September 2014 divergent adjective 1 Tending to be different or develop in different directions 2 Departing from convention Corporate Overview Divergent Energy Services Corp is a publicly traded company listed on the TSX Venture Exchange under the symbol ID: 269857
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INVESTOR PRESENTATIONSeptember 2014
di-ver-gent
adjective
1. Tending to be different or develop in different directions
2. Departing from conventionSlide2
Corporate OverviewDivergent Energy Services
Corp. is a publicly traded company listed on the TSX Venture Exchange under the symbol “DVG”
Innovation Focused
Service Oriented
Value DrivenSlide3
Management Team
Ken Berg,
P.Eng
.
President and CEO
with
DVG since
2012
Previously, COO, Canadian Oilfield Solutions
Prior here to, VP Sales for Sanjel Corporation and Drilling Engineer for Dome Petroleum / Amoco Canada
Mitch McClannahan
VP Product
Development, Karlington Artificial Lift
with DVG since2012
Scott Hamilton, C.A.CFO and Corporate Secretarywith DVG since2013
Phil D’AngeloPresident, COTS Mexicowith DVG since2009
Justin FultzArea Manager, Extreme Pump Solutionswith DVG since2010
Prior here to, CFO for Solana Resources Ltd., Crossfire Energy Services Inc., and Brahma Compression Ltd.24 years experience with public and private entities
Previously, President and CEO, Canadian Oilfield SolutionsPrior here to, 30 years with a number of private and public companies in the disciplines of investment banking, M&A, corporate restructuring, valuation, and asset management
40 years experience in mechanical and electrical engineering including being the founder of Karlington ElectricLead role in the co-development of the Linear Electric Submersible Pump
10 years experience in sales and service of submersible pump solutionSlide4
Calgary
Kalama
Gillette
Reynosa
Villahermosa
Areas of Operation
Headquartered in Calgary, Alberta
, DIVERGENT is positioned to capitalize on key conventional and unconventional plays across North America
Villahermosa Uplift
Viking
Bakken
Powder River Basin
Burgos BasinSlide5
Flexible Pipe
Flexible steel pipe combines the corrosion resistance and installation advantages of flexible pipe with a core of steel – the industry standard for durability.
Performance
Value
Durability
Distribution and Sales
Installation Services
API 17J certified
Up to 21
Mpa
rating (3000psi)
Sizes from 2” to 8”
API 15S Swaging ConnectorsHigh tension rating for longer pullsNo product failures to dateSlide6
Construction
Driving value through high ROCE oilfield construction finance opportunities
Project Management
Project Finance
3% administration fee
$11.4 million in projects funded to date
20% finance fee
50% of net profits per project
Assignment of proceeds in placeSlide7
Artificial Lift
Focused on providing innovative and cost effective technologies
Energy
Mining
Water
Sales and Service
Distribution
Powder River Basin in Wyoming
ESP’s
ESPCP’s
E
lectric motors for mine dewatering projects in Canada and the USA
Up to 500 hp
DistributionElectric motors for agriculture, municipal water, and industrial water applicationsUp to 250 hpSlide8
Technology and Innovation
Linear Electric Submersible Motor
The
Linear Electric Submersible Motor
duplicates rod pump movement without rod strings or surface lifting equipment. All moving parts are contained within the submersible pump housing, eliminating rod and tubing wear, making the Linear Motor ideal for placement into horizontal wellbores.
The linear motor and reciprocating pump are landed on the end of production tubing, with the power cable banded to the tubing.
How it works
The submersible reciprocating pump is driven by a linear synchronous permanent magnet motor
, which generates thrust from a magnetic field and permanent magnet mover.
Current is supplied to the motor only when the mover is travelling, and shut off between strokes. The absence of current between strokes allows for monitoring data to be transmitted up the power cable to surface to the controller.Features Reduced footprint on surfaceLower operating costAdjustable stroke length and rateLow noiseNo oil
leakage from stuffing boxRemote monitoring and adjustmentsApplications Vertical, Slant, and Horizontal WellsUp to 100 bbls/dayLanded depths to 1500 m Slide9
Technology and Innovation
Linear Electric Submersible PumpSlide10
Technology and Innovation
Target Well Parameters for Linear Pump
Calgary
Bakken
Well Profile
1500 m TVD
Bakken
formation
1300 m TVD landed pump
100
bbl
/day
40 API gravity sweet crude7 pHSlide11
11
Artificial Lift
Q3 Linear Motor installations
5 well pilot in Canada
Q4 Linear Motor installations
Potential 2
nd
phase testing in Canada
Flexible Pipe
Pemex has begun issuing flexible pipe tenders. Results are expected to be announced in late Q3.
