United  States
                       Securities  and  Exchange  Commission
                              Washington,  DC  20549

                                   FORM  10-Q

[X]  Quarterly report pursuant to Section 13 or 15(d) of the Securities Exchange
     Act  of  1934:  For  the  quarterly  period  ended:  March  31,  2006

                                       or
[ ]  Transition  report  pursuant  to  Section  13  or  15(d) of the Securities
     Exchange  Act  of 1934: For the transition period from _______ to _________

                     Commission  file  number:      001-32490

                           HYPERDYNAMICS  CORPORATION
             (Exact  name  of  registrant  as  specified  in  its  charter)

           Delaware                                               87-0400335
(State  or  other  jurisdiction                                (IRS  Employer
of incorporation or organization)                            Identification No.)

                           One  Sugar  Creek  Blvd.,  #125
                             Sugar  Land,  Texas  77478

          (Address  of  principal  executive  offices,  including  zip  code)

                                  713-353-9400
           (registrant's  principal  executive  office  telephone  number)

                           9700  Bissonnet,  Suite  1700
                              Houston,  Texas  77036
                                (former  address)


Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the  preceding  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  [  ]

Indicate  by  check mark whether the registrant is a large accelerated filer, an
accelerated  filer,  or a non-accelerated filer.  See definition of "accelerated
filer  and  large  accelerated  filer"  in  Rule  12b-2  of  the  Exchange  Act.

Large  Accelerated  Filer   | |
Accelerated  Filer          | |
Non-Accelerated  Filer      |X|

Indicate  by check mark whether the registrant is a shell company (as defined in
Rule  12b-2  of  the  Exchange  Act)   YES   |  |      NO  |X|

                      APPLICABLE  ONLY  TO  CORPORATE  ISSUERS

As  of  May  12,  2006,  46,008,727  shares  of  common stock, $0.001 par value,
were  outstanding.

Transitional  Small  Business  Disclosure  Format  (check  one):  Yes [ ] No [X]

                                       1
<PAGE>
                               Table  of  Contents

                          Part  I  Financial  Information

    Item 1     Financial Statements                                      3

      Unaudited Consolidated Balance Sheets at March 31, 2006
         and June 30, 2005                                               3

      Unaudited Consolidated Statements of Operations for the three
         and nine months ended March 31, 2006 and 2005                   4

      Unaudited Consolidated Statements of Cash Flows for the nine
         months ended March 31, 2005 and 2004                            5

      Unaudited Notes to Consolidated Financial Statements               6

    Item 2     Management's Discussion and Analysis of Financial
               Condition and Results of Operations                       8

    Item 3     Quantitative and Qualitative Disclosures
               About Market Risk                                        14

    Item 4     Controls and Procedures                                  14

                           Part II Other Information

    Item 1     Legal Proceedings                                        14

    Item 2     Unregistered Sales of Equity Securities
                 and Use of Proceeds                                    15

    Item 4     Submission of Matters to a Vote of
                 Security Holders                                       15

    Item 6     Exhibits                                                 16

    Signatures                                                          17

                                       2
<PAGE>

Part  I     Financial  Information
    Item  1     Financial  Statements

<TABLE>
                           HYPERDYNAMICS CORPORATION
                          Consolidated Balance Sheets
                                   (Unaudited)
<CAPTION>
<S>                                                                       <C>            <C>
                                                                             March 31,      June 30,
                                                                               2006           2005
                                                                          -------------  -------------


ASSETS
Current Assets
    Cash                                                                  $    161,063   $    259,448
    Restricted certificate of deposit                                           75,000         65,445
    Accounts receivable, net of allowance for doubtful accounts
    Of $31,242 and $20,145                                                      49,475         19,635
    Accounts receivable - recovery from working interest, net of
      allowance of doubtful accounts of $201,784                                     -              -
    Inventory                                                                        -          3,637
    Prepaid Expenses                                                            85,681        167,250
    Other Current Assets                                                         1,303              -
                                                                          -------------  -------------

Total Current Assets                                                           372,522        515,415

Property and equipment, net of accumulated depreciation of $400,313
and $314,171                                                                   527,746        599,092
Other assets                                                                         -              -
Oil and gas properties, using full cost method of accounting
     Proved properties                                                         786,084              -
     Unproved  properties                                                    4,133,609      4,072,503
     Accumulated depreciation, depletion, amortization & impairment           (117,913)             -
Net oil and gas properties                                                -------------  -------------
                                                                             4,801,780      4,072,503

Deposits                                                                         2,680         22,312
                                                                          -------------  -------------
 TOTAL ASSETS                                                             $  5,704,728   $  5,209,322
                                                                          =============  =============


LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities
Installment notes payable                                                 $     43,667   $    247,750
Convertible notes payable, net of discount of $504,573                         135,427              -
Accounts payable and accrued expenses                                          896,942        558,314
Accounts payable seismic data                                                  650,000        650,000
Deferred gain                                                                  983,107         73,464
Dividends payable                                                              372,398        372,398
Dividends payable to related party                                             109,250         27,250
                                                                          -------------  -------------

Total Current Liabilities                                                    3,190,791      1,929,176

Deferred rent                                                                        -        134,697
                                                                          -------------  -------------

     TOTAL LIABILITIES                                                       3,190,791      2,063,873
                                                                          -------------  -------------

Commitments and contingencies
Stockholders' equity
Preferred stock, par value $0.001; 20,000,000 shares authorized
    Series A - 1,945 shares issued and outstanding                                   2              2
    Series B - 2,725 shares issued and outstanding                                   3              3
Common stock, $.001 par value, 250,000,000 shares authorized,
    45,563,620 and 42,168,410 shares issued and outstanding, respectively       45,564         42,168
    Additional paid-in capital                                              28,074,758     22,915,690
    Accumulated deficit                                                    (25,606,390)   (19,812,414)
                                                                          -------------  -------------

Total stockholders' equity                                                   2,513,937      3,145,449
                                                                          -------------  -------------

    Total Liabilities and Stockholders' Equity                            $  5,704,728   $  5,209,322
                                                                          =============  =============
</TABLE>
                                       3
<PAGE>

<TABLE>
                                    HYPERDYNAMICS CORPORATION
                             Consolidated Statements of Operations
                                           (Unaudited)
<CAPTION>
<S>                                                 <C>            <C>            <C>            <C>
                                                         Three Months Ended           Nine Months Ended
                                                       March 31,      March 31,      March 31,     March 31,
                                                         2006           2005           2006           2005
                                                    -------------  -------------  -------------  -------------

Revenues                                            $   134,234    $    28,002    $   329,052    $   148,693

