options awarded Compensation expense recognized $ $ Weighted average award-date fair value of options outstanding $ $ | 2016 2015 Number of options granted Compensation expense recognized $ $ Compensation cost capitalized — — Weighted average grant-date fair value of options outstanding $ $ |
Schedule of significant assumptions used to compute the fair market values of employee and director stock options granted | 2016 2015 Risk-free interest rate 0.47-1.86 % 1.74 % Dividend yield % 0 % Volatility factor 109-157 % 109 % Expected life (years) 1.0-4.73 | 2016 2015 Risk-free interest rate 0.36 - 1.01 % 0.07 - 0.93 % Dividend yield % % Volatility factor 109 - 148 % 65 - 216 % Expected life (years) 0.5 - 2.875 0.5 - 2.875 |
Summary of employee stock options issued and outstanding | Options Weighted Aggregate Weighted Options outstanding at July 1, 2016 $ $ — Awarded Exercised ) Forfeited — — Expired ) Options outstanding at December 31, 2016 $ $ Options exercisable at December 31, 2016 $ $ | Options Weighted Aggregate Weighted Options outstanding at July 1, 2014 $ $ Granted Exercised — — Forfeited ) Expired ) Options outstanding at June 30, 2015 $ $ — Granted Exercised — — Forfeited ) Expired ) Options outstanding at June 30, 2016 $ $ — Options exercisable at June 30, 2016 $ $ — |
Schedule of stock options outstanding and exercisable | Options outstanding and exercisable as of December 31, 2016 Exercise Price Outstanding Number of Remaining Life Exercisable $ 0.41-4.00 Less than1 year $ 0.41-4.00 1 year $ 0.41-4.00 2 years $ 0.41-4.00 3 years $ 0.41-4.00 4 years $ 0.41-4.00 5 years — $ 4.01-10.00 Less than 1 year $ 4.01-10.00 1 year $ 4.01-10.00 2 years $ 4.01-10.00 3 years $ 10.01-20.00 Less than 1 year $ 10.01-20.00 4 years $ 20.01-30.00 Less than 1 year $ 20.01-30.00 4 years $ 30.01-40.00 Less than 1 year $ 30.01-40.00 5 years $ 40.01-48.72 4 years | Options outstanding and exercisable as of June 30, 2016 Exercise Price Outstanding Remaining Life Exercisable $0.42 - 4.00 1 year $0.42 - 4.00 2 years $0.42 - 4.00 3 years $0.42 - 4.00 4 years $0.42 - 4.00 5 years — $4.01 - 10.00 1 year $4.01 - 10.00 2 years $4.01 - 10.00 3 years $4.01 - 10.00 4 years $10.01 - 20.00 1 year $10.01 - 20.00 4 years $20.01 - 30.00 1 year $20.01 - 30.00 4 years $30.01 - 40.00 1 year $30.01 - 40.00 5 years $40.01 - 50.00 5 years Options outstanding and exercisable as of June 30, 2015 Exercise Price Outstanding Remaining Life Exercisable $0.90 - 4.00 1 year $0.90 - 4.00 3 years $0.90 - 4.00 4 years $0.90 - 4.00 5 years — $4.01 - 10.00 1 year $4.01 - 10.00 2 years $4.01 - 10.00 3 years $4.01 - 10.00 5 years $10.01 - 20.00 1 year $10.01 - 20.00 2 years $10.01 - 20.00 5 years $20.01 - 30.00 1 year $20.01 - 30.00 2 years $20.01 - 30.00 5 years $30.01 - 40.00 1 year $30.01 - 40.00 6 years $40.01 - 50.00 1 year $40.01 - 50.00 6 years |
Summary of common stock warrants issued and outstanding | Warrants Weighted Aggregate Weighted Outstanding at year ended June 30, 2014 $ $ — Granted — — Exercised — — Expired ) Outstanding at year ended June 30, 2015 $ $ — | |
Schedule of warrants outstanding and exercisable | Warrants outstanding and exercisable as of June 30, 2015 Exercise Outstanding Remaining Life Exercisable $12.64 0.30 year |
COMMITMENTS AND CONTINGENCIES (
COMMITMENTS AND CONTINGENCIES (Tables) | 6 Months Ended | 12 Months Ended |
Dec. 31, 2016 | Jun. 30, 2016 | |
COMMITMENTS AND CONTINGENCIES | ||
Schedule by years of minimum future rental payments required under operating leases that have initial or remaining non-cancellable lease terms in excess of one year | The following is a schedule by years of minimum future rental payments required under operating leases that have initial or remaining non-cancellable lease terms in excess of one year (in thousands): Years ending June 30: 2017 $ 2018 2019 2020 2021 and thereafter — Total minimum payments required $ | The following is a schedule by years of minimum future rental payments required under operating leases that have initial or remaining non-cancellable lease terms in excess of one year as of June 30, 2016 (in thousands): Years ending June 30: 2017 $ 2018 2019 2020 Total minimum payments required $ |
QUARTERLY RESULTS (UNAUDITED) (
QUARTERLY RESULTS (UNAUDITED) (Tables) | 12 Months Ended |
Jun. 30, 2016 | |
QUARTERLY RESULTS (UNAUDITED) | |
QUARTERLY RESULTS (UNAUDITED) | Shown below are selected unaudited quarterly data for the years ended June 30, 2016 and 2015 (in thousands, except per share data): First Second Third Fourth 2016: Depreciation $ $ $ $ General, administrative and other operating Full impairment of unproved oil and gas properties — — — Loss from operations ) ) ) ) Net loss ) ) ) ) Basic and diluted loss per common share: $ ) $ ) $ ) $ ) First Second Third Fourth 2015: Depreciation $ $ $ $ General, administrative and other operating Loss from operations ) ) ) ) Net loss ) ) ) ) Basic and diluted loss per common share: $ ) $ ) $ ) $ ) |
SUPPLEMENTAL OIL AND GAS INFO26
SUPPLEMENTAL OIL AND GAS INFORMATION (UNAUDITED) (Tables) | 6 Months Ended | 12 Months Ended |
Dec. 31, 2016 | Jun. 30, 2016 | |
SUPPLEMENTAL OIL AND GAS INFORMATION (UNAUDITED) | ||
Schedule of total capitalized costs of oil and gas properties | The following table provides detail of total capitalized costs for the Concession which remain unproved and unevaluated and are excluded from amortization as of December 31, 2016 and June 30, 2016 (in thousands): December 31, June 30, Oil and Gas Properties: Unproved properties not subject to amortization $ $ — | Aggregate capitalized costs relating to our crude oil and natural gas producing activities, including asset retirement costs and related accumulated depreciation, depletion & amortization are shown below (in thousands): United Republic of Total June 30, 2016 Unproved properties $ — $ — $ — Proved properties — — — — — — Less accumulated DD&A — — — Net capitalized costs $ — $ — $ — June 30, 2015 Unproved properties $ — $ $ Proved properties — — — — Less accumulated DD&A — — — Net capitalized costs $ — $ $ |
Schedule of costs incurred in oil and gas, exploration and development activities | Costs incurred in connection with our crude oil and natural gas acquisition, exploration and development activities are shown below (in thousands): United Republic of Total June 30, 2016 Property acquisition: Unproved $ — $ — $ — Exploration — Development — — — Total costs incurred $ — $ $ June 30, 2015 Property acquisition: Unproved $ — $ — $ — Exploration — Development — — — Total costs incurred $ — $ $ |
ORGANIZATION AND SIGNIFICANT 27
ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES - Nature of Business (Details) - subsidiary | 6 Months Ended | 12 Months Ended |
Dec. 31, 2016 | Jun. 30, 2016 | |
ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES | ||
Number of wholly-owned subsidiaries | 2 | 2 |
ORGANIZATION AND SIGNIFICANT 28
ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES - Status of Our Business - General Information (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | 12 Months Ended | ||||
Dec. 31, 2016 | Sep. 30, 2015 | Dec. 31, 2016 | Dec. 31, 2015 | Jun. 30, 2016 | Jun. 30, 2015 | Jun. 30, 2014 | |
ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES | |||||||
Costs and expenses | $ (5,044) | $ (1,857) | $ (9,035) | $ (3,762) | $ 22,846 | $ 13,394 | |
Cash | 2,239 | 2,239 | $ 14,367 | 10,327 | $ 18,374 | $ 35,270 | |
Current liabilities | $ 2,783 | $ 2,783 | $ 1,743 |
ORGANIZATION AND SIGNIFICANT 29
ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES - Status of Our Business - Oil and Gas Properties (Details) | Aug. 19, 2016USD ($)m | Aug. 15, 2016USD ($) | Dec. 31, 2016USD ($) | Jun. 30, 2016USD ($) | Jan. 24, 2017USD ($) | Dec. 31, 2012 | Dec. 30, 2012 | Dec. 27, 2012 | Jun. 30, 2010 |
Settlement and Release Agreement with Tullow and Dana | |||||||||
Status of our Business | |||||||||
Settlement amount | $ 686,570 | ||||||||
Settlement and Release Agreement with Tullow and Dana | Subsequent event | |||||||||
Status of our Business | |||||||||
Settlement amount | $ 686,570 | ||||||||
Guinea concession | |||||||||
Status of our Business | |||||||||
Ownership interest (as a percent) | 100.00% | 100.00% | 37.00% | 37.00% | 77.00% | ||||
Threshold gross expenditure cap for well to be paid by the entity | $ 100,000,000 | $ 100,000,000 | |||||||
Gross expenditure cap | $ 100,000,000 | $ 100,000,000 | |||||||
Extension period for second exploration (in years) | 1 year | ||||||||
Depth below seabed required to be drilled of an exploration well (in meters) | m | 2,500 | ||||||||
Amount receivable, if extension well not drilled | $ 46,000,000 | ||||||||
Maximum period of time over which current available liquidity could be exhausted | 12 months | 12 months | |||||||
Guinea concession | Subsequent event | |||||||||
Status of our Business | |||||||||
Ownership interest (as a percent) | 100.00% | ||||||||
Extension period for second exploration (in years) | 1 year | ||||||||
Depth below seabed required to be drilled of an exploration well (in meters) | m | 2,500 | ||||||||
Amount receivable, if extension well not drilled | $ 46,000,000 | $ 46,000,000 | |||||||
Estimated time for completion of exploration well project (in days) | 42 days | ||||||||
Guinea concession | Tullow Guinea Ltd | |||||||||
Status of our Business | |||||||||
Ownership interest sold (as a percent) | 40.00% | 40.00% | |||||||
Guinea concession | Dana | |||||||||
Status of our Business | |||||||||
Ownership interest (as a percent) | 23.00% | 23.00% | |||||||
Guinea concession | Tullow Guinea Ltd | |||||||||
Status of our Business | |||||||||
Ownership interest (as a percent) | 40.00% | 40.00% |
ORGANIZATION AND SIGNIFICANT 30
ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES - Allownace and Oil and Gas Properties (Details) $ in Thousands | 12 Months Ended | |||
Jun. 30, 2016USD ($)bbl | Jun. 30, 2015USD ($) | Dec. 31, 2016bbl | Jun. 30, 2013bbl | |
Oil and Gas Properties | ||||
Gain or loss recorded for oil and natural gas properties | $ | $ 0 | |||
Average period over which oil and natural gas price is based to derive future net revenue | 12 months | |||
Discount percentage | 10.00% | |||
Proved reserves | bbl | 0 | |||
Amortization of proved oil and gas properties subject to the full-cost ceiling test | $ | $ 14,300 | $ 0 | ||
Guinea concession | ||||
Oil and Gas Properties | ||||
Proved reserves | bbl | 0 | 0 |
ORGANIZATION AND SIGNIFICANT 31
ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES - Property and Equipment, Other than Oil and Gas (Details) | 12 Months Ended |
Jun. 30, 2016 | |
Minimum | |
Property and Equipment, other than Oil and Gas | |
Estimated useful lives of the assets | 3 years |
Maximum | |
Property and Equipment, other than Oil and Gas | |
Estimated useful lives of the assets | 5 years |
ORGANIZATION AND SIGNIFICANT 32
ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES - Impairments and Income Taxes (Details) - USD ($) $ in Thousands | Jun. 30, 2016 | Jun. 30, 2015 | Jun. 30, 2014 |
Income Taxes | |||
Unrecognized tax benefits | $ 5,485 | $ 5,485 | $ 5,485 |
ORGANIZATION AND SIGNIFICANT 33
ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES - Earnings per Share (Details) - $ / shares | 3 Months Ended | 6 Months Ended | 12 Months Ended | ||||
Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2016 | Dec. 31, 2015 | Jun. 30, 2016 | Jun. 30, 2015 | Jun. 30, 2014 | |
Earnings per share | |||||||
Average exercise price of warrants (in dollars per share) | $ 12.64 | ||||||
If net income had been earned | |||||||
Earnings per share | |||||||
Warrants to purchase common shares included in fully diluted earnings per share | 0 | ||||||
Stock options | |||||||
Earnings per share | |||||||
Potentially dilutive securities excluded from the computation of dilutive net loss per common share | 1,200,000 | 1,000,000 | 1,000,000 | 1,200,000 | |||
Average exercise price of common stock (in dollars per share) | $ 4.08 | $ 5.67 | $ 4.08 | $ 5.67 | |||
Common shares included in fully diluted earnings per share | 298,700 | 101,600 | 182,200 | 50,800 | |||
Warrants | |||||||
Earnings per share | |||||||
Potentially dilutive securities excluded from the computation of dilutive net loss per common share | 30,000 | ||||||
Stock options | |||||||
Earnings per share | |||||||
Average exercise price of common stock (in dollars per share) | $ 4.08 | $ 4.08 | $ 5.03 | $ 7.43 | $ 8.76 | ||
Stock options | If net income had been earned | |||||||
Earnings per share | |||||||
Common shares included in fully diluted earnings per share | 25,000 | 400 | |||||
Unvested restricted stock awards | If net income had been earned | |||||||
Earnings per share | |||||||
Common shares included in fully diluted earnings per share | 4,000 |
ORGANIZATION AND SIGNIFICANT 34
ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES - Financial Instruments and Foreign Currency Gains and Losses (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Jun. 30, 2016 | Jun. 30, 2015 | |
Foreign currency gains and losses from current operations | ||
Net foreign currency transaction gains (losses) | $ (3) | $ (100) |
PROPERTY AND EQUIPMENT (Details
PROPERTY AND EQUIPMENT (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Jun. 30, 2016 | Jun. 30, 2015 | Dec. 31, 2016 | |
Property and equipment | |||
Total Cost | $ 2,126 | $ 2,143 | |
Less - Accumulated depreciation | (2,075) | (1,983) | $ (2,097) |
Property and equipment, net | 51 | 160 | $ 59 |
Impairments of property and equipment | 0 | 0 | |
Computer equipment and software | |||
Property and equipment | |||
Total Cost | $ 1,285 | 1,302 | |
Useful Life | 3 years | ||
Office equipment and furniture | |||
Property and equipment | |||
Total Cost | $ 307 | 307 | |
Useful Life | 5 years | ||
Leasehold improvements | |||
Property and equipment | |||
Total Cost | $ 534 | $ 534 | |
Useful Life | 3 years |
INVESTMENT IN OIL AND GAS PRO36
INVESTMENT IN OIL AND GAS PROPERTIES (Details) | Mar. 01, 2017USD ($) | Jan. 24, 2017USD ($) | Aug. 19, 2016USD ($)km²itemm | Jun. 30, 2016USD ($)km²bbl | Dec. 31, 2012USD ($) | Mar. 25, 2010USD ($)mi²km²m | Dec. 31, 2009 | Sep. 30, 2013 | Feb. 29, 2012m | Dec. 31, 2016USD ($)bbl | Mar. 31, 2016USD ($) | Dec. 31, 2016USD ($)bbl | Mar. 31, 2016USD ($) | Jun. 30, 2016USD ($)km²bbl / dmbbl | Jun. 30, 2013USD ($)bbl | Jun. 30, 2015USD ($) | Dec. 30, 2012 | Dec. 27, 2012 | Jun. 30, 2010 | May 20, 2010 | Mar. 25, 2010$ / km² | Mar. 25, 2010 | Mar. 25, 2010km² |
Investments in oil and gas properties | |||||||||||||||||||||||
Reserves | bbl | 0 | 0 | |||||||||||||||||||||
Full impairment of unproved oil and gas properties | $ 753,000 | $ 14,331,000 | $ 753,000 | $ 14,331,000 | $ 14,331,000 | ||||||||||||||||||
Oil and Gas Properties: | |||||||||||||||||||||||
Unproved Oil and Gas Properties | $ 14,311,000 | ||||||||||||||||||||||
Unproved properties not subject to amortization | $ 4,142,000 | $ 4,142,000 | 14,311,000 | ||||||||||||||||||||
Guinea concession | |||||||||||||||||||||||
Investments in oil and gas properties | |||||||||||||||||||||||
Ownership interest in Guinea Concession (as a percent) | 100.00% | 37.00% | 37.00% | 100.00% | 100.00% | 37.00% | 77.00% | ||||||||||||||||
Contract area retained (in square kilometers/square miles) | 5,000 | 9,650 | 25,000 | ||||||||||||||||||||
Contract area retained as percentage of original contract area | 30.00% | ||||||||||||||||||||||
Relinquishment of contract area retained as percentage of original contract area | 70.00% | ||||||||||||||||||||||
Contract area retained as percentage of original contract area, required to be relinquished under PSC | 25.00% | ||||||||||||||||||||||
Current contract area | km² | 18,750 | 18,750 | |||||||||||||||||||||
Depth below seabed required to be drilled of an exploration well (in meters) | m | 2,500 | ||||||||||||||||||||||
Minimum depth to be reached to satisfy work requirement | m | 2,500 | ||||||||||||||||||||||
Guinea's share of cost and profit oil (as a percent) | 62.50% | ||||||||||||||||||||||
Annual training budget to be established, for the benefit of Guinea's oil industry personnel | $ 200,000 | ||||||||||||||||||||||
Annual surface tax, obligated to pay (in dollars per square kilometers) | $ / km² | 2 | ||||||||||||||||||||||
Royalty interest to Guinea as percentage of production | 10.00% | ||||||||||||||||||||||
Percentage of revenue after royalty | 90.00% | ||||||||||||||||||||||
Guinea's share in revenue, during the first production, after recovery cost of operations (as a percent) | 75.00% | ||||||||||||||||||||||
Contractor share in revenue, during the first production, after recovery cost of operations (as a percent) | 25.00% | ||||||||||||||||||||||
Gross expenditure cap | $ 100,000,000 | $ 100,000,000 | $ 100,000,000 | $ 100,000,000 | |||||||||||||||||||
Gross expenditure for an appraisal well to be paid by Tullow as additional consideration | 100,000,000 | 100,000,000 | |||||||||||||||||||||
Threshold gross expenditure cap for well to be paid by the entity | 100,000,000 | $ 100,000,000 | $ 100,000,000 | $ 100,000,000 | |||||||||||||||||||
Period through which additional consideration is to be paid by Tullow | 90 days | ||||||||||||||||||||||
Transaction costs | $ 3,300,000 | ||||||||||||||||||||||
Reserves | bbl | 0 | 0 | 0 | ||||||||||||||||||||
Full-Cost Ceiling Test written-down | $ 116,800,000 | ||||||||||||||||||||||
Full impairment of unproved oil and gas properties | $ 14,300,000 | $ 800,000 | $ 200,000 | $ 14,331,000 | |||||||||||||||||||
Increase in property balance resulting from capitalized cost adjustment | 4,100,000 | $ 20,000 | |||||||||||||||||||||
Oil and Gas Properties: | |||||||||||||||||||||||
Unproved Oil and Gas Properties | 14,311,000 | ||||||||||||||||||||||
Unproved properties not subject to amortization | 4,142,000 | $ 4,142,000 | $ 14,311,000 | ||||||||||||||||||||
Extension period for second exploration (in years) | 1 year | ||||||||||||||||||||||
Number of exploratory well in extension period | item | 1 | ||||||||||||||||||||||
Amount receivable, if extension well not drilled | $ 46,000,000 | ||||||||||||||||||||||
Notice period for termination (in days) | 30 days | ||||||||||||||||||||||
Mutually acceptable security | $ 5,000,000 | $ 5,000,000 | |||||||||||||||||||||
Estimated amount to limit cost recovery to share of expenditures | 150,000,000 | ||||||||||||||||||||||
Agreed amount in training budget | 250,000 | ||||||||||||||||||||||
Estimated amount of unused portion of training program | $ 500,000 | ||||||||||||||||||||||
Ownership interest (as a percent) | 100.00% | 37.00% | 37.00% | 100.00% | 100.00% | 37.00% | 77.00% | ||||||||||||||||
Guinea concession | Tullow Guinea Ltd | |||||||||||||||||||||||
Investments in oil and gas properties | |||||||||||||||||||||||
Ownership interest sold (as a percent) | 40.00% | 40.00% | |||||||||||||||||||||
Consideration of sale of interest in PSC | $ 27,000,000 | ||||||||||||||||||||||
Guinea concession | Dana | |||||||||||||||||||||||
Investments in oil and gas properties | |||||||||||||||||||||||
Ownership interest sold (as a percent) | 23.00% | ||||||||||||||||||||||
Guinea concession | Dana | |||||||||||||||||||||||
Investments in oil and gas properties | |||||||||||||||||||||||
Ownership interest in Guinea Concession (as a percent) | 23.00% | 23.00% | 23.00% | ||||||||||||||||||||
Oil and Gas Properties: | |||||||||||||||||||||||
Ownership interest (as a percent) | 23.00% | 23.00% | 23.00% | ||||||||||||||||||||
Guinea concession | Tullow Guinea Ltd | |||||||||||||||||||||||
Investments in oil and gas properties | |||||||||||||||||||||||
Ownership interest in Guinea Concession (as a percent) | 40.00% | 40.00% | 40.00% | ||||||||||||||||||||
Oil and Gas Properties: | |||||||||||||||||||||||
Ownership interest (as a percent) | 40.00% | 40.00% | 40.00% | ||||||||||||||||||||
Guinea concession | Minimum | |||||||||||||||||||||||
Investments in oil and gas properties | |||||||||||||||||||||||
Depth below seabed required to be drilled of an exploration well (in meters) | m | 2,500 | ||||||||||||||||||||||
Expenditure required on each exploration well | $ 15,000,000 | ||||||||||||||||||||||
Aggregate expenditure required on exploration wells | $ 30,000,000 | ||||||||||||||||||||||
Area of 3D seismic required to be acquired (in square kilometers) | km² | 2,000 | ||||||||||||||||||||||
Expenditure on acquisition of 3D seismic required to be acquired | $ 12,000,000 | ||||||||||||||||||||||
Guinea concession | Maximum | |||||||||||||||||||||||
Investments in oil and gas properties | |||||||||||||||||||||||
Extension of exploration period allowable to allow the completion of a well in process | 1 year | ||||||||||||||||||||||
Extension of exploration period allowable to allow the completion of appraisal of discovery made | 2 years | ||||||||||||||||||||||
Guinea's participating interest in development of discovery as percentage of costs | 15.00% | ||||||||||||||||||||||
Guinea concession | Subsequent event | |||||||||||||||||||||||
Investments in oil and gas properties | |||||||||||||||||||||||
Ownership interest in Guinea Concession (as a percent) | 100.00% | ||||||||||||||||||||||
Contract area retained (in square kilometers/square miles) | km² | 5,000 | ||||||||||||||||||||||
Depth below seabed required to be drilled of an exploration well (in meters) | m | 2,500 | ||||||||||||||||||||||
Oil and Gas Properties: | |||||||||||||||||||||||
Extension period for second exploration (in years) | 1 year | ||||||||||||||||||||||
Number of exploratory well in extension period | item | 1 | ||||||||||||||||||||||
Amount receivable, if extension well not drilled | $ 46,000,000 | $ 46,000,000 | |||||||||||||||||||||
Notice period for termination (in days) | 30 days | ||||||||||||||||||||||
Mutually acceptable security | $ 5,000,000 | $ 5,000,000 | $ 5,000,000 | ||||||||||||||||||||
Estimated amount to limit cost recovery to share of expenditures | 150,000,000 | ||||||||||||||||||||||
Agreed amount in training budget | 250,000 | ||||||||||||||||||||||
Estimated amount of unused portion of training program | $ 500,000 | ||||||||||||||||||||||
Ownership interest (as a percent) | 100.00% | ||||||||||||||||||||||
Guinea concession | From 0 to 2,000 | |||||||||||||||||||||||
Investments in oil and gas properties | |||||||||||||||||||||||
Guinea's share in revenue, after recovery cost of operations (as a percent) | 25.00% | ||||||||||||||||||||||
Contractor share in revenue, after recovery cost of operations (as a percent) | 75.00% | ||||||||||||||||||||||
Guinea concession | From 0 to 2,000 | Minimum | |||||||||||||||||||||||
Investments in oil and gas properties | |||||||||||||||||||||||
Daily production (in barrels per day) | bbl / d | 0 | ||||||||||||||||||||||
Guinea concession | From 0 to 2,000 | Maximum | |||||||||||||||||||||||
Investments in oil and gas properties | |||||||||||||||||||||||
Daily production (in barrels per day) | bbl / d | 2,000 | ||||||||||||||||||||||
Guinea concession | From 2,001 to 5,000 | |||||||||||||||||||||||
Investments in oil and gas properties | |||||||||||||||||||||||
Guinea's share in revenue, after recovery cost of operations (as a percent) | 30.00% | ||||||||||||||||||||||
Contractor share in revenue, after recovery cost of operations (as a percent) | 70.00% | ||||||||||||||||||||||
Guinea concession | From 2,001 to 5,000 | Minimum | |||||||||||||||||||||||
Investments in oil and gas properties | |||||||||||||||||||||||
Daily production (in barrels per day) | bbl / d | 2,001 | ||||||||||||||||||||||
Guinea concession | From 2,001 to 5,000 | Maximum | |||||||||||||||||||||||
Investments in oil and gas properties | |||||||||||||||||||||||
Daily production (in barrels per day) | bbl / d | 5,000 | ||||||||||||||||||||||
Guinea concession | From 5,001 to 100,000 | |||||||||||||||||||||||
Investments in oil and gas properties | |||||||||||||||||||||||
Guinea's share in revenue, after recovery cost of operations (as a percent) | 41.00% | ||||||||||||||||||||||
Contractor share in revenue, after recovery cost of operations (as a percent) | 59.00% | ||||||||||||||||||||||
Guinea concession | From 5,001 to 100,000 | Minimum | |||||||||||||||||||||||
Investments in oil and gas properties | |||||||||||||||||||||||
Daily production (in barrels per day) | bbl / d | 5,001 | ||||||||||||||||||||||
Guinea concession | From 5,001 to 100,000 | Maximum | |||||||||||||||||||||||
Investments in oil and gas properties | |||||||||||||||||||||||
Daily production (in barrels per day) | bbl / d | 100,000 | ||||||||||||||||||||||
Guinea concession | Over 100,001 | |||||||||||||||||||||||
Investments in oil and gas properties | |||||||||||||||||||||||
Guinea's share in revenue, after recovery cost of operations (as a percent) | 60.00% | ||||||||||||||||||||||
Contractor share in revenue, after recovery cost of operations (as a percent) | 40.00% | ||||||||||||||||||||||
Guinea concession | Over 100,001 | Minimum | |||||||||||||||||||||||
Investments in oil and gas properties | |||||||||||||||||||||||
Daily production (in barrels per day) | bbl / d | 100,001 | ||||||||||||||||||||||
Sabu-1 well | Minimum | |||||||||||||||||||||||
Investments in oil and gas properties | |||||||||||||||||||||||
Depth below seabed required to be drilled of an exploration well (in meters) | m | 2,500 |
ACCOUNTS PAYABLE AND ACCRUED 37
ACCOUNTS PAYABLE AND ACCRUED EXPENSES (Details) - USD ($) $ in Thousands | Dec. 31, 2016 | Jun. 30, 2016 | Jun. 30, 2015 |
ACCOUNTS PAYABLE AND ACCRUED EXPENSES | |||
Accounts payable-trade | $ 1,361 | $ 1,157 | |
Accounts payable - legal costs | $ 171 | 61 | 342 |
Accrued payroll | 703 | 321 | 169 |
Accounts payable and accrued expenses | $ 1,475 | $ 1,743 | $ 1,668 |
INCOME TAXES - Deferred Tax Ass
INCOME TAXES - Deferred Tax Assets (Details) - USD ($) $ in Thousands | Jun. 30, 2016 | Jun. 30, 2015 |
Non-current deferred tax assets | ||
Stock compensation | $ 2,464 | $ 2,389 |
Property and Equipment | 69 | 164 |
Oil and gas properties | 21,504 | 16,503 |
Capital loss | 144 | 144 |
Total non-current deferred tax assets | 24,181 | 19,200 |
Net operating losses | 36,138 | 34,128 |
Total | 60,319 | 53,328 |
Less: valuation allowance | (60,319) | (53,328) |
Net non-current deferred tax assets (liabilities) | $ 0 | $ 0 |
INCOME TAXES - Additional Discl
INCOME TAXES - Additional Disclosures (Details) - USD ($) | 12 Months Ended | |||
Jun. 30, 2016 | Jun. 30, 2013 | Jun. 30, 2001 | Jan. 14, 1998 | |
Components of deferred tax assets | ||||
Net operating loss carryforwards | $ 115,800,000 | |||
Excess tax benefits related to stock compensation | 2,200,000 | |||
Amount of net operating losses carryforwards, prior to ownership change | $ 3,313,000 | $ 949,000 | ||
Net operating losses carryforwards per year | $ 784,000 | $ 151,000 | ||
Net operating losses removed due to restructuring | $ 13,200,000 | |||
SCS | ||||
Components of deferred tax assets | ||||
Deferred income tax asset | 0 | |||
Differences in profit between book and tax basis | $ 118,000,000 |
INCOME TAXES - Reconciliation o
INCOME TAXES - Reconciliation of the Actual Taxes to the U.S. Statutory Tax Rate (Details) - USD ($) $ in Thousands | 6 Months Ended | 12 Months Ended | ||
Dec. 31, 2016 | Dec. 31, 2015 | Jun. 30, 2016 | Jun. 30, 2015 | |
