UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                   FORM 10-KSB
                 [X] ANNUAL REPORT UNDER SECTION 13 OR 15(D) OF
                       THE SECURITIES EXCHANGE ACT OF 1934
                     For the fiscal year ended June 30, 2005
                                       or
               [_] TRANSITION REPORT UNDER SECTION 13 OR 15(D) OF
                       THE SECURITES EXCHANGE ACT OF 1934

                      For the transition period from     to

                        Commission File Number 000-25496

                            HYPERDYNAMICS CORPORATION
                 (Name of small business issuer in its charter)

                            DELAWARE                   87-0400335
               (State  or  other  jurisdiction       (IRS Employer
              of incorporation or organization)  Identification  Number)

                   9700 BISSONNET, SUITE 1700, HOUSTON, TEXAS 77036
     (Address  of  principal  executive  offices,  including  zip  code)

                                    (713) 353-9400
     (Issuer's  telephone  number,  including  area  code)

         Securities registered under Section 12(b) of the Exchange Act:
        Title of Each Class     Name of Each Exchange on which Registered
        -------------------     -----------------------------------------
           Common Stock, $0.001 par value     American Stock Exchange

Check  whether  the issuer (1) filed all reports required to be filed by Section
13  or  15(d) of the Exchange Act during the past 12 months (or for such shorter
period  that the registrant was required to file such reports), and (2) has been
subject  to  such  filing  requirements  for  the  past  90 days. Yes [X] No [ ]
Check  if  there  is  no disclosure of delinquent filers pursuant to Item 405 of
Regulation  S-B  is  not  contained  in  this  form,  and  no disclosure will be
contained,  to  the  best  of  registrant's  knowledge,  in  definitive proxy or
information statements incorporated by reference in Part III of this Form 10-KSB
or  any  amendment  to  this  Form  10-KSB.  [  ]

Indicate  by check mark whether the registrant is a shell company (as defined in
Rule  12-b-2  of  the  Exchange  Act)  Yes  [  ]  No  [X  ]

Issuer's  revenues for the year ended June 30, 2005 were $172,669. The aggregate
market  value  of  Common  Stock  held  by  non-affiliates  of the registrant at
September  26,  2005  based  upon the last reported sales prices on the American
Stock  Exchange  of  $1.15 was $19,361,098. As of September 26, 2005, there were
42,168,410  Shares  of  Common  Stock  outstanding.

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Table of Contents
PART I . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   3
Item 1 Description of Business . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   3
Item 2 Description of Property . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  10
Item 3 Legal Proceedings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  15
Item 4 Submission of Matters to a Vote of Security Holders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  17
PART II. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  17
Item 5 Market for Common Equity and Related Stockholder Matters and Small Business Issuer Purchases of Equity Securities  17
Item 6 Management's Discussion and Analysis or Plan of Operation . . . . . . . . . . . . . . . . . . . . . . . . . . . .  18
Item 7 Financial Statements. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  24
Item 8 Changes In and Disagreements with Accountants on Accounting and Financial Disclosure. . . . . . . . . . . . . . .  24
Item 8 (A) Controls and Procedures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  24
Item 8 (B) Other Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  24
PART III . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  25
Item 9 Directors, Executive Officers, Promoters and Control Persons; Compliance with Section 16(A) of the Exchange Act .  25
Item 10 Executive Compensation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  28
Item 11 Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters . . . . . . . . .  30
Item 12 Certain Relationships and Related Transactions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  32
Item 13 Exhibits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  33
Item 14 Principal Accountant Fees and Services . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  33
Signatures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  35
</TABLE>

                                     PART I
Item  1  Description  of  Business
History
 Hyperdynamics  Corporation  ("Hyperdynamics") is a Delaware corporation founded
in  1996.  At  inception we were a value-added reseller of computer hardware and
software.  Our  business plan was to develop into a complete service provider of
integrated  information  technology  services. During the fiscal year ended June
30,  2001,  we  began to offer our Integrated Technology Service Provider (ITSP)
product,  a  bundled  service offering for clients who wished to outsource their
information  technology department in addition to receiving internet service. We
discontinued this integrated service beginning in fiscal year 2002, about a year
after  acquiring  our subsidiary, SCS Corporation ("SCS"). When we acquired SCS,
we  decided  to  implement  a  dramatic change in our business plan. SCS quickly
became  our  only  operating subsidiary. In the summer of 2001, months after the
SCS  acquisition, we shifted instead to providing products and services targeted
specifically  to  the  oil  and  gas  industry  such  as seismic data management
services,  customized  geological workstations, and data transcription services.
Additionally,  SCS'  management  had years of experience which included both oil
and gas exploration and the provision of seismic data management services to the
oil  and gas industry. In early 2002, SCS got the opportunity to become involved
in  an  exploration  project  offshore  the  Republic  of  Guinea,  West  Africa
("Guinea").  Additionally  in  late  fiscal  2004,  we  began  exploration  and
production activities in Louisiana, USA through our reportable operating segment
HYD  Resources  ("HYDR").

While  working  to  rectify the problems with the Guinea exploration project, we
focused  more heavily on our Louisiana operations. In April 2004, we initiated a
new  company,  HYD  Resources  Corporation  ("HYDR"). HYDR owns drilling rigs, a
workover  rig  and  drilling  equipment.  HYDR  drills oil wells in proven areas
within  the  United  States. So far all of its drilling activity has occurred in
Louisiana.  Our  primary  goal for HYDR is to cost-effectively generate domestic
production  revenues.

Finally,  we  continue to use our seismic data management or NuData(SM) services
in  house.  In  fiscal  2005,  we copied all the vintage data of the Republic of
Guinea  from nine-track data tapes to DVD. Thus, this software continues to meet
our  in-house  data  management  requirements.  Our  seismic  data  management
capabilities  facilitate  the  further  analysis  and  use  of the data acquired
pursuant  to  the  needs  of  our  exploration  work  programs.

Current  Focus  and  Direction  of  Business  Plan

Offshore  Oil  and  Gas  Exploration  and  Exploitation;  Production and Sharing
Agreement  for  Exploration  Territory  Offshore  The  Republic  of  Guinea
In  early  2002,  SCS  management,  in  association  with  US Oil Corporation of
Houston,  Texas  ("US  Oil") began to evaluate the viability of US Oil's oil and
gas  concession off the coast of The Republic of Guinea, West Africa ("Guinea").
After  SCS'  geo-experts  review  of  older  seismic  data  collected  from that
concession, we decided that the concession provided a good business opportunity.
Thus, we negotiated an agreement with US Oil to revitalize the then-dormant 1995
Production and Sharing Agreement that US Oil still had in effect with Guinea. We
proposed  to  perform  a regional seismic data acquisition across the concession
using  modern  digital  technology.  US  Oil  agreed  to  the  proposal  and the
Government  of  Guinea  was  amenable  to  our  proposal and issued permits. SCS
proceeded in 2002 to acquire one thousand kilometers of regional two-dimensional
("2D")  seismic  lines.  In December 2002 US Oil negotiated a new Production and
Sharing Agreement ("2002 PSA") with Guinea. US Oil farmed out 100% of the rights
and  obligations  of  this  agreement  to  SCS.  This  2002 PSA gives rights for
exploration  and  production  across  the  concession  of  approximately sixteen
million (16,000,000) acres. In November 2003, SCS acquired another four thousand
kilometers  of  2D  seismic.  We  performed our exploration work in Africa under
Guinea's  Hydrocarbon  Development  Program,  which  was instituted by President
Lansana  Conte.  During fiscal 2004 we accomplished critical exploration work: a
4000  kilometer  2D  seismic  data  shoot,  the  processing  of the seismic data
acquired, and the evaluation of that data and data that had been acquired in the
past.

Until  SCS began the exploration program, the geological information relating to
offshore Guinea was scant. The first exploration activity in our concession area
occurred  in  the  1970's.  The  technology  available  for data acquisition and
processing  at  that  time  did  not  reveal  geological  information with great
precision.  The  area was not considered as attractive as other areas which more
clearly evidenced hydrocarbon systems using contemporaneous technology and which
were  easier  to  explore  and  develop.  Accordingly,  very  little  additional
exploration  work  occurred  on  the concession until we began our work in 2002.
The  general  economic  environment  has  changed dramatically since the 1970's.
Today,  oil is more scarce and the price of oil is the highest it has ever been.
Because  of  this  economic  fact,  exploration  and development is occurring in
certain  areas  around  the  world that were previously not explored because the
cost  was  perceived  to exceed the potential benefits. As we now know, offshore
Guinea was viewed as an area such as this for many years based on old geological
and  geophysical  data.  We  conducted our surveys using modern technology which
more  accurately  depicts  the  geological character of the area. The geological
work  that we and our vendors have performed supports our plan to begin drilling
exploration  wells.

The  regional 2D seismic acquired in 2002 included about 1,000 kilometers of new
data,  which  we  re-evaluated  during fiscal year 2004. We used the information
garnered  from this regional data shoot to design a more detailed 2D coverage of
a  4,000  kilometer grid and we acquired the additional data. During the second,
third,  and  fourth  quarters  of  2004,  we  completed  the  processing  and
interpretation  of  this  additional  4,000  kilometers  of  seismic  data. This
fulfilled  our  work  obligation under the initial exploration phase of the 2002
PSA.

The  additional interpretation and analysis of this 2003 data in early 2004 kept
us  in  full compliance with our required work under the 2002 PSA and, began our
strategy  to  exceed  minimum  requirements  in  support  of our commitment to a
hydrocarbon  discovery.  We  continued  our analyses with new and better methods
into  late  fiscal  2005.  This  work  is  continually providing us with growing
evidence  in  the  form  of  documented  direct  hydrocarbon  indicators.

In  fiscal 2004, after completion of the initial processing and re-processing of
our  newly  acquired  4,000  kilometers  of  digital  2D  data,  we were able to
determine,  through  intense  detailed  analysis  and  mapping  procedures,  the
existence  of  direct  hydrocarbon  indicators,  including  many noted gas seeps
sourcing  from the ocean floor in our coverage area. Based on this and the other
geological  and  geophysical  analysis,  we  contracted TDI-Brooks International
("TDI")  to  perform an extensive geochemical analysis. In early August 2004, we
obtained a permit from the government of Guinea and the geochemical work program
began  offshore  Guinea  on August 17, 2004. A total of fifty seven core samples
were  acquired  and delivered back to TDI's laboratory at College Station, Texas
and  an  analysis  was  completed  on August 30, 2004. The results of the coring
program  in  early  fiscal 2005 added additional evidence supporting our plan to
drill  our  first  exploration  wells.

In addition to the geo-chemical analysis, we had originally planned to implement
a  three-dimensional  ("3D")  survey  in  early 2004. We decided to defer the 3D
survey  because  we  wish  to take the extra time to further analyze our data in
order  to design a more efficient program which would concentrate our efforts on
the most prospective areas in the concession. We contracted with internationally
known  Petroleum  Geo-Services  ("PGS")  to  perform  a third party detailed and
comprehensive analysis and interpretation of all our seismic data. PGS's team of
professionals  began  an  estimated  12  week  process  on  July  13, 2004. They
presented  their  preliminary  report  to  us  on  August  19,  2004  revealing
significant  corroborating  evidence  of  hydrocarbons,  but most importantly it
clearly  expressed  agreement  with  our view that there is well defined working
petroleum  system  across  the concession. PGS gave us their completed report in
December  of  2004.  This  report  supported  our  work,  giving  us  additional
corroborating  evidence  to  go  forward toward drilling. One of the main issues
with  regard  to determining our next step was the corroborating evidence of the
size  of  the  drilling  targets.  This  confirmed our belief that the next step
should  be  drilling our first exploration wells as opposed to spending any more
time and money on 3D seismic. Due to the size of the structures, our geo-experts
determined  that  we would gain much more by simply spending the money to drill.
In  January  2005, we began looking at ways to put together drilling operations.
Additionally,  we  stepped up our communications and negotiations with potential
oil  company  working  interest  partners, drilling companies, and began work to
contract  drilling  platforms  to  use  to  drill  our  exploration  wells.  Our
geo-experts refined their work during the months of January through May 2005 and
diligently  focused  in  on  four targets from shallow to medium depth water. We
also  developed  a  multi-channel strategy to drill more wells faster. The first
channel is to partner with oil companies on a working interest basis. The second
is  to  raise significant private funds and to contract directly with a drilling
company  and  drilling  platform  vendors  ourselves.  The third strategy was to
contract with turn-key offshore drilling companies whereby our geo-experts would
direct  the  drilling  operations  of  the  contractor.

Our  top  corporate  priority  revolved  around  discovering commercially viable
hydrocarbons  offshore  Guinea  since  December of 2002. We made progress toward
this  goal  until June 27, 2005, when we sent a request for a drilling permit to
Guinea,  through  USOil.  The request was to obtain a permit to drill as many as
four  exploration  wells  offshore  Guinea.  We expected to receive the drilling
permit  quickly  as  a hydrocarbon development program was always reportedly the
top  priority and of the utmost importance to the country of Guinea. We received
a  termination  letter on the letterhead of the private office of the president,
purportedly  written  in "Agreement with the Authority". We had not received any
prior deficiency notice when we received the letter. We began working diligently
to rectify issue of our right to continue under the 2002 PSA. We disclosed these
events  in  an  8-K  filed  on  July  28,  2005.

On  July  12, 2005 we received a notice from USOil as disclosed in our 8-K filed
on  July  28,  2005,  which  purported  that  the 2002 PSA had been canceled. We
disagreed totally with their assessment and filed suit against USOil on July 29,
2005,  as  disclosed in the legal proceedings section hereunder.  We immediately
began  working  diligently to clear up all misunderstandings with the Government
of  Guinea  so  that  we  could  get back to the objective of beginning drilling
operations  offshore  Guinea.  On August 26, 2005, Mr. Kent Watts, President and
Chief  Executive  Officer, hired Mr. Famourou Kourouma as the company's new Vice
President  of  Guinea  Affairs.  Mr.  Kourouma, born and raised in Guinea, began
working  on  the  problem  to  get us back into a position to begin our drilling
program  since  their  initial  contact  on  August  22,  2005.

He  traveled  to Conakry, Guinea in early September 2005 and sought a resolution
of  the  outstanding issues precluding SCS from pursuing an exploratory drilling
program.  Through  Mr.  Kourouma's  many meetings and contacts with business and
government  officials,  including  two separate meetings with the Head of State,
support for our issues was sincerely expressed and a clear path was given by the
Head  of  State to work with the Ministre Secretaire General De La Presidence De
La  Republique  De  Guinee,  Son  Excelence  Mr.  Fode  Bangoura.

On  Wednesday  September 21, 2005, Mr. Kourouma called from Guinea and requested
that  he  come to Conakry to prepare for a meeting with a top ranking government
official.  On  Thursday,  September  22,  2005,  Kent Watts left for Guinea.  He
arrived  in  Conakry,  Guinea  at  approximately 5:00PM on Friday, September 23,
2005.

On Tuesday, September 27, 2005, Mr. Kent Watts, CEO and Mr. Kourouma, VPGA had a
private  meeting  with  the  Ministre  Secretaire General De La Presidence De La
Republique De Guinee,  Son Excelence Mr. Fode Bangoura (hereunder referred to as
the  "MSG").  The  meeting  was  held  at  3:00PM  at the Presidential palace in
Conakry,  Guinea.  Our  issues  pertaining to being allowed to continue our work
were  discussed  and  the Minister Secretary General was extremely understanding
and  gracious.  First  and  foremost,  the  MSG  emphatically  denied  that  any
termination  letter  had been generated or authorized by his office.  This means
that  the termination letter forwarded to us by USOil and reported in our 8K was
a  fake  and  not  valid.

After  some  additional  interpretive dialogue, Mr. Watts and Mr. Kourouma asked
the Secretary General, "what could we report as a summary outcome of our meeting
together."  Mr.  Kourouma  reported  to  Mr.  Watts  the  following  substantive
interpretation  of  the  Secretary  General's  response.

"The  Secretary  General  Son  Excelence  Mr.  Fode Bangoura told us that he was
pleased  to  discuss  our  issues  with  us  and that he was very encouraged and
believed that we were the right company for the work.  He then said that he will
begin  by  reviewing  everything  in  detail tonight.  Then, he will discuss the
information  with  the minister committee and a proposal from the President will
be  submitted  to  the  National  Assembly  for  approval.  Once the proposal is
approved,  the  National  Assembly will issue a legal approval (projet de lois).
Then  he  said  that  he will inform us of the approval and at that time he will
perform  all  steps  necessary  to  allow  us  to  continue  our  work.  "

With this new development and pending the outcome, Hyperdynamics Corporation has
significant  reason  to  believe  an amicable solution is inevitable in the very
near  future.

Seismic  Data  Management  Services

On  August  27,  2004  we entered into a contract with Texas Geophysical Company
("TGC") relating to their data from Northern Alaska covering an offshore area of
the  Alaska  National  Wildlife Refuge ("ANWR"). Under this contract, SCS became
the  sales  agent  and seismic data management provider for TGC's ANWR data. The
State  of  Alaska  recently opened this area for block bids for offshore oil and
gas  exploration  and exploitation and TGC has the rights to the only 2D seismic
data  known to cover this area. Should oil companies license this data, SCS will
perform  the  data  processing  and  will earn associated service revenues and a
percentage  of  the  license  fees.

Development  of  SCS  NuData(TM)  Management  System

On  September  13, 2002, we acquired the copyrights and all rights to the source
code  of  the ONYX and ONYXII related conversion and transcription software. The
software  is  instrumental  in  providing  the  technical capabilities to handle
virtually  any  type of tape transcription and data conversion service. The ONYX
software establishes a major competitive advantage for us as a primary component
for our SCS NuData  Management System. The ONYX software has been developed over
the  last  five years and we are in the process of completing its latest version
of  the  software to take full advantage of Microsoft's 32 bit Operating Systems
such  as  Windows  2000,  Windows  XP  and  future  64  bit operating systems as
technology advances. As the primary cornerstone of our NuData Management System,
ONYX  facilitates  over 120 different tape formats including such common formats
like  SEG A,B,C, or D, Western Code 4.2 and 1, Geocore 4, and Tempest, to name a
few.  These  formats  are  converted  to the more standard SEG-Y format and then
consolidated to DVD. Features of the NuData Management System in addition to the

ONYX  based  conversion  capabilities  include:

A  custom  and  unique  tape tracking system tightly monitoring and managing the
transcription  process  and  database to organize and keep track of all the data
associated  with  a  particular  line  or  area  of  seismic  data.
Bundled  services  to  scan well logs, maps and other related information to PDF
format  and  consolidate  such  related  data  on  the  same  disk or DVD as the
converted  seismic  data.

Strong  quality  assurance  procedures.  Data  sets are catalogued in the NuData
database  and  then  compared  to  client's  database  and  reconciled to NuData
database.

Once  consolidated  on  DVD, there are many different data management and backup
solutions  available,  for  example, online virtual private network (VPN) access
established  privately  or  high  speed  transmission  from  Hyperdynamics
transcription  facility  to  remote  sites  across  high  bandwidth  capacity
connection.

While  we  maintain  the  ability  to service third party companies, the primary
benefit  of  our  NuData  capability  is  to  make  our  exploration  activities
significantly  more  efficient.

When  coupled  with  our  extensive  industry experience, the NuData  Management
System  allows  us to consolidate our seismic data in ways that save substantial
amounts  in  future  data  maintenance expenses. We can dramatically enhance our
accessibility  and  utility of our seismic data thereby enhancing our ability to
find new oil and gas reserves faster and at a lower cost. In summary, the NuData
Management  System makes the data we manage more secure, accessible, manageable,
and  portable  all  while  saving  us  significant  time  and  money.

Domestic  Oil  Field  Service  and  Production

On  April  23,  2004,  we acquired our new subsidiary, HYD Resources Corporation
(HYD).  HYD  is  a Texas corporation and is our second operating subsidiary. HYD
has corporate offices located at our home office in Houston and one field office
located  in  La  Salle Parish in Louisiana. When acquired, HYD had approximately
$375,000 worth of assets, the bulk of which was oil field equipment. At the time
of  acquisition,  HYD  also had no prior history of operations. HYD's president,
Mr. Sam Spears, a long time oil industry operator, made some strategic purchases
of  additional equipment in early fiscal 2005 and we then renovated two drilling
rigs and one work-over rig that are all in operation today. HYD drills oil wells
in  proven  areas  within  the  United  States.  Currently,  all of its drilling
activity  occurred  in  Louisiana.

In January 2005, Hyperdynamics acquired an inactive company that from the former
owners  of  HYD,  Trendsetter  Production  Company  (TPC).  TPC is an authorized
operator  in  the  state  of  Louisiana. This immediately made us an oil and gas
operator.