Operating Expenses
  Cost of revenues                                      241,778        266,027      1,515,185        693,389
  Selling                                                     -         26,748            199         64,098
  General and administration                            816,255        777,829      2,422,264      2,575,668
  Bad Debt expense                                      201,784              -        201,784              -
 (Gain) loss from retirement of assets                        -         (2,253)             -         17,159
  Loss on working interest buy back                     361,193              -        361,193              -
  Depreciation, depletion and amortization              158,859         24,377        231,000         80,602
                                                   -------------  -------------  -------------  -------------

Total Operating Expenses                              1,779,869      1,092,728      4,731,625      3,430,916
                                                   -------------  -------------  -------------  -------------

    LOSS FROM OPERATIONS                             (1,645,635)    (1,064,726)    (4,402,573)    (3,282,223)

Other Income (Expense)

  Other Income                                            1,995              -          1,995              -
  Interest income                                             -          3,679          2,438         16,461
  Interest expense                                   (1,148,944)       (23,144)    (1,313,837)      (314,300)
                                                   -------------  -------------  -------------  -------------

NET LOSS                                             (2,792,584)    (1,084,191)    (5,711,977)    (3,580,062)
Preferred dividend requirement                          (27,500)       (27,250)       (82,000)      (101,194)
                                                   -------------  -------------  -------------  -------------

Net loss chargeable to common shareholders         $ (2,820,084)  $ (1,111,441)  $ (5,793,977)  $ (3,681,256)
                                                   =============  =============  =============  =============

Basic and diluted loss per common share            $      (0.06)  $      (0.03)  $      (0.14)  $      (0.09)
Weighted average shares outstanding                  43,880,008     41,839,128     42,468,964     41,498,372
</TABLE>

                                       4
<PAGE>

<TABLE>
                                    HYPERDYNAMICS CORPORATION
                             Consolidated Statements of Cash Flows
                                           (Unaudited)
<CAPTION>
<S>                                                                       <C>            <C>
                                                                                   Nine Months
                                                                                 Ended March 31,
                                                                               2006           2005
                                                                          -------------  -------------

Cash flows from operating activities
  Net loss                                                                $ (5,711,977)  $ (3,580,062)
Adjustments to reconcile net loss to cash used by operating activities
  Depreciation and amortization                                                231,000         80,602
  Loss on disposal of assets                                                         -         17,159
  Loss on working interest buyback                                             361,193              -
  Options and warrants expense                                                 651,269      1,365,123
  Stock issued for services                                                    153,206              -
  Loss on retirement of mandatorily redeemable preferred stock                                 76,847
  Accretion of interest and amortization of offering costs of mandatorily
     redeemable preferred stock                                                      -        231,750
  Bad debt expense                                                             201,784          3,694
  Amortization of debt discount                                              1,109,764              -
  Changes in:
    Accounts receivable                                                        (29,840)       (33,296)
    Accounts receivable - recovery from working interest                      (201,784)             -
    Inventory                                                                    3,637         16,239
    Other current assets                                                        80,266        100,947
    Deposits from customers                                                          -         (3,264)
    Deferred rent                                                             (134,696)         7,182
    Accounts payable and accrued expenses                                      352,744         71,482
                                                                          -------------  -------------
Net cash used in operating activities                                       (2,933,434)    (1,645,597)
                                                                          -------------  -------------
Cash flows from investing activities
  Decrease in restricted cash                                                   (9,555)       129,750
  Investment in unproved property                                             (385,347)      (914,455)
  Purchase of equipment                                                        (62,741)      (160,530)
  Proceeds from disposal of assets                                                   -         13,413
  Change in deposits                                                            19,632           (280)
                                                                          -------------  -------------
Net cash provided by (used in) investing activities                           (438,011)      (932,102)
                                                                          -------------  -------------
Cash flows from financing activities
  Proceeds from sale of common stock and warrants                              940,000        162,125
  Proceeds from installment notes payable                                       78,177          7,201
  Proceeds from convertible notes payable, net                               1,980,872              -
  Proceeds from sale on working interest, net                                  726,000        176,000
  Payments on convertible notes payable                                       (186,717)             -
  Payments on installment debt                                                (265,272)      (122,119)
                                                                          -------------  -------------
Net cash provided by financing activities                                    3,273,060        223,207
                                                                          -------------  -------------
Net increase (decrease) in cash                                                (98,385)    (2,354,492)
Cash at beginning of period                                                    259,448      3,149,441
                                                                          -------------  -------------
Cash at end of period                                                     $    161,063   $    794,949
                                                                          =============  =============

Supplemental Information:

Cash paid for interest                                                    $    111,876   $      5,703

Cash paid for income taxes                                                $          -   $          -

Non-cash transactions
Issuance of common stock for accounts payable                             $          -   $     42,086
Geological and geophysical work performed on unproved oil
 and gas properties paid with equity-based compensation                         37,200        390,061
Series B preferred shareholder quarterly dividends                              82,000              -
Discount related to convertible debt                                         1,465,245              -
Common stock issued to retire mandatorily redeemable preferred stock
 in subsidiary                                                                       -        849,347
</TABLE>
                                       5
<PAGE>

                            HYPERDYNAMICS  CORPORATION
                    NOTES  TO  CONSOLIDATED  FINANCIAL  STATEMENTS
                                   (Unaudited)

1.   Basis  of  Presentation

     The  unaudited  consolidated  financial  statements  of  Hyperdynamics
     Corporation  ("Hyperdynamics")  have  been  prepared  in  accordance  with
     accounting principles generally accepted in the United States and the rules
     of  the  Securities  and Exchange Commission ("SEC"), and should be read in
     conjunction  with  the  audited  financial  statements  and  notes  thereto
     contained in Hyperdynamics' latest Annual Report filed with the SEC on Form
     10-KSB. In the opinion of management, all adjustments, consisting of normal
     recurring  adjustments,  necessary  for  a  fair  presentation of financial
     position  and  the  results of operations for the interim periods presented
     have  been  reflected herein. The results of operations for interim periods
     are  not  necessarily indicative of the results to be expected for the full
     year. Notes to the financial statements which would substantially duplicate
     the  disclosures contained in the audited financial statements for the most
     recent  fiscal year 2005 as reported in the Form 10-KSB, have been omitted.