Reconciliation of the actual taxes | ||||
Statutory federal rate (as a percent) | 35.00% | 35.00% | 35.00% | |
Income tax (benefit) at the statutory federal rate (35%) | $ (7,996) | $ (4,687) | ||
Increase (decrease) resulting from nondeductible stock compensation | 56 | 172 | ||
Foreign Rate Differential | 914 | 1,885 | ||
Other, net | 35 | 21 | ||
Change in valuation allowance | 6,991 | 2,609 | ||
Net income tax expense | $ 0 | $ 0 |
INCOME TAXES - Gross Unrecogniz
INCOME TAXES - Gross Unrecognized Tax Benefits Activity (Details) - USD ($) $ in Thousands | Jun. 30, 2016 | Jun. 30, 2015 |
Summary of activity related to gross unrecognized tax benefits | ||
Balance at the beginning of the period | $ 5,485 | $ 5,485 |
Balance at the end of the period | $ 5,485 | $ 5,485 |
INCOME TAXES - Unrecognized Tax
INCOME TAXES - Unrecognized Tax Benefits (Details) - USD ($) | Jun. 30, 2016 | Jun. 30, 2015 |
INCOME TAXES | ||
Unrecognized tax benefits that, if recognized, would affect our effective tax rate | $ 5,485,000 | $ 5,485,000 |
SHAREHOLDERS' EQUITY (Details)
SHAREHOLDERS' EQUITY (Details) - shares | 12 Months Ended | |
Jun. 30, 2016 | Jun. 30, 2015 | |
Common Stock Issuances | ||
Options exercised (in shares) | 0 | 0 |
SHARE-BASED COMPENSATION - Gene
SHARE-BASED COMPENSATION - General Information (Details) | Jan. 27, 2016shares | Feb. 18, 2010plan | Dec. 31, 2016shares | Jun. 30, 2016shares |
SHARE-BASED COMPENSATION | ||||
Number of stock award plans prior to the adoption of 2010 plan | plan | 2 | |||
2010 Plan | Stock options | ||||
SHARE-BASED COMPENSATION | ||||
Increase in the number of shares available for issuance | 750,000 | |||
Period within which shares of common stock, options or restricted stock can be granted under the 2010 plan | 10 years | |||
Number of shares issuable under the plan | 2,000,000 | 2,000,000 | ||
Number of shares remaining available for issuance | 783,460 | 945,710 |
SHARE-BASED COMPENSATION - Info
SHARE-BASED COMPENSATION - Information about Options (Details) - Stock options - USD ($) | 6 Months Ended | 12 Months Ended | ||
Dec. 31, 2016 | Dec. 31, 2015 | Jun. 30, 2016 | Jun. 30, 2015 | |
Stock Options | ||||
Number of options awarded (in shares) | 178,500 | 30,000 | 183,860 | 476,106 |
Compensation expense recognized | $ 106,000 | $ 189,000 | $ 352,653 | $ 643,980 |
Weighted average grant-date fair value of options outstanding (in dollars per share) | $ 4.08 | $ 5.67 | $ 5.03 | $ 5.13 |
SHARE-BASED COMPENSATION - Sign
SHARE-BASED COMPENSATION - Significant Assumptions (Details) - Stock options | 6 Months Ended | 12 Months Ended | ||
Dec. 31, 2016 | Dec. 31, 2015 | Jun. 30, 2016 | Jun. 30, 2015 | |
Significant assumptions used to compute the fair market values | ||||
Risk-free interest rate, low end of range (as a percent) | 0.47% | 0.36% | 0.07% | |
Risk-free interest rate, high end of range (as a percent) | 1.86% | 1.01% | 0.93% | |
Dividend yield (as a percent) | 0.00% | 0.00% | 0.00% | 0.00% |
Volatility factor, low end of range (as a percent) | 109.00% | 109.00% | 65.00% | |
Volatility factor, high end of range (as a percent) | 157.00% | 148.00% | 216.00% | |
Expected life (years) | 2 years 10 months 17 days | |||
Minimum | ||||
Significant assumptions used to compute the fair market values | ||||
Expected life (years) | 1 year | 6 months | 6 months | |
Maximum | ||||
Significant assumptions used to compute the fair market values | ||||
Expected life (years) | 4 years 8 months 23 days | 2 years 10 months 15 days | 2 years 10 months 15 days |
SHARE-BASED COMPENSATION - Stoc
SHARE-BASED COMPENSATION - Stock Option Activity (Details) - USD ($) | 6 Months Ended | 12 Months Ended | |||
Dec. 31, 2016 | Dec. 31, 2015 | Jun. 30, 2016 | Jun. 30, 2015 | Jun. 30, 2014 | |
Options | |||||
Exercised (in shares) | 0 | 0 | |||
Stock options | |||||
Options | |||||
Outstanding at the beginning of the period (in shares) | 1,016,997 | 1,181,954 | 1,181,954 | 1,441,727 | |
Awarded (in shares) | 178,500 | 30,000 | 183,860 | 476,106 | |
Exercised (in shares) | (20,000) | ||||
Forfeited (in shares) | (39,175) | (517,853) | |||
Expired (in shares) | (16,250) | (309,642) | (218,026) | ||
Outstanding at the end of the period (in shares) | 1,159,247 | 1,016,997 | 1,181,954 | 1,441,727 | |
Options exercisable at end of period (in shares) | 959,550 | 919,396 | |||
Weighted Average exercise Price | |||||
Outstanding at the beginning of the period (in dollars per share) | $ 5.03 | $ 7.43 | $ 7.43 | $ 8.76 | |
Granted (in dollars per share) | 1.06 | 0.54 | 1.40 | ||
Forfeited (in dollars per share) | 1.39 | 4.21 | |||
Expired (in dollars per share) | 34.43 | 12.01 | 10.71 | ||
Outstanding at the end of the period (in dollars per share) | 4.08 | 5.03 | $ 7.43 | $ 8.76 | |
Options exercisable at end of period (in dollars per share) | $ 4.72 | $ 5.50 | |||
Aggregate intrinsic value | |||||
Outstanding at the end of the period | $ 883,620 | $ 8,327 | |||
Weighted average remaining contractual term (years) | |||||
Outstanding at the end of the period | 2 years 6 months 15 days | 3 years 2 months 9 days | 3 years 4 months 21 days | 3 years 1 month 21 days | |
Options exercisable at period end | 2 years 1 month 2 days | 3 years |
SHARE-BASED COMPENSATION - Opti
SHARE-BASED COMPENSATION - Options Outstanding and Exercisable (Details) - Stock options - $ / shares | 6 Months Ended | 12 Months Ended | |
Dec. 31, 2016 | Jun. 30, 2016 | Jun. 30, 2015 | |
Options outstanding and exercisable | |||
Outstanding Number of Shares | 1,159,247 | 1,016,997 | 1,181,954 |
Exercisable Number of Shares | 959,550 | 919,396 | 754,136 |
Exercise price range $0.42 - $4.00, remaining life 1 year | |||
Options outstanding and exercisable | |||
Exercise Price, low end of the range (in dollars per share) | $ 0.42 | ||
Exercise Price, high end of the range (in dollars per share) | $ 4 | ||
Outstanding Number of Shares | 71,250 | ||
Remaining Life | 1 year | ||
Exercisable Number of Shares | 71,250 | ||
Exercise price range $0.42 - $4.00, remaining life 2 years | |||
Options outstanding and exercisable | |||
Exercise Price, low end of the range (in dollars per share) | $ 0.42 | ||
Exercise Price, high end of the range (in dollars per share) | $ 4 | ||
Outstanding Number of Shares | 78,855 | ||
Remaining Life | 2 years | ||
Exercisable Number of Shares | 78,855 | ||
Exercise price range $0.42 - $4.00, remaining life 3 years | |||
Options outstanding and exercisable | |||
Exercise Price, low end of the range (in dollars per share) | $ 0.42 | ||
Exercise Price, high end of the range (in dollars per share) | $ 4 | ||
Outstanding Number of Shares | 197,390 | ||
Remaining Life | 3 years | ||
Exercisable Number of Shares | 197,390 | ||
Exercise price range $0.42 - $4.00, remaining life 4 years | |||
Options outstanding and exercisable | |||
Exercise Price, low end of the range (in dollars per share) | $ 0.42 | ||
Exercise Price, high end of the range (in dollars per share) | $ 4 | ||
Outstanding Number of Shares | 348,954 | ||
Remaining Life | 4 years | ||
Exercisable Number of Shares | 333,963 | ||
Exercise price range $0.42 - $4.00, remaining life 5 years | |||
Options outstanding and exercisable | |||
Exercise Price, low end of the range (in dollars per share) | $ 0.42 | ||
Exercise Price, high end of the range (in dollars per share) | $ 4 | ||
Outstanding Number of Shares | 82,610 | ||
Remaining Life | 5 years | ||
Exercise price range $0.90 - $4.00, remaining life 1 year | |||
Options outstanding and exercisable | |||
Exercise Price, low end of the range (in dollars per share) | $ 0.90 | ||
Exercise Price, high end of the range (in dollars per share) | $ 4 | ||
Outstanding Number of Shares | 121,067 | ||
Remaining Life | 1 year | ||
Exercisable Number of Shares | 121,067 | ||
Exercise price range $0.90 - $4.00, remaining life 3 years | |||
Options outstanding and exercisable | |||
Exercise Price, low end of the range (in dollars per share) | $ 0.90 | ||
Exercise Price, high end of the range (in dollars per share) | $ 4 | ||
Outstanding Number of Shares | 88,264 | ||
Remaining Life | 3 years | ||
Exercisable Number of Shares | 68,842 | ||
Exercise price range $0.90 - $4.00, remaining life 4 years | |||
Options outstanding and exercisable | |||
Exercise Price, low end of the range (in dollars per share) | $ 0.90 | ||
Exercise Price, high end of the range (in dollars per share) | $ 4 | ||
Outstanding Number of Shares | 217,707 | ||
Remaining Life | 4 years | ||
Exercisable Number of Shares | 187,716 | ||
Exercise price range $0.90 - $4.00, remaining life 5 years | |||
Options outstanding and exercisable | |||
Exercise Price, low end of the range (in dollars per share) | $ 0.90 | ||
Exercise Price, high end of the range (in dollars per share) | $ 4 | ||
Outstanding Number of Shares | 375,000 | ||
Remaining Life | 5 years | ||
Exercise price range $4.01 - $10.00, remaining life 1 year | |||
Options outstanding and exercisable | |||
Exercise Price, low end of the range (in dollars per share) | $ 4.01 | $ 4.01 | $ 4.01 |
Exercise Price, high end of the range (in dollars per share) | $ 10 | $ 10 | $ 10 |
Outstanding Number of Shares | 38,625 | 97,938 | 43,498 |
Remaining Life | 1 year | 1 year | 1 year |
Exercisable Number of Shares | 38,625 | 97,938 | 43,498 |
Exercise price range $4.01 - $10.00, remaining life 2 years | |||
Options outstanding and exercisable | |||
Exercise Price, low end of the range (in dollars per share) | $ 4.01 | $ 4.01 | $ 4.01 |
Exercise Price, high end of the range (in dollars per share) | $ 10 | $ 10 | $ 10 |
Outstanding Number of Shares | 4,062 | 9,000 | 107,126 |
Remaining Life | 2 years | 2 years | 2 years |
Exercisable Number of Shares | 4,062 | 9,000 | 106,502 |
Exercise price range $4.01 - $10.00, remaining life 3 years | |||
Options outstanding and exercisable | |||
Exercise Price, low end of the range (in dollars per share) | $ 4.01 | $ 4.01 | $ 4.01 |
Exercise Price, high end of the range (in dollars per share) | $ 10 | $ 10 | $ 10 |
Outstanding Number of Shares | 7,000 | 4,062 | 13,062 |
Remaining Life | 3 years | 3 years | 3 years |
Exercisable Number of Shares | 7,000 | 4,062 | 10,281 |
Exercise price range $4.01 - $10.00, remaining life 4 years | |||
Options outstanding and exercisable | |||
Exercise Price, low end of the range (in dollars per share) | $ 4.01 | ||
Exercise Price, high end of the range (in dollars per share) | $ 10 | ||
Outstanding Number of Shares | 18,250 | ||
Remaining Life | 4 years | ||
Exercisable Number of Shares | 18,250 | ||
Exercise price range $4.01 - $10.00, remaining life 5 years | |||
Options outstanding and exercisable | |||
Exercise Price, low end of the range (in dollars per share) | $ 4.01 | ||
Exercise Price, high end of the range (in dollars per share) | $ 10 | ||
Outstanding Number of Shares | 22,000 | ||
Remaining Life | 5 years | ||
Exercisable Number of Shares | 22,000 | ||
Exercise price range $10.01 - $20.00, remaining life 1 year | |||
Options outstanding and exercisable | |||
Exercise Price, low end of the range (in dollars per share) | $ 10.01 | $ 10.01 | |
Exercise Price, high end of the range (in dollars per share) | $ 20 | $ 20 | |
Outstanding Number of Shares | 1,875 | 1,250 | |
Remaining Life | 1 year | 1 year | |
Exercisable Number of Shares | 1,875 | 1,250 | |
Exercise price range $10.01 - $20.00, remaining life 2 years | |||
Options outstanding and exercisable | |||
Exercise Price, low end of the range (in dollars per share) | $ 10.01 | ||
Exercise Price, high end of the range (in dollars per share) | $ 20 | ||
Outstanding Number of Shares | 1,875 | ||
Remaining Life | 2 years | ||
Exercisable Number of Shares | 1,875 | ||
Exercise price range $10.01 - $20.00, remaining life 4 year | |||
Options outstanding and exercisable | |||
Exercise Price, low end of the range (in dollars per share) | $ 10.01 | $ 10.01 | |
Exercise Price, high end of the range (in dollars per share) | $ 20 | $ 20 | |
Outstanding Number of Shares | 17,500 | 28,750 | |
Remaining Life | 4 years | 4 years | |
Exercisable Number of Shares | 17,500 | 28,750 | |
Exercise price range $10.01 - $20.00, remaining life 5 years | |||
Options outstanding and exercisable | |||
Exercise Price, low end of the range (in dollars per share) | $ 10.01 | ||
Exercise Price, high end of the range (in dollars per share) | $ 20 | ||
Outstanding Number of Shares | 28,750 | ||
Remaining Life | 5 years | ||
Exercisable Number of Shares | 28,750 | ||
Exercise price range $20.01 - $30.00, remaining life 1 year | |||
Options outstanding and exercisable | |||
Exercise Price, low end of the range (in dollars per share) | $ 20.01 | $ 20.01 | |
Exercise Price, high end of the range (in dollars per share) | $ 30 | $ 30 | |
Outstanding Number of Shares | 1,250 | 16,667 | |
Remaining Life | 1 year | 1 year | |
Exercisable Number of Shares | 1,250 | 16,667 | |
Exercise price range $20.01 - $30.00, remaining life 2 years | |||
Options outstanding and exercisable | |||
Exercise Price, low end of the range (in dollars per share) | $ 20.01 | ||
Exercise Price, high end of the range (in dollars per share) | $ 30 | ||
Outstanding Number of Shares | 1,250 | ||
Remaining Life | 2 years | ||
Exercisable Number of Shares | 1,250 | ||
Exercise price range $20.01 - $30.00, remaining life 4 year | |||
Options outstanding and exercisable | |||
Exercise Price, low end of the range (in dollars per share) | $ 20.01 | $ 20.01 | |
Exercise Price, high end of the range (in dollars per share) | $ 30 | $ 30 | |
Outstanding Number of Shares | 28,500 | 31,000 | |
Remaining Life | 4 years | 4 years | |
Exercisable Number of Shares | 28,500 | 31,000 | |
Exercise price range $20.01 - $30.00, remaining life 5 years | |||
Options outstanding and exercisable | |||
Exercise Price, low end of the range (in dollars per share) | $ 20.01 | ||
Exercise Price, high end of the range (in dollars per share) | $ 30 | ||
Outstanding Number of Shares | 31,625 | ||
Remaining Life | 5 years | ||
Exercisable Number of Shares | 31,625 | ||
Exercise price range $30.01 - $40.00, remaining life 1 year | |||
Options outstanding and exercisable | |||
Exercise Price, low end of the range (in dollars per share) | $ 30.01 | $ 30.01 | |
Exercise Price, high end of the range (in dollars per share) | $ 40 | $ 40 | |
Outstanding Number of Shares | 16,250 | 74,000 | |
Remaining Life | 1 year | 1 year | |
Exercisable Number of Shares | 16,250 | 74,000 | |
Exercise price range $30.01 - $40.00, remaining life 5 years | |||
Options outstanding and exercisable | |||
Exercise Price, low end of the range (in dollars per share) | $ 30.01 | $ 30.01 | |
Exercise Price, high end of the range (in dollars per share) | $ 40 | $ 40 | |
Outstanding Number of Shares | 13,313 | 25,813 | |
Remaining Life | 5 years | 5 years | |
Exercisable Number of Shares | 13,313 | 25,813 | |
Exercise price range $30.01 - $40.00, remaining life 6 years | |||
Options outstanding and exercisable | |||
Exercise Price, low end of the range (in dollars per share) | $ 30.01 | ||
Exercise Price, high end of the range (in dollars per share) | $ 40 | ||
Outstanding Number of Shares | 27,563 | ||
Remaining Life | 6 years | ||
Exercisable Number of Shares | 27,563 | ||
Exercise price range $40.01 - $50.00, remaining life 1 Year | |||
Options outstanding and exercisable | |||
Exercise Price, low end of the range (in dollars per share) | $ 40.01 | ||
Exercise Price, high end of the range (in dollars per share) | $ 50 | ||
Outstanding Number of Shares | 6,250 | ||
Remaining Life | 1 year | ||
Exercisable Number of Shares | 6,250 | ||
Exercise price range $40.01 - $50.00, remaining life 5 years | |||
Options outstanding and exercisable | |||
Exercise Price, low end of the range (in dollars per share) | $ 40.01 | ||
Exercise Price, high end of the range (in dollars per share) | $ 50 | ||
Outstanding Number of Shares | 3,750 | ||
Remaining Life | 5 years | ||
Exercisable Number of Shares | 3,750 | ||
Exercise price range $40.01 - $50.00, remaining life 6 Years | |||
Options outstanding and exercisable | |||
Exercise Price, low end of the range (in dollars per share) | $ 40.01 | ||
Exercise Price, high end of the range (in dollars per share) | $ 50 | ||
Outstanding Number of Shares | 5,000 | ||
Remaining Life | 6 years | ||
Exercisable Number of Shares | 5,000 |
SHARE-BASED COMPENSATION - St49
SHARE-BASED COMPENSATION - Stock Options - Additional Disclosures (Details) - Stock options - USD ($) $ / shares in Units, $ in Thousands | 6 Months Ended | 12 Months Ended | |
Dec. 31, 2016 | Jun. 30, 2016 | Jun. 30, 2015 | |
Stock Options | |||
Unrecognized compensation costs | $ 177 | $ 31 | $ 400 |
Option vested (in shares) | 76,404 | 449,904 | 377,274 |
Weighted average grant date fair value of options vested (in dollars per share) | $ 0.57 | $ 1.10 | $ 3.76 |
Unvested options outstanding (in shares) | 199,697 | 97,601 | 427,826 |
Weighted average grant date fair value of unvested options outstanding (in dollars per share) | $ 4.72 | $ 5.50 | $ 10.95 |
Amortization period | 1 year | ||
Weighted average remaining life of unvested options outstanding | 11 months 5 days | 4 years 10 months 28 days | 4 years 9 months 29 days |
Minimum | |||
Stock Options | |||
Amortization period | 1 year | 1 year | |
Maximum | |||
Stock Options | |||
Amortization period | 2 years | 2 years |
SHARE-BASED COMPENSATION - Rest
SHARE-BASED COMPENSATION - Restricted Stock - General Disclosures (Details) - Unvested restricted stock awards - USD ($) $ in Thousands | 6 Months Ended | 12 Months Ended | |
Dec. 31, 2016 | Jun. 30, 2016 | Jun. 30, 2015 | |
Restricted stock | |||
Forfeiture credits | $ 46 | ||
Granted (in shares) | 0 | 0 | |
Outstanding (in shares) | 0 | 0 |
SHARE-BASED COMPENSATION - Warr
SHARE-BASED COMPENSATION - Warrants (Details) - $ / shares | 12 Months Ended | ||
Jun. 30, 2016 | Jun. 30, 2015 | Jun. 30, 2014 | |
Warrants outstanding and exercisable | |||
Exercise price (in dollars per share) | $ 12.64 | ||
Warrants | |||
Warrants | |||
Outstanding at the beginning of the period (in shares) | 25,983 | 32,358 | |
Granted (in shares) | 0 | 0 | |
Exercised (in shares) | 0 | 0 | |
Expired (in shares) | (6,375) | ||
Outstanding at the end of the period (in shares) | 0 | 25,983 | 32,358 |
Weighted average share price | |||
Outstanding at the beginning of the period (in dollars per share) | $ 12.64 | $ 11.69 | |
Expired (in dollars per share) | 7.84 | ||
Outstanding at the end of the period (in dollars per share) | $ 12.64 | $ 11.69 | |
Weighted average remaining contractual life (years) | |||
Outstanding at the end of the period | 3 months 18 days | 1 year 1 month 13 days | |
Warrants outstanding and exercisable | |||
Outstanding Number of Shares | 25,983 | ||
Exercisable Number of Shares | 25,983 | ||
Warrants | Exercise price $12.64, remaining life 0.30 years | |||
Warrants outstanding and exercisable | |||
Exercise price (in dollars per share) | $ 12.64 | ||
Outstanding Number of Shares | 25,983 | ||
Remaining Life | 3 months 18 days | ||
Exercisable Number of Shares | 25,983 |
COMMITMENTS AND CONTINGENCIES -
COMMITMENTS AND CONTINGENCIES - Litigation and Other Legal Matters (Details) | Aug. 15, 2016USD ($) | Mar. 13, 2014lawsuit | May 09, 2012USD ($)plaintiff | Jun. 30, 2016USD ($) |
Settlement and Release Agreement with Tullow and Dana | ||||
LITIGATION AND OTHER LEGAL MATTERS | ||||
Settlement amount | $ 686,570 | |||
Settlement and Release Agreement with Tullow and Dana | Subsequent event | ||||
LITIGATION AND OTHER LEGAL MATTERS | ||||
Settlement amount | $ 686,570 | |||
Shareholder Lawsuits | ||||
LITIGATION AND OTHER LEGAL MATTERS | ||||
Number of lawsuits filed | lawsuit | 2 | |||
Provision for possible loss | $ 0 | |||
Iroquois Lawsuit | ||||
LITIGATION AND OTHER LEGAL MATTERS | ||||
Provision for possible loss | $ 0 | |||
Number of plaintiffs which filed lawsuit | plaintiff | 5 | |||
Damages sought | $ 18,500,000 | |||
Maximum possible loss | $ 18,500,000 |
COMMITMENTS AND CONTINGENCIES53
COMMITMENTS AND CONTINGENCIES - Minimum Future Rental Payments (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | 12 Months Ended | |||
Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2016 | Dec. 31, 2015 | Jun. 30, 2016 | Jun. 30, 2015 | |
Operating Leases | ||||||
2,017 | $ 392 | |||||
2,018 | $ 399 | $ 399 | 399 | |||
2,019 | 406 | 406 | 406 | |||
2,020 | 309 | 309 | 309 | |||
Total minimum payments required | 1,491 | 1,491 | 1,506 | |||
Rent expense | $ 100 | $ 100 | $ 200 | $ 300 | $ 400 | $ 300 |
SUBSEQUENT EVENTS (Details)
SUBSEQUENT EVENTS (Details) | Mar. 01, 2017USD ($) | Jan. 24, 2017USD ($) | Aug. 19, 2016USD ($)km²itemm | Dec. 31, 2016USD ($) | Aug. 15, 2016 | Jun. 30, 2016 | Dec. 31, 2012 | Dec. 30, 2012 | Mar. 25, 2010mi² | Mar. 25, 2010km² |
Tullow and Dana | Settlement Agreement | ||||||||||
SUBSEQUENT EVENTS | ||||||||||
Ownership interest (as a percent) | 100.00% | |||||||||
Guinea concession | ||||||||||
SUBSEQUENT EVENTS | ||||||||||
Ownership interest (as a percent) | 100.00% | 100.00% | 37.00% | 37.00% | 77.00% | |||||
Extension period for second exploration (in years) | 1 year | |||||||||
Number of exploratory well in extension period | item | 1 | |||||||||
Depth below seabed required to be drilled of an exploration well (in meters) | m | 2,500 | |||||||||
Amount receivable, if extension well not drilled | $ 46,000,000 | |||||||||
Contract area retained (in square kilometers/square miles) | 5,000 | 9,650 | 25,000 | |||||||
Notice period for termination (in days) | 30 days | |||||||||
Mutually acceptable security | $ 5,000,000 | $ 5,000,000 | ||||||||
Estimated amount to limit cost recovery to share of expenditures | 150,000,000 | |||||||||
Agreed amount in training budget | 250,000 | |||||||||
Estimated amount of unused portion of training program | $ 500,000 | |||||||||
Subsequent event | Tullow and Dana | Settlement Agreement | ||||||||||
SUBSEQUENT EVENTS | ||||||||||
Ownership interest (as a percent) | 100.00% | |||||||||
Subsequent event | Guinea concession | ||||||||||
SUBSEQUENT EVENTS | ||||||||||
Ownership interest (as a percent) | 100.00% | |||||||||
Extension period for second exploration (in years) | 1 year | |||||||||
Number of exploratory well in extension period | item | 1 | |||||||||
Depth below seabed required to be drilled of an exploration well (in meters) | m | 2,500 | |||||||||
Amount receivable, if extension well not drilled | $ 46,000,000 | $ 46,000,000 | ||||||||
Contract area retained (in square kilometers/square miles) | km² | 5,000 | |||||||||
Notice period for termination (in days) | 30 days | |||||||||
Mutually acceptable security | $ 5,000,000 | $ 5,000,000 | $ 5,000,000 | |||||||
Estimated amount to limit cost recovery to share of expenditures | 150,000,000 | |||||||||
Agreed amount in training budget | 250,000 | |||||||||
Estimated amount of unused portion of training program | $ 500,000 |
QUARTERLY RESULTS (UNAUDITED)55
QUARTERLY RESULTS (UNAUDITED) (Details) - USD ($) | 3 Months Ended | 6 Months Ended | 9 Months Ended | 12 Months Ended | ||||||||||
Dec. 31, 2016 | Jun. 30, 2016 | Mar. 31, 2016 | Dec. 31, 2015 | Sep. 30, 2015 | Jun. 30, 2015 | Mar. 31, 2015 | Dec. 31, 2014 | Sep. 30, 2014 | Dec. 31, 2016 | Dec. 31, 2015 | Mar. 31, 2016 | Jun. 30, 2016 | Jun. 30, 2015 | |
Selected unaudited quarter data | ||||||||||||||
Depreciation | $ 10,000 | $ 26,000 | $ 27,000 | $ 28,000 | $ 28,000 | $ 33,000 | $ 49,000 | $ 69,000 | $ 86,000 | $ 35,000 | $ 56,000 | $ 109,000 | $ 237,000 | |
General, administrative and other operating | 4,281,000 | 1,434,000 | 3,266,000 | 1,829,000 | 1,877,000 | 2,841,000 | 2,721,000 | 3,633,000 | 3,962,000 | 8,247,000 | 3,706,000 | 8,406,000 | 13,157,000 | |
Full impairment of unproved oil and gas properties | 753,000 | 14,331,000 | 753,000 | $ 14,331,000 | 14,331,000 | |||||||||
Loss from operations | $ (5,044,000) | (1,460,000) | (17,624,000) | (1,857,000) | (1,905,000) | (2,874,000) | (2,770,000) | (3,702,000) | (4,048,000) | $ (9,035,000) | $ (3,762,000) | $ (22,846,000) | $ (13,394,000) | |
Net loss | $ (1,460,000) | $ (17,624,000) | $ (1,857,000) | $ (1,905,000) | $ (2,874,000) | $ (2,770,000) | $ (3,701,000) | $ (4,047,000) | ||||||
Basic and diluted loss per common share: (in dollars per share) | $ (0.07) | $ (0.84) | $ (0.09) | $ (0.09) | $ (0.14) | $ (0.13) | $ (0.18) | $ (0.19) | $ (1.09) | $ (0.64) |
SUPPLEMENTAL OIL AND GAS INFO56
SUPPLEMENTAL OIL AND GAS INFORMATION (UNAUDITED) - General Disclosures (Details) | 12 Months Ended |
Jun. 30, 2016 | |
SUPPLEMENTAL OIL AND GAS INFORMATION (UNAUDITED) | |
Estimated future net cash flows, discount rate (as a percent) | 10.00% |
SUPPLEMENTAL OIL AND GAS INFO57
SUPPLEMENTAL OIL AND GAS INFORMATION (UNAUDITED) - Capitalized Costs (Details) - USD ($) | 3 Months Ended | 6 Months Ended | 9 Months Ended | 12 Months Ended | ||
Dec. 31, 2016 | Mar. 31, 2016 | Dec. 31, 2016 | Mar. 31, 2016 | Jun. 30, 2016 | Jun. 30, 2015 | |
Capitalized Costs Related to Oil and Gas Activities | ||||||
Unproved properties | $ 14,311,000 | |||||
Total oil and gas properties | 14,311,000 | |||||
Net capitalized costs | 14,311,000 | |||||
Full impairment of unproved oil and gas properties | $ 753,000 | $ 14,331,000 | $ 753,000 | $ 14,331,000 | $ 14,331,000 | |
Republic of Guinea | ||||||
Capitalized Costs Related to Oil and Gas Activities | ||||||
Unproved properties | 14,311,000 | |||||
Total oil and gas properties | 14,311,000 | |||||
Net capitalized costs | $ 14,311,000 |
SUPPLEMENTAL OIL AND GAS INFO58
SUPPLEMENTAL OIL AND GAS INFORMATION (UNAUDITED) - Costs Incurred (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Jun. 30, 2016 | Jun. 30, 2015 | |
Costs Incurred in Oil and Gas Activities | ||
Exploration | $ 20 | $ 52 |
Total costs incurred | 20 | 52 |
Republic of Guinea | ||
Costs Incurred in Oil and Gas Activities | ||
Exploration | 20 | 52 |
Total costs incurred | $ 20 | $ 52 |
CONDENSED CONSOLIDATED BALANCE
CONDENSED CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands | Dec. 31, 2016 | Jun. 30, 2016 |
Current assets: | ||
Cash and cash equivalents | $ 2,239 | $ 10,327 |
Prepaid expenses | 645 | 1,294 |
Deposits and other current assets | 235 | 6 |
Total current assets | 3,119 | 11,627 |
Property and equipment, net of accumulated depreciation of $2,097 and $2,075 | 59 | 51 |
Unproved oil and gas properties excluded from amortization (Full-Cost Method) | 4,142 | |
Total property and equipment and unproved oil and gas properties, net | 4,201 | 51 |
Total assets | 7,320 | 11,678 |
Current Liabilities: | ||
Accounts payable and accrued expenses | 1,475 | 1,743 |
Liability for legal settlement (Note 6) | 1,308 | |
Total current liabilities | 2,783 | 1,743 |
Commitments and contingencies (Note 6) | ||
Shareholders' equity: | ||
Preferred stock, $0.001 par value; 20,000,000 authorized, 0 shares issued and outstanding | ||
Common stock, $0.001 par value, 87,000,000 shares authorized; 21,201,536 and 21,046,591 shares issued and outstanding | 169 | 169 |
Additional paid-in capital | 317,938 | 317,757 |
Accumulated deficit | (313,570) | (307,991) |
Total shareholders' equity | 4,537 | 9,935 |
Total liabilities and shareholders' equity | $ 7,320 | $ 11,678 |
CONDENSED CONSOLIDATED BALANC60
CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($) $ in Thousands | Dec. 31, 2016 | Jun. 30, 2016 | Jun. 30, 2015 |
