UNITED
STATES


SECURITIES
AND EXCHANGE COMMISSION


WASHINGTON,
D.C. 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 December 31,
2010





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: 000-32490





HYPERDYNAMICS
CORPORATION


(Exact
name of registrant as specified in its charter)





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




12012
Wickchester Lane, # 475


Houston,
Texas 77079





(Address
of principal executive offices, including zip code)





713-353-9400


(registrant's
principal executive office telephone number)




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 has submitted electronically and posted on
its corporate Web site, if any, every Interactive Data File required to be
submitted and posted pursuant to Rule 405 of Regulation S-T (§ 232.405 of
this chapter) during the preceding 12 months (or for such shorter period that
the registrant was required to submit and post such
files.)    Yes   ̈    No   ̈




Indicate
by check mark whether the registrant is a large accelerated filer, an
accelerated filer, a non-accelerated filer, or a smaller reporting company. See
definition of “large accelerated filer,” “accelerated filer” and “smaller
reporting company” in Rule 12b-2 of the Exchange Act. (Check one):




Large
      accelerated filer   ̈
            Accelerated
      filer   ̈
            Non-accelerated
      filer   ̈
            Smaller
      reporting company  þ





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




As of
February 14, 2011, 126,033,147 shares of common stock, $0.001 par value, were
outstanding.










Table of
Contents




Part
      I. Financial InformationItem
      1.      Financial StatementsConsolidated
      Balance Sheets (unaudited) at December  31, 2010 and June 30,
      2010
                              3Consolidated
      Statements of Operations (unaudited) for the Three and Six Months Ended
      December 31, 2010 and 2009, respectively, and for the period from
      inception of the Exploration Stage (July 1, 2009) to December 31,
      2010
                              4Consolidated
      Statement of Shareholders’ Equity (unaudited) for the period from July 1,
      2009 (inception of the Exploration Stage) to December 31,
    2010
                              5Consolidated
      Statements of Cash Flows (unaudited) for the Six Months Ended December 31,
      2010 and 2009, and for the period from inception of the Exploration Stage
      (July 1, 2009) to December 31, 2010
                              6Notes
      to Consolidated Financial Statements (unaudited)
                              8Item
      2.      Management’s Discussion and Analysis of
      Financial Condition and Results of Operations
                              21Item
      3.      Quantitative and Qualitative Disclosures
      about Market Risks
                              23Item
      4.      Controls and Procedures
                              23Part
      II. Other InformationItem
      1.      Legal Proceedings
                              24Item
      1A.   Risk Factors
                              24Item
      2.      Unregistered Sales of Equity
      Securities and Use of Proceeds
                              24Item
      3.      Defaults Upon Senior
      Securities
                              24Item
      4.      Submission of Matters to a Vote of
      Security Holders
                              24Item
      5.      Other Information
                              24Item
      6.      Exhibits
                              24Signatures
                              27


2




HYPERDYNAMICS
CORPORATION
 (An
Exploration Stage Company)
 CONSOLIDATED
BALANCE SHEETS
 (In
Thousands, Except Number of Shares and Per Share Amounts)
 (Unaudited)
 
 December 31,
                    2010
                  
                  
                  June 30,
                    2010ASSETSCurrent
      assets:Cash
      and cash equivalents
                  
                  $
                  35,219
                  
                  
                  $
                  26,040Accounts
      receivable – joint interest
                  
                  
                  525
                  
                  
                  
                  150Prepaid
      expenses and other current assets
                  
                  
                  246
                  
                  
                  
                  205Total
      current assets
                  
                  
                  35,990
                  
                  
                  
                  26,395Property
      and equipment, net of accumulated depreciation of $586 and
      $445
                  
                  
                  916
                  
                  
                  
                  664Oil
      and gas properties, using full cost method:Unevaluated
      properties excluded from amortization
                  
                  
                  21,279
                  
                  
                  
                  92Restricted
      cash
                  
                  
                  150
                  
                  
                  
                  -Deposits
                  
                  
                  76
                  
                  
                  
                  69Total
      assets
                  
                  $
                  58,411
                  
                  
                  $
                  27,220LIABILITIES
      AND SHAREHOLDERS' EQUITYCurrent
      liabilities:Accounts
      payable and accrued expenses
                  
                  $
                  3,045
                  
                  
                  $
                  3,859Accounts
      payable - seismic data
                  
                  
                  650
                  
                  
                  
                  650Dividends
      payable
                  
                  
                  -
                  
                  
                  
                  372Short-term
      notes payable
                  
                  
                  53
                  
                  
                  
                  160Total
      current liabilities
                  
                  
                  3,
      748
                  
                  
                  
                  5,041Warrant
      derivative liability
                  
                  
                  -
                  
                  
                  
                  583Deferred
      rent
                  
                  
                  140
                  
                  
                  
                  70Total
      liabilities
                  
                  
                  3,888
                  
                  
                  
                  5,694Commitments
      and contingencies (Note 10)Shareholders'
      equity:Convertible
      preferred stock, par value $0.001; stated value $1,000; 20,000,000
      authorizedSeries
      A – 3,000 shares issued -0- and 1,945 shares
    outstanding
                  
                  
                  -
                  
                  
                  
                  -Common
      stock, $0.001 par value, 250,000,000 shares authorized; 125,232,158 and
      104,227,199 shares issued and outstanding
                  
                  
                  125
                  
                  
                  
                  104Additional
      paid-in capital
                  
                  
                  136,187
                  
                  
                  
                  97,046Accumulated
      deficit
                  
                  
                  (67,615
                  )
                  
                  
                  (67,615
                  )Deficit
      accumulated after reentering exploration stage
                  
                  
                  (14,174
                  )
                  
                  
                  (8,009
                  )Total
      shareholders' equity
                  
                  
                  54,523
                  
                  
                  
                  21,526Total
      liabilities and shareholders' equity
                  
                  $
                  58,411
                  
                  
                  $
                  27,220
 
 The
accompanying notes are an integral part of these consolidated financial
statements.
  3
  HYPERDYNAMICS
CORPORATION
 (An
Exploration Stage Company)
 CONSOLIDATED
STATEMENTS OF OPERATIONS
 (In
Thousands, Except Number of Shares and Per Share Amounts)
 (Unaudited)
 ThreeMonthsEnded
                      December31,
                    
                    
                    SixMonthsEnded
                      December31,
                    
                    
                    Inception of
                      Exploration Stage
                      (July 1, 2009)
                      through
                      December 31,2010
                    
                    
                    2009
                    
                    
                    2010
                    
                    
                    2009
                    
                    
                    2010Costs
      and expenses:Depreciation
                    
                    $
                    71
                    
                    
                    $
                    29
                    
                    
                    $
                    141
                    
                    
                    $
                    59
                    
                    
                    $
                    297Selling,
      general and administrative
                    
                    
                    3,218
                    
                    
                    
                    3,038
                    
                    
                    
                    5,267
                    
                    
                    
                    5,426
                    
                    
                    
                    16,114Total
      costs and expenses
                    
                    
                    3,289
                    
                    
                    
                    3,067
                    
                    
                    
                    5,408
                    
                    
                    
                    5,485
                    
                    
                    
                    16,411Loss
      from operations
                    
                    
                    (3,289
                    )
                    
                    
                    (3,067
                    )
                    
                    
                    (5,408
                    )
                    
                    
                    (5,485
                    )
                    
                    
                    (16,411
                    )Other
      income (expense):Gain
      on sale of interest in unevaluated oil and gas
    properties
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    2,955Loss
      on warrant derivative liability
                    
                    
                    -
                    
                    
                    
                    (423
                    )
                    
                    
                    (771
                    )
                    
                    
                    (478
                    )
                    
                    
                    (492
                    )Interest
      income (expense), net
                    
                    
                    7
                    
                    
                    
                    (496
                    )
                    
                    
                    14
                    
                    
                    
                    (711
                    )
                    
                    
                    (694
                    )Loss
      on settlement of debt
                    
                    
                    -
                    
                    
                    
                    (298
                    )
                    
                    
                    -
                    
                    
                    
                    (298
                    )
                    
                    
                    (298
                    )Total
      other income (expense)
                    
                    
                    7
                    
                    
                    
                    (1,217
                    )
                    
                    
                    (757
                    )
                    
                    
                    (1,487
                    )
                    
                    
                    1,471Loss
      from continuing operations
                    
                    
                    (3,282
                    )
                    
                    
                    (4,284
                    )
                    
                    
                    (6,165
                    )
                    
                    
                    (6,972
                    )
                    
                    
                    (14,940
                    )Gain
      (loss) on sale of discontinued operations
                    
                    
                    -
                    
                    
                    
                    (3
                    )
                    
                    
                    -
                    
                    
                    
                    765
                    
                    
                    
                    765Net
      loss
                    
                    
                    (3,282
                    )
                    
                    
                    (4,287
                    )
                    
                    
                    (6,165
                    )
                    
                    
                    (6, 207
                    )
                    
                    
                    (14,175
                    )Preferred
      stock dividend to related party
                    
                    
                    -
                    
                    
                    
                    16
                    
                    
                    
                    -
                    
                    
                    
                    (8
                    )
                    
                    
                    -Net
      loss attributable to common shareholders
                    
                    $
                    (3,282
                    )
                    
                    $
                    (4,271
                    )
                    
                    $
                    (6,165
                    )
                    
                    $
                    (6,215
                    )
                    
                    $
                    (14,175
                    )Basic
      and diluted income (loss) per share:From
      continuing operations
                    
                    $
                    (0.03
                    )
                    
                    $
                    $(0.05
                    )
                    
                    $
                    (0.06
                    )
                    
                    $
                    $(0.09
                    )From
      discontinued operations
                    
                    
                    0.00
                    
                    
                    
                    0.00
                    
                    
                    
                    0.00
                    
                    
                    
                    0.01Net
      loss per share attributable to common shareholders
                    
                    $
                    (0.03
                    )
                    
                    $
                    (0.05
                    )
                    
                    $
                    (0.06
                    )
                    
                    $
                    (0.08
                    )Weighted
      average shares outstanding – basic and diluted
                    
                    
                    118,093,593
                    
                    
                    
                    84,461,229
                    
                    
                    
                    111,190,899
                    
                    
                    
                    74,565,109
 
 The
accompanying notes are an integral part of these consolidated financial
statements.
  4
  HYPERDYNAMICS
CORPORATION
 (An
Exploration Stage Company)
 CONSOLIDATED
STATEMENT OF SHAREHOLDERS' EQUITY
 FOR
THE PERIOD FROM JULY 1, 2009 (INCEPTION OF EXPLORATION STAGE) THROUGH DECEMBER
31, 2010
 (In
Thousands, Except Number of Shares)
 (Unaudited)
 Series A Preferred
                    
                    
                    Series B Preferred
                    
                    
                    Common Stock
                    
                    
                    Additional
                      Paid-in
                    
                    
                    Accumulated
                    
                    
                    Deficit
                      Accumulated
                      after
                      reentering
                      ExplorationShares
                    
                    
                    Amount
                    
                    
                    Shares
                    
                    
                    Amount
                    
                    
                    Shares
                    
                    
                    Amount
                    
                    
                    Capital
                    
                    
                    Deficit
                    
                    
                    Stage
                    
                    
                    TotalBalance
      at July 1, 2009,as
      adjusted
                    
                    
                    1,945
                    
                    
                    
                    -
                    
                    
                    
                    2,406
                    
                    
                    
                    -
                    
                    
                    
                    64,162,813
                    
                    
                    
                    64
                    
                    
                    
                    70,220
                    
                    
                    
                    (67,615
                    )
                    
                    
                    -
                    
                    
                    
                    2,669Common
      stock issued for:Services
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    442,049
                    
                    
                    
                    -
                    
                    
                    
                    324
                    
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    324Conversion
      of Series B Preferred Stock
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    (2,406
                    )
                    
                    
                    -
                    
                    
                    
                    15,822,222
                    
                    
                    
                    16
                    
                    
                    
