Transcript Business Divisions - Divergent Energy Services

INVESTOR PRESENTATION
September 2014
di-ver-gent
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 “DVG”
Innovation Focused
Service Oriented
Value Driven
ARTIFICIAL LIFT
FLEXIBLE PIPE
CONSTRUCTION
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
Scott Hamilton, C.A.
CFO and Corporate Secretary
with DVG since
2013
• Prior here to, CFO for Solana Resources Ltd., Crossfire Energy Services Inc., and Brahma Compression
Ltd.
• 24 years experience with public and private entities
Phil D’Angelo
President, COTS Mexico
with DVG since
2009
• Previously, President and CEO, Canadian Oilfield Solutions
• Prior 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
Mitch McClannahan
VP Product Development, Karlington Artificial Lift
with DVG since
2012
• 40 years experience in mechanical and electrical engineering including being the founder of
Karlington Electric
• Lead role in the co-development of the Linear Electric Submersible Pump
Justin Fultz
Area Manager, Extreme Pump Solutions
with DVG since
• 10 years experience in sales and service of submersible pump solution
2010
Areas of Operation
Headquartered in Calgary, Alberta, DIVERGENT is positioned to capitalize on key
conventional and unconventional plays across North America
Viking
Bakken
•
•
Calgary
Kalama
Powder River Basin
•
Gillette
Burgos Basin
•
Reynosa
•
Villahermosa
Villahermosa Uplift
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
Installation Services
Distribution and Sales
•
•
•
API 17J certified
Up to 21 Mpa rating (3000psi)
Sizes from 2” to 8”
•
•
•
API 15S Swaging Connectors
High tension rating for longer pulls
No product failures to date
Construction
Driving value through high ROCE oilfield construction finance opportunities
Project Finance
Project Management
•
•
3% administration fee
$11.4 million in projects funded to
date
•
•
•
20% finance fee
50% of net profits per project
Assignment of proceeds in place
Artificial Lift
Focused on providing innovative and cost effective technologies
•
•
•
Energy
Mining
Water
Sales and Service
Distribution
Distribution
Powder River Basin in
Wyoming
ESP’s
ESPCP’s
•
•
Electric motors for mine
dewatering projects in
Canada and the USA
Up to 500 hp
•
•
Electric motors for
agriculture, municipal
water, and industrial
water applications
Up to 250 hp
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
Applications
Reduced footprint on surface
Lower operating cost
Adjustable stroke length and rate
Low noise
No oil leakage from stuffing box
Remote monitoring and adjustments
Vertical, Slant, and Horizontal Wells
Up to 100 bbls/day
Landed depths to 1500 m
Technology and Innovation
Linear Electric Submersible Pump
• Under development in
China for over ten years
• DIVERGENT secured
exclusivity in 2013
• Design finalized Q1 2014
Development
Testing
• Fall 2014 - partner has
been secured for a 5 well
pilot test
• A larger second phase
implementation will take
place pending test results
• Full commercialization
and introduction to other
regions and reservoirs will
be determined by the
performance of the
motor in phase 2.
Commercialization
Technology and Innovation
Target Well Parameters for Linear Pump
Bakken
Well Profile
1500 m TVD Bakken formation
•
Calgary
1300 m TVD landed pump
100 bbl/day
40 API gravity sweet crude
7 pH
2014 Outlook
Artificial Lift
Construction
•
•
Multiple concurrent operations
•
Inventory of projects continue to await
funding
•
Q3 Linear Motor installations
• 5 well pilot in Canada
Q4 Linear Motor installations
• Potential 2nd phase testing in Canada
Corporate
Flexible Pipe
•
•
Rebranding:
• New website coming September 2014
Pemex has begun issuing flexible pipe
tenders. Results are expected to be
announced in late Q3.
11
Financial Results
Six Months Ended June 30 Comparison*
2014
2013
% Change
Revenue
$3,075
$2,728
13%
Gross Profit
$1,082
$972
11%
Net Earnings (Loss)
($2,131)
($801)
(166%)
Earnings (Loss) per share
- Basic and Diluted
($0.01)
($0.01)
2014
2013
% Change
$1,556
$1,433
9%
$461
$506
(9%)
Net Earnings (Loss)
($1,484)
($819)
(81%)
Earnings (Loss) per share
- Basic and Diluted
($0.01)
($0.01)
Three Months Ended June 30 Comparison*
Revenue
Gross Profit
*All amounts in thousands, except per share amounts.
Balance Sheet
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
$902
Long Term Debt to Capitalization
26%
Debentures (in CAD, due December 31, 2014)
*All amounts in USD thousands, except as noted.
$5,750
Market Capitalization
As at August 27, 2014
Shares
91,402,090
Warrants
13,158,200
Options
5,300,000
Fully Diluted
Average Daily Volume (previous 30 days)
Market Cap. (CAD)
109,860,290
82,547
$28.3 million
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.
Divergent Energy Services Corp.
Corporate Office
1170, 800 – 6th Ave SW
Calgary Alberta T2P 3G3
T: 403.543.0060
F: 403.543.0069
www.divergentenergyservices.com
TSX-V: DVG
Our future is what we make it
Mission Focused
We provide cost effective, innovative technologies and solutions for subsurface pumping and the transmission of hydrocarbons
Value Driven
Empowerment and Accountability
Being Innovative and Open-Minded
Embracing and Driving Change
Celebrating Achievements
Building Relationships
Growth and Learning
Work / Life Balance
Financial Performance