Divergent Energy Services Corp.

Divergent Energy Services Corp.

August 28, 2014 16:49 ET

Divergent Energy Services Corp.: Release of Interim Results and Operations Update

CALGARY, ALBERTA--(Marketwired - Aug. 28, 2014) -


Divergent Energy Services Corp. (TSX VENTURE:DVG) (the "Corporation") has released its financial results for the three and six month periods ended June 30, 2014 and provides the following Operations and Corporate update.



The Corporation is pleased to announce that five Linear Electric Submersible Motors are assembled, tested, prepared for shipment and are being scheduled for immediate delivery to Canada. The Corporation's Vice President of Product Development travelled to the manufacturer's factory in China to witness the final assembly, testing, and packaging. In addition, we have hired a senior Artificial Lift expert as the Corporation's Business Development Manager and to lead the implementation and growth of this new product line. The motors are intended to resolve the ongoing issues of rod and tubing wear in conventional oil wells utilizing conventional rod pump technology by eliminating the rod string and pump jack.

Our conventional submersible pump sales continued to experience solid growth, posting improved year-over-year revenues due to increased market share in Wyoming. Management expects continued organic growth from this division as it continues to demonstrate a high quality of service and products.

The submersible electric motor distribution network added modest revenue growth in the quarter, largely due to corporate focus on finalizing the Linear Motors which unfortunately diverted attention from conventional sales. Management will continue to focus on expanding its sales into Canada and through existing relationships within the United States.


The large projects in the Terra region that had been suspended have been reinstated by Pemex and work is expected to commence immediately following an inspection of the area. The inspection is intended to confirm the status of the area and confirm any adverse effects from weather and any other noticeable changes to the sites. The market continues to suggest that there is a solid inventory of projects in which to engage.


The Mexican national oil company Pemex has issued tenders for flexible pipe work in Northern Mexico. To date, none of the tenders submitted by the Corporation have been fully analyzed by Pemex and the award dates are yet uncertain. Management will provide updates on the tenders as the awards become known.


The Corporation's previously announced USD $17.5 million revolving line of credit continues to make progress towards a closing date. The two party's legal counsels continue to work towards satisfying the needs of both parties including the subordination of the existing debentures.

The Corporation's new website is near completion and expected to launch very soon. The launch was delayed by the limited resources within the organization to dedicate to the complete re-write of content. Management anticipates that visitors to the new site will be impressed with the ease of navigation and access to information. The website will continue to expand and grow with the Corporation and as new product manuals and brochures are developed.

Selected Financial Information
(in 000's of USD $ unless otherwise stated)
For the three months ended June 30, 2014 2013
Revenue $ 1,556 $ 1,433
Cost of sales (1,095 ) (927 )
Gross Profit 461 506
Selling and administrative expense (920 ) (843 )
Net finance expense (860 ) (482 )
(1,780 ) (1,325 )
Loss before income taxes (1,319 ) (819 )
Income tax expense (165 ) -
Net earnings (loss) for the period (1,484 ) (819 )
Net loss per share - basic $ (0.01 ) $ (0.01 )
For the six months ended June 30, 2014 2013
Revenue $ 3,075 $ 2,728
Cost of sales (1,993 ) (1,756 )
Gross Profit 1,082 972
Selling and administrative expense (1,634 ) (1,436 )
Net finance expense (1,172 ) (184 )
(2,806 ) (1,620 )
Loss before income taxes (1,724 ) (648 )
Income tax expense (407 ) (153 )
Net earnings (loss) for the period (2,131 ) (801 )
Net loss per share - basic $ (0.01 ) $ (0.01 )
As at June 30, 2014 2013
Current assets $ 10,804 $ 12,624
Long-term assets 2,915 1,988
13,719 14,612
Current liabilities 7,324 5,603
Long-term liabilities 156 -
7,480 5,603
Working capital ratio 1.48 2.25
Debt (long-term and debentures) to equity ratio 36 % 20 %

The Corporation's complete set of June 30, 2014 financial statements and corresponding management's discussion and analysis have been filed on the SEDAR website at www.sedar.com.

Headquartered in Calgary, Alberta, Divergent Energy Services Corp. provides an array of specialized products and services that are used in the energy, mining, and industrial & agricultural water industries.

This document contains information that constitutes forward-looking information under applicable securities legislation. All statements, other than those of historical fact, which address activities, events, outcomes, results or developments that the Corporation anticipates or expects may or will occur in the future (in whole or in part) should be considered forward-looking information. In some cases, forward-looking information can be identified by terms such as "forecast", "future", "may", "expect", "anticipate", "believe", "potential", "enable", "plan", "continue", "contemplate", or other comparable terminology. In particular, this document contains statements regarding sales volumes and future operations of the Corporation.

Forward-looking information is based on current expectations, estimates, projections and assumptions, which the Corporation believes are reasonable but which may prove to be incorrect and therefore such forward-looking information should not be unduly relied upon. The forward-looking information in this document is based upon on various assumptions, including assumptions that the Corporation's contracts will be completed in accordance with their terms and according to schedule and that the projects will not be unduly delayed due to weather or underground conditions at the project sites as well as assumptions regarding industry activity: the general stability of the economic and political environment; the effect of market conditions on demand for the Corporation's products and services; the ability to obtain qualified staff, equipment and services in a timely and cost efficient manner; the ability to operate its business in a safe, efficient and effective manner; the performance and characteristics of various business segments; the effect of current plans; the timing and costs of capital expenditures; future oil and natural gas prices; currency, exchange and interest rates; the regulatory framework regarding royalties, taxes and environmental matters in the jurisdictions in which the Corporation operates; and the ability of the Corporation to successfully market its products and services.

Further, there is a multitude of risks that may cause the Corporation's actual results to differ materially from those contemplated (whether expressly or by implication) in the forward-looking information in this document. These risks include, without limitation, risks of counterparties breaching contracts; construction risks; economic risks; the risk that revenues may not be received in the timeframe that is projected in this document; uncertainty regarding underground conditions; financing risks; solvency risks; tax risks; legislative and regulatory developments; customers' completion of expected work programs; fluctuating prices for crude oil and natural gas; changes in drilling activity; general global economic, political and business conditions; weather conditions; regulatory changes; the successful exploitation and integration of technology; customer acceptance of technology; success in obtaining issued patents; the potential development of competing technologies by market competitors; availability of products, qualified personnel, manufacturing capacity and raw materials, and the Corporation's successful performance under contracts. Readers are cautioned that the above list of factors is not exhaustive. Other factors which could cause actual results, performance or achievements of the Corporation to differ materially from those contemplated (whether expressly or by implication) in the forward-looking statements or other forward-looking information are disclosed in the Corporation's publicly filed disclosure documents.

The Corporation is not obligated to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by applicable laws. Because of these risks, uncertainties and assumptions, prospective investors should not place undue reliance on these forward-looking statements. The foregoing statements expressly qualify any forward-looking information stated in this document.

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.

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