                    (16
                    )
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    -Conversion
      of debentures
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    1,949,411
                    
                    
                    
                    2
                    
                    
                    
                    1,294
                    
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    1,296Cash
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    16,878,096
                    
                    
                    
                    17
                    
                    
                    
                    17,183
                    
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    17,200Exercise
      of warrants
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    4,646,465
                    
                    
                    
                    5
                    
                    
                    
                    4,409
                    
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    4,414Cashless
      Exercise of options
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    124,653
                    
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    -Cashless
      Exercise of warrants classified as a derivative
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    201,490
                    
                    
                    
                    -
                    
                    
                    
                    723
                    
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    723Amortization
      of fair value of stock options
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    1,579
                    
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    1,579Discount
      related to modification of convertible debt
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    1,172
                    
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    1,172Warrant
      repricing charged to interest expense
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    158
                    
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    158Warrant
      repricingDeemed
      dividend
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    322
                    
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    322Deemed
      dividend
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    (322
                    )
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    (322
                    )Net
      loss
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    (8,009
                    )
                    
                    
                    (8,009
                    )Balance,
      June 30, 2010
                    
                    
                    1,945
                    
                    
                    $
                    -
                    
                    
                    
                    -
                    
                    
                    $
                    -
                    
                    
                    
                    104,227,199
                    
                    
                    $
                    104
                    
                    
                    $
                    97,046
                    
                    
                    $
                    (67,615
                    )
      $
                    
                    
                    (8,009
                    )
                    
                    $
                    21,526Common
      stock issued for:Cash
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    15,000,000
                    
                    
                    
                    15
                    
                    
                    
                    29,869
                    
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    29,884Exercise
      of warrants
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    5,109,378
                    
                    
                    
                    5
                    
                    
                    
                    6,163
                    
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    6,168Exercise
      of options
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    278,796
                    
                    
                    
                    -
                    
                    
                    
                    215
                    
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    215Cashless
      exercise of warrants classified as a derivative
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    384,848
                    
                    
                    
                    1
                    
                    
                    
                    1,353
                    
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    1,354Series
      A settlement;
                    
                    
                    (1,945
                    )
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    231,937
                    
                    
                    
                    -
                    
                    
                    
                    1,183
                    
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    1,183Settlement
      charge
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    (811
                    )
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    (811
                    )Amortization
      of fair value of stock options
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    1,169
                    
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    1,169Net
      loss
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    (6,165
                    )
                    
                    
                    (6,165
                    )Balance,
      December 31, 2010
                    
                    
                    -
                    
                    
                    $
                    -
                    
                    
                    
                    -
                    
                    
                    $
                    -
                    
                    
                    
                    125,232,158
                    
                    
                    $
                    125
                    
                    
                    $
                    136,187
                    
                    
                    $
                    (67,615
                    )
                    
                    $
                    (14,174
                    )
                    
                    $
                    54,523
 
 The
accompanying notes are an integral part of these consolidated financial
statements.
  5
  HYPERDYNAMICS
CORPORATION
 (An
Exploration Stage Company)
 CONSOLIDATED
STATEMENTS OF CASH FLOWS
 (In Thousands)
 (Unaudited)
 Six Months Ended December 31,
                    
                    
                    Inception of
                      Exploration Stage
                      (July 1, 2009)
                      through
                      December 31,2010
                    
                    
                    2009
                    
                    
                    2010CASH
      FLOWS FROM OPERATING ACTIVITIES:Net
      loss
                    
                    $
                    (6,165
                    )
                    
                    $
                    (6,207
                    )
                    
                    $
                    (14,174
                    )Income
      from discontinued operations
                    
                    
                    -
                    
                    
                    
                    (765
                    )
                    
                    
                    (765
                    )Adjustments
      to reconcile net loss to net cash used in operating
      activities:Depreciation,
      depletion and amortization
                    
                    
                    141
                    
                    
                    
                    59
                    
                    
                    
                    297Common
      stock issued for services
                    
                    
                    -
                    
                    
                    
                    143
                    
                    
                    
                    143Employee
      stock options
                    
                    
                    1,169
                    
                    
                    
                    1,363
                    
                    
                    
                    2,748Variable
      share issuance obligation
                    
                    
                    -
                    
                    
                    
                    (374
                    )
                    
                    
                    (374
                    )Loss
      on settlement of debt
                    
                    
                    -
                    
                    
                    
                    298
                    
                    
                    
                    298Gain
      on sale of oil and gas properties
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    (2,955
                    )Loss
      on derivative liability
                    
                    
                    771
                    
                    
                    
                    478
                    
                    
                    
                    492Interest
      accreted to debt principal
                    
                    
                    -
                    
                    
                    
                    342
                    
                    
                    
                    342Repricing
      of warrants
                    
                    
                    -
                    
                    
                    
                    158
                    
                    
                    
                    158Loss
      on disposition of assets
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    32Amortization
      of discount and financing costs on debt
                    
                    
                    -
                    
                    
                    
                    144
                    
                    
                    
                    144Changes
      in operating assets and liabilities:Accounts
      receivable -  joint interest
                    
                    
                    (375
                    )
                    
                    
                    -
                    
                    
                    
                    (375
                    )Accounts
      receivable
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    (150
                    )Prepaid
      expenses
                    
                    
                    (41
                    )
                    
                    
                    21
                    
                    
                    
                    81Other
      assets
                    
                    
                    (7
                    )
                    
                    
                    (106
                    )
                    
                    
                    (65
                    )Accounts
      payable and accrued expenses
                    
                    
                    (1,474
                    )
                    
                    
                    (889
                    )
                    
                    
                    1,240Deferred
      rent
                    
                    
                    70
                    
                    
                    
                    (7
                    )
                    
                    
                    84Cash
      used in operating activities – continuing operations
                    
                    
                    (5,911
                    )
                    
                    
                    (5,342
                    )
                    
                    
                    (12,799
                    )Cash
      used in operating activities – discontinued operations
                    
                    
                    -
                    
                    
                    
                    (76
                    )
                    
                    
                    (76
                    )Net
      cash used in operating activities
                    
                    
                    (5,911
                    )
                    
                    
                    (5,418
                    )
                    
                    
                    (12,875
                    )CASH
      FLOWS FROM INVESTING ACTIVITIES:Purchase
      of property and equipment
                    
                    
                    (393
                    )
                    
                    
                    (37
                    )
                    
                    
                    (1,044
                    )Investment
      in unevaluated oil and gas properties
                    
                    
                    (20,527
                    )
                    
                    
                    (2,521
                    )
                    
                    
                    (34,568
                    )Increase
      in restricted cash
                    
                    
                    (150
                    )
                    
                    
                    -
                    
                    
                    
                    (150
                    )Proceeds
      from sale of interest in unevaluated oil and gas
properties
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    25,001Cash
      used in investing activities – continuing operations
                    
                    
                    (21,070
                    )
                    
                    
                    (2,558
                    )
                    
                    
                    (10,761
                    )Cash
      provided by investing activities – discontinued operations
                    
                    
                    -
                    
                    
                    
                    881
                    
                    
                    
                    881Net
      cash used in investing activities
                    
                    
                    (21,070
                    )
                    
                    
                    (1,677
                    )
                    
                    
                    (9,880
                    )CASH
      FLOWS FROM FINANCING ACTIVITIES:Proceeds
      from issuance of stock and warrants, net of offering costs of $116, $470
      and $1,401
                    
                    
                    29,884
                    
                    
                    
                    7,530
                    
                    
                    
                    47,084Proceeds
      from exercise of stock options
                    
                    
                    215
                    
                    
                    
                    -
                    
                    
                    
                    215Proceeds
      from exercise of warrants
                    
                    
                    6,168
                    
                    
                    
                    -
                    
                    
                    
                    10,582Payments
      of dividends payable – related party
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    (430
                    )Payments
      on notes payable and installment debt
                    
                    
                    (107
                    )
                    
                    
                    (673
                    )
                    
                    
                    (837
                    )Cash
      provided by financing activities – continuing operations
                    
                    
                    36,160
                    
                    
                    
                    6,857
                    
                    
                    
                    56,614Cash
      used in financing activities – discontinued operations
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    -Net
      cash provided by financing  activities
                    
                    
                    36,160
                    
                    
                    
                    6,857
                    
                    
                    
                    56,614INCREASE
      (DECREASE) IN CASH AND CASH EQUIVALENTS
                    
                    
                    9,179
                    
                    
                    
                    (238
                    )
                    
                    
                    33,859CASH
      AND CASH EQUIVALENTS AT BEGINNING OF PERIOD
                    
                    
                    26,040
                    
                    
                    
                    1,360
                    
                    
                    
                    1,360CASH
      AND CASH EQUIVALENTS AT END OF PERIOD
                    
                    $
                    35,219
                    
                    
                    $
                    1,122
                    
                    
                    $
                    35,219
  The
accompanying notes are an integral part of these consolidated financial
statements.
  6
  HYPERDYNAMICS
CORPORATION
 (An
Exploration Stage Company)
 CONSOLIDATED
STATEMENTS OF CASH FLOWS (continued)
 (In Thousands)
 (Unaudited)
  Six Months Ended December 31,
                              
                              
                              Inception of
                                Exploration Stage
                                (July 1, 2009)
                                through
                                December 31,2010
                              
                              
                              2009
                              
                              
                              2010SUPPLEMENTAL
      DISCLOSURES:Interest
      paid in cash, net of amounts capitalized
                              
                              $
                              2
                              
                              
                              $
                              69
                              
                              
                              $
                              70Income
      taxes paid in cash
                              
                              
                              -
                              
                              
                              
                              -
                              
                              
                              
                              -NON-CASH
      INVESTING AND FINANCING TRANSACTIONS:Common
      stock issued to settle variable share obligation
                              
                              $
                              -
                              
                              
                              $
                              179
                              
                              
                              $
                              181Deemed
      dividend attributable to repriced warrants originally issued with purchase
      of common stock
                              
                              
                              -
                              
                              
                              
                              322
                              
                              
                              
                              322Asset
      retirement obligation transferred as part of sale of
assets
                              
                              
                              -
                              
                              
                              
                              18
                              
                              
                              
                              18Accounts
      payable for unevaluated oil and gas property
                              
                              
                              660
                              
                              
                              
                              3,813
                              
                              
                              
                              660Accrued
      and unpaid stock dividend to related parties
                              
                              
                              -
                              
                              
                              
                              8
                              
                              
                              
                              -Conversion
      of debt, net of discount of $0, $1,116 and $1,116
                              
                              
                              -
                              
                              
                              
                              1,294
                              
                              
                              
                              1,294Conversion
      of Series B Preferred Stock into Common Stock
                              
                              
                              -
                              
                              
                              
                              16
                              
                              
                              
                              16Fair
      value of warrant modifications
                              
                              
                              -
                              
                              
                              
                              -
                              
                              
                              
                              480Relative
      fair value of warrants issued in connection with equity
      offerings
                              
                              
                              -
                              
                              
                              
                              1,642
                              
                              
                              
                              3,839Note
      payable for prepaid insurance
                              
                              
                              -
                              
                              
                              
                              115
                              
                              
                              
                              275Discount
      of convertible debt modification
                              
                              
                              -
                              
                              
                              
                              1,172
                              
                              
                              
                              1,172Exercise
      of warrants classified as a derivative
                              
                              
                              1,354
                              
                              
                              
                              -
                              
                              
                              
                              2,077Reclassification
      of warrants as a derivative under ASC 815
                              
                              
                              -
                              
                              
                              
                              -
                              
                              
                              
                              1,585Common
      stock issued for Series A settlement
                              
                              
                              372
                              
                              
                              
                              -
                              
                              
                              
                              372
 
 The
accompanying notes are an integral part of these consolidated financial
statements.
  7
 
 HYPERDYNAMICS
CORPORATION
 (An
Exploration Stage Company)
 NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
 (Unaudited)
 
 1.
NATURE OF BUSINESS AND BASIS OF PRESENTATION
 
 Hyperdynamics
Corporation (“Hyperdynamics,” the “Company,” “we,” and “our”) is a Delaware
corporation formed in March 1996. We have two wholly-owned subsidiaries, SCS
Corporation (“SCS”) and HYD Resources Corporation (“HYD”). Through SCS and its
subsidiary, SCS Corporation Guinea SARL (a limited liability company formed
under the laws of the Republic of Guinea located in Conakry, Guinea), we focus
on oil and gas exploration offshore the west coast of Africa.  Our
exploration efforts are pursuant to a Hydrocarbon Production Sharing Contract,
as amended (the “PSC”).  We refer to the rights granted under the PSC
as the “Guinea Concession.” SCS began operations in oil and gas exploration,
seismic data acquisition, processing, and interpretation in late fiscal 2002. In
April 2004, we acquired HYD, and in January 2005, HYD acquired Trendsetter
Production Company (“Trendsetter”), an oil and gas operator in Louisiana that
had been under common ownership with HYD. Trendsetter operated all of our
domestic oil and gas assets until the sale of those assets in 2009.
 
