Document:

Exhibit 10.3 -- CLOSING STATEMENT

                         JOINT DISBURSEMENT INSTRUCTIONS
                           FOR CLOSING:  JUNE 22, 2006

     The undersigned do hereby:

     1.     Acknowledge  the  acceptance  of  subscriptions  from  purchasers
representing  gross  proceeds  of  $2,000,000  from  the issuance of Convertible
Debentures of HYPERDYNAMICS CORPORATION, a Delaware corporation (the "Company").
                                                                      -------

     2.     Represent  that all conditions precedent to closing of the Company's
offering  of  the  Convertible  Debentures  pursuant  to the Securities Purchase
Agreement  have  been  satisfied  or  waived;  and

     3.     Agree  that  gross  proceeds shall be disbursed via wire transfer in
immediately  available  U.S.  funds,  payable  to  the  following  parties:

Gross Proceeds:  From Cornell Capital Partners, LP                  $2,000,000

Less:            Commitment Fee (9% of Gross Proceeds) to            ($180,000)
                 Yorkville Advisors, LLC

                 Structuring Fee to Yorkville Advisors, LLC           ($15,000)

                 Due Diligence Fee to Yorkville Advisors, LLC          ($5,000)

Sub-Total:                                                          $1,800,000

Disbursements:

Net Proceeds:    Net Proceeds Payable to the Company                $1,800,000

                        [SIGNATURE PAGE IMMEDIATELY TO FOLLOW]

<PAGE>
HYPERDYNAMICS CORPORATION                      CORNELL CAPITAL PARTNERS, LP

                                               By:      Yorkville Advisors, LLC
                                               Its:     General Partner

By: /s/ Kent P. Watts                          By:  /s/ Mark Amgelo
Name:   Kent P. Watts                          Name:    Mark Angelo
Title:  President and Chief Executive Officer  Its:     Portfolio ManagerEXHIBIT 10.4 - SECURITY AGREEMENT

                               SECURITY AGREEMENT
                               ------------------

     THIS  SECURITY  AGREEMENT  (the  "Agreement"),  is  entered  into  and made
                                       ---------
effective  as  of  June  22,  2006,  by and between HYPERDYNAMICS CORPORATION, a
Delaware  corporation  with its principal place of business located at One Sugar
Creek  Center  Boulevard, Suite 125 Sugar Land, Texas 77478 (the "Company"), and
                                                                  -------
the  BUYER(S)  (the  "Secured  Party")  listed  on  Schedule  I  attached to the
                      --------------
Securities  Purchase  Agreement  (the "Securities Purchase Agreement") dated the
                                       -----------------------------
date  hereof  between  the  Company  and  the  Secured  Party.

     WHEREAS, the Company shall issue and sell to the Secured Party, as provided
in  the  Securities Purchase Agreement of even date herewith between the Company
and  the  Secured  Party  (the "Securities Purchase Agreement"), and the Secured
                                -----------------------------
Party  shall  purchase  up  to  Six  Million  Dollars  ($6,000,000)  of  secured
convertible  debentures  (the  "Convertible  Debentures"),  which  shall  be
                                -----------------------
convertible  into  shares  of  the Company's common stock, par value $0.001 (the
"Common  Stock")  (as  converted,  the  "Conversion  Shares")  in the respective
 -------------                           ------------------
amounts  set  forth  opposite  each  Buyer(s) name on Schedule I attached to the
Securities  Purchase  Agreement;

     WHEREAS,  to  induce  the  Secured  Party  to  enter  into  the transaction
contemplated  by  the Securities Purchase Agreement, the Convertible Debentures,
the  Investor  Registration  Rights  Agreement of even date herewith between the
Company  and  the  Secured Party (the "Investor Registration Rights Agreement"),
                                       --------------------------------------
and  the  Irrevocable Transfer Agent Instructions among the Company, the Secured
Party,  Fidelity  Transfer,  and  David  Gonzalez,  Esq.  (the  "Transfer  Agent
                                                                 ---------------
Instructions"),  the Subsidiary Security Agreement dated the date hereof between
------------
certain  subsidiaries  of  the  Company  and  the Secured Party, and all related
trasnactions  (collectively  referred  to  as  the "Transaction Documents"), the
                                                    ---------------------
Company  hereby  grants  to  the Secured Party a security interest in and to the
pledged property identified on Exhibit A hereto (collectively referred to as the
                               ---------
"Pledged Property") until the satisfaction of the Obligations, as defined herein
 ----------------
below;  and

     WHEREAS,  the  parties  desire that the Pledged Property shall specifically
exclude  any and all of the Secured Party's interests in SCS Corporation and SCS
Guinea  SARL  and  any  other interest, direct or indirect, that the Company may
have  or  acquire  in  connection  with Guinea, and that nothing herein shall be
deemed  to  encumber  any assets of either SCS Corporation or SCS Guinea SARL or
any  other interest, direct or indirect, that the Company may have or acquire in
connection  with  Guinea.

     NOW,  THEREFORE,  in consideration of the promises and the mutual covenants
herein  contained,  and  for other good and valuable consideration, the adequacy
and receipt of which are hereby acknowledged, the parties hereto hereby agree as
follows:

<PAGE>
                                   ARTICLE 1.