HYD's  business  is  drilling  and  production  services  for shallow wells with
relative  low  volume in proven areas known to historically produce oil and gas.
We  evaluate  the  performance  of  these  two  companies  as a single unit, our
reportable  segment  named  HYD  Resources  ("HYDR").

One  of  HYDR's  activities  is  the  acquisition  and  repair  of key oil field
equipment.  We  can  then  use  this  equipment to drill for our own oil and gas
production,  establish  production facilities, and maintain our producing wells.
Because  of  our  capabilities  to  drill  and operate, we have obtained working
interest  on  currently  614 acres under lease. We intend to continue to acquire
oil  leases  in known producing areas and drill these leases to increase our own
production  revenues.  We  can  acquire onshore producing leases with a very low
risk  and  cost-effectively  enhance the production of wells acquired by working
over  existing  wells.  Management  expects  our onshore operations to result in
current  income  to  cover  its  corporate  overhead.

Since  January 2005, we have obtained or drilled its first 21 oil wells on three
separate leases. While drilling our first lease known as the J. W. Norris lease,
it  was  determined that significant amounts of high pressure gas existed on the
lease.  As  each  well  drilled continued to hit additional gas zones, the first
twelve  wells  were  left  basically shut-in and it was determined that we would
need  to  install  a gas gathering system, contract with a pipeline transmission
company  and then execute a contract with a company to buy our gas. This process
to establish a means to sell our gas began in June 2005 and we signed a contract
with  Tennessee Gas on September 2, 2005. We subsequently delivered our contract
to  sell  our gas with British Petroleum on September 15, 2005. This has enabled
us to install a gas gathering system and metering equipment to begin selling our
natural  gas  reserves.  Gas  sales  are  expected  to  begin  in  October 2005.
After  determining  that  it  would  take  some  time to get established to sell
natural  gas,  we  began  drilling  oil wells on the Kelly lease. The first well
drilled, Kelly#1 began initially with flow rates of approximately thirty barrels
per day in July 2005. This increased to approximately seventy barrels per day in
early  August  and is expected to level out at around fifty barrels per day. The
company  also  has  drilled  Kelly#  2  as completed approximately at the end of
August.  While  drilling  Kelly#1  and Kelly#2, new gas zones were discovered as
well.  Since  the  gas  metering equipment for the Norris lease will actually be
located  on  the  Kelly  lease, we believe that drilling additional gas wells to
increase  gas  production  will be much easier and faster once the gas system is
completed.  With  at  least two more sites to place producing wells on the Kelly
lease,  management feels that maximum production from Norris and Kelly should be
reached  sometime  between  October  and  November  of  2005.

Since  July  1 through September 26, 2005 we sold approximately 1,943 barrels of
oil  and  have approximately nine hundred (880) barrels in the production tanks.
We  are  looking  to  begin  drilling  on  additional  leases  that  we have and
additionally  expect to obtain. During fiscal year 2006, the domestic production
goals  are  to  nominally  reach  seven  hundred  fifty (750) barrels per day of
production  of  oil  and  gas  equivalent.

Employees  and  Independent  Contractors

We  currently have 31 full time employees and no part time employees. Out of 31,
6  of  these  employees  are a strict part of corporate overhead, 4 are directly
associated  with  SCS  and thus attributable to the exploration and seismic data
management  effort  and 21are focused on the growing oil field production of HYD
Resources. They are comprised of 2 management and 19 hourly employees working on
well  work-over,  drilling,  and  strategic  equipment  renovation  projects.
Additionally,  we  use  independent  contractors  to minimize fixed overhead. No
employees  are  represented  by  a union and the Company believes that its labor
relations  are  good.

Alliance  Partnerships,  Key  Vendors  and  Technical  Certifications

Hyperdynamics  maintains  certifications with Microsoft as a Microsoft Solution
Provider  and  Great  Plains  Software  as  eEnterprise  reseller. Our technical
capabilities are more focused on vertical software development, for example, our
new  version  of  ONYX  software  that  is  the  cornerstone  of  our NuData(SM)
end-to-end  seismic  data  services.

Oil  industry  related  alliance  partners  and vendors that we have established
include  the  following:

Spectrum  Geophysical Processing Company ("Spectrum") provided professional data
processing  services  for  us.  Spectrum is a member of a UK registered group of
companies  providing  seismic  data  processing,  non-exclusive  surveys  and
electronic  data  management  services to a wide range of international clients.
Spectrum  has  its  headquarters in Woking, England, with operational centers in
Houston  and  Cairo.  There  are active joint ventures in Buenos Aires, Tripoli,
Tehran  and  New  Delhi.  SEISMIC  DATA  PROCESSING  operates a major processing
computer  hub  in  its  Houston  office  using  the  successful  combination  of
interactive  SeisUp  running  on multi CPU Hewlett Packard Exemplar systems with
the addition of a large PC cluster to run pre-stack time and depth migration and
other  CPU  intensive  processes.  Both  Spectrum's geophysicists and Spectrum's
clients  can  interactively utilize this capacity via Tarantella servers and the
internet.  As  pioneers  of  seismic  trace scanning and digital reconstruction,
Spectrum  continues  to  improve  its  Geoscan  service  and  product  with more
sophisticated  reconstruction  algorithms and an upgraded, interactive operating
environment.  Spectrum  also  provide  tape  transcription and remedial/recovery
services, and have successfully completed many projects involving the copying of
thousands of old tapes to new high density cartridges. NON-EXCLUSIVE SURVEYS are
an  important  part  of  the group's activities. The international portfolio has
recently increased with the completion of surveys offshore Oman and New Zealand.
We  contracted  with  Petroleum  Geophysical  Services  ("PGS")  to  establish a
strategic  alignment  for  further  seismic  acquisition  and  independent  data
interpretation  services.  PGS  is  a  technologically  focused oilfield service
company  principally  involved  in geophysical and floating production services.
PGS  provides  a  broad  range of seismic and reservoir services, including data
acquisition, processing, interpretation, and field evaluation. PGS also owns and
operates  four  floating  production,  storage and offloading units (FPSOs). PGS
operates  on  a  worldwide  basis  with  headquarters  in  Oslo,  Norway.

We engaged TDI-Brooks International ("TDI") to perform geochemical core analysis
of  our concession. TDI is the recognized leader in offshore surface geochemical
exploration  and  heat  flow  measurement.  Since 1996, TDI has collected nearly
7,000  deep  water piston core sediment samples and heat flow stations for every
major  oil  company,  in  areas  such  as the Caribbean, the Gulf of Mexico, the
Mediterranean,  the  North  Atlantic  and  offshore  West  Africa.

Key  Customers

Oil  production  from  our  Louisiana  properties is purchased by one customer -
Plains  Marketing  LLC.

Research  and  Development

We  do  not  expend  a  material  amount  on  research  and  development.
Cost  of  Compliance  with  Environmental  Laws

Because  we are engaged in extracting natural resources, our business is subject
to  various  federal,  state  and  local  provisions regarding environmental and
ecological  matters.  Therefore,  compliance  with  environmental  laws  may
necessitate  significant  capital  outlays,  affect  our earnings potential, and
cause  material  changes in our current and proposed business activities. At the
present  time,  however,  the  environmental  laws  do not materially hinder nor
adversely  affect  our  business. Capital expenditures relating to environmental
control facilities have not been material to our operations since our inception.
During the fiscal year, we have done an oil well clean up. The cost of the clean
up  was  less  than  $5,000.  We  have  abided  and  are  in compliance with the
environmental  law.

Item  2  Description  of  Property

Description  of  Oil  and  Gas  Properties

Foreign
-------
We  are  engaged  in  oil  and  gas  operations.  Beginning in November 2004, in
Louisiana  (onshore), we started drilling for and produced oil. During that time
we  also started drilling for gas, sometimes in the same borehole as for oil. As
of June 30, 2005 we drilled an aggregate of nine wells in Louisiana. We reworked
seven  shut-in  wells  that were on the leases when we acquired them. We finance
our  Louisiana drilling and production operations from internal resources and by
selling  some  of the working interest in oil and gas leases to investors, while
retaining  a  portion  of  the  working  interest for ourselves. In West Africa,
offshore  of  Guinea,  we are engaged in oil and gas geophysical exploration. We
have  not  yet  done  any  drilling  off  the  coast  of  Guinea.

In  early  2002, SCS management, in association with USOil began to evaluate the
viability  of USOil's oil and gas concession off the coast of Guinea. After SCS'
geo-experts  review  of  older  seismic  data collected from that concession, we
decided  that  the  concession  provided  a  good business opportunity. Thus, we
negotiated  an  agreement  with  USOil  to  revitalize  the  then-dormant  1995
Production  and Sharing Agreement that USOil still had in effect with Guinea. We
proposed  to  perform  a regional seismic data acquisition across the concession
using modern digital technology. USOil agreed to the proposal and the Government
of Guinea was amenable to our proposal and issued permits. SCS proceeded in 2002
to  acquire  one  thousand kilometers of regional two-dimensional ("2D") seismic
lines.  In  December  of  2002  USOil  negotiated  a  new Production and Sharing
Agreement  ("2002  PSA")  with  Guinea.  USOil farmed out 100% of the rights and
obligations  of  this agreement to SCS. This 2002 PSA gives exclusive rights for
exploration  and  production  across  the  concession  of  16  million  acres.

In  November  of  2003,  SCS  acquired  another  four  thousand kilometers of 2D
seismic.  The 2003 seismic data was processed by Spectrum Energy Information and
Technology.  In  June  of  2004, we engaged Petroleum Geo Services to perform an
independent  evaluation  of  our  seismic  data. In August of 2004, we hired TDI
Brooks  to  perform a seabed coring program and in November of 2004, we employed
Infoterra  to  conduct a satellite seep study of the Guinea offshore. In January
of  2005,  we  deployed  PrimeView to further analyze our seismic data through a
technique known as attribute analysis. The culmination of all of this effort and
expense  was  evident  when  on  June  27, 2005 we sent a request for a drilling
permit  to Guinea, through USOil Corporation. The request was to obtain a permit
to  drill  as  many  as  four  (4)  wells  offshore  Guinea.

The  minimum  remaining  term  of  our  Guinea  farmout is described as follows:
If  a  well  is  not  drilled  by  December 2, 2005 then SCS Corporation will be
granted  an  extension  until December 2, 2006 to drill a well. If a well is not
drilled by December 2, 2006 then SCS will relinquish its entire concession of 16
million acres. If a well is drilled by December 2, 2006 then SCS will have until
December  2, 2011 to drill additional wells and evaluate areas for exploitation.
Once  an  area  has  been  deem  commercially productive SCS can secure it as an
"Exploitation  Area" of a simple geometrical shape of 50km x 50km with a payment
of  one million dollars to the Republic of Guinea. The Exploitation Area is held
for  35  years  for  each  well drilled in its boundaries. SCS can have multiple
Exploitation  Areas.  After  December 2, 2011, SCS will surrender all acreage to
the  Republic  of  Guinea  with  the  exception  of  the  Exploitation  Areas.

The  above  is the case as if there had been no interruption to the work. Should
we  take  a  legal  position regarding the timing of the work, part of our claim
will  include  that we have been prevented from performing our work and thus the
time  to  perform  will need to be adjusted and extended accordingly once we are
allowed  to  continue.

Domestic
--------

Our  domestic  energy  operations  are  conducted  by our reportable segment HYD
Resources.  HYD  Resources provides drilling, workover and construction services
internally  and to third parties. It also leases and operates oil properties. It
has  approximately 698 acres of land under lease for oil and gas development. Of
this  total, leases totaling approximately 258 acres have production on them. We
have  approximately  47%  working  interest  on  46  acres  in  La Salle Parish,
Louisiana  that  are  currently  producing  oil.  On  the other acreage, we hold
working  interest ownerships ranging from 68% to 80% and we are the only working
interest  owners.

Reserves  Reported  To  Other  Agencies.

We  did not report any estimates of total, proved net oil or gas reserves to any
other  Federal  authority  or  agency.

Production.

We  commenced  production of oil and gas in Louisiana in 2004. The average sales
price  (including  transfers) per unit of oil produced in fiscal 2005 was $47.59
per  barrel.  We  did  not  sell  any  gas  in  2005.

Lifting  Costs.

The  average  production  cost (lifting cost) per barrel of oil produced in 2005
was  $11.00 per barrel. We expect this cost to decrease as additional production
is  brought  online.

Productive  Wells.

Crude  Oil  and Natural Gas Wells The number of productive crude oil and natural
---------------------------------
gas  wells  in  which  we  held  an interest as of June 30, 2005 was as follows:

<TABLE>
<CAPTION>

<S>                   <C>    <C>
                 2005 (1) (2)
                      Gross  Net
--------------------------------
Crude Oil Wells
---------------
United States
---------------
Onshore
---------------         16  10.3
International
---------------
Offshore. . . .          0     0
--------------------------------
Total                   16  10.3

</TABLE>

Productive  wells  are  producing wells and wells capable of production. A gross
well  is  a well in which a working interest is owned. The number of gross wells
is the total number of wells in which a working interest is owned. A net well is
deemed  to exist when the sum of fractional ownership working interests in gross
wells  equals  one. The number of net wells is the sum of the fractional working
interests owned in gross wells expressed as whole numbers and fractions thereof.
One  or  more  completions  in the same borehole are counted as one well in this
table.

Acreage.

The  developed  and  undeveloped acreage (including both leases and concessions)
that  we  held  as  of  June  30,  2005,  are  as  follows:

<TABLE>
<CAPTION>

<S>                    <C>                        <C>                          <C>          <C>
                                  Developed Acreage (1) (2)              Undeveloped Acreage (2) (3)
Location. . . . . . .          Gross Acres                Net Acres              Gross Acres       Net Acres
------------------------------------------------------------------------------------------------------------
United States
Onshore
---------------------
Louisiana . . . . . .              258                       178                     440               365
------------------------------------------------------------------------------------------------------------
Foreign Offshore
---------------------
Guinea. . . . . . . .                0                         0              16,000,000        13,120,000
------------------------------------------------------------------------------------------------------------
Total                              258                       178              16,000,440        13,120,365

</TABLE>

Developed  acreage  is  acreage  spaced  or  assignable  to  productive  wells.
A  gross  acre  is  an  acre in which a working interest is owned. A net acre is
deemed  to exist when the sum of fractional ownership working interests in gross
acres  equals  one. The number of net acres is the sum of the fractional working
interests owned in gross acres expressed as whole numbers and fractions thereof.
Undeveloped  acreage  is considered to be those leased acres on which wells have
not  been  drilled  or  completed to a point that would permit the production of
commercial  quantities of crude oil and natural gas regardless of whether or not
such  acreage  contains proved reserves. Included within undeveloped acreage are
those  leased acres (held by production under the terms of a lease) that are not
within  the spacing unit containing, or acreage assigned to, the productive well
so  holding  such  lease.

Net  Exploratory  and  Development  Wells.  The  following table sets forth, for
------------------------------------------
fiscal  2005, the number of net exploratory and development wells we drilled. An
------------
exploratory  well is a well drilled to find and produce crude oil or natural gas
in  an  unproved area, to find a new reservoir in a field previously found to be
productive  of  crude  oil  or  natural gas in another reservoir, or to extend a
known  reservoir.  A  development well, for purposes of the following table is a
well  drilled  within the proved area of a crude oil or natural gas reservoir to
the depth of a stratigraphic horizon known to be productive. The number of wells
drilled  refers to the number of wells completed at any time during fiscal 2005,
regardless of when drilling was initiated. Completion refers to the installation
of permanent equipment for the production of crude oil or natural gas, or in the
case  of  a dry hole, to the reporting of abandonment to the appropriate agency.

<TABLE>
<CAPTION>

<S>                               <C>                  <C>            <C>                <C>

                                     Net Exploratory Wells               Net Development Wells
    Year Ended June 30, 2005     Productive (1)        Dry (2)        Productive (1)      Dry (2)
    ------------------------     --------------        -------        --------------      -------
                                  U.S     Int'l     U.S     Int'l     U.S     Int'l     U.S     Int'l
                                  ---     -----     ---     -----     ---     -----     ---     -----
                                    0         0       1         0       8         0       0         0
                                    -         -       -         -       -         -       -         -

</TABLE>

A  productive well is an exploratory or development well that is not a dry hole.

A  dry  hole is an exploratory or development well determined to be incapable of
producing  either  crude  oil or natural gas in sufficient quantities to justify
completion  as  an  oil  or  gas  well.

At June 30, 2005, we were in the process of drilling 0 gross (0 net) exploratory
wells  and  1 gross (.75 net) development wells. These wells are located onshore
in Louisiana. These wells have objectives ranging from approximately 700 feet to
1,900  feet.  The  net  drilling cost to us of these wells will be approximately
$60,000  if  all  are  dry  and  approximately  $100,000 if all are completed as
producing  wells.

Delivery  Commitments.

Offshore  Guinea.  When,  if  and  as, there is production in Guinea, that falls
----------------
under  the  terms of the 2002 PSA, a 15% royalty will be paid to the Republic of
----
Guinea  and 3% will be paid to USOil pending any changes through our pursuit and
findings  in  litigation  with  them.

Present  Activities.

Subsequent to the end of the fiscal year two additional wells in Louisiana which
has  added  significantly  to  our  production  totals. We are in the process of
finalizing our contracts and commencing construction of natural gas gathering on
leases  near  Jena,  Louisiana.

Neither Hurricane  Katrina nor Hurricane Rita affected any of HYDR's operations,
nor  has  it in any way disrupted the daily production schedule. The storms have
not  caused  any  damage  to  the  production  facilities  or  equipment.

Description  of  Physical  Facilities
-------------------------------------

Description  of  Operations  Center  in  Louisiana

On  April  2005, HYD Resources executed a Commercial Capital Lease with Purchase
Option.  The  agreement  was for the lease/purchase of approximately 7/10 of one
acre of highway frontage land containing a metal building of approximately 7,000
square  feet.  It  was  obtained to use for the oil and gas operations center in
Jena,  Louisiana.  The agreement terms included making payments of $6,541.09 per
month from May 2005 through December with a $1 option to acquire the property at
the  end  of  the  lease. The total to be paid for the facility is approximately
$52,330,  which  includes  interest  of $2,330. The property is well located and
well  suited  to  facilitate  organization  and  mobilization of our oil and gas
drilling  and  production  in  Louisiana.

Description  of  Administrative  Office  Property

In  2000  we signed a 10-year lease with AGB Westwood, LTD to lease our facility
at the Westwood Technology Center, a 540,000 square foot development in Houston,
Texas. Under the lease we leased approximately 17,807 square feet of space to be
used initially corporate offices, data center and integration center operations.
Our  lease  payments  were  $20,774  per  month  or $14 per square foot up until
September  2005 when the rate changed to $16.25 per foot. We now pay $24,114 per
month.

In  May  2005,  we  filed  suit  against  the landlord for breach of contract as
disclosed  in  the  legal  proceedings  section  hereunder.

Item  3  Legal  Proceedings

Dixon  Financial  Services

In  2001,  we  were  named  as  a  defendant in a lawsuit styled Dixon Financial
Services,  Ltd.  v.  Fidelity Transfer Company, Erin Oil Exploration, Inc., Bill
Knollenberg,  Ron  Bearden,  R.F. Bearden Associates, Inc., James Chang, Nick H.
Johnson,  Riley  L.  Burnett,  Jr., Johnson, Burnett & Chang, L.L.P., Greenberg,
Peden,  Siegmyer  & Oshman, P.C., George Siegmyer and Hyperdynamics Corporation;
Cause  No.  2001-06263;  In  the 215th Judicial District Court of Harris County,
Texas.

This  suit  alleged breach of contract for failure to deliver share certificates
in the name of Dixon Financial Services for 574,500 shares of the Company stock,
which  shares  were  held  in  a nominee name. In 2000, The Erin Oil Exploration
parties, including their attorneys, brought suit against the Company, wrongfully
claiming  that the shares were subject to their claims against other persons and
obtained  a  temporary  restraining order preventing the transfer of the shares.
Fidelity  Transfer,  as  the  Company's  transfer agent, refused to transfer the
shares  to  Dixon  because  of  the  restraining  order. The Court set aside the
temporary  restraining order as to the shares and the shares were not subject to
a  later  temporary  injunction. However, legal counsel for the Erin Oil parties
wrongfully  asserted  to  Fidelity  Transfer that the shares were subject to the
injunction  and  Fidelity  Transfer  refused  to  transfer  the  shares to Dixon
Financial  for  a  period  of at least three months during which the share price
dropped  from  more  than  $6.00  a share to slightly more than $1.00 per share.
Dixon  Financial and the Company brought claims against the Erin Oil parties and
their  legal  counsel  for  their  wrongful  conduct. The Erin Oil legal counsel
asserted  a litigation privilege under Texas law. The Erin Oil parties and their
legal  counsel  filed  motions  for  summary  judgment  asserting the litigation
privilege  as  a  bar to liability. The trial court granted all such motions for
summary  judgment.