 We
reentered the exploration stage effective July 1, 2009 after the sale of all of
our proved reserves.
 
 Our
unaudited consolidated financial statements have been prepared in accordance
with accounting principles generally accepted in the United States and the rules
of the Securities and Exchange Commission ("SEC"), and should be read in
conjunction with the audited financial statements and notes thereto contained in
our Annual Report filed with the SEC on Form 10-K for the year ended June 30,
2010. In the opinion of management, all adjustments, consisting of normal
recurring adjustments, necessary for a fair presentation of financial position
and the results of operations for the interim periods presented have been
reflected herein.  The results of operations for interim periods are
not necessarily indicative of the results to be expected for the full year.
Notes to the financial statements which would substantially duplicate the
disclosures contained in the audited financial statements for the most recent
fiscal year ended June 30, 2010, as reported in the Form 10-K, have been
omitted.
 
 Use
of estimates
 
 The
preparation of the consolidated financial statements in conformity with
accounting principles generally accepted in the United States requires
management to make estimates and assumptions that affect the reported amounts of
assets, liabilities, 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
 
 Cash
equivalents are highly liquid investments with an original maturity of three
months or less.  We maintain our cash in bank deposit accounts which,
at times, exceed the federally insured limits.  At December 31, 2010,
we had approximately $34,400,000 in excess of FDIC limits.  We have
not experienced any losses in such accounts.
 
 Restricted
cash
 
 Included
in restricted cash is a certificate of deposit (“CD”) with Amegy Bank. This CD
was established in July 2010 to secure corporate credit cards used for general
corporate purposes, primarily for travel expenditures. As of December 31, 2010,
this CD balance was $150,000.
 
 During
the six months ended December 31, 2010, we also established a CD to secure our
Amegy Bank letter of credit relating to our 3D seismic contract with PGS
Geophysical AS, Norway (“PGS”).  Under the terms of the 3D seismic
contract, we secured a collateralized CD for a letter of credit in July 2010 in
the amount of $21.0 million for the sole purpose of funding this seismic
acquisition. As work was performed and invoiced, PGS submitted draw documents to
Amegy Bank for payment under the terms of the agreement. The final payment was
made in December 2010 and the CD and letter of credit were fully expended at
December 31, 2010. See Note 10.
  8
 
 Accounts
receivable and allowance for doubtful accounts
 
 We do not
require collateral from our customers. We establish provisions for losses on
accounts receivable if we determine that we will not collect all or part of the
outstanding balance. Accounts receivable are written down to reflect
management’s best estimate or realizability based upon known specific analysis,
historical experience, and other currently available evidence of the net
collectible amount. There is no allowance for doubtful accounts as of December
31, 2010 and June 30, 2010. At December 31, 2010, all of our accounts receivable
balance was related to joint interest billings to Dana Petroleum (E&P)
Limited (“Dana”), who owns a 23% participating interest in our Guinea
Concession.
 
 Earnings
per share
 
 Basic
loss per common share has been computed by dividing net loss by the weighted
average number of shares of common stock outstanding during each period and
after preferred stock dividend requirements. In period of earnings, diluted
earnings per common share are calculated by dividing net income available to
common shareholders by weighted-average common shares outstanding during the
period plus weighted-average dilutive potential common
shares.  Diluted earnings per share calculations assume, as of the
beginning of the period, exercise of stock options and warrants using the
treasury stock method.  Convertible securities are included in the
calculation during the time period they are outstanding using the if-converted
method.
 
 All
potential dilutive securities, including potentially dilutive options, warrants
and convertible securities, if any, were excluded from the computation of
dilutive net loss per common share for the three and six months ended December
31, 2010 and 2009, respectively, as their effects are antidilutive due to our
net loss for those periods.
 
 Stock
options to purchase approximately 7.6 million common shares at an average
exercise price of $1.02 and warrants to purchase approximately 5.2 million
shares of common stock at an average exercise price of $1.28 were outstanding at
December 31, 2010. Using the treasury stock method, had we had net income,
approximately 2.7 million common shares attributable to our outstanding stock
options and 2.5 million common shares attributable to our outstanding warrants
to purchase common shares would have been included in the fully diluted earnings
per share calculation for the six-month period ended December 31, 2010, while
approximately 4.2 million common shares attributable to our outstanding stock
options and 3.2 million common shares attributable to our outstanding warrants
would have been included for the three month period ended December 31,
2010.
 
 Stock
options to purchase approximately 7.9 million common shares at an average
exercise price of $1.39 and warrants to purchase approximately 13.3 million
common shares at an average exercise price of $1.44 were outstanding at December
31, 2009. Using the treasury stock method, had we had net income, approximately
0.9 million common shares attributable to our then outstanding stock options and
0.7 million common shares attributable to our then outstanding warrants would
have been included in the fully diluted earnings per share calculation for the
six-month period ended December 31, 2009, while approximately 1.1 million common
shares attributable to our then outstanding stock options and 1.4 million common
shares attributable to our then outstanding warrants would have been included
for the three month period ended December 31, 2009.
 
 Contingencies
  Legal
  We are
subject to legal proceedings, claims and liabilities which arise in the ordinary
course of business. We accrue for losses associated with legal claims when such
losses are probable and can be reasonably estimated. These accruals are adjusted
as additional information becomes available or circumstances change. Legal fees
are charged to expense as they are incurred. See Note
10.
  Environmental
 
 We accrue
for losses associated with environmental remediation obligations when such
losses are probable and can be reasonably estimated. These accruals are adjusted
as additional information becomes available or circumstances change. Costs of
future expenditures for environmental remediation obligations are not discounted
to their present value. Recoveries of environmental remediation costs from other
parties are recorded at their undiscounted value as assets when their receipt is
deemed probable.
  Financial
instruments
 
 The
accounting standards regarding fair value of financial instruments and related
fair value measurements define fair value, establish a three-level valuation
hierarchy for disclosures of fair value measurement, and enhance disclosure
requirements for fair value measures.
 
 The three
levels are defined as follows:
 
 ·
              Level
      1 - inputs to the valuation methodology are quoted prices (unadjusted) for
      identical assets or liabilities in active
  markets.
  9
  ·
              Level
      2 - inputs to the valuation methodology include quoted prices for similar
      assets and liabilities in active markets, and inputs that are observable
      for the asset or liability, either directly or indirectly, for
      substantially the full term of the financial
  instrument.
  ·
              Level
      3 - inputs to the valuation methodology are unobservable and significant
      to the fair value measurement.
 
 Financial
assets and liabilities are classified in their entirety based on the lowest
level of input that is significant to the fair value measurement.  We
have determined that certain warrants outstanding during the periods covered
by  these financial statements qualified as derivative financial
instruments under the provisions of FASB ASC Topic No. 815-40, Derivatives and Hedging – Contracts
in an Entity’s Own Stock. These warrant agreements include provisions
designed to protect holders from a decline in the stock price (‘down-round’
provision) by reducing the exercise price in the event we issue equity shares at
a price lower than the exercise price of the warrants.  As a result of
this down-round provision, the exercise price of these warrants could be
modified based upon a variable that is not an input to the fair value of a
‘fixed-for-fixed’ option as defined under FASB ASC Topic No. 815-40 and
consequently, these warrants must be treated as a liability and recorded at fair
value at each reporting date.
 
 The fair
value of these warrants was determined using a lattice model, with any change in
fair value during the period recorded in earnings as “Other income (expense) –
Loss on warrant derivative liability.” As a result, the derivative
warrant liability is carried on the balance sheet at its fair
value.
 
 Significant
Level 3 inputs used to calculate the fair value of the warrants include the
stock price on the valuation date, expected volatility, risk-free interest rate
and management’s assumptions regarding the likelihood of a future repricing of
these warrants pursuant to the down-round provision.
 
 The
following table sets forth by level within the fair value hierarchy our
financial assets and liabilities (in thousands) that were accounted for at fair
value on a recurring basis as of December 31, 2010:
 
 Carrying
                              Value at
                              December 31,
                            
                            
                            Fair Value Measurement at December 31, 20102010
                            
                            
                            Level 1
                            
                            
                            Level 2
                            
                            
                            Level 3Derivative
      warrants liability
                            
                            $
                            -
                            
                            
                            $
                            -
                            
                            
                            $
                            -
                            
                            
                            $
                            -
 
 The
following table sets forth the changes in the fair value measurement of our
Level 3 derivative warrant liability:
 
 Beginning
      balance – July 1, 2010
                                  
                                  $
                                  583Change
      in fair value of derivative liability
                                  
                                  
                                  771Reduced
      for warrants exercised and reclassified to additional paid-in
      capital
                                  
                                  
                                  (1,354
                                  )Balance
      at  December 31, 2010
                                  
                                  $
                                  -
 
 The
$771,000 change in fair value during the six-month period ended December 31,
2010, was recorded as an increase to the derivative liability and as a non-cash
loss in our statement of operations. For the six months ended December 31, 2009,
we incurred a $478,000 non-cash loss.
 
 All of
the remaining warrants underlying this derivative liability were exercised in
October 2010. At December 31, 2010, there is no remaining derivative liability
balance.
 
 Subsequent
events
 
 We
evaluated all subsequent events from December 31, 2010 through the date of the
issuance of the consolidated financial statements. See Note 11.
  10
 
 Recently
issued or adopted accounting pronouncements
  Recently
issued or adopted accounting pronouncements are not expected to have, or did not
have, a material impact on our financial position or results from
operations.
 
 2.
SALES OF OIL AND GAS PROPERTIES AND DISCONTINUED OPERATIONS
 
 On April
1, 2009, we executed a contract to sell the working interest in all of our
domestic oil and gas properties in a transaction that was treated for accounting
purposes as three sales. The sale was completed during August 2009 at which time
we received a final payment of $820,000 and recognized a gain on sale of
$765,000.
 
 3.
INVESTMENT IN OIL AND GAS PROPERTIES
 
 Investment
in oil and gas properties consists entirely of our Guinea concession in offshore
West Africa. We own a 77% participating interest in our Guinea
Concession.
 
 We follow
the “full-cost” method of accounting for oil and natural gas property and
equipment costs. Under this method, internal costs incurred that are directly
identified with exploration, development, and acquisition activities undertaken
by us for our own account, and which are not related to production, general
corporate overhead, or similar activities, are capitalized. For the six month
and three month periods ended December 31, 2010, we capitalized $1,083,000 and
$623,000of such costs, respectively. Internal costs eligible for capitalization
for periods prior to July 1, 2010 were not significant.
 
