DIVERGENT Energy Services Corp. ("Divergent" or the "Corporation") (TSX VENTURE:DVG) has released its financial results for the year ended December 31, 2016 and provides the following highlights.
2016 FINANCIAL AND OPERATING HIGHLIGHTS
Annual revenues from the US Submersible Pump division increased 111% to USD $11.5 MM in 2016 versus $5.4 in 2015. The US division also increased gross profit to USD $2.0 MM in 2016 as compared to $1.3 MM in 2015, an increase of 46%.
Improved oil prices have led to increased activity in the North American oil industry and related industry services. Divergent is well positioned to capitalize on this increasing activity, and we expect continued growth in Electric Submersible Pump (ESP) sales, with quarterly results continuing to improve year-over-year. Throughout 2016 we experienced increases in costs and wages that we were unable to pass on to our clients due to fixed annual contracts, leading to a decline in margins in late 2016. As of January 2017, we have successfully renegotiated contracts across our client base that have returned margins to a level that can promote growth. In response to the increase in activity and improved pricing, management has begun planning for an expansion facility in Colorado to meet the rising demand for services. Future opportunities may include Kansas, Oklahoma, Texas, North Dakota, and Utah in the United States as well as Manitoba, Saskatchewan, Alberta and British Columbia in Canada.
The Linear Pump continues to be a focal point of the long-term vision of the Corporation. The 2016 deployments incorporated changes to the pump design, and identified an issue with the power cable that delivers electricity to the pump. The issue has been identified and a corrective measure will be implemented with the next installation, planned before the end of March 2017. We are encouraged by the continued interest in the Linear Pump by industry participants, and we believe results of the current installation will help to create momentum towards commercialization.
The outlook for 2017 is as follows:
Divergent's long-term strategy is to be a premier supplier of submersible pumping products that increase production, reduce operating costs and reduce carbon footprint. The commercialization of our Linear Pump represents a build on our existing ESP business, and will provide oil companies with the opportunity to capitalize on the Linear Pumps many benefits, while differentiating Divergent within a competitive and growing market.
ABOUT THE PUMP
The permanent magnet motor technology duplicates rod pump movement without rod string or surface lifting equipment. All moving parts are contained within the submersible pump housing, eliminating rod and tubing wear, making the Pump ideally suited for landing in deviated or horizontal oil wells and as an alternative to conventional pump jack installations.
The Corporation's complete set of December 31, 2016 consolidated financial statements and corresponding management's discussion and analysis have been filed on the SEDAR website at www.sedar.com and are also available on the Corporation's website at www.divergentenergyservices.com.
ABOUT DIVERGENT ENERGY SERVICES CORP.
Headquartered in Calgary, Alberta, DIVERGENT Energy Services Corp. provides an array of Artificial Lift products and services that are used in the oil and gas industry. Products include Electromagnetic Pumps, Electric Submersible Pumps, and Electric Submersible Progressing Cavity Pumps.
SOURCE: DIVERGENT Energy Services Corp
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