                         DEFINITIONS AND INTERPRETATIONS
                         -------------------------------

     Section 1.1.     Recitals.
                      --------

     The  above  recitals  are  true and correct and are incorporated herein, in
their  entirety,  by  this  reference.

     Section 1.2.     Interpretations.
                      ---------------

     Nothing  herein  expressed  or implied is intended or shall be construed to
confer  upon  any person other than the Secured Party any right, remedy or claim
under  or  by  reason  hereof.

     Section 1.3.     Obligations Secured.
                      -------------------

     The  obligations  secured hereby are any and all obligations of the Company
now  existing  or  hereinafter  incurred  to  the Secured Party, whether oral or
written  and  whether  arising  before,  on  or after the date hereof including,
without  limitation, those obligations of the Company to the Secured Party under
this  Agreement,  the  Transaction  Documents,  and  any  other  amounts  now or
hereafter  owed  to  the  Secured  Party  by the Company thereunder or hereunder
(collectively,  the  "Obligations").
                      -----------

                                   ARTICLE 2.

                 PLEDGED PROPERTY, ADMINISTRATION OF COLLATERAL
                 ----------------------------------------------
                      AND TERMINATION OF SECURITY INTEREST
                      ------------------------------------

     Section 2.1.     Pledged Property.
                      ----------------

          (a)     Company  hereby  pledges  to the Secured Party, and creates in
the  Secured  Party for its benefit, a security interest for such time until the
Obligations  are  paid  in full, in and to all of the property of the Company as
set  forth  in  Exhibit  "A"  attached  hereto  and the products thereof and the
                ------------
proceeds of all such items (collectively, the "Pledged Property"):
                                               -----------------

          (b)     Simultaneously  with  the  execution  and  delivery  of  this
Agreement,  the  Company  shall  make,  execute,  acknowledge,  file, record and
deliver  to  the Secured Party any documents reasonably requested by the Secured
Party  to perfect its security interest in the Pledged Property.  Simultaneously
with  the  execution  and  delivery  of  this Agreement, the Company shall make,
execute,  acknowledge  and  deliver  to  the  Secured  Party  such documents and
instruments,  including, without limitation, financing statements, certificates,
affidavits  and  forms  as  may,  in the Secured Party's reasonable judgment, be
necessary  to  effectuate, complete or perfect, or to continue and preserve, the
security  interest of the Secured Party in the Pledged Property, and the Secured
Party shall hold such documents and instruments as secured party, subject to the
terms  and  conditions  contained  herein.

          (c)     The Pledged Property shall specifically exclude any and all of
the  Secured  Party's  interests in SCS Corporation and SCS Guinea SARL and that
nothing  herein  shall  be

                                        2
<PAGE>
deemed  to  encumber  any assets of either SCS Corporation or SCS Guinea SARL or
any  other interest, direct or indirect, that the Company may have or acquire in
connection  with  Guinea.

     Section 2.2.     Rights; Interests; Etc.
                      -----------------------

          (a)     So  long as no Event of Default (as hereinafter defined) shall
have  occurred  and  be  continuing:

               (i)     the  Company  shall  be  entitled to exercise any and all
rights  pertaining  to  the Pledged Property or any part thereof for any purpose
not  inconsistent  with  the  terms  hereof;  and

               (ii)     the  Company shall be entitled to receive and retain any
and  all  payments  paid  or  made  in  respect  of  the  Pledged  Property.

          (b)     Upon  the occurrence and during the continuance of an Event of
Default:

               (i)     All rights of the Company to exercise the rights which it
would otherwise be entitled to exercise pursuant to Section 2.2(a)(i) hereof and
to receive payments which it would otherwise be authorized to receive and retain
pursuant  to  Section  2.2(a)(ii) hereof shall be suspended, and all such rights
shall  thereupon become vested in the Secured Party who shall thereupon have the
sole  right  to exercise such rights and to receive and hold as Pledged Property
such  payments;  provided,  however,  that  if  the  Secured  Party shall become
entitled  and  shall  elect  to  exercise  its  right  to realize on the Pledged
Property  pursuant  to  Article  5  hereof,  then  all cash sums received by the
Secured  Party, or held by Company for the benefit of the Secured Party and paid
over  pursuant  to  Section  2.2(b)(ii)  hereof,  shall  be  applied against any
outstanding  Obligations;  and

               (ii)     All  interest,  dividends, income and other payments and
distributions  which  are  received by the Company contrary to the provisions of
Section  2.2(b)(i)  hereof  shall  be  received  in trust for the benefit of the
Secured  Party, shall be segregated from other property of the Company and shall
be  forthwith  paid  over  to  the  Secured  Party;  or

               (iii)     The  Secured  Party  in  its  sole  discretion shall be
authorized  to sell any or all of the Pledged Property at public or private sale
in  order  to recoup all of the outstanding principal plus accrued interest owed
pursuant  to  the  Convertible  Debenture  as  described  herein

          (c)     An  "Event  of Default" shall be deemed to have occurred under
                       -----------------
this Agreement upon an Event of Default under the Convertible Debentures.

                                   ARTICLE 3.

