CALGARY, ALBERTA--(Marketwired - Nov. 21, 2014) -
NOT FOR DISSEMINATION IN THE UNITED STATES OF AMERICA
DIVERGENT Energy Services Corp. (the "Corporation") (TSX VENTURE:DVG) has released its financial results for the nine months ended September 30, 2014 and provides the following financial highlights and operations update.
FINANCIAL HIGHLIGHTS
| For the three months ended September 30, |
2014 |
2013 |
| Revenue |
$1,698 |
$1,625 |
| Net loss for the period |
(1,438) |
(333) |
| Total assets |
12,743 |
13,904 |
| Total liabilities |
7,790 |
5,253 |
| Shareholders' equity |
4,953 |
8,651 |
| Loss per share - basic and diluted |
($0.01) |
$0.00 |
OPERATIONS UPDATE
ARTIFICIAL LIFT
The Corporation is pleased to announce that it is preparing to install and commission three (3) Linear Electric Submersible Pumps ("LESP") as part of a thirty (30) day test of the new technology. The remaining two (2) LESP's will be kept in inventory and installed at a later date, yet to be determined. During the test, the LESP's will be evaluated for ease of installation, pump efficiency, electrical draw, functionality, and other operating parameters. The Corporation will not be providing updates during the test period and will only announce the results once the data has been analyzed. Management anticipates that a successful test will result in a larger second phase deployment, the scope and timing of which has not been determined.
This is the Corporation's first installation of the technology, which will evaluate three major components of the LESP: a) the downhole permanent magnet reciprocating motor; b) a reciprocating pump; and c) a variable frequency drive, that together make up the LESP. Divergent' s client has chosen the Bakken formation for initial tests due to the formation's oil characteristics and large inventory of wellbores with existing rod pumps in use.
The Corporation's conventional Electric Submersible Pump ("ESP") operation in Gillette, WY continues to attract new clients, and has become the largest ESP provider for gas producers in the Powder River Basin. Management anticipates leveraging this success to attract oil producers, whose wells are deeper and are expected to generate higher revenues per installation due to increased horsepower and pumping rates as compared to the existing gas business of pumping water from shallow gas wells.
CONSTRUCTION
Oilfield construction activity has resumed in the Villahermosa region of Southeastern Mexico where the Corporation provides project management and financing. The Corporation currently has four (4) projects in various stages of completion. Clients continue to indicate that an inventory of construction projects exists for the remainder of 2014 and into 2015. The Corporation and its unrelated Mexican business partner executed a new agreement, the Amended and Restated Project Financing Agreement effective November 3, 2014. This agreement provides for 100% of the construction project profits to be applied directly to the outstanding Long-term loan receivable (original amount of $1,385) and the Long-term finance contract (original amount of $1,209). Previous agreements had the parties splitting the profits on a 50/50 basis, whereby only 50% of the profits were applied to the outstanding Long-term receivable and Long-term finance contract. The Corporation will continue to earn its 20% funding fees and 3% administration fees on its construction financing activities.
PIPE SALES
Pipe tenders continue to be identified and pursued by management but no current projects have been awarded to the Corporation. Management will provide updates as to any successful tenders in Mexico as they become available. Project awards will also be contingent on the Corporation securing additional working capital.
RESULTS OF OPERATIONS
Selected Financial Information
(in 000's of USD $ unless otherwise stated)
| For the three months ended September 30, |
2014 |
2013 |
| Revenue |
$1,698 |
$1,625 |
| Cost of sales |
(1,270) |
(890) |
| Gross Profit |
428 |
735 |
| Selling and administrative expense |
(1,097) |
(776) |
| Net finance expense |
(1,136) |
(198) |
| |
(2,233) |
(974) |
| Loss before income taxes |
(1,805) |
(239) |
| Income tax recovery (expense) |
367 |
(94) |
| Net earnings (loss) for the period |
(1,438) |
(333) |
| Net loss per share - basic |
($0.01) |
$0.00 |
| |
|
|
| For the nine months ended September 30, |
2014 |
2013 |
| Revenue |
$4,773 |
$4,353 |
| Cost of sales |
(3,263) |
(2,646) |
| Gross Profit |
1,510 |
1,707 |
| Selling and administrative expense |
(2,731) |
(2,212) |
| Net finance expense |
(2,308) |
(382) |
| |
(4,448) |
(2,594) |
| Loss before income taxes |
(5,039) |
(887) |
| Income tax expense |
(40) |
(247) |
| Net earnings (loss) for the period |
(3,569) |
(1,134) |
| Net loss per share - basic |
($0.04) |
($0.01) |
| |
|
|
| As at September 30, |
2014 |
2013 |
| Assets |
|
|
| |
Current assets |
$10,492 |
$11,755 |
| |
Long-term assets |
2,251 |
2,149 |
| |
12,743 |
13,904 |
| Liabilities |
|
|
| |
Current liabilities |
7,651 |
5,088 |
| |
Long-term liabilities |
139 |
165 |
| |
7,790 |
5,253 |
| Working capital ratio |
1.37 |
2.31 |
| Debt (long-term and debentures) to equity ratio |
35% |
28% |
The Corporation's complete set of September 30, 2014 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.
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.