Africa in the New Oil World: The Game has Changed, But How?

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1 Africa in the New Oil World: The Game has Changed, But How? Ray Leonard President and CEO Hyperdynamics Corporation Council for Foreign Relations February 214

2 Forward Looking and Other Cautionary Statements This presentation contains forward looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, regarding Hyperdynamics Corporation's future plans and expected performance that are based on assumptions the Company believes to be reasonable. Statements preceded by, followed by or that otherwise include the words "believes", "expects", "anticipates", "intends", "projects", "estimates", "plans", "may increase", "may result", "will result", "may fluctuate" and similar expressions or future or conditional verbs such as "will", "should", "would", "may" and "could" are generally forward-looking in nature and not historical facts. A number of risks and uncertainties could cause actual results to differ materially from these statements, including without limitation, funding and exploration efforts, fluctuations in oil and gas prices and other risk factors described from time to time in the Company's reports filed with the SEC, including the Company's Annual Report on Form 1-K for the fiscal year ended June 3, 213. Information reported on this presentation speaks only as of today, and you are advised that time sensitive information may no longer be accurate after today. The Company undertakes no obligation to publicly update these forward looking statements to reflect events or circumstances that occur after the issuance of this news release or to reflect any change in the Company's expectations with respect to these forward looking statements. Investors are cautioned that these statements are not guarantees of future performance, and actual results could differ materially. Potential risks include, among other. things, geologic risks, political risks, oil and gas price volatility, uncertainties inherent in oil and gas production operations, government regulation and uncertainties regarding access to capital.

3 Prediction is very hard, especially about the future Yogi Berra Technology & Operations (Engineers) Resources (Geoscientists) Profitability (Economists) Politics (Sociologists) Cautions in viewing predictions End of history illusion Smartest guy in the room Consider the source

4 Resources and Definitions BP Statistical View of World Energy (213) Authors own published studies FSU Resources World Energy Council Natural Bitumen and Heavy Oil United States Energy Information Agency Definitions Conventional Oil: Crude oil, non-renewable, onshore and offshore <4 MWD, lighter than 15 degrees API, nonshale reservoirs Deepwater: >4 MWD Heavy Oil and tar sands: heavier than 15 degrees API gravity Shale oil: Shale reservoir, produced by hydraulic fracking NGL s: Liquified hydrocarbons produced in the manufacture, purification and stabilization of natural gas

5 MMBOD Conventional Oil Peak discovery decade , peak production 25 By 23, 63% of conventional production in Arabian, West Siberian and North Caspian Basins Shift of Production Arabian West Siberian North Caspian Rest of World Conventional Percent of Conventional Arabian, West Siberian and North Caspian 7% 6% 5% 4% 3% 2% 1% %

Share of Deepwater + Unconventional Oil increases in non-renewable oil production 2-23 12 5% 45 1 45% 4% 4 8 35% 3% 35 3 6 25% 25 4 2% 15% 2 15 2 1% 1 5% 2 25 21 215 22 225 23

6 Share of Deepwater + Unconventional Oil increases in non-renewable oil production % % 4% % 3% % % 15% % 1 5% Conventional % Unconventional and deepwater Deepwater NGL Total Total Shale Oil Heavy Oil and Tar Sands Percent Unconventional and deepwater Total Unconventional

my Gulf of Mexico French Guiana Ceara South America Guinea/Sierra Leone/Liberia

7 Deepwater North America West of Shetlands Europe Oil Eastern Canada Atlantic Margin Mega Provinces Gulf of Mexico Campos/ Santos Niger Congo Atlantic Seaway 11 my Gulf of Mexico French Guiana Ceara South America Guinea/Sierra Leone/Liberia Ghana Sergipe-Alagoas Campos/Santos Niger Congo Africa >25 BBO 1-25 BBO 1-1 BBO Prospective

8 Deepwater Production limited mainly to basins of Atlantic Margin 14, 12, Common factors: World class source rocks Continuous subsidence and deposition Differentiating factors for mega provinces Presence of massive salt Major river systems for sediment input Cumulative Reserves estimated 16 BB of which 115 BBO have been discovered Production peaks at MMBOD in decade of , 8, 6, 4, 2, GOM Deepwater Brazil Deepwater OPEC Deepwater Other Non OPEC DW Total Deepwater Cumulative Discovered BBO

9 MMBOD Heavy Oil Production Production reaches 7 MMBOD in 23 85% of resources in two provinces High oil prices needed for profitability Heaviest environmental footprint (surface imprint, CO2 emission, water use) of unconventional production Better commercial environment in Canada vs. Venezuela makes Canada leader in production and technology despite better reservoir and oil quality in Venezuela Venezuela Canada ROW Total Heavy Oil and Bitumen in Place (BBO) World Energy Council 27 Venezuela 225 Canada 16 Rest of World 8

$Shale Oil Production by hydraulic fracturing Significant production initiated in 21 utilizing combination of fracking and$ potential formations can be found worldwide, significant production only started in USA for mainly non-technical reasons The two

potential formations can be found worldwide, significant production only started in USA for mainly non-technical reasons The two

10 Shale Oil Production by hydraulic fracturing Significant production initiated in 21 utilizing combination of fracking and horizontal drilling Economics dominated by high well decline rates and need for extensive infrastructure While potential high potential formations can be found worldwide, significant production only started in USA for mainly non-technical reasons The two key questions are How high will the production level reach in the USA? How quickly will the shale oil revolution spread to the rest of the world?

