DIVERGENT Energy Services Announces the Release of 2021 Year End Results
16 Mars 2022 - 2:00PM
DIVERGENT Energy Services Corp.
(“Divergent”, the
“Company”, or
“DVG”) announces the release of
its financial results for the year ended December 31, 2021. All
amounts are in thousands (000’s) of United States Dollars, unless
otherwise noted.
HIGHLIGHTS FOR THE YEAR
- Revenues of
$8,362, an increase of 93% over 2021.
- Operating income
of $397 and adjusted EBITDA of $767 in 2021 as compared to ($65)
and ($481) in 2020 demonstrated improved operating performance year
over year.
- The Company
received confirmation of forgiveness of the Payroll Protection Plan
(“PPP”) loan of $226.
- On January 19,
2021 the Company completed a corporate restructuring which improved
its working capital position and consolidated its outstanding
shares.
INDUSTRY OUTLOOK
The continuing strength of oil and gas commodity
prices, which have demonstrated a strong recovery since the onset
of COVID, should increase submersible pump sales across the United
States for at least the next 12 months as customers are expected to
optimize production using commodity price hedges to ensure revenue
certainty. The amount of work available for the Company over the
next twelve months is also dependent on how each client makes its
internal decisions for the allocation of its capital, be it
improving its balance sheet by way of paying down debt or
increasing production through investment in field operations.
The Company’s largest client has indicated that,
based on its commodity price assumptions, it intends to continue
its CBM workover program for the next 12 months at a pace similar
to that experienced during the second half of 2021, barring
interruptions due to weather or supply chain. While drilling rig
counts are recovering in Wyoming, they remain roughly sixty percent
lower than pre-COVID rig counts. Our customer base in Wyoming that
relies on ESPs to produce their wells have not yet begun to
significantly increase drilling or making new investments in their
field operations despite their improved balance sheet
positions.
The Company continues to seek and evaluate
strategic growth opportunities to both diversify its product
offerings and drive continuous margin improvements.
FINANCIAL AND OPERATING HIGHLIGHTS –
YEAR MONTHS ENDED DECEMBER 31, 2021
Select Financial Information for the year ended
December 31, 2021 have been summarized below. Tables contain
results for 2021 and 2020. 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)
Audited Condensed Consolidated Statements of Net Income and
Comprehensive Income |
|
|
|
Year ended December 31, |
|
|
|
|
2021 |
|
|
2020 |
|
Revenue |
|
$8,362 |
|
$4,332 |
|
Cost of sales |
|
|
(6,466 |
) |
|
(3,247 |
) |
Reversal of provision for slow
moving inventory |
|
|
181 |
|
|
934 |
|
Gross profit |
|
|
2,077 |
|
|
2,019 |
|
General and
administration |
|
|
(1,639) |
|
|
(2,054) |
|
Depreciation and
amortization |
|
|
(10) |
|
|
(20) |
|
Share-based compensation |
|
|
(31) |
|
|
(10) |
|
Results from operating
activities |
|
|
397 |
|
|
(65) |
|
|
|
|
|
Forgiveness of paycheck
protection loan |
|
|
226 |
|
|
- |
|
Benefit on low interest
government loans |
|
|
- |
|
|
182 |
|
Finance income |
|
|
1,839 |
|
|
12 |
|
Net
income |
|
|
2,462 |
|
|
129 |
|
|
|
|
|
Other comprehensive income
being foreign exchange gains |
|
|
27 |
|
|
91 |
|
Total comprehensive
income |
|
$2,489 |
|
$220 |
|
|
|
|
|
Income per
share |
|
|
|
Net
income – basic and dilutive - cents (1) |
|
$0.08 |
|
$0.01 |
|
Audited Condensed Consolidated Statements of Financial
Position |
|
|
|
At December 31, 2021 |
|
At December 31, 2020 |
|
ASSETS |
|
|
|
Current assets |
|
|
|
Cash |
|
$607 |
|
$63 |
|
Prepaid expenses, deposits and advances |
|
|
104 |
|
|
77 |
|
Trade receivables |
|
|
877 |
|
|
975 |
|
Inventories |
|
|
711 |
|
|
1,261 |
|
|
|
|
2,299 |
|
|
2,376 |
|
Non-current assets |
|
|
|
Property and equipment |
|
|
133 |
|
|
171 |
|
Right-of-use assets |
|
|
535 |
|
|
630 |
|
Total
Assets |
|
$2,967 |
|
$3,177 |
|
|
|
|
|
LIABILITIES |
|
|
|
Current liabilities |
|
|
|
Accounts payable and accrued liabilities |
|
$1,438 |
|
$1,401 |
|
Current portion of lease obligations |
|
|
156 |
|
|
170 |
|
Interest payable |
|
|
183 |
|
|
91 |
|
Pay check protection program loan |
|
|
- |
|
|
53 |
|
Promissory notes |
|
|
216 |
|
|
156 |
|
Debentures |
|
|
- |
|
|
4,356 |
|
|
|
|
1,993 |
|
|
6,227 |
|
Non-current liabilities |
|
|
|
Lease obligations |
|
|
353 |
|
|
452 |
|
Promissory notes |
|
|
2,061 |
|
|
2,300 |
|
Government loans |
|
|
26 |
|
|
186 |
|
Debentures |
|
|
654 |
|
|
- |
|
Total
Liabilities |
|
$5,087 |
|
$9,165 |
|
SHAREHOLDERS’
DEFICIT |
|
|
|
Share capital |
|
$19,613 |
|
$18,364 |
|
Contributed surplus |
|
|
5,972 |
|
|
5,800 |
|
Warrants |
|
|
99 |
|
|
141 |
|
Accumulated other comprehensive loss |
|
|
(1,018) |
|
|
(1,045) |
|
Accumulated deficit |
|
|
(26,786) |
|
|
(29,248) |
|
Total Shareholders’
Deficit |
|
($2,120) |
|
($5,988) |
|
Total Liabilities and
Shareholders’ Deficit |
|
$2,967 |
|
$3,177 |
|
|
|
The Company’s complete set of December 30, 2021
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.
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)
Divergent Energy Services (TSXV:DVG)
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