Fidelity  Transfer asserted that it was not subject to jurisdiction in Texas and
the  Company  determined  that  Fidelity  Transfer was not currently solvent for
purposes  of  any  judgment  against  it in this matter. Fidelity Transfer is no
longer  a party to this lawsuit, but the Company has a formal agreement allowing
it  to  pursue  recovery  against  Fidelity  Transfer  at  a  later  time.

At  the  end  of  April  2005,  the  Company and Dixon Financial entered into an
agreement  to  settle and resolve this litigation. The agreement provides, among
other  things,  that  since  the  claims of both Dixon Financial and the Company
against  the  Erin  Oil  parties  and  their legal counsel are similar, that the
Company  will  bear  the  cost of appealing the summary judgments granted to the
Erin Oil parties on the litigation privilege defense to liability. The agreement
further  provides  that  the  Company  agree  to  a  judgment  in  the amount of
$2,015,264  for  the  failure  to  deliver  the  shares  into  the name of Dixon
Financial.  However,  Dixon  Financial  has  agreed that it will not abstract or
otherwise  seek  to  enforce  the  agreed judgment, except in the event that the
appeal  is  unsuccessful or the Erin Oil parties are determined not to be liable
for  any  other  reason.  If  the  appeal is unsuccessful, the Company and Dixon
Financial  have  agreed that the Company will pay the sum of $240,000 payable in
the  amount  of  $10,000  per month for a period of 24 months. This agreement is
subject  to  court approval. The Company reasonably believes that its liability,
if  any,  will not arise prior to January 2007.  In the event that the appeal is
successful,  the  Company will not be obligated to pay any amount of money other
than legal fees and expenses. If the appeal is successful, the Company will seek
to  recover  its  damages  and  costs  from the Erin Oil parties and their legal
counsel.  The  Erin  Oil  parties'  legal counsel have insurance which have been
providing  a defense and which may be liable for any damages awarded against the
Erin  Oil  parties'  counsel.

The  proposed  agreed judgment described above was submitted to the court in May
2005.  As  of  October  4,  2005,  the  court  had  not  ruled  on the judgment.
Wellington

On  April  9, 2001, we were named as a defendant in a lawsuit styled Wellington,
LLC  vs.  Hyperdynamics  Corporation et al. Civil Action# 18811-NC, The Court of
Chancery  of  Delaware.

The  Plaintiff claims that we did not carry out conversion of series A preferred
stock  to  common  stock.  On  August  9,  2002  Plaintiff, Defendant, and their
respective  counsels  executed  an "Agreement for Transfer of Claims in Delaware
Action  to  Georgia". Subsequently, the lawsuit was moved in its entirety to the
Atlanta,  Georgia  to  be litigated under the lawsuit discussed BELOW. Under the
agreement,  the  Plaintiff in the Delaware action, Wellington, LLC. would become
the  Defendant in Atlanta. During the fiscal year ended June 30, 2004, the Court
of  Chancery  of  Delaware  dismissed  the  Delaware  case.

On  November  5,  2001,  we  filed  a  lawsuit styled Hyperdynamics Corporation,
Plaintiff,  v.  J.P.  Carey  Securities,  Inc., J.P. Carey Asset Management LLC,
Joseph  C.  Canouse,  John  C.  Canouse,  James  P.  Canouse,  Jeffrey  Canouse,
Southridge  Capital  Management  LLC,  Stephen  Hicks a/k/a Steve Hicks, Thomson
Kernaghan  &  Co.,  Limited,  Mark Valentine, Talya Davies, Cache Capital (USA),
L.P.,  Carpe  Diem,  Carpe  Diem LTD., Wellington, LLC, Minglewood Capital, LLC,
Falcon  Securities,  LTD,  Navigator  Management  LTD.,  David  Sims,  and Citco
Trustees  (Cayman)  Limited,  Defendants;  and  Wellington  LLC,
Counterclaim/Third-Party  Plaintiff,  v.  Hyperdynamics  Corporation, a Delaware
corporation, Kent Watts, Michael Watts, Robert Hill, Harry J. Briers, DJX, Ltd.,
a  Belize corporation, and Does 1-10, Counterclaim/Third-Party Defendants, Civil
Action  File  No.  2001CV44988, In The Superior Court of Fulton County, State of
Georgia.

We filed our First Amended Complaint against Defendants on September 12, 2002 in
which  we  presented  thirteen  counts  for  Causes of Action against defendants
including "Violations of Georgia Racketeer Influenced and Corrupt Organizations"
(RICO)  Act  (O.C.G.A.  SS  16-14-1,  ET  SEO).

We  believe  that  more than one of the Defendants worked together to create the
appearance  of providing initial long-term financing ($3,000,000) and additional
financing commitments (up to additional $5,000,000), all from reputable sources,
while  the  Defendants'  real  plan  was  to  manipulate  our  stock  through
contractually  prohibited  short  selling  and  multiple  breaches  of  the
contractually  agreed  to  selling  covenants.

We are subject to counterclaims in this Georgia litigation. The counterclaimants
allege  that  Hyperdynamics  and  its  officers  and  directors  breached  their
fiduciary duties to shareholders and committed other tortuous acts. We intend to
continue to vigorously pursue damages and defend all counterclaims. Discovery is
being  primarily  focused  on  jurisdictional  issues  at  this time. During the
litigation  we have made numerous claims of discovery abuse resulting in certain
defendants  and  defense attorney's involved being sanctioned by the court. They
have  filed  for  sanctions  against  us  as  well.

AGB  Westwood,  L.P.

On  May  5, 2005 the Company filed a lawsuit styled Hyperdynamics Corporation v.
AGB  Westwood L.P.; Cause No. 2005-30992; In the 165thth Judicial District Court
of  Harris  County,  Texas.
The  Company alleges that AGB Westwood L.P. committed fraud and has breached the
lease  contract with Company. The Company intends to aggressively pursue damages
for  its  claims.

USOil

On  July  29,  2005  our  wholly  owned  subsidiary  filed  a lawsuit styled SCS
Corporation, Plaintiff v. USOIL CORPORATION, Defendant; Cause No. 2005-49205; in
the  333rd  Judicial  District  Court  of  Harris  County,  Texas.
The  Company alleges Breach of Contract, Fraud, Negligent Misrepresentation, and
seeks  a  Declaratory  Judgment.

Item  4  Submission  of  Matters  to  a  Vote  of  Security  Holders

None.

                                     PART II

Item  5  Market  for  Common  Equity  and  Related Stockholder Matters and Small

Business  Issuer  Purchases  of  Equity  Securities

Price  Range  of  Common  Stock

Our  Common  Stock  was traded on the OTCBB under the symbol "HYPD" until May 5,
2005  when  it began trading on the American Stock Exchange "AMX". The following
table  sets forth the quarterly high and low bid prices per share for the Common
Stock,  as  reported by the OTCBB or the AMEX as the case may be. The bid prices
reflect  inter-dealer  quotations,  do  not  include retail markup, markdown, or
commission  and  do  not  necessarily  reflect  actual  transactions.

<TABLE>
<CAPTION>

<S>             <C>        <C>
                High Bid   Low Bid
Fiscal 2004
First Quarter.  $  2.1400  $ 0.7300
--------------  ---------  --------
Second Quarter     2.2500    1.4100
--------------  ---------  --------
Third Quarter.     3.7200    1.5100
--------------  ---------  --------
Fourth Quarter     3.0200    2.2700
--------------  ---------  --------

Fiscal 2005
First Quarter.  $  2.7200  $ 1.7600
--------------  ---------  --------
Second Quarter     3.5000    2.1700
--------------  ---------  --------
Third Quarter.     3.4000    1.7500
--------------  ---------  --------
Fourth Quarter     3.2000    1.9900
--------------  ---------  --------
</TABLE>

On  September 26, 2005 the last bid for the Common Stock as reported by the AMEX
was  $1.15  per  share.  On  September  26, 2005, there were approximately 6,000
stockholders  of  record  of  the  Common  Stock.

We  have  not  paid,  and  we  do not currently intend to pay in the foreseeable
future,  cash  dividends on our common stock. The current policy of our Board of
Directors  is to retain all earnings, if any, to provide funds for operation and
expansion of our business. The declaration of dividends, if any, will be subject
to  the discretion of the Board of Directors, which may consider such factors as
our  results  of  operations, financial condition, capital needs and acquisition
strategy,  among  others.

Recent  Sales  of  Unregistered  Securities

We  effected  the  following  transactions  in  reliance  upon  exemptions  from
registration under the Securities Act of 1933 as amended (the "Act") as provided
in  Section  4(2)  thereof.  Each certificate issued for unregistered securities
contained  a  legend  stating that the securities have not been registered under
the  Act  and setting forth the restrictions on the transferability and the sale
of  the  securities.  No  underwriter  participated  in,  nor  did  we  pay  any
commissions  or  fees  to  any  underwriter  in  connection  with  any  of these
transactions.  None  of  the transactions involved a public offering. We believe
that each person had knowledge and experience in financial and business matters,
which  allowed  them  to  evaluate  the  merits  and  risk of the receipt of our
securities.  We  believe that each person was knowledgeable about our operations
and  financial  condition.

In  May  2005,  Hyperdynamics issued 87,715 shares of restricted common stock to
DJX,  Ltd.  to  pay  for accrued dividends of $245,163 on the company's Series B

Preferred  Stock.

In  June  2005,  one  individual  exercised 11,000 warrants for common stock for
$5,500.

Item  6  Management's  Discussion  and  Analysis  or  Plan  of  Operation

               CAUTIONARY STATEMENT ON FORWARD-LOOKING INFORMATION
We  are including the following cautionary statement to make applicable and take
advantage  of  the  safe  harbor  provision of the Private Securities Litigation
Reform  Act  of  1995  for  any forward-looking statements made by us, or on our
behalf.  This  Annual Report on Form 10-KSB contains forward-looking statements.
Forward-looking  statements  include  statements  concerning  plans, objectives,
goals,  strategies,  expectations,  future  events or performance and underlying
assumptions  and other statements, which are other than statements of historical
facts.  Certain  statements contained herein are forward-looking statements and,
accordingly,  involve  risks and uncertainties, which could cause actual results
or  outcomes  to  differ  materially from those expressed in the forward-looking
statements.  Our  expectations,  beliefs  and  projections are expressed in good
faith  and  we  believe  them  to  have  a  reasonable  basis, including without
limitations,  management's  examination  of  historical  operating  trends, data
contained  in our records and other data available from third parties, but there
can  be no assurance that management's expectations, beliefs or projections will
result  or be achieved or accomplished. In addition to other factors and matters
discussed  elsewhere  herein,  the  following are important factors that, in our
view,  could  cause  actual results to differ materially from those discussed in
the  forward-looking  statements:  our  ability  of to respond to changes in the
information system environment, competition, the availability of financing, and,
if  available, on terms and conditions acceptable to us, and the availability of
personnel  in  the  future.  We  have  no  obligations to update or revise these
forward-looking  statements  to  reflect  future  events.

The  following  discussion  should  be  read  in  conjunction with the financial
statements  and notes thereto for the fiscal years ended June 30, 2005 and 2004.

Results  of  Operations

Reportable  segments
--------------------
 Hyperdynamics  management  has two reportable segments: SCS Corporation ("SCS")
and its Louisiana operations ("HYDR"). SCS is engaged in oil and gas exploration
activities pertaining to offshore Guinea, West Africa. Additionally, it provides
seismic data transcription and management services to support its activities and
to  external  customers.  The seismic data work is performed in the USA. HYDR is
engaged  in oil and gas exploration and production activities in Louisiana, USA;
it  also  provides  some  oilfield services to external customers. Hyperdynamics
evaluates  performance  based  on profit or loss from operations. The reportable
segments  are  managed  by  separate management teams who are evaluated based on
their  segment's  performance.

Louisiana  Operations  ("HYDR")

Our prior year revenue only reflects two months of operation. Accordingly we are
not able to compare the results for this segment. The revenue for 2004 was 9,974
and  our  current  year  revenue  was  $169,259  which includes $52,008 from oil
production  and  $117,251  from oilfield service work. The oilfield service work
was  performed  during  the six months ended December 31, 2004. Since that time,
our  workover crew has been devoted to improving our oil and gas properties, and
we expect them to continue to provide internal services. We expect to derive our
future  revenues  primarily  from  oil  production and not from the provision of
oilfield  services.

In June 30, 2005 our cost of revenue comprised of approximately $80,000 of costs
associated  with  oilfield service work, $271,337 associated with oil production
revenues, and $859,608 of general field expenses. The breakdown for this expense
is  derived  from  the  costs  associated  with  startup  costs  ,  repairs  and
maintenance, tools & yard cost, equipment and service contracts of approximately
$602,917,  and  $256,691  in  operational  salaries  and  contract  labor.
Additionally,  we  incurred  selling,  general,  and  administrative expenses of
approximately  $372,666  and  $133,357  attributable  to  administrative payroll
costs.  Our  other  significant  expenditures  were  professional  fees, such as
consulting,  legal  and  accounting  of  $62,090,  workman's  compensation  and
insurance  expenses  of  $76,668,  bad  debt  expense  of  $34,368,  office  and
administrative expenses of $66,182 and depreciation and amortization of $77,370.
Our  loss  from  operations  for the twelve months ended June 30, 2005 from this
segment  was  ($1,508,093).

Guinea  and  Seismic  Data  Management  ("SCS")

We had revenues of $3,140 and $18,314 from this segment during the twelve months
ended June 30, 2005 and 2004, respectively. The lack of revenues is attributable
to  a  significant  amount of internal seismic data processing work during these
two  periods:  we  have  focused  on  the  acquisition  of  seismic data for our
concession  in  Guinea. Cost of revenues increased 19% from $58,432 in June 2004
to  $69,480  for  the  twelve  months  ended  June  30,  2005.

We  have  processed  a portion of some data that we have the right to market in
order to provide samples of the data to our prospects. When we sell the right to
use  this  data,  we  will  receive  a  fee  and we will also be compensated for
processing  the  data  that  we  sell.

Our  selling,  general, and administrative expenses increased 23%, from $343,256
for  the  twelve months ended June 30, 2004 to $423,558 during the twelve months
ended June 30, 2005. The selling expenses increased 102% from $18,556 in 2004 to
$37,522  in  2005 due to an addition of staff and, the 6801% increase in general
and  administrative  expenses  relating  to  the  purchase  of additional health
insurance  coverage  for  new employees from $349 in 2004 to $24,083 in 2005. An
increase  of 175% on other taxes particularly the Franchise Tax Board assessment
was  $5,000  higher than 2004. Utility use also rose 31% from $35,926 in 2004 to
$47,170  in  2005  due  to  a  higher electric consumption . The office expenses
increased  38%  from  $17,369 in 2004 to $24,051 in 2005 due to more conferences
participated  by  personnel.  Our  travel expenses increased 40% from $48,406 in
2004 to $67,793 in 2005 due to multiple trips to London and Africa in connection
with  the  Guinea  concession.

Our  other  significant expenditures include professional fees which reflects an
increase  of  305%  due  to accounting costs related to the fairness opinion for
preferred  stock paydown matter. Our depreciation and amortization increased 18%
from  $24,248  in  2004  to  $28,499  for  year  ended  2005.

Based  on  the  factors discussed above, Our loss from operations for the twelve
months  ended  June  30,  2005  from  this  segment  was  ($528,617).

Corporate  Overhead

We  continue to receive occasional revenues from our prior value added reselling
and  computer  consulting business. When this occurs, we classify the revenue to
corporate  overhead.  This revenue was $300 for the twelve months ended June 30,
2005  and  $10,056  for the twelve months ended June 2004, thus a 97% decline in
revenues  for  2005.  We do not actively pursue revenues of this nature and they
occur  very  irregularly.

Our  Cost  of  Revenues  decreased  from  $81,356 in 2004 to $68,104 in 2005. We
classify  certain  computer expenditures and our system engineer's payroll costs
as  cost  of  revenues attributable to corporate overhead. The 15% difference in
cost of revenues is attributable to the cost of the computer equipment purchased
and  resold  in  June  2005.

Our  selling, general, and administrative expenses increased 16% from $2,415,381
during  the  twelve  months  ended June 30, 2004 to $2,803,192 during the twelve
months  ended  June 30, 2005. The one reason for this difference is equity-based
compensation  costs. Equity-based compensation costs were approximately $300,000
higher in the twelve months ended June 30, 2005 than in the comparable period of
2004.  This  year's  expense  related  to  equity-based  compensation  to  four
consultants  of  $1,833,086  derives  from  the  vesting  of 800,000 warrants to
purchase  common  stock at an exercise price of $0.50 per share. During the year
ending  June  30,  2004,  2,000,000  warrants  were  originally  granted to four
consultants  and 800,000 warrants vested during that year. Additionally, 800,000
warrants  have  vested  during  the  current  fiscal  year: 200,000 warrants are
scheduled  to  vest  at  the  end  of each quarter for the next two quarters. We
record  the  expense  associated with these warrants using the fair value of the
warrants  as  of  the  date  they  vest as estimated by the Black-Scholes option
pricing  model.  Thus,  provided  that  the agreements are not terminated (which
would  result in the forfeiture of the unvested warrants), we will incur expense
related  to  these  warrants  each  quarter  for the next three quarters and the
expense  will  vary  based  upon  the  market  price of our common stock in each
quarter.  Equity-based  compensation  does not impact our liquidity or net worth
because  the  consulting  expense is offset by an increase to additional paid-in
capital.

Additional factors affecting the increase of selling, general and administrative
expenses is attributable to the purchase of added coverage for the directors and
officers  indemnity  insurance, an increase of $99,865 from $14,962 in 2004. The
insurance  policy  is in force beginning April 2004. Our general office expenses
increased  from  $49,319  in  2004  to  $158,327  in  2005 due to American Stock
Exchange  listing  fees  of  $65,000  and  higher  expenses  for the cost of the
shareholder  meeting.

Based  on  the factors discussed above, the loss from operations attributable to
corporate  overhead increased from ($2,594,994) in 2004 to ($2,863,195) in 2005.

Other  Items

Interest  expense  decreased  from  $474,463 in the twelve months ended June 30,
2004  to $316,034 in the twelve months ended June 30, 2005. The interest expense
during  fiscal 2004 consists of approximately $250,000 attributable to the Notes
Payable,  due  December  31,  2007  and  $230,000  of  accretion  on mandatorily
redeemable  preferred  stock.  These  notes  payable  were  converted during the
quarter  ended  December 31, 2003. The interest expense during 2005 consisted of
accretion  of  interest  on mandatorily redeemable preferred stock and a loss on
the  retirement  of  the  preferred  stock.

Based  on  the  factors  discussed  for each segment, the Net Loss chargeable to
common  shareholders  increased  $1,666,748, or 45% from $(3,677,822), or $(.12)
per  share  in  2004  to $(5,344,570), or $(.13) per share in 2005. The net loss
chargeable  to  common  shareholders  includes  a  provision for preferred stock
dividends of $186,779 in 2004 and $128,445 in 2005. The negative results are due
to  the  factors  discussed  above.

Critical  Accounting  Policies

Property  and  Equipment  and  Unproved  Oil  and  Gas  Properties:
-------------------------------------------------------------------

We  have  capitalized  approximately  $4,072,503 in oil and gas properties as of
June 30, 2005. The $4,072,503 in oil and gas properties is subject to impairment
review  as  of  June  30, 2005. The Oil and Gas Properties were determined to be
unimpaired  because  the Government of Guinea is currently working diligently to
give  us  our  permits  and  permission  to continue our work.  Additionally, we
expect  various  strategies  to  raise  funds, as discussed in the liquidity and
capital  resources section, to raise sufficient funds to satisfy our obligations
with  regard  to  the  Guinea  project.

Off-Balance  Sheet  Arrangements
--------------------------------

Under  our  agreement  with US Oil, we will pay US Oil $1,600,000 if SCS obtains
third  party  financing  for the Guinea development project, and a 3% royalty if
oil  and  gas is produced on our Guinea project, under the terms still in effect
under the 2002 PSA and related farmout agreement and depending on the outcome of
our  current  litigation  with  them.  This  contingent  payable  will, if paid,
increase the cost of the Unproved Oil and Gas properties at the time of payment.
As  such,  it  will  increase  the cost of sales over the oil and gas production
period as part of the periodic amortization of the Proved Properties, or, if the
development  of the properties does not culminate in oil and gas production, the
cost  will  be  charged  to  expense  as  an  impairment.

