Upload
others
View
0
Download
0
Embed Size (px)
Citation preview
ANNUAL
MEETING
JUNE 2, 2015
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.
Mission: “Changing the way clients think about producing energy”
“DVG”TSX-V Symbol
93,160,090Shares Outstanding
$0.12 - $0.5452 Week Range*
$37.3 millionMarket Capitalization*
25Employees
9Years of Service
02014 TRIF
LargestESP Supplier
(Gillette WY gas wells)
6.5%Inside Ownership
*As at June 1, 2015
Positions Held With DVG Since
Scott Berry Chairman of the Board and Director 2009
Ken Bagan Corporate Governance and Nominating Committee
Chair and Director
2012
Ken Berg President, Chief Executive Officer and Director 2012
John Grisdale Health, Safety and Environment Chair and Director 2015
Martin Hall Audit Committee Chair and Director 2013
Robert Riecken Compensation Committee Chair and Director 2014
Bob Tutty Director 2010
NOTE: All directors are considered to be independent with the exception of Mr. Berg by virtue of his position as President and CEO.
Positions Held With DVG Since
Ken Berg President, Chief Executive Officer, Director 2012
Prior to DVG: VP Sales at Sanjel Corporation; Drilling Engineer at Amoco Canada
Scott Hamilton Chief Financial Officer, Corporate Secretary 2013
Prior to DVG: CFO for Solana Resources Ltd.; Crossfire Energy Services Inc.; and Brahma
Compression Ltd.
Mitch McClannahan Vice President, Product Development 2014
Prior to DVG: Founder of Karlington Electric
Rob Jackson Manager, Business Development 2014
Prior to DVG: Sales Manager at Lufkin-Pentagon
Phil D’Angelo President, Mexico Operations 2009
Prior to DVG: A number of private and public companies in the disciplines of investment
banking, M&A, corporate restructuring, valuation, and asset management.
Justin Fultz Area Manager, Wyoming 2010
Prior to DVG: Tower worker installing radio communication systems for Emergency Radio
Services.
� Industry is dominated by horizontal drilling for oil.
� Divergent is…
• Oil focused.
• Developing pumps suited to horizontal wells
• Linear Electric Submersible Pump (“Pump”).
• Not dependent on drilling activity.
� Divergent currently has…
• One Pump installed;
• Made significant progress in furthering its control
systems software;
• Finalized the commercial design of the Pump;
• Began moving towards the production phase;
• Received an initial order for the commercial
version of the Pump from our industry partner.
Oil
90%
Gas
10%
Vertical
12%
Horizontal
2014 Canadian Well Types2
2014 Canadian Well Targets1
1. Source: PSAC
2. Source: CAODC
Alberta1
• Viking
• Cardium
• Slave Point
Saskatchewan1
• Bakken
• Viking
• Shaunavon
Manitoba1
• Spearfish (Amaranth)
1. Oil plays that are being developed using horizontal drilling techniques, and rely heavily on pump
jacks to produce oil. This creates a ready-made market for Divergent’s Pump sales.
Source: Internal Estimates of ESP Products & Services for dewatering Powder River Basin gas wells
Since 2006 we have specialized in electric submersible pumps.
Divergent’s Wyoming operation is…
• Cashflow positive;
• The largest Electric Submersible Pump provider for gas producers in the Powder River Basin;
• Ideally located to introduce the Linear Electric Submersible Pumps.
Our strong focus on sales and operational excellence has offset the overall decline in industry
activity due to weak oil and gas prices.
25%40%
60%35%
30%
20%25% 15%10%
15% 15% 10%
2013 2014 2015
Market Share
Divergent Competitor 1 Competitor 2 Competitor 3
Wyoming
• Niobrara Shale Oil - a
prominent oil play that
relies heavily on rod pumps
• Coalbed Methane - the
core of our operation for 9
years
North Dakota
• Bakken Shale Oil - nearly
100% of wells use rod
pumps as production
volumes decline
Colorado
• Niobrara Shale Oil - highly
developed and relies
heavily on rod pumps
Veracruz
• Linear Pump
• Poza Rica Field.
• 750+ candidate wells
identified by Pemex.
• High failure rate using
rod pumps.
Tabasco
• Construction Financing
• We do not anticipate
having the necessary
credit facility to bid on
projects in 2015.
Tamaulipas
• Flexible Pipe Sales
• We do not anticipate
having the necessary
credit facility to bid on
projects in 2015.
Divergent’s Linear Electric Submersible Pump...
� Is powered by permanent magnets made from rare earth metals. Efficient Power.
