Ray Leonard - Chief Executive Officer, President, Director and Member of Government Relations Committee
Hyperdynamics Corporation (HDY) Investor Conference Call February 27, 2013 11:00 AM ET
Good morning, ladies and gentlemen. Thank you for standing by. Welcome to the Hyperdynamics Update Conference Call. [Operator Instructions] This conference is being recorded today, Wednesday, February 27, 2013. And at this time, I'd like to turn the conference over to Mr. Jack Lascar. Please go ahead, sir.
Thank you, Vince, and good morning, everyone. Before I turn the call over to Ray Leonard, Hyperdynamics' President and Chief Executive Officer, I have a couple of items to cover. In a few hours, a replay of today's conference call will be available by webcast on Hyperdynamics' Investor Relations website. Also, if you would like to receive future news releases, please go to the Investor Relations page of Hyperdynamics' website, where you can sign up to receive those automatically.
As a reminder, except for historical information presented, matters disclosed in this conference call may include forward-looking statements. These statements represent the company's current judgment on the future and are subject to risk factors and uncertainties that could cause actual results to differ materially. To the extent that they are statements that can be construed as forward-looking, they should be considered in the context of all our previous releases and federal filing. Again, information relayed on this call speaks only as of today, February 27, 2013, so any time-sensitive information may no longer be accurate at the time of any replay.
I would like now to turn the call over to Ray Leonard.
Thanks, Jack. Good morning, everyone, and thank you for joining us. I'd like to discuss 3 items this morning. The first is the completion of the farm-out with Tullow that occurred at the end of December and the steps we're undertaking now to transfer operatorship to Tullow on April 1. The second is an update of the continuing technical work we're doing on the prospects on our concession and an update on the latest Netherland, Sewell resource report that we released in mid-February and is available on our website. The third is an overall status update on the company and our plans for the remainder of 2013.
First, regarding our farm down to Tullow. We met with the Minister of Mines and Geology in Guinea in mid-December 2012 to review the farm-in agreement with Tullow, to present a preliminary budget for 2013 and to request an arrete or decree to approve the farm-in transaction. We received the arrete on December 27 and the transaction was closed on December 31. The entire process, from deciding on the winner of the tender in mid-October to working in consultation with the Ministry of Mines and Geology and negotiating the transaction agreement with Tullow, as well as with our other concession member, Dana Petroleum, was wrapped up quickly and efficiently in just 2 months.
To remind you of the farm-out terms, Tullow paid Hyperdynamics $27 million in cash and agreed to carry Hyperdynamics for up to $37 million for a 37% share of the cost of an exploration well. Tullow also will carry us for up to $37 million for our share of an appraisal well if the first well makes a discovery. Each carry is for a gross well cost of $100 million, and we expect Tullow to be able to drill each of these wells for approximately $100 million, and we have a cash cushion for unexpected overruns.
In mid-January, the consortium held an operating committee meeting to chart out the course for Tullow to take over operatorship and to transfer the day-to-day functions to Tullow. It was decided that Tullow will become full operator on April 1. However, all the geological, geophysical and engineering data was transmitted to Tullow at the beginning of January to enable them to start working immediately. Our respective technical teams have met several times and the technical handover is essentially complete.
In the last week of January, a technical meeting of the consortium took place in Cape Town, South Africa for Hyperdynamics to present our geologic interpretations to the Tullow staff at their exploration office. Further meetings were held in London with research specialists from their Dublin technology center last week and future technical meetings are scheduled in the upcoming months.
On the engineering side, Tullow is already working on preplanning activities for a deepwater well on the Sylli prospect, ordering long-term lead items such as the well head and tubulars and planning rig schedules. A large team of drilling, procurement and logistics specialists is in Guinea as I speak, reviewing port facilities and taking the initial steps to set up an operational base.
I've been involved in many farm-ins in my 35 years in the oil business and I've never seen a company take charge and move toward operatorship as quickly and efficiently as Tullow is doing. I believe more strongly than ever that we've made the right decision in choosing them as operator to this project.
