CALGARY, Alberta, April 29, 2020 (GLOBE NEWSWIRE) — DIVERGENT Energy Services Corp. (“Divergent”, the “Company“, “our” or “DVG”) (DVG: TSX-V) announces the release of its financial results for the year ended December 31, 2019.
FINANCIAL AND OPERATING HIGHLIGHTS – YEAR ENDED DECEMBER 31, 2019Demand for artificial lift services across the United States remained strong throughout 2019 and the Company was able to secure work in adjacent geographic areas within the region that delivered higher revenues per job. As a result, revenues increased in both the three and twelve month periods of 2019 as compared to 2018.A significant majority of the Company’s sales are generated from one customer who is focused solely on coal bed methane (“CBM”) wells in the Powder River Basin. The level of activity with this customer has remained relatively consistent over the past three years, and effective October 1, 2019, the customer agreed to amend the master services contract with a cost recovery price increase of 13 percent.Select Financial Information for the three and twelve-month periods ending December 31, 2019 have been summarized as follows:RESULTS OF OPERATIONS
Select Financial Information – Tables contain fourth quarter and year-end results for 2019 and 2018. Refer to the Company’s consolidated audited financial statements and related management’s discussion and analysis (“MD&A”) for a full description.The Company’s complete set of 2019 year 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.OUTLOOKAs of the date of this MD&A the oil and gas market has been negatively impacted by major international supply competition and the COVID 19 pandemic. On March 30, 2020 the Company issued a press release clearly outlining the direct impact of these events on the Company and the steps it has taken to work with customers, suppliers, creditors and other stakeholders to work through this unprecedented situation.The Company has significantly reduced its workforce by temporarily laying off staff and is pursuing all government wage subsidy programs that may apply in both Canada and the United States. Senior executive staff have taken salary reductions and the Board of Directors has waived the current payment of fees. The Company continues discussions with major customers and suppliers to enable collection of receivables and to meet extended payables terms as we manage through these unprecedented challenges. In response to the COVID-19 pandemic, the Company has also committed to a “work from home” protocol, where practical, and has limited access to our facilities by non-essential and third-party personnel.The slowdown in activity is expected to remain until oil and gas prices improve. The Company’s largest client has indicated that it intends to perform workovers on only its best producing wells to preserve its own cash reserves. While this will result in some sales during the second quarter, collection is expected to be delayed. A full return to work is contingent on the price of natural gas rising to meet the clients lifting costs, but is also stabilized by the necessity of DVG’s client to manage the reservoir to maintain the long term viability of the field.There is currently a Senate bill proposed in Colorado as part of the government’s renewable energy strategy which would include methane from coal as part of the renewable energy mix. The bill, when passed, will require large natural gas utilities to source some of their supply from sources other than conventional natural gas. DVG’s client anticipates this bill, if passed, will create a demand for their methane gas at premium pricing which in turn provides DVG with more stable cash flow.During the second quarter of 2020, DVG continues to be called upon for occasional service work for other clients and has been awarded a number of jobs which are to be scheduled pending commodity prices rising above each client’s lifting costs. For Further Information:Ken Berg, President and Chief Executive Officer, kberg@divergentenergyservices.comLance Mierendorf, Interim Chief Financial Officer, lmierendorf@divergentenergyservices.comABOUT DIVERGENT ENERGY SERVICES CORP.Headquartered in Calgary, Alberta, Divergent provides Artificial Lift products and services that are used in the oil and gas industry. Product lines including Electric Submersible Pumps, Electric Submersible Progressing Cavity Pumps, and the future development of an Electromagnetic Pump technology.DIVERGENT Energy Services Corp., 2020, 715 – 5th Ave SW, Calgary, AB T2P 2X6, (403) 543-0060, (403) 543-0069 (fax), www.divergentenergyservices.comFORWARD LOOKING STATEMENTSThis 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)
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