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DIVERGENT Energy Services Announces the Release of 2022 Third Quarter Results

Divergent Energy Services Corp.
Divergent Energy Services Corp.

CALGARY, Alberta, Nov. 16, 2022 (GLOBE NEWSWIRE) -- DIVERGENT Energy Services Corp. (“Divergent”, the "Company", or “DVG) announces the release of its financial results for the three and six months ended September 30, 2022.   All amounts are in thousands (000’s) of United States Dollars, unless otherwise noted.

HIGHLIGHTS FOR THE QUARTER

  • The Company posted its ninth consecutive quarter of revenue growth earning $3.7 million of revenue in the third quarter of 2022.

  • Adjusted EBTIDA of $221 thousand in the third quarter of 2022 represents the eighth consecutive quarter of positive adjusted EBITDA.

  • Divergent’s balance sheet continues to strengthen with positive working capital of $353 thousand.

INDUSTRY OUTLOOK

Divergent’s overall outlook for services for the remainder of 2022 remains positive. Global demand for energy remains strong as the world's major economies continue to rely on petroleum products in everyday life. Macroeconomic factors including continued inflationary pressures, escalation of geopolitical tension, and the lifting of COVID-19 restrictions all point to continued strong commodity pricing through 2022 and into 2023. At these commodity price levels we anticipate generally robust oilfield service activity levels as our customers remain very positive on their current capital spending plans for the remainder of 2022 and into 2023.

Customers continue to demonstrate an urgency in returning wells to production and overall demand for services is increasing. While Divergent is working to increase its market share, it is constrained by supply chain delays and staffing availability. Attracting and retaining additional personnel continues to be a challenge across the industry making it much more difficult than in past upturns to supply additional crews. The Company’s customer base has indicated that it intends to continue their workover programs for the next 12 months at a pace which may exceed that experienced during the previous three quarters, with limiting factors being supply chain, service rig availability and labour.

While the cost of sales in the third quarter of 2022 were negatively impacted by inflationary increases to parts, components and logistics, the Company is actively working with customers to pass these cost increases along. There is no guarantee that all of these cost increases can be passed along in the near term.

The positive commodity pricing trends the industry is currently experiencing is in part caused by a structural shortfall in supply which will be difficult for the industry to overcome for some time.  As a result, the demand for energy services and the ability for the sector to improve over the next few years is seen as highly likely. In this environment the Company intends to seek and evaluate strategic growth opportunities to both diversify its product offerings and drive continuous margin improvements.

FINANCIAL AND OPERATING HIGHLIGHTS – THREE AND SIX MONTHS ENDED SEPTEMBER 30, 2022

Select Financial Information for the three and six months ended September 30, 2022 have been summarized below. Tables contain results for 2022 and 2021. Refer to the Company’s audited condensed consolidated financial statements and related management’s discussion and analysis (“MD&A”) for a full description.

(All figures in ‘000’s of US dollars except number of shares and per share data, unless otherwise stated)

Unaudited Condensed Consolidated Statements of Net Income and Comprehensive Income

 

 

Three months ended
September 30,

 

Nine months ended
September 30,

 

 

 

2022

 

2021

 

2022

 

2021

 



Revenue

 

$3,712

 

$2,185

 

$9,470

 

$5,897

 

Cost of sales

 

(3,149)

 

(1,557)

 

(7,518)

 

(4,518)

 

Provision reversal for slow moving inventory

 

-

 

21

 

-

 

181

 

Gross profit

 

563

 

649

 

1,952

 

1,560

 



General and administration

 

(419)

 

(371)

 

(1,216)

 

(1,214)

 

Depreciation and amortization

 

(1)

 

(2)

 

(7)

 

(7)

 

Share-based compensation

 

(10)

 

(12)

 

(35)

 

(19)

 

Results from operating activities

 

133

 

264

 

694

 

320

 

 

 

 

 

 

 

Finance income

 

445

 

300

 

289

 

2,183

 

Net income

 

578

 

564

 

983

 

2,503

 

 

 

 

 

 

 

Other comprehensive loss being foreign exchange losses

 

(559)

 

(218)

 

(700)

 

(32)

 

Total comprehensive income for the period

 

$19

 

$346

 

$283

 

$2,471

 

 

 

 

 

 

 

Income per share

 

 

 

 

 

Net income – basic and dilutive

 

$0.01

 

$0.02

 