2.   Convertible  Notes  payable  -

Convertible  Note  Payable

     In  August  2005,  Hyperdynamics  closed  a  private  financing convertible
     note  payable  with  Dutchess  Private Equities Fund II, LP (Dutchess). The
     proceeds  from  the  transaction  were  received in two tranches. The first
     tranche  of  $1,000,000  was  received at closing and the second tranche of
     $500,000  was received upon the filing of a registration statement with the
     SEC.  The  registration  statement  was filed with the SEC in October 2005.
     Upon  effectiveness  of  the  registration statement, Dutchess may elect to
     receive loan payments in the form of stock at a conversion price based upon
     the prevailing market price of Hyperdynamics's common stock but in no event
     less  than  $1.00  per  share.  In  conjunction  with  the  transaction,
     Hyperdynamics  issued  a  detachable warrant to Duchess to purchase 500,000
     shares  of  common stock at $1.00 per share. The relative fair value of the
     warrants  was $304,631 and the intrinsic value of the conversion feature of
     the  two  tranches  was $354,631. Effective February 9, 2006, Hyperdynamics
     has  the  option  to  enter  into  another  debenture  with Dutchess for an
     additional  $1,500,000.  During the quarter ending March 31, 2006 this note
     was  converted  into  common  stock.

Short  Term  Note  Payable

     In  December  2005,  Hyperdynamics  issued  127,000  shares of stock with a
     market  value  of  $240,030  and a non-interest bearing note to Dutchess in
     exchange  for  $640,000.  Upon  effectiveness  of  the  aforementioned
     registration  statement, Dutchess may elect to receive loan payments in the
     form  of stock at a conversion price based upon the prevailing market price
     of  Hyperdynamics's  common  stock.

Hyperdynamics  analyzed its convertible notes payable instruments for derivative
accounting consideration under SFAS 133 and EITF 00-19. Hyperdynamics determined
the  conversion  feature  met  the  criteria for classification in stockholders'
equity  under  SFAS  133 and EITF 00-19. Therefore, derivative accounting is not
applicable  for  the  convertible  instruments.


The  carrying  value  of  the  notes  at
March  31,  2006  is  as  follows:

Face  value  of  notes  payable                   $2,140,000
Less:  discount  related  to  warrants              (304,631)
      discount  related  to  conversion  feature  (1,219,631)
      discount  related  to  financing  costs        (90,075)
      conversion  to  common  shares              (1,500,000)
Add:  amortization  of  discount                   1,109,764
                                                  -----------
Carrying  value  of  note  at  March  31,  2006   $  135,427
                                                  ===========

                                       6
<PAGE>

3.   Contingencies

From  time  to  time, Hyperdynamics is party to various legal proceedings in the
ordinary  course of business or otherwise. The following is a description of the
material  legal  proceedings involving Hyperdynamics commenced or pending during
the  three  months  ended March 31, 2006. In accordance with SFAS 5, "Accounting
for  Contingencies,"  the  company  makes a provision for a liability when it is
both  probable that a liability has been incurred and the amount of the loss can
be  reasonably  estimated.  These provisions are reviewed at least quarterly and
adjusted to reflect the impacts of negotiations, settlements, rulings, advice of
legal counsel, and other information and events pertaining to a particular case.
Although  Hyperdynamics  believes  it  has adequate provisions for the following
matters,  litigation  is  inherently  unpredictable and it is possible that cash
flows or results of operations could be materially and adversely affected in any
particular period by the unfavorable resolution or disposition of one or more of
these  contingencies.

TRENDSETTER  INVESTORS,  LLC

On  March  8,  2006,  Trendsetter Investors, LLC ("Trendsetter") filed a lawsuit
against  Hyperdynamics.  Trendsetter  purchased  from  Hyperdynamics  working
interests  in  certain  domestic  properties.  Trendsetter  seeks  unspecified
monetary  damages.  Hyperdynamics  has  filed  a motion to
dismiss, and the case is currently stayed by the court pending a ruling on these
motions  to  dismiss.

Hyperdynamics  is  considering  counter  claims  against  Trendsetter.

4.   Stock  Based  Compensation

On  January  1,  2006,  Hyperdynamics  adopted  SFAS  No.  123(R),  "Share-Based
Payment"("SFAS  123(R)").  SFAS  123(R) replaced SFAS No. 123 and supersedes APB
Opinion  No.  25.  SFAS  123(R)  requires all share-based payments to employees,
including  grants  of  employee stock options, to be recognized in the financial
statements  based  on  their  fair  values. The pro forma disclosures previously
permitted  under  SFAS  123  are no longer an alternative to financial statement
recognition.  The  consolidated  financial statements for the three months ended
March  31,  2006  and  2005  reflect  the  impact  of  adopting  SFAS  123(R).

5.   Segment  Information

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

     Hyperdynamics  has  two  reportable  segments:  SCS Corporation ("SCS") and
     its  Louisiana  operations  ("HYDR").  SCS  is  engaged  in  oil  and  gas
     exploration  activities  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  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 three
and  nine  months  ended  March  31,  2006  and  2005:

<TABLE>
<CAPTION>
<S>                                                                       <C>            <C>            <C>            <C>
                                                                               SCS            HYDR        Corporate        Total
                                                                          -------------  -------------  -------------  -------------

 As of March 31, 2006:
    Segment assets                                                        $  4,274,928   $    1,226,819  $    202,981   $  5,704,728

Nine months ended March 31, 2006
    Revenues from external customers                                                 -        329,052              -        329,052
    Depreciation, depletion and amortization                                    21,739        192,217         17,044        231,000
    Loss from operations                                                      (517,094)    (1,997,523)    (1,887,956)    (4,402,573)
    Expenditures for long-lived assets                                          76,106        524,971          8,249        609,326
Three months ended March 31, 2006
    Revenues from external customers                                                 0        134,234              -        134,234
    Depreciation, depletion and amortization                                     8,019        142,808          8,032        158,859
    Loss from operations                                                      (180,965)      (802,562)      (662,108)    (1,645,635)
    Expenditures for long-lived assets                                           2,629        174,474          3,813        180,916

As of March 31, 2005:
    Segment assets                                                           4,074,834      1,480,284        722,152      6,277,270

Nine months ended March 31, 2005
    Revenues from external customers                                             3,140        145,253            300        148,693
    Depreciation, depletion and amortization                                    21,270         45,643         13,689         80,602
    Loss from operations                                                      (430,418)      (752,018)    (2,099,787)    (3,282,223)
    Expenditures for long-lived assets                                         849,502        611,981          3,564      1,465,047
Three months ended March 31, 2005
    Revenues from external customers                                                 -         28,002              -         28,002
    Depreciation, depletion and amortization                                     7,243         12,669          4,465         24,377
    Loss from operations                                                      (112,903)      (329,705)      (622,118)    (1,064,726)
    Expenditures for long-lived assets                                         137,114        427,331              -        564,445
</TABLE>

                                  7
<PAGE>

<TABLE>
<CAPTION>
<S>                                                                       <C>            <C>            <C>            <C>
Product and services information
--------------------------------
                                                                           Quarter Ended March 31,       Nine Months Ended March 31,
                                                                               2006           2005           2006           2005
                                                                          -------------  -------------  -------------  -------------
Revenues from:
     Seismic data management                                              $          -   $          -   $          -   $      3,140
     Computer-related sales                                                          -              -                           300
     Oilfield services                                                               -              -                       117,251
     Oil and gas production                                                    134,234         28,002        329,052         28,002
                                                                          -------------  -------------  -------------  -------------
Totals                                                                    $    134,234   $     28,002   $    329,052   $    148,693
                                                                          =============  =============  =============  =============
</TABLE>

     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  prospectus  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  to  respond  to  changes  in  the  information system
environment,  competition, the availability of financing, 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.