CONDENSED CONSOLIDATED BALANCE SHEETS | |||
Property and equipment, accumulated depreciation (in dollars) | $ 2,097 | $ 2,075 | $ 1,983 |
Preferred stock, par value (in dollars per share) | $ 0.001 | $ 0.001 | $ 0.001 |
Preferred stock, shares authorized | 20,000,000 | 20,000,000 | 20,000,000 |
Preferred stock, shares issued | 0 | 0 | 0 |
Preferred stock, shares outstanding | 0 | 0 | 0 |
Common stock, par value (in dollars per share) | $ 0.001 | $ 0.001 | $ 0.001 |
Common stock, shares authorized | 87,000,000 | 87,000,000 | 43,750,000 |
Common stock, shares issued | 21,201,536 | 21,046,591 | 21,046,591 |
Common stock, shares outstanding | 21,201,536 | 21,046,591 | 21,046,591 |
CONDENSED CONSOLIDATED STATEMEN
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($) | 3 Months Ended | 6 Months Ended | ||
Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2016 | Dec. 31, 2015 | |
Costs and expenses: | ||||
Depreciation | $ 10,000 | $ 28,000 | $ 35,000 | $ 56,000 |
General, administrative and other operating | 4,281,000 | 1,829,000 | 8,247,000 | 3,706,000 |
Full-cost ceiling test write-down | 753,000 | 753,000 | ||
Loss from operations | (5,044,000) | (1,857,000) | (9,035,000) | (3,762,000) |
Gain (loss) on settlement agreement | (371,000) | 4,764,000 | ||
Cost of legal settlement | (1,308,000) | (1,308,000) | ||
Loss before income tax | (6,723,000) | (1,857,000) | (5,579,000) | (3,762,000) |
Net loss | $ (6,723,000) | $ (1,857,000) | $ (5,579,000) | $ (3,762,000) |
Basic and diluted loss per share | $ (0.31) | $ (0.09) | $ (0.26) | $ (0.18) |
Weighted average shares outstanding - basic and diluted | 21,201,536 | 21,046,591 | 21,127,758 | 21,046,591 |
CONDENSED CONSOLIDATED STATEM62
CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY - USD ($) $ in Thousands | Common Stock | Additional Paid-in Capital | Accumulated Deficit | Total |
Balance at Jun. 30, 2014 | $ 169 | $ 316,760 | $ (271,753) | $ 45,176 |
Balance (in shares) at Jun. 30, 2014 | 21,046,591 | |||
Increase (Decrease) in Shareholders' Equity | ||||
Net loss | (13,392) | $ (13,392) | ||
Common stock issued for: | ||||
Exercise of stock options (in shares) | 0 | |||
Amortization of fair value of stock options | 644 | $ 644 | ||
Balance at Jun. 30, 2015 | $ 169 | 317,404 | (285,145) | 32,428 |
Balance (in shares) at Jun. 30, 2015 | 21,046,591 | |||
Increase (Decrease) in Shareholders' Equity | ||||
Net loss | (22,846) | $ (22,846) | ||
Common stock issued for: | ||||
Exercise of stock options (in shares) | 0 | |||
Amortization of fair value of stock options | 353 | $ 353 | ||
Balance at Jun. 30, 2016 | $ 169 | 317,757 | (307,991) | 9,935 |
Balance (in shares) at Jun. 30, 2016 | 21,046,591 | |||
Increase (Decrease) in Shareholders' Equity | ||||
Net loss | (5,579) | (5,579) | ||
Common stock issued for: | ||||
Exercise of stock options | 18 | 18 | ||
Exercise of stock options (in shares) | 20,000 | |||
Awards in lieu of cash bonus | 57 | 57 | ||
Awards in lieu of cash bonus (in shares) | 134,945 | |||
Amortization of fair value of stock options | 106 | 106 | ||
Balance at Dec. 31, 2016 | $ 169 | $ 317,938 | $ (313,570) | $ 4,537 |
Balance (in shares) at Dec. 31, 2016 | 21,201,536 |
CONDENSED CONSOLIDATED STATEM63
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) | 6 Months Ended | |
Dec. 31, 2016 | Dec. 31, 2015 | |
CASH FLOWS FROM OPERATING ACTIVITIES: | ||
Net loss | $ (5,579,000) | $ (3,762,000) |
Adjustments to reconcile net loss to net cash used in operating activities: | ||
Depreciation | 35,000 | 56,000 |
Full-cost ceiling test write-down | 753,000 | |
Stock based compensation | 106,000 | 189,000 |
Stock issued in lieu of cash bonuses | 57,000 | |
Gain on legal settlement | (4,078,000) | |
Cost of legal settlement | 1,308,000 | |
Changes in operating assets and liabilities: | ||
Increase in Accounts receivable - joint interest | (52,000) | |
Decrease in Prepaid expenses | 649,000 | 582,000 |
Increase in Deposits and other current assets | (229,000) | (8,000) |
Decrease in Accounts payable and accrued expenses | (268,000) | (992,000) |
Net cash used in operating activities | (7,246,000) | (3,987,000) |
CASH FLOWS FROM INVESTING ACTIVITIES: | ||
Purchase of property and equipment | (42,000) | |
Investment in unproved oil and gas properties | (818,000) | (20,000) |
Net cash used in investing activities | (860,000) | (20,000) |
CASH FLOWS FROM FINANCING ACTIVITIES: | ||
Proceeds from exercise of stock options | 18,000 | |
Net cash provided by financing activities | 18,000 | |
DECREASE IN CASH AND CASH EQUIVALENTS | (8,088,000) | (4,007,000) |
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD | 10,327,000 | 18,374,000 |
CASH AND CASH EQUIVALENTS AT END OF PERIOD | $ 2,239,000 | $ 14,367,000 |
ORGANIZATION AND SIGNIFICANT 64
ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES | 6 Months Ended | 12 Months Ended |
Dec. 31, 2016 | Jun. 30, 2016 | |
ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES | ||
ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES | 1. ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES General Overview Hyperdynamics Corporation ("Hyperdynamics," the "Company," "we," "us," and "our") is a Delaware corporation formed in March 1996. Hyperdynamics has two wholly-owned subsidiaries, SCS Corporation Ltd ("SCS"), a Cayman corporation, and HYD Resources Corporation ("HYD"), a Texas corporation. Through SCS, Hyperdynamics focuses on oil and gas exploration offshore the coast of West Africa. Our exploration efforts are pursuant to a Hydrocarbon Production Sharing Contract, as amended (the "PSC"). We refer to the rights granted under the PSC as the "Concession." We began operations in oil and gas exploration, seismic data acquisition, processing, and interpretation in late fiscal 2002. As used herein, references to "Hyperdynamics," "Company," "we," "us," and "our" refer to Hyperdynamics Corporation and our subsidiaries, including SCS. The rights in the Concession offshore Guinea are held by SCS. Status of our Business, Liquidity and Going Concern We have no source of operating revenue and there is no assurance when we will, if ever. On December 31, 2016, we had $2.2 million in cash, and $1.5 million in accounts payable and accrued expense liabilities, all of which are current liabilities. We are currently pursuing several avenues to raise funds. We have no other material commitments other than ordinary operating costs and commitments relating to the PSC. As of April 27, 2017 the Company's trade accounts payable and accrued expenses exceeded its cash balances. In 2010 we sold a 23% gross interest in the Concession to Dana Petroleum, PLC ("Dana"), a subsidiary of the Korean National Oil Corporation. Later, at the end of 2012, we sold a 40% gross interest to Tullow Guinea Ltd. ("Tullow"). The Share Purchase Agreement ("Tullow SPA") was dated December 31, 2012. A few months later Tullow became the Operator of the Concession on April 1, 2013. We refer to Tullow, Dana and us in the Concession as the "Consortium". Pursuant to the Tullow SPA between Tullow and us, Tullow paid us $26.0 million in cash and Tullow agreed to pay our entire participating interest share of expenditures associated with joint operations in the Concession up to a gross expenditure cap of $100.0 million incurred during the period of our carried interest while drilling the initial exploratory well that began on September 21, 2013. Tullow also agreed to pay our participating interest share of future costs for the drilling of an appraisal well following the initial exploration well, if drilled, up to an additional gross expenditure cap of $100.0 million. The Consortium planned to drill the exploration well in the ultra-deepwater area (water depths of over 2,000 meters) of the Concession during the first half of calendar 2014, but Tullow declared Force Majeure in March of 2014 based on the mere existence of the Department of Justice ("DOJ") and Securities and Exchange Commission ("SEC") investigations pursuant to the Foreign Corrupt Practices Act of the United States ("FCPA Investigations"). Tullow withdrew its Force Majeure declaration in May of 2014, but did not resume petroleum operations citing the existence of the FCPA investigations and the Ebola outbreak in Guinea as the reason. The DOJ investigation ended last May 2015, the SEC investigation ended last September 2015, and the World Health Organization declared Guinea Ebola free on December 29, 2015. Notwithstanding the resolution of the FCPA investigations, Dana insisted on further specific title assurances from the Government of Guinea and at a Petroleum Operations Management Committee meeting with the Government of Guinea in Conakry on December 16 and 17, 2015, Tullow and SCS obtained a PSC Amendment that we believed provided such further assurances. Instead of signing the PSC Amendment both Tullow and Dana refused to execute the agreement. Unable to see a path forward, we filed legal actions against Tullow and Dana under our Joint Operating Agreement. On August 15, 2016, we entered into a Settlement and Release Agreement with Tullow and Dana ("Settlement Agreement") that returned to Hyperdynamics 100% of the interest under the PSC, long-lead item property useful in the drilling of an exploratory well, and $0.7 million in cash, in return for a mutual release of all claims. We also agreed to pay Dana a success fee based upon the certified reserves of the Fatala well if it results in a discovery. On August 19, 2016, we signed a non-binding Memorandum of Understanding with the Government of Guinea and executed a Second Amendment to the PSC ("2016 Amendment") on September 15, 2016. We also received a Presidential Decree that gave Hyperdynamics a one year extension to the second exploration period of the PSC to September 22, 2017 ("PSC Extension Period") and we also became the designated Operator with the receipt of the Presidential Decree. In addition to clarifying certain elements of the initial PSC, we agreed in the 2016 Amendment to drill one exploratory well to a minimum depth of 2,500 meters below the seabed within the PSC Extension Period with a projected commencement date of April 2017 (the "Extension Well") with the option of drilling additional wells. If the Extension Well is not drilled within the PSC Extension Period, we will owe the Government of Guinea, under Article 4.2 of the PSC, the difference between the actual expenditures in Guinea that are related to the well and $46.0 million. Fulfillment of the work obligations exempts us from the expenditure obligations during the PSC Extension Period. Failure to comply with the drilling and other obligations of the PSC as amended subjects us to financial penalties and a risk of loss of the Concession. In mid-January 2017 the Company requested and received a notification letter dated January 24, 2017 from the General Director of the National Petroleum Office of the Republic of Guinea, informing the Company that the Republic of Guinea granted a postponement of the Company's obligation to provide a mutually acceptable security of $5.0 million to February 20, 2017 (originally required by no later than January 21, 2017) as well as a clarification regarding the timing of the security under Article 4.2 of the 2016 PSC Amendment until the work on the Fatala-1 well is completed. On March 1, 2017, the Republic of Guinea has issued a reservation of rights letter asserting the Company has not satisfied its obligation to deposit mutually acceptable security of $5.0 million. See Note 7, "Subsequent Events" below. Absent cash inflows we will not have adequate capital resources to meet our current obligations as they become due and therefore there is substantial doubt about our ability to continue as a going concern. Our ability to meet our current obligations as they become due over the next twelve-months, and to be able to continue exploration, will depend on obtaining additional resources through sales of additional interests in the Concession, equity or debt financial offerings, or through other means. No assurance can be given that any of these actions can be completed. Principles of consolidation The accompanying unaudited condensed consolidated financial statements include the accounts of Hyperdynamics and its direct and indirect wholly-owned subsidiaries. All intercompany accounts and transactions have been eliminated in consolidation. The financial statements have been prepared in accordance with accounting principles generally accepted in the United States and the rules of the Securities and Exchange Commission, and should be read in conjunction with the audited financial statements and notes thereto for the fiscal year ended June 30, 2016 presented above. In the opinion of management, all adjustments, consisting of normal recurring adjustments, necessary for a fair presentation of financial position and the results of operations for the interim periods presented have been reflected herein. The results of operations for interim periods are not necessarily indicative of the results to be expected for the full year. Notes to the financial statements which would substantially duplicate the disclosures contained in the audited financial statements for the most recent fiscal year ended June 30, 2016, have been omitted. Use of estimates The preparation of the consolidated financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities and expenses at the balance sheet date and for the period then ended. We believe our estimates and assumptions are reasonable; however, such estimates and assumptions are subject to a number of risks and uncertainties that may cause actual results to differ materially from such estimates. Significant estimates and assumptions underlying these financial statements include: • estimates in the calculation of share-based compensation expense, • estimates made in our income tax calculations, • estimates in the assessment of current litigation claims against the Company, • estimates and assumptions involved in our assessment of unproved oil and gas properties for impairment, and • estimates and assumptions involved in our fair market value assessment of the well construction equipment received in the August 15, 2016 Settlement Agreement with Tullow and Dana. We are subject, from time to time, to legal proceedings, claims, and liabilities that arise in the ordinary course of business. We accrue for losses when such losses are considered probable and the amounts can be reasonably estimated. Cash and cash equivalents Cash equivalents are highly liquid investments with an original maturity of three months or less. For the periods presented, we maintained all of our cash in bank deposit accounts which, at times, exceed the federally insured limits. Earnings per share Basic loss per common share has been computed by dividing net loss by the weighted average number of shares of common stock outstanding during each period. In period of earnings, diluted earnings per common share are calculated by dividing net income available to common shareholders by weighted-average common shares outstanding during the period plus weighted-average dilutive potential common shares. Diluted earnings per share calculations assume, as of the beginning of the period, exercise of stock options and warrants using the treasury stock method. All potential dilutive securities, including potentially dilutive options, warrants and convertible securities, if any, were excluded from the computation of dilutive net loss per common share for the three and six month periods ended December 31, 2016 and 2015, respectively, because their effects in the computation are antidilutive due to our net loss for those periods. Stock options to purchase approximately 1.2 million common shares at an average exercise price of $4.08 were outstanding at December 31, 2016. Using the treasury stock method, had we had net income, approximately 298,700 common shares attributable to our outstanding stock options would have been included in the fully diluted earnings per share for the three month period ended December 31, 2016 while approximately 182,200 common shares attributable to our outstanding stock options would have been included in the fully diluted earnings per share for the six month period ended December 31, 2016. Stock options to purchase approximately 1.0 million common shares at an average exercise price of $5.67 were outstanding at December 31, 2015. Using the treasury stock method, had we had net income, approximately 101,600 common shares attributable to our outstanding stock options would have been included in the fully diluted earnings per share for the three month period ended December 31, 2015 while approximately 50,800 common shares attributable to our outstanding stock options would have been included in the fully diluted earnings per share for the six month period ended December 31, 2015. Contingencies We are subject to legal proceedings, claims and liabilities. We accrue for losses associated with legal claims when such losses are probable and can be reasonably estimated. These accruals are adjusted as additional information becomes available or circumstances change. Legal fees are charged to expense as they are incurred. See Note 6 for more information on legal proceedings and settlements. Fair Value Measurements The accounting standards define fair value, establish a three-level valuation hierarchy for disclosures of fair value measurements and enhance disclosure requirements for fair value measures. As discussed in Note 2, we determined a fair value of the well construction equipment material (Level 3 fair value measurement) that we received at the time of our legal settlement with Tullow and Dana. The fair value estimate was based on the combination of cost and market approaches taking into consideration a number of factors, which included but were not limited to the original cost and the condition of the material and demand for steel and tubulars at the time of measurement. | 1. ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES Nature of business Hyperdynamics Corporation ("Hyperdynamics," the "Company," "we," "us," and "our") is a Delaware corporation formed in March 1996. Hyperdynamics has two wholly-owned subsidiaries, SCS Corporation Ltd (SCS), a Cayman corporation, and HYD Resources Corporation (HYD), a Texas corporation. Through SCS and its wholly-owned subsidiary, SCS Guinea SARL (SCSG), which is a Guinea limited liability company formed under the laws of the Republic of Guinea ("Guinea") located in Conakry, Guinea, Hyperdynamics focuses on oil and gas exploration offshore the coast of West Africa. Our exploration efforts are pursuant to a Hydrocarbon Production Sharing Contract, as amended (the "PSC"). We refer to the rights granted under the PSC as the "Concession." We began operations in oil and gas exploration, seismic data acquisition, processing, and interpretation in late fiscal 2002. As used herein, references to "Hyperdynamics," "Company," "we," "us," and "our" refer to Hyperdynamics Corporation and our subsidiaries, including SCS Corporation Ltd ("SCS"). The rights in the Concession offshore Guinea are held by SCS. Status of our Business We have no source of operating revenue and there is no assurance when we will, if ever. On June 30, 2016, we had $10.3 million in cash, and $1.7 million in liabilities, all of which are current liabilities. We plan to use our existing cash to fund our general corporate needs and our expenditures associated with the Concession. On December 31, 2012, we closed a sale to Tullow, a subsidiary of Tullow Oil plc, of a 40% gross interest in the Concession. Through June 30, 2016, we held a 37% participating interest, with Dana Petroleum, PLC ("Dana"), which is a subsidiary of the Korean National Oil Corporation, holding the remaining 23% interest in the Concession. We refer to Tullow, Dana and us in the Concession as the "Consortium". Pursuant to the Share Purchase Agreement ("Tullow SPA") between Tullow and us, Tullow agreed to pay our entire participating interest share of expenditures associated with joint operations in the Concession up to a gross expenditure cap of $100 million incurred during the carry period that began on September 21, 2013. Additionally, Tullow agreed to pay our participating interest share of future costs for the drilling of an appraisal of the initial exploration well, if drilled, up to a gross expenditure cap of $100 million. We signed a non-binding Memorandum of Understanding with the Government of Guinea on August 19, 2016 and a second amendment to the PSC ("2016 Amendment") on September 15, 2016. As more fully described below, the 2016 Amendment gave us a one year extension to the PSC to September 22, 2017 ("PSC Extension Period"). During the PSC Extension Period, we agreed to drill an exploration well to a minimum depth of two thousand five hundred (2,500) meters below the seabed for an estimated amount of forty six million US Dollars ($46,000,000 USD). The projected commencement date of drilling of the exploration well is April 2017 with a currently estimated time to completion of 42 days. Additional exploration wells may be drilled during the PSC Extension Period. If the well is not drilled within the PSC Extension Period, we will owe the Government of Guinea the difference between the actual expenditures related to the well and U.S. $46,000,000. Failure to comply with the drilling and other obligations of the PSC as amended subjects us to financial penalties and a risk of loss of the Concession. The continued delays have affected adversely the ability to explore the Concession and reduces the attractiveness of the Concession to prospective industry participants and financing sources. While we currently hold 100% of the Concession, it is unknown whether we will be able to raise the necessary funds to drill the exploratory well during the PSC Extension Period. As described in Note 8, SCS filed parallel actions on January 11, 2016, in the United States District Court for the Southern District of Texas and before the American Arbitration Association ("AAA") against Tullow and Dana. The legal actions sought (1) a determination that Tullow and Dana are in breach of their contractual obligations and (2) orders requiring Tullow and Dana to move forward with well drilling activities offshore Guinea. In addition, the arbitration action seeks the damages caused by the repeated delays in well drilling resulting from the activities of Tullow and Dana. On January 28, 2016, the action in the Federal District Court was voluntarily dismissed by us and refiled in District Court in Harris County, Texas (the "Texas District Court"). On February 8, 2016 Tullow and Dana removed the case to Federal District Court. On February 2, 2016, SCS filed an Application for Emergency Arbitrator and Interim Measures of Protection and requested the following relief: (a) expedite discovery prior to the constitution of the arbitral tribunal; (b) provide that the time period permitted by the parties' arbitration agreement for the selection of the arbitrators and the filing of any responsive pleadings or counterclaims be accelerated; (c) require Tullow, as the designated operator under the JOA, to maintain existing "well-planning activities"; (d) require Tullow to undertake and complete certain planning activities; and (e) require Tullow and Dana to join with SCS in completing the negotiation of an acceptable amendment to the PSC and to agree to a process that will result in the execution of the amendment. With the exception of limited relief regarding discovery and agreement by Tullow to maintain certain well plan readiness, the Emergency Arbitrator ruled on February 17, 2016 that SCS is not entitled to the emergency injunctive relief it requested. Further, the Emergency Arbitrator enjoined all parties to the dispute from pursuing parallel Federal District Court proceeding. The Federal District Court action was voluntarily stayed by us on February 12, 2016. Subsequently, on August 15, 2016, we entered into a Settlement and Release Agreement with Tullow and Dana ("Settlement and Release") with respect to our dispute in arbitration (American Arbitration Association, Case No: 01-16-0000-0679, styled SCS Corporation Ltd v. Tullow Guinea Ltd. and Dana Petroleum (E&P) Ltd.). Under the Settlement and Release, we released all claims against Tullow and Dana and Tullow and Dana (i) issued to the Government of Guinea a notice of withdrawal from the Concession and PSC effective immediately, (ii) transferred their interest in the long lead items previously purchased by the Consortium in preparation for the drilling of the Fatala well, and agreed to pay net cash of $686,570 to us. We also agreed to pay Dana a success fee based upon the certified reserves of the Fatala well if it results in a discovery. We will record the long lead items and a gain once they have been inspected and appropriately valued. The timing and amount of our cash outflows are dependent on a number of factors including: a negative outcome related to any of our legal proceedings, inability to resume petroleum operations or drilling delays, well costs exceeding our carry, or if we have unfavorable well results. As a result, absent cash inflows, there is substantial doubt as to whether we will have adequate capital resources to meet our current obligations as they become due and therefore be able to continue as a going concern. Our ability to meet our current obligations as they become due over the next twelve-months, and to be able to continue exploration, will depend on obtaining additional resources through sales of additional interests in the Concession, equity or debt financings, or through other means, although no assurance can be given that any of these actions can be completed. Principles of Consolidation The accompanying consolidated financial statements include the accounts of Hyperdynamics and its direct and indirect wholly-owned subsidiaries. All intercompany accounts and transactions have been eliminated in consolidation. The financial statements have been prepared in accordance with accounting principles generally accepted in the United States and the rules of the Securities and Exchange Commission (SEC). Use of Estimates The preparation of the consolidated financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities and expenses at the balance sheet date and for the period then ended. We believe our estimates and assumptions are reasonable; however, such estimates and assumptions are subject to a number of risks and uncertainties that may cause actual results to differ materially from such estimates. Significant estimates and assumptions underlying these financial statements include: • estimates in the calculation of share-based compensation expense, • estimates made in our income tax calculations, • estimates in the assessment of current litigation claims against the company, and • estimates and assumptions involved in our assessment of unproved oil and gas properties for impairment. We are subject to legal proceedings, claims, and liabilities that arise in the ordinary course of business. We accrue for losses when such losses are considered probable and the amounts can be reasonably