Shale Oil Production Increase: How much and how fast? USA Production: (not including NGL s) Major plays Bakken and Eagle Ford should plateau at about 1. and 1.2 MMBOD for 5 years before declining.

11 Shale Oil Production Increase: How much and how fast? USA Production: (not including NGL s) Major plays Bakken and Eagle Ford should plateau at about 1. and 1.2 MMBOD for 5 years before declining. Permian a combination of shale and conventional plays Other shale plays an order of magnitude smaller NGL s major part of play, as they are needed to make most gas shale plays economic Combination of crude oil and NGL s will add about 5 MMBOD to US production in the period USA Russia ROW Total International Production: Besides good geology, three keys: Superior fiscal terms Extensive infrastructure (pipelines, rail,roads, service companies) Right physical setting (onshore, easy terrain, away from population, availability of water) Four initial production areas: Western Canada: all elements present, current production of 2, BOPD should rise to plateau of 5, BOPD. West Siberia: Bazhenov shale is world class, all elements present except fiscal terms. Test production ongoing, production should gradually rise to 1 MMBOPD by 23. Argentina: Vaca Muerta Shale comparable to best US oil shales, production up to 16, BOPD. Production rise limited by infrastructure and fiscal uncertainties. Northern Mexico: Eagle Ford trend extends from Texas. All elements present north of border. Speed of development will depend on political events.

MMBOD Natural Gas Liquid (NGL) production continues to rise along with gas production NGL production increase through 23 associated with: NGL s associated with shale gas production in North America

12 MMBOD Natural Gas Liquid (NGL) production continues to rise along with gas production NGL production increase through 23 associated with: NGL s associated with shale gas production in North America OPEC Rest of World FSU Total (MMBOD) Shift in Russia gas production from dry gas to wet gas regions in West Siberia By-product of increased gas production for power generation and petrochemical industry in Middle East By-product of increased gas production associated with LNG projects BP World Energy Outlook (212)

is beginning East African Rift play is largest new conventional oil province of the past decade New deep-water SW Africa and Transform Margin

13 Transform Margin +3.5 BBO Sub-Saharan Africa: Major New Oil Source 2-23 Production almost doubles from 2 to 22 (3.9 to 7.2 MMBOD) While most production still in SW West Africa Deep Water +2 BBO East Africa Rift +5 BBO Africa, shift to Transform Margin and East Africa is beginning East African Rift play is largest new conventional oil province of the past decade New deep-water SW Africa and Transform Margin production is high cost, requiring favorable fiscal terms and economic stability Many new producing countries East Africa Rifts Transform Margin SW Africa

14 SW Africa: Shift from Conventional to Deepwater In 2, trend from Cameroon to Angola produced 3.6 MMBOD oil, 95% conventional, about 2/3 from Nigeria Approximately 2 billion barrels discovered in deep-water fields in since 2 By 22, SW Africa will be producing 6 MMBOD, 1/3 from Nigeria, however 2/3 will be from deep-water fields Deep-water fields are far higher cost and require lower government take than conventional development: this will have to be recognized to attract continued investment Southwest Africa Production Profile deepwater conventional Angola Deepwater Production Profile

Number of Exploration Wells Per Year Oil Pric, $/bbl NW Africa Transform Margin: New deepwater play Northwest Africa (Ghana to Senegal) had poor exploration results prior to 15 MMBO Espoir discovery

No significant exploration success elsewhere for following 25 years 2 18 16 14 12 1 8 6 4 2 Exploration Wells in NW Africa, 1975-213 (Senegal-Ghana) Cote d Ivoire Espoir et al discoveries < 5 m Water

15 Number of Exploration Wells Per Year Oil Pric, $/bbl NW Africa Transform Margin: New deepwater play Northwest Africa (Ghana to Senegal) had poor exploration results prior to 15 MMBO Espoir discovery in Ivory Coast in No significant exploration success elsewhere for following 25 years Exploration Wells in NW Africa, (Senegal-Ghana) Cote d Ivoire Espoir et al discoveries < 5 m Water Depth > 5 m Water Depth OilPrice Jubilee discovery Deepwater1.5 Billion Barrel Jubilee discovery in Ghana in 27 started current deep-water Cairn exploration play Senegal Additional 7-1 MMBO discovered in Ghana, with TEN Guinea complex declared commercial Despite many smaller discoveries along trend, the next hub discovery has not yet been made Tullow Sierra Leone Liberia Côte d'ivoire Ghana In 214, a number of important deep-water wildcats will test the Anadarko Total play from Ivory Coast to Senegal

26, discovery in Albertine Graben in Uganda has led to proving of 2.5 billion barrels reserves.