Item  2.  Management's  Discussion  and  Analysis  of  Financial  Condition  and
         Results  of  Operations

Hyperdynamics  has  two  reportable  segments:  Our operations in Guinea and our
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.
HYDR  also  provides  some  oilfield  services  to  external  customers.

During  the  quarter  ended March 31, 2006, we continued to work in implementing
our  subsidiary  SCS  Corporation  Guinea  SARL. Our Chief Executive, Kent Watts
traveled  twice  to  Guinea  in January and March upon invitation from the Prime
Minister  and  the Minister of the Mines and Geology. At the same time Mr. Watts
met  with  Mr.  Jackson McDonald, the U.S. Ambassador to Guinea to update him on
our  situation  and  ask for diplomatic support. We maintained our intense focus
for  our plans to drill exploration wells offshore Guinea, make discoveries, and
begin  major  production  operations. During the quarter, numerous technical and
business  meetings  were held with government officials and the U.S. Ambassador.

In  addition  to  what  has  been  previously  discussed in our Form 10Q for the
quarter  ending  12/31/05  10Q,  Kent  Watts  returned to Guinea in March upon a
written  request of the Minister of the Mines and of the Geology, Minister Ahmed
Tidiane  Souare to finalize negotiations. Earlier in the quarter we had resolved
all technical issues and completed most of the negotiations. When Mr. Watts left
Guinea,  he returned with a protocol letter agreement to follow through with the
execution  of the newly negotiated 2006 Production Sharing Agreement between the
Republic  of  Guinea and SCS Corporation; to receive a decree regarding such new
contract  from President Lansana Cont ; and to receive a projet les loi ratified
by  the  National  Assembly  of  Guinea.

     Subsequent  to  Mr. Watts return, the Guinea government experienced a major
change  with  the  resignation  of  Prime  Minister  Diallo.

                                       8
<PAGE>

In  April  Mr. Harry Briers, our Executive Vice President and Mr. Michael Watts,
Hyperdynamics'  consultant and brother of Kent Watts, traveled to Guinea to join
Mr.  Kourouma  to continue the steady focused process of completing our new deal
pursuant  to  the  protocol letter of March 17, 2006. During their visit several
meetings  were  held with the President, ministers, advisors, and new government
officials  including  the  Director  General  of  the  National  Assembly. Three
additional  meetings  were  held  with  President  Cont  .  One  of the meetings
included  President Lansana cont , a presidential advisor, Madame Chantal Colle,
U.S.  Ambassador  Jackson  McDonald,  and  Michael  Watts.  In  this meeting the
development  of  U.S.  commercial  and  diplomatic  interests  in  Guinea  was
significantly  discussed.  The ambassador expressed the United States' continued
desire  to  strengthen  relations with the Republic of Guinea, including through
commercial  projects  such  as  those  advanced  by Hyperdynamics. He reiterated
continued  U.S. support for security and stability in Guinea and West Africa. In
that  meeting,  President Cont  again expressed a desire for  us to continue our
work.

As  of  the filing of this 10Q, Mr. Famourou Kourouma remains in Guinea, working
to get the protocol letter fulfilled. We believe it is the intent and preference
of  the  Guinea  government to execute the new agreement with SCS Corporation in
line  with  the understanding of the protocol letter of March 17, 2006. However,
it  is  our  position  that since we own the rights to 100% of the offshore area
under  the 2002 PSA, and have fulfilled all obligations under that agreement, we
have continued to remind the government of our willingness to continue under the
2002  PSA  as  long  as  all  time frames were reset due to delays caused by the
government  and  out  of  our control as is the case provided for in article 25:
Force  Majeure  of  the  2002  PSA.  We  are  prepared to move forward in either
respect.  We  are  now firmly entrenched with our office and personnel in Guinea
working in our behalf and our contacts throughout the government have been fully
educated to the fact of our work and that we are the only company ready to drill
offshore  Guinea.  Additionally,  we  plan  to  keep  Ambassador  McDonald fully
informed  of  each  and  every  development as things come about from this point
forward  and  we  will  solicit  his  assistance  whenever  it may be necessary.
Expectations  have  been  set for us by the Guinea Government to sign a new 2006
PSA  soon.  We are using a great deal of diplomacy and patience in allowing them
to  determine  exactly  what needs to happen on their end to complete this task.

During  the  quarter,  HYD  Resources  Corporation  has made continuous progress
towards  increased  production  on  the Norris/Kelly leases. As a result we have
been able to steadily solve problems and have realized a stepped increase in oil
production  from  approximately  620  barrels of monthly production for December
2005,  to approximately 720 barrels for both January and February, 1,670 barrels
for  March  2006  and 1,770 barrels in April 2006. Management remains optimistic
that  this trend can continue and we can soon maximize our oil production out of
the  current  wells  on  these  leases. At that point we plan to evaluate how to
enhance  this  production  further  through  additional  work-over,  as  well as
re-focusing  on  our  potential  natural  gas production using the gas gathering
system  recently  installed. Once we get to the point of determining the optimum
production  levels  from  our  production  facilities  installed,  we  will then
reevaluate  our  drilling programs going forward. As part of this, we anticipate
the  search  and  hiring  of  a  professional drilling and production manager to
continue  our  growth  of  production  from low volume, low cost wells in proven
zones.

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.

We recorded oil and gas revenues of $134,234 and $28,002 during the three months
ended  March 31, 2006 and 2005, respectively. The increase of $106,232 is due to
the increasing production trend noted above. We recorded oil and gas revenues of
$329,052  and  $148,693  during  the  nine months ended March 31, 2006 and 2005,
respectively. This increase of $180,359 is also due to the increasing production
trend  noted  above.  Our  seismic  data management, computer-related sales, and
oilfield  service  revenues  declined  from  $3,140,  $300,  and  $117,251,
respectively,  during  the  nine  months ended March 31, 2005 to zero during the
nine  months ended March 31, 2006 due to our continued emphasis on expanding and
increasing  our  oil  and gas production. We did not recognize any revenues from
these  activities  in  the  three  months  ended  March  31,  2006  and  2005.