estimated. Cash and cash equivalents Cash equivalents are highly liquid investments with an original maturity of three months or less. For the years presented, we maintained all of our cash in bank deposit accounts which, at times, exceed the federally insured limits. Oil and Gas Properties Full-Cost Method We account for oil and natural gas producing activities using the full-cost method of accounting as prescribed by the SEC. Accordingly, all costs incurred in the acquisition, exploration, and development of oil and natural gas properties, including the costs of abandoned properties, dry holes, geophysical costs and annual lease rentals are capitalized. All selling, general and administrative corporate costs unrelated to drilling activities are expensed as incurred. Sales or other dispositions of oil and natural gas properties are accounted for as adjustments to capitalized costs, with no gain or loss recorded unless the ratio of capitalized costs to proved reserves would significantly change, or to the extent that the sale proceeds exceed our capitalized costs. Depletion of evaluated oil and natural gas properties would be computed on the units of production method based on proved reserves. The net capitalized costs of proved oil and natural gas properties are subject to quarterly impairment tests. Costs Excluded from Amortization Costs associated with unproved properties are excluded from amortization until it is determined whether proved reserves can be assigned to the properties. We review our unproved properties at the end of each quarter to determine whether the costs incurred should be transferred to the amortization base. We assess unproved property on a quarterly basis for possible impairment or reduction in value. We assess properties on an individual basis or as a group if properties are individually insignificant. The assessment includes consideration of the following factors, among others: intent to drill; remaining lease term under our concession; geological and geophysical evaluations; drilling results and activity; the assignment of proved reserves; and the economic viability of development if proved reserves are assigned. We assess our unproved properties on a country-by-country basis. During any period in which these factors indicate an impairment, the adjustment is recorded through earnings of the period. Full-Cost Ceiling Test At the end of each quarterly reporting period, the capitalized costs less accumulated amortization and deferred income taxes shall not exceed an amount equal to the sum of the following items: (i) the present value of estimated future net revenues of oil and gas properties (including future development and abandonment costs of wells to be drilled) using prices based on the preceding 12-months' average price based on closing prices on the first day of each month, or prices defined by existing contractual arrangements, discounted at 10%, (ii) the cost of properties not being amortized, and (iii) the lower of cost or estimated fair value of unproved properties included in the costs being amortized, less related income tax effects ("Full-Cost Ceiling Test"). The calculation of the Full-Cost Ceiling Test is based on estimates of proved reserves. There are numerous uncertainties inherent in estimating quantities of proved reserves and in projecting the future rates of production, timing, and plan of development. The accuracy of any reserves estimate is a function of the quality of available data and of engineering and geological interpretation and judgment. Results of drilling, testing, and production subsequent to the date of the estimate may justify revision of such estimates. Accordingly, reserves estimates are often different from the quantities of oil and natural gas that are ultimately recovered. We have no proved reserves. We recognized a $14.3 million Full-Cost Ceiling test write-down in the year ended June 30, 2016. No Full-Cost Ceiling test write-down was recognized in the year ended June 30, 2015. Property and Equipment, other than Oil and Gas Property and equipment are stated on the basis of historical cost less accumulated depreciation. Depreciation is provided using the straight-line method over the estimated useful lives of the assets, generally three to five years. Income Taxes We account for income taxes in accordance with FASB Accounting Standards Codification ("ASC") 740, "Income Taxes," which requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of temporary differences between the tax and financial reporting basis of assets and liabilities and for loss and credit carryforwards. Valuation allowances are provided when recovery of deferred tax assets is not considered likely. Tax benefits are recognized only for tax positions that are more likely than not to be sustained upon examination by tax authorities. The amount recognized is measured as the largest amount of benefit that is greater than 50 percent likely to be realized upon ultimate settlement. Unrecognized tax benefits are tax benefits claimed in our tax returns that do not meet these recognition and measurement standards. As of June 30, 2016 and 2015, the Company has unrecognized tax benefits totaling $5.5 million. Our policy is to recognize potential accrued interest and penalties related to unrecognized tax benefits within income tax expense. For the years ended June 30, 2016 and 2015, we did not recognize any interest or penalties in our consolidated statements of operations, nor did we have any interest or penalties accrued on our consolidated balance sheets at June 30, 2016 and 2015 relating to unrecognized benefits. The tax years 2011-2015 remain open to examination for federal income tax purposes and by the other major taxing jurisdictions to which we are subject. Stock-Based Compensation ASC 718, "Compensation-Stock Compensation" requires recognition in the financial statements of the cost of employee services received in exchange for an award of equity instruments over the period the employee is required to perform the services in exchange for the award (presumptively the vesting period). We measure the cost of employee services received in exchange for an award based on the grant-date fair value of the award. We account for non-employee share-based awards based upon ASC 505-50, "Equity-Based Payments to Non-Employees." Earnings Per Share Basic loss per common share has been computed by dividing net loss by the weighted average number of shares of common stock outstanding during each period. In a period of earnings, diluted earnings per common share are calculated by dividing net income available to common shareholders by weighted-average common shares outstanding during the period plus weighted-average dilutive potential common shares. Diluted earnings per share calculations assume, as of the beginning of the period, exercise of stock options and warrants using the treasury stock method. All potential dilutive securities, including potentially dilutive options, warrants and convertible securities, if any, were excluded from the computation of dilutive net loss per common share for the years ended June 30, 2016, and 2015, respectively, as their effects are antidilutive due to our net loss for those periods. Stock options to purchase approximately 1.0 million common shares at an average exercise price of $5.03 were outstanding at June 30, 2016. Using the treasury stock method, had we had net income, approximately 25 thousand common shares attributable to our outstanding stock options would have been included in the fully diluted earnings per share for the year ended June 30, 2016. Stock options to purchase approximately 1.2 million common shares at an average exercise price of $7.43 and warrants to purchase approximately 0.03 million shares of common stock at an average exercise price of $12.64 were outstanding at June 30, 2015. Using the treasury stock method, had we had net income, approximately four hundred common shares attributable to our outstanding stock options would have been included in the fully diluted earnings per share calculation for the year ended June 30, 2015. There would have been no dilution attributable to our outstanding warrants to purchase common shares. Had we had net income, approximately four thousand common shares attributable to restricted stock awards would have been included in the fully diluted earnings per share for the year ended June 30, 2015. Contingencies We are subject to legal proceedings, claims and liabilities. We accrue for losses associated with legal claims when such losses are probable and can be reasonably estimated. These accruals are adjusted as additional information becomes available or circumstances change. Legal fees are charged to expense as they are incurred. See Note 8 for more information on legal proceedings. Foreign currency gains and losses from current operations In accordance with ASC Topic 830, Foreign Currency Matters , the functional currency of our international subsidiaries is the U.S. Dollar. Gains and losses from foreign currency transactions arising from operating assets and liabilities are included in general, administrative and other operating expense, have not been significant. Net foreign currency transaction gains (losses) were ($3) thousand and ($0.1) million for the years ended June 30, 2016 and 2015, respectively. Subsequent Events The Company evaluated all subsequent events from June 30, 2016 through the date of issuance of these financial statements. |
INVESTMENT IN OIL AND GAS PRO65
INVESTMENT IN OIL AND GAS PROPERTIES | 6 Months Ended | 12 Months Ended |
Dec. 31, 2016 | Jun. 30, 2016 | |
INVESTMENT IN OIL AND GAS PROPERTIES | ||
INVESTMENT IN OIL AND GAS PROPERTIES | 2. INVESTMENT IN OIL AND GAS PROPERTIES Investment in oil and gas properties consists entirely of our Concession in offshore Guinea, West Africa. We previously owned a 37% participating interest in our Guinea Concession on June 30, 2016. On August 19, 2016, we signed a non-binding Memorandum of Understanding with the Government of Guinea and executed a Second Amendment to the PSC ("2016 Amendment") on September 15, 2016 and received a Presidential Decree on September 21, 2016 giving us a one year extension to the second exploration period of the PSC to September 22, 2017 ("PSC Extension Period") and reaffirming that we now own 100% of the Concession. One part of our settlement with Tullow and Dana included the relinquishments of their respective 40% and 23% participating interests in the Concession. Hyperdynamics now owns 100% of the participating interests in the Concession. In addition to clarifying certain elements of the PSC, we agreed in the 2016 Amendment to drill one (1) exploratory well to a minimum depth of 2,500 meters below the seabed within the PSC Extension Period with a projected commencement date of April 2017 (the "Extension Well") with the option of drilling additional wells. If the Extension Well is not drilled within the PSC Extension Period, we will owe the Government of Guinea the difference between the actual expenditures in Guinea related to the well and $46.0 million. Fulfillment of the work obligations exempts us from the expenditure obligations during the PSC Extension Period. In the event a discovery is made, the terms of the PSC make us eligible for a two-year appraisal period during which we are obliged either to declare that the reserves are commerciality viable or that we decide that the PSC shall terminate. In turn, we will retain only an area equivalent to approximately 5,000 square kilometers in the Guinea offshore and will provide the Government of Guinea: (1) A parent company guarantee for the well obligation, (2) monthly progress reports and a reconciliation of budget to actual expenditures, (failure to provide the reports and assurances on a timely basis could result in a notice of termination with a 30 day period to cure), and (3) guarantees to the Guinea Government that (a) no later than January 21, 2017 we will provide a mutually acceptable security for $5.0 million on terms customary in international petroleum operations, provided that this security is to be released at the time the drilling rig for the Extension Well is on location offshore Guinea, and (b) no later than April 12, 2017, we will deliver a mutually acceptable security for the difference between $46.0 million and the amount spent to date on the Extension Well. For the purposes of calculation for this clause, however, only costs spent for services and goods provided in Guinea shall be taken into account until the drilling rig to be used in the drilling of the Extension Well is located in the territorial waters of the Republic of Guinea. On January 24, 2017 the Company requested and received a notification letter from the General Director of the National Petroleum Office of the Republic of Guinea, informing the Company that the Republic of Guinea granted a postponement to provide a mutually acceptable security of $5.0 million to February 20, 2017 as well as a clarification regarding the timing of the $46.0 million security payment under Article 4.2 of the 2016 PSC Amendment until the work on the Fatala well is completed. On March 1, 2017, the Republic of Guinea has issued a reservation of rights letter asserting the Company has not satisfied its obligation to deposit mutually acceptable security of $5.0 million. Additionally, we agreed to limit the cost recovery pool to date to our share of expenditures in the PSC since 2009 (estimated to be approximately $150,000,000) and move into the territory of Guinea the long lead items we received in the Settlement Agreement that are currently in Takoradi, Ghana for the drilling of the Extension Well by January 31, 2017. The movement of approximately $1.6 million of the $4.1 million of equipment was started on January 29, 2017 and was completed on February 5, 2017. The balance of the material still in Ghana will be moved at a later date. Finally, we agreed to allocate and administer a training budget during the PSC Extension Period for the benefit of the Guinea National Petroleum Office of $250,000 in addition to any unused portion of the training program under Article 10.3 of the PSC, estimated to be approximately $500,000. Failure to comply with the drilling and other obligations of the PSC as amended subjects us to financial penalties and a risk of loss of the Concession. The continued delays have affected adversely the ability to explore the Concession and reduce the attractiveness of the Concession to prospective industry participants and financing sources. While we currently hold 100% of the Concession, it is unknown whether we will be able to raise the necessary funds to drill the exploratory well during the PSC Extension Period. We follow the "Full-Cost" method of accounting for oil and natural gas property and equipment costs. Under this method, internal costs incurred that were directly identified with exploration, development, and acquisition activities undertaken by us for our own account, and which were not related to production, general corporate overhead, or similar activities, are capitalized. Capitalization of internal costs was discontinued April 1, 2013 when Tullow became the operator. Hyperdynamics became the operator after the signing of the Second Amendment of the PSC on September 15, 2016 and thus capitalization of certain internal, project related costs had resumed. For the three and six month periods ended December 31, 2016, we capitalized $1.3 million and $1.5 million of such costs, respectively. Capitalized internal costs of $ 0.2 million from the previous quarter were written off and recorded as Full-cost ceiling test write-down expenses, and capitalized internal costs of $ 1.3 million in the current quarter were written off and recorded as General, administrative and other operating costs. Geological and geophysical costs incurred that are directly associated with specific unproved properties are capitalized in "Unproved properties excluded from amortization" and evaluated as part of the total capitalized costs associated with a prospect. The cost of unproved properties not being amortized is assessed to determine whether such properties have been impaired. In determining whether such costs should be impaired, we evaluate current drilling plans and drilling results and available geological and geophysical information. No reserves have been attributed to the Concession. The following table provides detail of total capitalized costs for the Concession which remain unproved and unevaluated and are excluded from amortization as of December 31, 2016 and June 30, 2016 (in thousands): December 31, June 30, Oil and Gas Properties: Unproved properties not subject to amortization $ $ — During the six month period ended December 31, 2016, our oil and gas property balance increased by $4.1 million as a result of the fair value of the material received in our settlement with Tullow and Dana. The fair value of the material, for the most part well construction material, at the time of the settlement was approximately $4.4 million, of which we reduced by approximately $0.4 million during the second quarter of fiscal year 2017 based on additional information that we determined reduced the original fair market value. We engaged an independent outside party with expertise in valuing oil and gas equipment to conduct an appraisal and provide a fair valuation determination for our initial recording and reporting purposes. During the quarter ended December 31, 2016 we impaired $0.8 million of unproved oil and gas property costs capitalized during the current quarter ($0.5 million) and previous quarter ($0.3 million) and the internal costs described above. That impairment assessment was based on our liquidity position, and the possibility that we may not reach an agreement with the Government of Guinea regarding the requirement under the PSC to provide a mutually acceptable security of $5.0 million, and the possibility that the Government of Guinea may at any time and without prior notice terminate our Concession. As of June 30, 2016 at the close of our last fiscal year we fully impaired the $14.3 million of previously capitalized unproved oil and gas property costs. That impairment assessment was based on the continued impasse at the time by our members of the Consortium to resume petroleum operations and drill the next exploration obligation well, which needed to be commenced at that time by the end of September 2016, and our inability at the time to get interim injunctive relief from the American Arbitration Association requiring Tullow and Dana to join with SCS in the negotiation of an acceptable amendment to the PSC and to agree to a process that would result in the execution of the amendment which we hoped would have led to the resumption of petroleum operations by the Consortium. Thus, we believed all legal measures to require Tullow and Dana to drill the planned exploration well had been exhausted. | 3. INVESTMENT IN OIL AND GAS PROPERTIES Investment in oil and gas properties consists entirely of our Guinea Concession in offshore West Africa. We owned a 77% participating interest in our Guinea Concession prior to the sale of a 40% gross interest to Tullow which closed on December 31, 2012. We now own a 37% interest in the Concession. Guinea Concession We have been conducting exploration work related to the area off the coast of Guinea since 2002. On September 22, 2006 we entered into the PSC with Guinea. Under that agreement, we were granted certain exclusive contractual rights by Guinea to explore and exploit offshore oil and gas reserves, if any, off the coast of Guinea. We are conducting our current work in Guinea under the PSC, as amended on March 25, 2010 (the "PSC Amendment"). The PSC Amendment clarified that we retained a Contract Area of approximately 25,000 square kilometers, which is approximately equivalent to 9,650 square miles or 30% of the original Contract Area under the PSC, following a December 31, 2009 relinquishment of approximately 70% of the original Contract Area. The PSC Amendment required that the Consortium relinquish an additional 25% of the retained Contract Area by September 30, 2013. The Contract Area is currently 18,750 square kilometers. Under the terms of the PSC Amendment, the first exploration period ended and the Consortium entered into the second exploration period on September 21, 2010. The second exploration period ran until September 2013, at which point it was renewed to September 2016 and may be extended for up to one (1) additional year to allow the completion of a well in process and for up to two (2) additional years to allow the completion of the appraisal of any discovery made. The PSC Amendment required the drilling of an exploration well, which had to be commenced by the year-end 2011, to a minimum depth of 2,500 meters below seabed. This requirement was satisfied with the drilling of the Sabu-1 well which was commenced during October of 2011 and reached the minimum depth of 2,500 meters below the seabed in February of 2012. The Consortium is required to drill an additional exploration well, which is to be commenced by the end of September 2016, to a minimum depth of 2,500 meters below seabed. The PSC Amendment requires the expenditure of $15 million on each of the exploration wells ($30 million in the aggregate). The Consortium was also required to acquire a minimum of 2,000 square kilometers of 3D seismic by September 2013 with a minimum expenditure of $12 million. This requirement was satisfied with the first 3D seismic survey acquired in 2010. Fulfillment of work obligations exempts us from expenditure obligations and exploration work in excess of minimum work obligations for each exploration period may be carried forward to the following exploration period. If the Consortium does not fulfil the work requirement under the PSC, it is required to pay to Guinea the difference between the amounts actually spent on work realized in fulfillment of the obligations of the work program and the amounts estimated for the total work program. Under the PSC Amendment, Guinea may participate in development of any discovery at a participating interest of up to 15% of costs being carried for its share. The cost of that carry is to be recovered out of 62.5% of Guinea's share of cost and profit oil. The PSC Amendment clarified that only those eligible expenditures, which were made following the date the PSC was signed, on September 22, 2006, are eligible for cost recovery. We are required to establish an annual training budget of $200,000 for the benefit of Guinea's oil industry personnel, and we are also obligated to pay an annual surface tax of $2.00 per square kilometer on our retained Concession acreage. The PSC Amendment also provides that should the Guinea government note material differences between provisions of the PSC Amendment and international standards or the Petroleum Code, the parties will renegotiate the relevant articles. Under the PSC and PSC Amendment our Guinea Concession is subject to a 10% royalty interest to Guinea. Of the remaining 90% of the first production, we will receive 75% of the revenue for recovery of the cost of operations, and Guinea will receive 25%. After recovery cost of operations, revenue will be split as outlined in the table below: Daily production (b/d) Guinea Share Contractor Share From 0 to 2,000 % % From 2,001 to 5,000 % % From 5,001 to 100,000 % % Over 100,001 % % The Guinea Government may elect to take a 15% working interest in any exploitation area. On May 20, 2010, we completed a 23% assignment to Dana following the receipt of the final approvals from the Government of Guinea, which were in the form of a Presidential Decree approving the PSC and a document, referred to as an Arrêté, from the Guinea Ministry of Mines and Geology. On December 27, 2012, we received an Arrêté which formally authorized our 40% assignment of a participating interest to Tullow. Sale of Interest to Tullow On December 31, 2012, we closed a sale to Tullow of a 40% gross interest in the Concession. As consideration, we received $27 million from Tullow as reimbursement of our past costs in the Concession and, as additional consideration, Tullow agreed to: (i) pay our participating interest share of future costs associated with joint operations in the Concession, up to a gross expenditure cap of $100 million incurred during the carry period that began on September 21, 2013; and (ii) pay our participating interest share of costs associated with an appraisal well of the initial exploration well, if drilled, subject to a gross expenditure cap on the appraisal well of $100 million. Tullow will continue to pay our costs, subject to the gross expenditure cap of $100 million, until 90 days following the date on which the rig contracted to drill the exploration well moves off the well location. We are responsible for our share of any costs exceeding the gross expenditure cap of $100 million per well. The $27 million payment was received by us on December 31, 2012 and was recorded as a reduction in unproved oil and gas properties, net of transaction costs of approximately $3.3 million. In connection with the transaction, SCS, Tullow and Dana entered into a Joint Operating Agreement Novation and Amendment Agreement reflecting that as a result of the sale to Tullow, the interest of the parties in the Concession are SCS 37%, Dana 23%, and Tullow 40%, and that Tullow agreed to be bound by the PSC and the JOA previously entered into between SCS and Dana. Tullow assumed all the respective liabilities and obligations of SCS in respect of the assigned 40% interest. SCS and Tullow executed a Deed of Assignment. The Assignment was approved by Guinea's Ministry of Mines and Geology by issuing an Arrêté on December 27, 2012 which formally authorized our assignment of a participating interest to Tullow. SCS, Dana and Tullow have elected Tullow as the Operator of the Concession beginning April 1, 2013. Accounting for oil and gas property and equipment costs We follow the "Full-Cost" method of accounting for oil and natural gas property and equipment costs. Under this method, internal costs incurred that are directly identified with exploration, development, and acquisition activities undertaken by us for our own account, and which were not related to production, general corporate overhead, or similar activities, are capitalized. Capitalization of internal costs was discontinued April 1, 2013 when Tullow became the operator. Geological and geophysical costs incurred that are directly associated with specific unproved properties are capitalized in "Unproved properties excluded from amortization" and evaluated as part of the total capitalized costs associated with a prospect. The cost of unproved properties not being amortized is assessed to determine whether such properties have been impaired. In determining whether such costs should be impaired, we evaluate current drilling results and available geological and geophysical information. If petroleum operations are not commenced soon, our ability to obtain additional financing and our financial condition will be adversely affected, which will likely impact