Divergent Energy Services Corp.
TSX VENTURE : DVG

Divergent Energy Services Corp.

May 27, 2015 09:00 ET

DIVERGENT Energy Services Corp.: Release of Operational Highlights and Q1 2015 Interim Results

CALGARY, ALBERTA--(Marketwired - May 27, 2015) -

NOT FOR DISSEMINATION IN THE UNITED STATES OF AMERICA

DIVERGENT Energy Services Corp. (TSXVENTURE:DVG) (the "Corporation") has released its financial results for the three months ended March 31, 2015 and provides the following highlights.

OPERATIONAL HIGHLIGHTS

ARTIFICIAL LIFT

The Corporation installed and started its Linear Electric Submersible Pump (the "Pump") on April 18, 2015. This was the third installation during a thirty-day test period to evaluate the prototype of the Pump. As previously announced, a faulty bushing had caused the failure on the first two installations and a new bushing was used for the third Pump installation. The key accomplishments thus far in running the prototype Pump are:

  • Successfully adjusting the pump rates remotely; and
  • Successfully shutting down and restarting remotely.

In our Wyoming business, we estimate that we have increased our market share to 60% (from 40% in 2014) as a result of our strong focus on sales and operational excellence. Our position as the largest Electric Submersible Pump ("ESP") supplier for gas producers in the Powder River Basin provides us with the operational platform to launch our new Pump. A number of our key clients on the gas producing side also have a large interest in oil plays in Wyoming and have expressed interest in installing our new Pump.

CONSTRUCTION

The Corporation completed a number of Mexico construction projects in the first quarter for which the receivables have now been collected.

OUTLOOK

Our industry partner has agreed to move ahead with the commercial version of the Pump. With four prototypes remaining in inventory, we will continue to look for additional candidates to install two of the remaining four prototypes so that we can continue to refine our control systems and automation software. Two prototypes will be kept in inventory as backups. The timeline to become fully commercialized is unknown at this time, as the rate of adoption of new technology cannot be clearly predicted. As we move towards commercialization, our immediate focus will be to:

  • Commence production of the commercial-design Pumps;
  • Open a permanent Canadian operations facility in SE Saskatchewan;
  • Install Pumps in both Canada and the United States; and
  • Continually improve our automation software to enable the Pump to adjust "on-the-fly" to changes in wellbore conditions.

ABOUT THE SYSTEM

The permanent magnet motor technology duplicates rod pump movement without rod string or surface lifting equipment. All moving parts are contained within the submersible pump housing, eliminating rod and tubing wear, making the Pump ideally suited for landing in deviated or horizontal oil wells and as an alternative to conventional pumpjack installations.

RESULTS OF OPERATIONS

Selected Financial Information
(in 000's of USD $ unless otherwise stated)
For the three months ended March 31, 2015 2014
Revenue $ 1,367 $ 1,519
Cost of sales (797 ) (898 )
Gross Profit 570 621
Selling and administrative expense (825 ) (711 )
Product development (204 ) -
Provision for bad debts (1,602 ) -
Settlement of contingent consideration (238 ) -
Stock based compensation (122 ) (3 )
Net finance expense (242 ) (312 )
(3,233 ) (1,026 )
Loss before income taxes (2,663 ) (405 )
Income tax recovery (expense) 276 (242 )
Net loss for the period (2,387 ) (647 )
Net loss per share - basic $ (0.03 ) $ (0.01 )
As at March 31, 2015 2014
Assets
Current assets $ 7,369 $ 11,365
Long-term assets 819 3,499
8,188 14,864
Liabilities
Current liabilities 7,182 6,904
Long-term liabilities 111 170
7,293 7,074
Working capital ratio 1.03 1.65
Debt (long-term and debentures) to equity ratio 30 % 33 %

The Corporation's complete set of March 31, 2015 financial statements and corresponding management's discussion and analysis have been filed on the SEDAR website at www.sedar.com and are also available on the Corporation's website at www.divergentenergyservices.com.

Further information can be accessed at www.divergentenergyservices.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 press release contains forward-looking statements, including, without limitation, statements pertaining to the installation of additional hardware and the starting of the Pump. 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. Forward-looking statements are based on estimates and opinions of management of the Corporation at the time the information is presented. The Corporation may, as considered necessary in the circumstances, update or revise such forward-looking statements, whether as a result of new information, future events or otherwise, but the Corporation undertakes no obligation to update or revise any forward-looking statements, except as required by applicable securities laws.

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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