DIVERGENT Energy Services Corp. announces the release of its financial results for the three and six months ended September 30, 2022. All amounts are in thousands (000’s) of United States Dollars, unless otherwise noted.
HIGHLIGHTS FOR THE QUARTER
• The Company posted its ninth consecutive quarter of revenue growth earning $3.7 million of revenue in the third quarter of 2022.
• Adjusted EBTIDA of $221 thousand in the third quarter of 2022 represents the eighth consecutive quarter of positive adjusted EBITDA.
• Divergent’s balance sheet continues to strengthen with positive working capital of $353 thousand.
INDUSTRY OUTLOOK
Divergent’s overall outlook for services for the remainder of 2022 remains positive. Global demand for energy remains strong as the world's major economies continue to rely on petroleum products in everyday life. Macroeconomic factors including continued inflationary pressures, escalation of geopolitical tension, and the lifting of COVID-19 restrictions all point to continued strong commodity pricing through 2022 and into 2023. At these commodity price levels we anticipate generally robust oilfield service activity levels as our customers remain very positive on their current capital spending plans for the remainder of 2022 and into 2023.
Customers continue to demonstrate an urgency in returning wells to production and overall demand for services is increasing. While Divergent is working to increase its market share, it is constrained by supply chain delays and staffing availability. Attracting and retaining additional personnel continues to be a challenge across the industry making it much more difficult than in past upturns to supply additional crews. The Company’s customer base has indicated that it intends to continue their workover programs for the next 12 months at a pace which may exceed that experienced during the previous three quarters, with limiting factors being supply chain, service rig availability and labour.
While the cost of sales in the third quarter of 2022 were negatively impacted by inflationary increases to parts, components and logistics, the Company is actively working with customers to pass these cost increases along. There is no guarantee that all of these cost increases can be passed along in the near term.
The positive commodity pricing trends the industry is currently experiencing is in part caused by a structural shortfall in supply which will be difficult for the industry to overcome for some time. As a result, the demand for energy services and the ability for the sector to improve over the next few years is seen as highly likely. In this environment the Company intends to seek and evaluate strategic growth opportunities to both diversify its product offerings and drive continuous margin improvements.
