News out Very good update in this release (why release this on a friday afternoon??). Yes they seem to be having some type of an issue with the new motor/pump but it sounds like the actual magnetic motor technology is solid (motor continues to work fine) and the issue is more on the pump side? or may be similar to the first time - motor and pump connection area. They will find out next week and correct and get going again...all good.
Selling the Gillette property was a bit of a surprise but I think smart...$400k USD should really help to get them through until as they say they will be cash flow positive in Q4. Record sales and activity ongoing in US office...I suspect they are doing very good numbers down there as they picked up alot of work from other service providers that have left that region.
Mexico - sounds like they still fully expect the $1M + receivable to come, just timing.
Overall, a good update in my books...not gonna lie, dont understand why they cant get another test customer but it sounds like they are close. So sounds like business is booming in Gillette, they got some funds from the sale and expecting the larger receivable from Mexico, and they should know next week the issue down hole...they are going through some issues, but I fully believe they will make it through the other side to full commercialization.
GLTA C1
DIVERGENT ENERGY SERVICES CORP. ANNOUNCES LINEAR PUMP UPDATE AND IMPROVED FINANCIAL POSITION
Divergent Energy Services Corp. has provided an update on its linear electromagnetic submersible pump and an update on recent developments that strengthen the company's financial position.
Linear pump update
Divergent continues to advance the linear pump toward 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 standards, a new linear pump was reinstalled 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 continuing wet weather in the area, the client has been unable to access the well site, 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, Wyo., for net proceeds of approximately $400,000 (U.S.). With Divergent's continuing activity growth from Gillette over the past nine 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 continuing 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.
Mexico update
The corporation continues to pursue its outstanding receivable in Mexico, and work is continuing to reduce costs during this period. The corporation also announces that as part of an audit of its 2011 Mexican financial statements by the Mexican tax authority, the corporation's bank accounts in Mexico, which contain minor balances totalling approximately $5,400 (U.S.), have been frozen by the tax authority under standard procedure during the tax audit process. Divergent does not believe that the outcome of this tax audit will result in any material effect on the corporation or its ability to collect the outstanding receivable.