                          ATTORNEY-IN-FACT; PERFORMANCE
                          -----------------------------

     Section 3.1.     Secured Party Appointed Attorney-In-Fact.
                      ----------------------------------------

     Upon the occurrence of an Event of Default, the Company hereby appoints the
Secured  Party  as  its  attorney-in-fact,  with full authority in the place and
stead  of  the  Company  and  in  the

                                        3
<PAGE>
name  of  the  Company  or  otherwise,  from time to time in the Secured Party's
discretion  to  take  any action and to execute any instrument which the Secured
Party  may  reasonably  deem  necessary  to  accomplish  the  purposes  of  this
Agreement, including, without limitation, to receive and collect all instruments
made  payable to the Company representing any payments in respect of the Pledged
Property  or  any  part  thereof  and  to give full discharge for the same.  The
Secured  Party may demand, collect, receipt for, settle, compromise, adjust, sue
for, foreclose, or realize on the Pledged Property as and when the Secured Party
may  determine.  To  facilitate collection, the Secured Party may notify account
debtors  and  obligors  on any Pledged Property to make payments directly to the
Secured  Party.

     Section 3.2.     Secured Party May Perform.
                      -------------------------

     If the Company fails to perform any agreement contained herein, the Secured
Party,  at  its  option,  may  itself  perform,  or  cause  performance of, such
agreement,  and  the  expenses  of  the  Secured  Party  incurred  in connection
therewith shall be included in the Obligations secured hereby and payable by the
Company  under  Section  8.3.

                                   ARTICLE 4.

                         REPRESENTATIONS AND WARRANTIES
                         ------------------------------

     Section 4.1.     Authorization; Enforceability.
                      -----------------------------

     Each  of  the  parties hereto represents and warrants that it has taken all
action  necessary  to  authorize the execution, delivery and performance of this
Agreement  and  the  transactions  contemplated  hereby;  and upon execution and
delivery,  this Agreement shall constitute a valid and binding obligation of the
respective  party, subject to applicable bankruptcy, insolvency, reorganization,
moratorium  and  similar  laws  affecting creditors' rights or by the principles
governing  the  availability  of  equitable  remedies.

     Section 4.2.     Ownership of Pledged Property.
                      -----------------------------

     The  Company  warrants  and  represents that it is the legal and beneficial
owner  of  the  Pledged  Property free and clear of any lien, security interest,
option  or  other charge or encumbrance except for the security interest created
by  this  Agreement.

                                   ARTICLE 5.

                    DEFAULT; REMEDIES; SUBSTITUTE COLLATERAL
                    ----------------------------------------

     Section 5.1.     Default and Remedies.
                      --------------------

          (a)     If  an  Event  of  Default  occurs, then in each such case the
Secured  Party may declare the Obligations to be due and payable immediately, by
a  notice  in  writing  to  the  Company,  and  upon  any  such declaration, the
Obligations  shall  become  immediately  due  and  payable.

          (b)     Upon  the occurrence of an Event of Default, the Secured Party
shall:  (i) be entitled to receive all distributions with respect to the Pledged
Property,  (ii)  to  cause  the  Pledged

                                        4
<PAGE>
Property  to  be  transferred into the name of the Secured Party or its nominee,
(iii)  to  dispose of the Pledged Property, and (iv) to realize upon any and all
rights  in  the  Pledged  Property  then  held  by  the  Secured  Party.

     Section 5.2.     Method  of  Realizing  Upon  the  Pledged  Property: Other
                      ----------------------------------------------------------
Remedies.
--------

     Upon  the  occurrence of an Event of Default, in addition to any rights and
remedies  available  at  law or in equity, the following provisions shall govern
the  Secured  Party's  right  to  realize  upon  the  Pledged  Property:

          (a)     Any item of the Pledged Property may be sold for cash or other
value in any number of lots at brokers board, public auction or private sale and
may  be  sold  without  demand, advertisement or notice (except that the Secured
Party shall give the Company ten (10) days' prior written notice of the time and
place  or  of  the  time  after  which  a  private  sale  may be made (the "Sale
                                                                            ----
Notice")),  which  notice period is hereby agreed to be commercially reasonable.
------
At  any  sale  or  sales  of  the  Pledged Property, the Company may bid for and
purchase the whole or any part of the Pledged Property and, upon compliance with
the  terms  of  such  sale,  may  hold,  exploit and dispose of the same without
further  accountability  to  the  Secured  Party.  The  Company will execute and
deliver,  or  cause  to  be executed and delivered, such instruments, documents,
assignments,  waivers,  certificates,  and  affidavits and supply or cause to be
supplied  such  further  information and take such further action as the Secured
Party reasonably shall require in connection with any such sale.

          (b)     Any  cash  being held by the Secured Party as Pledged Property
and  all  cash  proceeds  received  by the Secured Party in respect of, sale of,
collection  from,  or  other  realization  upon  all  or any part of the Pledged
Property  shall  be  applied  as  follows:

               (i)     to  the  payment of all amounts due the Secured Party for
the  expenses reimbursable to it hereunder or owed to it pursuant to Section 8.3
hereof;

               (ii)     to  the  payment of the Obligations then due and unpaid.

               (iii)     the  balance, if any, to the person or persons entitled
thereto,  including,  without  limitation,  the  Company.

          (c)     In  addition  to  all  of  the  rights  and remedies which the
Secured  Party may have pursuant to this Agreement, the Secured Party shall have
all  of  the rights and remedies provided by law, including, without limitation,
those  under  the  Uniform  Commercial  Code.

