INVESTOR PRESENTATION JUNE 2015 This Corporate Presentation - - PowerPoint PPT Presentation

INVESTOR PRESENTATION JUNE 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

• f 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

• utcomes. 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

• f 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

93,160,090

Shares Outstanding

$0.12 - $0.54

52 Week Range*

$37.3 million

Market Capitalization*

25

Employees

9

Years of Service 2014 TRIF

Largest

ESP Supplier

(Gillette WY gas wells)

6.5%

Inside Ownership

*As at June 1, 2015

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;
• Begun 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

• rganically as market share continues to climb.
• Untapped growth potential for ESP sales in
• il 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

• ur LESP technology.
• Opportunity for the Conventional “Cold

Flow” Heavy Oil market.

ESP ESPCP LESP

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

($0.02) ($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.

1.18

Current Ratio

0.48

Debt-Equity Ratio

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

Changing the way clients think about producing energy