Construction
Multiple concurrent operations
Inventory of projects continue to await funding
2014 OutlookCorporateRebranding:New website coming September 2014Slide12
Financial Results
Six
Months Ended June 30 Comparison*
2014
2013
% Change
Revenue
$3,075$2,72813%
Gross Profit$1,082$972
11%
Net Earnings (Loss)
($2,131)($801)(166%)Earnings (Loss) per share - Basic and Diluted($0.01)
($0.01)*All amounts in thousands, except per share amounts. Three Months Ended June 30 Comparison*20142013% ChangeRevenue$1,556$1,4339%Gross Profit$461$506(9%)Net Earnings (Loss)
($1,484)($819)(81%)Earnings (Loss) per share - Basic and Diluted($0.01)($0.01)Slide13
As at Six Months Ended June 30, 2014
Cash and Cash Equivalents
$1,583
Working Capital
$3,480
Long Term Finance
Contract
$1,136
Property, Equipment and Trademark$902Long Term Debt to Capitalization
26%
Debentures (in CAD,
due December 31, 2014)$5,750Balance Sheet*All amounts in
USD thousands, except as noted.Slide14
Market Capitalization
As at
August 27
, 2014
Shares
91,402,090
Warrants
13,158,200Options
5,300,000Fully Diluted109,860,290Average Daily Volume (previous 30 days)
82,547
Market Cap. (CAD)
$28.3 millionSlide15
Forward Looking Statements
This Corporate Presentation contains certain forward‑looking statements and forward‑looking information (collectively referred to herein as “
forward‑looking statements
”) within the meaning of applicable securities laws. All statements other than statements of present or historical fact are forward‑looking statements. Forward‑looking information is often, but not always, identified by the use of words such as “could”, “should”, “can”, “anticipate”, “expect”, “believe”, “will”, “may”, “projected”, “sustain”, “continues”, “strategy”, “potential”, “projects”, “grow”, “take advantage”, “estimate”, “well positioned” or similar words suggesting future outcomes. In particular, this Corporate Presentation contains forward‑looking statements relating to future opportunities, business strategies and competitive advantages. The forward‑looking statements regarding the Company are based on certain key expectations and assumptions of the Company concerning anticipated financial performance, business prospects, strategies, the sufficiency of budgeted capital expenditures in carrying out planned activities, the availability and cost of labour and services and the ability to obtain financing on acceptable terms, all of which are subject to change based on market conditions and potential timing delays. Although management of the Company consider these assumptions to be reasonable based on information currently available to them, they may prove to be incorrect.
By their very nature, forward‑looking statements involve inherent risks and uncertainties (both general and specific) and risks that forward‑looking statements will not be achieved. Undue reliance should not be placed on forward‑looking statements, as a number of important factors could cause the actual results to differ materially from the beliefs, plans, objectives, expectations and anticipations, estimates and intentions expressed in the forward‑looking statements, including among other things: inability to meet current and future obligations; inability to implement the Company’s business strategy effectively in Canada, Mexico and the United States; inability of the Company to continue meet the listing requirements of the TSX Venture Exchange; general economic and market factors, including business competition, changes in government regulations; access to capital markets; interest and currency exchange rates; technological developments; general political and social uncertainties; lack of insurance; delay or failure to receive board or regulatory approvals; changes in legislation; timing and availability of external financing on acceptable terms; and lack of qualified, skilled labour or loss of key individuals.
Readers are cautioned that the foregoing list is not exhaustive.
The forward‑looking statements contained herein are expressly qualified in their entirety by this cautionary
statement. The forward‑looking statements included in this Corporate Presentation are made as of the date of this Corporate Presentation and the Company does not undertake and is not obligated to publicly update such forward‑looking statements to reflect new information, subsequent events or otherwise unless so required by applicable securities laws
.Slide16
Our future is what we make it
Divergent Energy Services Corp.
Corporate
Office
1170
, 800 – 6
th
Ave SW
Calgary Alberta T2P
3G3
T
:
403.543.0060F: 403.543.0069www.divergentenergyservices.comTSX-V: DVG
Mission FocusedWe provide cost effective, innovative technologies and solutions for subsurface pumping and the transmission of hydrocarbonsValue DrivenEmpowerment and AccountabilityBeing Innovative and Open-MindedEmbracing and Driving ChangeCelebrating Achievements
Building RelationshipsGrowth and LearningWork / Life BalanceFinancial Performance