16 East Africa Rifts: Largest conventional oil discovery of the decade Older Cretaceous rift oil discovery in South Sudan in 197 s. Due to political difficulties, 2 years until commercial production Four rift systems extending up through Tertiary extending into Uganda, DRC, Kenya, Tanzania and Ethiopia In 26, discovery in Albertine Graben in Uganda has led to proving of 2.5 billion barrels reserves. In 211, discovery in Lokichar basin in Kenya has led to proving of 6 million barrels of reserves with larger amounts expected Anza Basin in Kenya has encouraging oil shows and gas discoveries, but not yet commercial. Basins in Tanzania and Ethiopia virtually unexplored to date Copyright Taipan Resources

Different Timelines to Ghana Development 25 21 215 22 29 Commercial Reserves 27 Jubilee Discovery 211 First Production Further Developments Uganda 26 Albertine Discovery 28 Commercial Reserves

17 Different Timelines to Ghana Development Commercial Reserves 27 Jubilee Discovery 211 First Production Further Developments Uganda 26 Albertine Discovery 28 Commercial Reserves Pipeline Route Disputes Uneconomic Refinery Demand Government Transparency Questions 218 Likely First Production Kenya 213 Commercial Reserves 211 Lokichar Discovery 217 Likely First Production No system is perfect, however Ghana demonstrated that fiscal stability results in rapid commercial development. Kenya may follow Ghana s example while Uganda resolves internal struggles. All three projects led by Tullow Oil.

Lifting Cost $/BBL Why oil prices will stay at least at $1/bbl (212 dollars) in the future Conventional producers need $1/bbl. oil to balance budgets Unconventional producers need $1/bbl.

18 Lifting Cost $/BBL Why oil prices will stay at least at $1/bbl (212 dollars) in the future Conventional producers need $1/bbl. oil to balance budgets Unconventional producers need $1/bbl. oil to make a profit (215 production and costs) 12 Profits & Taxes M Marginal M Bakken Eagle Ford Canada Orinoco 5 Shale Oil 2 Deepwater Shale Oil Heavy Oil Conventional NGL MMBBL/D

19 $/BBL Yearly average price 212 dollars The Oil Plateau $1/bbl 1 Oil Embargo Iraq/Iran War New North Sea, West Siberian Production 22 Next Potential Oil Price Squeeze Conventional Peak oil 1 US Dominance $25/bbl Year Following the price stability of US dominance for most of the 2 th century, the following 3 years is a period of price instability. Stability ($1/bbl +/- 2%) returns in 21 although at a higher price. The next price pressure point will come at the end of the current decade when deep-water and US shale oil production peaks.

Two Contrasting Decades 21-22 22-23 Production increase 8 MMBOD Conventional production decline

(212 dollars) Production increase only 3 MMBOD Conventional production decline Deep-water and US

20 Two Contrasting Decades Production increase 8 MMBOD Conventional production decline Major production increase in deep-water and unconventional production Stable oil price at $1/bbl. (212 dollars) Production increase only 3 MMBOD Conventional production decline Deep-water and US shale oil production plateau and decline Upward pressure on oil price Potential solutions to avoid price spike (each with ramifications.) Accelerated heavy oil and worldwide shale oil production Major increase in Arabian Basin conventional production Reduced demand by shift to natural gas and/or renewables

Summary and Conclusions New Oil World Non-renewable conventional production peaked in 25 and is rapidly being replaced by high cost deep-water and unconventional oil Remaining conventional production

21 Summary and Conclusions New Oil World Non-renewable conventional production peaked in 25 and is rapidly being replaced by high cost deep-water and unconventional oil Remaining conventional production focused in the Arabian Basin and FSU, while new production mostly in Western Hemisphere and Sub- Saharan Africa World production growth slows in 22 s when deep-water production peaks, and next price spike a possibility Sub-Saharan Africa Production doubles in the 2-22 time period Low cost conventional oil largely replaced by high cost deep-water oil Despite increased production, revenue per barrel is approximately half; without recognizing fiscal reality, necessary investment will not be attracted After 22, production will gradually shift from current SW Africa hub to new provinces in NW Africa and East Africa

Production: Industry view. World Oil Reserves and. World Oil Reserves and. Kuwait Energy Company. Ray Leonard. ASPO 2007 Cork Ireland

Production: Industry view. World Oil Reserves and. World Oil Reserves and. Kuwait Energy Company. Ray Leonard. ASPO 2007 Cork Ireland World Oil Reserves and World Oil Reserves and Production: Industry view ASPO 2007 Cork Ireland Ray Leonard Kuwait Energy Company November 2006 Hedberg Conference November 2006 Hedberg Conference Gathering