We  have  an  operating  lease  with our landlord as disclosed in Note 15 of our
financial  statements  that  appear in our annual report for the year ended June
30,  2005.  The lease is a ten year lease. The lease inception date was November
1,  2000.  The  base monthly rent is $0 for months 1-6, $20,774 for months 7-54,
and  $24,114  for  months  55-120, beginning November 1, 2000. Additional common
area maintenance charges are assessed. At June 30, 2005, future minimum payments
are $289,364 per year in years 2006-2010, and $120,568 in 2011.  We are involved
in  a  lawsuit  with  our landlord as disclosed in Part I Item 3 of this report.
We also have a contingent $350,000 note payable that is only payable with 25% of
the  profits of SCS Corporation. We have the right to pay this note using common
stock  or  cash.

Additionally,  in  conjunction  with  our purchase of HYD, we entered into three
notes  payable  to  two  individuals totaling $856,000. The notes are to be paid
quarterly  over the five years ended June 30, 2009. Payments will be due only if
HYD  has  a  net income according to accounting principles generally accepted in
the  United  States of America. Payment amount will be 25% of the net income for
the period, unless there was a net loss in previous period(s). If there is a net
loss, subsequent net income must completely offset the losses before any amounts
are  due.  After  the loss is offset, payment of 25% of the remaining net income
will  be  due.

Liquidity  and  Capital  Resources
----------------------------------

At  June 30, 2005 our current ratio of current assets to current liabilities was
..27  to 1. This compares to 1.86 to 1 for 2004. A deeper analysis of the current
ratio  reveals several current obligations that reduce the current ratio but for
which  there  is  no  requirement  to use cash to satisfy them or the payment is
deferred  until  we  receive  cash  inflows  sufficient to pay them. These items
include  Deferred  gain,  Accounts  payable Seismic Data, Dividends payable, and
Dividends  payable  to  related  party.

On  August  12,  2005,  we  closed a private financing transaction with Dutchess
Private  Equities  Fund  II,  LP.  The  financing  included a subscription for a
$1,500,000  two  (2)  year debenture that was funded $1,000,000 upon closing and
funds  $500,000 upon filing of a registration statement which we plan to file in
October 2005. Upon effectiveness of the ensuing registration, Dutchess may elect
to  convert  the  payments  coming  due on the debenture at a stock price of the
lesser of the fixed floor conversion price or $1 per share. Hyperdynamics has an
option to into another debenture with Dutchess for an additional $1,500,000 upon
the  effectiveness  of  the registration statement. Management believes that the
registration  statement will be effective within six months. However, since only
the  Securities  and  Exchange  Commission  can  order  a registration statement
effective, we do not know for certain when or if the registration statement will
become  effective.  Management  believes that these financings will enable us to
fund  our  operating  activities  through  June  30,  2006.

We also executed an investment agreement and received a commitment from Dutchess
to  fund up to $20,000,000 in equity at 95% of the market price. The company and
Dutchess  agreed  through  a  global  amendment to limit the number of shares to
register  under  financing  to 8,400,000 shares without a shareholder vote. This
insures the number of shares to be issued will not exceed 20% of the outstanding
common  stock  as is required by the rules of the American Stock Exchange. Thus,
the amount ultimately raised by the financing will be determined strictly by the
stock  price  at  each  point  in  time  the  equity  line  is  used.

Although  we  plan  to  continue  to  improve  on  our  current ratio, we have a
contractual  requirement  during  the  second  exploration  period in the Guinea
concession  to  invest  an  estimated  $10,000,000  in  drilling  at  least  one
exploratory well offshore Guinea. The second exploration period expires sometime
during  the later part of this decade depending on initial periods and extension
provisions.  Although  we  have  several years to complete this work, we wish to
initiate a drilling program as soon as possible. Thus, we are considering all of
our  options  or  any combination of these options to; a) increase revenues from
operations; b) raise additional capital to support at least the minimum required
drilling  program;  c)  negotiate  one  or  more  transactions  with oil company
partners  who  share  in  the required work and financing risk; and d) negotiate
work program related deals with oil industry vendors such as seismic acquisition
companies. We believe that our ability to manage and effect one or more of these
options  will  determine our significant current ratio and financial position in
the  future.

Our  cash  from  operations  was  a  deficit  this  last year based on our asset
appreciation  based plan. We have taken overhead reduction steps to minimize non
productive expenditures. We are spending the bulk of the capital raised directly
or  indirectly  on  enhancing  the value of our offshore oil and gas concession.
These  expenditures, however, do not improve cash flow from operations. In order
to  improve our operating cash flow situation for future periods, management has
budgeted  certain  amounts  of  capital  and has started to build up our service
revenues.  As  mentioned  in  the  business section of this annual report we are
pursuing  domestic production to give us income enough to first pay our overhead
as  we  move  forward  and  then  second to enhance the returns available to our
shareholders  as  we  move  forward  into  future  drilling  programs.

Because  SCS  has  significant  work  requirements  to  accomplish  a 3D seismic
acquisition  program, processing, and analysis thereof, and to drill exploration
wells,  we  are  beginning  to  look at more than one option to raise additional
funds.  Management is confident in its ability to raise additional capital under
more  conventional  financing  structures  such  as  an  underwritten  secondary
financing,  but  also  believes  we  will  be able to secure oil and gas working
interest  partners  to  fund  and  carry  significant  portions  of  the capital
investment  burden.

We  have been successful in raising our necessary capital and management is very
confident  in  our ability to continue to raise capital. Based on our relatively
low overhead in comparison to the rather large task at hand, the lion's share of
all  capital  raised  is  going  to  improve  our  drilling  prospects.

We  expect  to  exploit our leases in Louisiana by operating numerous low volume
wells  that  produce  20  barrels  a day or less. We believe the relatively high
price  of  oil  will  help  make  these  wells  more economically viable. We are
currently  in  the  process  of completing the wells so that they are capable of
production.  We  announced  on  May  10, 2005 that we have completed 10 out of a
planned  14 wells for our first lease in La Salle Parish, Louisiana. We are also
evaluating  the  production  of  natural gas that we have encountered in all ten
wells.

Because of the geological features of this lease and our oil production to date,
we consider this an attractive prospect for oil and gas investors. Therefore, we
made  the  decision to sell working interest units in this lease. We can sell up
to  a total amount of $2,695,000 (representing 49% working interest). If we sold
the  entire  49%  working interest that is being offered in this lease, we would
net  up  to  $2,156,000 of cash proceeds, after marketing costs. As of September
26, 2005, we have sold 32.5 units, resulting in gross proceeds of $1,787,500 and
net  proceeds  of $1,430,000. When completed, this sale of working interest will
replenish  our  cash  without  the need for additional capital financing at this
time.

As  a  public  company,  the  health of our market is paramount to able to raise
critical  capital. In May 2005, we began trading on the American Stock Exchange.
We believe this will directly and indirectly help to strengthen and provide more
stability  to  the  company's  market  for  its  common stock and that financing
options  for  the  company  will  expand  as  a  result.

As  reported  in  our  annual  report,  we  raised  $5,937,063  from the sale of
restricted common stock during the fiscal year ended June 30, 2004. The majority
of  the  capital raised in the past has been invested to improve our oil and gas
properties.  We  believe that should we implement a strategy to raise additional
capital  that the use of these funds will continue to enhance our asset value in
our oil and gas concession. It is our belief that such a strategy would continue
to  enhance  shareholder  value  and  facilitate  additional  financing options.
Because  our  subsidiary,  SCS  Corporation  ("SCS")  is looking to increase its
exploration  activities,  we  are  beginning  to look at more than one option to
raise  additional  funds.  Management  is  confident  in  its  ability  to raise
additional  capital  under  more  conventional  financing structures but we also
believe  that  ultimately we will be able to secure oil and gas working interest
partners  to  fund  and  carry  significant  portions  of the capital investment
burden.  As  we have discussed in the press, we are formulating plans and moving
forward  towards  drilling  our  first exploration well offshore West Africa. We
feel  that  we  can  successfully  finance  such a work program either ourselves
through  an  equity  financing  plan,  through  working  interest partners, or a
combination  of  both

Thus,  management  believes  that  additional  capital funds raised has and will
continue to substantially enhance our asset value in our oil and gas concession.
This  will  yield  us  greatly  enhanced  shareholder value, and make additional
capital  easier  and  easier  to  come  by  at  ever  increasing  stock  prices.
We  have  a  capital  lease  obligation  of  $9,872 financing certain electrical
equipment  in  our  data  center and another obligation of $31,725 financing the
purchase  of  land  and  a building in La Salle Parish, Louisiana. We have other
installment  obligations  totaling  $206,153. We also have a contingent $350,000
note payable that is only payable with 25% of the profits of SCS Corporation. We
have  the  right  to  pay  this  note  off  using  common  stock.

Additionally,  in  conjunction  with  our purchase of HYD, we entered into three
notes  payable  to  two  individuals totaling $856,000. The notes are to be paid
quarterly  over the five years ended June 30, 2009. Payments will be due only if
HYD  has  a  net income according to accounting principles generally accepted in
the  United  States of America. Payment amount will be 25% of the net income for
the period, unless there was a net loss in previous period(s). If there is a net
loss, subsequent net income must completely offset the losses before any amounts
are  due.  After  the loss is offset, payment of 25% of the remaining net income
will  be  due.

Finally,  we  originally purchased a CD in the amount of $436,000, which secured
the  lease  at Westwood with a Letter of Credit arrangement.  This CD and letter
of  credit  is  now  $65,445. There is a pending lawsuit against the landlord as
discussed  in  the  legal  section.

We  could  obtain  additional capital also upon the exercise of other previously
issued  in  the  money outstanding warrants and options for common stock. If all
outstanding warrants and options that are currently in the money were exercised,
the  company  would  receive approximately $8,000,000 in cash proceeds from such
additional  capital  investment.

Item  7  Financial  Statements
The  information  required  hereunder is included in this report as set forth in
the  "Index  to  Financial  Statements  on  page  F-1.

Item 8 Changes In and Disagreements with Accountants on Accounting and Financial
Disclosure
None

Item  8  (A)  Controls  and  Procedures
Kent  Watts, President, Chief Executive Officer and our Chief Financial Officer,
has  concluded  that  our disclosure controls and procedures are appropriate and
effective.  Mr.  Watts has evaluated these controls and procedures as of the end
of  the  period covered by this report on Form 10-KSB. There were no significant
changes  in  the  our  internal  controls  or  in  other  factors  that  could
significantly  affect these controls subsequent to the date of their evaluation,
including  any  corrective  actions  with regard to significant deficiencies and
material  weaknesses.

There  have  been  no  changes  in our internal control over financial reporting
identified  in connection with the evaluation required by Rule 13a-14(b) or Rule
15d-14(b)  that  occurred  during  our  last  fiscal quarter that has materially
affected,  or  is  reasonably  likely to materially affect, our internal control
over  financial  reporting.

Item  8  (B)  Other  Information
On August 26, 2005, Mr. Kent Watts, President and Chief Executive Officer, hired
Mr. Famourou Kourouma as the company's new Vice President of Guinea Affairs. Mr.
Kourouma, born and raised in Guinea, began working on the problem to get us back
into  a  position  to  begin our drilling program since their initial contact on
August  22,  2005.

He  traveled  to Conakry, Guinea in early September 2005 and sought a resolution
of  the  outstanding issues precluding SCS from pursuing an exploratory drilling
program.  Through  Mr.  Kourouma's  many meetings and contacts with business and
government  officials,  including  two separate meetings with the Head of State,
support for our issues was sincerely expressed and a clear path was given by the
Head  of  State to work with the Ministre Secretaire General De La Presidence De
La  Republique  De  Guinee,  Son  Excelence  Mr.  Fode  Bangoura.

On  Wednesday  September 21, 2005, Mr. Kourouma called from Guinea and requested
that  Mr.  Watts  come  to  Conakry  to prepare for a meeting with a top ranking
government  official.  On  Thursday,  September  22,  2005,  Kent Watts left for
Guinea.  He  arrived  in  Conakry,  Guinea  at  approximately  5:00PM on Friday,
September  23,  2005.

On Tuesday, September 27, 2005, Mr. Kent Watts, CEO and Mr. Kourouma, VPGA had a
private  meeting  with  the  Ministre  Secretaire General De La Presidence De La
Republique De Guinee,  Son Excelence Mr. Fode Bangoura (hereunder referred to as
the  "MSG").  The  meeting  was  held  at  3:00PM at the Presidential offices in
Conakry,  Guinea.  Our  issues  pertaining to being allowed to continue our work
were  discussed  and  the Minister Secretary General was extremely understanding
and  gracious.  First  and  foremost,  the  MSG  emphatically  denied  that  any
termination  letter  had been generated or authorized by his office.  This means
that  the termination letter forwarded to us by USOil and reported in our 8K was
a  fake  and  not  valid.

After  some  additional  interpretive dialogue, Mr. Watts and Mr. Kourouma asked
the Secretary General, "what could we report as a summary outcome of our meeting
together."  Mr.  Kourouma  reported  to  Mr.  Watts  the  following  substantive
interpretation  of  the  Secretary  General's  response.

"The  Secretary  General  Son  Excelence  Mr.  Fode Bangoura told us that he was
pleased  to  discuss  our  issues  with  us  and that he was very encouraged and
believed that we were the right company for the work.  He then said that he will
begin  by  reviewing  everything  in  detail tonight.  Then, he will discuss the
information  with  the minister committee and a proposal from the President will
be  submitted  to  the  National  Assembly  for  approval.  Once the proposal is
approved,  the  National  Assembly will issue a legal approval (projet de lois).
Then  he  said  that  he will inform us of the approval and at that time he will
perform  all  steps  necessary  to  allow  us  to  continue  our  work.  "

With this new development and pending the outcome, Hyperdynamics Corporation has
significant  reason  to  believe  an amicable solution is inevitable in the very
near  future.

                                    PART III

Item  9 Directors, Executive Officers, Promoters and Control Persons; Compliance
with  Section  16(A)  of  the  Exchange  Act

Executive  Officers  and  Directors

The  following table sets forth the names and positions of each of our executive
officers  and  directors.

 Name                                 Position                   Age
 ----                                 --------                   ---
Kent  Watts        Director,  Chief  Executive Officer, Chief     47
                   Financial Officer and President
Harry  J.  Briers  Director,  Chief  Operating  Officer  and      42
                   Executive  Vice President
Harold A. Poling   Director                                       79
Albert F. Young    Director                                       68
Lewis Ball         Secretary                                      74

Directors  are elected annually and hold office until the next annual meeting of
our stockholders or until their successors are elected and qualified. We have no
standing committees of the Board of Directors. Officers are elected annually and
serve  at  the  discretion  of  the  Board  of  Directors.  There  is  no family
relationship  between  or among any of the directors and our executive officers.
Board  vacancies  are  filled  by  a  majority  vote  of  the  Board.

Kent  Watts, age 47, became Chairman of the Board of Directors and was named our
President and Chief Executive Officer (CEO) and Chief Financial Officer (CFO) on
June  4,  1997.  Mr. Watts has been a certified public accountant in Texas since
1985  and  a  licensed  real estate broker since 1979. He received a Bachelor of
Business Administration Degree from the University of Houston in 1983. Mr. Watts
founded MicroData Systems, Inc., a former subsidiary of the Company, in 1988 and
was  MicroData's  CEO  until  he became President and Chief Executive Officer of
Hyperdynamics  Corporation.  He  has  extensive experience designing and working
with  integrated  communications  network  systems  and  management  information
systems; additionally he designed our Integrated Technology Center. He continues
to  fulfill  the  dual role as CEO and CFO. As the Company's CEO and Chairman of
the Board, he remains primarily responsible for managing the Company's strategic
direction  and focus on the vertical oil and gas industry. As CFO he manages the
capital  structure  and financing requirements for the company, while overseeing
and insuring the Company's compliance with all government reporting requirements
as  well  as  any  legal  issues  involving  the  Company.  He  holds  no  other
directorships.

Harry  James  Briers,  age  42, has been a Director since March 2, 2000. He also
serves  as  the  Director  of  Integrated Information Systems when he joined the
company  in  May  1998.  He was also elected as Vice President of Operations for
Hyperdynamics Corporation in 1999 and named the Chief Operating Officer in 1999.
He  became  the  Company's  Executive  Vice President in October 2002. From 1988
until  May  1998,  Mr.  Briers  owned and operated Perfect Solutions, a software
consulting  firm  in Houston, Texas. He has extensive experience in the sale and
implementation  of mission critical software applications. Prior work experience
included  consulting  for Ernst & Young in their Entrepreneurial Services Group.
Mr.  Briers  has  a  BS  in  Accounting  and  an  MBA  from  the  University  of
Houston-Clear  Lake.  As Executive Vice President he is responsible for managing
the  daily  operations  of  the  organization.  He holds no other directorships.

Mr.  Harold  A.  Poling, age 79, was elected as the Company's fourth director on
June  2,  2004. He is a former chairman of the board and chief executive officer
(CEO)  of  Ford  Motor  Co. After finishing his MBA in accounting, he took a job
with  Ford in 1951. Ford of Europe had record earnings during his tenure as head
of  that subsidiary. He moved to Ford's North American Operations prior to being
named  president  and  chief  operating  officer,  then  vice chairman and chief
operating  officer,  and  then  chairman  and CEO of Ford Motor Co., the world's
second-largest  auto  maker.  He  served as a member of their board of directors
from  May  1979  until  January 1994, and was elected chairman in March 1990. He
became  a  member  of  the  Office  of  the Chief Executive in November 1984. He
retired  from Ford in January 1994. Currently, Mr. Poling serves as the chairman
of  The  PGA  Tournament  Players  Club of Michigan and is also the chairman for
Eclipse  Aviation  Corp.  He  is  a director of Flint Ink Corp., Monmouth (Ill.)
College  Senate, and William Beaumont Hospital where he is also a trustee. He is
also  a member of the board of trustees of Spring Arbor University. In the past,
Mr.  Poling  has  also  served on the boards of ArvinMeritor, Royal Dutch Shell,
Kellogg,  and is past director of the Professional Golf Association's (PGA) Tour
Policy  Board.

Albert  F.  Young,  age 68, was elected to the Board of Directors on October 18,
2004.  He  currently owns and operates Al Young Sales and Consulting. He retired
from  Venture  Industries,  where  he had spent the preceding 14 years, in 2003.
Currently,  he  continues to consult with Venture and is the Executive Assistant
to  their  Chairman. During his tenure at Venture, Mr. Young was responsible for
building  his  division's  sales  to  approximately  $500  million  annually.
Additionally,  Mr.  Young  was  instrumental  in  formulating  and orchestrating
several  acquisitions  and joint ventures including Venture's purchase of a Ford
Plastic  Plant,  Design  Center  and two (2) tool shops in Melbourne, Australia.
These  acquisitions  made  Venture  a  supplier  of  automotive design projects.
Additionally,  Mr.  Young  helped Venture acquire Bailey Corporation and a third
tool  shop  in  Michigan  and became a joint venture partner with Visteon in the
purchase  of  Atlantic  Automotive in Benton Harbor, Michigan. He holds no other
public  company  directorships.

Lewis E. Ball, age 74, has served as the Secretary of the Company since 1997 and
as the Chief Financial Officer from June 1996 to January 1997. Mr. Ball has been
a  financial consultant to a number of companies since 1993. Mr. Ball has served
as  a  Director , Secretary and Treasurer of JVWeb, Inc. from 1998 to 2002 and a
Director  of  its successor, IQ Biometrics, Inc. from 2002 to 2003. Mr. Ball has
many  years  of  industry experience as a Chief Financial Officer with Stewart &
Stevenson  Services, Inc. and Richmond Tank Car Company (from 1983 to 1993). Mr.
Ball  is  an  Accredited  Senior  Appraiser,  Certified  Public Accountant and a
Certified  Management  Accountant.  Mr.  Ball  has  a B.B.A. in Finance from the
University  of  Texas,  and  he  did  post-graduate  work  in  accounting at the
University  of  Houston.  He  holds  no  other  directorships.

Information  Concerning  the  Board  of  Directors  and  its  Committees

We  have  no  compensation  committee  and  no  nominating  committee. Decisions
concerning  nominees  for Director and executive officer compensation for fiscal
2004  were made by the full Board of Directors. The Board has not adopted formal
policies  with  regard  to the process to be used for identifying and evaluating
nominees  for  director  and determining executive compensation. However, we are
currently  in  the  process of developing these policies and procedures. At this
time,  the  consideration  of  candidates  nominated  by  directors  and  the
compensation  of  our officers are in the Board's discretion. We believe this is
adequate  based  on  the  size  of  the  Company and each current board member's
qualifications.

