AGREEMENT FOR EXCLUSIVE DEALING
 
 AND LETTER OF INTENT

 
This AGREEMENT FOR EXCLUSIVE DEALING AND LETTER OF INTENT (the “LOI”), is
effective November 26th, 2009 (the “Effective Date”), between
 
SCS Corporation, an Affiliate of Hyperdynamics Corporation, a company
incorporated under Delaware statutes, United States of America, whose Head
Office is located at: One Sugar Creek Center Blvd, Suite 125, Sugar Land, Texas
77478, USA (collectively “HDY-SCS”), of the first part, and Repsol Exploración,
S.A. a company incorporated in the Kingdom of Spain whose Head Office is located
at Paseo de la Castellana 280, 28046 Madrid, Spain, (“REPSOL”)  of the second
part.
 
HDY and REPSOL may also be referred to herein individually as a “Party” or
collectively as the “Parties”.
 
Recitals:
 
WHEREAS, HDY owns, through its Affiliate, SCS, certain rights pertaining to the
Hydrocarbon Production Sharing Contract dated September 22, 2006 between the
Republic of Guinea and SCS (the “PSC”); and
 
WHEREAS, a Memorandum of Understanding in relation to the PSC has been entered
into between the Republic of Guinea and SCS dated September 11, 2009 (the
“MoU”); and
 
WHEREAS, REPSOL possesses certain expertise and resources that it believes will
be beneficial in the exploration and development of the area to which the PSC
applies as may be varied pursuant to the MoU (the “Project”); and
 
WHEREAS, REPSOL wishes to evaluate its potential participation in the Project on
an exclusive basis; and
 
WHEREAS, HDY-SCS has executed an Agreement for Exclusive Dealing and Letter of
Intent with Dana Petroleum (E&P) Ltd, effective October 11, 2009, (“Dana Letter
of Intent”), which, among other things provides that HDY-SCS and its Affiliated
Companies including, without limitation SCS, will negotiate exclusively with
DANA with regard to the prospective acquisition by DANA of an undivided twenty
three percent (23%) participating interest in and under the PSC and the initial
Contract Area (as such term is defined in the PSC) (the “DANA Working
Interest”), and more specifically provides that HDY shall, and shall procure
that its Affiliated Companies including, without limitation, SCS shall not
initiate, or otherwise participate in, directly or indirectly, a solicitation of
any other offer or proposal for the sale, assignment or transfer, directly or
indirectly, through merger, consolidation or otherwise, of the DANA Working
Interest, which means any interest in the PSC and/or the Contract Area that is
or would be inclusive of the DANA Working Interest or continue negotiations or
discussions with other persons that have indicated an interest in acquiring such
an interest; and
 
 
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WHEREAS, HDY-SCS, represents and warrants that any actions, discussions or
negotiations between them and Repsol proceed in full respect of the Dana Letter
of Intent and do not intend that any actions, discussions or negotiations
between the Parties interfere with such Dana Letter of Intent or include or
pertain to the twenty-three percent (23%) participating interest subject to the
Dana Letter of Intent; and
 
WHEREAS, the Parties wish to record in this LOI certain binding and certain
non-binding commercial terms and conditions on which the Parties have agreed to
continue discussions and conduct further mutual evaluation and negotiations with
the possibility of, but not the obligation to, reaching binding definitive
agreement(s) as to REPSOL’s participation in the Project (the “Definitive
Agreements” as defined in Exhibit “A”).
 
NOW, THEREFORE, the Parties hereby agree as follows:
 
Article I
Non-Binding Provisions

1.1           Non-Binding Nature of Provisions. The Parties have set out in
Exhibit “A” attached hereto and incorporated herein their preliminary and
non-binding understanding of certain commercial terms and conditions which may
be addressed in the prospective Definitive Agreements. The Parties agree that no
provision of this LOI shall obligate either Party to enter into any Definitive
Agreements, and that no commercial terms set out in Exhibit “A” attached hereto
shall be legally binding in any way upon either Party. This LOI reflects only
the preliminary understanding of the Parties with respect to the potential due
diligence and negotiation with respect to a transaction regarding the Project,
and is not intended to, shall not be construed to, and does not constitute an
agreement of either Party to (a) perform due diligence, negotiate, or consummate
any transaction regarding the Project, or (b) enter into any Definitive
Agreements with respect to the Project.
 