our ability to conduct exploration. No reserves have been attributed to the concession. We exclude capitalized costs of unproved oil and gas properties from amortization until evaluated. Geological and geophysical information pertaining to the Guinea concession was collected and evaluated and no reserves have been attributed to the Concession. In February 2012, we completed the drilling of the Sabu-1 well, which was determined to be non-commercial. As a result, we evaluated certain geological and geophysical related costs in unproved properties along with the drilling costs of the Sabu-1 well totaling $116.8 million and determined that these properties were subject to the Full-Cost Ceiling Test. As we have no proved reserves to include in the Full-Cost Ceiling Test, the entire $116.8 million resulted in a Full-Cost Ceiling Test write-down of our unproved oil and gas properties. As of March 31, 2016, based on our impairment assessment, we fully impaired the $14,331,000 of unproved oil and gas properties. This impairment assessment was based on the continued impasse by our members of the Consortium to resume petroleum operations and drill the next exploration obligation well, which needs to be commenced by the end of September 2016, and our inability to get interim injunctive relief from the American Arbitration Association requiring Tullow and Dana to join with SCS in the negotiation of an acceptable amendment to the PSC and to agree to a process that would result in the execution of the amendment which we hoped would have led to the resumption of petroleum operations. Thus, we believe all legal measures to require Tullow and Dana to drill the planned exploration well have been exhausted. Despite this impairment, we continued to pursue any avenues in order to begin drilling activities in our Concession. The following table provides detail of total capitalized costs for our Guinea Concession as of June 30, 2016 and 2015 (in thousands): June 30, 2016 June 30, 2015 Oil and Gas Properties: Unproved oil and gas Properties $ — $ Other Equipment Costs — — Unproved properties not subject to amortization $ — $ During the year ended June 30, 2016, our oil and gas property balance increased by $20 thousand to $14,331,000 as a result of additional geological and geophysical costs incurred. Subsequently on August 19, 2016, we signed a non-binding Memorandum of Understanding with the Government of Guinea and executed a Second Amendment to the PSC ("2016 Amendment") on September 15, 2016. The 2016 Amendment, upon receipt of a Presidential Decree, will give us a one year extension to the second exploration period of the PSC to September 22, 2017 ("PSC Extension Period"). In addition to clarifying certain elements of the PSC, we agreed in the 2016 Amendment to drill one (1) exploratory well to a minimum depth of 2,500 meters below the seabed within the PSC Extension Period with a projected commencement date of April 2017 (the "Extension Well") with the option of drilling additional wells. If the Extension Well is not drilled within the PSC Extension Period, we will owe the Government of Guinea the difference between the actual expenditures in Guinea related to the well and $46,000,000. Fulfillment of the work obligations exempts us from the expenditure obligations during the PSC Extension Period. In turn, we will retain only an area equivalent to approximately 5,000 square kilometers in the Guinea offshore and will provide the Government of Guinea: (1) A parent company guarantee for the well obligation, (2) monthly progress reports and a reconciliation of budget to actual expenditures, (failure to provide the reports and assurances on a timely basis in a notice of termination with a 30 day period to cure), and (3) guarantees to Guinea that (a) no later than January 21, 2017 we will provide a mutually acceptable security for $5,000,000 on terms customary in international petroleum operations, provided that this security is to be released at the time the drilling rig for the Extension Well is on location offshore Guinea, and (b) no later than April 12, 2017, we will deliver a mutually acceptable security for the difference between $46,000,000 and the amount spent to date on the Extension Well. For the purposes of calculation for this clause, however, only costs spent for services and goods provided in Guinea shall be taken into account until the drilling rig to be used in the drilling of the Extension Well is located in the territorial waters of the Republic of Guinea. If we do not provide either security by the specified dates, the Government of Guinea may terminate the PSC immediately and without prior notice to remedy such deficiency. Additionally, we agreed to limit the cost recovery pool to date to our share of expenditures in the PSC since 2009 (estimated to be approximately $150,000,000) and move into the territory of Guinea the long lead items we received in the Settlement Agreement that are currently in Takoradi, Ghana for the drilling of the Extension Well by January 31, 2017. Finally, we agreed to allocate and administer a training budget during the PSC Extension Period for the benefit of the Guinea National Petroleum Office of $250,000 in addition to any unused portion of the training program under Article 10.3 of the PSC, estimated to be approximately $500,000. Failure to comply with the drilling and other obligations of the PSC as amended subjects us to financial penalties and a risk of loss of the Concession. The continued delays have affected adversely the ability to explore the Concession and reduces the attractiveness of the Concession to prospective industry participants and financing sources. While we currently hold 100% of the Concession, it is unknown whether we will be able to raise the necessary funds to drill the exploratory well during the PSC Extension Period. |
ACCOUNTS PAYABLE AND ACCRUED 66
ACCOUNTS PAYABLE AND ACCRUED EXPENSES | 6 Months Ended | 12 Months Ended |
Dec. 31, 2016 | Jun. 30, 2016 | |
ACCOUNTS PAYABLE AND ACCRUED EXPENSES | ||
ACCOUNTS PAYABLE AND ACCRUED EXPENSES | 3. ACCOUNTS PAYABLE AND ACCRUED EXPENSES Accounts payable and accrued expenses as of December 31, 2016 and June 30, 2016 include the following (in thousands): December 31, June 30, Accounts payable—trade and oil and gas exploration activities $ $ Accounts payable—legal costs Accrued payroll Liability for legal settlement (Note 6) — $ $ | 4. ACCOUNTS PAYABLE AND ACCRUED EXPENSES Accounts payable and accrued expenses as of June 30, 2016 and 2015 include the following (in thousands): 2016 2015 Accounts payable—trade $ $ Accounts payable—legal costs Accrued payroll $ $ The single largest payable in the Accounts payable trade balances is for the yearly Director & Officer Insurance renewal and was $1.3 million and $1.1 million for 2016 and 2015, respectively. |
SHARE-BASED COMPENSATION67
SHARE-BASED COMPENSATION | 6 Months Ended | 12 Months Ended |
Dec. 31, 2016 | Jun. 30, 2016 | |
SHARE-BASED COMPENSATION | ||
SHARE-BASED COMPENSATION | 4. SHARE-BASED COMPENSATION On February 18, 2010, at our annual meeting of stockholders, the board of directors and stockholders approved the 2010 Equity Incentive Plan (the "2010 Plan"). Prior to the 2010 stockholder meeting, we had two stock award plans: the Stock and Stock Option Plan, which was adopted in 1997 ("1997 Plan") and the 2008 Restricted Stock Award Plan ("2008 Plan"). In conjunction with the approval of the 2010 Plan at the annual meeting, the 1997 Plan and the 2008 Plan were terminated as of February 18, 2010. Subsequently, on February 17, 2012, the 2010 Plan was amended to increase the maximum shares issuable under the 2010 Plan and again on January 27, 2016, at our annual meeting of stockholders, the stockholders approved amending the 2010 Plan to increase the number of shares available for issuance by 750,000 shares. The 2010 Plan provides for the awards of shares of common stock, restricted stock units or incentive stock options or nonqualified stock options to purchase our common stock to selected employees, directors, officers, agents, consultants, attorneys, vendors and advisors of ours' or of any parent or subsidiary thereof. Shares of common stock, options, or restricted stock can only be awarded under the 2010 Plan within 10 years from the effective date of February 18, 2010. A maximum of 2,000,000 shares are issuable under the 2010 Plan and at December 31, 2016, 783,460 shares remained available for issuance. The 2010 Plan provides a means to attract and retain the services of participants and also to provide added incentive to such persons by encouraging stock ownership in the Company. Plan awards are administered by the Compensation, Nominating, and Corporate Governance Committee, who has substantial discretion to determine which persons, amounts, time, price, exercise terms, and restrictions, if any. From time to time we issue non-compensatory warrants, such as warrants issued to investors. Stock Options The fair value of stock option awards is estimated using the Black-Scholes valuation model. For market-based pricing of stock option awards, those options where vesting terms are dependent on achieving a specified stock price, the fair value was estimated using a Black-Scholes option pricing model with inputs adjusted for the probability of the vesting criteria being met and the median expected term for each award as determined by utilizing a Monte Carlo simulation. Expected volatility is based solely on historical volatility of our common stock over the period commensurate with the expected term of the stock options. We rely solely on historical volatility because we do not have options that are traded. The expected term calculation for stock options is based on the simplified method as described in the Securities and Exchange Commission Staff Accounting Bulletin No. 107. We use this method because we do not have sufficient historical information on exercise patterns to develop a model for expected term. The risk-free interest rate is based on the U. S. Treasury yield in effect at the time of award for an instrument with a maturity that is commensurate with the expected term of the stock options. The dividend yield rate of 0% is based on the fact that we have never paid cash dividends on our common stock and we do not expect to pay cash dividends on our common stock during the expected term of the options. The following table provides information about options during the six months ended December 31, 2016 and 2015: 2016 2015 Number of options awarded Compensation expense recognized $ $ Weighted average award-date fair value of options outstanding $ $ The following table details the significant assumptions used to compute the fair values of employee and director stock options awarded during the six month periods ended December 31, 2016 and 2015: 2016 2015 Risk-free interest rate 0.47 - 1.86% % Dividend yield 0% % Volatility factor 109 - 157% % Expected life (years) 1.0 - 4.73 Summary information regarding employee and director stock options issued and outstanding under all plans as of December 31, 2016 is as follows: Options Weighted Aggregate Weighted Options outstanding at July 1, 2016 $ $ — Awarded Exercised ) Forfeited — — Expired ) Options outstanding at December 31, 2016 $ $ Options exercisable at December 31, 2016 $ $ Options outstanding and exercisable as of December 31, 2016 Exercise Price Outstanding Remaining Life Exercisable $0.41 - 4.00 Less than1 year $0.41 - 4.00 1 year $0.41 - 4.00 2 years $0.41 - 4.00 3 years $0.41 - 4.00 4 years $0.41 - 4.00 5 years — $4.01 - 10.00 Less than 1 year $4.01 - 10.00 1 year $4.01 - 10.00 2 years $4.01 - 10.00 3 years $10.01 - 20.00 Less than 1 year $10.01 - 20.00 4 years $20.01 - 30.00 Less than 1 year $20.01 - 30.00 4 years $30.01 - 40.00 Less than 1 year $30.01 - 40.00 5 years $40.01 - 48.72 4 years At December 31, 2016, there were $177 thousand of unrecognized compensation costs related to non-vested share based compensation arrangements awarded to employees and directors under the plans. During the six months ended December 31, 2016, a total of 76,404 options, with a weighted average award date fair value of $0.57 per share, vested in accordance with the underlying agreements. Unvested options at December 31, 2016 totaled 199,697 with a weighted average award date fair value of $4.72, an amortization period of one year and a weighted average remaining life of 0.93 years. Restricted Stock The fair value of restricted stock awards classified as equity awards is based on the Company's stock price as of the date of grant. During the year ended June 30, 2015, all such awards were forfeited. No new grants have been issued, and none are outstanding at December 31, 2016. | 7. SHARE-BASED COMPENSATION On February 18, 2010, at our annual meeting of stockholders, the board of directors and stockholders approved the 2010 Equity Incentive Plan (the "2010 Plan"). Prior to the 2010 stockholder meeting, we had two stock award plans: the Stock and Stock Option Plan, which was adopted in 1997 ("1997 Plan") and the 2008 Restricted Stock Award Plan ("2008 Plan"). In conjunction with the approval of the 2010 Plan at the annual meeting, the 1997 Plan and 2008 Plan were terminated as of February 18, 2010. Subsequently, on February 17, 2012, the 2010 Plan was amended to increase the maximum shares issuable under the 2010 Plan and again on January 27, 2016, at our annual meeting of stockholders, the stockholders approved amending the 2010 Plan to increase the number of shares available for issuance by 750,000 shares. The 2010 Plan provides for the grants of shares of common stock, restricted stock or incentive stock options and/or nonqualified stock options to purchase our common stock to selected employees, directors, officers, agents, consultants, attorneys, vendors and advisors of ours' or of any parent or subsidiary thereof. Shares of common stock, options, or restricted stock can only be granted under this plan within 10 years from the effective date of February 18, 2010. A maximum of 2,000,000 shares are issuable under the 2010 Plan and at June 30, 2016, 945,710 shares remained available for issuance. The 2010 Plan provides a means to attract and retain the services of participants and also to provide added incentive to such persons by encouraging stock ownership in the Company. Plan grants are administered by the Compensation, Nominating, and Corporate Governance Committee, who has substantial discretion to determine which persons, amounts, time, price, exercise terms, and restrictions, if any. Additionally, from time to time, we issue non-compensatory warrants, such as warrants issued to investors. Stock Options The fair value of stock option awards is estimated using the Black-Scholes valuation model. For market based stock option awards, those options where vesting terms are dependent on achieving a specified stock price, the fair value was estimated using a Black-Scholes option pricing model with inputs adjusted for the probability of the vesting criteria being met and the median expected term for each grant as determined by utilizing a Monte Carlo simulation. Expected volatility is based solely on historical volatility of our common stock over the period commensurate with the expected term of the stock options. We rely solely on historical volatility as we do not have traded options. The expected term calculation for stock options is based on the simplified method as described in the Securities and Exchange Commission Staff Accounting Bulletin number 107. We use this method because we do not have sufficient historical information on exercise patterns to develop a model for expected term. The risk-free interest rate is based on the U. S. Treasury yield in effect at the time of grant for an instrument with a maturity that is commensurate with the expected term of the stock options. The dividend yield rate of zero is based on the fact that we have never paid cash dividends on our common stock and we do not expect to pay cash dividends on our common stock during the expected term of the options. The following table provides information about options during the years ended June 30: 2016 2015 Number of options granted Compensation expense recognized $ $ Compensation cost capitalized — — Weighted average grant-date fair value of options outstanding $ $ The following table details the significant assumptions used to compute the fair market values of employee and director stock options granted during the years ended June 30: 2016 2015 Risk-free interest rate 0.36 - 1.01 % 0.07 - 0.93 % Dividend yield % % Volatility factor 109 - 148 % 65 - 216 % Expected life (years) 0.5 - 2.875 0.5 - 2.875 Summary information regarding employee stock options issued and outstanding under all plans as of June 30, 2016 is as follows: Options Weighted Aggregate Weighted Options outstanding at July 1, 2014 $ $ Granted Exercised — — Forfeited ) Expired ) Options outstanding at June 30, 2015 $ $ — Granted Exercised — — Forfeited ) Expired ) Options outstanding at June 30, 2016 $ $ — Options exercisable at June 30, 2016 $ $ — Options outstanding and exercisable as of June 30, 2016 Exercise Price Outstanding Remaining Life Exercisable $0.42 - 4.00 1 year $0.42 - 4.00 2 years $0.42 - 4.00 3 years $0.42 - 4.00 4 years $0.42 - 4.00 5 years — $4.01 - 10.00 1 year $4.01 - 10.00 2 years $4.01 - 10.00 3 years $4.01 - 10.00 4 years $10.01 - 20.00 1 year $10.01 - 20.00 4 years $20.01 - 30.00 1 year $20.01 - 30.00 4 years $30.01 - 40.00 1 year $30.01 - 40.00 5 years $40.01 - 50.00 5 years Options outstanding and exercisable as of June 30, 2015 Exercise Price Outstanding Remaining Life Exercisable $0.90 - 4.00 1 year $0.90 - 4.00 3 years $0.90 - 4.00 4 years $0.90 - 4.00 5 years — $4.01 - 10.00 1 year $4.01 - 10.00 2 years $4.01 - 10.00 3 years $4.01 - 10.00 5 years $10.01 - 20.00 1 year $10.01 - 20.00 2 years $10.01 - 20.00 5 years $20.01 - 30.00 1 year $20.01 - 30.00 2 years $20.01 - 30.00 5 years $30.01 - 40.00 1 year $30.01 - 40.00 6 years $40.01 - 50.00 1 year $40.01 - 50.00 6 years At June 30, 2016, there was $31 thousand of unrecognized compensation costs related to non-vested share based compensation arrangements granted to employees under the plans. During 2016, a total of 449,904 options, with a weighted average grant date fair value of $1.10 per share, vested in accordance with the underlying agreements. Unvested options at June 30, 2016 totaled 97,601 with a weighted average grant date fair value of $5.50, an amortization period of one to two years and a weighted average remaining life of 4.91 years. At June 30, 2015, there was $0.4 million of unrecognized compensation costs related to non-vested share based compensation arrangements granted to employees under the plans. During 2015, a total of 377,274 options, with a weighted average grant date fair value of $3.76 per share, vested in accordance with the underlying agreements. Unvested options at June 30, 2015 totaled 427,826 with a weighted average grant date fair value of $10.95, an amortization period of one to two years and a weighted average remaining life of 4.83 years. Restricted Stock The fair value of restricted stock awards classified as equity awards is based on the Company's stock price as of the date of grant. Such awards do not grant any rights as a shareholder of the company until a certificate for the vested shares of common stock has been issued. During the year ended June 30, 2015, all such awards were forfeited with compensation expense forfeiture credits of approximately $46 thousand recorded. No new grants have been issued, and none are outstanding at June 30, 2016. Warrants The exercise price of the warrants may be adjusted in the case of stock splits, stock dividends or combinations of shares, or in the event the Company issues rights, options or warrants to all holders of the Company's common stock with an exercise or purchase price less than the volume weighted average price of the Company's shares on the record date. The warrants are considered indexed to our common stock and therefore are not considered a derivative. The fair value of the warrants was determined using the Black-Scholes option pricing model. The last of the previously granted outstanding warrants expired in October 2015, and there were no warrants granted or exercised in the years ended June 30, 2016 and 2015. Accordingly, there were no warrants outstanding at the year ended June 30, 2016 Summary information regarding common stock warrants issued and outstanding as of June 30, 2015 is as follows: Warrants Weighted Aggregate Weighted Outstanding at year ended June 30, 2014 $ $ — Granted — — Exercised — — Expired ) Outstanding at year ended June 30, 2015 $ $ — Warrants outstanding and exercisable as of June 30, 2015 Exercise Outstanding Remaining Life Exercisable $12.64 0.30 year |
INCOME TAXES68
INCOME TAXES | 6 Months Ended | 12 Months Ended |
Dec. 31, 2016 | Jun. 30, 2016 | |
INCOME TAXES | ||
INCOME TAXES | 5. INCOME TAXES Federal income taxes are not due as we have had losses since inception. Our effective tax rate for the six month periods ended December 31, 2016 and 2015 is 0%. This rate is lower than the U.S. statutory rate of 35% primarily due to the valuation allowance applied against our net deferred tax assets. | 5. INCOME TAXES Federal Income taxes are not currently due since Hyperdynamics has had losses since inception. Components of deferred tax assets as of June 30, 2016 and 2015 are as follows (in thousands): 2016 2015 Current deferred tax assets: Other current deferred tax assets $ — $ — Total current temporary differences — — Less: valuation allowance — — Net current deferred tax assets $ — $ — Non-current deferred tax assets Stock compensation $ $ Property and Equipment Oil and gas properties Capital loss Total non-current deferred tax assets $ $ Non-current deferred tax liabilities Property and Equipment — — Net operating losses Less: valuation allowance ) ) Net non-current deferred tax assets (liabilities) $ — $ — Deferred tax assets have been fully reserved due to determination that it is more likely than not that the Company will not be able to realize the benefit from them. In accordance with generally accepted accounting principles, no deferred income tax asset has been recognized for the $118 million excess of the income tax basis in SCS, the Company's Cayman Island operating subsidiary, over the book basis of the subsidiary. This potential tax benefit will only be fully realized if the subsidiary or the Concession is sold at a taxable gain, subject to potential tax limitations. Hyperdynamics has U.S. net operating loss carryforwards of approximately $115.8 million at June 30, 2016. The U.S. net operating losses contain excess tax benefits related to stock compensation in the amount of $2.2 million which have not been included in the financial statements. Internal Revenue Code Section 382 restricts the ability to use these carryforwards whenever an ownership change, as defined, occurs. Hyperdynamics incurred such an ownership change on January 14, 1998 and again on June 30, 2001. As a result of the first ownership change, Hyperdynamics' use of net operating losses as of January 14, 1998, of $949,000, is restricted to $151,000 per year. The availability of losses from that date through June 30, 2001 of $3,313,000 is restricted to $784,000 per year. The Company underwent a restructuring during fiscal 2012 that removed approximately $13.2 million of net operating losses from the U.S. consolidated tax return. It is unlikely that the entity where these net operating losses reside will ever generate U.S. taxable income sufficient to utilize any of these losses. Due to the existence of the valuation allowance, it is not expected that any possible limitation will have an impact on the results of operations or financial position of the Company. The U.S. net operating loss carryforwards expire from 2020 to 2035. The difference between the statutory tax rates and our effective tax rate is primarily due to the valuation allowance applied against our deferred tax assets generated by net operating losses. A reconciliation of the actual taxes to the U.S. statutory tax rate for the years ended June 30, 2016 and 2015 is as follows (in thousands): 2016 2015 Income tax (benefit) at the statutory federal rate (35%) $ ) $ ) Increase (decrease) resulting from nondeductible stock compensation Foreign Rate Differential Other, net Change in valuation allowance Net income tax expense $ — $ — The following table summarizes the activity related to our gross unrecognized tax benefits from July 1, 2014 to June 30, 2016 (in thousands): Federal, State and (In thousands) Balance at July 1, 2014 $ Additions to tax positions related to the current year — Additions to tax positions related to prior years — Statute expirations — Balance at June 30, 2015 $ Additions to tax positions related to the current year — Additions to tax positions related to prior years — Statute expirations — Balance at June 30, 2016 $ The total unrecognized tax benefits that, if recognized, would affect our effective tax rate was $5,485,000 for the years ended June 30, 2016 and June 30, 2015. We file income tax returns, including tax returns for our subsidiaries, with federal, state, local, and foreign jurisdictions. Our tax returns are subject to routine compliance review by the taxing authorities in the jurisdictions in which we file tax returns in the ordinary course of business. We consider the United States to be our most significant tax jurisdiction; however, the taxing authorities in Guinea may audit various tax returns. We currently have no ongoing federal or state audits. The normal statute of limitations for tax returns being available for IRS audit is three years from the filing date of the return. However, net operating losses are subject to adjustment upon utilization of the loss to offset taxable income regardless of when the net operating loss was generated. Therefore, all of our historic losses are subject to adjustment until they are utilized or expire. We do not believe there will be any decreases to our unrecognized tax benefits within the next twelve months. |
COMMITMENTS AND CONTINGENCIES69
COMMITMENTS AND CONTINGENCIES | 6 Months Ended | 12 Months Ended |
Dec. 31, 2016 | Jun. 30, 2016 | |
COMMITMENTS AND CONTINGENCIES | ||