               (i)     If  the  Company  fails  to pay such amounts due upon the
occurrence  of  an  Event of Default which is continuing, then the Secured Party
may  institute  a  judicial proceeding for the collection of the sums so due and
unpaid,  may  prosecute  such  proceeding  to  judgment  or final decree and may
enforce  the same against the Company and collect the monies adjudged or decreed
to  be  payable  in  the  manner provided by law out of the property of Company,
wherever  situated.

               (ii)     The  Company  agrees  that  it  shall  be liable for any
reasonable  fees, expenses and costs incurred by the Secured Party in connection
with  enforcement,  collection  and

                                        5
<PAGE>
preservation  of  the  Transaction  Documents,  including,  without  limitation,
reasonable legal fees and expenses, and such amounts shall be deemed included as
Obligations  secured  hereby  and  payable  as  set forth in Section 8.3 hereof.

     Section 5.3.     Proofs of Claim.
                      ---------------

          In  case of the pendency of any receivership, insolvency, liquidation,
bankruptcy,  reorganization,  arrangement,  adjustment,  composition  or  other
judicial proceeding relating to the Company or the property of the Company or of
such  other obligor or its creditors, the Secured Party (irrespective of whether
the  Obligations  shall  then  be  due  and  payable  as therein expressed or by
declaration  or  otherwise  and  irrespective of whether the Secured Party shall
have made any demand on the Company for the payment of the Obligations), subject
to  the rights of Previous Security Holders, shall be entitled and empowered, by
intervention  in  such  proceeding  or  otherwise:

               (i)     to  file  and  prove  a claim for the whole amount of the
Obligations  and  to  file such other papers or documents as may be necessary or
advisable  in order to have the claims of the Secured Party (including any claim
for  the  reasonable legal fees and expenses and other expenses paid or incurred
by  the  Secured  Party  permitted hereunder and of the Secured Party allowed in
such  judicial  proceeding),  and

               (ii)     to  collect  and  receive  any  monies or other property
payable  or  deliverable  on any such claims and to distribute the same; and any
custodian,  receiver,  assignee,  trustee,  liquidator,  sequestrator  or  other
similar  official  in  any  such judicial proceeding is hereby authorized by the
Secured  Party to make such payments to the Secured Party and, in the event that
the  Secured  Party shall consent to the making of such payments directed to the
Secured  Party,  to  pay  to  the  Secured Party any amounts for expenses due it
hereunder.

     Section 5.4.     Duties Regarding Pledged Property.
                      ---------------------------------

     The  Secured Party shall have no duty as to the collection or protection of
the  Pledged  Property  or  any  income thereon or as to the preservation of any
rights pertaining thereto, beyond the safe custody and reasonable care of any of
the  Pledged  Property  actually  in  the  Secured  Party's  possession.

                                   ARTICLE 6.

                              AFFIRMATIVE COVENANTS
                              ---------------------

     The  Company  covenants and agrees that, from the date hereof and until the
Obligations  have  been fully paid and satisfied, unless the Secured Party shall
consent  otherwise  in  writing  (as  provided  in  Section  8.4  hereof):

     Section 6.1.     Existence, Properties, Etc.
                      ---------------------------

          (a)     The  Company  shall  do,  or  cause to be done, all things, or
proceed  with  due  diligence with any actions or courses of action, that may be
reasonably necessary (i) to maintain Company's due organization, valid existence
and  good  standing  under  the  laws  of  its  state  of

                                        6
<PAGE>
incorporation,  and  (ii)  to  preserve  and  keep  in full force and effect all
qualifications,  licenses  and registrations in those jurisdictions in which the
failure  to  do  so could have a Material Adverse Effect (as defined below); and
(b)  the  Company  shall  not  do,  or  cause  to be done, any act impairing the
Company's corporate power or authority (i) to carry on the Company's business as
now  conducted,  and  (ii)  to  execute  or  deliver this Agreement or any other
document  delivered  in  connection herewith, including, without limitation, any
UCC-1  Financing Statements required by the Secured Party to which it is or will
be  a  party,  or  perform  any of its obligations hereunder or thereunder.  For
purpose  of  this  Agreement,  the term "Material Adverse Effect" shall mean any
                                         -----------------------
material  and  adverse  affect  as  determined  by  Secured  Party  in  its sole
discretion,  whether  individually  or  in the aggregate, upon (a) the Company's
assets,  business,  operations, properties or condition, financial or otherwise;
(b)  the  Company's  to  make  payment as and when due of all or any part of the
Obligations;  or  (c)  the  Pledged  Property.

     Section 6.2.     Reserved.
                      --------

     Section 6.3.     Accounts and Reports.
                      --------------------

     The  Company  shall  maintain a standard system of accounting in accordance
with  generally accepted accounting principles consistently applied and provide,
at its sole expense, to the Secured Party the following:

          (a)     as  soon  as  available,  a  copy  of  any  notice  or  other
communication  alleging  any  nonpayment or other material breach or default, or
any  foreclosure  or  other action respecting any material portion of its assets
and  properties,  received  respecting any of the indebtedness of the Company in
excess  of $100,000 (other than the Obligations), or any demand or other request
for  payment  under  any  guaranty,  assumption,  purchase  agreement or similar
agreement or arrangement respecting the indebtedness or obligations of others in
excess  of  $100,000, including any received from any person acting on behalf of
the  Secured  Party  or  beneficiary  thereof;  and

          (b)     within  fifteen  (15) days after the making of each submission
or  filing, a copy of any report, financial statement, notice or other document,
whether  periodic or otherwise, submitted to the shareholders of the Company, or
submitted  to  or filed by the Company with any governmental authority involving
or affecting (i) the Company that could have a Material Adverse Effect; (ii) the
Obligations;  (iii)  any  part  of  the  Pledged  Property;  or  (iv) any of the
transactions contemplated in this Agreement or the Loan Instruments.