Our cost of revenues were $241,778 and $266,027 for the three months ended March
31, 2006 and 2005, respectively, and $1,515,185 and $693,389 for the nine months
ended  March 31, 2006 and 2005, respectively. The decrease of $24,249 during the
quarter  is  due  to  the  billing  of recoverable drilling costs to our working
interest partners. The increase of $821,796 during the nine months period is due
to  an  increase  in  the  cost  of  maintaining  and  repairing  our production
facilities  in  preparation  for  bringing  our  oil  and gas production online.

Selling,  general  and  administrative expenses were $1,018,039 and $804,577 for
the  three  months  ended  March  31, 2006 and March 31, 2005, respectively. The
increase  of  $213,462  is  primarily  due to the establishment of a reserve for
uncollectible  working  interest  billings  in the amount of $201,784 during the
quarter  as  a result of a lawsuit filed by one of our working interest holders.
Selling,  general  and  administrative  expenses  were $2,624,047 and $2,639,766
during the nine months ended March 31, 2006 and 2005, respectively. The decrease
of  $15,719  was  primarily  due to the following factors: 1) an increase in bad
debt  expense  of  $201,784,  noted  above,  2)  reduction  in  rent  expense of
approximately  $128,000  as  a  result  of  the settlement of a dispute with our
former  landlord,  3)  a  payroll  tax  refund of $46,000, and 4) $45,000 due to
increased  shareholder  meeting  costs,  travel  to  Guinea  and  the  cost  of
registration  statement  preparation  and  filings.

We  recorded  a  loss on the buyback of working interests of $361,193 during the
three  and  nine  months  ended  March 31, 2006 as a result of the repurchase of
working  interests  in  our  Louisiana  properties  that were previously sold to
investors  in  2005.

Depreciation  and  amortization  was  $158,859  and $24,377 for the three months
ended  March  31,  2006  and  2005, respectively.   The increase of $134,482 was
primarily  due to depletion of $117,913 on wells that came on line in late 2005.
Depreciation and amortization was $231,000 and $80,602 for the nine months ended
March  31,  2006  and  2005,  respectively.  The  increase of $150,398 is due to
depletion  on  wells  that  came  on  line  in  late  2005.

                                       9
<PAGE>

Interest  expense  was  $1,148,944 and $23,144 for the three months ended March
31,  2006  and  2005,  respectively.  The  increase of $1,290,692 was due to the
expensing  of  previously  unamortized  debt  discount  related  to our Dutchess
financings  that  were  converted  to  common  shares  during the third quarter.
Interest  expense was $1,313,837 and $314,300 during the nine months ended March
31, 2006 and 2005, respectively.  The increase of $999,537 was due in large part
to  the expensing of the unamortized debt discount on the Dutchess notes as they
were  repaid  during  the  period.

     A  breakdown  of  our  operations  by  segments  is  as  follows:

<TABLE>
<CAPTION>
<S>                                                                       <C>            <C>            <C>            <C>
                                                                               SCS            HYDR        Corporate        Total
                                                                          -------------  -------------  -------------  -------------
As of March 31, 2006:
    Segment assets                                                        $  4,274,928   $    1,226,819  $    202,981   $  5,704,728

Nine months ended March 31, 2006
    Revenues from external customers                                                 -        329,052              -        329,052
    Depreciation, depletion and amortization                                    21,739        192,217         17,044        231,000
    Loss from operations                                                      (517,094)    (1,997,523)    (1,887,956)    (4,402,573)
    Expenditures for long-lived assets                                          76,106        524,971          8,249        609,326
Three months ended March 31, 2006
    Revenues from external customers                                                 0        134,234              -        134,234
    Depreciation, depletion and amortization                                     8,019        142,808          8,032        158,859
    Loss from operations                                                      (180,965)      (802,562)      (662,108)    (1,645,635)
    Expenditures for long-lived assets                                           2,629        174,474          3,813        180,916

As of March 31, 2005:
    Segment assets                                                           4,074,834      1,480,284        722,152      6,277,270

Nine months ended March 31, 2005
    Revenues from external customers                                             3,140        145,253            300        148,693
    Depreciation, depletion and amortization                                    21,270         45,643         13,689         80,602
    Loss from operations                                                      (430,418)      (752,018)    (2,099,787)    (3,282,223)
    Expenditures for long-lived assets                                         849,502        611,981          3,564      1,465,047
Three months ended March 31, 2005
    Revenues from external customers                                                 -         28,002              -         28,002
    Depreciation, depletion and amortization                                     7,243         12,669          4,465         24,377
    Loss from operations                                                      (112,903)      (329,705)      (622,118)    (1,064,726)
    Expenditures for long-lived assets                                         137,114        427,331              -        564,445

Product and services information
--------------------------------
                                                                           Quarter Ended March 31,     Nine Months Ended March 31,
                                                                               2006           2005           2006           2005
                                                                          -------------  -------------  -------------  -------------
Revenues from:
     Seismic data management                                              $          -   $          -   $          -   $      3,140
     Computer-related sales                                                          -              -                           300
     Oilfield services                                                               -              -                       117,251
     Oil and gas production                                                    134,234         28,002        329,052         28,002
                                                                          -------------  -------------  -------------  -------------
Totals                                                                    $    134,234   $     28,002   $    329,052   $    148,693
</TABLE>
                                       10
<PAGE>

Geographical  Information
------------------------

All  or our revenues are currently derived from domestic sources. All long-lived
assets  are  located  in  the  USA,  except  for our oil and gas exploration and
exploitation  rights,  which  are  located  offshore  Guinea,  West  Africa.

Guinea  and  Seismic  Data  Management  ("SCS")

We  had  no  revenues  from this segment during the three months ended March 31,
2006  and  2005,  respectively, and negligible revenues from this segment during
the  nine  months  ended  March  31,  2006  and  2005, respectively. The lack of
revenues  is attributable to the amount of internal seismic data processing work
performed during these periods as we focused our resources on the acquisition of
seismic  data  for  our  concession  in  Guinea.

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  depreciation  and  amortization  was $8,019 and $7,243 for the three months
ended  March  31,  2006  and 2005, respectively; and $21,739 and $21,270 for the
nine  months  ended  March  31,  2006  and 2005, respectively. These amounts are
comparable  between  the  periods.

Our  loss from operations for this segment increased by $68,062, from ($112,903)
for  the  three  months  ended  March 31, 2005 to ($180,965)for the three months
ended  March  31,  2006.  Our loss from operations for this segment increased by
$86,676  from  ($430,418)  for  the  nine  months  ended  March  31,  2005  to
($517,094)for  the  nine  months  ended March 31, 2006. The increased losses for
both  periods  of time is due the increased costs associated with our efforts to
secure  our  Guinea  concession,  as  noted  at  the  beginning of this section.