 The
following table provides detail of total capitalized costs (in thousands) for
our Guinea concession as of December 31, 2010 and June 30, 2010:
 
 December 31,
                    2010
                  
                  
                  June 30,
                    2010Geological
      and geophysical cost
                  
                  $
                  21,172
                  
                  
                  $
                  92Other
      exploration costs
                  
                  
                  107
                  
                  
                  
                  -Unevaluated
      properties not subject to amortization
                  
                  $
                  21,279
                  
                  
                  $
                  92
 
 We
exclude capitalized costs of unevaluated oil and gas properties from
amortization. Currently, geological and geophysical information pertaining to
the Guinea concession is being collected and evaluated and no reserves have been
attributed to this concession and as a result, net costs associated with such
unproved properties of $21,279,000 and $92,000 as of December 31, 2010 and June
30, 2010, respectively, are excluded from amounts subject to amortization. The
majority of the evaluation activities are expected to be completed within the
next two years. As of December 31, 2010, based on our impairment review and our
intent to continue evaluation activities, there was no impairment indicated for
our excluded costs.
 
 We
incurred $21,080,000 of geological and geophysical costs and $107,000 of other
exploration costs for our Guinea Concession during the six months ended December
31, 2010, primarily related to our 3D seismic acquisition work which commenced
in August 2010.
 
 We
incurred $6,334,000 of geological and geophysical costs for our Guinea
Concession during the six months ended December 31, 2009.  In May
2010, upon obtaining the Republic of Guinea Presidential decree for the amended
PSC and an arête that officially allowed Dana to participate in the PSC, Dana
paid us a cash purchase price of $19.6 million for their 23% participation
interest. We recorded the $19.6 million received from Dana as a reduction in the
carrying value of our Guinea Concession and, after reducing our investment to
zero, we recognized a gain of $2,955,000, which represented the excess of the
$19.6 million over our net remaining investment in the Guinea Concession as of
the date the funds were received. Subsequent to reducing our investment in the
Guinea Concession to zero, we incurred $92,000 of additional costs, which
represent the carrying value at June 30, 2010.
  11
 
 4.
ACCOUNTS PAYABLE AND ACCRUED EXPENSES
 
 Accounts payable and accrued
expenses(in
thousands)as ofDecember
31, 2010 and
June 30, 2010include thefollowing:
 
 December 31,
                    2010
                  
                  
                  June 30,
                    2010Accounts
      payable – oil and gas exploration activities
                  
                  $
                  1,717
                  
                  
                  $
                  2,061Accrued
      payroll and bonus
                  
                  
                  1,038
                  
                  
                  
                  1,362Accrued
      – Other
                  
                  
                  290
                  
                  
                  
                  436$
                  3,045
                  
                  
                  $
                  3,859
 
 5. ACCOUNTS PAYABLE – SEISMIC
DATA
 
 Accounts
payable – seismic data reflects amounts due to a vendor under an agreement whose
repayment terms are subject to our selling seismic data related to our Guinea
concession originally procured from this vendor. During the six months ended
December 31, 2010 we did not sell any seismic data and we believe no amounts are
due under the agreement.
 
 6.
SHORT-TERM NOTES PAYABLE AND LONG-TERM DEBT
 
 Short-term
notes payable and long-term debt (in thousands) consists of the
following:
 
 December 31,
                      2010
                    
                    
                    June 30,
                      2010Installment
      notes payable
                    
                    $
                    53
                    
                    
                    $
                    160Less:  current
      portion
                    
                    
                    (53
                    )
                    
                    
                    (160
                    )Long
      term notes payable
                    
                    $
                    -
                    
                    
                    $
                    -
 
 During
the year ended June 30, 2010, we financed an insurance policy for an aggregate
amount of $178,000, with a down payment of $18,000. As of June 30, 2010, the net
amount outstanding on these notes was $160,000. The notes are payable over nine
months from inception in installments of approximately $18,000 per month and
accordingly for the six-month period ended December 31, 2010, payments of
$107,000 were made, leaving a balance of $53,000.
 
 7.
WARRANT DERIVATIVE LIABILITY
 
 Effective
July 1, 2009, we adopted FASB ASC Topic No. 815-40 (formerly EITF 07-05)
which defines determining whether an instrument (or embedded feature) is indexed
to an entity’s own stock.  This guidance specifies that a contract
that would otherwise meet the definition of a derivative but is both (a) indexed
to our own stock and (b) classified in stockholders’ equity in the statement of
financial position, would not be considered a derivative financial instrument
and provides a new two-step model to be applied in determining whether a
financial instrument or an embedded feature is indexed to an issuer’s own stock
and thus able to qualify for the scope exception.
 
 As a
result of this adoption, certain warrants previously treated as equity pursuant
to the derivative treatment exemption are no longer afforded equity treatment
because these warrants have a down-round provision applicable to the exercise
price. As a result, the warrants are not considered indexed to our stock, and as
such, all future changes in the fair value of these warrants will be recognized
currently in earnings in our consolidated statement of operations under the
caption “Other income (expense) – Gain (loss) on warrant derivative
liability” until such time as the warrants are exercised or
expire.
 
 The
exercise price of certain warrants issued to YA Global Investments, LP (“YA
Global”), which were completely exercised prior to December 31, 2010, were
subject to down-round provisions in the event we subsequently issue common
stock, stock warrants, stock options or convertible debt with a stock price,
exercise price or conversion price lower than YA Global’s exercise price,
originally $2.00 per share. If these provisions had triggered, YA Global would
have received warrants to purchase additional shares of common stock and a
reduction in the exercise price of all their warrants.
 
 As such,
effective July 1, 2009, we reclassified from additional paid-in capital, as a
cumulative effect adjustment, $1,585,000 to Warrant Derivative Liability to
recognize the fair value of the YA Global Warrants as if these warrants had been
treated as a derivative liability since their issuance in February 2008. We
recognized a loss of $478,000 related to the change in the fair market value of
these warrants during the six months ended December 31, 2009.
 
 In
November 2009, the YA Global warrants, then totaling 666,666 were reset to an
exercise price of $0.95 and into a total number of shares of
1,157,894.  In December 2009, these warrants, then totaling 1,157,894
were reset to an exercise price of $0.90 and into 1,222,222
shares.
  12
 
 In April
2010, YA Global exercised 520,000 of these warrants on a cashless basis. This
reduced the derivative liability by $722,000 and increased additional paid-in
capital by the same amount. The fair value of the YA Global Warrants
was $583,000 on June 30, 2010.
 
 In
September 2010, YA Global exercised 468,611 of these warrants on a cashless
basis. This reduced the derivative liability by $705,000 and increased
additional paid-in capital by the same amount. During the three months ended
September 30, 2010, we recognized a $771,000 non-cash loss related to the
remaining YA Global warrants.
  In
October 2010, YA Global exercised its remaining warrants into 161,608 shares of
stock on a cashless basis. As a result, we reduced the remaining derivative
liability by $649,000 and increased additional paid-in capital by the same
amount.  No warrant derivative liability exists as of December 31,
2010.
  8.
SHAREHOLDERS' EQUITY
  Agreement
with Certain Stockholders
  On July
21, 2010, we entered into two agreements (the “Letter Agreements”) with certain
holders of Common Stock in which an aggregate of 13,400,000 shares of our Common
Stock and Warrants to purchase an aggregate of 3,980,000 shares of our Common
Stock that are owned by the holders (the shares of Common Stock and shares of
Common Stock underlying the Warrants are collectively referred to as the
“Securities”) will be subject to certain lock-up restrictions.  The
holders have agreed that, during the period beginning on July 21, 2010, and
ending nine months later on April 21, 2011 (the “Restriction Period”), except
under certain circumstances discussed below and identified in the Letter
Agreements, without our written consent, they will not (i) sell, offer to sell,
contract to agree to sell, hypothecate, hedge, pledge, grant any option to
purchase, make any short sale or otherwise dispose of or agree to dispose of,
directly or indirectly, any of the 13,400,000 shares of Common Stock held by
them or the 3,980,000 shares that may be acquired pursuant to exercise of the
Warrants, or any of the 3,980,000 Warrants or (ii) enter into any swap or other
arrangement that transfers to another, in whole or in part, any of the economic
consequences of ownership of any of these Securities, whether any such
transaction is to be settled by delivery of such Securities, in cash or
otherwise.  During the Restriction Period (i) 15 percent of the
locked-up shares would be released from the lock-up if the stock price reaches
$3 a share for five days, which occurred in October 2010, (ii) 50 percent would
be released if the price reaches $5 a share for five days, which it did in
December 2010, and (iii) 100 percent would be released if the stock price
reaches $9 a share for five days.  Under the terms of the Letter
Agreements, the holders also agreed to donate an aggregate of 2,000,000 shares
of Common Stock and Warrants to purchase an aggregate of 1,000,000 shares of
Common Stock to the American Friends of Guinea, a charitable organization with
which we are working to provide support to the people of Guinea.
 
 The
Series B Agreement entered into between the Company and the holders of our
Series B preferred stock on September 29, 2009, which is more fully discussed in
this Note 8 below, was terminated under the terms of the Letter
Agreements.  Because the closing price of our common stock has reached
$3.00 and $5.00 per share for five consecutive trading days subsequent to the
execution of the Letter Agreements, 50% of the locked-up shares have been
released from the lock-up.
 
 On
December 30, 2010, in conjunction with the litigation settlement described in
Note 10 below, the Company entered into an Amendment to Lockup Agreements (the
“Amendment”) with certain holders of our common stock.  The Amendment
modifies the Lockup Agreements described above.  The Amendment reduced
the number of warrants to purchase shares of our common stock required to be
donated to the American Friends of Guinea by Michael Watts from 500,000 to
400,000.  Additionally, Kent Watts and Michael Watts have agreed to
donate to the American Friends of Guinea an amount in cash or shares of our
Common Stock equal in value to 50% of the Black Scholes valuation of 100,000
warrants, which valuation will be calculated using a price of $3.95 per share of
our Common Stock.
 
 Common
Stock issuances
 
 Six months ended December
31, 2010
 
 For
exercise of options:
 
 During
the six months ended December 31, 2010, 291,849 options were exercised for
total gross proceeds of $215,550. The options were exercised at prices ranging
from $0.31 to $2.00.
  13
 
 For
exercise of warrants for cash:
 
 During
the six months ended December 31, 2010, 5,109,378 warrants were exercised for
total gross proceeds of $6,169,150. The warrants were exercised at prices
ranging from $0.98 to $1.58.
 
 For
cashless exercise of warrants:
 
 During
the six months ended December 31, 2010, we issued 384,848 shares of common stock
to YA Global upon the cashless exercise of warrants to purchase 702,222 shares
of common stock.
 
 Private
placement of common stock:
 
 On
November 3, 2010, we entered into a Stock Purchase Agreement with
two institutional funds under management of affiliates of BlackRock
(collectively, the “Investors”) pursuant to which the Investors agreed to
purchase an aggregate of 15,000,000 shares of our Common Stock at a purchase
price of $2.00 per share in a private placement. At closing, we received
approximately $29.9 million, net of offering costs.
 
 Issuance
of common stock in Series A settlement:
 
 On
December 30, 2010, we entered into a litigation settlement whereby we issued
239,437 shares of our common stock. See Note 10.
 
 Employee
stock options
 
 During
the six months ended December 31, 2010, we granted options to purchase 771,000
shares of common stock to our employees and directors. The compensation
expense associated with employee stock options during the six months ended
December 31, 2010 was $1,168,000.
 