COMMITMENTS AND CONTINGENCIES | 6. COMMITMENTS AND CONTINGENCIES LITIGATION AND OTHER LEGAL MATTERS From time to time, we and our subsidiaries are involved in disputes. We review the status of on-going proceedings and other contingent matters with legal counsel. Liabilities for such items are recorded if and when it is probable that a liability has been incurred and when the amount of the liability can be reasonably estimated. If we are able to reasonably estimate a range of possible losses, an estimated range of possible loss is disclosed for such matters in excess of the accrued liability, if any. Liabilities are periodically reviewed for adjustments based on additional information. Iroquois Lawsuit On May 9, 2012, a lawsuit was filed in the Supreme Court of the State of New York against us and all of our directors. The plaintiffs, five hedge funds that invested in us in early 2012, alleged that we breached an agreement with the plaintiffs, and that we and the directors made certain negligent misrepresentations relating to our drilling operations. Among other claims, the plaintiffs alleged that we misrepresented the status of our drilling operations and the speed with which the drilling would be completed. The plaintiffs' advanced claims for breach of contract and negligent misrepresentation and sought damages in the amount of $18.5 million plus pre-judgment interest. On July 12, 2012, we and the directors moved to dismiss the suit for failure to state a claim as to all defendants and for lack of personal jurisdiction over the director defendants. On June 19, 2013, the court dismissed the negligent misrepresentation claim but declined to dismiss the breach of contract claim. The negligent misrepresentation claim was dismissed without prejudice, meaning plaintiffs could attempt to refile it. On August 12, 2013, the plaintiffs filed an amended complaint. That complaint named only the Company and sought recovery for alleged breaches of contract. We filed an answer to the plaintiffs' amended complaint on September 9, 2013, and the court entered a scheduling order governing pre-trial proceedings in the matter. On December 31, 2016 we entered into a settlement agreement with the plaintiffs whereby Hyperdynamics will issue to the plaintiffs a total of 600,000 new shares of common stock, and it will cause a payment to be made of $1.35 million in cash that will be covered under its directors' and officers' insurance policy.The liability for the issuance of the shares was recorded to "liability for legal settlement" in the amount of $1.3 million based on the $2.18 December 30, 2016 closing price of our common stock. The plaintiffs are restricted from selling the shares before April 1, 2017 under the terms of the agreement. The shares of common stock were issued on February 2, 2017, whereby the issuance of those shares will be recorded to "Common Stock" and "Additional paid in capital" and the liability for legal settlement will be cleared. Shareholder Lawsuits Beginning on March 13, 2014, two lawsuits styled as class actions were filed in the U.S. District Court for the Southern District of Texas against us and several then-current officers of the Company alleging that the Company made false and misleading statements that artificially inflated the Company's stock prices. The lawsuits alleged, among other things, that the Company misrepresented its compliance with the Foreign Corrupt Practices Act and anti-money laundering statutes and that it lacked adequate internal controls. The lawsuits sought damages based on Sections 10(b) and 20 of the Securities Exchange Act of 1934, although the specific amount of damages is not specified. On May 12, 2014, a shareholder filed a motion for appointment as lead plaintiff. Both of the March 2014 lawsuits were dismissed voluntarily. One was dismissed during the quarter ended September 30, 2016 and the second on October 6, 2016. Tullow and Dana Legal Actions On January 11, 2016, we filed legal actions against members of the Consortium under the Joint Operating Agreement governing the oil and gas exploration rights offshore Guinea ("JOA") in the United States District Court for the Southern District of Texas and before the American Arbitration Association ("AAA") against Tullow for their failure to meet their obligations under the JOA. On January 28, 2016, the action in the Federal District Court was voluntarily dismissed by us and refiled in District Court in Harris County, Texas. On February 8, 2016 Tullow and Dana removed the case to Federal District Court. On February 2, 2016, SCS filed an Application for Emergency Arbitrator and Interim Measures of Protection and requested the following relief: (a) expedite discovery prior to the constitution of the arbitral tribunal; (b) provide that the time period permitted by the parties' arbitration agreement for the selection of the arbitrators and the filing of any responsive pleadings or counterclaims be accelerated; (c) require Tullow, as the designated operator under the JOA, to maintain existing "well-planning activities"; (d) require Tullow to undertake and complete certain planning activities; and (e) require Tullow and Dana to join with SCS in completing the negotiation of an acceptable amendment to the PSC and to agree to a process that will result in the execution of the amendment. With the exception of limited relief regarding discovery and agreement by Tullow to maintain certain well plan readiness, the Emergency Arbitrator ruled on February 17, 2016, that SCS was not entitled to the emergency injunctive relief it requested. Further, the Emergency Arbitrator enjoined all parties to the dispute from pursuing parallel District Court proceedings. On February 12, 2016, the case was voluntarily stayed by us. The AAA action sought (1) a determination that Tullow and Dana was in breach of their contractual obligations and (2) the damages caused by the repeated delays in well drilling caused by the activities of Tullow and Dana. We determined to bring the legal actions only after it became apparent that Tullow and Dana would not move forward, despite many opportunities to do so, with petroleum operations. SCS believed that it had exhausted all of its options for the pursuit of legal measures to require Tullow and Dana to drill the planned exploration well. On August 15, 2016, we subsequently entered into a Settlement and Release Agreement with Tullow and Dana ("Settlement and Release") with respect to our dispute in arbitration. Under the Settlement and Release, we released all claims against Tullow and Dana and Tullow and Dana (i) issued to the Government of Guinea a notice of withdrawal from the Concession and PSC effective immediately, (ii) transferred their interest in the long lead items of well construction material previously purchased by the Consortium in preparation for the initial drilling of the Fatala well, and agreed to pay net cash of $686,570 to us. The net cash received was recorded as a part of the gain on the legal settlement. We also agreed to pay Dana a success fee based upon the certified reserves of the Fatala well if it results in a discovery of commercially producible oil and gas reserves. The $4.8 million gain on legal settlement also includes the estimated fair value of $4.1 million for the well construction material we received from Tullow as a part of our Settlement and Release Agreement. COMMITMENTS AND CONTINGENCIES Operating Leases We lease office space under long-term operating leases with varying terms. Most of the operating leases contain renewal and purchase options. We expect that in the normal course of business, most of the operating leases will be renewed or replaced by other similar leases. During the three months period ended December 31, 2016 and as a part of our program to begin drilling operations in Guinea, we entered into a lease for in-country offices and nearby apartments. The leases are for six months with options to renew as necessary and collectively cost about $30 thousand per month. The following is a schedule by years of minimum future rental payments required under operating leases that have initial or remaining non-cancellable lease terms in excess of one year (in thousands): Years ending June 30: 2017 $ 2018 2019 2020 2021 and thereafter — Total minimum payments required $ Rent expense included in net loss from operations for the three month periods ended December 31, 2016 and 2015 was $0.1 million in each period. Rent expense included in net loss from operations for the six month periods ended December 31, 2016 and 2015 was $0.2 million and $0.3 million respectively, in each period. | 8. COMMITMENTS AND CONTINGENCIES LITIGATION AND OTHER LEGAL MATTERS From time to time, we and our subsidiaries are involved in disputes. We are unable to predict the outcome of such matters when they arise. We review the status of on-going proceedings and other contingent matters with legal counsel. Liabilities for such items are recorded if and when it is probable that a liability has been incurred and when the amount of the liability can be reasonably estimated. If we are able to reasonably estimate a range of possible losses, an estimated range of possible loss is disclosed for such matters in excess of the accrued liability, if any. Liabilities are periodically reviewed for adjustments based on additional information. Tullow and Dana Legal Actions On January 11, 2016, we filed legal actions against members of the Consortium under the Joint Operating Agreement governing the oil and gas exploration rights offshore Guinea ("JOA") in the United States District Court for the Southern District of Texas and before the AAA against Tullow for their failure to meet their obligations under the JOAC. On January 28, 2016, the action in the Federal District Court was voluntarily dismissed by us and refiled in District Court in Harris County, Texas. On February 8, 2016 Tullow and Dana removed the case to Federal District Court. On February 2, 2016, SCS filed an Application for Emergency Arbitrator and Interim Measures of Protection and requested the following relief: (a) expedite discovery prior to the constitution of the arbitral tribunal; (b) provide that the time period permitted by the parties' arbitration agreement for the selection of the arbitrators and the filing of any responsive pleadings or counterclaims be accelerated; (c) require Tullow, as the designated operator under the JOA, to maintain existing "well-planning activities"; (d) require Tullow to undertake and complete certain planning activities; and (e) require Tullow and Dana to join with SCS in completing the negotiation of an acceptable amendment to the PSC and to agree to a process that will result in the execution of the amendment. With the exception of limited relief regarding discovery and agreement by Tullow to maintain certain well plan readiness, the Emergency Arbitrator ruled on February 17, 2016, that SCS is not entitled to the emergency injunctive relief it requested. Further, the Emergency Arbitrator enjoined all parties to the dispute from pursuing parallel District Court proceedings. On February 12, 2016, the case was voluntarily stayed by us. The AAA action sought (1) a determination that Tullow and Dana are in breach of their contractual obligations and (2) the damages caused by the repeated delays in well drilling caused by the activities of Tullow and Dana. We determined to bring the legal actions only after it became apparent that Tullow and Dana would not move forward, despite many opportunities to do so, with petroleum operations. Subsequently, on August 15, 2016, we entered into a Settlement and Release Agreement with Tullow and Dana ("Settlement and Release") with respect to our dispute in arbitration (American Arbitration Association, Case No: 01-16-0000-0679, styled SCS Corporation Ltd v. Tullow Guinea Ltd. and Dana Petroleum (E&P) Ltd.). Under the Settlement and Release, we released all claims against Tullow and Dana and Tullow and Dana (i) issued to the Government of Guinea a notice of withdrawal from the Concession and PSC effective immediately, (ii) transferred their interest in the long lead items previously purchased by the Consortium in preparation for the drilling of the Fatala well, and agreed to pay net cash of $686,570 to us. We also agreed to pay Dana a success fee based upon the certified reserves of the Fatala well if it results in a discovery. We will record the long lead items and a gain once they have been inspected and appropriately valued. Shareholder Lawsuits Beginning on March 13, 2014, two lawsuits styled as class actions were filed in the U.S. District Court for the Southern District of Texas against us and several then-current officers of the Company alleging that we made false and misleading statements that artificially inflated our stock prices. The lawsuits allege, among other things, that we misrepresented our compliance with the Foreign Corrupt Practices Act and anti-money laundering statutes and that we lacked adequate internal controls. The lawsuits seek damages based on Sections 10(b) and 20 of the Securities Exchange Act of 1934, although the specific amount of damages is not specified. On May 12, 2014, a shareholder filed a motion for appointment as lead plaintiff, which remains pending. One of the March 2014 lawsuits has now been dismissed voluntarily, and the parties to the remaining suit await the issuance of a scheduling order in that matter. We have assessed the status of the remaining March 2014 lawsuit and have concluded that an adverse judgment remains reasonably possible, but not probable. As a result, no provision has been made in the consolidated financial statements. We are unable to estimate a range of possible loss; however, in our opinion, the outcome of this dispute will not have a material effect on our financial condition and results of operations. In addition, we have received demands from shareholders to inspect our books and records. Iroquois Lawsuit On May 9, 2012, a lawsuit was filed in the Supreme Court of the State of New York against us and all of our directors. The plaintiffs, five hedge funds that invested in us in early 2012, allege that we breached an agreement with the plaintiffs, and that we and the directors made certain negligent misrepresentations relating to our drilling operations. Among other claims, the plaintiffs allege that we misrepresented the status of our drilling operations and the speed with which the drilling would be completed. The plaintiffs advance claims for breach of contract and negligent misrepresentation and seek damages in the amount of $18.5 million plus pre-judgment interest. On July 12, 2012, we and the directors moved to dismiss the suit for failure to state a claim as to all defendants and for lack of personal jurisdiction over the director defendants. On June 19, 2013, the court dismissed the negligent misrepresentation claim but declined to dismiss the breach of contract claim. The negligent misrepresentation claim was dismissed without prejudice, meaning plaintiffs could attempt to refile it. On August 12, 2013, the plaintiffs filed an amended complaint. That complaint names only us and seeks recovery for alleged breaches of contract. We filed an answer to the plaintiffs' amended complaint on September 9, 2013, and the court has entered a scheduling order governing pre-trial proceedings in the matter. The maximum possible loss is the full amount of $18.5 million plus interest accrued thereon until judgment. We, however, have assessed the status of this matter and have concluded that although an adverse judgment is reasonably possible, it is not probable. As a result, no provision has been made in the consolidated financial statements. In our opinion, the outcome of this dispute will not have a material effect on our financial condition and results of operations. COMMITMENTS AND CONTINGENCIES Operating Leases We lease office space under long-term operating leases with varying terms. Most of the operating leases contain renewal and purchase options. We expect that in the normal course of business, the majority of operating leases will be renewed or replaced by other leases. The following is a schedule by years of minimum future rental payments required under operating leases that have initial or remaining non-cancellable lease terms in excess of one year as of June 30, 2016 (in thousands): Years ending June 30: 2017 $ 2018 2019 2020 Total minimum payments required $ Rent expense included in loss from operations for the years ended June 30, 2016 and 2015 was $0.4 million and $0.3 million, respectively in each year. |
SUBSEQUENT EVENTS70
SUBSEQUENT EVENTS | 6 Months Ended | 12 Months Ended |
Dec. 31, 2016 | Jun. 30, 2016 | |
SUBSEQUENT EVENTS | ||
SUBSEQUENT EVENTS | 7. SUBSEQUENT EVENTS Issuance of Common Stock and Payment of Cash by Insurers: Settlement of Iroquois Lawsuit On January 11, 2017 a payment of $1.35 million was made by the insurance underwriters of the Company's directors' and officers' insurance policy to the hedge funds in the Iroquois lawsuit on behalf of the Company. On February 2, 2017 the Company issued 600,000 shares of its common stock to the hedge funds named in the settlement agreement. On December 31, 2016 we had entered into a settlement agreement with the five hedge funds in the Iroquois lawsuit. Under the terms of the settlement agreement, Hyperdynamics would issue to the plaintiffs a total of 600,000 shares of new common stock, and it would cause a payment to be made of $1.35 million in cash that would be covered under its directors' and officers' insurance policy. The plaintiffs are restricted from selling the shares of common stock before April 1, 2017 under the terms of the agreement. Certain requirements under the PSC On January 24, 2017 the Company requested and received a notification letter from the General Director of the National Petroleum Office of the Republic of Guinea, informing the Company that the Republic of Guinea granted a postponement to provide a mutually acceptable security of $5.0 million to February 20, 2017 as well as a clarification regarding the timing of the $46.0 million security payment under Article 4.2 of the 2016 PSC Amendment until the work on the Fatala well is completed. On March 1, 2017, the Republic of Guinea has issued a reservation of rights letter asserting the Company has not satisfied its obligation to deposit mutually acceptable security of $5.0 million. On March 30, 2017, SCS entered into a Farmout Agreement (the "Farmout Agreement") with SAPETRO, pursuant to the terms of which, and subject to certain conditions therein, SCS will assign and transfer to SAPETRO 50% of its 100% gross participating interest in the PSC and the Joint Operating Agreement (as defined below). Pursuant to the terms of the Farmout Agreement, upon closing, SAPETRO will (i) reimburse SCS its proportional share of past costs associated with the preparations for the drilling of the Fatala-1 well, and (ii) pay its participating interest's share of future costs in the Concession. Currently the total amount of costs spent by SCS after the date of the Second PSC Amendment in relation to the preparation of drilling of the Fatala-1 well is estimated at approximately $8-10 million depending on the timing of the completion of the Farmout Agreement and upon approval of the Guinea government. The parties have agreed to close on or before May 31, 2017, unless the Farmout Agreement is previously terminated due to parties' failure to satisfy the closing conditions, by mutual agreement of the parties. On April 12, 2017 SCS, SAPETRO and Guinea executed a Third Amendment to the PSC (the "Third PSC Amendment") that was subject to the receipt of a Presidential Decree and the closing of the Farmout Agreement. We received a Presidential Decree on April 21, 2017 approving the assignment of 50% of SCS' participating interest in the Guinea concession to SAPETRO, and it confirms the two companies' rights to explore for oil and gas on our 5,000-square-kilometer Concession offshore the Republic of Guinea. The contract requires that drilling operations in relation to the obligation well Fatala-1 (the "Extension Well") shall begin no later than May 30, 2017 and provides that additional exploration wells may be drilled within the exploration period at the companies' option. The Third PSC Amendment further reaffirms clear title of SAPETRO and SCS to the Concession as well as amends the security instrument requirements under the PSC. SCS and SAPETRO agreed to a US $5 million security instrument to be put in place within 30 days from the date of the Presidential Decree. The security instrument will be released at such time that the drilling rig to be used in the drilling of the extension well is located in the shelf waters of the Republic of Guinea, including its territorial waters. Pursuant to the terms of the Protocol, SAPETRO will provide the $5 million security instrument upon Government of Guinea approval to enter the Concession and completion of the Farmout Agreement. SCS and SAPETRO agreed to joint and several liability to the Government of Guinea in respect to the PSC. In addition SCS and SAPETRO separately agreed that SCS's "sufficient financing for the Obligation Well Costs" as defined in the Farmout Agreement will be $15 million in "cash and committed financing to the satisfaction of SAPETRO acting reasonably" in addition to costs already incurred. SAPETRO and SCS further agreed that SAPETRO may elect to pay for a portion of SCS's Fatala-1 well costs so long as SCS is not in default of either the PSC or the Farmout Agreement and requires credit support. In case SAPETRO makes such payments for a share of SCS's costs of, SCS shall assign to SAPETRO 2% of its participating interest in the Concession for each $ 1 million of SCS's costs paid by SAPETRO. OTC Markets Group Listing Requirements and Delinquency Notice On February 27, 2017 the OTC Markets Group determined that the Company was delinquent in filing its SEC Form 10-Q for the Quarter ended December 31, 2016. The Company was advised that it had until March 29, 2017, a thirty day period, to correct the deficiency. If the Company is unable to correct the deficiency or provide an acceptable plan to comply with the requirement to timely file its ongoing disclosure obligations, the OTC Markets Group will remove the Company from OTCQX U.S. to OTC Pink on March 30, 2017. The filing of Form 10-Q on March 3, 2017 cured this delinquency. Series A Preferred Stock Offering Between March 17 and April 26, 2017, the Company held four closings of a private placement offering (the "Series A Offering") of an aggregate of 1,951 Units of its securities, at a purchase price of $1,000 per Unit. Each "Unit" consisted of (i) one share of the Company's Series A Preferred Stock, with a Stated Value of $1,040 per share, and (ii) a warrant (the "Investor Warrant") to purchase 223 shares of the Company's common stock, exercisable from issuance until March 17, 2019, at an exercise price of $3.50 per share (subject to adjustment in certain circumstances). At the closings, the Company issued to the subscribers an aggregate of: (i) 1,951 shares of Series A Preferred Stock and (ii) Investor Warrants to purchase an aggregate of 435,073 shares of common stock. The Company received an aggregate of $1,951,000 in gross cash proceeds, before deducting placement agent fees and expenses, and legal, accounting and other fees and expenses, in connection with the sale of the Units. Subscribers in the Series A Offering have an option (the "Subscriber Option") to purchase, at the same purchase price of $1,000 per Unit, their pro rata share of up to an aggregate of $3,000,000 in additional Units following the effective date of the registration statement registering for resale the shares of common stock issuable upon conversion of the Series A Preferred Stock and exercise of the Investor Warrants and Placement Agent Warrants (as defined below), which the Company have agreed to file as described below (the "Registration Statement"). The Company also agreed in the Subscription Agreements that until March 17, 2018, the Company will not create or allow to be created any security interest, lien, charge or other encumbrance on any of its or its subsidiaries' rights under or interests in the PSC that secures the repayment of indebtedness of the Company or any of its subsidiaries for money borrowed. The Certificate of Designation for the Series A Preferred Stock provides that: • Each holder of Series A Preferred Stock is entitled to receive dividends payable on the Stated Value of such Series A Preferred Stock at the rate of 1% per annum, which shall be cumulative and be due and payable in common stock on the applicable conversion date or in cash in the case of a redemption of the Series A Preferred Stock by the Company. • Shares of Series A Preferred Stock are redeemable, in whole or in part, at the option of the Company, in cash, at a price per share equal to 115% of the Stated Value plus 115% of accrued but unpaid dividends. • In the event of any liquidation, dissolution or winding up of the Company, holders of Series A Preferred Stock will be entitled to receive, out of assets available therefor, an amount equal to 115% of the Stated Value of their shares plus 115% of any accrued but unpaid dividends. • The Series A Preferred Stock is convertible at the option of the holder, in whole or in part, into shares of common stock at any time after the earlier of (i) the date the Registration Statement is declared effective by the SEC or (ii) September 17, 2017. If no conversion has taken place by December 17, 2017, the Series A Preferred Stock, plus any accrued but unpaid dividends, will automatically convert into shares of common stock. The conversion price per share of common stock in either event is the lesser of (i) $2.75 per share (subject to adjustment in certain circumstances), or (ii) 80% of the lowest closing price during 21 consecutive trading days ending on the trading day immediately prior to the conversion date, subject to a floor of $0.25 per share (which floor is subject to "full ratchet" adjustment in certain circumstances if the Company issues common stock (or common stock equivalents) in the aggregate amount of not less than $1,000,000 at a price below $0.25 per share of common stock, and to proportionate adjustment in certain other circumstances). • Except in certain limited circumstances affecting the rights of the holders of Series A Preferred Stock or as required by law, holders of the Series A Preferred Stock will not have voting rights. • Until September 17, 2017, the Company will not authorize or create any class of stock ranking as to dividends, redemption or distribution of assets upon a liquidation senior to the Series A Preferred Stock, without the consent of holders of no less than 66 2 / 3 % of the then-outstanding shares of Series A Preferred Stock. A U.S. registered broker-dealer (the "Placement Agent") was engaged by the Company as placement agent for the Series A Offering, on a reasonable best effort basis. The Company agreed to pay to the Placement Agent (and any sub agent) a cash commission of 9% of the gross purchase price paid by the Subscribers for the Units (including for Units that may be issued upon exercise of the Subscriber Option), and to issue to the Placement Agent (and any sub agent) warrants to purchase a number of shares of common stock equal to 7% of the number of shares of common stock initially issuable upon conversion of the shares of Series A Preferred Stock contained in the Units sold in Series A Offering (including Units that may be issued upon exercise of the Subscriber Option), at the exercise price of $3.00 per share (the "Placement Agent Warrants"). The Company also agreed to reimburse the Placement Agent for certain expenses related to the Series A Offering. The Company paid the Placement Agent a total of $175,590 of cash fees and issued to the Placement Agent or its designees Placement Agent Warrants to purchase an aggregate of 51,650 shares of common stock. The