Expenditures for long lived assets were $2,629 and $137,114 for the three months
ended  March 31, 2006 and 2005, respectively. Expenditures for long lived assets
were  $76,106  and  $849,502  for the nine months ended March 31, 2006 and 2005,
respectively.  The  decreases of $134,485 and $773,396 during the three and nine
month  periods  noted  is  primarily  due to reductions in geophysical and other
related  consulting  services.

Louisiana  Operations  ("HYDR")

Revenue  for  the  three  months  ended March 31, 2006 and 2005 was $134,234 and
$28,002,  respectively.  The  increase  of  $106,232  is  due  to the increasing
production  trend  noted above. We recorded oil and gas revenues of $329,052 and
$145,253  during  the  nine  months ended March 31, 2006 and 2005, respectively.
This  increase  of $183,799 is also due to the increasing production trend noted
above.

Depreciation,  depletion and amortization was $142,808 and $12,669 for the three
months  ended March 31, 2006 and 2005, respectively. The increase of $130,139 is
due  to  the  aforementioned  production  increases. Depreciation, depletion and
amortization  were $192,217 and $45,643 for the nine months ended March 31, 2006
and  2005,  respectively.  The increase of $146,574 is due to the aforementioned
production  increases.

Our loss from operations for this segment increased by $472,857, from ($329,705)
for  the  three  months  ended  March 31, 2005 to ($802,562)for the three months
ended  March  31,  2006.  Our loss from operations for this segment increased by
$1,245,505  from  ($752,018)  for  the  nine  months  ended  March  31,  2005 to
($1,997,523)for  the  nine  months  ended  March  31, 2005. The increased losses
during  the  quarter  are  due  primarily  to the loss in the amount of $361,193
incurred  upon  the  buyback  of working interests in our oil and gas properties
during  the  period  and  increased  costs  associated  with  bringing  our  oil
production  on  line. The increase in the loss for the nine month period is also
due  to  these  same  factors.

Our  expenditures  for  long lived assets in this segment decreased by $252,857,
from  $427,331  during  the three months ended March 31, 2005 to $174,474 during
the  three  months ended March 31, 2006 due to the substantial completion of the
capital  improvements  in  our  gas  production  and  gathering  systems.  Our
expenditures  for  long  lived assets in this segment decreased by $87,010, from
$611,981 during the nine months ended March 31, 2005 to $524,971 during the nine
months  ended  March 31, 2006 due to the slow down in work on our gas production
and  gathering  systems  as  they  neared  completion.

Corporate  Overhead

Revenue  was  zero  for  the  three  months  ended  March  31,  2006  and  2005,
respectively.  We  recorded  negligible revenues in this segment during the nine
months ended March 31, 2006 and 2005. We do not actively pursue revenues in this
segment.

The  loss  from operations attributable to corporate overhead was ($662,108) and
($622,118) for the three months ended March 31, 2006 and 2005, respectively. The
increase  of  $39,990 is due to increased shareholder meeting costs and the cost
of  registration  statement  preparation  and  filings. The loss from operations
attributable  to  corporate  overhead  was ($1,887,956) and ($2,099,787) for the
nine  months  ended  March  31, 2006 and 2005, respectively. The decrease in the
loss  of  $211,831  was  due  to  1)  reduction in rent expense of approximately
$128,000  as the result of the settlement of a dispute with our former landlord,
2)  a  payroll  tax  refund  of  $46,0000,  and  efforts  to  reduce  overhead.

Our expenditures for long lived assets were negligible during the three and nine
months  ended  March  31,  2006  and  2005  respectively and consisted of office
equipment.

                                       11
<PAGE>

     Liquidity  and  Capital  Resources

Our  ratio of current assets to current liabilities (current ratio) was .12 to 1
at  March  31,  2006  and  .27  to 1 at March 31, 2005. 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 for which
the  payment  is  deferred  until  we receive cash inflows sufficient to pay the
obligation.  These  items  include Deferred gain, Accounts payable Seismic Data,
Dividends  payable,  and  Dividends  payable to related party. While the company
continues  to work toward generating positive cash flow from domestic operations
altogether,  including  corporate  overhead,  it is expecting to report positive
cash  flow  from  its  HYDR  operations  very  soon.

Our  financing  activities and strategy over the last several months have put us
in  very  good condition to meet and exceed minimum requirements for exploration
offshore  in  West Africa. As explained below, we are now prepared to perform on
our  most  valuable  asset offshore Guinea. As discussed hereunder we expect our
liquidity  ratios  to  improve  directly  from our equity financing and with the
success  of  putting our drilling operations back online in Guinea, we expect to
have  plenty  of  financial  partnering  opportunities that will allow us to far
exceed  minimum  exploration  and  drilling  requirements. This will allow us to
drill  more  wells  faster  in  quality  locations. The more we drill in quality
locations, the more chances we have to realize a viable commercial discovery for
Guinea  and  for  us.  Once  the  March 17th protocol letter is fulfilled by the
Government  of  Guinea,  we will be able to implement our additional strategy to
bring  on  working  interest  partners  to share in the risk on some of our more
expensive  wells  to  be  drilled  sooner  rather  than  later.

Currently,  in  anticipation of receiving our permits to drill in Guinea, we are
prepared  and  our  financing  is  in  place to drill at least one well offshore
Guinea.  Partners  that  have  contacted  us with verbal indications of interest
could  provide  the  ability  for us to drill many more wells and at a very fast
pace.

In August 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  $500,000
upon  the  filing  of  a  registration  statement.  The  registration  statement
became  effective  on February 9, 2006. Dutchess converted 100% of the amount of
this debenture into our common stock during the quarter and thus the entire debt
has been converted into equity. Also, as part  of  the S-1 that became effective
on  February  9,  2006,  we  have  an  investment  agreement in place and have a
commitment  from  Dutchess  to  fund up to $20,000,000  in  equity at 95% of the
market  price of our common stock. The puts against the  equity  line  are  made
at  the company's discretion. The agreements limited  the number of shares to be
registered  and  to be used for the equity line under  the  financing  agreement
to  6,400,000  shares.  Coupled  with  the  2,000,000  shares  registered  for
conversion  of the aforementioned debenture and associated warrant,  this limits
the  entire  stock issuance to a total of 8,400,000 shares unless  a shareholder
vote  is  held  to approve more shares. This insures that 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. The amount ultimately
raised  by  the  financing  will  be  determined  by the stock price and trading
volumes  at  each  point  in  time  the  equity  line  is  used.  Additionally,
management  believes that the better the company performs, the easier it will be
for  the  company to access this capital and at the same time minimize any share
issuance.

