It takes say minimum 90 days to pay off and more likely 120-180 days.
In that time if 3 rigs where drilling, at say 30 days for a drill and frac crew, we would have 12 to 18 wells drilled before the first 3 became earnings accruive.
So if they can come up with a plan to cover 18 wells, or if they are prepared to wait till current wells are accruive by 30-60 days, they can possibly just afford 3 rigs.
Fundign 18 wells before they become accruive would cost ADI approx, $9M. In my opinion as soon as all 3 JVP,s have earnings rolling in from hilcopr after its costs are recovered this is a definite likelihood.
But until close to the time when they become earnings accruive its unlikely to see more then 2 rigs.
If they did go this way it would rocket the sp. Adding roughly adding 1-2c value to the sp per rig per month in my opinion. Doesnt sound like much, but on a 30c share with 3 rigs thats 36-72c gain in 12 months. With 5 rigs if they pulled that off its 60-120c gain.
People might now see the value of the CR if something along these lines is announced.
ADI Price at posting:
28.0¢ Sentiment: LT Buy Disclosure: Not Held
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