Tullow has an outstanding record of exploration success offshore West Africa and is a very experienced and skilled operator in the region. They're a world-class explorer and the speed with which they're moving forward is a testament, I believe, to the strong prospectivity of the concession.
Now regarding the Netherland, Sewell report, about 3 weeks ago, we posted on our website a revised Netherland, Sewell resource report. This report replaces all previous Netherland, Sewell reports and incorporates interpretation of the results of the Sabu-1 well and the fast-track processing of the 4,000 square kilometer Deepwater 3D survey that was acquired last year. Netherland, Sewell is an independent resource reserve engineering company and did an independent assessment of the resources, which we believe is helpful to you, our investors.
I'd also like to put the newest report into context with the 3 previous reports that this firm has prepared for us. The resource potential estimates of the February 2013 report replace the previous reports. This is not an addition to them. In other words, you shouldn't add the numbers found on this report to the numbers in either of the previous reports covering the shallow and the deepwater.
We're encouraged by the overall results of the latest report and we believe that it highlights the prospectivity of the block. The prospects identified in their latest report fall into 3 broad categories: the deepwater fan play, which holds most of the larger prospects and the greatest estimated probability of geologic success in the range of 17% to 23% for the different sands; then the shallow water prospects on Survey A that have lower resource potential and a somewhat lower chance of geologic success, up to 16%; and then in the third category, the Neocomian Carbonate prospects on the northern portion of the block with very high resource potential, but the highest risk on the block with less than 10% of geologic -- chance of geologic success. So far, the new 3D survey results have clearly enhanced the prospectivity of the deepwater fan play.
Now as a result of the Sabu-1 well, which indicated the presence of hydrocarbons in the basin, although not in commercial qualities in that particular location, Netherland, Sewell downgraded the Upper Cretaceous prospects on Survey A compared to their prior reports. The mid-Cretaceous or syn-rift prospects, which were deeper than in the Sabu-1 well, remained at a similar level of prospectivity to the prior Netherland, Sewell reports. And of course, the Neocomian Carbonate prospects in the northern portion of the block have not significantly changed.
Tullow recently put out its first mean resource estimate on what appears to be their primary fan prospect, the Sylli prospect. It's important to explain the difference between their mean estimates for the Sylli well and the Netherland, Sewell best guess for the entire Sylli prospect. Tullow estimates mean resources for specific wells and specific target sands. The 355 million barrel oil equivalent represents their estimate for the best developed sand target on the Sylli prospect, the lower Cenomanian #1 sand. This is actually similar to the Netherland, Sewell estimate for that particular target, which is 100 -- which is 345 million barrels of oil, which you can see on Page 13 of the Netherland, Sewell report. The Netherland, Sewell resource estimate for Sylli of 1.2 billion barrels of oil equivalent covers the entire prospect, and we would likely need to drill more than one well to encounter all the reservoirs.
Our reference to how Tullow gradually increased their resource estimate of the Jubilee field in Ghana eventually reaching over 1 billion barrels as they drilled the different targets, is a good example of how they carefully and conservatively matched their mean resource target to specific wells. Angus McCoss, their Exploration Director, indicated that they view Sylli as a Jubilee-type prospect in their recent webcast, and Tullow has a similar statement on Slide 34 of their annual report.
I should point out that the Netherland, Sewell report was prepared using the fast-track 3D seismic data on Survey C, which was not fully processed at the time of the report. They state in their report that it's possible that final processing may change subsequent interpretations of the Sylli fan prospect and other deepwater fan prospects on Survey C. But I also point out that the fast-track data was of very high quality and we feel very good about the data and about Netherlands Sewell's evaluation of it. At this time, we don't envision revising this resource report prior to the commencement of the drilling program.