     Section 6.4.     Maintenance of Books and Records; Inspection.
                      --------------------------------------------

     The  Company  shall  maintain its books, accounts and records in accordance
with  generally  accepted accounting principles consistently applied, and permit
the  Secured  Party, its officers and employees and any professionals designated
by  the  Secured  Party  in writing, at any time to visit and inspect any of its
properties  (including  but  not limited to the collateral security described in
the  Transaction  Documents  and/or  the  Loan Instruments), corporate books and
financial  records,  and  to discuss its accounts, affairs and finances with any
employee,  officer  or  director  thereof.

                                        7
<PAGE>
     Section 6.5.     Maintenance and Insurance.
                      -------------------------

          (a)     The  Company  shall maintain or cause to be maintained, at its
own  expense,  all  of  its  assets  and  properties  in  good working order and
condition,  making  all  necessary repairs thereto and renewals and replacements
thereof.

          (b)     The  Company  shall maintain or cause to be maintained, at its
own  expense,  insurance in form, substance and amounts (including deductibles),
which  the  Company  deems  reasonably  necessary to the Company's business, (i)
adequate  to  insure  all assets and properties of the Company, which assets and
properties  are of a character usually insured by persons engaged in the same or
similar  business  against  loss  or  damage  resulting from fire or other risks
included in an extended coverage policy; (ii) against public liability and other
tort claims that may be incurred by the Company; (iii) as may be required by the
Transaction  Documents  and/or  applicable  law  and  (iv)  as may be reasonably
requested  by  Secured Party, all with adequate, financially sound and reputable
insurers.

     Section 6.6.     Contracts and Other Collateral.
                      ------------------------------

     Except  as  would  not  have  a  Material Adverse Effect, the Company shall
perform  all  of  its  obligations  under  or  with  respect to each instrument,
receivable,  contract  and  other intangible included in the Pledged Property to
which the Company is now or hereafter will be party on a timely basis and in the
manner therein required, including, without limitation, this Agreement.

     Section 6.7.     Defense of Collateral, Etc.
                      ---------------------------

     The  Company  shall defend and enforce its right, title and interest in and
to  any  part  of:  (a) the Pledged Property; and (b) if not included within the
Pledged  Property,  those assets and properties whose loss could have a Material
Adverse  Effect,  the  Company shall defend the Secured Party's right, title and
interest in and to each and every part of the Pledged Property, each against all
manner  of  claims and demands on a timely basis to the full extent permitted by
applicable  law.

     Section 6.8.     Payment of Debts, Taxes, Etc.
                      -----------------------------

     The  Company  shall  pay,  or cause to be paid, all of its indebtedness and
other  liabilities and perform, or cause to be performed, all of its obligations
in accordance with the respective terms thereof, and pay and discharge, or cause
to  be paid or discharged, all taxes, assessments and other governmental charges
and  levies  imposed upon it, upon any of its assets and properties on or before
the  last  day on which the same may be paid without penalty, as well as pay all
other  lawful  claims  (whether  for  services,  labor,  materials,  supplies or
otherwise)  as  and  when  due

     Section 6.9.     Taxes and Assessments; Tax Indemnity.
                      ------------------------------------

     The  Company  shall  (a)  file  all  tax  returns and appropriate schedules
thereto that are required to be filed under applicable law, prior to the date of
delinquency,  (b)  pay  and  discharge  all  taxes, assessments and governmental
charges  or levies imposed upon the Company, upon its income and profits or upon
any  properties  belonging  to  it,  prior to the date on which penalties attach
thereto,  and  (c) pay all taxes, assessments and governmental charges or levies
that,  if

                                        8
<PAGE>
unpaid,  might  become  a  lien  or charge upon any of its properties; provided,
however,  that  the  Company in good faith may contest any such tax, assessment,
governmental  charge  or  levy described in the foregoing clauses (b) and (c) so
long as appropriate reserves are maintained with respect thereto.

     Section 6.10.     Compliance with Law and Other Agreements.
                       ----------------------------------------

     The  Company  shall  maintain its business operations and property owned or
used  in  connection  therewith  in  compliance with (a) all applicable federal,
state  and  local  laws,  regulations  and  ordinances  governing  such business
operations  and  the use and ownership of such property, and (b) all agreements,
licenses,  franchises,  indentures and mortgages to which the Company is a party
or by which the Company or any of its properties is bound.  Without limiting the
foregoing,  the Company shall pay all of its indebtedness promptly in accordance
with  the  terms  thereof.

     Section 6.11.     Notice of Default.
                       -----------------

     The  Company  shall  give  written  notice  to  the  Secured  Party  of the
occurrence  of  any  default  or  Event  of  Default  under  this Agreement, the
Transaction  Documents  or  any  other Loan Instrument or any other agreement of
Company  for  the  payment  of  money,  promptly  upon  the  occurrence thereof.

