Divergent Energy Services Corp. (TSX:DVG.V) – Q3 Interim Results – Nov 23 ’15

DIVERGENT Energy Services Announces Release of Q3 Interim Results and Operating Highlights

Symbol (DVG: TSX-V)

CALGARY, ALBERTA – November 23, 2015. DIVERGENT Energy Services Corp. (the “Corporation”) has released its financial results for the three and nine months ended September 30, 2015 and provides the following highlights.

OPERATING HIGHLIGHTS

In the Powder River Basin (based in Gillette, Wyoming and providing electric submersible pumps), the Corporation’s activity levels remained steady despite the steep decline in overall activity in the region. Although the operation generated decreased Q3 2015 sales of USD $1.2 million from USD $1.4 million in Q3 2014, Q3 2015 delivered an increased gross profit of 27% as compared to 11% in Q3 2014. Gross profits for the nine months ended September 30 rose similarly to 30% in 2015 from 23% in 2014. These improvements come from a continued effort to focus on sales and reductions in operating costs. The Gillette operation has now extended its cash flow positive status for 11 continuous quarters.

OUTLOOK

For the remainder of 2015 and beyond, Divergent will remain focused on its long-term strategy to commercialize the Linear Electric Submersible Pump (the “Linear Pump”). Divergent believes it has the right people and product offerings to position the Corporation for long-term growth and profitability.

As previously announced, a second-generation Linear Pump has been received from the Corporation’s manufacturing partner. Prior to deployment in the field, each Linear Pump undergoes a series of operational tests to ensure it meets expected performance criteria. In addition, the manufacturer has recently finished testing the new design at their facility, running the Linear Pump at various rates and pressures. The Linear Pump was then taken apart and inspection revealed zero wear, a major accomplishment that overcomes the wear experienced with the prototypes. The Corporation has also been performing tests at anticipated wellbore conditions, and the results confirm that the Linear Pump is now ready for deployment in the field. One of the Pumps has been delivered to a staging area in Southeast Saskatchewan, and the timing of the installation will be based on the client’s schedule and resource availability. This new Linear Pump design reflects what was learned from prototypes that were installed earlier in 2015. Additional installations are expected to follow the successful deployment of this Pump, with inventory to be available in Canada and the United States.

Also previously announced was the expected increase in activity as a result of the acquisition of several natural gas assets in the Powder River Basin by a large investment firm based in the United States. The assets had previously been operated by separate companies, to which the Corporation provided each company various amounts of products and services. With the work now being awarded by a single entity that the Corporation had an existing single provider relationship with, our operation is seeing a significant increase in activity. Additionally, the Gillette operation is preparing to expand into the larger and more lucrative oil-well submersible pump market. Oil-well submersible pumps can generate up to ten times the revenue per installation. Successful penetration into the oil-well market also provides early exposure to clients that are candidates for the Corporation’s Linear Pump.

DIVERGENT’s management believes that the current growth in activity will continue over the next few quarters, both from the Corporation’s ability to increase market share and the commercialization of the Linear Pump. DIVERGENT will continue to advance the permanent magnet motor and pump technology while continuing to strengthen the foundation of its conventional submersible pump business. Producers are seeking innovations that drive down operating costs, and DIVERGENT’s Pump is targeted at eliminating the ongoing cost of rod and tubing wear in oil wells.

The Corporation does not anticipate any new business in Mexico in its existing business segments. The Mexico business requires working capital that is beyond the Corporation’s access in the foreseeable future. In addition, the Mexico business segments are not consistent with the Corporation’s vision of streamlining into a provider of Artificial Lift products and services. Mexico will remain a strategic region as part of the future commercialization of the Linear Pump.

ABOUT THE LINEAR PUMP

The permanent magnet motor technology duplicates conventional rod pump movement without the rod string or surface lifting equipment (pump jack), while still utilizing an industry standard reciprocating downhole pump. All moving parts are contained within the submersible pump housing, eliminating rod and tubing wear, making the Linear Pump ideally suited for landing in deviated or horizontal oil wells and as an alternative to conventional pump jack installations. The linear-motion motor and reciprocating pump are landed on the end of the production tubing, with the power cable banded to the tubing.

RESULTS OF OPERATIONS

Visit sedar.com or http://www.divergentenergyservices.com/upload/news/35/fcadd309e36a/2015-11-23-release-of-q3-interim-results-and-operations-update.pdf

The Corporation’s complete set of September 30, 2015 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.

DIVERGENT Energy Services Corp., 1170, 800 – 6th Ave SW, Calgary, AB T2P 3G3, (403) 543-0060, (403) 543-0069 (fax), www.divergentenergyservices.com

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