We've received a number of questions since the Tullow announcement about the timing of the next well. Our agreement with Tullow has been using reasonable best efforts to spud the well by end of first quarter 2014. On Slide 41 of their annual report, they state that Sylli is scheduled to be drilled in the first quarter of 2014. While drilling plans have not been finalized, Tullow continues to exceed our expectations in their preparation to drill the well.
Now turning to Hyperdynamics' plans for 2013 and the status of our finances and listing on the New York Stock Exchange. Our operational milestone is the completion of the processing of the deepwater 3D survey. The post-stack time migration cube was completed and delivered in early February to all partners. This data set can be utilized to look through the AVO, or amplitude variations with offset, anomalies and other possible direct indicators of morphology and hydrocarbons and will be the major tool we will use to high-grade prospects to choose the first drilling location. The final product, the post-stack depth migration cube should be delivered in May. After interpretation of this final data set is complete, the consortium will be in a position to choose the well location, although the work on the pre-stack time migration cube will very likely tell us which prospect to concentrate on.
Once Tullow takes over operatorship, they will be the contact point to the government in Guinea. Consequently, we'll be closing our office -- our Guinea office this spring.
As we move to non-operator status, we'll require fewer staff members in our Houston office also. By midyear 2013, our staff is expected to be less than 1/2 the number of full-time employees that we had in mid-2012. These reductions include the closing of our London office last fall, as well as the Guinea office closure in the coming months.
The general and administrative cash costs of the company for fiscal 2014, which runs from July 1, 2013 to June 3, 2014, are projected to be less than $1 million a month. As we've previously stated, we will continue to make appropriate adjustments to our cost structure as we transition to a non-operator position.
Now we're all disappointed at the level of the share price right now, but we believe that long-term sustainable shareholder value is created by taking the right long-term operational and financial steps. Bringing in Tullow as operator, continuing the exploration of the concession and stabilizing our finances are the right long-term steps. Over time, we're hopeful that the market will recognize the value of our actions.
Many of you have asked about our listing status on the New York Stock Exchange in recent weeks. As you know, we were sent a compliance warning by the New York Stock Exchange last May after our share price fell below $1 per share. We are in regular communication with the New York Stock Exchange on methods to meet New York Stock Exchange compliance, and Hyperdynamics intends to maintain the New York Stock Exchange listing. If the requisite stock price correction does not take place in the coming months, our plan is to propose to shareholders at our next annual shareholders' meeting appropriate action to avoid delisting.
Our position is strong. We have about $54 million in unrestricted cash and $19 million in restricted cash relating to the AGR litigation. We believe we have sufficient cash to carry us through the upcoming deepwater well and have a cash cushion for unexpected cost overruns. As I mentioned previously, we're reducing our overhead on the operations side as we transition operatorship to Tullow. We want to be prepared for the upcoming drilling program with Tullow and what we hope will be additional exploration efforts on the block after the next well. We believe that each of the 2 wells that Hyperdynamics will be carried for by Tullow can be drilled for about $100 million. However, if either of the wells experiences unexpected cost overruns, we want to be in a position financially to fund our portion.
In January, I presented at the Macquarie Investment Conference in London and had a number of meetings with institutional investors. There were 3 consistent messages that I heard from investors and analysts from these meetings: number one, with Tullow we have picked the best possible partner to discover commercial oil as quickly as possible; number two, our strategy of focusing solely on Guinea in calendar year 2013 and significantly reducing overhead and conserving cash is key; and number three, we need to become more visible on the London and European investment scene where Tullow's many exploration successes and African exploration in general, have strong investor interest.
We've recently added Ian Norbury to our Board of Directors. He's U.K. based and well known in the exploration and finance community there. He will be supporting our efforts to gain a higher profile in U.K. and Europe. He'll be making many trips to meet with analysts and potential investors to get the story out on Hyperdynamics.