To help the company bridge its need for capital, while waiting on the process of
its  registration  to  complete, in December 2005, the Company borrowed $640,000
from  Dutchess  as  a short term loan. The short term loan covenants to pay back
$800,000  over  one  year  and is secured by puts against its $20MM equity line.
Also,  the  company may pay the short term loan back as fast as it likes. 60% of
all puts against its equity line must go to first pay off this short term bridge
loan.

During  the  quarter, investors exercised warrants to purchase restricted shares
of  common  stock  for  gross proceeds of approximately $915,000. On February 9,
2005,  Dutchess  exercised  a  warrant  to purchase 500,000 registered shares of
common  stock  for  gross  proceeds  of  $450,000.  As  a  result, the company's
liquidity  and cash position has improved and with its financing in place we are
ready  to  continue  to  perform  the work required of us. Net of reductions for
prior  cash  payments  plus  accrued  interest  and  premium, the balance of the
$1,500,000  debenture  was  $1,313,283  at  12/31/05.  In February and March the
outstanding  balance  was  converted  into registered common stock at a price of
$.90  per  share.  In  April  2006 we raised $800,000 by making puts against its
equity  line  whereby  we issued 268,855 shares of registered common stock at an
average  price  of approximately $2.98 per share. In May 2006 we raised $100,000
by  making  a  put  against  our  equity line whereby we issued 38,558 shares of
registered  common  stock  at a price of $2.59 per share. Of the $900,000 raised
from  our  equity  line so far, $540,000 has gone to pay down the balance on the
bridge  loan.  Thus,  the remaining balance of our bridge loan is $140,000 as of
the  date  of  this  filing. The amount of financing commitment remaining on our
equity  line  is  $19,100,000.

It is now our understanding that we will be operating under a new agreement with
Guinea. Such agreement will dictate requirements for capital which we believe we
will  be  able  to  easily  meet. Should the Guinea government decide to proceed
under  the  2002  PSA, we are prepared to ramp back up under the 2nd exploration
phase  under  that agreement and after an adjustment to required time frames due
to  delays  associated with a case for Force Majure under that contract, we will
expect  that  we  will  be able to meet the obligation of the second exploration
phase  estimated  to be approximately $10,000,000 to drill one exploration well.

Now,  with our financing in place, management is highly confident in our ability
to  proceed  and  perform  under either scenario of a new 2006 PSA or continuing
under the 2002 PSA. Also, under the old agreement, 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. We
currently have $19,100,000 remaining as a commitment from Dutchess on our equity
line  and  we  have  options  and  warrants  to purchase restricted common stock
outstanding,  that if exercised would raise an additional $8,000,000 in capital.

                                       12
<PAGE>

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  affect  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. This last year we have taken overhead reduction steps
to  minimize  non  productive expenditures. We continue to spend 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  production  revenues  for HYDR with the real hopes of production
offshore  Guinea  in  the  future.

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. Most recently
our  oil production has resulted in approximately 1,600 barrels of production in
March,  1,700  barrels  of  production in April, and we are on target to surpass
2,000 barrels of production for May. Because of our ability to solve problems in
Louisiana, the geological reports of our Louisiana leases, and our improving oil
production  from  those  leases  to  date,  we  remain  optimistic  that  HYDR's
production  improvements  will  continue.

In  April  of  2005  we  sold  a  35%  working  interest in two of our leases in
Louisiana.  Since this time, with the belief we could solve operational problems
that  we  encountered  and  that  we could gradually increase our production, we
decided  to offer a buy-back of the working interest from the non-operators that
invested  in  these  leases.  In  2006  non-operators  owning  5% of the working
interest readily accepted our offer and we issued 197,416 shares of common stock
to  them  in  exchange for their working interest. No new working interest sales
are  planned  at this time. Management will continue to assess its progress with
the  production  of  current  leases  and make a determination of increasing its
drilling  activities  going  forward.  We  believe  that  there  is  significant
attainable  production  to  go  after  on  a  profitable basis and will continue
towards  its  goal  of  profitable  operations  from  its  domestic  operations.
Management  believes  it  has  the  financing  in  place  to invest in necessary
improvements,  production  facilities  and  new drilling programs to continue to
build  this  domestic  production.

In January 2006 we entered into a new lease for office space with a term of five
years.  The  new  lease  will  become  effective  upon  the completion of tenant
improvements specified in the lease agreement. As of now it appears this will be
sometime  in  June 2006. This lease will cost us approximately $15,000 per month
less  in rent and approximately another $5,000 less in electricity. Currently we
are  in temporary space that is being provided by our landlord at no cost to the
Company  while  our new space is being readied for occupancy. Once the new lease
begins,  the  base  monthly  rent  is  $0 for months 1-6, and we have paid three
months  of  rent  in  advance  so once we move into the new space we will not be
required  to pay rent for nine months. We have put up a $75,000 Letter of Credit
to  secure  our  build-out  costs.  We will get this money back after 18 months.

Off-Balance  Sheet  Arrangements

We  have  a contractual arrangement and now a lawsuit against USOil Corporation.
The  original  agreements  provide for us to pay USOil $1,600,000 if SCS obtains
third  party  financing  for  the  Guinea  development  project. Also USOil will
receive a 3% royalty if oil and gas is produced on this project and depending on
the outcome of our legal claims against them. 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 Resources Corporation, 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 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.  Upon  the resignation of Sam Spears Jr. $350,000 of this
contingent  amount  was  foregone  by  agreement.

                                       13
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Item  3.     Quantitative  and  Qualitative  Disclosures  About  Market  Risk

Our functional currency is the US dollar. Our revenue is directly related to the
price of oil and gas. Assuming that we sell one barrel of oil, then a one dollar
decrease  in the price that we get for that barrel of oil will lower our revenue
by  one  dollar,  and correspondingly so for a one dollar increase in price. The
same  is true for changes in the price of natural gas. We intend to sell oil and
gas  immediately  upon  lifting to the wellhead. We do not contemplate retaining
any  oil and gas inventory. We do not hedge any market risk. Although the prices
of oil and gas have recently increased substantially, there is no assurance that
the  price  of  oil  and  gas  will  not  fall  dramatically  in  the  future.

Item  4.  Controls  and  Procedures

Our Chief Executive Officer and our Chief Financial Officer, have concluded that
our  disclosure controls and procedures are appropriate and effective. They have
evaluated  these  controls and procedures as of the end of the period covered by
this  report  on  Form  10-QSB.  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.