     Section 6.12.     Notice of Litigation.
                       --------------------

     The  Company shall give notice, in writing, to the Secured Party of (a) any
actions,  suits  or  proceedings  wherein  the  amount  at issue is in excess of
$500,000 and which may have a Material Adverse Effect on the business operations
or  financial  condition  of  the Company, instituted by any persons against the
Company, or affecting any of the assets of the Company, and (b) any dispute, not
resolved  within  fifteen  (15)  days  of  the commencement thereof, between the
Company  on  the  one  hand and any governmental or regulatory body on the other
hand,  which  might  reasonably be expected to have a Material Adverse Effect on
the business operations or financial condition of the Company.

                                   ARTICLE 7.

                               NEGATIVE COVENANTS
                               ------------------

     The  Company  covenants  and  agrees  that,  from the date hereof until the
Obligations  have  been  fully paid and satisfied, the Company shall not, unless
the  Secured  Party  shall  consent  otherwise  in  writing:

     Section 7.1.     Reserved.
                      --------

     Section 7.2.     Liens and Encumbrances.
                      ----------------------

     The Company shall not directly or indirectly make, create, incur, assume or
permit to exist any assignment, transfer, pledge, mortgage, security interest or
other  lien  or  encumbrance  of  any  nature  in, to or against any part of the
Pledged  Property  or  of  the  Company's  capital  stock,

                                        9
<PAGE>
or  offer  or agree to do so, or own or acquire or agree to acquire any asset or
property  of  any  character  subject  to  any  of  the  foregoing  encumbrances
(including any conditional sale contract or other title retention agreement), or
assign,  pledge  or  in  any  way  transfer or encumber its right to receive any
income  or  other distribution or proceeds from any part of the Pledged Property
or  the  Company's  capital  stock;  or  enter into any sale-leaseback financing
respecting  any  part of the Pledged Property  as lessee, or cause or assist the
inception  or  continuation  of  any  of  the  foregoing.

     Section 7.3.     Certificate of Incorporation, By-Laws, Mergers,
                      -----------------------------------------------
                      Consolidations, Acquisitions and Sales.
                      --------------------------------------

     Without the prior express written consent of the Secured Party, the Company
shall  not:   (a)  be  a  party  to  any  merger,  consolidation  or  corporate
reorganization,  unless after such event, the Company provides the Secured Party
a security interest of the same character and in the same assets and property as
the  Secured  Party  had prior to such event (b) sell, transfer, convey, grant a
security  interest in or lease all or any substantial part of its assets, unless
after  such event, the Company provides the Secured Party a security interest of
the  same character and in the same assets and property as the Secured Party had
prior  to  such  event,  nor  (c) create any subsidiaries, nor convey any of its
assets  to  any  subsidiary  unless,  in  either case, the subsidiary provides a
security  interest  to  the  Secured Party in the same character as the security
interest  that  the  Secured  Party  has  in  the  Company.

     Section 7.4.     Management, Ownership.
                      ---------------------

     The  Company  shall not materially change its ownership, executive staff or
management  without  the  prior  written  consent  of  the  Secured  Party.  The
ownership, executive staff and management of the Company are material factors in
the Secured Party's willingness to institute and maintain a lending relationship
with  the  Company.

     Section 7.5.     Dividends, Etc.
                      --------------

     The  Company  shall not declare or pay any dividend of any kind, in cash or
in  property, on any class of its capital stock, nor purchase, redeem, retire or
otherwise  acquire for value any shares of such stock, nor make any distribution
of  any kind in respect thereof, nor make any return of capital to shareholders,
nor  make  any  payments  in respect of any pension, profit sharing, retirement,
stock  option,  stock  bonus,  incentive compensation or similar plan (except as
required  or  permitted  hereunder),  without  the  prior written consent of the
Secured  Party.

     Section 7.6.     Guaranties; Loans.
                      -----------------

     The  Company  shall  not  guarantee  nor  be  liable in any manner, whether
directly  or  indirectly,  or  become contingently liable after the date of this
Agreement  in  connection  with the obligations or indebtedness of any person or
persons,  except  for  (i)  the  indebtedness  currently  secured  by  the liens
identified  on  the Pledged Property identified on Exhibit A hereto and (ii) the
endorsement  of  negotiable  instruments  payable  to the Company for deposit or
collection  in  the ordinary course of business.  The Company shall not make any
loan,  advance  or  extension  of  credit to any person other than in the normal
course  of  its  business.

                                       10
<PAGE>
     Section 7.7.     Debt.
                      ----

     The  Company  shall  not  create,  incur,  assume  or  suffer  to exist any
additional  indebtedness of any description whatsoever in an aggregate amount in
excess  of  $25,000  (excluding  any  indebtedness of the Company to the Secured
Party,  trade  accounts  payable  and  accrued expenses incurred in the ordinary
course  of business and the endorsement of negotiable instruments payable to the
Company,  respectively  for  deposit  or  collection  in  the ordinary course of
business).

     Section 7.8.     Conduct of Business.
                      -------------------

     The Company will continue to engage, in an efficient and economical manner,
in  a  business  of the same general type as conducted by it on the date of this
Agreement.

