With the 15th consecutive quarter without generating any revenues just gone by, Hyperdynamics (NYSE: HDY) could possibly be in deep trouble. Some die-hard, passionate "investors" in this stock may not like what's happening, but the fact that losses widened in the third quarter requires attention.

Poor show
Net losses for the third quarter stood at $4.4 million, compared to a loss of $2.8 million for last year's third quarter. The reason, as stated in the company's quarterly filing, is that the estimated costs for drilling its first well off the shores of Guinea have been higher than what management had initially expected.

Hyperdynamics is currently involved in a two-well exploration program off the western coast of Guinea. What caught my attention was one of the reasons stated in the filing: "logistical delays resulting from limited port facilities in Guinea." Oh, really? What were they expecting there?

What next?
As a result, the drilling of the second well is now under review. With no operating cash flows at hand, management now requires substantial funds to keep the entire project afloat. That's definitely a cause of concern. The company raised $136 million in March and things had looked pretty in terms of liquidity. But now, things look dicey once again. The third quarter saw a $40 million decline in cash and cash equivalents, with a balance now of just over $39 million.

It's imperative that the fourth quarter witness some actual production, but that doesn't look too likely. Simply beefing up the balance sheet with cash from stock offerings won't help keep investor confidence up forever. It's not too surprising that the stock crashed 24% yesterday following the latest quarterly filing.

An eyewash?
On the operations front, things were seemingly picking up, with oil-field services provider CGG Veritas (NYSE: CGV) coming on board to conduct a 3-D seismic survey to further investigate the two-dimensional data obtained by Hyperdynamics on its 4,000-square- kilometer area. While the survey is expected to begin in November, management expects the costs involved to add up to $22 million. This looks scary given the company's current cash balances. The survey looks more like a last-ditch effort on management's part to raise more capital.

Management needs to be held responsible for some lousy decisions. Given the tight situation, it's downright laughable when insiders exercise their stock options before the company even generates a dollar in terms of revenues. The decision to exercise half a million dollars of stock options at this juncture, led by CEO Ray Leonard, looks ridiculous. So much for performance-based stock compensations.

The African discovery
Africa has, in general, been well-explored for oil and natural gas. Upstream giants led by Royal Dutch Shell (NYSE: RDS-A), Total (NYSE: TOT), and ConocoPhillips (NYSE: COP) have successfully discovered oil across the continent. And this has been despite unstable governments, theft, sabotage of pipelines, etc. But isn't it surprising that these Big Oil companies have decidedly given Guinea a miss? Now I may, in the future, be proved wrong here, and I'm in no way suggesting that a discovery in Guinea isn't possible. But I'm pretty sure that the giants have a good reason behind this.

Back in February, I spoke about how the political situation in Guinea isn't something to be taken lightly. Things haven't been looking great since, despite the country's having its first-ever elected government since last year. The unpredictable situation prompted the U.S. to issue a travel warning against Guinea last week. This is again where things look dicey.

Foolish bottom line
This stock is for speculators. Period. It is definitely not for Fools who value fundamentally sound business models and sound investing principles.

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Fool contributor Isac Simon does not own shares of any of the companies mentioned in this article. The Motley Fool owns shares of CGG. Motley Fool newsletter services have recommended buying shares of Total. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.