1.2.           Further, the Parties expressly acknowledge and agree that this
Article I of this LOI (other than this Article 1.2), is not intended to be
legally binding and that neither Party shall have any obligation to the other
with respect thereto unless and until both Parties execute mutually agreed and
duly authorized Definitive Agreements. Further, it is understood that the
Definitive Agreements contemplated in this LOI are subject to review and
approval in accordance with the policies and procedures established by the each
Party’s respective board of directors for transactions of this nature.
 
1.3           It is envisaged that the Definitive Agreements will include (i) a
sale and purchase agreement in respect of the transfer of the REPSOL
Participating Interest (as hereinafter defined) (the “SPA”); (ii) an assignment
of the REPSOL Participating Interest, validly transferring title to the REPSOL
Participating Interest to REPSOL (the “Assignment of Participating Interest”);
(iii) a Deed of Assignment to serve as the muniment of the Assignment of
Participating Interest to be forward to the Government of the Republic of Guinea
for approval of the Assignment of Participating Interest pursuant to Article 23
of the PSC (the “Deed of Assignment”); and (iv) a joint operating agreement
based on the 2002 AIPN International Operating Agreement Model Form (the “JOA”)
under which REPSOL is to be designated Operator upon full payment of
Consideration for Assignment of Participating Interest (as defined in Exhibit
“A”) and subject to government and third party approvals and consents as
required.  It is also intended that, subsequent to execution of the Definitive
Agreements, the Parties will enter into a clarification of, an amendment to or
restatement of the PSC as required by, incorporating the relevant terms of, and
superseding, the MoU (the “PSC Clarification”).  HDY-SCS will provide within
seven (7) Working days of the Effective Date an initial draft of the SPA, the
PSC Assignment and the JOA for review and evaluation by REPSOL.  The Parties
will work jointly in preparing the PSC Clarification to the PSC.  It is further
envisaged that the Parties will work together in a cooperative fashion on all
other technical, commercial and strategic matters and will attempt to
incorporate such cooperation into the relevant provisions of the JOA and the PSC
Clarification.

 
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Article II
Binding Provisions

The following provisions shall be binding upon the Parties:
 
2.1.           Exclusive Dealing.  HDY-SCS agrees that it and its Affiliates
including, without limitation SCS, will negotiate exclusively with REPSOL with
regard to the prospective acquisition by REPSOL of an undivided thirty-seven
percent (37%) participating interest in and under the PSC and the initial
Contract Area (as such term is defined in the PSC) (the “REPSOL Participating
Interest”).  More specifically, HDY-SCS shall, and shall procure that its
Affiliates including, without limitation, SCS shall: (i) not initiate, or
otherwise participate in, directly or indirectly, a solicitation of any other
offer or proposal for the sale, assignment or transfer, directly or indirectly,
through merger, consolidation or otherwise, of the REPSOL Participating
Interest, which means any interest in the PSC and/or the Contract Area that is
or would be inclusive of the REPSOL Participating Interest; and (ii) cease
negotiations and discussions with any other persons that have indicated an
interest in, or have submitted an offer to acquire any interest in the REPSOL
Participating Interest or any interest in the PSC and/or Contract Area that is
or would be inclusive of the REPSOL Participating Interest.  The obligations of
HDY/SCS and its Affiliates including, without limitation, SCS, to deal
exclusively with REPSOL herein will commence on the Effective Date and continue
until the earlier to occur of the Termination Date or the Parties’ execution of
mutually agreed and duly authorized Definitive Agreements.
 
After the signature of this LOI Repsol commits to pay its share of the Seismic
Acquisition Payments, as specified in Exhibit A Seismic Acquisition Payments.
 
If the Definitive Agreements are not executed within the agreed term established
in 2.3 Repsol can at its sole option choose between the request of the
reimbursement of the costs of the Seismic Acquisition to HDY/SCS or to legally
own the property of such information.
 
2.2           Due Diligence; Obligation to Negotiate in Good Faith.  During the
time period commencing on the Effective Date and continuing until the earlier to
occur of the Termination Date or the Parties’ execution of  mutually agreed and
duly authorized Definitive Agreements, the Parties will conduct due diligence
with respect to the prospective transaction described herein, and shall
negotiate in good faith regarding such prospective transaction.

 
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2.3           Term of this LOI. Unless otherwise extended by mutual agreement of
the Parties in writing, this LOI shall terminate at midnight local time in
Houston, Texas, on 31st January 2010, unless the mutually agreed and duly
authorized Definitive Agreements have been executed whichever occurs first, such
date of termination being herein referred to as the “Termination Date”.
 