We have an Audit Committee. The Audit Committee was created during October 2004.
Mr.  Poling and Mr. Young are the members of the Audit Committee; both committee
members  are independent. The Audit Committee held no meetings during the fiscal
year  ended  June 30, 2004. The Audit Committee has a written charter, which was
included  as  Exhibit "A" to our proxy statement which was filed on Form Def 14A
on  December  28, 2004. During the year ended June 30, 2005, the Audit Committee
met  five  times  and  took  action  by  Unanimous  Consent  one  time.

The  board  has  not  adopted  formal  policies  with  regard  to  shareholder
communications  with  individual Board members. However, we are currently in the
process  of  developing  these  policies  and  procedures.

The Board of Directors held special meetings on four occasions during the fiscal
year  ended  June  30,  2005, in which all then-present Directors took part. The
Board  of  Directors  also took action by written consent on 16 occasions during
the  fiscal  year ended June 30, 2005, in which all present Directors took part.
Our Directors are elected annually and hold office until the next annual meeting
of  our  stockholders  or  until  their  successors  are  elected and qualified.
Officers  are  elected  annually  and  serve  at  the discretion of the Board of
Directors.  There  is  no  family  relationship between any of our directors and
executive  officers. Board vacancies are filled by a majority vote of the Board.
Section  16(a)  Beneficial  Ownership  Reporting  Compliance

We  have  reviewed the Forms 3 and 4 submitted to us relating to fiscal 2005. We
have  found that Harry Briers, Harold Poling, Albert F. Young, DJX Ltd, and Kent
Watts have filed all required Form 3's and 4's during fiscal 2005. The following
table  summarizes  the  results  of  our  review.

2005.  The  following  table  summarizes  the  results  of  our  review.

<TABLE>
<CAPTION>

<S>              <C>        <C>                         <C>
Name. . . . . .  Form Type  Number of forms filed late  Number of transactions reported late
---------------  ---------  --------------------------  ------------------------------------
Harry Briers. .          4                           1                                     3
---------------  ---------  --------------------------  ------------------------------------
DJX Ltd . . . .          4                           1                                     1
Kent Watts. . .          4                           0                                     0
Harold Poling .          4                           0                                     0
Albert F. Young          3                           1                                   N/A
Albert F. Young          4                           0                                     0
Robert Hill . .          4                           4                                    14
</TABLE>

Code  of  Ethics
We have adopted a Code of Ethics for our senior executive and financial officers
which  was  to our Form 10-KSB for the year ended June 30, 2005, which was filed
September  29,  2005.

Committee  Meeting

The Board of Directors held special meetings on four occasions during the fiscal
year  ended  June  30,  2005, in which all then-present Directors took part. The
Board  of  Directors  also took action by written consent on 16 occasions during
the  fiscal  year ended June 30, 2005, in which all present Directors took part.
The  Audit Committee has a written charter, which was included as Exhibit "A" to
our proxy statement which was filed on Form Def 14A on December 28, 2004. During
the year ended June 30, 2005, the Audit Committee met five times and took action
by  Unanimous  Consent  one  time

Item  10  Executive  Compensation

Summary  Compensation  Table

The  following  table  reflects  all  forms of compensation for the fiscal years
ended June 30, 2003, 2004, and 2005 for services provided by our named executive
officers.

<TABLE>
<CAPTION>

<S>                           <C>   <C>      <C>    <C>               <C>               <C>                   <C>      <C>
                                             Annual Compensation Awards           Long Term Compensation Payouts
                                             --------------------------           -------------------------------
                                                        Other         Restricted Stock  Securities Underlying  LTIP     All Other
                              Year  Salary   Bonus  Annual Compensation     Awards           Options SARS     Payouts  Compensation
Name & Principal Position
---------------------------------------------------------------------------------------------------------------
Kent Watts
Chief Executive & Financial   2005  $ 100,000   -0-      -0-                 -0-                 -0-            -0-        -0- (1)
Officer                       2004  $ 100,000   -0- $171,062 (3)             -0-                 -0-            -0-        -0-
                              2003  $ 100,000   -0- $147,314 (2)             -0-          1,100,000 (2)         -0-        -0-

Harry Briers
Chief Operating Officer &     2005  $ 95,000    -0-      -0-                 -0-                 -0-            -0-        -0-
ExecutiveVice President       2004  $ 95,000    -0-$ 132,861 (3)             -0-                 -0-            -0-        -0-
                              2003  $ 87,100    -0-  147,314 (2)             -0-          1,100,000 (2)         -0-        -0-

</TABLE>

On  July  21, 1999, our Board of Directors unanimously agreed to the terms of an
"Executive Employment Agreement" for Kent Watts. The Agreement was duly executed
on  July  21, 1999 which establishes Mr. Watts as our President, Chief Executive
Officer  (CEO), and Chief Financial Officer (CFO). In the agreement we note that
we  intend to hire a new CFO at the time the Board deems it to be beneficial. At
that time, Mr. Watts will continue his responsibilities as President and CEO and
he  will  relinquish  his  duty  as CFO. As of June 30, 2005, Mr. Watts is still
acting  as  our  CFO. The contract allows for a base salary of $100,000 annually
with a performance based incentive salary based on 5% of adjusted net income, up
to  an  additional  $100,000  in  salary.  Therefore,  maximum  salary under the
Agreement  is  $200,000  annually.  This  agreement  has  been  renewed  on  a
year-by-year  basis  under  the  same  terms.

On  August  26, 2002, the strike price of the warrants described in Note (2) was
reduced  to  $0.23.  The  repricing of the warrants was valued as a new grant in
fiscal 2003. This table reflects the $122,857 original fair value of the 400,000
warrants earned during 2003 and $24,457 fair value attributable to the repricing
of  1,100,000  warrants  for  a  total  of  $147,314.

For  the  year  ended June 30, 2004, an additional 400,000 warrants were earned.
The  original fair value of these warrants, $129,686, and $3,175 attributable to
the  repricing  of  these  warrants  is  included  in  2004  bonus  income.

Option/SAR  Grants  Table

We  did not grant any options or SARS to any of our directors or officers during
the  year  ended  June  30,  2005.

<TABLE>
<CAPTION>

<S>                                         <C>            <C>               <C>                    <C>
Aggregate Options Exercised In Last Fiscal Year And Fiscal Year End Option Values
---------------------------------------------------------------------------------
                                                                     Number of Unexercised Securities  Value of Unexercised
                                    Shares Acquired                     Underlying Options at FYE      in the Money Options at
Name. . . . . . . . . . . . . . . . . on Exercise     Value Realized    Exercisable/Unexercisable   FYE Exercisable/Unexercisable
---------------------------------------------------------------------------------------------------------------------------------
Kent Watts
Chief Executive & Financial Officer         -0-             -0-              400,000/0                     $   1,032,000/0
Harry Briers
Chief Operating Officer & Executive         -0-             -0-              400,000/0                     $   1,032,000/0
Vice President

</TABLE>

These  are  all  of the remaining warrants that were in the money at fiscal year
end  2005.  Mr. Watts and Mr. Briers hold 400,000 warrants for restricted common
stock  each  that  are  vested  but  have  not  been  exercised.

Long-term  Incentive  Plan  Awards  Table

There  were no long-term incentive plan awards to any of our officers during the
year  ended  June  30,  2005.

Director  Compensation

On  January  21, 2005 the Board of Directors approved compensation for directors
of  $4,000 per quarter to be paid in the form of common stock of the Company and
$1,000  per  quarter for our Secretary. On January 21, 2005 $8,000 each was paid
to  Kent  Watts,  Harold  Poling, Robert Hill, Harry Briers and $4,000 to Albert
Young  for  services  over the first two quarters of the fiscal year. $2,000 was
paid  to Lewis Ball. The stock was issued at a price of $3.17 per share and thus
2,524  shares  each  were  issued  to Kent Watts, Harold Poling, Robert Hill and
Harry Briers; and 1,262 shares were issued to Albert Young and 631 shares issued
to  Lewis Ball. On May 9, 2005, the third quarter 2005 directors compensation of
$4,000  was paid to each of the five directors by issuing 1,527 shares of common
stock based on the average closing bid price for the quarter of $2.62 per share.
382 shares were also issued to pay the $1,000 accrued at that time for Mr. Lewis
Ball.  As  of  September  5,  2005,  the  fourth quarter director's compensation
accrued  is  $4,000 each for Kent Watts, Harold Poling, Harry Briers, and Albert
Young,  and $1,000 for Lewis Ball. These amounts remained unpaid as of September
5,  2005.

There  was  no  other  compensation  granted  by the board for services rendered
during  the  fiscal year ended 2005. There have been no director meeting expense
reimbursements  for  2005  and  2004.

Employment  contracts  and  termination  of  employment  and  change-in-control
arrangements

Other  than  Kent  Watts'  employment  contract,  as  disclosed in Note 1 to the
Summary  Compensation  Table,  there  are  no employment contracts nor are there
termination of employment and change-in-control agreements between Hyperdynamics
and  its  executive  officers.

Item  11  Security  Ownership  of  Certain  Beneficial Owners and Management and

Related  Stockholder  Matters

Securities  authorized  for  issuance  under  equity  compensation  plans.
The following table reflects all equity compensation plans to date that have not
been approved specifically by security holders. We have a Stock and Stock Option
Plan  and  several Individual Compensation Arrangements established by the Board
of  Directors.

<TABLE>
<CAPTION>

<S>                      <C>                                   <C>                   <C>
-----------------------------------------------------------------------------------------------------------------------------------
                                                   Equity Compensation Plan Information
-----------------------------------------------------------------------------------------------------------------------------------
                           Number of Securities to be Issued   Weighted-Average Exercise Price  Number of Securities Remaining
                         Upon Exercise of Outstanding Options,  Price of Outstanding Options,   Availible for Future Issuance
                                  Warrants, & Rights                 Warrants & Rights         Under Equity Compensation Plans
                                                                                     (Excluding Securities Reflected in Column (a))
Plan Category                           (a)                                 (b)                            (c)

Equity compensation plans               -0-                                 N/A                         4,879,075
approved by security
holders

Equity compensation plans        2,902,000                               $ 0.42                                -0-
not approved by security
holders

Total                            2,902,000                               $ 0.42                         4,879,075

</TABLE>

The  Stock  and  Stock  Option Plan of Hyperdynamics was adopted May 7, 1997 and
amended on December 3, 2001. On June 30, 2004, we had 44,453 shares available to
be issued or granted pursuant to the Plan. On January 21, 2005, the shareholders
approved  an  increase in the plan for an additional 4,880,000 shares to a total
of 10,000,000 shares under the plan. We issued 45,378 shares under the plan this
fiscal  year, leaving us with 4,879,075 shares available to be issued or granted
pursuant  to  the  plan  as  of  June  30,  2005.

Under  the  Stock  and  Stock Option plan, options will vest over a five-year or
other  negotiated  period  and will have a strike price set at the time of grant
and  based  on the then current market value of the stock. Our President has the
authority  as  given  by  the  Board  of  Directors  to  negotiate  stock option
agreements  with  corporate  consultants  as  well.

We  presently  have  warrants  to purchase 2,902,000 shares of common stock at a
weighted  average  price  of $0.42 per share which are currently outstanding and
were  issued  pursuant  to individual compensation plans to officers, employees,
and  consultants.

The purpose of the stock option program will be to further our interest, and the
interest of our subsidiaries and our stockholders by providing incentives in the
form  of stock or stock options to key employees, consultants, and directors who
contribute  materially  to  our  success  and profitability. We believe that our
future  success  will  depend  in  part  on our continued ability to attract and
retain  highly  qualified  personnel  as employees, independent consultants, and
attorneys.  The  issuance  of  stock  and  grants  of  options and warrants will
recognize  and  reward outstanding individual performances and contributions and
will  give  such  persons  a  proprietary  interest  in us, thus enhancing their
personal interest in our continued success and progress. We pay wages, salaries,
and  consulting  rates  that we believe are competitive. We use the Stock Option
Plan  and  Individual  Compensation  Arrangements  to  augment  our  available
compensation  packages.

Security  Ownership  of  Certain  Beneficial  Owners

The  following  table sets forth certain information at September 26, 2005, with
respect to the beneficial ownership of shares of Common Stock by (1) each person
who  owns  beneficially  more than 5% of the outstanding shares of Common Stock,
(2)  each  of  our directors, (3) each of our executive officers, and (4) all of
our  executive  officers  and  directors  as  a  group.

<TABLE>
<CAPTION>



<S>                                                          <C>                         <C>
                                                             Shares Beneficially Owned
                                                             --------------------------
Name and Address of Beneficial Owner. . . . . . . . . . . .  Number                      Percent
----------------------------------------------------------- ------------------------------------
Kent Watts
9700 Bissonnet, Suite 1700
Houston, Texas 77036. . . . . . . . . . . . . . . . . . . .              23,029,756 (1)     36.9%
Harry Briers
9700 Bissonnet, Suite 1700
Houston, Texas 77036. . . . . . . . . . . . . . . . . . . .               1,921,174 (2)      3.1%
Harold Poling
Fairlane Plaza North
290 Town Center Drive, Suite 322
Dearborn, Michigan 48126. . . . . . . . . . . . . . . . . .                 334,941 (3)      0.5%
Albert F. Young
2417 Fox Chase Blvd
Troy, Michigan 48098-5626 . . . . . . . . . . . . . . . . .                     37,789       0.1%
Lewis Ball
9700 Bissonnet, Suite 1700
Houston Texas 77036 . . . . . . . . . . . . . . . . . . . .                      9,013       0.0%
DJX Ltd.
4438 West 10th Avenue
Vancouver, BC V6R4R8. . . . . . . . . . . . . . . . . . . .                 20,272,900 (4)  32.5%
All directors and executive officers as a group (5 persons)                 25,332,673      40.6%
<FN>

(1)     This  amount includes 2,356,856 shares of common stock; currently exercisable warrants to
purchase  400,000  shares  at  $0.23; and 20,185,185 shares deemed as indirectly owned by Kent P.
Watts  based  on  his  relationship with DJX Ltd., whose shares he presently has the authority to
vote  and  which is half owned by his minor children; and 87,715 Common Stock shares owned by DJX
Ltd.  and  deemed  owned  by  Kent  P.  Watts.
(2)     This  amount includes 1,521,174 shares of common stock and currently exercisable warrants
to  purchase  400,000  shares  at  $0.23.
(3)     This amount includes 209,941 shares of common stock and currently exercisable warrants to
purchase  125,000  shares  at  $0.25.
(4)     On May 31, 2001 a stock exchange agreement was completed to acquire SCS as a wholly owned
subsidiary.  We  issued 2,725 shares of Series B Preferred Stock to pay for the acquisition. Each
share  of  Series  B  Preferred Stock carries a $1,000 per share face value and is convertible by
written  request  into  common  stock at the lesser of $0.135 per share or 50% of the closing bid
price  on conversion. On June 30, 2004 the closing bid price was $2.52 per share. Thus if 100% of
this  series  B  Preferred was converted at the lesser $0.135 amount per share, the shares common
stock  shares issued would be 20,185,185. This presentation is prepared as if full conversion has
occurred.  DJX  Ltd. is a foreign corporation whose shareholders are the grand children of Ernest
M.  Watts,  the  father  of Kent P. Watts, our Chairman, CEO, and President. Kent Watts currently
exercises  voting  rights  of  DJX  shares. DJX also owns 87,715 shares of common stock issued in
payment  of  accrued  dividends  so  the  total  attributed  to  DJX  is  20,272,900  shares.

</TABLE>

Item  12  Certain  Relationships  and  Related  Transactions

On  November 14, 2003, a Master Public Relations Consulting Agreement was signed
with  Michael  E.  Watts,  the  brother of Kent Watts, the Chairman and CEO. The
Agreement  affirmed and established Michael Watts as the primary consultant with
the  responsibility  to  help  manage  the  public  relations,  general investor
relations,  and shareholder communications, in agreement with management. In the
Agreement  Michael  Watts  was  authorized  and required to communicate publicly
known  information to shareholders and potential shareholders and to help in all
reasonable  ways  to convey the history and story of Hyperdynamics with the goal
to increase the interest of all investors in investing in Hyperdynamics publicly
traded stock. The agreement additionally authorized Michael Watts to subcontract
public  relations  services  to other firms and consultants. It was contemplated
that these sub-contracts would include but not necessarily be limited to setting
up  public  relations  agents  in  different  parts  of  the  country. The total
compensation  for  this  Master  Public  Relations  Consulting Agreement and all
underlying sub-contracts as described hereunder is a total of 2,000,000 warrants
with  a  strike  price  of $0.50 for each share of restricted, 144 common stock.
During  January  and April 2004, Hyperdynamics granted an aggregate of 1,200,000
of  the  warrants  (of  which 900,000 were vested as of June 30, 2005) under the
Master Public Relations Consulting Agreement to a company of which Michael Watts
is president and we granted 800,000 (of which 600,000 were vested as of June 30,
2005)  of the warrants under the Master Public Relations Consulting Agreement to
unrelated  third  parties.

This  compensation  was  designed  to  encourage the long-term commitment to the
market  developing  work  being performed in the maintenance of our informed and
orderly  market.  As such, it is believed that significant incentive is in place
for all public relations consultants, agents, and sub-contractors to continually
work  in  communicating  the Hyperdynamics story and opportunity. This agreement
with Michael Watts may be canceled by the company at any time by giving a 30 day
written  notice.

During  the year ended June 30, 2004, Michael Watts received payment of $699,951
cash  to  pay for offering costs on private subscription agreements and warrants
exercised.  Additional offering costs will also be paid on 3,732,403 outstanding
warrants  purchased by private investors should they be exercised in the future.
If  all  of these warrants were exercised, Mr. Watts would receive approximately
$712,000  to  pay  these  additional  costs.

On  February  9,  2005  the  Audit  Committee  of  Hyperdynamics  Corporation
pre-approved  a contract with Geoserve Marketing, an assumed name for Michael E.
Watts,  the brother of the Chief Executive Officer. The contract was executed by
Trendsetter  Production  Company,  (our  wholly  owned subsidiary) with Geoserve
Marketing.  Under  the Agreement Geoserve Marketing was to sell up to 49% of the
working  interest  in  certain  oil  and gas properties owned by Trendsetter. At
$55,000  per  point,  this was to bring in proceeds of $2,695,000 once sold out.
Geoserve  Marketing  was  given the responsibilities to sell working interest on
the  company's  oil  and gas leases; obtain executed documents for such sales as
required  by  the  company;  help  prepare  the  marketing materials for working
interest  sales;  obtain  investor  non-disclosure  agreements  and  other
representations  from  all  prospective  non-operators;  obtain a check or wired
funds  from and signatures of non-operators on all pertinent operating agreement
forms;  pay expenses for working interest promotion including but not limited to
any  brokerage  fees  and  referral  fees.  Trendsetter agreed to pay 20% of the
proceeds  to  Geoserve  Marketing  in return for these services. On June 30, the
Audit Committee pre-approved an extension of the working interest sales contract
through  July  30,  2005. As of June 30, 2005, 18.5% or $1,017,500 of a total of
49% planned had been sold and Geoserve Marketing had been paid promotion fees of
$203,500.  On  July  29,  2005 the Audit Committee pre-approved that Trendsetter
Production  Company  may extend the term of the contract with Geoserve Marketing
until  total  proceeds of $2,695,000 has occurred or it has been determined that
HDY  is  cash  flowing,  as  a  whole,  or  the company otherwise reaches a cash
position  net of current liabilities equal to at least $1,500,000 with projected
cash  surplus  to  last a minimum of one year based on current operations. As of
September 26, 2005, 32.5% or $1,787,500 had been sold and a total of $357,500 in
promotion  fees  have  been  paid  to  Geoserve  Marketing.

On  May  9,  2005,  Harry  James Briers, Executive Vice President, requested and
obtained  pre-approval  from  the  Audit  Committee  to rehire Mr. Jeremy Driver
(son-in-law of Michael E. Watts, brother of the Chief Executive Officer), a past
employee  of  Hyperdynamics Corporation, to work as General Manager for HYD. Mr.
Driver  had just been honorably discharged from the United States Air Force with
the  rank of Lieutenant. The Audit Committee approved the request and Mr. Driver
was  hired  by  Mr.  Briers  at  an  initial  salary  of  $45,000  annually.

Item  13  Exhibits

Exhibit  21  -  Subsidiaries  of  the  Registrant

Exhibit  31.1  -  Certification  of  Chief  Executive  Officer  of Hyperdynamics
Corporation  required  by  Rule  13a-14(1)  or  Rule 15d-14(a) of the Securities
Exchange  Act  of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley
Act  of  2002.

