CALGARY, ALBERTA--(Marketwired - June 24, 2016) -
(NOT FOR DISSEMINATION IN THE UNITED STATES OF AMERICA)
DIVERGENT Energy Services Corp. ("Divergent" or the "Corporation") (TSX VENTURE:DVG) provides an update on its Linear Electromagnetic Submersible Pump (the "Linear Pump"), and an update on recent developments that strengthen the Company's financial position.
Linear Pump Update
Divergent continues to advance the Linear Pump towards commercialization, and throughout 2016 has amassed valuable data and operating information following the installation of the Linear Pump in a well in Southeast Saskatchewan. As outlined in the Company's March 31, 2016 press release, the Linear Pump was removed from the well following a decoupling of the pump shaft from the motor. After modifying certain operating parameters, a new Linear Pump was re-installed in the same well on May 17, 2016. After 19 days of consistent run time and pump rates, it was observed that although the Linear Pump continued to function normally and was responding to commands, fluid production from the well had ceased. A series of standard operating procedures were undertaken over several days in an attempt to rectify the issue from surface, and the Linear Pump continued to appear to be functioning normally over the course of the procedures. After several attempts to regain the flow of fluid, Divergent and the client have elected to remove the Linear Pump and conduct a visual inspection to identify and understand the cause of the issue. Due to ongoing wet weather in the area, the client has been unable to access the wellsite, but believes access may be possible during the week of June 27, 2016 based on current weather forecasts. Following the complete examination of the Linear Pump, Divergent will provide further details and outline next steps.
In the interim, Divergent continues to market the Linear Pump with other potential clients who have expressed interest.
Building Sale in Wyoming Improves Financial Flexibility
Divergent has entered into an agreement to sell its facility in Gillette, Wyoming, for net proceeds of approximately USD$400,000. With Divergent's ongoing activity growth from Gillette over the past 9 months, the Company has outgrown its existing facility and will be moving into a larger facility that will enable it to expand operations and increase sales. Closing of the building sale is anticipated on or about July 11, 2016, subject to standard terms and conditions within the sale agreement. Proceeds from the sale will be utilized to meet ongoing working capital requirements.
Divergent's Gillette operation continues to exceed expectations, with activity in May achieving record levels. Upon commencing operations in the larger facility in July, the Corporation will be positioned to more efficiently service its existing clients and extend its product lines into new clients and geographic regions. The Corporation is forecasting that it will be cash flow positive by the fourth quarter of 2016, which will support Divergent's focus on commercializing the Linear Pump.
The Corporation continues to pursue its outstanding receivable in Mexico and work is ongoing to reduce costs during this period. The Corporation also announces that as part of an audit of its 2011 Mexico financial statements by the Mexico tax authority, the Corporation's bank accounts in Mexico, which contain minor balances totalling approximately USD$5,400, have been frozen by the tax authority under standard procedure during the tax audit process. Divergent does not believe that the outcome if this tax audit will result in any material effect on the Corporation or its ability to collect the outstanding receivable.
ABOUT DIVERGENT ENERGY SERVICES CORP.
Headquartered in Calgary, Alberta, DIVERGENT Energy Services Corp. provides an array of artificial lift products and services that are used in the oil and gas industry, including its revolutionary Linear Electromagnetic Submersible Pump. Divergent's Pump is approaching commercialization and is targeted to replace traditional oil pumpjacks. Other Divergent products currently in use by its oil and gas industry customers include Electric Submersible Pumps and Electric Submersible Progressing Cavity Pumps.
Neither the TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.
This news release may contain certain forward-looking information and statements, including without limitation, statements pertaining to the use of proceeds and the closing of the private placement including the Corporation's ability to obtain necessary approvals from the TSX Venture Exchange. All statements included herein, other than statements of historical fact, are forward-looking information and such information involves various risks and uncertainties. There can be no assurance that such information will prove to be accurate, and actual results and future events could differ materially from those anticipated in such information. A description of assumptions used to develop such forward-looking information and a description of risk factors that may cause actual results to differ materially from forward-looking information can be found in the Corporation's disclosure documents on the SEDAR website at www.sedar.com. The Corporation does not undertake to update any forward-looking information except in accordance with applicable securities laws.