$0.03

 

$0.08

 

 

 

 

 

 

 

Unaudited Condensed Consolidated Statements of Financial Position

 

 

September 30,
2022

 

December 31,
2021

 

ASSETS

 

(Unaudited)

 

(Audited)

 

Current assets

 

 

 

Cash

 

$665

 

$607

 

Prepaid expenses, deposits and advances

 

126

 

104

 

Trade receivables

 

1,188

 

877

 

Inventories

 

554

 

711

 

 

 

2,533

 

2,299

 

Non-current assets

 

 

 

Property and equipment

 

159

 

133

 

Right-of-use assets

 

501

 

535

 

Total Assets

 

$3,193

 

$2,967

 

 

 

 

LIABILITIES

 

 

Current liabilities

 

 

Accounts payable and accrued liabilities

 

$1,462

 

$1,438

 

Current portion of lease obligations

 

171

 

156

 

Interest payable

 

145

 

183

 

Promissory notes

 

402

 

216

 

 

 

2,180

 

1,993

 

Non-current liabilities

 

 

 

Lease obligations

 

297

 

353

 

Promissory notes

 

1,819

 

2,061

 

Government loans

 

29

 

26

 

Debentures

 

670

 

654

 

Total Liabilities

 

$4,995

 

$5,087

 

SHAREHOLDERS’ DEFICIT

 

 

 

Share capital

 

$19,613

 

$19,613

 

Contributed surplus

 

6,007

 

5,972

 

Warrants

 

99

 

99

 

Accumulated other comprehensive loss

 

(1,718)

 

(1,018)

 

Accumulated deficit

 

(25,803)

 

(26,786)

 

Total Shareholders’ Deficit

 

($1,802)

 

($2,120)

 

Total Liabilities and Shareholders’ Deficit

 

$3,193

 

$2,967

 

The Company’s complete set of September 30, 2022 quarter end filings have been filed on the SEDAR website at www.sedar.com and are also available on the Company’s website at www.divergentenergyservices.com.

For Further Information:

Ken Berg, President and Chief Executive Officer, kberg@divergentenergyservices.com

Ken Olson, Interim Chief Financial Officer, ken.olson@divergentenergyservices.com

ABOUT DIVERGENT ENERGY SERVICES CORP.

Headquartered in Calgary, Alberta, Divergent provides fluids management products and services for the water, gas and oil industries through its wholly owned subsidiary Extreme Pump Solutions LLC.

DIVERGENT Energy Services Corp., 2020, 715 – 5th Ave SW, Calgary, AB T2P 2X6, (403) 543-0060, (403) 543-0069 (fax), www.divergentenergyservices.com

FORWARD LOOKING STATEMENTS

This press release contains forward-looking statements, including, without limitation, statements pertaining to anticipated future operational activity levels of Divergent and of a majority of its customers, and statements pertaining to interest payments on the Company’s debentures. All statements included herein, other than statements of historical fact, are forward-looking information and such information involves various risks and uncertainties, including: the risk that the anticipated slowdown in sales and service of submersible pumps by Divergent’s customers lasts longer than expected or impacts Divergent’s revenues more severely than expected, the risk that the COVID-19 pandemic and the low oil and gas price environment cause additional negative effects on Divergent’s business, the risk that the suspension of trading of the Company’s common shares by the TSXV cannot be lifted in a timely manner or at all, and the risk that the Company cannot remedy the outstanding interest payments under the terms of its debenture indenture in a timely manner or at all . 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 Company's disclosure documents on the SEDAR website at www.sedar.com. Forward-looking statements are based on estimates and opinions of management of the Company at the time the information is presented, including expectations provided to Divergent by its customers. The Company 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 Company undertakes no obligation to update or revise any forward-looking statements, except as required by applicable securities laws.

This press release contains financial outlook information ("FOFI") about prospective revenue reductions, which are subject to the same assumptions, risk factors, limitations, and qualifications as set forth in the above paragraphs. FOFI contained in this press release was made as of the date hereof and was provided for the purpose of providing an update regarding an anticipated material reduction in near-term revenue. Divergent disclaims any intention or obligation to update or revise any FOFI contained in this press release, whether as a result of new information, future events or otherwise, unless required pursuant to applicable law. Readers are cautioned that the FOFI contained in this press release should not be used for purposes other than for which it is disclosed herein.

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.

(Not for dissemination in the United States of America)