Exhibit  31.2  -  Certification  of  Chief  Financial  Officer  of Hyperdynamics
Corporation  required  by  Rule  13a-14(1)  or  Rule 15d-14(a) of the Securities
Exchange  Act  of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley
Act  of  2002.

Exhibit  32.1  -  Certification  of  Chief  Executive  Officer  of Hyperdynamics
Corporation  pursuant  to  Section  906  of  the  Sarbanes-Oxley Act of 2002 and
Section  1350  of  18  U.S.C.  63.

Exhibit  32.2  -  Certification  of  Chief  Financial  Officer  of Hyperdynamics
Corporation  pursuant  to  Section  906  of  the  Sarbanes-Oxley Act of 2002 and
Section  1350  of  18  U.S.C.  63.

Item  14  Principal  Accountant  Fees  and  Services

Audit  Fees

Malone & Bailey, PC billed us in the aggregate amount of $58,091 and $34,510 for
professional  services  rendered  for  their  audit  of  our  annual  financial
statements  and  their reviews of the financial statements included in our Forms
10-KSB  for  the  years  ended  June  30,  2005 and June 30, 2004, respectively.

Audit-Related  Fees

Malone  &  Bailey,  PC  did  not  bill us for, nor perform professional services
rendered  for assurance and related services that were reasonably related to the
performance  of  audit  or  review of the Company's financial statements for the
years  ended  June  30,  2005  and  June  30,  2004.

Financial  Information  Systems  Design  And  Implementation  Fees

For  the fiscal years ended June 30, 2005 and June 30, 2004, Malone & Bailey, PC
did  not  bill  us for, nor perform, any financial information systems design or
implementation.  For  the fiscal years ended June 30, 2005 and June 30, 2004, we
were  not  billed  for  professional services from any other accounting firm for
information  systems  design  or  implementation.

Tax  Fees

Malone  &  Bailey,  PC  billed  us in the aggregate amount of $ 0 and $3,740 for
professional services rendered for tax related services for the years ended June
30,  2005  and  June  30,  2004,  respectively.

All  Other  Fees

We were not billed for any other professional services for the fiscal year ended
June  30,  2005.

Auditor  Independence

Our  Board  of  Directors  considers that the work done for us in the year ended
June  30,  2005  by  Malone & Bailey, PC is compatible with maintaining Malone &
Bailey,  PC's  independence.

Auditor's  Time  On  Task

All  of  the work expended by Malone & Bailey, PC on our June 30, 2005 audit was
attributed  to  work  performed  by  Malone  & Bailey, PC's full-time, permanent
employees.

                                   Signatures

In  accordance with the requirements of Section 13 or 15(d) of the Exchange Act,
the Registrant caused this report to be signed on its behalf by the undersigned,
thereunto  duly  authorized,
     HYPERDYNAMICS  CORPORATION

     By: /s/  KENT  WATTS
         ----------------
         (Kent  Watts, Chairman of the Board,
         Chief Executive Officer and Chief Financial
         Officer)

Dated  October  13,  2005

In  accordance  with  the Exchange Act, this report has been signed below by the
following  persons  on behalf of the registrant and in the capacities and on the
dates  indicated:

/s/ KENT WATTS     Chairman of the Board, Chief Executive
--------------     & Chief Financial Officer                    October 13, 2005
(Kent  Watts)

/s/ HARRY BRIERS             Director                           October 13, 2005
---------------
(Harry  Briers)

/s/ HAROLD POLING            Director                           October 13, 2005
----------------
(Harold  Poling)

/s/ ALBERT YOUNG             Director                           October 13, 2005
---------------
(Albert  Young)

<TABLE>
<CAPTION>

<S>                                                                                                       <C>
HYPERDYNAMICS CORPORATION
Audited Financial Statements
Index to Financial Statements
Report Of Independent Registered Public Accounting Firm. . . . . . . . . . . . . . . . . . . . . . . . .  F-2
Consolidated Balance Sheet As Of June 30, 2005 . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  F-3
Consolidated Statements Of Operation Years Ended June 30, 2005 And 2004. . . . . . . . . . . . . . . . .  F-4
Consolidated Statement Of Changes In Stockholders' Equity Years Ended June 30, 2005 And 2004 . . . . . .  F-5
Consolidated Statement Of Changes In Stockholders' Equity Years Ended June 30, 2005 And 2004 (Continued)  F-6
Consolidated Statements Of Cash Flows Years Ended June 30, 2005 And 2004 . . . . . . . . . . . . . . . .  F-7
Consolidated Statements Of Cash Flows Years Ended June 30, 2005 And 2004(Continued). . . . . . . . . . .  F-8
Notes To Consolidated Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  F-9
</TABLE>

             REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To  the  Board  of  Directors  and  Stockholders
Hyperdynamics  Corporation
Houston,  Texas

We  have  audited  the  accompanying consolidated balance sheet of Hyperdynamics
Corporation  and  subsidiaries as of June 30, 2005, and the related consolidated
statements  of  operations,  changes in stockholders' equity, and cash flows for
each  of  the  two  years  then  ended.  These  financial  statements  are  the
responsibility of Hyperdynamics' management. Our responsibility is to express an
opinion  on  these  financial  statements  based  on  our  audits.

We  conducted  our  audits  in  accordance  with  standards  of  Public  Company
Accounting Oversight Board (United States). Those standards require that we plan
and  perform  the  audits  to  obtain  reasonable  assurance  about  whether the
financial  statements  are  free  from  material misstatement. An audit includes
examining,  on  a test basis, evidence supporting the amounts and disclosures in
the  financial  statements.  An  audit  also  includes  assessing the accounting
principles  used  and  significant  estimates  made  by  management,  as well as
evaluating  the  overall  financial  statement presentation. We believe that our
audits  provide  a  reasonable  basis  for  our  opinion.

In  our opinion, the consolidated financial statements referred to above present
fairly,  in  all  material  respects,  the  financial  position of Hyperdynamics
Corporation  as of June 30, 2005, and the results of its operations and its cash
flows  for  each  of  the  two  years  then ended, in conformity with accounting
principles  generally  accepted  in  the  United  States  of  America.

MALONE  &  BAILEY,  PC
www.malone-bailey.com
---------------------
Houston,  Texas
September  21,  2005

<TABLE>
<CAPTION>



<S>                                                                                              <C>
HYPERDYNAMICS CORPORATION
CONSOLIDATED BALANCE SHEET
As of June 30, 2005

ASSETS
Current Assets
Cash. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  $    259,448
Restricted certificate of deposit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .        65,445
Accounts receivable, net of allowance for doubtful accounts of $31,242. . . . . . . . . . . . .        19,635
Inventory . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .         3,637
Prepaid expenses. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .       167,250
Total Current Assets. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .       515,415
                                                                                                 -------------

Property and equipment, net of accumulated depreciation of $314,171 . . . . . . . . . . . . . .       599,092

Investment in Oil and Gas Properties, using Full Cost Method of Accounting. . . . . . . . . . .     4,072,503
Deposits. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .        22,312
TOTAL ASSETS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  $  5,209,322
                                                                                                 -------------

LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities
Current portion of installment notes payable. . . . . . . . . . . . . . . . . . . . . . . . . .  $    247,750
Accounts payable and accrued expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . .       558,314
Accounts payable seismic data . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .       650,000
Deferred gain . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .        73,464
Dividends payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .       372,398
Dividends payable to related party. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .        27,250
Total Current Liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .     1,929,176
                                                                                                 -------------

Deferred rent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .       134,697
TOTAL LIABILITIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .     2,063,873
                                                                                                 -------------
Commitments and Contingencies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .             0
                                                                                                 -------------

Stockholders' Equity
Convertible preferred stock, par value $.001;
stated value $1,000; 20,000,000 authorized;
Series A - 1,945 shares issued and outstanding. . . . . . . . . . . . . . . . . . . . . . . . .             2
Series B - 2,725 shares issued and outstanding. . . . . . . . . . . . . . . . . . . . . . . . .             3
Common Stock, par value $.001; 250,000,000 shares
authorized; 42,168,410 shares issued and outstanding. . . . . . . . . . . . . . . . . . . . . .        42,168
Additional paid in capital. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .    22,915,690
Accumulated deficit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   (19,812,414)
Total Stockholders' Equity. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .     3,145,449
                                                                                                 -------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY. . . . . . . . . . . . . . . . . . . . . . . . . . .  $  5,209,322
                                                                                                 -------------
See accompanying summary of accounting policies and notes to consolidated financial statements.
</TABLE>

<TABLE>
<CAPTION>



<S>                                                                                               <C>           <C>
HYPERDYNAMICS CORPORATION
CONSOLIDATED STATEMENTS OF OPERATION
Years Ended June 30, 2005 and 2004


                                                                                                         2005          2004

Revenues . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  $   172,699   $    38,344

Operating Expenses
Cost of revenues . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .    1,348,529       207,200
Selling. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .       63,225        48,568
General and administration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .    3,536,190     2,838,486
Depreciation and amortization. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .      124,660        61,004
Total Operating Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .    5,072,604     3,155,258
LOSS FROM OPERATIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   (4,899,905)   (3,116,914)
                                                                                                  ------------  ------------

Other Income (Expense)
Interest expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .     (239,187)     (474,463)
Interest income. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .       16,973         8,268
  Loss on retirement of assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .      (17,159)            0
 Loss on retirement of mandatorily redeemable preferred stock. . . . . . . . . . . . . . . . . .      (76,847)            0
 Gain on debt payoff . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .            0        92,066
Total Other Income (Expense) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .     (316,220)     (374,129)
                                                                                                  ------------  ------------

NET LOSS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   (5,216,125)   (3,491,043)

Preferred dividend requirement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .     (128,445)     (186,779)
NET LOSS CHARGEABLE TO COMMON SHAREHOLDERS . . . . . . . . . . . . . . . . . . . . . . . . . . .  $(5,344,570)  $(3,677,821)
                                                                                                  ------------  ------------


Basic and diluted loss per common share. . . . . . . . . . . . . . . . . . . . . . . . . . . . .  $      (.13)  $      (.12)
Weighted average shares outstanding. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   41,646,844    31,938,926

See accompanying summary of accounting policies and notes to consolidated financial statements.

</TABLE>

<TABLE>
<CAPTION>

HYPERDYNAMICS CORPORATION
CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
Years Ended June 30, 2005 and 2004

<S>                                                                  <C>        <C>     <C>           <C>

                                                                         Preferred               Common
                                                                     Shares     Amount      Shares     Amount
                                                                     ------     ------  ----------    -------
Balances, June 30, 2003 (restated). . . . . . . . . . . . . . .      4,670     $     5  27,631,507    $27,632
Common stock issued for:
-  cash, net. . . . . . . . . . . . . . . . . . . . . . . . . .                          8,575,543      8,576
-  exercise of options for cash, net. . . . . . . . . . . . . .                            179,000        179
-  cashless exercise of options, net of 257,070 shares returned                          2,976,263      2,976
-  services . . . . . . . . . . . . . . . . . . . . . . . . . .                            181,250        181
-  accounts payable . . . . . . . . . . . . . . . . . . . . . .                             35,489         35
-  conversion of notes payable. . . . . . . . . . . . . . . . .                          1,595,573      1,596
-  acquisition of HYD Resources . . . . . . . . . . . . . . . .                             32,328         32

Issuance of stock options and warrants

Preferred stock dividends

Funds raised from sale of warrants to purchase Hyperdynamics
Corporation stock in association with SCS Corp. units
Net loss
Balances, June 30, 2004 . . . . . . . . . . . . . . . . . . . .      4,670           5  41,206,953     41,207
                                                                 --------------------------------------------
Common stock issued for:
-  exercise of options. . . . . . . . . . . . . . . . . . . . .                            321,500        321
-  services . . . . . . . . . . . . . . . . . . . . . . . . . .                            155,756        156
-  conversion of mandatorily redeemable preferred stock . . . .                            269,634        270
-  accounts payable . . . . . . . . . . . . . . . . . . . . . .                             25,372         25
-  acquisition of HYD Resources . . . . . . . . . . . . . . . .                            101,480        101

Issuance of stock options and warrants
Preferred stock dividends
Payment of preferred stock dividends in common shares . . . . .                             87,715         88

Net loss
                                                               ----------------------------------------------
Balances, June 30, 2005 . . . . . . . . . . . . . . . . . . . .      4,670     $     5  42,168,410    $42,168
                                                               ==============================================
<FN>
See accompanying summary of accounting policies and notes to consolidated financial statements.
</TABLE>

<TABLE>
<CAPTION>

HYPERDYNAMICS CORPORATION
CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
Years Ended June 30, 2005 and 2004 (Continued)

<S>                                                      <C>                           <C>                    <C>

                                                         Additional Paid in Capital    Accumulated Deficit    Totals
                                                         --------------------------    -------------------    ------
Balances, June 30, 2003 (restated). . . . .. . . . . .  $                10,445,284   $        (10,790,022)  $ (317,101)
                                                          ----------------------------  ---------------------  -----------
Common stock issued for:
-  cash, net. . . . . . . . . . . . . . . . . . . . . . . . .             5,870,237                           5,878,813
-  exercise of options for cash, net. . . . . . . . . . . . .                67,071                              67,250
-  cashless exercise of options, net of 257,070 shares returned             (27,948)                            (24,972)
-  services . . . . . . . . . . . . . . . . . . . . . . . . .               393,557                             393,738
-  accounts payable . . . . . . . . . . . . . . . . . . . . .                76,204                              76,239
-  conversion of notes payable. . . . . . . . . . . . . . . .               266,460                             268,056
-  acquisition of HYD Resources . . . . . . . . . . . . . . .                93,718                              93,750

Issuance of stock options and warrants. . . . . . . . . . . .             1,783,642                           1,783,642

Preferred stock dividends . . . . . . . . . . . . . . . . . .              (186,779)                           (186,779)

Funds raised from sale of warrants to purchase Hyperdynamics .              118,597                             118,597
Corporation stock in association with SCS Corp. units
Net loss. . . . . . . . . . . . . . . . . . . . . . . . . . .                                   (3,491,043)
                                                             -----------------------------------------------------------
Balances, June 30, 2004 . . . . . . . . . . . . . . . . . . .            19,086,822            (14,467,844)   4,660,190

Common stock issued for:
-  exercise of options. . . . . . . . . . . . . . . . . . . .               167,304                             167,625
-  services . . . . . . . . . . . . . . . . . . . . . . . . .               389,904                             390,060
-  conversion of mandatorily redeemable preferred stock . . .               849,077                             849,347
-  accounts payable . . . . . . . . . . . . . . . . . . . . .                63,187                              63,212
-  acquisition of HYD Resources . . . . . . . . . . . . . . .               281,149                             281,250

Issuance of stock options and warrants. . . . . . . . . . . .             1,833,085                           1,833,085
Preferred stock dividends . . . . . . . . . . . . . . . . . .                                     (128,445)    (128,445)
Payment of preferred stock dividends in common shares . . . .               245,162                             245,250

Net loss. . . . . . . . . . . . . . . . . . . . . . . . . . .            (5,216,125)                         (5,216,125)
                                                             -----------------------------------------------------------
Balances, June 30, 2005 . . . . . . . . . . . . . . . . . . .  $         22,915,690          $ (19,812,414)  $3,145,449
                                                             ===========================================================
<FN>
See accompanying summary of accounting policies and notes to consolidated financial statements.

</TABLE>

<TABLE>
<CAPTION>



<S>                                                                                                     <C>           <C>
HYPERDYNAMICS CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
Years Ended June 30, 2005 and 2004

                                                                                                        2005          2004
                                                                                           ---------------------------------------
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   $(5,216,125)  $(3,491,043)
Adjustments to reconcile net loss to cash used in operating activities:
Depreciation and amortization . . . . .  . . . . . . . . . . . . . . . . . . . . . . . . . .  .       124,660        61,004
Shares issued for services. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .        48,010           -0-
Options and warrants issued . . . .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . ..     1,833,085     1,783,642
Beneficial conversion feature associated with convertible notes payable to officers . . . . . .           -0-       249,066
(Gain)/loss on disposition of assets. . .. . . . . . . . . . . . . . . . . . . . . . . . . . ..        17,159           -0-
Bad debt expense. . . . . . . . . .  . . . . . . . . . . . . . . . . . . . . . . . . . . . . ..        14,791          (216)
Accretion of interest and amortization of offering costs of mandatorily redeemable preferred stock    231,750       231,750
Loss on retirement of mandatorily redeemable preferred stock.. . . . . . . . . . . . . . . . ..        76,847           -0-
Shares withheld from cashless exercise of Options . . . . . . . . . . . . . . . . . . . . . . .           -0-       (24,972)
Changes in assets and liabilities
Accounts receivable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .        (6,182)      (20,853)
Inventory . . . . . . . . .  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ..        46,016       (28,261)
Other current assets. . . . . . . . . . . . .  . . . . . . . . . . . . . . . . . . . . . . . ..       (36,699)          234
Accounts payable and accrued expenses. . . . . . . . . . . . . . . . . . . . . . . . . . . . ..       302,291       (98,358)
Customer deposits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .        (3,264)          -0-
Change in deferred rent . .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ..        (6,786)        9,577
NET CASH USED IN OPERATING ACTIVITIES. . . . . . . . . . . . . . . . . . . . . . . . . . . . ..    (2,574,447)   (1,328,430)
                                                                                                   ------------  ------------

CASH FLOWS FROM INVESTING ACTIVITIES
Purchases of property and equipment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .      (266,956)     (129,112)
Decrease in restricted cash . . . .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . ..       129,750        86,391
Proceeds from sale of assets. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .        13,413           -0-
Investment in oil and gas properties . . . . . . . . . . . . . . . . . . . . . . . . . . . . ..    (1,250,406)   (1,900,990)
Return of deposit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .          (680)        1,800
NET CASH USED IN INVESTING ACTIVITIES . .. . . . . . . . . . . . . . . . . . . . . . . . . .  .    (1,374,879)   (1,941,911)
                                                                                                  ------------  ------------

CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from sale of common stock, net . . .  . . . . . . . . . . . . . . . . . . . . . . . ..           -0-     5,878,813
Proceeds from exercise of options, net. . . . . . . . . . . . . . . . . . . . . . . . . . . . .       167,625        67,250
Proceeds from sale of units consisting of warrants in Hyperdynamics and preferred stock in
subsidiary, net of $39,500 and $12,000 offering cost respectively
Proceeds from sale of working interest in oil and gas properties, net . . . . . . . . . . . . .       814,000           -0-
Proceeds from installment debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ..       227,454           -0-
Payments on installment debt. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .      (149,746)      (57,798)
                                                                                                   -----------    ----------
NET CASH PROVIDED BY FINANCING ACTIVITIES . . . . . . . . . . . . . . . . . . . . . . . . . . .     1,059,333     6,243,765
                                                                                                   -----------    ----------
<FN>
See accompanying summary of accounting policies and notes to consolidated financial statements.
</TABLE>

<TABLE>
<CAPTION>

<S>                                                                                  <C>           <C>
HYPERDYNAMICS CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
Years Ended June 30, 2005 and 2004(Continued)

                                                                                            2005         2004
Net Change In Cash. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  $(2,889,993)  $2,973,424
                                                                                     ------------  ----------
CASH AT BEGINNING OF PERIOD . . . . . . . . . . . . . . . . . . . . . . . . . . . .    3,149,441      176,017
CASH AT END OF PERIOD . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  $   259,448   $3,149,441
                                                                                     ------------  ----------

SUPPLEMENTAL DISCLOSURES
Interest paid in cash . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  $     7,437   $   10,100
Income taxes paid in cash . . . . . . . . . . . . . . . . . . . . . . . . . . . . .          -0-          -0-

NON-CASH TRANSACTIONS
Issuance of common stock for accounts payable . . . . . . . . . . . . . . . . . . .  $    63,212   $   76,239
Payment of preferred stock dividends in common shares . . . . . . . . . . . . . . .      245,250          -0-
Conversion of notes payable to common stock . . . . . . . . . . . . . . . . . . . .          -0-      268,056
Conversion of mandatorily redeemable preferred stock. . . . . . . . . . . . . . . .      849,347          -0-
Issuance of stock for oil and gas properties. . . . . . . . . . . . . . . . . . . .      342,050      393,738
Purchase of HYD Resources for stock and note payable. . . . . . . . . . . . . . . .          -0-      375,000
Stock issued for note payable . . . . . . . . . . . . . . . . . . . . . . . . . . .      281,250          -0-

See accompanying summary of accounting policies and notes to financial statements.
</TABLE>

                            Hyperdynamics Corporation
                   Notes To Consolidated Financial Statements

Note  1  -  Significant  Accounting  Policies

Nature  of  business.  Hyperdynamics  Corporation  (Hyperdynamics) is a Delaware
corporation  formed  in  March  1996.  Hyperdynamics  utilizes  its  integrated
technology  infrastructure  to provide support to its wholly-owned subsidiaries,
SCS  Corporation  (SCS),  HYD  Resources  Corporation  (HYD),  and  Trendsetter
Production  Company (Trendsetter). Through SCS, Hyperdynamics focuses on oil and
gas  exploration  offshore the coast of West Africa. SCS began operations in oil
and gas exploration, seismic data acquisition, processing, and interpretation in
late  fiscal  2002.  In  April  2004, Hyperdynamics acquired HYD, and in January
2005,  Hyperdynamics  acquired Trendsetter, an oil and gas operator in Louisiana
that  had  been  under  common  ownership with HYD. Trendsetter owns oil and gas
leases.  It  contracts  with  its sister company, HYD, which drills new wells in
shallow, proven areas and implements production facilities on Trendsetter leases
to  produce  oil  and  gas.  The  fiscal  year-end  is  June  30.