     Section 7.9.     Places of Business.
                      ------------------

     The  location  of  the Company's chief place of business is One Sugar Creek
Center  Boulevard,  Suite  125  Sugar  Land, Texas 77478.  The Company shall not
change  the  location  of its chief place of business, chief executive office or
any  place of business disclosed to the Secured Party or move any of the Pledged
Property  from  its  current  location  without  thirty (30) days' prior written
notice  to  the  Secured  Party  in  each  instance.

                                   ARTICLE 8.

                                  MISCELLANEOUS
                                  -------------

     Section 8.1.     Notices.
                      -------

     All  notices  or  other  communications  required  or permitted to be given
pursuant  to  this Agreement shall be in writing and shall be considered as duly
given  on:  (a)  the  date  of  delivery,  if delivered in person, by nationally
recognized  overnight  delivery  service  or  (b) five (5) days after mailing if
mailed  from  within  the  continental  United  States by certified mail, return
receipt requested to the party entitled to receive the same:

If to the Secured Party:           Cornell Capital Partners, LP
                                   101 Hudson Street-Suite 3700
                                   Jersey City, New Jersey 07302
                                   Attention:   Mark Angelo
                                                Portfolio Manager
                                   Telephone:   (201) 986-8300
                                   Facsimile:   (201) 985-8266

With a copy to:                    Troy Rillo, Esq.
                                   101 Hudson Street, Suite 3700
                                   Jersey City, NJ 07302
                                   Telephone:   (201) 985-8300
                                   Facsimile:   (201) 985-8266

                                       11
<PAGE>
And if to the Company:             Hyperdynamics Corporation
                                   One Sugar Creek Center Boulevard, Suite 125
                                   Sugar Land, Texas 77478
                                   Attention:   Kent P. Watts
                                   Telephone:   (713) 353-9400
                                   Facsimile:   (713) 353-9421

With a copy to:                    Joel Seidner, Esq.
                                   880 Tully Road #50
                                   Houston, TX 77079
                                   Telephone:   (281) 493-1311
                                   Facsimile:   (281) 667-3292

     Any  party  may  change  its  address  by  giving notice to the other party
stating its new address.  Commencing on the tenth (10th) day after the giving of
such notice, such newly designated address shall be such party's address for the
purpose of all notices or other communications required or permitted to be given
pursuant  to  this  Agreement.

     Section 8.2.     Severability.
                      ------------

     If  any provision of this Agreement shall be held invalid or unenforceable,
such  invalidity  or  unenforceability  shall  attach only to such provision and
shall  not  in  any  manner  affect or render invalid or unenforceable any other
severable  provision  of this Agreement, and this Agreement shall be carried out
as  if  any  such  invalid or unenforceable provision were not contained herein.

     Section 8.3.     Expenses.
                      --------

     In  the  event  of an Event of Default, the Company will pay to the Secured
Party  the  amount  of any and all reasonable expenses, including the reasonable
fees  and  expenses  of  its  counsel,  which  the  Secured  Party  may incur in
connection  with:  (i)  the  custody or preservation of, or the sale, collection
from,  or other realization upon, any of the Pledged Property; (ii) the exercise
or  enforcement of any of the rights of the Secured Party hereunder or (iii) the
failure  by  the  Company  to  perform  or observe any of the provisions hereof.

     Section 8.4.     Waivers, Amendments, Etc.
                      -------------------------

     The  Secured  Party's  delay  or  failure at any time or times hereafter to
require  strict  performance  by  Company  of  any  undertakings,  agreements or
covenants  shall  not waiver, affect, or diminish any right of the Secured Party
under  this Agreement to demand strict compliance and performance herewith.  Any
waiver  by  the  Secured Party of any Event of Default shall not waive or affect
any other Event of Default, whether such Event of Default is prior or subsequent
thereto  and whether of the same or a different type.  None of the undertakings,
agreements  and  covenants  of  the  Company contained in this Agreement, and no
Event  of  Default,  shall  be

                                       12
<PAGE>
deemed  to  have  been  waived  by  the Secured Party, nor may this Agreement be
amended,  changed  or  modified,  unless  such  waiver,  amendment,  change  or
modification  is  evidenced  by an instrument in writing specifying such waiver,
amendment, change or modification and signed by the Secured Party.

     Section 8.5.     Continuing Security Interest.
                      ----------------------------

     This  Agreement  shall create a continuing security interest in the Pledged
Property and shall: (i) remain in full force and effect until payment in full of
the  Obligations;  and  (ii)  be binding upon the Company and its successors and
heirs and (iii) inure to the benefit of the Secured Party and its successors and
assigns.  Upon  the  payment  or  satisfaction  in  full of the Obligations, the
Company  shall be entitled to the return, at its expense, of such of the Pledged
Property  as  shall  not have been sold in accordance with Section 5.2 hereof or
otherwise  applied  pursuant  to  the  terms  hereof.

     Section 8.6.     Independent Representation.
                      --------------------------

     Each  party  hereto acknowledges and agrees that it has received or has had
the  opportunity to receive independent legal counsel of its own choice and that
it has been sufficiently apprised of its rights and responsibilities with regard
to  the  substance  of  this  Agreement.

     Section 8.7.     Applicable Law:  Jurisdiction.
                      -----------------------------

     This  Agreement shall be governed by and interpreted in accordance with the
laws  of the State of New Jersey without regard to the principles of conflict of
laws.  The  parties further agree that any action between them shall be heard in
Hudson  County,  New Jersey, and expressly consent to the jurisdiction and venue
of  the  Superior  Court  of New Jersey, sitting in Hudson County and the United
States  District  Court  for  the  District of New Jersey sitting in Newark, New
Jersey  for  the  adjudication  of  any  civil  action asserted pursuant to this
Paragraph.