HDY-SCS may not unilaterally terminate this LOI prior to the Termination Date.
If the LOI terminates as a result of Definitive Agreements not having been
executed prior to the Termination Date, neither Party shall have any obligation
or liability to the other except to the extent that, prior to the Termination
Date, a Party has breached any of the binding provisions of this LOI.
 
2.4           Liability. Nothing contained in this LOI shall create or
constitute or be deemed to create or constitute a partnership between the
Parties or any of them. Any liability of the Parties hereunder shall be several
and not joint or collective and each Party shall be responsible only for its
individual obligations hereunder.

Neither Party shall be liable in an action initiated by one against the other
for special, indirect or consequential damages resulting from or arising out of
this LOI, including, without limitation, loss of value, loss of production, loss
of financial advantage, loss of profit or business interruptions, however same
may be caused.
 
2.5           Confidentiality. The terms and conditions of the Confidentiality
Agreement entered into by REPSOL and SCS on October 5, 2009 (the “CA”), are
incorporated by reference into this LOI and shall apply with regard to all
information exchanged or developed hereunder. Notwithstanding the foregoing,
neither Party shall be prohibited from making any disclosure if it is necessary
to do so in order to comply with the applicable laws, rules, or regulations of
any governmental entity, court, or stock exchange having jurisdiction over such
Party or any of its Affiliated Companies (which term shall have the same meaning
herein as defined in the CA).
 
2.6           Repsol Participation Prior to Execution of Definitive
Agreements. Notwithstanding any other provisions hereof, REPSOL shall be
entitled to fully participate with HDY-SCS in the evaluation of technical data
leading to direction and interpretation of geological and geophysical data as
well as to participate in any meeting with the Government of the Republic of
Guinea during that interim period between the LOI and  the execution of
Definitive Agreements and, furthermore, shall fully participate during such
period in the preparation for negotiations with the Ministry of Mines, Energy
and Hydraulics of the Republic of Guinea (the “Ministry”) regarding the terms of
the PSC Clarification; shall be kept fully appraised of the progress of such
negotiations; and, subject to Ministry consent, shall be entitled to participate
in such negotiations.   Such negotiations shall be commenced as soon as
reasonably practicable following the Effective Date, and HDY/SCS will send a
notice to Repsol regarding any meeting to be held with the Ministry and/or Dana
at least five (5) days before.

 
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2.7           Press Releases. Neither Party may issue press releases, public
communications or public statements regarding the existence or terms of this LOI
and matters arising in relation hereto unless and until the other Party has been
furnished with a copy of such statement in advance and has given written
approval, which shall not be unreasonably withheld and which shall be timely
given, in no case exceeding twenty-four (24) hours.  Notwithstanding the
foregoing, neither Party shall be prohibited from making any disclosure if it is
necessary to do so in order to comply with the applicable laws, rules, or
regulations of any governmental entity, court, or stock exchange having
jurisdiction over such Party or any of its Affiliated Companies.
 
2.8           Applicable Law. This LOI and the transactions contemplated herein,
and the relationship of the Parties hereto shall be interpreted and construed in
accordance with the laws of England excluding any conflict of laws principles
which would refer the matter to the laws of another jurisdiction. No Person
other than a Party may enforce this LOI by virtue of the Contracts (Right of
Third Parties) Act 1999.
 

Any dispute, controversy or claim (“Dispute”) arising out of, relating to or in
connection with this LOI, including any question regarding its existence,
validity or termination, or regarding a breach hereof which cannot be resolved
by good faith discussions between the Parties within ninety (90) days (or such
longer period as may be agreed by the claimant Party) shall be referred by any
Party to, and shall be finally settled by, arbitration under and in accordance
with the Rules of Arbitration of the International Chamber of Commerce (the
“Rules”).  A Dispute shall be deemed to have arisen when either Party gives
Notice to the other to that effect.

The place of arbitration shall be London, England, and the award shall be deemed
to have been made there. The arbitration tribunal shall consist of three (3)
arbitrators appointed in accordance with the Rules. Arbitration shall be in the
English language. The decision of the arbitration tribunal shall include a
statement of reasons for such decision, the award shall be final and binding on
the Parties, and judgment thereon may be entered in any court having
jurisdiction for its enforcement. The Parties hereby expressly agree to exclude
all rights to application or appeal pursuant to Section 45 or Section 69 (as
amended or otherwise) of the Arbitration Act 1996 relating to any questions of
law arising in the course of the arbitration or with respect to any decision or
award made.