 Six months ended December
31, 2009
 
 Series
B Preferred Stockholders
  Prior to
the conversion of our Series B preferred stock on September 29, 2009, the Series
B stockholders were entitled to a 4% cumulative dividend on the stated value,
which was payable only upon conversion of the preferred stock. Dividends may be
paid in stock or cash at our option. During the six months ended December 31,
2009, dividends of $8,000 were accrued.
  On
September 29, 2009, we entered into an agreement (“the Series B Agreement”) with
the holders of all of our Series B preferred stock in which the Series B holders
(i) converted all of  their shares of Series B preferred stock into
approximately 15,822,222 shares of common stock, (ii) agreed to the cancellation
of warrants to purchase 1,000,000 shares of common stock, (iii) agreed to
donate, pursuant to a specified schedule, 2,000,000 shares of common stock,
issued upon conversion of the Series B preferred stock, and warrants to purchase
1,000,000 shares of common stock, to the American Friends of Guinea, a
charitable organization that provides support to the people of Guinea, and (iv)
agreed to be subject to a nine month lock-up of the 15,822,222 million shares of
common stock received in connection with the conversion of the Series B
preferred stock, and any shares that may be received upon exercise of their
warrants.  The common stock received upon conversion represented a
reduction of 2,000,000 shares that otherwise would have been issuable under the
original terms of the Series B preferred stock.
  Under the
terms of the Series B Agreement, if we completed an equity or debt financing
following the execution of the Series B Agreement of $10,000,000 or more, we
also agreed to (i)  pay a previously owed dividend in the aggregate
amount of approximately $430,000 to the Series B holders and (ii) subject to
market conditions, release from the lock-up provision described above, up to
1,000,000 shares of common stock received in connection with the Series B
preferred stock conversion in order to allow for resale by the Series B holders.
On April 23, 2010, following our April 20, 2010 registered direct offering, we
paid $430,000 to the Series B holders for previously owed
dividends.
 
 The
Series B Agreement was terminated as a result of the Letter Agreements discussed
above.
 
 Common Stock issuances
  During
the six months ended December 31, 2009, the Company issued 388,251
shares of common stock from its Stock and Stock Option plan to employees,
directors and consultants for services valued at $322,000. The
shares were valued using the market close price on the date of
grant.
  14
  On
November 12, 2009, we entered into a Shares Purchase Agreement with Enable
Growth Partners, L.P. (“Enable”), which held certain securities that were
previously issued by us.  Pursuant to the Shares Purchase Agreement,
we issued to Enable 1,578,948 shares of our common stock, par value $0.001
per share.  The aggregate net proceeds from the offering, after
deducting offering expenses payable by us, was approximately
$1,485,000.  The offering closed on November 17,
2009.
  On
December 3, 2009, the Company entered into a Securities Purchase Agreement
pursuant to which the Company agreed to sell an aggregate of 7,222,223 shares of
its common stock and warrants to purchase a total of 3,250,000 shares of its
common stock to institutional investors for gross proceeds of approximately $6.5
million.  The net proceeds to the Company from the offering, after
deducting placement agent fees and the Company’s offering expenses, were
approximately $6,045,000.  The placement agent also received warrants to
purchase 144,444 shares of common stock as additional
compensation.  The purchase price of a share of common stock and
fractional warrant was $0.90 with the warrants priced at $0.98.  Subject to
certain ownership limitations, the warrants were exercisable 181 days
following the closing date of the offering and expire four years following the
initial exercise date at an exercise price of $0.98. The offering closed on
December 7, 2009.
 
 Employee
stock options
 
 During
the six months ended December 31, 2009, we granted options to purchase 6,065,000
shares of common stock to the Company’s employees and
directors.   The compensation expense associated with employee
stock options during the six months ended December 31, 2009 was
$1,363,000.
 
 9.
STOCK OPTIONS AND WARRANTS
 
 On
February 18, 2010, at our annual meeting of stockholders, the stockholders
approved the 2010 Equity Incentive Plan (the “2010 Plan”). Prior to the 2010
stockholder meeting, we had two stock award plans: the Stock and Stock Option
Plan, which was adopted in 1997 (“1997 Plan”) and the 2008 Restricted Stock
Award Plan (“2008 Plan”). In conjunction with the approval of the 2010 Plan, the
1997 Plan and the 2008 Plan were terminated as of February 18,
2010.
 
 The 2010
Plan provides for the grants of shares of common stock, restricted stock units
or incentive stock options and/or nonqualified stock options to purchase our
common stock to selected employees, directors, officers, agents, consultants,
attorneys, vendors and advisors. Shares of common stock, options, or restricted
stock units can only be granted under this plan within 10 years from the
effective date of February 18, 2010. A maximum of 5,000,000 shares are issuable
under the 2010 Plan and at December 31, 2010, 3,255,000 shares remained issuable
under the 2010 Plan.
  The 2010
Plan provides a means to attract and retain the services of participants and
also to provide added incentive to such persons by encouraging stock ownership
in us. Plan grants are administered by the Compensation Committee, which has
substantial discretion to determine which persons, amounts, time, price,
exercise terms, and restrictions, if any.
  Additionally,
from time to time, we issue non-compensatory warrants, such as warrants issued
to investors.
 
 The fair
value of non-market based options or warrants are estimated using the
Black-Scholes valuation model. For market based options, the fair value was
estimated using a Black-Scholes option pricing model with inputs adjusted for
the probability of the vesting criteria being met and the median expected term
for each grant as determined by utilizing a Monte Carlo simulation. Expected
volatility is based solely on historical volatility of our common stock over the
period commensurate with the expected term of the stock options. We rely solely
on historical volatility as we do not have traded options. The expected term
calculation for stock options is based on the simplified method as described in
the SEC Staff Accounting Bulletin number 107. We use this method because we do
not have sufficient historical information on exercise patterns to develop a
model for expected term. The risk-free interest rate is based on the U. S.
Treasury yield in effect at the time of grant for an instrument with a maturity
that is commensurate with the expected term of the stock options. The dividend
yield rate of zero is based on the fact that we have never paid cash dividends
on our common stock and we do not intend to pay cash dividends on our common
stock.
 
 2010
Equity Incentive Plan
 
 Options
granted to employees during the six months ended December 31, 2010
were:
  ·
              In
      September 2010, we granted options to purchase 75,000 shares of common
      stock, 25,000 shares each to three employees. The options have an exercise
      price of $1.22 per share and a term of ten years and vest upon achieving a
      trading share price for our common stock of $3.00 per
      share.  These options had an estimated fair value of $43,000,
      the full amount of which we expensed during the six months ended December
      31, 2010.
  15
  ·
              In October 2010, we granted an
      option to an executive officer to purchase 100,000 shares of common stock.
      The options have an exercise price of $3.43 per share and a term of ten
      years and vest ratably over three years. These options had an estimated
      fair value of $275,000.
  ·
              In October 2010, we granted
      options to two new employees to purchase 280,000 shares of common stock.
      The options have ten year terms having exercise prices of $2.36 for one of
      the employees and $3.43 per share for the other employee. Each has an
      option to purchase 90,000 shares of common stock that vested immediately,
      and 50,000 shares of common stock that vest upon achieving a trading share
      price for our common stock of $3.00 per share. These options had an
      estimated fair value of $589,000, the full amount of which we expensed
      during the six months ended December 31,
  2010.
  ·
              In November 2010, we granted an
      option to a new director to purchase 50,000 shares of common stock. The
      option has an exercise price of $2.88 per share and a term of five years
      and vests ratably over two years. This option had an estimated fair value
      of $119,000.
  ·
              In December 2010, we granted
      options to all nonexecutive employees to purchase an aggregate of 216,000
      shares of common stock. The options have an exercise price of $3.08 per
      share and a term of ten years and vest ratably over three years. These
      options had an estimated fair value of
  $533,000.
 
 The
following table provides information about options granted and option related
expense during the six months ended December 31, 2010 and 2009:
 
 2010
                  
                  
                  2009Number
      of options granted
                  
                  
                  721,000
                  
                  
                  
                  6,065,000Compensation
      expense recognized as selling, general and administrative
      expense
                  
                  $
                  1,168,000
                  
                  
                  $
                  1,363,000Compensation
      cost capitalized
                  
                  
                  -
                  
                  
                  
                  -Weighted
      average fair value of options
                  
                  $
                  2.16
                  
                  
                  $
                  0.43
 
 The
following table details the significant assumptions used to compute the fair
market values of employee stock options granted during the six months ended
December 31, 2010 and 2009:
 
 2010
                  
                  
                  2009Risk-free
      interest rate
                  
                  
                  1.14-2.68
                  %
                  
                  
                  0.38-3.30
                  %Dividend
      yield
                  
                  
                  0
                  %
                  
                  
                  0
                  %Volatility
      factor
                  
                  
                  112-146
                  %
                  
                  
                  115-178
                  %Expected
      life (years)
                  
                  
                  0.9-5.0
                  
                  
                  
                  1.0
      - 7.5
 
 At
December 31, 2010, there was $2,666,000 of unrecognized compensation costs
related to non-vested share based compensation arrangements granted to employees
and directors under the plan. We expect to amortize this cost over the next
seven years.
 
 Summary
information regarding employee and director stock options issued and outstanding
as of December 31, 2010 is as follows:
 
 Options
                  
                  
                  Weighted
                    AverageShare
                    Price
                  
                  
                  Weighted
                    average
                    remaining
                    contractual
                    term (years)
                  
                  
                  Aggregate
                    intrinsic valueOutstanding
      at year ended June 30, 2010
                  
                  
                  7,998,760
                  
                  
                  $
                  0.91Granted
                  
                  
                  721,000
                  
                  
                  
                  2.85Exercised
                  
                  
                  (291,849
                  )
                  
                  
                  0.86Forfeited
                  
                  
                  (425,000
                  )
                  
                  
                  0.93Expired
                  
                  
                  (383,760
                  )
                  
                  
                  2.24Outstanding
      at December 31, 2010
                  
                  
                  7,619,151
                  
                  
                  $
                  1.02
                  
                  
                  
                  4.83
                  
                  
                  $
                  29,999,208
  16
 
 Options outstanding and exercisable as of December 31, 2010Exercise Price
                            
                            
                            Outstanding
                              Number of
                              Shares
                            
                            Remaining Life
                            
                            Exercisable
                              Number of Shares$
                            0.01 – 0.49
                            
                            
                            
                            55,000
                            
                            1
      year or less
                            
                            
                            55,000$
                            0.01 – 0.49
                            
                            
                            
                            45,000
                            
                            1
      year
                            
                            
                            45,000$
                            0.01 – 0.49
                            
                            
                            
                            3,600,000
                            
                            3
      years
                            
                            
                            977,500$
                            0.50 – 1.00
                            
                            
                            
                            35,000
                            
                            1
      year or less
                            
                            
                            35,000$
                            0.50 – 1.00
                            
                            
                            
                            40,000
                            
                            1
      year
                            
                            
                            40,000$
                            0.50 – 1.00
                            
                            
                            
                            110,000
                            
                            3
      years
                            
                            
                            50,000$
                            0.50 – 1.00
                            
                            
                            
                            300,000
                            
                            4
      years
                            
                            
                            100,000$
                            1.00 – 1.49
                            
                            
                            
                            13,151
                            
                            1
      year or less
                            
                            
                            13,151$
                            1.00 – 1.49
                            
                            
                            
                            920,000
                            
                            3
      years
                            
                            
                            840,000$
                            1.00 – 1.49
                            
                            
                            
                            1,074,000
                            
                            9
      years
                            
                            
                            210,000$
                            1.50 – 1.99
                            
                            
                            
                            581,000
                            
                            3
      years
                            
                            
                            290,333$
                            2.00 - 3.00
                            
                            
                            
                            140,000
                            
                            1
      year or less
                            
                            
                            140,000$
                            2.00 - 3.00
                            
                            
                            
                            60,000
                            
                            1
      year
                            
                            
                            60,000$
                            2.00 – 3.00
                            
                            
                            
                            190,000
                            
                            9
      years
                            
                            
                            140,000$
                            3.00 – 4.00
                            
                            
                            
                            456,000
                            
                            9
      years
                            
                            
                            140,0007,619,151
                            
                            
                            
                            
                            3,135,984
  Options
exercisable had an intrinsic value of $11,917,739 at December 31,
2010.
 
 Warrants
 
 During
the six months ended December 31, 2010, we did not grant any warrants and nine
holders of warrants exercised 5,109,378 warrants with exercise prices ranging
from $0.98 to $1.58 per share for total proceeds to us of $6,169,150.
Additionally, YA Global exercised the remaining 702,222 of its warrants on a
cashless basis and received 384,848 shares of our common stock.
 