� Uses magnetic fields to create thrust from the motor section - only one moving part. Simple.
� Is a reciprocating pump - similar to conventional rod pumps used in pumping jack applications
i.e. linear motion - it does not spin.
Permanent magnets hold their field almost indefinitely, losing only 1% of their magnetism over a
ten year period.
$96,000
$12,000
$60,000
Annual Rod Pump Costs
Service Rig
New Rods
Lost Oil
Production
Divergent’s Linear Electric Submersible Pump…
� Eliminates Surface Lifting equipment - smaller footprint means reduced construction costs,
lower environmental impact, and lower impact on farm/ranching lands.
� Eliminates Sucker rods - worn and broken sucker rods can cost clients up to $168,000 annually
to maintain. Cash flow suffers when oil is not being produced during failures.
� Eliminates leaking wellheads from how the sucker rods exit the wellhead (known as a stuffing
box). This is a chronic environmental issue with pumpjack operations.
Assumptions in Calculating Annual Rod Pump Costs:
• Rod Strings $20 per meter ; 10% of string replaced after a failure
event;
• Service Rig $12,000 per day ; 2 days per failure event;
• Non-producing Days – 5 days lost production per rod failure;
• Oil price of $60/bbl;
• Production rate of 50 bbl/day;
• Rod string failure rate of 4 failures annually.
Divergent’s Linear Electric Submersible Pump delivers…
� Remote adjustments to pump rates - as your wellbore changes, so does your pump.
� Remote monitoring - watch your production 24/7.
� Can be landed in horizontal, deviated, or vertical wells.
Resolving Old Problems: Yesterday’s solutions are not a fit for today’s wells
Target Market
750,000 Rod Pumps
in North America
North American
Market Penetration
1% Initially
Canada Market Potential
7,500 Pumps Initially
65% of wells that require some form of artificial lift use rod pumps.
Based on early estimates of wellbore suitability.
5,000 Bakken and 2,500 Shaunavon wells meet wellbore criteria.*
MATURE
FIELDS
DEMAND FOR
PUMPS
LIMITS ON
TECHNOLOGY
OPPORTUNIT
Y
*Depth and casing size
2015 Growth by Product Type
Linear Electric Submersible Pump (“LESP”) sales are
expected to make the greatest impact to our revenue,
accounting for 88% of our growth.
• Commercial production of the LESP in 2015
Electric Submersible Pump (“ESP”) sales from our
Gillette, WY operation are expected to grow
organically as market share continues to climb.
• Untapped growth potential for ESP sales in
oil wells in Wyoming and North Dakota.
Electric Submersible Progressing Cavity Pump
(“ESPCP”) sales will see a modest improvement.
• Potential development of submersible
electro-magnetic rotating motors based on
our LESP technology.
• Opportunity for the Conventional “Cold
Flow” Heavy Oil market.
ESPESPCP
LESP
Resolving Old Problems: Identifying technology gaps, delivering solutions, and creating
satisfaction.
Client
Needs
Shareholder
Satisfaction
Client
Satisfaction
Team
Satisfaction
Year Ended December 31
2014 2013 % Change
Revenue $6,133 $5,673 8%
Gross Profit $1,916 $2,096 (9%)
Net Earnings (Loss) ($5,662) ($1,861) (204%)
Earnings (Loss) per share
- Basic and Diluted ($0.06) ($0.02)
Three Months Ended March 31
2015 2014 % Change
Revenue $1,367 $1,519 (10%)
Gross Profit $570 $621 (8%)
Net Earnings (Loss) ($2,387) ($647) (269%)
Earnings (Loss) per share
- Basic and Diluted ($0.03) ($0.01)
Comparative Results: All amounts in USD thousands, except per share amounts and as noted.
As at December 31, 2014
Cash and Cash Equivalents $1,371
Working Capital $1,296
Long Term Finance Contract and Loan Receivable $756
Property, Equipment and Trademark $854
Debentures (in CAD, due December 31, 2014) $5,750
As at May 1, 2015
Shares 93,160,090
Warrants 15,400,200
Options 5,700,000
Fully Diluted 114,260,290
Market Cap. ($CAD) $44.7 million
All amounts in USD thousands, except per share amounts and as noted.
1.18Current Ratio
0.48Debt-Equity Ratio
Divergent Energy Services Corp.Corporate Office
1170, 800 – 6th Ave SWCalgary Alberta T2P 3G3
T: 403.543.0060F: 403.543.0069
www.divergentenergyservices.comTSX-V: DVG
Changing the way clients think about producing energy