                           Part  II  Other  Information

ITEM  1.  Legal  Proceedings

TRENDSETTER  INVESTORS,  LLC
On  March 8, 2006,  a lawsuit was filed against us styled Trendsetter Investors,
LLC,  Plaintiff  vs.  Hyperdynamics Corporation, Trensetter Production Co., Kent
Watts,  Michael  Watts,  Christopher  Watts  and Harry Briers, Defendants; Civil
Action  No.  H  06-0746;  in  the  United States District Court for the Southern
District  of  Texas,  Houston  Division.

The  Plaintiff  alleges  Fraud  or Deceit in the Sale of Securities, Common Law
Fraud,  Fraud  by  Omission  and  Control  Person  Liability.  Plaintiff  seeks
unspecified  monetary damages.  We deny all their allegations and are vigorously
defending  ourselves.  We  have  filed  a  motion  to  dismiss  on behalf of all
defendants.  The case is currently stayed by the Court pending a ruling on these
motions  to  dismiss.  We  believe this plaintiff's shareholders are one and the
same  as  the  members  of a control group (the "Manning Group") led by Mr. Jack
Manning.  Manning  is  a  Houston  based  attorney  and  has been a supporter of
Hyperdynamics  Corporation  in  the past. In private equity deals since April of
2003, he and his group have purchased common stock in the price range of $.15 to
$.80  per  share.  We  believe  that the Manning Group through the circumstances
surrounding  the  Trendsetter  LLC working interest investment, has an agenda to
unjustly  enrich  themselves through our securities.  We are considering counter
claims  against  Trendsetter  LLC  and each member of the Manning Group. We have
significant  concerns  that  they  collectively have or have had over 10% of our
common  stock  and  they have been acting in concert, making them an undisclosed
affiliate  group.

MANNING,  MOORE,  LONG
On  May  5,  2006 a lawsuit was served styled Jack Manning, Sue Manning, Stephen
Moore  and  Geoffrey  Long, Plaintiffs versus Hyperdynamics Corporation and Kent
Watts,  defendants.  The  suit  was  filed in the 189th District Court of Harris
County,  Texas  with  cause  no.  2006-22135. The Plaintiff alleges they had the
pre-emptive  right  to  invest  in  Hyperdynamics  Corporation's  common  stock.
 We  deny  all  their  allegations  and will vigorously defend ourselves and are
evaluating  all  possible counter claim actions. We believe this lawsuit is tied
to  the  Trendsetter  LLC  litigation  discussed  above,  and is a part of their
groups'  concerted  attack  on  the  company  as  a  strategy  to  receive undue
enrichment  in  the  form  of  our  common  stock.

Of far more importance to the Company is the fact that this group is now, or has
in  the  past,  been  acting together in concert since as far back as April 2003
when they funded a bridge loan and collectively invested and purchased 2,878,969
shares  of common stock.  At that time there was approximately 27,000,000 shares
of  common stock outstanding. This would have given them greater than 10% of the
outstanding  common  stock  of the company. In review of our records, during the
period of time between October of 2003 through approximately the end of March of
2004,  this  group  dramatically  increased  their  holdings  of  Hyperdynamics
Corporation's  common  stock.   Based  on  concerted  actions since then, we are
seriously  evaluating  all  corroborating information concerning the possibility
that  their  group  is  an  undisclosed  affiliate of Hyperdynamics Corporation.

                                       14
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ITEM  2.  Unregistered  Sales  of  Equity  Securities  and  Use  of  Proceeds

We  have  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 risks of our securities. We
believe  that  each  person was knowledgeable about our operations and financial
condition.

In March 2006, Hyperdynamics issued 197,416 shares of restricted common stock to
various working interest partners who have agreed with the buyback settlement of
working  interest.

In  March  2006,  Hyperdynamics, we received an aggregate of $50,000 in exercise
proceeds.  This was a private placement made in reliance of Section 4 (2) of the
Act

In  February  2006, Hyperdynamics issued additional 300,000 shares of restricted
common stock to various individuals who have exercise their options. We received
an aggregate of $150,000 in exercise proceeds. This was a private placement made
in  reliance  of  Section  4  (2)  of  the  Act

ITEM  4     Submission  of  Matters  to  a  Vote  of  Security  Holders

On  February  21,  2006,  the  company  held  its  annual shareholder meeting as
disclosed in its proxy statement filed January 20, 2006. The shareholder meeting
was  for  shareholders  of  record  at  December  27,  2005.

The  election  judges  reported at the meeting that there were 42,567,273 common
stock  shares  outstanding  on  that date carrying one vote per share plus 2,725
shares  of  Series  B Preferred Stock carrying 20,186,800 votes. The total votes
outstanding  on  December  27,  2005 and eligible to be cast at the meeting were
62,736,073.  The  total  voting shares present either by proxy or in person were
31,225,686 common shares and 2,725 Series B Preferred shares. This yielded a sum
total  of  51,412,486  votes available to be counted. Of these votes, 51,412,486
votes were cast representing 83% of the total outstanding votes eligible to vote
at  the  meeting.

The  results  of  the  voting  by  Item  are  as  follows:

ITEM  1:
With  respect  to  election  of  Directors  of  the  Company:

                  #  of  shares  FOR  #  of  shares  WITHHELD

Kent  Watts              51,834,533             4,088,579
L.  Gene  Shohler        52,035,433             3,887,679
Harry  Briers            51,835,086             4,088,026
Harold  A.  Poling       52,035,773             3,887,379
Al  Young                52,035,773             3,887,379

                                       15
<PAGE>

ITEM  2:
With  respect  to  Ratification  of  Selection  of  Malone  &  Bailey, PC as the
Company's  Independent  Auditors  for  the  Fiscal  Year  ended  June  30, 2006:

#  of  shares  FOR          #  of  shares  AGAINST          #  of shares ABSTAIN
    51,800,674                      155,253                       3,967,185

Item  6  Exhibits

Exhibit
 Number                             Description
--------  ----------------------------------------------------------------------
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.

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.

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.

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.

                                       16


<PAGE>




                                   Signature

Pursuant  to  the  requirements  of  the  Securities  Exchange  Act of 1934, the
Registrant  has  duly  caused  this  Report  to  be  signed on its behalf by the
undersigned  thereunto  duly

        Hyperdynamics  Corporation
         (Registrant)

(signed)
        By:  /s/  Kent  Watts
             ----------------
             Kent  Watts,  Chairman  of  the  Board,
             Chief  Executive  Officer

Dated:  May  22,  2006


(signed)
        By:  /s/  Steven  M.  Plumb
             ----------------------
             Steven  Plumb,
             Chief  Financial  Officer

Dated:  May  22,  2006

                                       17

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