In summary, we've emerged 1 year after drilling the Sabu-1, with a first-class operator now, Tullow, that has a strong track record of exploration success in the Transform Margin, where our concession lies and a strong track record for safety and efficiency. We have sizable financial resources and a clear strategy to become a leaner organization, one that's properly sized and adequately financed for an exploration program, which we believe has world-class potential.
That concludes my prepared remarks. Next, I'd like to respond to the questions that were pre-submitted to the website. I'll answer them by category, starting with Hyperdynamics' liquidity, overhead and transition to the non-operator status.
Now some of the questions were directly answered in my speech and then other questions were duplicative, and I've combined them, so you won't hear every single question, but I believe that all of the information that was requested in the questions will be answered.
First question is how many current employees are under contract, and what you anticipate severance liabilities to be after your headcount is reduced to a stable level?
As I've said, we've reduced our staff by 1/2 from the staff level of June 30, 2012, and we'll continue to evaluate the correct staffing level and G&A costs as we moved to a non-operator status after March 31. Our severance costs during this period, since mid-2012 to the present, have been $1.3 million. I would also like to mention that certain severance costs specifically related to the turning over of the operatorship, due to take place on March 31, such as the closure of the Guinea office and the shifting of technical responsibilities, will be shared by the consortium; that is 40% Tullow, 30% Hyperdynamics and 23% Dana.
The second question, with many insiders purchasing stock, why doesn't the company buy back stock at these depressed prices?
We believe that the best use of our cash right now is to create shareholder value by continuing to explore the concession and to maintain the cash resources needed to conduct that exploration.
The third point, what is your current monthly burn rate? And what will it be once Tullow takes over?
For the next fiscal year, which begins in July, we expect the monthly cash costs for general and administrative costs to be less than $1 million, and we will continue to review costs over that time.
Please give us some color as to what the new business model for Hyperdynamics will look like after April 1 when Tullow takes over operations.
Our near-term business model during 2013 is to focus solely on Guinea and to educate investors on the Hyperdynamics business proposition. The results of the next well will play a major role in what comes after that.
The next set of questions are focusing on the next well. Several questions were about Tullow's selection of a rig to drill the next well and the timing for the well.
Now we can hope that the well will spud before the end of 2013, but as the operator, Tullow, will provide a drilling slot for a rig capable of operating these water depths. And according to their tentative plan, it will be to drill it no later than the first quarter of 2014.
Next question, what is the estimated time it will take to drill the Sylli-1 from spud date to TD?
Now this will depend on the final well program, which, in turn, depends on the final geologic prognosis. So it really is premature to be specific. Now other deepwater fan plays of this type on the Transform Margin typically are in the 60- to 90-day range. But again, we need to do the final geologic prognosis to be specific about the Sylli well.
The next question, why did the partners agree that $100 million was a reasonable cost estimate for the Sylli well? And what happens if it costs more than $100 million?
It's our current understanding that Tullow has a high degree of confidence that it should be able to drill the Sylli well within the allotted $100 million budget. We were shown a detailed breakdown of their costs when we agreed on that figure in that negotiations. If the well does cost more than $100 million, all parties will bear their proportionate share.
The next set of questions are on the prospectivity. What is Hyperdynamics' opinion of the likelihood and percentages that the Sylli-1 well will be successful?
I believe management's opinion for success of the Sabu-1 was less than 25%. Now several questions were asked about the chance of success for the Sylli well. Neither the operator, Tullow, nor we comment publicly on the chance of success, but the Netherland, Sewell report gives their view of probability of geologic success, which they calculate as 23%.
The next question, what did Tullow mean when it said play diversity offsets exploration risk? And they were specifically referring to the Guinea block, where we see multiple play types.
