Hyperdynamics hit by Sabu costs

Oil and gas explorer, Hyperdynamics, began re-drilling an exploratory well off the Republic of Guinea, but said its liquidity had been hurt by higher-than-expected expenses

To address the issue, the company said it entered into an agreement with institutional investors to raise about US$30mn through a stock offering, Reuters reported. The company said its problems included issues on the drilling rig, logistical delays resulting from limited port facilities in Guinea and an expanded well logging program.

"The unexpectedly high cost of the Sabu-1 well has adversely affected our cash position and liquidity," the filing said.

According to Reuters, the company had about $19.4mn in cash as of 27 January, down from $39.5mn in cash and equivalents as of 30 September. The company had suspended drilling for the second time in two months last week to repair equipment. Drilling restarted at the well from a depth of 2,304 m subsea and is planned to continue till 3,600 m, the company said in a statement.

The company recently issued 10mn shares at $3 per share. The company said it plans to use the proceeds for general corporate purposes and working capital, including the ongoing drilling costs for the Sabu well.

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