Symbol (DVG: TSX-V)
CALGARY, Alberta, May 12, 2021 (GLOBE NEWSWIRE) — DIVERGENT Energy Services Corp. (“Divergent”, the “Company“, or “DVG”) announces the release of its financial results for the three months ended March 31, 2021.
HIGHLIGHTS FOR THE QUARTER
- Revenues of $1,721 consistent with Q1 2020.
- Operating income of $113 and adjusted EBITDA of $62 as compared to ($571) and ($264) demonstrated improved performance over prior period.
- Financial restructuring was approved by debenture holders and shareholders in December 2020 and was approved by the TSX-V on January 19, 2021, allowing the debenture conversion and share consolidation to be completed.
- Cash flow was sufficient to pay interest on debentures in cash, as planned, and not in shares of the Company.
INDUSTRY OUTLOOK
The improvements in the oil and gas markets and the growing confidence in the United States of a controlled COVID-19 pandemic is expected to increase submersible pump sales across the United States in 2021. Both markets demonstrated strong pricing during the 2020/2021 winter months, a trend which has continued into the second quarter. The amount of work available for the remainder of the year is dependent on the price of gas and how each client makes its internal decisions for the use of its working capital such as improving its balance sheet versus drilling new wells.
In the ongoing COVID-19 pandemic, the Company continues its commitment to a “work from home” protocol, where practical, and has limited access to our facilities by non-essential and third-party personnel.
The Company’s largest client has indicated that it intends to perform workovers for the remainder of the year at a pace similar to Q1 2021, with the caution that Q2 historically experiences reduced activity due to spring storms that limit access to remote wellsites.
FINANCIAL AND OPERATING HIGHLIGHTS – THREE MONTHS ENDED MARCH 31, 2021
Select Financial Information for the three month period ended March 31, 2021 have been summarized below. Tables contain first quarter results for 2021 and 2020. Refer to the Company’s unaudited 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 Loss and Comprehensive Loss
| Three months ended March 31, | ||
| 2021 | 2020 | |
| Revenue | $1,721 | $1,764 |
| Cost of sales | (1,283) | (1,499) |
| Provision for slow moving inventory | 124 | (195) |
| Gross profit | 562 | 70 |
| General and administration | (446) | (623) |
| Depreciation and amortization | (2) | (12) |
| Stock based compensation | (1) | (6) |
| Results from operating activities | 113 | (571) |
| Finance income (expense) | 2,134 | 763 |
| Net income (loss) | 2,247 | 192 |
| Other comprehensive (loss) income being foreign exchange (losses) gains | 91 | (505) |
| Total comprehensive loss for the period | $2,338 | ($313) |
| Income (loss) per share | ||
| Net income (loss) – basic and dilutive | $0.08 | $0.02 |
Unaudited Condensed Consolidated Statements of Financial Position
| March 31, 2021 |
December 31, 2020 |
|
|
ASSETS |
||
| Current assets | ||
| Cash | $400 | $63 |
| Prepaid expenses, deposits and advances | 57 | 77 |
| Trade receivables | 608 | 975 |
| Inventories | 1,066 | 1,261 |
| 2,131 | 2,376 | |
| Non-current assets | ||
| Right-of-use assets | 632 | 630 |
| Property and equipment | 180 | 171 |
| Total Assets | $2,943 | $3,177 |
|
LIABILITIES |
||
| Current liabilities | ||
| Accounts payable and accrued liabilities | $1,221 | $1,401 |
| Current portion of lease obligations | 189 | 170 |
| Interest payable | 127 | 91 |
| Government loans | 57 | 53 |
| Promissory notes | 287 | 156 |
| Debentures | – | 4,356 |
| 1,881 | 6,227 | |
| Non-current liabilities | ||
| Lease obligations | 418 | 452 |
| Promissory notes | 2,161 | 2,300 |
| Government loans | 190 | 186 |
| Debentures | 594 | – |
| Total Liabilities | $5,244 | $9,165 |
| SHAREHOLDERS’ DEFICIT | ||
| Share capital | $19,613 | $18,364 |
| Contributed surplus | 5,801 | 5,800 |
| Warrants | 240 | 141 |
| Accumulated other comprehensive loss | (954) | (1,045) |
| Accumulated deficit | (27,001) | (29,248) |
| Total Shareholders’ Deficit | ($2,301) | ($5,988) |
| Total Liabilities and Shareholders’ Deficit | $2,943 | $3,177 |
The Company’s complete set of March 31, 2021 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
ABOUT 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, 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.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)