Now one way to explain the idea of play diversity offsetting exploration risk is with an example. Now let's say a company has 3 blocks: one with a single large prospect covering all of the blocks; a second with 3 smaller prospects all of the same play type on each of the different blocks; and a third with different play types on the different blocks. And let's say that each prospect has a 20% chance of success and the resource estimates for all blocks are equal. In other words, the total resource estimate for the 3 blocks is equal. So if the first well on the single prospect is a dry hole then exploration is finished. If the first well on the 3-prospect single play is a dry hole, there are still 2 more prospects to drill. However, the dry hole probably makes the play much more risky and makes the other 2 prospects much less attractive. In contrast, if you have 3 prospects and 3 play types, the dry hole on the first well may not make the other 2 play types more risky and, therefore, attractive. So in that way, more play diversity makes a block more attractive and can at least partly compensate for individual prospect risks. Going to Guinea, we have a number of different play concepts, not only the fan but the Neocomian Carbonates and a lot of the shallow water Survey A prospects. So that's one of the reasons that this block is so attractive to Tullow.
The next question, the Netherland, Sewell probability of geologic success for Sylli was 23% and is based on an incomplete stage of processing. Is final processing Survey C post-stack depth migration now complete? And if yes, has the probability of success improved or declined, and by how much?
We haven't received the final post-stack depth migration yet, although we have received the time migration but haven't had a chance to interpret it. It's hard to say how this will affect the chance of success for Sylli. It will make what is there clearer. Whether that increases it or decreases it, we can't tell until we do the interpretation.
Next question. If the Guinea concession meets the JV partners' expectation of proving up a major oil province, approximately how many wells could one expect to be drilled over the next 10 or 20 years?
This comes back to the diversity of play type. It really depends on the successful play types. So you'll get one number if it's just the fan play is successful, another if the shallow water plays are successful, an entirely different number if the Neocomian Carbonates are successful. So really, we have to wait and see how the exploration success goes. And for an example, once the Jubilee well was discovered, the deepwater fan play in Ghana, in 5 years over 30 deepwater exploration fan plays have been drilled.
The next question, Hyperdynamics' options if Sylli is not commercial. How do you see Hyperdynamics' funding share of any future exploration cost if the Sylli-1 well doesn't pan out and Tullow chooses not to drill an appraisal well?
It's not really appropriate to speculate in detail past the next well. We are positioning ourselves financially to have sufficient time and cash after the next well to fully evaluate our situation. We are working to make sure we have a cash cushion.
Please explain what an appraisal well does. Does it confirm the commerciality of the previous well or can it identify a separate discovery?
An appraisal well is defined in our joint operating agreement as any well other than an exploration well or development well whose purpose is to appraise the extent of the volume of hydrocarbon reserves contained in an existing discovery.
And that leads to the next question, what kind of minimum result will the partners need from the Sylli well to justify drilling an appraisal well?
You need to have the elements that the members of the consortium believe will lead to a commercial discovery on that prospect. That includes the size of the trap, the quality of the reservoir and the hydrocarbons. In other words, that initial well has got to have the elements that make people feel that additional drilling can lead to a commercial accumulation.
The next question is on valuation, and there was a very lengthy question that went through potential amounts of value per barrel and size of prospect and converts that into share price that I really don't think is appropriate to go into. The answer to this, really, is that this needs to be left to the analyst community. Our job at Hyperdynamics is to explore the concession and find hydrocarbons. We don't want to speculate on the value of an unfound discovery. And again, I want to lead people to the various analysts who have given speculative prices for Hyperdynamics. We do believe, however, that a significant discovery will positively impact the share price, and how positive depends on the size of the discovery.
The next set of questions were on the New York Stock Exchange listing. First question, what is management's expectation regarding the New York Stock Exchange listing? And what is your plan to cure the deficiency?
First of all, it is our intent to maintain the New York Stock Exchange listing, and we're viewing our options to accomplish this.
The next set of questions, what is the possibility of a reverse split to maintain the New York Stock Exchange listing? And what are management's plans to generate some buying post-split? We all know -- and this is part of a question. We all know that after the reverse split, many more institutions will be able to buy the stock again. The next question, as an investor, should I be worried about a reverse split due to the New York Stock Exchange rule of being below $1?