Investor Warrants and the Placement Agent Warrants have provisions for the "weighted average" adjustment of their exercise price in the event that the Company issue shares of common stock (or common stock equivalents) for a consideration per share less than the exercise price then in effect, subject to certain exceptions. In connection with the Series A Offering, the Company entered into a Registration Rights Agreement with each of the subscribers for the Series A Preferred Stock and the holders of the Placement Agent Warrants, which requires the Company to file a Registration Statement with the SEC by May 1, 2017, registering for resale (i) all shares of common stock issued or issuable upon conversion of the Series A Preferred Stock (including any shares of Series A Preferred Stock issued pursuant to the Subscriber Option described under "Management's Discussion and Analysis of Financial Condition and Results of Operations—Series A Preferred Stock Offering" above), and (ii) all shares of common stock issued or issuable upon exercise of the Investor Warrants (including any Investor Warrants issued pursuant to the Subscriber Option described above) and the Placement Agent Warrants (including any that may be issued upon exercise of the Subscriber Option), and to use its commercially reasonable efforts to cause the Registration Statement to be declared effective no later than July 29, 2017. If the Registration Statement is not declared effective by, the SEC within the specified deadline set forth above, or the Registration Statement ceases to be effective or otherwise cannot be used for a period specified in the Registration Rights Agreement, or trading of the common stock on the Company's principal market is suspended or halted for more than three consecutive trading days (each, a "Registration Event"), monetary penalties payable by the Company to the holders of registrable shares that are affected by such Registration Event will commence to accrue at a rate equal to 12% per annum of the purchase price paid for each Unit purchased, for the period that such Registration event continues, but not exceeding in the aggregate 5% of such purchase price. The Company has agreed to use its commercially reasonable efforts to keep the Registration Statement effective until the earliest of (a) the date that is two years from the date it is declared effective by the SEC, (b) the date on which all the securities registered hereunder have been transferred other than to certain permitted assignees, and (c) the date as of which all of the selling stockholders may sell all of the securities registered hereunder without restriction pursuant to SEC Rule 144 (including, without limitation, volume restrictions) and without the need for current public information required by Rule 144(c)(1) or Rule 144(i)(2), if applicable. The Company also granted to the holders of the registrable shares certain "piggyback" registration rights until two years after the effectiveness of the Registration Statement. | 9. SUBSEQUENT EVENTS On August 15, 2016, we entered into a Settlement and Release Agreement with Tullow and Dana ("Settlement Agreement") that gave us 100% of the interest under the PSC, property useful in the drilling of an exploratory well, and cash, in return for a mutual release of all claims. We will record the property received and a gain once they have been inspected and appropriately valued. On August 19, 2016, we signed a non-binding Memorandum of Understanding with the Government of Guinea and executed a Second Amendment to the PSC ("2016 Amendment") on September 15, 2016. As more fully described below, upon receipt of a Presidential Decree, the 2016 Amendment will give us a one year extension to the second exploration period of the PSC to September 22, 2017 ("PSC Extension Period"). In addition to clarifying certain elements of the PSC, we agreed in the 2016 Amendment to drill one (1) exploratory well to a minimum depth of 2,500 meters below the seabed within the PSC Extension Period with a projected commencement date of April 2017 (the "Extension Well") with the option of drilling additional wells. If the Extension Well is not drilled within the PSC Extension Period, we will owe the Government of Guinea the difference between the actual expenditures in Guinea related to the well and $46,000,000. Fulfillment of the work obligations exempts us from the expenditure obligations during the PSC Extension Period. In turn, we will retain only an area equivalent to approximately 5,000 square kilometers in the Guinea offshore and will provide the Government of Guinea: (1) A parent company guarantee for the well obligation, (2) monthly progress reports and a reconciliation of budget to actual expenditures, (failure to provide the reports and assurances on a timely basis in a notice of termination with a 30 day period to cure), and (3) guarantees to Guinea that (a) no later than January 21, 2017 we will provide a mutually acceptable security for $5,000,000 on terms customary in international petroleum operations, provided that this security is to be released at the time the drilling rig for the Extension Well is on location offshore Guinea, and (b) no later than April 12, 2017, we will deliver a mutually acceptable security for the difference between $46,000,000 and the amount spent to date on the Extension Well. For the purposes of calculation for this clause, however, only costs spent for services and goods provided in Guinea shall be taken into account until the drilling rig to be used in the drilling of the Extension Well is located in the territorial waters of the Republic of Guinea. If we do not provide either security by the specified dates, the Government of Guinea may terminate the PSC immediately and without prior notice to remedy such deficiency. Additionally, we agreed to limit the cost recovery pool to date to our share of expenditures in the PSC since 2009 (estimated to be approximately $150,000,000) and move into the territory of Guinea the long lead items we received in the Settlement Agreement that are currently in Takoradi, Ghana for the drilling of the Extension Well by January 31, 2017. Finally, we agreed to allocate and administer a training budget during the PSC Extension Period for the benefit of the Guinea National Petroleum Office of $250,000 in addition to any unused portion of the training program under Article 10.3 of the PSC, estimated to be approximately $500,000. Failure to comply with the drilling and other obligations of the PSC as amended subjects us to financial penalties and a risk of loss of the Concession. The continued delays have affected adversely the ability to explore the Concession and reduces the attractiveness of the Concession to prospective industry participants and financing sources. While we currently hold 100% of the Concession, it is unknown whether we will be able to raise the necessary funds to drill the exploratory well during the PSC Extension Period. |
ORGANIZATION AND SIGNIFICANT 71
ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES (Policies) | 6 Months Ended | 12 Months Ended |
Dec. 31, 2016 | Jun. 30, 2016 | |
ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES | ||
Principles of consolidation | Principles of consolidation The accompanying unaudited condensed consolidated financial statements include the accounts of Hyperdynamics and its direct and indirect wholly-owned subsidiaries. All intercompany accounts and transactions have been eliminated in consolidation. The financial statements have been prepared in accordance with accounting principles generally accepted in the United States and the rules of the Securities and Exchange Commission, and should be read in conjunction with the audited financial statements and notes thereto for the fiscal year ended June 30, 2016 presented above. In the opinion of management, all adjustments, consisting of normal recurring adjustments, necessary for a fair presentation of financial position and the results of operations for the interim periods presented have been reflected herein. The results of operations for interim periods are not necessarily indicative of the results to be expected for the full year. Notes to the financial statements which would substantially duplicate the disclosures contained in the audited financial statements for the most recent fiscal year ended June 30, 2016, have been omitted. | Principles of Consolidation The accompanying consolidated financial statements include the accounts of Hyperdynamics and its direct and indirect wholly-owned subsidiaries. All intercompany accounts and transactions have been eliminated in consolidation. The financial statements have been prepared in accordance with accounting principles generally accepted in the United States and the rules of the Securities and Exchange Commission (SEC). |
Use of estimates | Use of estimates The preparation of the consolidated financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities and expenses at the balance sheet date and for the period then ended. We believe our estimates and assumptions are reasonable; however, such estimates and assumptions are subject to a number of risks and uncertainties that may cause actual results to differ materially from such estimates. Significant estimates and assumptions underlying these financial statements include: • estimates in the calculation of share-based compensation expense, • estimates made in our income tax calculations, • estimates in the assessment of current litigation claims against the Company, • estimates and assumptions involved in our assessment of unproved oil and gas properties for impairment, and • estimates and assumptions involved in our fair market value assessment of the well construction equipment received in the August 15, 2016 Settlement Agreement with Tullow and Dana. We are subject, from time to time, to legal proceedings, claims, and liabilities that arise in the ordinary course of business. We accrue for losses when such losses are considered probable and the amounts can be reasonably estimated. | Use of Estimates The preparation of the consolidated financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities and expenses at the balance sheet date and for the period then ended. We believe our estimates and assumptions are reasonable; however, such estimates and assumptions are subject to a number of risks and uncertainties that may cause actual results to differ materially from such estimates. Significant estimates and assumptions underlying these financial statements include: • estimates in the calculation of share-based compensation expense, • estimates made in our income tax calculations, • estimates in the assessment of current litigation claims against the company, and • estimates and assumptions involved in our assessment of unproved oil and gas properties for impairment. We are subject to legal proceedings, claims, and liabilities that arise in the ordinary course of business. We accrue for losses when such losses are considered probable and the amounts can be reasonably estimated. |
Cash and cash equivalents | Cash and cash equivalents Cash equivalents are highly liquid investments with an original maturity of three months or less. For the periods presented, we maintained all of our cash in bank deposit accounts which, at times, exceed the federally insured limits. | Cash and cash equivalents Cash equivalents are highly liquid investments with an original maturity of three months or less. For the years presented, we maintained all of our cash in bank deposit accounts which, at times, exceed the federally insured limits. |
Earnings per share | Earnings per share Basic loss per common share has been computed by dividing net loss by the weighted average number of shares of common stock outstanding during each period. In period of earnings, diluted earnings per common share are calculated by dividing net income available to common shareholders by weighted-average common shares outstanding during the period plus weighted-average dilutive potential common shares. Diluted earnings per share calculations assume, as of the beginning of the period, exercise of stock options and warrants using the treasury stock method. All potential dilutive securities, including potentially dilutive options, warrants and convertible securities, if any, were excluded from the computation of dilutive net loss per common share for the three and six month periods ended December 31, 2016 and 2015, respectively, because their effects in the computation are antidilutive due to our net loss for those periods. Stock options to purchase approximately 1.2 million common shares at an average exercise price of $4.08 were outstanding at December 31, 2016. Using the treasury stock method, had we had net income, approximately 298,700 common shares attributable to our outstanding stock options would have been included in the fully diluted earnings per share for the three month period ended December 31, 2016 while approximately 182,200 common shares attributable to our outstanding stock options would have been included in the fully diluted earnings per share for the six month period ended December 31, 2016. Stock options to purchase approximately 1.0 million common shares at an average exercise price of $5.67 were outstanding at December 31, 2015. Using the treasury stock method, had we had net income, approximately 101,600 common shares attributable to our outstanding stock options would have been included in the fully diluted earnings per share for the three month period ended December 31, 2015 while approximately 50,800 common shares attributable to our outstanding stock options would have been included in the fully diluted earnings per share for the six month period ended December 31, 2015. | Earnings Per Share Basic loss per common share has been computed by dividing net loss by the weighted average number of shares of common stock outstanding during each period. In a period of earnings, diluted earnings per common share are calculated by dividing net income available to common shareholders by weighted-average common shares outstanding during the period plus weighted-average dilutive potential common shares. Diluted earnings per share calculations assume, as of the beginning of the period, exercise of stock options and warrants using the treasury stock method. All potential dilutive securities, including potentially dilutive options, warrants and convertible securities, if any, were excluded from the computation of dilutive net loss per common share for the years ended June 30, 2016, and 2015, respectively, as their effects are antidilutive due to our net loss for those periods. Stock options to purchase approximately 1.0 million common shares at an average exercise price of $5.03 were outstanding at June 30, 2016. Using the treasury stock method, had we had net income, approximately 25 thousand common shares attributable to our outstanding stock options would have been included in the fully diluted earnings per share for the year ended June 30, 2016. Stock options to purchase approximately 1.2 million common shares at an average exercise price of $7.43 and warrants to purchase approximately 0.03 million shares of common stock at an average exercise price of $12.64 were outstanding at June 30, 2015. Using the treasury stock method, had we had net income, approximately four hundred common shares attributable to our outstanding stock options would have been included in the fully diluted earnings per share calculation for the year ended June 30, 2015. There would have been no dilution attributable to our outstanding warrants to purchase common shares. Had we had net income, approximately four thousand common shares attributable to restricted stock awards would have been included in the fully diluted earnings per share for the year ended June 30, 2015. |
Contingencies | Contingencies We are subject to legal proceedings, claims and liabilities. We accrue for losses associated with legal claims when such losses are probable and can be reasonably estimated. These accruals are adjusted as additional information becomes available or circumstances change. Legal fees are charged to expense as they are incurred. See Note 6 for more information on legal proceedings and settlements. | Contingencies We are subject to legal proceedings, claims and liabilities. We accrue for losses associated with legal claims when such losses are probable and can be reasonably estimated. These accruals are adjusted as additional information becomes available or circumstances change. Legal fees are charged to expense as they are incurred. See Note 8 for more information on legal proceedings. |
Fair Value Measurements | Fair Value Measurements The accounting standards define fair value, establish a three-level valuation hierarchy for disclosures of fair value measurements and enhance disclosure requirements for fair value measures. As discussed in Note 2, we determined a fair value of the well construction equipment material (Level 3 fair value measurement) that we received at the time of our legal settlement with Tullow and Dana. The fair value estimate was based on the combination of cost and market approaches taking into consideration a number of factors, which included but were not limited to the original cost and the condition of the material and demand for steel and tubulars at the time of measurement. |
INVESTMENT IN OIL AND GAS PRO72
INVESTMENT IN OIL AND GAS PROPERTIES (Tables) | 6 Months Ended | 12 Months Ended |
Dec. 31, 2016 | Jun. 30, 2016 | |
INVESTMENT IN OIL AND GAS PROPERTIES | ||
Schedule of total capitalized costs of oil and gas properties | The following table provides detail of total capitalized costs for the Concession which remain unproved and unevaluated and are excluded from amortization as of December 31, 2016 and June 30, 2016 (in thousands): December 31, June 30, Oil and Gas Properties: Unproved properties not subject to amortization $ $ — | Aggregate capitalized costs relating to our crude oil and natural gas producing activities, including asset retirement costs and related accumulated depreciation, depletion & amortization are shown below (in thousands): United Republic of Total June 30, 2016 Unproved properties $ — $ — $ — Proved properties — — — — — — Less accumulated DD&A — — — Net capitalized costs $ — $ — $ — June 30, 2015 Unproved properties $ — $ $ Proved properties — — — — Less accumulated DD&A — — — Net capitalized costs $ — $ $ |
ACCOUNTS PAYABLE AND ACCRUED 73
ACCOUNTS PAYABLE AND ACCRUED EXPENSES (Tables) | 6 Months Ended | 12 Months Ended |
Dec. 31, 2016 | Jun. 30, 2016 | |
ACCOUNTS PAYABLE AND ACCRUED EXPENSES | ||
Summary of accounts payable and accrued expenses | Accounts payable and accrued expenses as of December 31, 2016 and June 30, 2016 include the following (in thousands): December 31, June 30, Accounts payable — trade and oil and gas exploration activities $ $ Accounts payable — legal costs Accrued payroll Liability for legal settlement (Note 6) — $ $ | Accounts payable and accrued expenses as of June 30, 2016 and 2015 include the following (in thousands): 2016 2015 Accounts payable—trade $ $ Accounts payable—legal costs Accrued payroll $ $ |
SHARE-BASED COMPENSATION (Tab74
SHARE-BASED COMPENSATION (Tables) | 6 Months Ended | 12 Months Ended |
Dec. 31, 2016 | Jun. 30, 2016 | |
SHARE-BASED COMPENSATION | ||
Schedule of information about options | 2016 2015 Number of options awarded Compensation expense recognized $ $ Weighted average award-date fair value of options outstanding $ $ | 2016 2015 Number of options granted Compensation expense recognized $ $ Compensation cost capitalized — — Weighted average grant-date fair value of options outstanding $ $ |
Schedule of significant assumptions used to compute the fair values of employee and director stock options awarded | 2016 2015 Risk-free interest rate 0.47-1.86 % 1.74 % Dividend yield % 0 % Volatility factor 109-157 % 109 % Expected life (years) 1.0-4.73 | 2016 2015 Risk-free interest rate 0.36 - 1.01 % 0.07 - 0.93 % Dividend yield % % Volatility factor 109 - 148 % 65 - 216 % Expected life (years) 0.5 - 2.875 0.5 - 2.875 |
Summary of employee and director stock options issued and outstanding | Options Weighted Aggregate Weighted Options outstanding at July 1, 2016 $ $ — Awarded Exercised ) Forfeited — — Expired ) Options outstanding at December 31, 2016 $ $ Options exercisable at December 31, 2016 $ $ | Options Weighted Aggregate Weighted Options outstanding at July 1, 2014 $ $ Granted Exercised — — Forfeited ) Expired ) Options outstanding at June 30, 2015 $ $ — Granted Exercised — — Forfeited ) Expired ) Options outstanding at June 30, 2016 $ $ — Options exercisable at June 30, 2016 $ $ — |
Schedule of stock options outstanding and exercisable | Options outstanding and exercisable as of December 31, 2016 Exercise Price Outstanding Number of Remaining Life Exercisable $ 0.41-4.00 Less than1 year $ 0.41-4.00 1 year $ 0.41-4.00 2 years $ 0.41-4.00 3 years $ 0.41-4.00 4 years $ 0.41-4.00 5 years — $ 4.01-10.00 Less than 1 year $ 4.01-10.00 1 year $ 4.01-10.00 2 years $ 4.01-10.00 3 years $ 10.01-20.00 Less than 1 year $ 10.01-20.00 4 years $ 20.01-30.00 Less than 1 year $ 20.01-30.00 4 years $ 30.01-40.00 Less than 1 year $ 30.01-40.00 5 years $ 40.01-48.72 4 years | Options outstanding and exercisable as of June 30, 2016 Exercise Price Outstanding Remaining Life Exercisable $0.42 - 4.00 1 year $0.42 - 4.00 2 years $0.42 - 4.00 3 years $0.42 - 4.00 4 years $0.42 - 4.00 5 years — $4.01 - 10.00 1 year $4.01 - 10.00 2 years $4.01 - 10.00 3 years $4.01 - 10.00 4 years $10.01 - 20.00 1 year $10.01 - 20.00 4 years $20.01 - 30.00 1 year $20.01 - 30.00 4 years $30.01 - 40.00 1 year $30.01 - 40.00 5 years $40.01 - 50.00 5 years Options outstanding and exercisable as of June 30, 2015 Exercise Price Outstanding Remaining Life Exercisable $0.90 - 4.00 1 year $0.90 - 4.00 3 years $0.90 - 4.00 4 years $0.90 - 4.00 5 years — $4.01 - 10.00 1 year $4.01 - 10.00 2 years $4.01 - 10.00 3 years $4.01 - 10.00 5 years $10.01 - 20.00 1 year $10.01 - 20.00 2 years $10.01 - 20.00 5 years $20.01 - 30.00 1 year $20.01 - 30.00 2 years $20.01 - 30.00 5 years $30.01 - 40.00 1 year $30.01 - 40.00 6 years $40.01 - 50.00 1 year $40.01 - 50.00 6 years |
COMMITMENTS AND CONTINGENCIES75
COMMITMENTS AND CONTINGENCIES (Tables) | 6 Months Ended | 12 Months Ended |
Dec. 31, 2016 | Jun. 30, 2016 | |
COMMITMENTS AND CONTINGENCIES | ||
Schedule by years of minimum future rental payments required under operating leases that have initial or remaining non-cancellable lease terms in excess of one year | The following is a schedule by years of minimum future rental payments required under operating leases that have initial or remaining non-cancellable lease terms in excess of one year (in thousands): Years ending June 30: 2017 $ 2018 2019 2020 2021 and thereafter — Total minimum payments required $ | The following is a schedule by years of minimum future rental payments required under operating leases that have initial or remaining non-cancellable lease terms in excess of one year as of June 30, 2016 (in thousands): Years ending June 30: 2017 $ 2018 2019 2020 Total minimum payments required $ |
ORGANIZATION AND SIGNIFICANT 76
ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES - General Overview (Details) - subsidiary | 6 Months Ended | 12 Months Ended |
Dec. 31, 2016 | Jun. 30, 2016 | |
ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES | ||
Number of wholly-owned subsidiaries | 2 | 2 |
ORGANIZATION AND SIGNIFICANT 77
ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES - Status of Our Business - General Information (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | 12 Months Ended | |||||
Dec. 31, 2016 | Dec. 31, 2015 | Sep. 30, 2015 | Dec. 31, 2016 | Dec. 31, 2015 | Jun. 30, 2016 | Jun. 30, 2015 | Jun. 30, 2014 | |
ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES | ||||||||
Operating revenue | $ 0 | $ 0 | $ 0 | $ 0 | ||||
Costs and expenses | (5,044) | $ (1,857) | (9,035) | (3,762) | $ 22,846 | $ 13,394 | ||
Cash | 2,239 | $ 14,367 | 2,239 | $ 14,367 | 10,327 | 18,374 | $ 35,270 | |
Accounts payable and accrued expense liabilities | 1,475 | 1,475 | $ 1,743 | $ 1,668 | ||||
Other commitments | $ 0 | $ 0 |
ORGANIZATION AND SIGNIFICANT 78
ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES - Status of Our Business - Liquidity and Going Concern (Details) | Mar. 01, 2017USD ($) | Jan. 24, 2017USD ($) | Aug. 19, 2016USD ($)itemm | Aug. 15, 2016USD ($) | Dec. 31, 2016USD ($) | Dec. 31, 2016USD ($)m | Jun. 30, 2016USD ($) | Dec. 31, 2012 | Dec. 30, 2012 | Dec. 27, 2012 | Jun. 30, 2010 |
Tullow and Dana | |||||||||||
Status of our Business | |||||||||||
Minimum ultra deepwater depth (in meters) | m | 2,000 | ||||||||||
Tullow and Dana | Settlement Agreement | |||||||||||
Status of our Business | |||||||||||
Ownership interest (as a percent) | 100.00% | ||||||||||
Settlement amount | $ 700,000 | ||||||||||
Tullow and Dana | Settlement Agreement | Subsequent Event | |||||||||||
Status of our Business | |||||||||||
Ownership interest (as a percent) | 100.00% | ||||||||||
Guinea concession | |||||||||||
Status of our Business | |||||||||||
Cash proceeds from Tullow | $ 26,000,000 | ||||||||||
Ownership interest (as a percent) | 100.00% | 100.00% | 100.00% | 37.00% | 37.00% | 77.00% | |||||
Gross expenditure cap | $ 100,000,000 | $ 100,000,000 | $ 100,000,000 | ||||||||
Threshold gross expenditure cap for well to be paid by the entity | 100,000,000 | $ 100,000,000 | $ 100,000,000 | ||||||||
Extension period for second exploration (in years) | 1 year | ||||||||||
Number of exploratory wells drilled | item | 1 | ||||||||||
Depth below seabed required to be drilled of an exploration well (in meters) | m | 2,500 | ||||||||||
Amount receivable, if extension well not drilled | $ 46,000,000 | ||||||||||
Mutually acceptable security | $ 5,000,000 | $ 5,000,000 | |||||||||
Maximum period of time over which current available liquidity could be exhausted | 12 months | 12 months | |||||||||
Guinea concession | Subsequent Event | |||||||||||
Status of our Business | |||||||||||
Ownership interest (as a percent) | 100.00% | ||||||||||
Extension period for second exploration (in years) | 1 year | ||||||||||
Depth below seabed required to be drilled of an exploration well (in meters) | m | 2,500 | ||||||||||
Amount receivable, if extension well not drilled | $ 46,000,000 | $ 46,000,000 | |||||||||
Mutually acceptable security | $ 5,000,000 | $ 5,000,000 | $ 5,000,000 | ||||||||
Guinea concession | Tullow Guinea Ltd | |||||||||||
Status of our Business | |||||||||||
Ownership interest sold (as a percent) | 40.00% | 40.00% | |||||||||
Guinea concession | Dana | |||||||||||
Status of our Business | |||||||||||
Ownership interest (as a percent) | 23.00% | 23.00% |
ORGANIZATION AND SIGNIFICANT 79
ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES - Earnings per Share (Details) - $ / shares | 3 Months Ended | 6 Months Ended | 12 Months Ended | |||
Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2016 | Dec. 31, 2015 | Jun. 30, 2016 | Jun. 30, 2015 | |
Earnings per share | ||||||
Average exercise price of warrants (in dollars per share) | $ 12.64 | |||||