The costs of the arbitration proceedings shall be borne according to the
arbitration award. However, each Party to the Dispute shall bear its own costs,
including costs regarding its own witnesses, expert witnesses, translators and
attorneys, as well as such expert witnesses, translators and legal fees,
regardless of which Party prevails.

Without prejudice to the rights and remedies otherwise available to a Party, the
Parties agree that money damages would not be an adequate remedy for any breach
of this LOI and that a Party will be entitled to specific performance or other
equitable relief by way of injunction if a Party breaches or threatens to breach
any provision of this LOI.

 
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All matters relating to the arbitration proceeding, the existence of the
arbitration proceeding, documents prepared produced and exchanged in such
arbitration proceeding and the arbitral award itself shall be kept confidential
and not disclosed to third parties unless such disclosure is (i) required in a
Party’s efforts to compel arbitration or in its efforts to enforce an arbitral
award, (ii) required by applicable law or by a governmental order, decree,
regulation or rule or by any stock exchange on which the shares of the
disclosing Party or its Affiliates are listed, or (iii) as otherwise agreed in
writing by the Parties.

 
2.9           Costs and Expenses. Each Party shall be liable for its own legal,
accounting and other costs and expenses incurred by it in connection with the
undertakings associated with this LOI, including, without limitation, the
negotiation and execution of Definitive Agreements.
 
2.10                      Counterparts.  This LOI may be executed and delivered
by the Parties (in original form or by facsimile or emailed pdf scan) in
counterparts, each of which shall be deemed an original instrument, but all of
which together shall constitute the same instrument, provided that this LOI
shall not be effective until each Party has executed and delivered a
counterpart.
 
2.11                      Entire Agreement.  This LOI constitutes the entire
understanding among the Parties with respect to the subject matter hereof,
superseding all negotiations, prior discussions and prior agreements and
understandings relating to such subject matter.
 
2.12                      Amendments.  This LOI may not be amended nor any
rights hereunder waived except by written mutual agreement of the Parties.
 
2.13                      Assignment.  This LOI and the rights and obligations
herein may not be assigned by a Party, in whole or in part, without the prior
written consent of the other Party.
 
2.14                      No Third Party Beneficiaries.  This LOI is intended to
benefit only the Parties hereto and their respective permitted successors and
assigns.
 
2.15           Notices.  All notices and communications with respect to this LOI
shall be in writing.  Any communication or delivery hereunder shall be deemed to
have been duly made and the receiving Party charged with notice (i) if
personally delivered, when received, (ii) if sent by telecopy or facsimile
transmission, on the first business day on or after which such facsimile is
successfully transmitted and received, (iii) if mailed, three business days
after mailing, certified mail, return receipt requested, or (iv) if sent by
overnight courier, the first business day on or after such notice is sent by
overnight courier.

All notices shall be addressed as follows:

If to REPSOL: Attn. Didier Lluch, West Africa Exploration Director, Repsol
Exploración, S.A., Paseo de la Castellana 280, 4, 28046 Madrid, Tel: +34
91.756.61.06.

 
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If to HDY-SCS: Attn: Ray Leonard, President and Chief Executive Officer,
Hyperdynamics Corporation, One Sugar Creek Center Blvd., Suite 125, Sugar Land,
Texas 77478, USA Telephone +1 713.353.9400, Facsimile +1 713.353.9421.

Any Party may, by written notice so delivered to the other Party, change the
address or individual to which delivery shall thereafter be made.

2.16           Compliance With U.S. and International Laws Governing Sanctions
and Corrupt Practices. Each Party represents that, to the best of its knowledge
and belief, it is not subject to economic or other sanctions imposed under the
laws of the United States or treaties or conventions of the United Nations
and is eligible to receive exports from the United States under the laws of the
United States.
 

 
[Execution Page Follows]

 
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The Parties have executed this AGREEMENT FOR EXCLUSIVE DEALING AND LETTER OF
INTENT as of the Effective Date.
 

 
HYPERDYNAMICS CORPORATION
SCS Corporation
           
By:  /s/ Ray Leonard                                              
By:  /s/ Ray Leonard                                              
       Ray Leonard
 
       President and Chief Executive Officer
 

 
REPSOL EXPLORACIÓN, S.A.
 