     Section 8.8.     Waiver of Jury Trial.
                      --------------------

     AS  A FURTHER INDUCEMENT FOR THE SECURED PARTY TO ENTER INTO THIS AGREEMENT
AND  TO  MAKE  THE  FINANCIAL  ACCOMMODATIONS TO THE COMPANY, THE COMPANY HEREBY
WAIVES  ANY RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING RELATED IN ANY WAY TO
THIS  AGREEMENT  AND/OR ANY AND ALL OTHER DOCUMENTS RELATED TO THIS TRANSACTION.

     Section 8.9.     Entire Agreement.
                      ----------------

     This  Agreement  constitutes  the  entire  agreement  among the parties and
supersedes  any  prior agreement or understanding among them with respect to the
subject  matter  hereof.

                  [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

                                       13
<PAGE>
     IN  WITNESS  WHEREOF,  the  parties  hereto  have  executed  this  Security
Agreement  as  of  the  date  first  above  written.

                                   COMPANY:
                                   HYPERDYNAMICS CORPORATION

                                   By: /s/ Kent P. Watts
                                   Name:  Kent P. Watts
                                   Title:  President and Chief Executive Officer

                                   SECURED PARTY:
                                   CORNELL CAPITAL PARTNERS, LP

                                   BY:   YORKVILLE ADVISORS, LLC
                                   ITS:  GENERAL PARTNER

                                   By: /s/ Mark Angelo
                                   Name:  Mark Angelo
                                   Title:  Portfolio Manager

                                       14
<PAGE>
                                    EXHIBIT A

                         DEFINITION OF PLEDGED PROPERTY
                         ------------------------------

     For  the purpose of securing prompt and complete payment and performance by
the  Company  of  all  of  the  Obligations,  the  Company  unconditionally  and
irrevocably hereby grants to the Secured Party a continuing security interest in
and to, and lien upon, the following Pledged Property of the Company:

          (a)     all  goods  of  the  Company,  including,  without limitation,
machinery,  equipment,  furniture,  furnishings, fixtures, signs, lights, tools,
parts,  supplies  and  motor  vehicles  of  every  kind  and description, now or
hereafter owned by the Company or in which the Company may have or may hereafter
acquire any interest, and all replacements, additions, accessions, substitutions
and  proceeds  thereof,  arising from the sale or disposition thereof, and where
applicable,  the  proceeds  of insurance and of any tort claims involving any of
the  foregoing;

          (b)     all  inventory  of the Company, including, but not limited to,
all  goods,  wares,  merchandise,  parts,  supplies,  finished  products,  other
tangible  personal  property,  including such inventory as is temporarily out of
Company's  custody  or possession and including any returns upon any accounts or
other  proceeds,  including  insurance  proceeds,  resulting  from  the  sale or
disposition  of  any  of  the  foregoing;

          (c)     all  contract  rights  and general intangibles of the Company,
including,  without limitation, goodwill, trademarks, trade styles, trade names,
leasehold  interests, partnership or joint venture interests, patents and patent
applications,  copyrights,  deposit  accounts  whether  now  owned  or hereafter
created;

          (d)     all  documents,  warehouse  receipts,  instruments and chattel
paper of the Company whether now owned or hereafter created;

          (e)     all accounts and other receivables, instruments or other forms
of  obligations  and  rights  to  payment  of  the  Company (herein collectively
referred  to  as  "Accounts"),  together  with  the  proceeds thereof, all goods
                   --------
represented  by  such  Accounts  and  all such goods that may be returned by the
Company's  customers,  and  all  proceeds  of  any  insurance  thereon,  and all
guarantees,  securities  and liens which the Company may hold for the payment of
any  such  Accounts  including,  without  limitation,  all rights of stoppage in
transit,  replevin and reclamation and as an unpaid vendor and/or lienor, all of
which  the  Company  represents  and  warrants  will  be  bona fide and existing
obligations of its respective customers, arising out of the sale of goods by the
Company  in  the  ordinary  course  of  business;

          (f)     to  the  extent  assignable, all of the Company's rights under
all  present  and future authorizations, permits, licenses and franchises issued
or granted in connection with the operations of any of its facilities

          (g)     except  with respect to SCS Corporation and SCS Guinea SARL or
any  other interest, direct or indirect, that the Company may have or acquire in
connection with Guinea, all equity interests, securities or other instruments in
other companies, including, without limitation, any subsidiaries, investments or
other  entities  (whether  or  not  controlled);  and;

                                      A-1
<PAGE>
          (h)     all  products  and  proceeds  (including,  without limitation,
insurance  proceeds)  from  the  above-described  Pledged  Property.

          (i)     The Pledged Property shall specifically exclude any and all of
the  Company's  interests  in  SCS Corporation and SCS Guinea SARL and any other
interest, direct or indirect, that the Company may have or acquire in connection
with Guinea, and nothing herein shall be deemed to encumber any assets of either
SCS  Corporation  or  SCS Guinea SARL or any other interest, direct or indirect,
that the Company may have or acquire in connection with Guinea.

                                      A-2

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