Hyperthermal collisions (5 eV) of ground-state atomic oxygen [O (P-3)] with a liquid-saturated hydrocarbon, squalane (C30H62), have been studied using QM/MM hybrid "on-the-fly" direct dynamics. The surface structure of the liquid squalane is obtained from a classical molecular dynamics simulation using the OPLS-AA force field. The MSINDO semiempirical Hamiltonian is combined with OPLS-AA for the QM/MM calculations. In order to achieve a more consistent and efficient simulation of the collisions, we implemented a dynamic partitioning of the QM and MM atoms in which atoms are assigned to QM or MM regions based on their proximity to "seed" (open-shell) atoms that determine where bond making/breaking can occur. In addition, the number of seed atoms is allowed to increase or decrease as time evolves so that multiple reactive events can be described. The results show that H abstraction is the most important process for all incident angles, with H elimination, double H abstraction, and C-C bond cleavage also being important. A number of properties of these reactive channels, as well as inelastic nonreactive scattering, are investigated, including angular and translational energy distributions, the effect of incident collision angle, variation with depth of the reactive event within the liquid, with the reaction site on the hydrocarbon, and the effect of dynamics before and after reaction (direct reaction versus trapping reaction-desorption).