Stock options | ||||||
Earnings per share | ||||||
Potentially dilutive securities excluded from the computation of dilutive net loss per common share | 1,200,000 | 1,000,000 | 1,000,000 | 1,200,000 | ||
Average exercise price of common stock (in dollars per share) | $ 4.08 | $ 5.67 | $ 4.08 | $ 5.67 | ||
Common shares included in fully diluted earnings per share | 298,700 | 101,600 | 182,200 | 50,800 |
INVESTMENT IN OIL AND GAS PRO80
INVESTMENT IN OIL AND GAS PROPERTIES (Details) | Mar. 01, 2017USD ($) | Jan. 29, 2017USD ($) | Jan. 24, 2017USD ($) | Aug. 19, 2016USD ($)km²itemm | Jun. 30, 2016USD ($)bbl | Dec. 31, 2016USD ($)bbl | Mar. 31, 2016USD ($) | Dec. 31, 2016USD ($)bbl | Mar. 31, 2016USD ($) | Jun. 30, 2016USD ($)bbl | Sep. 30, 2016USD ($) | Jun. 30, 2015USD ($) | Jun. 30, 2013bbl | Dec. 31, 2012 | Dec. 30, 2012 | Jun. 30, 2010 | Mar. 25, 2010mi² | Mar. 25, 2010km² |
Investments in oil and gas properties | ||||||||||||||||||
Movement in oil and gas properties | $ 4,100,000 | |||||||||||||||||
Reserves | bbl | 0 | 0 | ||||||||||||||||
Oil and Gas Properties: | ||||||||||||||||||
Unproved properties not subject to amortization | $ 4,142,000 | $ 4,142,000 | $ 14,311,000 | |||||||||||||||
Full impairment of unproved oil and gas properties | 753,000 | $ 14,331,000 | 753,000 | $ 14,331,000 | $ 14,331,000 | |||||||||||||
Settlement and Release Agreement with Tullow and Dana | ||||||||||||||||||
Oil and Gas Properties: | ||||||||||||||||||
Fair value of well construction material | $ 4,100,000 | $ 4,100,000 | ||||||||||||||||
Guinea concession | ||||||||||||||||||
Investments in oil and gas properties | ||||||||||||||||||
Ownership interest in Guinea Concession (as a percent) | 100.00% | 37.00% | 100.00% | 100.00% | 37.00% | 37.00% | 77.00% | |||||||||||
Extension period for second exploration (in years) | 1 year | |||||||||||||||||
Number of exploratory well in extension period | item | 1 | |||||||||||||||||
Depth below seabed required to be drilled of an exploration well (in meters) | m | 2,500 | |||||||||||||||||
Amount receivable, if extension well not drilled | $ 46,000,000 | |||||||||||||||||
Eligible appraisal period | 2 years | |||||||||||||||||
Contract area retained (in square kilometers/square miles) | 5,000 | 9,650 | 25,000 | |||||||||||||||
Notice period for termination (in days) | 30 days | |||||||||||||||||
Mutually acceptable security | $ 5,000,000 | $ 5,000,000 | ||||||||||||||||
Estimated amount to limit cost recovery to share of expenditures | 150,000,000 | |||||||||||||||||
Agreed amount in training budget | 250,000 | |||||||||||||||||
Estimated amount of unused portion of training program | $ 500,000 | |||||||||||||||||
Movement in oil and gas properties | $ 1,600,000 | |||||||||||||||||
Capitalized costs | $ 1,300,000 | $ 1,500,000 | ||||||||||||||||
Reserves | bbl | 0 | 0 | 0 | |||||||||||||||
Oil and Gas Properties: | ||||||||||||||||||
Unproved properties not subject to amortization | $ 4,142,000 | $ 4,142,000 | $ 14,311,000 | |||||||||||||||
Increase in property balance resulting from capitalized cost adjustment | 4,100,000 | $ 20,000 | ||||||||||||||||
Fair value of well construction material | 4,400,000 | 4,400,000 | ||||||||||||||||
Reduction in fair value of well construction material | 400,000 | |||||||||||||||||
Oil and gas property capitalized | 500,000 | 500,000 | $ 300,000 | |||||||||||||||
Full impairment of unproved oil and gas properties | $ 14,300,000 | $ 800,000 | 200,000 | $ 14,331,000 | ||||||||||||||
Guinea concession | General, Administrative And Other Operating Cost | ||||||||||||||||||
Investments in oil and gas properties | ||||||||||||||||||
Capitalized costs | $ 1,300,000 | |||||||||||||||||
Guinea concession | Tullow Guinea Ltd | ||||||||||||||||||
Investments in oil and gas properties | ||||||||||||||||||
Ownership interest in Guinea Concession (as a percent) | 40.00% | 40.00% | 40.00% | |||||||||||||||
Ownership interest sold (as a percent) | 40.00% | 40.00% | ||||||||||||||||
Guinea concession | Dana | ||||||||||||||||||
Investments in oil and gas properties | ||||||||||||||||||
Ownership interest in Guinea Concession (as a percent) | 23.00% | 23.00% | 23.00% | |||||||||||||||
Ownership interest sold (as a percent) | 23.00% | 23.00% | ||||||||||||||||
Guinea concession | Subsequent Event | ||||||||||||||||||
Investments in oil and gas properties | ||||||||||||||||||
Ownership interest in Guinea Concession (as a percent) | 100.00% | |||||||||||||||||
Extension period for second exploration (in years) | 1 year | |||||||||||||||||
Number of exploratory well in extension period | item | 1 | |||||||||||||||||
Depth below seabed required to be drilled of an exploration well (in meters) | m | 2,500 | |||||||||||||||||
Amount receivable, if extension well not drilled | $ 46,000,000 | $ 46,000,000 | ||||||||||||||||
Contract area retained (in square kilometers/square miles) | km² | 5,000 | |||||||||||||||||
Notice period for termination (in days) | 30 days | |||||||||||||||||
Mutually acceptable security | $ 5,000,000 | $ 5,000,000 | $ 5,000,000 | |||||||||||||||
Estimated amount to limit cost recovery to share of expenditures | 150,000,000 | |||||||||||||||||
Agreed amount in training budget | 250,000 | |||||||||||||||||
Estimated amount of unused portion of training program | $ 500,000 |
ACCOUNTS PAYABLE AND ACCRUED 81
ACCOUNTS PAYABLE AND ACCRUED EXPENSES (Details) - USD ($) $ in Thousands | Dec. 31, 2016 | Jun. 30, 2016 | Jun. 30, 2015 |
ACCOUNTS PAYABLE AND ACCRUED EXPENSES | |||
Accounts payable - trade and oil and gas exploration activities | $ 601 | $ 1,361 | |
Accounts payable - legal costs | 171 | 61 | $ 342 |
Accrued payroll | 703 | 321 | 169 |
Accounts payable and accrued expenses | 1,475 | 1,743 | $ 1,668 |
Liability for legal settlement (Note 6) | 1,308 | ||
Total current liabilities | $ 2,783 | $ 1,743 |
SHARE-BASED COMPENSATION - Ge82
SHARE-BASED COMPENSATION - General Information (Details) | Jan. 27, 2016shares | Feb. 18, 2010plan | Dec. 31, 2016shares | Jun. 30, 2016shares |
SHARE-BASED COMPENSATION | ||||
Number of stock award plans prior to the adoption of 2010 plan | plan | 2 | |||
2010 Plan | Stock options | ||||
SHARE-BASED COMPENSATION | ||||
Increase in the number of shares available for issuance | 750,000 | |||
Period within which shares of common stock, options or restricted stock can be awarded under the 2010 plan | 10 years | |||
Number of shares issuable under the plan | 2,000,000 | 2,000,000 | ||
Number of shares remaining available for issuance | 783,460 | 945,710 |
SHARE-BASED COMPENSATION - In83
SHARE-BASED COMPENSATION - Information about Options (Details) - Stock options - USD ($) | 6 Months Ended | 12 Months Ended | ||
Dec. 31, 2016 | Dec. 31, 2015 | Jun. 30, 2016 | Jun. 30, 2015 | |
Stock Options | ||||
Number of options awarded (in shares) | 178,500 | 30,000 | 183,860 | 476,106 |
Compensation expense recognized | $ 106,000 | $ 189,000 | $ 352,653 | $ 643,980 |
Weighted average award-date fair value of options outstanding (in dollars per share) | $ 4.08 | $ 5.67 | $ 5.03 | $ 5.13 |
SHARE-BASED COMPENSATION - Si84
SHARE-BASED COMPENSATION - Significant Assumptions (Details) - Stock options | 6 Months Ended | 12 Months Ended | ||
Dec. 31, 2016 | Dec. 31, 2015 | Jun. 30, 2016 | Jun. 30, 2015 | |
Significant assumptions used to compute the fair market values | ||||
Risk-free interest rate (as a percent) | 1.74% | |||
Risk-free interest rate, low end of range (as a percent) | 0.47% | 0.36% | 0.07% | |
Risk-free interest rate, high end of range (as a percent) | 1.86% | 1.01% | 0.93% | |
Dividend yield (as a percent) | 0.00% | 0.00% | 0.00% | 0.00% |
Volatility factor (as a percent) | 109.00% | |||
Volatility factor, low end of range (as a percent) | 109.00% | 109.00% | 65.00% | |
Volatility factor, high end of range (as a percent) | 157.00% | 148.00% | 216.00% | |
Expected life (years) | 2 years 10 months 17 days | |||
Minimum | ||||
Significant assumptions used to compute the fair market values | ||||
Expected life (years) | 1 year | 6 months | 6 months | |
Maximum | ||||
Significant assumptions used to compute the fair market values | ||||
Expected life (years) | 4 years 8 months 23 days | 2 years 10 months 15 days | 2 years 10 months 15 days |
SHARE-BASED COMPENSATION - St85
SHARE-BASED COMPENSATION - Stock Option Activity (Details) - USD ($) | 6 Months Ended | 12 Months Ended | |||
Dec. 31, 2016 | Dec. 31, 2015 | Jun. 30, 2016 | Jun. 30, 2015 | Jun. 30, 2014 | |
Options | |||||
Exercised (in shares) | 0 | 0 | |||
Stock options | |||||
Options | |||||
Outstanding at the beginning of the period (in shares) | 1,016,997 | 1,181,954 | 1,181,954 | 1,441,727 | |
Awarded (in shares) | 178,500 | 30,000 | 183,860 | 476,106 | |
Exercised (in shares) | (20,000) | ||||
Expired (in shares) | (16,250) | (309,642) | (218,026) | ||
Outstanding at the end of the period (in shares) | 1,159,247 | 1,016,997 | 1,181,954 | 1,441,727 | |
Options exercisable at end of period (in shares) | 959,550 | 919,396 | |||
Weighted Average Exercise Price | |||||
Outstanding at the beginning of the period (in dollars per share) | $ 5.03 | $ 7.43 | $ 7.43 | $ 8.76 | |
Awarded (in dollars per share) | 1.06 | 0.54 | 1.40 | ||
Exercised (in dollars per share) | 0.90 | ||||
Expired (in dollars per share) | 34.43 | 12.01 | 10.71 | ||
Outstanding at the end of the period (in dollars per share) | 4.08 | 5.03 | $ 7.43 | $ 8.76 | |
Options exercisable at end of period (in dollars per share) | $ 4.72 | $ 5.50 | |||
Aggregate intrinsic value | |||||
Outstanding at the end of the period | $ 883,620 | $ 8,327 | |||
Options exercisable at period end | $ 646,342 | ||||
Weighted average remaining contractual term (years) | |||||
Outstanding at the end of the period | 2 years 6 months 15 days | 3 years 2 months 9 days | 3 years 4 months 21 days | 3 years 1 month 21 days | |
Options exercisable at period end | 2 years 1 month 2 days | 3 years |
SHARE-BASED COMPENSATION - Op86
SHARE-BASED COMPENSATION - Options Outstanding and Exercisable (Details) - Stock options - $ / shares | 6 Months Ended | 12 Months Ended | |
Dec. 31, 2016 | Jun. 30, 2016 | Jun. 30, 2015 | |
Options outstanding and exercisable | |||
Outstanding Number of Shares | 1,159,247 | 1,016,997 | 1,181,954 |
Exercisable Number of Shares | 959,550 | 919,396 | 754,136 |
Exercise price range $0.41 - $4.00, remaining life less than 1 year | |||
Options outstanding and exercisable | |||
Exercise Price, low end of the range (in dollars per share) | $ 0.41 | ||
Exercise Price, high end of the range (in dollars per share) | $ 4 | ||
Outstanding Number of Shares | 245,525 | ||
Exercisable Number of Shares | 245,525 | ||
Exercise price range $0.41 - $4.00, remaining life less than 1 year | Maximum | |||
Options outstanding and exercisable | |||
Remaining Life (in years) | 1 year | ||
Exercise price range $0.41 - $4.00, remaining life 1 year | |||
Options outstanding and exercisable | |||
Exercise Price, low end of the range (in dollars per share) | $ 0.41 | ||
Exercise Price, high end of the range (in dollars per share) | $ 4 | ||
Outstanding Number of Shares | 57,916 | ||
Remaining Life (in years) | 1 year | ||
Exercisable Number of Shares | 57,916 | ||
Exercise price range $0.41 - $4.00, remaining life 2 years | |||
Options outstanding and exercisable | |||
Exercise Price, low end of the range (in dollars per share) | $ 0.41 | ||
Exercise Price, high end of the range (in dollars per share) | $ 4 | ||
Outstanding Number of Shares | 136,296 | ||
Remaining Life (in years) | 2 years | ||
Exercisable Number of Shares | 136,296 | ||
Exercise price range $0.41 - $4.00, remaining life 3 years | |||
Options outstanding and exercisable | |||
Exercise Price, low end of the range (in dollars per share) | $ 0.41 | ||
Exercise Price, high end of the range (in dollars per share) | $ 4 | ||
Outstanding Number of Shares | 226,720 | ||
Remaining Life (in years) | 3 years | ||
Exercisable Number of Shares | 226,720 | ||
Exercise price range $0.41 - $4.00, remaining life 4 years | |||
Options outstanding and exercisable | |||
Exercise Price, low end of the range (in dollars per share) | $ 0.41 | ||
Exercise Price, high end of the range (in dollars per share) | $ 4 | ||
Outstanding Number of Shares | 112,610 | ||
Remaining Life (in years) | 4 years | ||
Exercisable Number of Shares | 71,405 | ||
Exercise price range $0.41 - $4.00, remaining life 5 years | |||
Options outstanding and exercisable | |||
Exercise Price, low end of the range (in dollars per share) | $ 0.41 | ||
Exercise Price, high end of the range (in dollars per share) | $ 4 | ||
Outstanding Number of Shares | 158,492 | ||
Remaining Life (in years) | 5 years | ||
Exercise price range $4.01 - $10.00, remaining life less than 1 year | |||
Options outstanding and exercisable | |||
Exercise Price, low end of the range (in dollars per share) | $ 4.01 | ||
Exercise Price, high end of the range (in dollars per share) | $ 10 | ||
Outstanding Number of Shares | 79,563 | ||
Exercisable Number of Shares | 79,563 | ||
Exercise price range $4.01 - $10.00, remaining life less than 1 year | Maximum | |||
Options outstanding and exercisable | |||
Remaining Life (in years) | 1 year | ||
Exercise price range $4.01 - $10.00, remaining life 1 year | |||
Options outstanding and exercisable | |||
Exercise Price, low end of the range (in dollars per share) | $ 4.01 | $ 4.01 | $ 4.01 |
Exercise Price, high end of the range (in dollars per share) | $ 10 | $ 10 | $ 10 |
Outstanding Number of Shares | 38,625 | 97,938 | 43,498 |
Remaining Life (in years) | 1 year | 1 year | 1 year |
Exercisable Number of Shares | 38,625 | 97,938 | 43,498 |
Exercise price range $4.01 - $10.00, remaining life 2 years | |||
Options outstanding and exercisable | |||
Exercise Price, low end of the range (in dollars per share) | $ 4.01 | $ 4.01 | $ 4.01 |
Exercise Price, high end of the range (in dollars per share) | $ 10 | $ 10 | $ 10 |
Outstanding Number of Shares | 4,062 | 9,000 | 107,126 |
Remaining Life (in years) | 2 years | 2 years | 2 years |
Exercisable Number of Shares | 4,062 | 9,000 | 106,502 |
Exercise price range $4.01 - $10.00, remaining life 3 years | |||
Options outstanding and exercisable | |||
Exercise Price, low end of the range (in dollars per share) | $ 4.01 | $ 4.01 | $ 4.01 |
Exercise Price, high end of the range (in dollars per share) | $ 10 | $ 10 | $ 10 |
Outstanding Number of Shares | 7,000 | 4,062 | 13,062 |
Remaining Life (in years) | 3 years | 3 years | 3 years |
Exercisable Number of Shares | 7,000 | 4,062 | 10,281 |
Exercise price range $10.01 - $20.00, remaining life less than 1 year | |||
Options outstanding and exercisable | |||
Exercise Price, low end of the range (in dollars per share) | $ 10.01 | ||
Exercise Price, high end of the range (in dollars per share) | $ 20 | ||
Outstanding Number of Shares | 13,125 | ||
Exercisable Number of Shares | 13,125 | ||
Exercise price range $10.01 - $20.00, remaining life less than 1 year | Maximum | |||
Options outstanding and exercisable | |||
Remaining Life (in years) | 1 year | ||
Exercise price range $10.01 - $20.00, remaining life 4 years | |||
Options outstanding and exercisable | |||
Exercise Price, low end of the range (in dollars per share) | $ 10.01 | $ 10.01 | |
Exercise Price, high end of the range (in dollars per share) | $ 20 | $ 20 | |
Outstanding Number of Shares | 17,500 | 28,750 | |
Remaining Life (in years) | 4 years | 4 years | |
Exercisable Number of Shares | 17,500 | 28,750 | |
Exercise price range $20.01 - $30.00, remaining life less than 1 year | |||
Options outstanding and exercisable | |||
Exercise Price, low end of the range (in dollars per share) | $ 20.01 | ||
Exercise Price, high end of the range (in dollars per share) | $ 30 | ||
Outstanding Number of Shares | 3,750 | ||
Exercisable Number of Shares | 3,750 | ||
Exercise price range $20.01 - $30.00, remaining life less than 1 year | Maximum | |||
Options outstanding and exercisable | |||
Remaining Life (in years) | 1 year | ||
Exercise price range $20.01 - $30.00, remaining life 4 years | |||
Options outstanding and exercisable | |||
Exercise Price, low end of the range (in dollars per share) | $ 20.01 | $ 20.01 | |
Exercise Price, high end of the range (in dollars per share) | $ 30 | $ 30 | |
Outstanding Number of Shares | 28,500 | 31,000 | |
Remaining Life (in years) | 4 years | 4 years | |
Exercisable Number of Shares | 28,500 | 31,000 | |
Exercise price range $30.01 - $40.00, remaining life less than 1 year | |||
Options outstanding and exercisable | |||
Exercise Price, low end of the range (in dollars per share) | $ 30.01 | ||
Exercise Price, high end of the range (in dollars per share) | $ 40 | ||
Outstanding Number of Shares | 12,500 | ||
Exercisable Number of Shares | 12,500 | ||
Exercise price range $30.01 - $40.00, remaining life less than 1 year | Maximum | |||
Options outstanding and exercisable | |||
Remaining Life (in years) | 1 year | ||
Exercise price range $30.01 - $40.00, remaining life 5 years | |||
Options outstanding and exercisable | |||
Exercise Price, low end of the range (in dollars per share) | $ 30.01 | $ 30.01 | |
Exercise Price, high end of the range (in dollars per share) | $ 40 | $ 40 | |
Outstanding Number of Shares | 13,313 | 25,813 | |
Remaining Life (in years) | 5 years | 5 years | |
Exercisable Number of Shares | 13,313 | 25,813 | |
Exercise price range $40.01 - $48.72, remaining life 4 years | |||
Options outstanding and exercisable | |||
Exercise Price, low end of the range (in dollars per share) | $ 40.01 | ||
Exercise Price, high end of the range (in dollars per share) | $ 48.72 | ||
Outstanding Number of Shares | 3,750 | ||
Remaining Life (in years) | 4 years | ||
Exercisable Number of Shares | 3,750 |
SHARE-BASED COMPENSATION - St87
SHARE-BASED COMPENSATION - Stock Options - Additional Disclosures (Details) - Stock options - USD ($) $ / shares in Units, $ in Thousands | 6 Months Ended | 12 Months Ended | |
Dec. 31, 2016 | Jun. 30, 2016 | Jun. 30, 2015 | |
Stock Options | |||
Unrecognized compensation costs | $ 177 | $ 31 | $ 400 |
Option vested (in shares) | 76,404 | 449,904 | 377,274 |
Weighted average award date fair value of options vested (in dollars per share) | $ 0.57 | $ 1.10 | $ 3.76 |
Unvested options outstanding (in shares) | 199,697 | 97,601 | 427,826 |
Weighted average award date fair value of unvested options outstanding (in dollars per share) | $ 4.72 | $ 5.50 | $ 10.95 |
Amortization period | 1 year | ||
Weighted average remaining life of unvested options outstanding | 11 months 5 days | 4 years 10 months 28 days | 4 years 9 months 29 days |
SHARE-BASED COMPENSATION - Re88
SHARE-BASED COMPENSATION - Restricted Stock - General Disclosures (Details) - Unvested restricted stock awards - shares | 6 Months Ended | 12 Months Ended |
Dec. 31, 2016 | Jun. 30, 2016 | |
Restricted stock | ||
Granted (in shares) | 0 | 0 |
Outstanding (in shares) | 0 | 0 |
INCOME TAXES (Details)
INCOME TAXES (Details) | 6 Months Ended | 12 Months Ended | |
Dec. 31, 2016 | Dec. 31, 2015 | Jun. 30, 2016 | |
INCOME TAXES | |||
Effective tax rate (as a percent) | 0.00% | 0.00% | |
Statutory federal rate (as a percent) | 35.00% | 35.00% | 35.00% |
COMMITMENTS AND CONTINGENCIES90
COMMITMENTS AND CONTINGENCIES - Litigation and Other Legal Matters (Details) | Oct. 06, 2016lawsuit | Aug. 15, 2016USD ($) | Mar. 13, 2014lawsuit | May 09, 2012USD ($)plaintiff | Dec. 31, 2016USD ($)$ / sharesshares | Sep. 30, 2016lawsuit | Dec. 31, 2016USD ($)plaintiff$ / sharesshares |
LITIGATION AND OTHER LEGAL MATTERS | |||||||
Liability for legal settlement | $ 1,308,000 | $ 1,308,000 | |||||
Closing price of common stock (in dollars per share) | $ / shares | $ 2.18 | $ 2.18 | |||||
Gain on legal settlement | $ (371,000) | $ 4,764,000 | |||||
Iroquois Lawsuit | |||||||
LITIGATION AND OTHER LEGAL MATTERS | |||||||
Number of plaintiffs which filed lawsuit | plaintiff | 5 | ||||||
Damages sought | $ 18,500,000 | ||||||
Settlement of Iroquois Lawsuit | |||||||
LITIGATION AND OTHER LEGAL MATTERS | |||||||
Number of plaintiffs which filed lawsuit | plaintiff | 5 | ||||||
Number of shares will issue to the plaintiffs | shares | 600,000 | 600,000 | |||||
Settlements in cash payable | $ 1,350,000 | $ 1,350,000 | |||||
Shareholder Lawsuits | |||||||
LITIGATION AND OTHER LEGAL MATTERS | |||||||
Number of lawsuits filed | lawsuit | 2 | ||||||
Number of lawsuits dismissed | lawsuit | 1 | 1 | |||||
Settlement and Release Agreement with Tullow and Dana | |||||||
LITIGATION AND OTHER LEGAL MATTERS | |||||||
Settlement amount | $ 686,570 | ||||||
Gain on legal settlement | 4,800,000 | ||||||
Fair value of well construction material | $ 4,100,000 | $ 4,100,000 |
COMMITMENTS AND CONTINGENCIES91
COMMITMENTS AND CONTINGENCIES - Operating Leases (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | 12 Months Ended | |||
Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2016 | Dec. 31, 2015 | Jun. 30, 2016 | Jun. 30, 2015 | |
Operating Leases | ||||||
Operating lease term (in years) | 6 months | |||||
Operating lease cost per month | $ 30 | |||||
2,017 | $ 377 | 377 | ||||
2,018 | 399 | 399 | $ 399 | |||
2,019 | 406 | 406 | 406 | |||
2,020 | 309 | 309 | 309 | |||
Total minimum payments required | 1,491 | 1,491 | 1,506 | |||
Rent expense | $ 100 | $ 100 | $ 200 | $ 300 | $ 400 | $ 300 |
SUBSEQUENT EVENTS (Details)92
SUBSEQUENT EVENTS (Details) | Apr. 12, 2017USD ($)km² | Mar. 30, 2017USD ($) | Mar. 01, 2017USD ($) | Feb. 27, 2017 | Feb. 02, 2017shares | Jan. 24, 2017USD ($) | Jan. 11, 2017USD ($) | Aug. 19, 2016USD ($)km² | Dec. 31, 2016USD ($)shares | Dec. 31, 2016USD ($)plaintiffshares | Jun. 30, 2016 | Dec. 31, 2012 | Dec. 30, 2012 | Mar. 25, 2010mi² | Mar. 25, 2010km² |
Settlement of Iroquois Lawsuit | |||||||||||||||
SUBSEQUENT EVENTS | |||||||||||||||
Number of plaintiffs which filed lawsuit | plaintiff | 5 | ||||||||||||||
Number of shares will issue to the plaintiffs | shares | 600,000 | 600,000 | |||||||||||||
Settlements in cash payable | $ 1,350,000 | $ 1,350,000 | |||||||||||||
Subsequent Event | |||||||||||||||
SUBSEQUENT EVENTS | |||||||||||||||
Period to correct delinquency | 30 days | ||||||||||||||
Subsequent Event | Settlement of Iroquois Lawsuit | |||||||||||||||
SUBSEQUENT EVENTS | |||||||||||||||
Cash payment of settlements | $ 1,350,000 | ||||||||||||||
Number of shares issued to plaintiffs | shares | 600,000 | ||||||||||||||
Guinea concession | |||||||||||||||
SUBSEQUENT EVENTS | |||||||||||||||
Mutually acceptable security | $ 5,000,000 | $ 5,000,000 | |||||||||||||
Ownership interest (as a percent) | 100.00% | 100.00% | 100.00% | 37.00% | 37.00% | 77.00% | |||||||||
Contract area retained (in square kilometers/square miles) | 5,000 | 9,650 | 25,000 | ||||||||||||
Amount receivable, if extension well not drilled | $ 46,000,000 | ||||||||||||||
Guinea concession | Subsequent Event | |||||||||||||||
SUBSEQUENT EVENTS | |||||||||||||||
Mutually acceptable security | $ 5,000,000 | $ 5,000,000 | $ 5,000,000 | ||||||||||||
Ownership interest (as a percent) | 100.00% | ||||||||||||||
Contract area retained (in square kilometers/square miles) | km² | 5,000 | ||||||||||||||
Amount receivable, if extension well not drilled | $ 46,000,000 | $ 46,000,000 | |||||||||||||
Guinea concession | Subsequent Event | Farm-out Agreement | |||||||||||||||
SUBSEQUENT EVENTS | |||||||||||||||
Mutually acceptable security | $ 5,000,000 | ||||||||||||||
Contract area retained (in square kilometers/square miles) | km² | 5,000 | ||||||||||||||
Maximum days for security instrument to put in place | 30 days | ||||||||||||||
Guinea concession | Subsequent Event | SAPETERO | Farm-out Agreement | |||||||||||||||
SUBSEQUENT EVENTS | |||||||||||||||
Ownership interest sold (as a percent) | 50.00% | ||||||||||||||
Ownership interest (as a percent) | 2.00% | ||||||||||||||
Sufficient financing for the Obligation Well Cost | $ 15,000,000 | ||||||||||||||
Threshold amount for additional assigned 2% participating interest | $ 1,000,000 | ||||||||||||||
Guinea concession | Subsequent Event | SAPETERO | Farm-out Agreement | Minimum | |||||||||||||||
SUBSEQUENT EVENTS | |||||||||||||||
Estimated total drilling preparation cost | $ 8,000,000 | ||||||||||||||
Guinea concession | Subsequent Event | SAPETERO | Farm-out Agreement | Maximum | |||||||||||||||
SUBSEQUENT EVENTS | |||||||||||||||
Estimated total drilling preparation cost | $ 10,000,000 |
SUBSEQUENT EVENTS - Series A Pr
SUBSEQUENT EVENTS - Series A Preferred Stock Offering (Details) | 1 Months Ended | |||
Apr. 26, 2017USD ($)item$ / sharesshares | Dec. 31, 2016USD ($)$ / shares | Jun. 30, 2016USD ($)$ / shares | Jun. 30, 2015USD ($)$ / shares | |
Series A Preferred Stock Offering | ||||
Stated value per share | $ 0.001 | $ 0.001 | $ 0.001 | |
Exercise price (in dollars per share) | $ 12.64 | |||
Share Price | $ 2.18 | |||
Aggregate amount of common stock | $ | $ 169,000 | $ 169,000 | $ 169,000 | |
Subsequent Event | Placement Agent | ||||
Series A Preferred Stock Offering | ||||
Exercise price (in dollars per share) | $ 3 | |||
Series A Preferred Stock Offering | Subsequent Event | ||||
Series A Preferred Stock Offering | ||||
Number of closing of a private placement offerings held | item | 4 | |||
Aggregate number of units issued | shares | 1,951 | |||
Purchase price per unit | $ 1,000 | |||
Stated value per share | $ 1,040 | |||
Number of shares each warrant can purchase | shares | 223 | |||
Exercise price (in dollars per share) | $ 3.50 | |||
Aggregate cash proceeds from sale of units | $ | $ 1,951,000 | |||
Maximum value of pro rata shares to be purchased | $ | $ 3,000,000 | |||
Dividend payable rate per annum | 1.00% | |||
Percentage of stated value portion of price per share | 115.00% | |||
Percentage of price per share accrued but unpaid dividends | 115.00% | |||
Share Price | $ 2.75 | |||
Lowest closing price percentage | 80.00% | |||
Number of consecutive trading days | 21 days | |||
Percentage of consent of holders required to authorize or create any class of stock | 66.67% | |||
Accrue rate per annum of purchase price of monetary penalties payable by the company to the holders of registrable shares | 12.00% | |||
Series A Preferred Stock Offering | Subsequent Event | Placement Agent | ||||
Series A Preferred Stock Offering | ||||
Percentage of placement agent commission fee | 9.00% | |||
Payments of Stock Issuance Costs | $ | $ 175,590 | |||
Series A Preferred Stock Offering | Subsequent Event | Minimum | ||||
Series A Preferred Stock Offering | ||||
Share Price | $ 0.25 | |||
Aggregate amount of common stock | $ | $ 1,000,000 | |||
Series A Preferred Stock Offering | Subsequent Event | Maximum | ||||
Series A Preferred Stock Offering | ||||
Share Price | $ 0.25 | |||
Percentage of aggregate purchase price | 5.00% | |||
Series A Preferred Stock Offering | Common Stock | Subsequent Event | ||||
Series A Preferred Stock Offering | ||||
Aggregate shares of common stock issued | shares | 435,073 | |||
Series A Preferred Stock Offering | Common Stock | Subsequent Event | Placement Agent | ||||
Series A Preferred Stock Offering | ||||
Number of shares each warrant can purchase | shares | 51,650 | |||
Percentage of warrants to purchase a number of shares of common stock | 7.00% |