By:   /s/ Marcus E. Mazetic                                   
Printed Name:   Marcus E. Mazetic                      
Title:  Exploration Director                                    
 
 
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EXHIBIT “A”
 
Essential Commercial Terms
 
This Exhibit sets forth certain essential business terms for a prospective
transaction which is being considered by the Parties.  These terms are set forth
solely for the purpose of furthering discussions between the Parties, and is not
intended to, and shall not be construed to, create any legally binding
obligation enforceable against either Party.
 
Affiliate
shall mean any person which (a) controls either directly or indirectly a Party,
or (b) is controlled directly or indirectly by such Party, or (c) is directly or
indirectly controlled by a person which directly or indirectly controls such
Party, for which purpose “control” means the right to exercise, directly or
indirectly, fifty percent (50%) or more of the voting rights in the appointment
of the directors or similar representation of a person, where “person” means any
individual, corporation, partnership, limited liability company or other legally
recognized entity.

 

 
Assignor:
SCS Corporation (SCS)- Hyperdinamics Corporation (HDY)

 
Assignee:
Repsol Exploración, S.A.

 
REPSOL
 

Participating
 

Interest:
An undivided thirty seven percent (37%) Participating interest in the PSC and
Contract Area to be assigned by the PSC Assignment contemporaneously with
execution of the JOA, subject to government and third party approvals and
consents as required, Assignee to be designated Operator upon full payment of
Consideration for Assignment of Participating Interest set out below and subject
to government and third party approvals and consents as required.

Contract
 Area:
Contract Area, as such term is defined in the PSC, it being understood and
acknowledged that such Contract Area is subject to variation pursuant to the
MoU.

Consideration for
Assignment of
Participating
Interest:
US$31,500,000 payable upon execution of the PSC Clarification and its entry into
full legal effect pursuant to the laws of the Republic of Guinea.

 
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Seismic
Acquisition
Payments, consist of:

Repsol to pay 37% share of BOS seismic program upon signing of Definitive
Agreements. This will include an immediate payment of 37% of payments already
made by Hyperdynamics at time of signing (currently estimated to be net $1.63
MM) and subsequently 37% of billings of $2.8 MM upon Hyperdynamics receiving the
second and third tranches of 3000 km. Repsol to have the same rights as
Hyperdynamics regarding the data, including cost recovery and resale.

Definitive Agreements:
SPA to be negotiated and executed by HDY/SCS and REPSOL (or its nominated
Affiliated Company), in respect of the acquisition by REPSOL of the REPSOL
Participating Interest as more particularly described below.

PSC Assignment assigning the REPSOL Participating Interest to REPSOL, such that
REPSOL becomes a party to the PSC, to be negotiated and executed by SCS, REPSOL
(or its nominated Affiliated Company), any third parties to the PSC, and the
Government of the Republic of Guinea, or such alternative means of effecting and
documenting the transfer of the REPSOL Participating Interest to REPSOL as may
be mutually agreed in writing by HDY,/SCS and REPSOL.

JOA (including Accounting Procedure) in respect of the PSC and Contract Area to
be negotiated and executed by SCS, REPSOL (or its nominated Affiliated Company)
and any third party co-venturers.

The foregoing agreements constitute the “Definitive Agreements”.

PSC Clarification,
to be negotiated by HDY-SCS, REPSOL (or its nominated Affiliated Company), any
third party co-venturers, and the Government of the Republic of Guinea
incorporating, inter alia, the relevant terms of, and superseding, the MoU, and
to be executed by all parties to the PSC.

Right of
First Refusal:
The right of first refusal applicable to SCS pursuant to Article 2.3 of the MoU
shall be passed on to REPSOL pro rata to the REPSOL Participating Interest.

 
 
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Indemnity:
HDY-SCS shall indemnify and hold harmless REPSOL in respect of any and all
claims and liabilities in respect of the period prior to the date of approval by
the Republic of Guinea of the assignment to REPSOL of the REPSOL Participating
Interest.

Conditions
Precedent:
All necessary approvals and consents by the Government of the Republic of Guinea
and relevant third parties for the acquisition of the Participating Interest by
REPSOL including, without limitation, approval of the Definitive Agreements, the
PSC Clarification, and any and all other ancillary documents of transfer and
recordation.

Working day
means a Day (other than a Saturday or Sunday) on which banks in Guinea Conakry
and in Madrid, Spain are customarily open for business.

 
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