 Summary
information regarding common stock warrants issued and outstanding as of
December 31, 2010 is as follows:
 
 Warrants
                    
                    
                    Weighted
                      Average
                      Share PriceOutstanding
      at year ended June 30, 2010
                    
                    
                    11,065,128
                    
                    
                    $
                    1.25Granted
                    
                    
                    -
                    
                    
                    
                    -Exercised
                    
                    
                    (5,811,600
                    )
                    
                    
                    1.17Cancelled
                    
                    
                    (100,000
                    )
                    
                    
                    4.00Expired
                    
                    
                    -
                    
                    
                    
                    -Outstanding
      at December 31, 2010
                    
                    
                    5,153,528
                    
                    
                    $
                    1.28
  Warrants outstanding and exercisable as of December 31, 2010Exercise Price
                                
                                
                                Outstanding
                                  Number of
                                  Shares
                                
                                Remaining
                                  Life
                                
                                Exercisable
                                  Number of
                                  Shares$
                                0.90
                                
                                
                                
                                3,480,000
                                
                                3
      years
                                
                                
                                3,480,000$
                                0.98
                                
                                
                                
                                221,666
                                
                                3
      years
                                
                                
                                221,666$
                                1.58
                                
                                
                                
                                230,770
                                
                                1
      years
                                
                                
                                230,770$
                                1.58
                                
                                
                                
                                821,092
                                
                                4
      years
                                
                                
                                821,092$
                                4.00
                                
                                
                                
                                400,000
                                
                                3
      years
                                
                                
                                400,0005,153 ,528
                                
                                
                                
                                
                                5,153,528
  The
outstanding warrants had an intrinsic value of $18,950,324 at December 31, 2010.
All of the 5,153,528 warrants outstanding at December 31, 2010, are
exercisable.
  17
  10.
COMMITMENTS AND CONTINGENCIES
 
 LITIGATION
AND OTHER LEGAL MATTERS
 
 From time
to time, we and our subsidiaries are involved in business disputes that may
occur in the ordinary course of business. We are unable to predict the outcome
of such matters when they arise. Other than disputes currently disclosed under
litigation, we are not aware of any other disputes that exist, and do not
believe that the ultimate resolution of such matters would have a material
adverse effect on our financial statements.
 
 Wellington
Lawsuit
 
 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 claimed 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 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
(United States), 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. Counterclaims were filed against us in this case.
 
 The
counterclaimants alleged that Hyperdynamics and its Officers and Directors
breached their fiduciary duties to shareholders and committed other tortuous
acts.
 
 On
December 30, 2010, we entered into a settlement agreement pursuant to which we
issued 239,437 shares of our common stock in connection with the conversion of
1,945 outstanding shares of Series A Preferred Stock. As part of the settlement,
we were relieved of any Series A Preferred Stock dividend payments, two former
officers agreed to the cancellation of an aggregate of 100,000 warrants which
had an exercise price of $4.00 and 7,500 shares of our common stock were
surrendered to us. As a result of this agreement, we were not required to issue
the full amount of convertible securities under the terms of the Series A
Preferred and we did not have to pay $372,000 of dividends we previously accrued
as payable. The common shares, based upon the stock price at the settlement
date, had a fair market value of $1,183,000. The exchange of those common shares
for the conversion of the Series A Preferred Stock, the elimination of the
corresponding dividend payable, and the cancellation of 100,000 warrants and
7,500 shares of our common stock was a capital transaction and no gain or loss
was recorded. We recorded $1,183,000 to additional paid-in capital, with a
corresponding charge to additional paid-in capital of $811,000, which
represented the difference between the fair market value of the common shares
issued for settlement and the elimination of the accrued dividend payable
related to the Series A Preferred Stock, resulting in a net credit to additional
paid-in capital of $372,000.
 
 Ashley
and Wilburn Lawsuits
 
 Trendsetter
Production Company was named in two separate lawsuits, Raymond Thomas et al v.
Ashley Investment et al and Wilburn L. Atkins   and Malcolm L.
Mason Jr. vs. BP America Production et al, Nos. 38,839 and 41,913-B,
respectively, “C”, 5th  Judicial District Court, Parish of Richland,
State of Louisiana. These cases are environmental cleanup cases involving wells
operated by Trendsetter prior to our acquisition of Trendsetter. These cases are
in the early discovery stage and our attorneys are developing strategies to
defend the suits. We believe losses from these cases are possible; however, the
loss or range of loss cannot be reasonably estimated.
 
 Contingent
notes payable
 
 Our
subsidiary, SCS, has $350,000 remaining of a contingent note payable due to the
former owners of SCS Corporation's assets. It is payable in our common stock and
it is payable only if SCS has net income in any given quarter. If SCS
experiences net income in a quarter, 25% of the income will be paid against the
note, until the contingency is satisfied.
  18
  PGS
Geophysical AS, Norway
 
 On June
11, 2010, we entered into an Agreement for the Supply of Marine Seismic Data
(“3D Seismic Contract”) with PGS Geophysical AS, Norway
(“PGS”).  Under the terms of the 3D Seismic Contract, PGS agreed to
conduct the acquisition phase of a 3,635 square kilometer 3D seismic survey of
the area that is subject to our rights, or concession, to explore and exploit
offshore oil and gas reserves off the coast of Guinea.  The intended
purpose of the 3D seismic survey was to obtain detailed imaging of the multiple
prospects which were identified from our prior 2D seismic data acquisition over
the concession.
 
 Under the
terms of the 3D Seismic Contract, PGS agreed to carry out the survey in two
separate portions that commenced in August 2010.  The 3D Seismic
Contract was initially for $21.0 million, including mobilization and
demobilization expenses. The acquisition work was completed in December 2010,
with a final cost under the 3D Seismic Contract of approximately $24.7 million,
including mobilization and demobilization expenses.  Our share of the
cost was 77% of that amount, or approximately $19.0 million. Under the terms of
the 3D Seismic Contract, we secured a Letter of Credit in the amount of $21.0
million for the sole purpose of funding this seismic acquisition. As work was
performed and invoiced, PGS submitted draw documents to the institution the
letter of credit was with for payment of such invoices under the terms of the
agreement.
 
 The
Letter of Credit was through Amegy Bank N.A. and the Letter of Credit
Reimbursement Agreement was entered into on July 15, 2010. The Letter of Credit
was secured by a Certificate of Deposit, which was funded in the amount of $21.0
million on July 8, 2010 bearing interest at a rate of 0.25% per annum. We
incurred an issuance fee of $76,000 with respect to the Letter of
Credit.
 
 All such
payments have been made under this agreement and accordingly the Letter of
Credit is no longer in effect as of December 31, 2010.
 
 PGS
Americas, Inc.
 
 We have
contracted with PGS Americas, Inc. to process the data from the 3D seismic
acquisition surveys. The seismic data processing contract was for $2.5 million
and is expected to be completed in the first quarter of 2011. The processing
costs incurred as of December 31, 2010 amount to approximately $677,000 with our
77% share being approximately $521,000.
 
 AGR
Peak Well Management Limited
 
 We have
contracted with AGR Peak Well Management Limited (“AGR”) to manage our
exploration drilling project in offshore Republic of Guinea. AGR will handle
well construction project management services, logistics, and tendering of
materials as well as overall management responsibilities for the drilling
program. The drilling project management contract, entered into on November 30,
2010, was for an estimated $6.8 million, of which we expect our share to be 77%
of that amount.  In the event we terminate this contract, AGR would
invoice us for services carried out to date and for any commitments made on
behalf of us, including termination fees. In the event we terminate this
contract without cause and we enter into direct contracts for the drilling rig,
vessels and third party services previously held by AGR, then we would reimburse
AGR cancellation fees of $500,000, The costs incurred as of December 31, 2010
amount to approximately $63,000 with our 77% share being approximately
$49,000.
 
 Operating
Leases
 
 We lease
office space under long-term operating leases with varying terms. Most of the
operating leases contain renewal and purchase options. We expect that in the
normal course of business, the majority of operating leases will be renewed or
replaced by other leases.
 
 The
following is a schedule by years of minimum future rental payments required
under operating leases that have initial or remaining noncancellable lease terms
in excess of one year as of December 31, 2010:
 
 Years
      ending June 30:
                      (in
      thousands)2011
                    
                    $
                    1072012
                    
                    
                    2212013
                    
                    
                    2412014
                    
                    
                    2682015
                    
                    
                    194Total
      minimum payments required
                    
                    $
                    1,031
 
 Rent
expense included in net loss from operations for the six-month periods ended
December 31, 2010 and 2009 was $122,000 and   $90,000,
respectively.
  19
  Environmental
Contingencies
 
 Because
we are engaged in extracting natural resources, our business is subject to
various Federal, state and local provisions regarding the environment.
Compliance with environmental laws may, in certain circumstances, 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 prohibitive to our operations since our inception.
 
 11.
SUBSEQUENT EVENTS
 
 Warrants
Exercised
  Warrant
exercises since December 31, 2010 include:
  ·
              650,989
      warrants with strike prices ranging from of $0.98 to $1.58 were exercised
      for proceeds of $902,063.
  Stock
Options Exercised
  Stock
option exercises since December 31, 2010 include:
  ·
              150,000
      options with strike prices ranging from of $0.24 to $1.06 were exercised
      for proceeds of $118,000.
 
 Equity
transactions
 
 Significant
stock options granted, forfeited or expired since December 31, 2010,
include:
 
 ·
              A
      stock option for 30,000 shares granted under the 2010 Plan with a strike
      price of $5.04, and a ten year life. This option vests ratably over
      three years and had an estimated fair value on the date of grant of
      $121,000.
 
 ·
              No
      stock options have been forfeited, cancelled or expired since December 31,
      2010.
  20
  Item
2. Management's Discussion and Analysis of Financial Condition and Results of
Operations
  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, or on behalf of,
us. This quarterly report on Form 10-Q 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 are believed by us 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 the
view of us, could cause actual results to differ materially from those discussed
in the forward-looking statements: the ability of us to respond to changes in
the oil and gas exploration and production environment, competition, the
availability of financing, and, if available, on terms and conditions acceptable
to us, and the availability of personnel in the future.
  Overview
 
 Our
corporate mission is to provide energy for the future by exploring for,
developing new, and re-establishing pre-existing sources of energy
worldwide.  We are currently exploring for oil and gas offshore
Guinea, West Africa.
 
 We devote
a substantial portion of our efforts to obtaining additional PSC participants to
help fund our exploration and development of sub-surface hydrocarbons in
commercial quantities offshore Guinea.   We intend to continue
acquiring, exploring and developing oil and gas properties on a global
basis.  At this time, we have no source of operating revenue and there
is no assurance when we will, if ever.  We have no operating cash
flows and require substantial additional funds to fulfill our business
plans.
 
 Our
operating plan within the next 12 months includes the following:
  ·
              Obtaining
      funds and completing technical work and planning with Dana Petroleum
      (E&P) Limited (“Dana”) and prospective participants in our concession
      to drill offshore Guinea in late 2011. If we add other PSC participants,
      we would expect to include the assignment of a portion of our interest in
      the Guinea Concession to such
participants.
  ·
              Processing
      and interpreting the 3D seismic survey, the acquisition of which was
      completed in December 2010. This will allow for identification of one or
      more proposed drilling locations.
  Results of
Operations
 
 Based on
the factors discussed below for our international segment, discontinued
operations and for corporate overhead, the net loss attributable to common
shareholders for the six months ended December 31, 2010 decreased $50,000, or
1%, from a net loss of $6,215,000, or $0.08 per share in the 2010 period to a
net loss of $6,165,000, or $0.06 per share in the 2011 period.  The
net loss chargeable to common shareholders in the 2009 period includes a
provision for preferred stock dividends of $8,000.
  21
 
 Reportable
segments
  We have
one reportable segment: our international operations in Guinea conducted
through our subsidiary SCS. SCS is engaged in oil and gas exploration activities
pertaining to offshore Guinea. During the year ended June 30, 2009, our
domestic operations were discontinued, and as of August 2009, all the assets
associated with HYD, which was our domestic subsidiary that held certain
producing oil and gas properties located in Louisiana, were
sold.
 