The answer to these questions is very straightforward. We believe that the best way for management to create long-term shareholder value is to focus on increasing the value of the Guinea asset. We don't envision any change in the value of the asset as a result of any action taken to maintain the New York Stock Exchange listing. I think that makes it clear. Our plan is to work to maintain the listing, and how we maintain the listing will not change the underlying value of the asset.
Next is a series of miscellaneous questions. Would Hyperdynamics consider farming out a portion of their 37% prior to Tullow drilling if there was interest?
We would always look at ways to maximize shareholder value on our concession, and of course, any opportunity would have to be evaluated on that basis.
Please explain the required relinquishment in the third quarter.
According to the production-sharing contract, as we enter that third and final exploration phase of the contract in September 2013, we need to relinquish 25% of the acreage we still hold. The particular area proposed will be a joint decision by the consortium. Now we're confident, based on our technical studies, that we can retain all of the prime prospects that we have identified in the remaining area.
The next question, what assurances are there that if oil is discovered we will realize maximum value as the stock market prices it versus an out-of-the-blue action that would be sub-optimal its value for the retail investor such as a forced buy out at a low price?
Now first of all, I can make no assurances. Hyperdynamics' management is actively meeting with investors to educate them on Hyperdynamics' value proposition. This education process will be ongoing with or without a discovery on the next well. We're focused on creating long-term sustainable shareholder value.
Next question, what strategic alternatives could be available to an oil exploration company similar to Hyperdynamics? Further, assuming success in the next well and appraisal well, what strategic alternatives could be available to the firm?
Now once we have a discovery and some success, we can better discuss future strategic alternatives. Now having said that, Hyperdynamics' core competency is exploration, and that's something to potentially leverage off in the future.
Is there any possibility of reaping a future benefit from the $10 million that's been written off already in relation to the investment opportunity of last year?
Now that was related to a potential production project in our current business stand. We don't anticipate revisiting that prospect, and I don't think we'll be able to reap any benefit from that $10 million.
What is Dana doing? Is Dana still interested in the project?
Dana remains interested in the project and is a full participating 23% partner. Of particular interest, they're a partner with Tullow in Mauritania in which an extensive drilling program in the deepwater is taking place this year. And they've been very supportive of Tullow joining the consortium and taking the operator position.
The next question, regarding the short position. Why would anybody short at this juncture?
Hyperdynamics has a strong cash position and has obtained the best possible JV partner with several significant prospects.
What do your institutional investors have to say about the short position? Is it the vast majority of the short interest is hedging by fund managers for a stake in [ph] shorting by hedge funds? Please provide your insight.
Well, actually, I think that was more of a statement than a question. I mean, our answer really is we aren't the experts in the activities of hedge funds and speculators. Our job is to make good long-term operational and financial decisions to maximize the long-term value, and we believe that, that, in turn, will provide our shareholders long-term sustainable value.
Next question, do you expect to obtain any new research coverage in the near future?
We're currently covered by 4 analysts. We're going to be actively meeting with them and other analysts and investors to educate them on the Hyperdynamics' value proposition. We hope this education process and the addition of Tullow as operator will cause some additional analyst coverage. The analysts who have covered Tullow have certainly shown an increased interest in us.
Next question, there was a 2-year study initiated at the University of Arizona in August 2011 with Hyperdynamics. Can you update us on any of their findings?
We recognize early on that volcanic and igneous rocks are part of the stratigraphy in some parts of our exploration area, and we wanted to understand their occurrence. We've used the geology department at the University of Arizona to help us with topics like volcanology and seismic expression of volcanic departments -- deposits. Fortunately, the volcanic and igneous rocks for the most part are either older than the strata with our main targets, the deepwater fan deposits, or much younger and are aerially separated from the fan play. The Arizona project helped us understand the relatively limited occurrence of the volcanic rocks in the exploration block. They've done an excellent job and it's helped us in our program.
Can we get an update on legal proceedings and the likely timing of any settlement? Do you have a sense of how long we can expect them to remain open-ended in months or years?