Basis  of  presentation.  The  consolidated  financial  statements  include  the
accounts of Hyperdynamics and its wholly-owned subsidiaries, SCS, HYD Resources,
and  Trendsetter  Production  Company.  Significant  inter-company  accounts and
transactions  have  been  eliminated.

Estimates  and  assumptions.  Preparing  financial statements in conformity with
accounting  principles  generally  accepted  in  the  United  States  of America
requires  management  to make estimates and assumptions that affect the reported
amounts  of  assets, liabilities, revenue and expenses at the balance sheet date
and for the period then ended. Actual results could differ from these estimates.
Cash  and  cash equivalents include all highly liquid investments purchased with
original  maturity  of  three  months  or  less.

Restricted  cash  is  a certificate of deposit at a bank that uses the letter of
credit  as  collateral  for  supporting  Hyperdynamics' lease commitment. The CD
matures  on  May  9,  2006  and accrues interest at .75% annually. Hyperdynamics
plans  to  renew  it  next  year and the amount will be reduced to coincide with
reduction  in  the  Letter  of  Credit  in favor of Hyperdynamics' Landlord. The
restriction  on  the  CD  will  be  lifted  according to the following schedule:
$65,445  on  November  1,  2005.

Revenue recognition. Revenue, if any, from tape conversions, consulting, and oil
field  services  is  recognized when services are rendered. Revenues for oil and
gas sales are recognized at the point when title to the oil or gas passes to the
customer. For oil sales, this occurs when the customer's truck takes delivery of
oil  from  Trendsetter's  storage  tanks.

Accounts receivable are written down to reflect management's best estimate based
upon  known  specific  analysis,  historical  experience,  and  other  currently
available  evidence  of  the  net  collectible  amount.

Inventory  consists of oil field equipment and is stated at the lower of cost or
market  using  the  first-in  first-out  basis  (FIFO).

Other  current  assets  consist  of  prepaid  insurance  of  $167,250.

Long-lived Assets. Property, equipment and a building 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 of 3 - 15
years.

The  Company  follows  Statement  of  Financial  Accounting  Standards  No. 144,
Accounting  for  the  Impairment  or Disposal of Long-Lived Assets, by reviewing
such  assets for impairment whenever events or changes in circumstances indicate
that  the  carrying  amount  of an asset may not be recoverable. Impairment loss
recognized  is  the  excess  of  the  carrying amount over the fair value of the
asset.  Hyperdynamics  has  no  impairment  in  the  year  ended  June 30, 2005.
Accounts  payable  and  accrued  expenses  consist  of  the  following:

<TABLE>
<CAPTION>

<S>                       <C>
Accounts payable . . . .  $332,635
Accrued payroll expenses   112,249
Accrued insurance. . . .   110,494
Taxes payable. . . . . .     2,258
Other. . . . . . . . . .       678
                          $558,314
                          --------
</TABLE>

Deferred  rent  represents  the difference between the rent expense per month as
calculated  based  on  the total contractual payments specified over the 10-year
period  of  the  lease  and  the actual monthly rent paid. It arises because the
initial  6  months of the lease were free and because the rent payment increases
after  the  60th  month of the lease. The deferral will reverse beginning in the
year  ending  June  30,  2005.

Income  taxes are computed using the tax liability method of accounting, whereby
deferred  income  taxes  are  determined  based on differences between financial
reporting  and  tax  bases  of assets and liabilities and are measured using the
enacted  tax  rates  that  will  be  in  effect  when  the  differences reverse.
Hyperdynamics  accounts  for  stock  options  issued  to  employees  under  the
recognition and measurement principles of FASB Statement No. 123, Accounting for
Stock-Based  Compensation.  No  options  are  outstanding  as  of June 30, 2005.
The  basic  net  loss  per  common  share  is  computed by dividing the net loss
chargeable  to  common  stockholders  by  the  weighted average number of common
shares  outstanding.

Diluted  net  loss  per  common  share  is  computed  by  dividing  the net loss
applicable  to  common  stockholders, adjusted on an "as if converted" basis, by
the weighted average number of common shares outstanding plus potential dilutive
securities.  For  the  years  ended  June  30, 2005 and 2004, potential dilutive
securities  had an anti-dilutive effect and were not included in the calculation
of  diluted  net  loss  per  common  share.

Recently  issued  accounting  pronouncements.  Hyperdynamics does not expect the
adoption  of  recently  issued  accounting  pronouncements to have a significant
impact on Hyperdynamics' results of operations, financial position or cash flow.
Reclassifications.  Certain prior year amounts have been reclassified to conform
with  the  current  year  presentation.

Note  2  -  HYD  Resources  Corporation  and  Trendsetter  Production  Company
In  April 2004, Hyperdynamics purchased 100% of the stock of HYD for $375,000 to
be  paid in Hyperdynamics common stock in four quarterly installments to be paid
between  April  2004  and  January  2005. At the time of acquisition, HYD had no
operations  and consisted solely of assets donated to the company by its initial
shareholders.  As of June 30, 2005, the entire purchase price has been paid. The
final  purchase  price  allocation  is:

<TABLE>
<CAPTION>

<S>              <C>
Inventory . . .  $ 15,400
Field equipment   359,600
Total assets. .  $375,000
                 --------
Liabilities . .         0
Net Assets. . .  $375,000
                 --------
</TABLE>

HYD  is  a  dealer of used equipment and it provides oil field services, such as
well  workovers,  drilling  services, and the repair and leasing of equipment to
oil  field  operators.  In  conjunction  with the purchase of HYD, Hyperdynamics
entered  into  two  employment  agreements  with  HYD's prior owners under which
Hyperdynamics agreed to pay two employees $3,500 per month. Under the contracts,
Hyperdynamics  may  terminate  the  employment  agreements  for cause, or if HYD
experiences  a  cumulative  net  loss  any  time  after the first nine months of
operation.  One  of  the  employees  was  terminated early in 2005 and the other
remains  as  the  primary  operating  officer.

The  initial employment agreements stipulated that bonuses, in the form of three
contingent  notes  payable,  of up to $856,000 will be paid based upon HYD's net
income  over the next five years. The payments will be 25% of the net income for
each  quarter,  if there is net income after offsetting any losses from previous
quarters.  As  of  June 30, 2005, HYD had a cumulative net loss of approximately
$1,381,524.  This  amount  would  need to be earned as net income in current and
future periods prior to having to pay the contingent note with 25% of net income
in  excess  of  the  recovery  amount.

The  owners  of  HYD  also owned Trendsetter Production Company (Trendsetter), a
Louisiana  oil  and  gas  operator.  In  January  2005,  Hyperdynamics  acquired
Trendsetter.  Trendsetter  at  that  time had no operations and one oil lease of
nominal  cost.  This  transaction  was  involved  entities under common control;
accordingly,  Trendsetter's  asset  was  recorded  at  historical  cost.

Note  3  -  Property  and  Equipment

A  summary  of  property  and  equipment  as  of  June  30,  2005 is as follows:

<TABLE>
<CAPTION>

<S>                                              <C>         <C>
Computer equipment and software . . . . . . . .    3 years   $153,689
Office equipment and furniture. . . . . . . . .    5 years     13,892
Oil Field Equipment . . . . . . . . . . . . . .    3 years     64,252
Oil Field Equipment . . . . . . . . . . . . . .    5 years    551,038
Other equipment . . . . . . . . . . . . . . . .    5 years     80,392
Building. . . . . . . . . . . . . . . . . . . .   15 years     25,000
Land. . . . . . . . . . . . . . . . . . . . . .      N/A       25,000
Total cost. . . . . . . . . . . . . . . . . . .               913,263
                                                            ----------
Less: accumulated depreciation and amortization              (314,171)
Net carrying value. . . . . . . . . . . . . . .             $ 599,092
</TABLE>

Hyperdynamics  reviews  assets  for  impairment  whenever  events  or changes in
circumstances  indicate  that  the  carrying  amount  of  an  asset  may  not be
recoverable.  During  the  year  ended  June 30, 2005 there was no impairment of
Hyperdynamics'  Property  and  Equipment.  During  the year ended June 30, 2004,
there  was  no  impairment  of  Hyperdynamics'  assets.

Note  4  -  Investment  in  Oil  and  Gas  Properties

Investment  in  Oil  and  Gas properties consist of Hyperdynamics' concession in
offshore West Africa, as previously disclosed, and leaseholds in Louisiana, USA.
Proved  Oil  and  Gas  Properties  relate to three leases in Louisiana, USA. The
following table provides detail of costs to date by country as of June 30, 2005:

<TABLE>
<CAPTION>



<S>                                       <C>                   <C>          <C>
                                          Republic of Guinea    USA          Total

Lease Acquisition Costs
Proved . . . . . . . . . . . . . . . . .                       $  4,269   $  4,269
Unproved . . . . . . . . . . . . . . . .  $           290,452    13,329    303,781
Exploration Costs - Unproved Properties
Geological and Geophysical costs . . . .            3,782,051            3,782,051
Drilling . . . . . . . . . . . . . . . .                         50,773     50,773
Development Costs. . . . . . . . . . . .                        607,175    607,175
Purchased Proved Reserves. . . . . . . .                         64,990     64,990
Cost Recovery (sale of working Interest)                       (740,536)  (740,536)
                                          -----------------------------------------
                                          $         4,072,503   $     0 $4,072,503
                                          -----------------------------------------
</TABLE>

Sale  of  working  interest
---------------------------
During  March  2005, Hyperdynamics began to market working interest units in one
lease  in  Louisiana, USA. The working interest units were priced at $55,000 for
each  one  percent working interest. 49 units were available for sale. Marketing
costs  related  to these units is 20%.  As of June 30, 2005, 18.5 units had been
sold,  resulting  in  net  proceeds  of  $814,000.

The  proceeds  reduced the full cost pool related to the USA by $740,536. By the
terms of the agreement, Hyperdynamics must drill an additional four wells to the
casing  point  at  its own expense. Because Hyperdynamics has this obligation to
the  working  interest  investors  as  of  June  30, 2005, there will be no gain
computed  on  the  sale  of  these  units  until  the  obligation  is fulfilled.

Therefore,  the  balance  of the net proceeds, $73,464, is reflected as deferred
gain  as  of  June  30,  2005.

Republic  of  Guinea  Production  Sharing  Agreement  (PSA)
-----------------------------------------------------------
Under  the  PSA,  SCS  had  the  following  obligations:
a.     Pursuant  to  the  PSA, a payment to the Government of Guinea of $250,000
was  made in June 2003. The PSA, that was filed with the Company's form 8K filed
on  July  29, 2005, specifies royalties and production sharing if oil and/or gas
is  discovered.

b.     SCS  must  perform  2-D  seismic  and  other  work on 4,000 kilometers of
seismic  acquired  in  2003, as well as additional work on pre-acquired seismic,
exceeding  the  work requirement obligation of the PSA for the First Exploration
Period which ended in December 2003. SCS has continued its work in 2004 and 2005
and  contracted  with  third  parties  for  a satellite seeps study and a coring
analysis  as well as obtaining an independent interpretation of its data from an
internationally  known  vendor,  PGS.

c.     During  the  second exploration period, SCS is required to drill at least
one exploratory well at an estimated cost of $10 million. The time frame for SCS
has  to  complete  this requirement is at least four years. Because of events as
explained  below,  management  believes the time frames are frozen as a case for
Force  Majeure  has  occurred  pursuant  to  the  PSA.

If  SCS were to continue to perform under the 2002 PSA as farmed out from USOil,
SCS  would  pay  US  Oil  $1,600,000  conditionally  if  SCS obtains third party
financing  for  this  Guinea  development  project  from  an oil company partner
participating  in  a working interest purchase or a 3rd party financing company.
Also  under  the  2002  PSA  and  associated  Farmout Agreement with USOil, a 3%
royalty  on  oil and gas production would also be paid to USOil. With the events
surrounding  the  8K  filed  in July with regard to a fake termination letter as
discussed  below,  the  ensuing litigation with USOil Corporation may ultimately
determine  any  amounts  at all to be paid pursuant to the original terms of the
Farmout  Agreement. While in Guinea, the Vice President and CEO also hired a new
in-country general manager to facilitate consistent daily communication with the
Government.

On  June  27,  2005,  SCS  made  a  request  for a drilling permit to the Guinea
Government  through  its USOil contact. On July 12, 2005, USOil claimed that the
Guinea  Government had cancelled the Royalties and Production Sharing Agreement.
On  July  29,  2005, Hyperdynamics filed its 8K explaining the occurrence of the
confusing events. In the 8K filed, the company states its belief that the PSA is
still in full force and effect because none of the terms regarding disputes with
respect  to  any  issues  regarding  the  PSA,  including  proper procedures for
termination  of the PSA were followed whatsoever. The terms of the PSA regarding
disputes  and  termination  were  literally ignored. Additionally, the purported
termination letter did not specify the reason for termination and the letter was
not  signed by the Minister of the private office of the President of Guinea, or
the  President  himself.

Hyperdynamics  hired  Famourou  Kourouma  as  its  new Vice President for Guinea
Affairs in August.  Both Mr. Kourouma and the Company's CEO, Kent Watts traveled
to  Guinea.  They  have  determined  from  direct  meetings  with  the  Ministre
Secretaire  General  de  la  Presidence  de  la  Republique  de  Guinee that the
termination letter did not originate from his office. For the termination letter
to  be  legitimate  it  would  have  had  to be initiated by his office with his
knowledge.  The  termination  letter  was a fake. The Government has represented
that  SCS  will be allowed to resume work and the Ministre Secretaire General is
working  on  this  by  order  of  his  Excelence  President  Lansana  Conte.

Note  5  -  Oil  and  Gas  Accounting  Policies

Property and equipment. Hyperdynamics follows the full cost accounting method to
account  for the costs incurred in the acquisition, exploration, development and
production  of  oil  and  gas  reserves.  Under this method, all costs including
internal  costs  that  are  directly  related  to  acquisition, exploration, and
development  activities  are  capitalizable  as  oil  and  gas  property  costs.
Amortization of unproved property costs begins when the properties become proved
or  their  values  become  impaired. Hyperdynamics assesses the realizability of
unproved  properties  on  at  least  an  annual  basis or when there has been an
indication that an impairment in value may have occurred. Impairment of unproved
properties  is  assessed  based  on management's intention with regard to future
exploration  and  development  of  individually  significant  properties and the
ability  of  Hyperdynamics  to  obtain  funds  to  finance  such exploration and
development.  If  the  results of an assessment indicate that the properties are
impaired,  the  amount of the impairment is added to the capitalized costs to be
amortized.

Under  full  cost  accounting  rules  for each cost center, capitalized costs of
proved  properties,  less  accumulated  amortization and related deferred income
taxes,  shall  not exceed an amount (the "cost ceiling") equal to the sum of (a)
the  present  value of future net cash flows from estimated production of proved
oil  and  gas  reserves,  based  on  current  economic and operating conditions,
discounted  at  10 percent, plus (b) the cost of properties not being amortized,
plus  (c)  the  lower of cost or estimated fair value of any unproved properties
included  in  the costs being amortized, less (d) any income tax effects related
to  differences  between  the  book and tax basis of the properties involved. If
capitalized  costs  exceed  this  limit,  the excess is charged as an impairment
expense.

Note  6  -  Accounts  Payable  Seismic  Data

In  February  2003, SCS agreed to pay $650,000 to Offshore Seismic Surveys, Inc.
(OSS),  an  offshore  seismic company, for OSS agreeing to release GHRC from the
$550,000  due  to  OSS  for the Guinea seismic data. The additional $100,000 was
charged  to  expense  in 2003. OSS maintains a lien on the ownership and sale of
1,000 kilometers of the seismic data acquired in 2002, for the $650,000 less any
payments  made  on  this  amount.

Any  user  license  sales  proceeds  generated  from  user  licenses of the 2002
acquired  data  shall  first go to payoff the $650,000 liability at a rate of 90
percent  of  gross  user  license  sales proceeds for OSS and 10 percent for SCS
until the $650,000 is paid in full. Any funding arrangement SCS enters into with
respect  to the Guinea PSA, whereby all rights and obligations under the PSA are
transferred, shall cause the $650,000 to become immediately due upon signing and
funding  of  such  agreement.

Note  7  -  Installment  Notes  Payable

Installment  notes  payable  consist  of  the  following  as  of  June 30, 2005:

<TABLE>
<CAPTION>

<S>                                                                                                              <C>
Installment notes payable consist of the following as of June 30, 2005:
Lease payable in approximately 6 equal remaining monthly installments of $1,693 including interest               $9,872
at 10% APR, and secured by electrical equipment
Vendor settlement payable in 9 equal monthly installments of $1,000 plus a balloon payment of $24,500            33,500
due May 1, 2006, no interest no collateral
Lease/Purchase payable for acquisition of oil and gas operations center with 5 equal remaining                   31,725
monthly installments of $6,541.09 including interest of 12% APR, and secured by a metal building
of approximately 7,000 sq. ft. located on about 7/10 of an acre of land
Directors and Officers Liability Insurance premium notes payable with $20,994 down and the balance              104,970
in 9 monthly installments of $9,545.80 including interest of 5.5% APR
Equipment floater finance agreement, payable in one remaining installment. . . . . . . . . . . . .                  800

Workman's Compensation finance agreement payable with $10,117 down and balance in 9 monthly                      49,786
installments of $4,826
Auto insurance finance agreement payable with $6,185 down and balance in 9 monthly installments of $1,276        17,097
                                                                                                               --------
                                                                                                               $247,750
                                                                                                               ========
</TABLE>

Note  8  -  Letter  Of  Credit

Hyperdynamics  renewed  its letter of credit for $65,445 with Frost Bank, and it
now  expires  on  October  31,  2005.  The purpose of the letter of credit is to
guarantee  the  lease  payments  on  Hyperdynamics'  office space. The letter of
credit  is  guaranteed  by  a security interest in a certificate of deposit with
Frost  Bank  that  may not be redeemed until the letter of credit expires. There
were no draws against this letter of credit as of June 30, 2005. The letter will
not be renewed upon expiration and the funds will be free of restriction at that
time.

During  the  year  ended  June 30, 2005, Hyperdynamics retired 5.15 units of SCS
mandatorily  redeemable  preferred stock.  Hyperdynamics offered payment of this
obligation  using Hyperdynamics common stock in lieu of cash, as provided by the
original  agreement.  The  investors  would  receive  one share of Hyperdynamics
common  stock  for  each  $1.91  of  preferred  stock outstanding. All investors
accepted  this offer as of March 31, 2005; a total of 269,634 shares were issued
to  redeem  the  5.15  units  they owned.  A loss of $76,847 was recorded on the
redemption.

Note  9  -  Income  Taxes

Income  taxes  are  not  due since Hyperdynamics has had losses since inception.
Hyperdynamics  has net operating loss carryforwards of approximately $12,911,000
at  June  30,  2005.

Deferred  tax  assets          $  4,389,000
                               ============
Less:  valuation  allowance      (4,389,000)
Net  deferred  taxes                     $0
                                         --

Internal  Revenue  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  are  restricted  to  $151,000  per  year.  The
availability  of  losses  from that date through June 30, 2001 of $3,313,000 are
restricted  to  $784,000  per  year.  Losses  in  fiscal 2002 and beyond are not
restricted.  The  net  operating  loss  carryforwards  expire from 2011 to 2025.