 Three
months ended December 31, 2010 Compared to Three Months Ended December 31,
2009
 
 Revenues.  There
were no revenues for the three months ended December 31, 2010 and 2009. We
have focused on the acquisition and interpretation of 3D seismic data for our
concession in Guinea.
 
 Depreciation.  Depreciation
increased 145%, or $42,000 due to additional depreciation associated with assets
placed in service over this period of time. Depreciation expense was $71,000 and
$29,000 in the three months ended December 31, 2010 and 2009,
respectively.
 
 Selling, General and
Administrative Expenses. Our selling, general and administrative
expenses were $3,218,000 and $3,038,000 for the three months ended December 31,
2010 and 2009, respectively. This represents an increase of 6%, or $180,000. As
our staff has increased between the periods, the increase in expense was
primarily employee-related costs, which include salaries, bonuses and
stock-based compensation related to options granted to employees and
others.
 
 Other income
(expense). Other income (expense) totaled income of $7,000 and expense of
($1,217,000) for the three months ended December 31, 2010 and 2009,
respectively. During the fiscal 2011 period, we recognized only net interest
income, as we had virtually no debt and the warrant derivative liability has
been resolved this quarter upon the exercise of the last warrants underlying the
derivative. Comparatively, in the fiscal 2010 period, we recognized a non-cash
loss on the derivative liability related to the YA Global warrants of
($423,000), interest expense of ($496,000), and loss on settlement of debt of
($298,000) primarily attributable to interest expense and retirement costs on
debentures.
 
 Loss from Continuing
Operations. Based on the expenses discussed above, our loss from
operations decreased by 23%, or $1,002,000, from $4,284,000 in the three months
ended December 31, 2009 to $3,282,000 for the three months ended December 31,
2010.
 
 Discontinued
Operations. There were no discontinued operations for the three months
ended December 31, 2010 while there was a loss of $3,000 for the three months
ended December 31, 2009.
 
 Six
months ended December 31, 2010 Compared to Six Months Ended December 31,
2009
 
 Revenues.  There
were no revenues for the six months ended December 31, 2010 and 2009. We
have focused on the acquisition and interpretation of 3D seismic data for our
concession in Guinea.
 
 Depreciation.  Depreciation
increased 139%, or $82,000 due to additional depreciation associated with assets
placed in service over this period of time. Depreciation expense was $141,000
and $59,000 in the six months ended December 31, 2010 and 2009,
respectively.
 
 Selling, General and
Administrative Expenses. Our selling, general and administrative
expenses were $5,267,000 and $5,426,000 for the six months ended December 31,
2010 and 2009, respectively. This represents a decrease of 3%, or
$159,000.
 
 Other income
(expense). Other income (expense) totaled expense of ($757,000) and
expense of ($1,487,000) for the six months ended December 31, 2010 and 2009,
respectively. During the fiscal 2011 period, we recognized a non-cash loss on
the derivative liability related to the YA Global warrants of ($771,000)
compared to a non-cash loss on the derivative liability related to the YA Global
warrants of ($478,000) in the fiscal 2010 period.  Interest income,
net was $14,000 for the fiscal 2011 period compared to interest expense of
($711,000) for the fiscal 2010 period and loss on settlement of debt of
($298,000) primarily attributable to interest expense and retirement costs on
debentures. There was virtually no debt during the fiscal 2011
period.
 
 Loss from Continuing
Operations. Based on the expenses discussed above, our loss from
operations decreased by 12%, or $807,000, from $6,972,000 in the six months
ended December 31, 2009 to $6,165,000 for the six months ended December 31,
2010.
 
 Discontinued
Operations. There were no discontinued operations for the six months
ended December 31, 2010 while there was a gain of $765,000 for the six months
ended December 31, 2009.
  22
 
 Liquidity
and Capital Resources
 
 Going
Concern Considerations
 
 As
indicated in our auditors’ report dated September 28, 2010 contained in our
Annual Report on Form 10-K for the fiscal year ended June 30, 2010, our
financial statements were prepared assuming we will continue as a going concern.
As discussed in the notes to those financial statements, we do not have revenues
from operations, and we had significant financial commitments in excess of our
then current capital resources. It was noted that our ability to continue as a
going concern was dependent upon our ability to obtain additional funding. Since
June 30, 2010, we have raised $6.4 million from warrants and stock option
exercises, and on November 3, 2010, raised $29.9 million from the sale of common
stock to funds managed by BlackRock. As a result, we have adequate capital
resources to meet our working capital requirements for the next twelve
months.
  You
should carefully consider the risks described in our Annual Report on Form 10-K
for the fiscal year ended June 30, 2010 in evaluating our company.  We
will require substantial additional funding to drill wells in offshore Guinea,
either from capital raised, sales of participation interests, or through other
means. Other risks include our ability to respond to changes in the oil
exploration and production environment, competition for, and the availability
of, personnel in the future to support our activities; the PSC Amendment is
subject to renegotiation under certain circumstances and there is no assurance
that these negotiations will result in a mutually acceptable
agreement.   We operate in Guinea, a country where corrupt behavior
exists that could impair our ability to do business in the future or result in
significant fines or penalties.   There are significant risks
associated with operating in Guinea.
  Liquidity
 
 We are
committed under the PSC to spud our first well by December 31,
2011.  We estimate the cost to be $50 million on a gross basis, or
$38.5 million for our current 77% interest in the Guinea
Concession.  We plan to sell additional participation interests and/or
raise additional funds to help fund our impending drilling program.
  On
December 31, 2010, we had $35,369,000 in cash and restricted cash and $3,888,000
in liabilities. The liabilities are comprised of current liabilities of
$3,748,000 and noncurrent liabilities of $140,000.  Net cash used in
operating activities for continuing operations for the six months ended December
31, 2010 was $5,911,000 compared to $5,342,000 for the six months ended December
31, 2009. Cash used in investing activities for continuing operations for the
six months ended December 31, 2010 was $21,070,000 compared to $2,558,000 in the
six months ended December 31, 2009. This increase was primarily due to our
3D seismic acquisition. There was net cash provided by financing activities for
the six months ended December 31, 2010 of $36,160,000 compared to $6,857,000
during the six months ended December 31, 2009. This increase was primarily due
to the stock sale to BlackRock and the proceeds from warrant and stock option
exercises.
 
 Liquidity
Effects of Discontinued Operations
 
 On April
1, 2009, we executed a contract to sell all of our working interests in our U.S.
domestic oil and gas properties for $2,670,000.  The third and final
installment under the agreement was completed in August 2009.  The
cash flows from discontinued operations are separately reported in the
Consolidated Statements of Cash Flows for all periods
presented.  While this transaction improved our short term liquidity
at that time, it also eliminated our sole revenue
source.  Accordingly, the liquidity implication of the discontinued
operations is that we will require additional funding from debt or equity
sources or from an additional participant in our Guinea
concession.
 
 Item
3. Quantitative and Qualitative Disclosures About Market Risk
 
 Our
functional currency is the US dollar. We have some foreign currency exchange
rate risk resulting from our in-country office in Guinea. US dollars are
accepted in Guinea and many of our purchases and purchase obligations, such as
our office lease in Guinea, are denominated in US dollars. However, our costs
for labor, supplies, and fuel could increase if the Guinea Franc appreciates
against the US dollar. We do not hedge the exposure to currency rate
changes.
 
 Item
4. Controls and Procedures
 
 Disclosure
Controls and Procedures
 
 We
conducted an evaluation, under the supervision and with the participation of our
management, including our Chief Executive Officer and Principal Financial
Officer, of the effectiveness of the design and operation of our disclosure
controls and procedures. The term “disclosure controls and procedures,” as
defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act means controls
and other procedures of a company that are designed to ensure that information
required to be disclosed by us in the reports we file or submit under the
Exchange Act is recorded, processed, summarized and reported, within the time
periods specified in the Commission’s rules and forms.  Disclosure
controls and procedures also include, without limitation, controls and
procedures designed to ensure that information required to be disclosed by a
company in the reports that it files or submits under the Exchange Act is
accumulated and communicated to our management, including its principal
executive and principal financial officers, or persons performing similar
functions, as appropriate to allow timely decisions regarding required
disclosure.  Based upon that evaluation, our principal executive and
principal financial officers concluded that our disclosure controls and
procedures were effective at December 31, 2010.
  23
  Internal
Control over Financial Reporting
 
 There was
no change in our control over financial reporting during the first six months of
2010 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
 
 As stated
in Note 10 to the financial statements in this Quarterly Report on Form 10-Q, we
have been involved in a lawsuit known as the Wellington lawsuit which commenced
on November 5, 2001 in the Superior Court of Fulton County, state of
Georgia.
 
 On
December 30, 2010, we entered into a settlement agreement pursuant to which we
issued 239,437 shares of our common stock in connection with the conversion of
1,945 outstanding shares of Series A Preferred Stock.  As part of the
settlement, we were relieved of any Series A Preferred Stock dividend payments,
two former officers agreed to the cancellation of an aggregate of 100,000
warrants which had an exercise price of $4.00 and 7,500 shares of our common
stock were surrendered to us. As a result of this agreement, we were not
required to issue the full amount of convertible securities under the terms of
the Series A Preferred and we did not have to pay $372,000 of dividends we
previously accrued as payable.
  Item
1A. Risk Factors
 
 None.
 
 Item
2. Unregistered Sales of Equity Securities and Use of Proceeds
 
 None.
 
 Item
3. Defaults upon Senior Securities
 
 None.
 
 Item
4. Submission of Matters to a Vote of Security Holders
 
 None.
 
 Item
5. Other Information
 
 None.
 