Lawsuits have their own life cycle depending on the type of suit and jurisdiction and much of that is out of our control. While some can take years to go to trial, others are settled in a timely manner. What I can say is that we continue to work through each lawsuit diligently and seek a proper resolution to each in a timely manner.
That concludes the questions that were submitted. And now, we'd like to move forward to questions that will come directly from people who've been listening.
[Operator Instructions] First question is from the line of Joe Hudak with Wells Fargo Advisors.
Just to go back a little bit, Ray, on the Netherland, Sewell report, that it looks like on Page 1 there appears to be 4 prospective billion barrel prospects. You've really touched on this, but can you give us any additional color? I mean, was this -- does this exceed your expectations? Does this meet your expectations? To me, looking at that 4 multi-billion barrel potential is pretty exciting to me.
Okay. I'd be glad to. Well, as I mentioned before, there are really 3 different categories of prospects. In the deepwater sand, the 3D has significantly enhanced the prospectivity of the sands. We have 3 that, in the resource estimates by Netherland, Sewell, exceed the $1 billion potential. So we're delighted with the results there. In the shallow water area, one prospect that has come out that we're very pleased with is the cesium [ph] carbonate, that it has shown up through further work there and is exciting. In the Neocomian Carbonate area, that's basically very similar to before. We haven't shot a 3D yet. But I would come back to Angus McCoss, the Exploration Director's statement, that he sees Sylli as a Jubilee-type prospect. So clearly, Tullow sees this as a very exciting area. And also, their comment about multiple play diversity, in other words, that this is not just a one-shot type of play. So yes, we're very pleased, and we look forward to an exciting exploration effort together with Tullow.
Great. Also, the churn of these 12 months have been extremely challenging, reflecting back on all of us. Of all the developments, what would you say really exceeded the expectations of you and your team? And what would you say currently remains a major hurdle?
Okay. Well the biggest positive over the past year has been the completion of the deal with Tullow and the way Tullow has responded in the past few months in terms of getting control of the operatorship, moving very quickly on their technical work. For example, the team that they now have on the project was the team that had worked the Ghana exploration there. Their last exploration block in Ghana has now expired, and they're moving into production mode, and the Ghana exploration team has been put on the Guinea project. So Tullow is really making an effort here, and I would say that is the #1 positive. The toughest thing has been moving from the operator to non-operator mode and having to reduce staff and go to a leaner staff and cut costs. And that's ongoing, we're doing what needs to be done, but that's been the toughest piece. The other positive is, as you mentioned in the first part of your question, was when taking into account the Sabu well and the 3D seismic, the strong results on the Netherland, Sewell resource report.
Okay. And I know that Tullow has stated that they feel that this is a Jubilee-type find on Sylli. And is there any other comments from Tullow that you can possibly share with us as to their excitement in all this?
Well, I think that the best thing to do is I encourage people to go to the Tullow website and review the comments that they made about this project by Angus McCoss. I think it's best said, really, by Tullow in terms of how they view this project as compared to some of their other projects that they're involved in, in the Transform Margin and how highly they rate it. So turn to the Tullow website, I don't want to parrot their words. I'd rather you hear it directly from Tullow.
Thank you. Ladies and gentlemen, at this time, I'd like to turn the conference back to Mr. Leonard for any closing remarks.
Okay. Well, once again, thank you for listening. Thank you for being supporters of Hyperdynamics. And as was mentioned earlier, we've come through a -- the last year, I think, in a very strong position with a first class partner and solid financial base and with an excellent resource report. So we look forward to consolidating our position in the coming year and to exploring a world-class concession. So once again, thank you for your support, and for those of you considering Hyperdynamics, I believe it's a very attractive proposition. Thank you.
Thank you, sir. Ladies and gentlemen, this does conclude the Hyperdynamics update conference call. We'd like to thank you very much for your participation. You may now disconnect.
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