Note  10  -  Preferred  Stock

Series A Convertible Preferred Stock was issued in January 2000 for net proceeds
of  $2,604,190.  The stated value is $1,000 per share and par value is $.001. It
is  convertible  into Hyperdynamics' common stock at a price of the lower of the
trading  price  when  purchased  at  $5.25  or  80% of the current 5-day trading
average.  All  or  any of the stock may be converted at any time at the holder's
option,  and  all  shares  outstanding  as  of  January  30,  2002  were  to  be
automatically  converted.  This  series  is non-voting and pays dividends of 4%,
payable  at  conversion  in  either  cash  or  shares  of  common  stock,  at
Hyperdynamics'  option.  1,055 shares were converted to common in 2000 and 2001.
Hyperdynamics  has  not  converted  any of the Series A shares since fiscal 2001
because  of  claims  filed  in  November  2001  in our lawsuit with the Series A
shareholders.  Since  the  outcome  is  not  known  and  no  conversion has been
effected,  Hyperdynamics  is  continued to accrue the dividend through September
30,  2004.  Management  evaluated  the  accrual  as  of  September 30, 2004, and
considers  the  accrual  at  that date to be adequate to cover the liability, if
any,  pursuant  to  the  lawsuit.

As  of  June  30,  2004,  $352,953  in dividends were accrued. 2005 dividends of
$19,445  have  been  accrued  this  year,  resulting  in  total accrued Series A
dividends  of  $372,398  as  of  June  30,  2005.

2,725  shares  of  Series  B  Convertible  Preferred  Stock  were issued for the
acquisition  of  SCS Corporation on May 31, 2001. The stated value is $1,000 per
share  and  the  par  value  is $.001. Each Series B share may vote 7,408 common
shares  for  a  total  of 20,186,800 votes. The shares are convertible to common
stock  at the lesser of $.135 or 50% of the current 5-day average trading price.
Series  B  stockholders  are  entitled to a 4% cumulative dividend on the stated
value,  which  is payable only upon conversion of the preferred stock. Dividends
may  be paid in stock or cash at HyperDynamics' option. Dividends accrued on the
Series  B  as  of June 30, 2004 were $163,500. In 2005 dividends of $81,750 were
accrued  for  the  first  three  (3)  quarters of FYE 2005, resulting in accrued
dividends  as of March 31, 2005 of $245,250. The board of directors approved the
issuance  of  87,715 shares of restricted common stock to pay the March 31, 2005
accrued series B dividend. Dividends were accrued for the fourth quarter leaving
a  June  30,  2005  balance  of  $27,250.

Accrued  dividends  on  Series  A and Series B stock as of June 30, 2005 totaled
$399,648.

If all Preferred Series A and B shares were converted as of June 30, 2005, total
common  shares  outstanding  would  be  approximately  66,225,000  shares.

Note  11  -  Common  Stock

During  the  year  ended  June  30,  2005, Hyperdynamics issued 25,372 shares of
common  stock  for  accounts  payable of $63,212; 101,480 shares of common stock
were  issued  for  $281,250  note  payable  to pay off the purchase price of HYD
Resources  Corporation;  20,006  shares of common stock were issued for services
totaling $48,010; 135,750 shares of common stock were issued for $342,050 of oil
and  gas  properties;  269,634  shares  of  common  stock  were issued to redeem
$849,347  worth of the SCS Series A preferred stock; and 87,715 shares of common
stock  were  issued  to  pay  $245,250  of  series  B  accrued  dividends.

Also  during  2005,  321,500  shares  were issued for warrant exercises totaling
$167,625.

Note  12  -  Stock  Options  and  Warrants

Hyperdynamics' Stock Option Plan provides for the grant of non-qualified options
to  directors,  employees  and  consultants,  and  opportunities  for directors,
officers, employees and consultants to make purchases of stock in Hyperdynamics.
In addition, Hyperdynamics issues stock warrants from time to time to employees,
consultants,  stockholders and creditors as additional financial incentives. The
plans and warrant issuances are administered by the Board of Directors, who have
substantial  discretion  to  determine  which  persons,  amounts,  time,  price,
exercise  terms,  and restrictions, if any. Options differ from warrants in that
the  options awards are immediately exercisable and are assignable. In contrast,
warrants  have  employment  termination  restrictions,  vesting  periods and are
non-transferable.

During  2005,  Hyperdynamics did not grant any compensatory warrants or options.
In  2004,  Hyperdynamics  granted  2,360,000  warrants  to  consultants.  The
compensation cost recognized for these warrants in was $1,833,085 and $1,517,922
for  the  years  ended  June  30,  2005  and  2004,  respectively,  based on the
Black-Scholes  option  pricing  model.

During  2005 and 2004, respectively, Hyperdynamics issued 0 and 333,333 warrants
to  employees.  The compensation cost recognized for these warrants was $265,721
for  the  year  ended  June  30, 2004, based on the Black-Scholes option pricing
model.  In  addition  to  shares  issued to consultants and employees, investors
purchased  3,732,403  warrants  in  conjunction  with purchases of SCS preferred
stock  and  Hyperdynamics  common  stock.

The  weighted  average  fair  value of the stock options granted during 2005 and
2004  was  $0  and  $1.31,  respectively.  Variables  used  in the Black-Scholes
option-pricing  model  include  (1)  risk-free interest rates ranging from 1% to
2.5%,  depending  on  the grant dates and the expected lives of the options, (2)
expected option life is the actual remaining life of the options as of the grant
date,  (3)  expected volatility is the actual historical stock price fluctuation
volatility  and  (4)  zero  expected  dividends.

Summary  information  regarding  options  and  warrants  is  as  follows:

<TABLE>
<CAPTION>

<S>                                      <C>        <C>                           <C>         <C>

                                         Options    Weighted Average Share Price   Warrants   Weighted Average Share Price
Year ended June 30, 2004 :
Outstanding, June 30, 2003                  0                   $N/A               4,625,000              $1.16

Granted                                                                            6,425,736               1.31
Exercised                                                                         (3,412,333)               .28
Expired                                                                             (355,000)               .83
Cancelled due to repricing                                                               -0-                -0-
Forfeited                                                                                -0-                -0-
                           ------------------------------------------------------------------------------------
Outstanding, year ended June 30, 2004       0                    N/A               7,283,403              1.69

Year ended June 30, 2005:
Granted                                                                              250,000               .55
Exercised                                                                           (321,350)              .52
Expired unused                                                                      (600,000)             6.50
Outstanding, year ended June 30, 2005       0                    N/A               6,611,903             $1.27
                           ------------------------------------------------------------------------------------
</TABLE>

<TABLE>
<CAPTION>

<S>                                                         <C>                           <C>             <C>
Warrants outstanding and exercisable as of June 30, 2005:                                                 Exercisable Number
Exercise Price . . . . . . . . . . . . . . . . . . . . . .  Outstanding Number of Shares  Remaining life       of Shares
..23 . . . . . . . . . . . . . . . . . . . . . . . . . . .                        800,000         2 years         800,000
 .25 . . . . . . . . . . . . . . . . . . . . . . . . . . .                       175,000         3 years         175,000
 .28 . . . . . . . . . . . . . . . . . . . . . . . . . . .                        10,000         1 years          10,000
 .50 . . . . . . . . . . . . . . . . . . . . . . . . . . .                       100,000         1 years         100,000
 .50 . . . . . . . . . . . . . . . . . . . . . . . . . . .                     1,992,000         2 years       1,392,000
 2.00. . . . . . . . . . . . . . . . . . . . . . . . . . .                     3,534,903         2 years       3,534,903
                                                                               6,611,903                       6,011,903
----------------------------------------------------------  -------------------------------------------------------------------

</TABLE>

NOTE  13  -  Segment  Information

Reportable  segments
--------------------

Hyperdynamics  management  has  two reportable segments: SCS Corporation ("SCS")
and  its Louisiana operations ("HYD"). SCS is engaged in oil and gas exploration
activities pertaining to offshore Guinea, West Africa. Additionally, it provides
seismic data transcription and management services to support its activities and
to  external  customers.  The  seismic data work is performed in the USA. HYD is
engaged  in oil and gas exploration and production activities in Louisiana, USA;
it  also  provides  some  oilfield services to external customers. Hyperdynamics
evaluates  performance  based  on profit or loss from operations. The reportable
segments  are  managed  by  separate management teams who are evaluated based on
their  segment's  performance.

The  following  tables summarize certain balance sheet and income statement data
about  Hyperdynamics'  reportable segments and corporate overhead for the twelve
months  ended  June  30,  2005  and  2004:
As  of  June  30,  2005:

<TABLE>
<CAPTION>



<S>                                       <C>          <C>           <C>           <C>
                                          SCS          HYD           Corporate     Total
                                          -----------  ------------  ------------  ------------
Segment Assets . . . . . . . . . . . . .  $4,104,519   $   819,170   $   285,633   $ 5,209,322
----------------------------------------  -----------  ------------  ------------  ------------
Twelve months ended June 30, 2005:
  SCS. . . . . . . . . . . . . . . . . .  HYD          Corporate     Total
----------------------------------------  -----------  ------------  ------------
Revenues from external customers . . . .  $    3,140   $   169,259   $       300   $   172,699
                                          -----------  ------------  ------------  ------------
Depreciation, depletion and amortization      28,499        77,370        18,791       124,660
Loss from operations . . . . . . . . . .    (528,617)   (1,508,093)   (2,863,195)   (4,899,905)
Expenditures for long-lived assets . . .     888,630       958,092        16,708     1,863,430

As of June 30, 2004:

  SCS. . . . . . . . . . . . . . . . . .  HYD          Corporate     Total
Segment assets . . . . . . . . . . . . .  $3,310,065   $   515,043   $ 3,457,553   $ 7,282,661
                                          -----------  ------------  ------------  ------------


Twelve months ended June 30, 2004:

  SCS. . . . . . . . . . . . . . . . . .  HYD          Corporate     Total
Revenues from external customers . . . .  $   18,314   $     9,974   $    10,056   $    38,344
                                          -----------  ------------  ------------  ------------
Depreciation, depletion and amortization      24,248        19,093        17,663        61,004
Loss from operations . . . . . . . . . .    (407,622)      (92,232)   (2,617,060)   (3,116,914)
Expenditures for long-lived assets . . .   2,338,980       359,304         1,244     2,699,528

</TABLE>

<TABLE>
<CAPTION>

<S>                              <C>       <C>
Product and Service Information
Twelve Months Ended June 30
                                     2005     2004
                                   -------  -------
Revenues from:
Seismic date management . . . .  $  3,140  $18,314
Computer related sales. . . . .       300   10,056
Oilfield services . . . . . . .   117,251    9,974
Oil and gas production. . . . .    52,008        -
Totals. . . . . . . . . . . . .  $172,699  $38,344
                                 --------  -------
</TABLE>

Geographical  Information
-------------------------
All  revenues  currently derive from domestic sources. All long-lived assets are
located  in  the  USA,  except  for  rights  associated with the Guinea offshore
territory.

Note  14  -  Commitments  and  Contingencies

From  time  to time, Hyperdynamics and its subsidiaries are involved in a number
of  routine business disputes that may occur in the ordinary course of business.
Hyperdynamics  is unable to predict the outcome of such matters when they arise.
Other than disputes currently disclosed under litigation, the company is unaware
of  any  other  disputes  that  exist  and  does  not  believe that the ultimate
resolution of such matters would have a material adverse effect on the financial
statements  of  Hyperdynamics.

Hyperdynamics  leases  its  office  space from AGP Westwood, LTD over a 10-year
period.  The  company's  rent  under  this  lease has increased from $20,774 for
months  7-54, to $24,114 for months 55-120. The lease payments began on November
1,  2000.  Additional  common area maintenance charges are assessed. At June 30,
2005,  future  minimum  payments  are  $289,364 per year in years 2006-2010, and
$120,568  in  2011.  Rent  expense  for  the  years ended June 30, 2005 and 2004
totaled  $267,290  and  $274,214,  respectively. Hyperdynamics has a termination
option  that  may  be exercised after 60 months of the lease. If the termination
option  is  exercised,  Hyperdynamics  will  be released from the lease after 69
months.  On  May  5,  2005  the  Company  filed  a  lawsuit styled Hyperdynamics
Corporation  v.  AGB  Westwood L.P.; Cause No. 2005-30992; In the 165th Judicial
District  Court  of  Harris County, Texas. The Company alleges that AGB Westwood
L.P.  committed  fraud  and  has  breached  the lease contract with Company. The
Company  intends to aggressively pursue damages for its claims and is looking to
cancel  the  lease  and  move  out  in  order  to  mitigate  further  damages.

In  addition, Hyperdynamics is involved in a dispute with its series A preferred
shareholders over conversion rights to common stock and whether monetary damages
are  due  for  various  claims  against the preferred shareholders. The economic
effects  of  and  the  probable  outcome  of  this  contingency  are  not known.
Hyperdynamics'  subsidiary,  SCS,  has  $350,000  remaining of a contingent note
payable  due  to  Seacon  Computer  Systems  Inc.,  the  former  owners  of  SCS
Corporation's  assets.

As  mentioned  above,  should Hyperdynamics' subsidiary, SCS, continue under the
2002  PSA,  Hyperdynamics  will owe USOil $1,600,000 if SCS procures third party
funding  for  the  Guinea  project  (see  Note  4).

Hyperdynamics'  subsidiary,  SCS,  has  arrangements with one individual and one
corporation  to  provide  geological  and  geophysical  services in exchange for
Hyperdynamics  common  stock.  This  arrangement  was  temporarily  put  on hold
beginning  in  July  2005. Should SCS continue with the 2002 PSA or proceed with
rights  to  explore  and  exploit  the  concession  off  the  coast  of  Guinea,
Hyperdynamics  may  be obligated under these agreements to issue 41,250 - 46,250
shares  per  quarter, depending upon the price of Hyperdynamics common stock, or
it  may,  at  the  company's  option renegotiate or cancel such agreements going
forward  in  any  respect.

Note  15  -  Related  Party  Transactions

Related party transactions include payments to the CEO's brother, Michael Watts,
as  follows:  during  the  year  ended  June  30, 2004, Michael Watts, the CEO's
brother,  received payment of $699,951 cash to pay for offering costs on private
subscription  agreements  and warrants exercised. Additional offering costs will
also be paid on 3,732,403 warrants purchased by private investors should they be
exercised  in  the  future.  If  all of these warrants were exercised, Mr. Watts
would  receive  approximately  $712,000  to  pay  these  additional  costs.

Additionally,  1,200,000  warrants with an exercise price of $.50 per share were
issued  to  a  company  of  which  Michael  Watts  is  president  for  public
relations/investor  relations services. The warrants vest quarterly from January
2004  through  December  2005  and  expire  July  18, 2007. As of June 30, 2005,
960,000  of  these warrants have vested. The value of the 1,200,000 warrants, as
computed  using  the Black-Scholes model, was $2,256,592 of which $1,101,493 and
$959,895  was  recognized  2005  and  2004,  respectively.  The  balance will be
recognized  in  the  fiscal  year  ended  June  30,  2006,  when  they  vest.

On  February  9,  2005  the Audit Committee of Hyperdynamics Corporation, acting
under  the  Audit Committee Charter adopted by the board of directors on October
18,  2005  (see  Exhibit 14.1 hereunder),  pre-approved a contract with Geoserve
Marketing,  an  assumed  name  for  Michael  E.  Watts, the brother of the Chief
Executive  Officer. The contract was executed by Trendsetter Production Company,
(our  wholly  owned  subsidiary)  with  Geoserve  Marketing. Under the Agreement
Geoserve  Marketing was to sell up to 49% of the working interest in certain oil
and gas properties owned by Trendsetter. At $55,000 per point, this was to bring
in  gross revenues of $2,695,000 once sold out. Geoserve Marketing was given the
responsibilities  to  sell working interest on the company's oil and gas leases;
obtain  executed  documents  for  such  sales  as  required by the company; help
prepare  the  marketing  materials  for  working interest sales; obtain investor
non-disclosure  agreements  and  other  representations  from  all  prospective
non-operators;  obtain  a  check  or  wired  funds  from  and  signatures  of
non-operators  on  all  pertinent  operating  agreement  forms; pay expenses for
working  interest  promotion including but not limited to any brokerage fees and
referral  fees.  Trendsetter  agreed  to  pay  20%  of  the proceeds to Geoserve
Marketing  in return for these services. On June 30, 2005, the independent audit
committee  pre-approved  an  extension  of  the  working interest sales contract
through  July  30,  2005. As of June 30, 2005, 18.5% or $1,017,500 of a total of
49%  working  interest  had  been  sold  and  Geoserve  Marketing  had been paid
promotion  fees  of $203,500. On July 29, 2005, the audit committee pre-approved
that  Trendsetter  Production  Company  may extend the term of the contract with
Geoserve Marketing until a total of gross sales of $2,695,000 has occurred or it
has  been  determined  that  HYDR  is  cash  flowing, as a whole, or the company
otherwise  reaches  a cash position net of current liabilities equal to at least
$1,500,000  with  projected  cash surplus to last a minimum of one year based on
current  operations.  As of September 8, 2005, 32.5% or $1,787,500 had been sold
and  a total of $357,500 in promotion fees have been paid to Geoserve Marketing.
On  May  9,  2005,  Harry  James Briers, Executive Vice President, requested and
obtained  pre-approval  from  the  audit  committee  to rehire Mr. Jeremy Driver
(son-in-law of Michael E. Watts, brother of the Chief Executive Officer), a past
employee  of  Hyperdynamics  Corporation,  to  work  as  General Manager for HYD
Resources  Corporation.  Mr.  Driver had just been honorably discharged from the
United  States  Air  Force  with  the  rank  of  Lieutenant. The audit committee
approved the request and Mr. Driver was hired by Mr. Briers at an initial salary
of  $45,000  annually.

Note  16  -  Subsequent  Events

On  July  12,  2005,  Hyperdynamics  Corporation  received  a  letter from USOil
Corporation  whereby  they  claimed  that  the  royalties and production sharing
agreement between them and Guinea had been terminated. Hyperdynamics immediately
went  to  work to rectify the situation and initially took the position that the
Royalties  and  Production  Sharing agreement was still in full force and effect
since  the  contract  was  ignored  with respect to events of default, remedies,
notices,  and  cures  of such defaults.  On August 26, 2005, Hyperdynamics hired
Famourou  Kourouma as its new Vice President for Guinea Affairs in August.  Both
Mr.  Kourouma  and  the Company's CEO, Kent Watts traveled to Guinea.  They have
determined  from  direct  meetings  with  the  Ministre Secretaire General de la
Presidence  de  la  Republique  de  Guinee  that  the termination letter did not
originate  from his office. For the termination letter to be legitimate it would
have  had  to  be  initiated  by  his office with his knowledge. The termination
letter  was  a  fake. The Government has represented that SCS will be allowed to
resume  work  and the Ministre Secretaire General is working on this by order of
his Excelence President Lansana Conte. Mr. Kourouma remains working in Guinea at
this  time.

On  August  12,  2005, Hyperdynamics closed a private financing transaction with
Dutchess Private Equities Fund II, LP. The financing included a subscription for
a  $1,500,000 two (2) year debenture that was funded $1,000,000 upon closing and
funds  $500,000  upon filing of a registration statement which is expected to be
filed  in October 2005. Upon effectiveness of the ensuing registration, Dutchess
may  elect  to convert the payments coming due on the debenture at a stock price
of the lesser of the fixed floor conversion price or $1 per share. Hyperdynamics
has  an  option  to  into  another  debenture  with  Dutchess  for an additional
$1,500,000  upon  the  effectiveness  of  the registration statement. Management
believes  that  the  registration statement will be effective within six months.
However,  since  only  the  Securities  and  Exchange  Commission  can  order  a
registration  statement effective, it is not certain when or if the registration
statement  will become effective. Management believes that these financings will
enable  Hyperdynamics  to  fund  its operating activities through June 30, 2006.

Hyperdynamics  also  executed  an investment agreement and received a commitment
from  Dutchess  to  fund up to $20,000,000 in equity at 95% of the market price.
The  company  and Dutchess agreed through a global amendment to limit the number
of  shares to register under financing to 8,400,000 shares without a shareholder
vote.  This insures the number of shares to be issued will not exceed 20% of the
outstanding  common  stock  as  is  required  by the rules of the American Stock
Exchange. Thus, the amount ultimately raised by the financing will be determined
strictly  by  the  stock  price  at  each point in time the equity line is used.

On  August  31,  2005,  Trendsetter  Production  Company  (wholly  owned  by HYD
Resources  Corporation)  signed  a  gas  facilities  contract with Tennessee Gas
Pipeline  Company.  On  September  1, 2005 a gas sales and purchase contract was
signed  with  British  Petroleum.  The  company is now installing the production
facilities  and  metering equipment to allow it to begin selling its natural gas
reserves.