 Item
6. Exhibits
  Exhibit
                  Number
                Description3.1.1
                Certificate
      of Incorporation (1)3.1.2
                Certificate
      of Amendment of Certificate of Incorporation, dated January 21, 1997
      (1)3.1.3
                Certificate
      of Amendment of Certificate of Incorporation, dated September 20, 1999
      (1)3.1.4
                Certificate
      of Amendment of Certificate of Incorporation, dated December 22, 2003
      (1)3.1.5
                Series
      B Certificate of Designation (5)3.2
                By-laws
      (1)
  24
  3.3
                Amendment
      to Bylaws (2)4.1
                Form
      of Common Stock Certificate (3)4.2
                Warrant
      issued to Trendsetter Investors, LLC on June 12, 2007
  (4)10.1
                Hydrocarbon
      Production Sharing Contract (PSA) between SCS Corporation and the Republic
      of Guinea, dated September 22, 2006 (6)10.2
                Amendment
      No. 1 to the Hydrocarbons Production Sharing Contract between SCS
      Corporation and the Republic of Guinea, dated March 25, 2010
      (11)10.3*
                Employment
      Agreement between Hyperdynamics and Jason D. Davis, dated June 17, 2009
      (8)10.4*
                Amendment
      No. 1 to the Employment Agreement between Hyperdynamics Corporation and
      Jason D. Davis, dated October 16, 2009 (20)10.5*
                Employment
      Agreement between Hyperdynamics and Ray Leonard, dated July 22, 2009
      (9)10.6*
                Amendment
      No. 1 to Employment Agreement between Hyperdynamics Corporation and Ray
      Leonard, dated December 11, 2009 (15)10.7
                Sale
      and Purchase Agreement between Hyperdynamics Corporation and Dana
      Petroleum (E&P) Limited, effective as of  December 4, 2009
      (12)10.8
                Letter
      Agreement between Hyperdynamics Corporation and Dana Petroleum (E&P)
      Limited, dated December 2, 2009 (12)10.9
                Operating
      Agreement between SCS Corporation and Dana Petroleum (E&P) Limited,
      dated January 28, 2010 (16)10.10
                Lease
      Agreement between Hyperdynamics Corporation and Parkway Properties LP,
      dated December 29, 2009 (17)10.11
                Memorandum
      of Understanding between the Government of the Republic of Guinea and SCS
      Corporation, dated September 11, 2009 (English translation)
      (7)10.12
                Lock-up
      Agreement among Hyperdynamics and certain Stockholders, dated July 21,
      2010 (13)10.13
                Lock-up
      Agreement among Hyperdynamics and TWJ Navigation, Inc., dated July 21,
      2010 (13)10.14
                Marine
      2D Seismic Data Acquisition Services Agreement between Hyperdynamics
      Corporation and Bergen Oilfield Services AS of Norway, dated September 29,
      2009 (18)10.15
                3D
      Seismic Contract between PGS Geophysical AS, Norway and Hyperdynamics
      Corporation, dated June 11, 2010 (21)10.16
                Amendment
      to Lock-up Agreement among Hyperdynamics and certain stockholders dated
      December 30, 2010 (23)10.17*
                2010
      Equity Incentive Plan (10)10.18*
                Form
      of Incentive Stock Option Agreement (10)10.19*
                Form
      of Non-Qualified Stock Option Agreement (10)10.20*
                Form
      of Restricted Stock Agreement (10)10.21
                Master
      Service Agreement for Geophysical Data Processing Services between SCS
      Corporation and PGS Data Processing, Inc., dated July 2, 2010
      (21)10.22
                Supplemental
      Agreement No. 1 to Master Service Agreement between SCS Corporation and
      PGS Data Processing, Inc., dated July 2, 2010
    (21)10.23
                Form
      of Stock Purchase Agreement, dated November 3, 2010 among Hyperdynamics
      Corporation and the Investors
(22)
  25
  10.24
                Form
      of Registration Rights Agreement, dated November 3, 2010 among
      Hyperdynamics Corporation and the Investors (22).14.1
                Code
      of Ethics (1)31.1**
                Certification
      of Chief Executive Officer of Hyperdynamics Corporation required by Rule
      13a-14(a) of the Securities Exchange Act of 1934, as adopted pursuant to
      Section 302 of the Sarbanes-Oxley Act of 200231.2**
                Certification
      of Chief Financial Officer and Principal Accounting Officer of
      Hyperdynamics Corporation required by Rule 13a-14(a) of the Securities
      Exchange Act of 1934, as adopted pursuant to Section 302 of the
      Sarbanes-Oxley Act of 200232.1**
                Certification
      of Chief Executive Officer of Hyperdynamics Corporation pursuant to
      Section 906 of the Sarbanes-Oxley Act of 2002 and Section 1350 of Chapter
      63 of Title 18 of the United States Code (18 U.S.C.
  1350)32.2**
                Certification
      of Principal Financial Officer and Principal Accounting Officer of
      Hyperdynamics Corporation pursuant to Section 906 of the Sarbanes-Oxley
      Act of 2002 and Section 1350 of Chapter 63 of Title 18 of the United
      States Code (18 U.S.C. 1350)
  *
                Management
      contracts or compensatory plans or arrangements.**
                Filed
      herewith.(1)
                Incorporated
      by reference to Form 10-KSB/A filed May 16, 2005.(2)
                Incorporated
      by reference to Form 8-K filed March 9, 2009.(3)
                Incorporated
      by reference to Form S-1 filed January 12, 2006, as
    amended.(4)
                Incorporated
      by reference to Form 8-K filed June 18, 2007.(5)
                Incorporated
      by reference to Form 8-K filed June 15, 2001.(6)
                Incorporated
      by reference to Form 8-K filed September 28, 2006.(7)
                Incorporated
      by reference to Form 8-K filed September 15, 2009.(8)
                Incorporated
      by reference to Form 8-K filed July 6, 2009.(9)
                Incorporated
      by reference to Form 8-K filed July 23, 2009.(10)
                Incorporated
      by reference to Form S-8 filed June 14, 2010.(11)
                Incorporated
      by reference to Form 8-K, dated March 31, 2010.(12)
                Incorporated
      by reference to Form 8-K, filed December 7, 2009.(13)
                Incorporated
      by reference to Form 8-K filed July 27, 2010.(14)
                Intentionally
      omitted.(15)
                Incorporated
      by reference to Form 8-K, dated December 11, 2009.(16)
                Incorporated
      by reference to Form 8-K, dated January 29, 2010.(17)
                Incorporated
      by reference to Form 8-K, dated January 6, 2010.(18)
                Incorporated
      by reference to Form 8-K filed October 2, 2009.(19)
                Incorporated
      by reference to Form 8-K filed May 14, 2010.(20)
                Incorporated
      by reference to Form 8-K filed on October 16, 2009.(21)
                Incorporated
      by reference to Form 10-K filed on September 28, 2010.(22)
                Incorporated
      by reference to Form 8-K filed on November 4, 2010.(23)
                Incorporated
      by reference to Form 8-K filed January 6,
2011.
  26
 
 Signatures
 
 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 authorized.
 
 Hyperdynamics
      Corporation(Registrant)By:
              /s/ Ray LeonardRay
      LeonardChief
      Executive Officer
 
 Dated:
February 14, 2011
 
 By:
              /s/ Jason DavisJason
      DavisPrincipal
      Financial OfficerPrincipal
      Accounting Officer
 
 Dated:
February 14, 2011
  27
  Exhibit
Index
 
 Exhibit
                    Number
                  Description3.1.1
                  Certificate
      of Incorporation (1)3.1.2
                  Certificate
      of Amendment of Certificate of Incorporation, dated January 21, 1997
      (1)3.1.3
                  Certificate
      of Amendment of Certificate of Incorporation, dated September 20, 1999
      (1)3.1.4
                  Certificate
      of Amendment of Certificate of Incorporation, dated December 22, 2003
      (1)3.1.5
                  Series
      B Certificate of Designation (5)3.2
                  By-laws
      (1)3.3
                  Amendment
      to Bylaws (2)4.1
                  Form
      of Common Stock Certificate (3)4.2
                  Warrant
      issued to Trendsetter Investors, LLC on June 12, 2007
  (4)10.1
                  Hydrocarbon
      Production Sharing Contract (PSA) between SCS Corporation and the Republic
      of Guinea, dated September 22, 2006 (6)10.2
                  Amendment
      No. 1 to the Hydrocarbons Production Sharing Contract between SCS
      Corporation and the Republic of Guinea, dated March 25, 2010
      (11)10.3*
                  Employment
      Agreement between Hyperdynamics and Jason D. Davis, dated June 17, 2009
      (8)10.4*
                  Amendment
      No. 1 to the Employment Agreement between Hyperdynamics Corporation and
      Jason D. Davis, dated October 16, 2009 (20)10.5*
                  Employment
      Agreement between Hyperdynamics and Ray Leonard, dated July 22, 2009
      (9)10.6*
                  Amendment
      No. 1 to Employment Agreement between Hyperdynamics Corporation and Ray
      Leonard, dated December 11, 2009 (15)10.7
                  Sale
      and Purchase Agreement between Hyperdynamics Corporation and Dana
      Petroleum (E&P) Limited, effective as of  December 4, 2009
      (12)10.8
                  Letter
      Agreement between Hyperdynamics Corporation and Dana Petroleum (E&P)
      Limited, dated December 2, 2009 (12)10.9
                  Operating
      Agreement between SCS Corporation and Dana Petroleum (E&P) Limited,
      dated January 28, 2010 (16)10.10
                  Lease
      Agreement between Hyperdynamics Corporation and Parkway Properties LP,
      dated December 29, 2009 (17)10.11
                  Memorandum
      of Understanding between the Government of the Republic of Guinea and SCS
      Corporation, dated September 11, 2009 (English translation)
      (7)10.12
                  Lock-up
      Agreement among Hyperdynamics and certain Stockholders, dated July 21,
      2010 (13)10.13
                  Lock-up
      Agreement among Hyperdynamics and TWJ Navigation, Inc., dated July 21,
      2010 (13)10.14
                  Marine
      2D Seismic Data Acquisition Services Agreement between Hyperdynamics
      Corporation and Bergen Oilfield Services AS of Norway, dated September 29,
      2009 (18)10.15
                  3D
      Seismic Contract between PGS Geophysical AS, Norway and Hyperdynamics
      Corporation, dated June 11, 2010
(21)
  28
  10.16
                Amendment
      to Lock-up Agreement among Hyperdynamics and certain stockholders dated
      December 30, 2010 (23)10.17*
                2010
      Equity Incentive Plan (10)10.18*
                Form
      of Incentive Stock Option Agreement (10)10.19*
                Form
      of Non-Qualified Stock Option Agreement (10)10.20*
                Form
      of Restricted Stock Agreement (10)10.21
                Master
      Service Agreement for Geophysical Data Processing Services between SCS
      Corporation and PGS Data Processing, Inc., dated July 2, 2010
      (21)10.22
                Supplemental
      Agreement No. 1 to Master Service Agreement between SCS Corporation and
      PGS Data Processing, Inc., dated July 2, 2010
    (21)10.23
                Form
      of Stock Purchase Agreement, dated November 3, 2010 among Hyperdynamics
      Corporation and the Investors (22)10.24
                Form
      of Registration Rights Agreement, dated November 3, 2010 among
      Hyperdynamics Corporation and the Investors (22).14.1
                Code
      of Ethics (1)31.1**
                Certification
      of Chief Executive Officer of Hyperdynamics Corporation required by Rule
      13a-14(a) of the Securities Exchange Act of 1934, as adopted pursuant to
      Section 302 of the Sarbanes-Oxley Act of 200231.2**
                Certification
      of Chief Financial Officer and Principal Accounting Officer of
      Hyperdynamics Corporation required by Rule 13a-14(a) of the Securities
      Exchange Act of 1934, as adopted pursuant to Section 302 of the
      Sarbanes-Oxley Act of 200232.1**
                Certification
      of Chief Executive Officer of Hyperdynamics Corporation pursuant to
      Section 906 of the Sarbanes-Oxley Act of 2002 and Section 1350 of Chapter
      63 of Title 18 of the United States Code (18 U.S.C.
  1350)32.2**
                Certification
      of Principal Financial Officer and Principal Accounting Officer of
      Hyperdynamics Corporation pursuant to Section 906 of the Sarbanes-Oxley
      Act of 2002 and Section 1350 of Chapter 63 of Title 18 of the United
      States Code (18 U.S.C. 1350)
  *
                Management
      contracts or compensatory plans or arrangements.**
                Filed
      herewith.(1)
                Incorporated
      by reference to Form 10-KSB/A filed May 16, 2005.(2)
                Incorporated
      by reference to Form 8-K filed March 9, 2009.(3)
                Incorporated
      by reference to Form S-1 filed January 12, 2006, as
    amended.(4)
                Incorporated
      by reference to Form 8-K filed June 18, 2007.(5)
                Incorporated
      by reference to Form 8-K filed June 15, 2001.(6)
                Incorporated
      by reference to Form 8-K filed September 28, 2006.(7)
                Incorporated
      by reference to Form 8-K filed September 15, 2009.(8)
                Incorporated
      by reference to Form 8-K filed July 6, 2009.(9)
                Incorporated
      by reference to Form 8-K filed July 23, 2009.(10)
                Incorporated
      by reference to Form S-8 filed June 14, 2010.(11)
                Incorporated
      by reference to Form 8-K, dated March 31, 2010.(12)
                Incorporated
      by reference to Form 8-K, filed December 7, 2009.(13)
                Incorporated
      by reference to Form 8-K filed July 27, 2010.(14)
                Intentionally
      omitted.(15)
                Incorporated
      by reference to Form 8-K, dated December 11, 2009.(16)
                Incorporated
      by reference to Form 8-K, dated January 29, 2010.(17)
                Incorporated
      by reference to Form 8-K, dated January 6, 2010.(18)
                Incorporated
      by reference to Form 8-K filed October 2, 2009.(19)
                Intentionally
      Omitted.(20)
                Incorporated
      by reference to Form 8-K filed on October 16, 2009.(21)
                Incorporated
      by reference to Form 10-K filed on September 28, 2010.(22)
                Incorporated
      by reference to Form 8-K filed on November 4, 2010.(23)
                Incorporated
      by reference to Form 8-K filed January 6,
2011.
  29