DIVERGENT Energy Services Announces the Release of 2022 Second Quarter Results
August 11 2022 - 9:00AM
DIVERGENT Energy Services Corp.
(“Divergent”, the "
Company", or
“
DVG”
) (DVG: TSX-V)
announces the release of its financial results for the three and
six months ended June 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 $3.1 million of revenue in the second quarter of
2022.
- Adjusted EBTIDA of $359 thousand in the second quarter of 2022
represents the seventh consecutive quarter of positive adjusted
EBITDA.
- Divergent’s balance sheet continues to strengthen with positive
working capital of $461 thousand.
INDUSTRY OUTLOOK
Divergent’s overall outlook for our 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. At these
commodity price levels we anticipate generally robust oilfield
service activity levels throughout the remainder of the year as our
customers remain very positive on their current capital spending
plans for the second half of 2022.
Our customer base in Wyoming is demonstrating a
renewed 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, barring interruptions due to weather, supply chain or
labour limitations.
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 JUNE 30, 2022
Select Financial Information for the three and
six months ended June 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 June 30, |
|
Six months ended June 30, |
|
|
|
|
2022 |
|
|
2021 |
|
|
2022 |
|
|
2021 |
|
Revenue |
|
|
$3,142 |
|
|
$1,991 |
|
|
$5,758 |
|
|
$3,712 |
|
Cost of sales |
|
|
(2,461) |
|
|
(1,678) |
|
|
(4,369) |
|
|
(2,961) |
|
Provision reversal for slow
moving inventory |
|
|
- |
|
|
36 |
|
|
- |
|
|
160 |
|
Gross profit |
|
|
681 |
|
|
349 |
|
|
1,389 |
|
|
911 |
|
General and
administration |
|
|
(391) |
|
|
(397) |
|
|
(797) |
|
|
(843) |
|
Depreciation and
amortization |
|
|
(4) |
|
|
(3) |
|
|
(6) |
|
|
(5) |
|
Share-based compensation |
|
|
(13) |
|
|
(6) |
|
|
(25) |
|
|
(7) |
|
Results from operating
activities |
|
|
273 |
|
|
(57) |
|
|
561 |
|
|
56 |
|
|
|
|
|
|
|
Finance income (expense) |
|
|
120 |
|
|
(251) |
|
|
(156) |
|
|
1,883 |
|
Net income
(loss) |
|
|
393 |
|
|
(308) |
|
|
405 |
|
|
1,939 |
|
|
|
|
|
|
|
Other comprehensive income
(loss) being foreign exchange gains and losses |
|
|
(254) |
|
|
95 |
|
|
(141) |
|
|
186 |
|
Total comprehensive
income (loss) for the period |
|
|
$139 |
|
|
($213) |
|
|
$264 |
|
|
$2,125 |
|
|
|
|
|
|
|
Income (loss) per
share |
|
|
|
|
|
Net income (loss) – basic and
dilutive |
|
|
$0.01 |
|
|
($0.01) |
|
|
$0.01 |
|
|
$0.06 |
|
Unaudited Condensed Consolidated Statements of Financial
Position
|
|
June 30, 2022 |
|
December 31, 2021 |
|
ASSETS |
|
(Unaudited) |
|
(Audited) |
|
Current assets |
|
|
|
Cash |
|
|
$432 |
|
|
$607 |
|
Prepaid expenses, deposits and advances |
|
|
55 |
|
|
104 |
|
Trade receivables |
|
|
1,592 |
|
|
877 |
|
Inventories |
|
|
488 |
|
|
711 |
|
|
|
|
2,567 |
|
|
2,299 |
|
Non-current assets |
|
|
|
Property and equipment |
|
|
132 |
|
|
133 |
|
Right-of-use assets |
|
|
466 |
|
|
535 |
|
Total
Assets |
|
|
$3,165 |
|
|
$2,967 |
|
|
|
|
|
LIABILITIES |
|
|
|
Current liabilities |
|
|
|
Accounts payable and accrued liabilities |
|
|
$1,429 |
|
|
$1,438 |
|
Current portion of lease obligations |
|
|
174 |
|
|
156 |
|
Interest payable |
|
|
157 |
|
|
183 |
|
Promissory notes |
|
|
346 |
|
|
216 |
|
|
|
|
2,106 |
|
|
1,993 |
|
Non-current liabilities |
|
|
|
Lease obligations |
|
|
259 |
|
|
353 |
|
Promissory notes |
|
|
1,914 |
|
|
2,061 |
|
Government loans |
|
|
28 |
|
|
26 |
|
Debentures |
|
|
689 |
|
|
654 |
|
Total Liabilities |
|
|
$4,996 |
|
|
$5,087 |
|
SHAREHOLDERS’
DEFICIT |
|
|
|
Share capital |
|
|
$19,613 |
|
|
$19,613 |
|
Contributed surplus |
|
|
5,997 |
|
|
5,972 |
|
Warrants |
|
|
99 |
|
|
99 |
|
Accumulated other comprehensive loss |
|
|
(1,159) |
|
|
(1,018) |
|
Accumulated deficit |
|
|
(26,381) |
|
|
(26,786) |
|
Total Shareholders’
Deficit |
|
|
($1,831) |
|
|
($2,120) |
|
Total Liabilities and
Shareholders’ Deficit |
|
|
$3,165 |
|
|
$2,967 |
|
The Company’s complete set of June 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)
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