CALGARY, Alberta, Nov. 29, 2017 (GLOBE NEWSWIRE) -- Divestco Inc. (TSX-V:DVT) (“Divestco” or the “Company”), an exploration services company dedicated to providing a comprehensive and integrated portfolio of data, software and services to the oil and gas industry worldwide, today announced its financial and operating results for the three and nine months ended September 30, 2017.
Financial Highlights
Overall Performance and Operational Results
Financial Results (Thousands, Except Per Share Amounts)
Three months ended September 30
Nine months ended September 30
2017
2016
$ Change
% Change
2017
2016
$ Change
% Change
Revenue
$
1,599
$
2,015
$
(416
)
-21
%
$
9,432
$
8,287
$
1,145
14
%
Operating Expenses (1)
2,813
2,448
365
15
%
8,380
7,640
740
10
%
Other Loss (Gain)
(844
)
(9
)
(835
)
N/A
(806
)
62
(868
)
N/A
EBITDA (2)
(370
)
(424
)
54
N/A
1,858
585
1,273
218
%
Finance Costs
457
359
98
27
%
1,231
1,069
162
15
%
Depreciation and Amortization (3)
1,647
1,643
4
0
%
6,385
4,750
1,635
34
%
Net Loss
$
(2,474
)
$
(2,426
)
$
(48
)
N/A
$
(5,758
)
$
(5,234
)
$
(524
)
N/A
Per Share - Basic and Diluted
(0.04
)
(0.04
)
-
N/A
(0.09
)
(0.08
)
(0.01
)
N/A
Funds from (used in) Operations
$
(978
)
$
(453
)
$
(525
)
N/A
$
845
$
567
$
278
49
%
Per Share - Basic and Diluted
(0.01
)
(0.01
)
-
N/A
0.01
0.01
-
0
%
Class A Shares Outstanding
66,343
67,252
N/A
N/A
66,343
67,252
N/A
N/A
Weighted Average Shares Outstanding
Basic
66,416
67,254
N/A
N/A
66,692
67,240
N/A
N/A
Basic and Diluted
66,416
67,254
N/A
N/A
66,692
67,240
N/A
N/A
(1) Includes salaries & benefits, general & administrative expenses and share-based payments but excludes depreciation and amortization and other losses (income) (2) See the “Non GAAP Measures” section of the Company’s Management Discussion and Analysis filed on the Company’s website and on SEDAR (3) Increase in 2017 from 2016 is due to a new seismic survey completed in Q1 2017. The Company’s policy is to amortize 40% of the cost of a new seismic survey in the period of data delivery.
Q3 2017 vs. Q3 2016
Divestco generated revenue of $1.6 million in Q3 2017 compared to $2.0 million in Q3 2016, a decrease of $0.4 million (21%). This was due to lower seismic data library revenue and to a delay in a contract that was subsequently signed in Q4. Revenue in the Seismic Data segment ($0.3 million) decreased by $0.4 million (53%). Revenue in the Services segment ($0.6 million) increased slightly as the Company was awarded several contracts in Q3 2017. Revenue in the Software & Data segment ($0.7 million) decreased by $0.2 million (23%) as a log sale expected to close in Q3 2017, closed in Q4 2017. Operating expenses increased by $0.4 million (15%) to $2.8 million in Q3 2017 from $2.4 million in Q3 2016 due to higher salaries as certain austerity measures in place in 2016 were reversed in 2017. Finance costs increased by $98,000 (27%) to $457,000 in Q3 2017 from $359,000 in Q3 2016 due to higher debt levels. Depreciation and amortization was $1.6 in Q3 2017 and Q3 2016.
Nine Months Ended September 30, 2017 vs. Nine Months Ended September 30, 2016
Divestco generated revenue of $9.4 million in the first nine months of 2017 compared to $8.3 million for the same period in 2016, an increase of $1.1 million (14%) mainly due to higher Seismic Data segment revenue related to the completion of a new seismic survey and significantly higher data library sales. Revenue in the Seismic Data segment ($5.7 million) increased by $2.7 million (89%). Revenue in the Software & Data segment ($2.2 million) decreased by $1.1 million (34%) mainly due to a log sale expected to close in Q3 2017, closed in Q4 2017. Revenue in the Services segment ($1.5 million) decreased by $0.4 million (22%) primarily due to delays in the awarding of new contracts on successful bids. Several projects were awarded commencing in the later portion of Q3 2017; these will be completed from Q4 2017 to Q2 2018. Operating expenses increased by $0.8 million (10%) to $8.4 million in the first nine months of 2017 from $7.6 million for the same period in 2016 due to higher salaries as certain of the austerity measures in place in 2016 were reversed in 2017. In addition, business taxes were higher due to a refund received in Q1 2016 and royalties related to international projects increased. This was partially offset by lower property taxes. Finance costs increased by $0.1 million (15%) to $1.2 million for the first nine months of 2017 from $1.1 million for the same period in 2016 due to higher debt levels. Depreciation and amortization was $6.4 million for the first nine months of 2017 compared to $4.8 million in 2016, an increase of $1.6 million (34%) due to the completion of a new seismic survey.
Financial Position(1)
As at September 30, 2017, Divestco had a working capital deficiency of $3.3 million (December 31, 2016: $3.9 million deficiency), excluding deferred revenue of $1.3 million (December 31, 2016: $1.7 million). The decrease in the working capital deficit from the end of 2016 was due to the repayment of a bridge loan in March 2017 which was replaced by a long-term debt facility and positive funds from operations.
(1) See the “Non GAAP Measures” section of the Company’s Management Discussion and Analysis filed on the Company’s website and on SEDAR
Term Loan
In March 2017, the Company entered into a secured loan with a new lender for $6.0 million with an initial draw of $5.0 million. The loan bears interest at 17% per annum compounded monthly and matures in September 2020. Effective September 30, 2017, the loan agreement was amended to reduce the amount of cash restricted by the lender to $750,000 from $3.1 million. As a result of the amendment, the Company is required to make a $2 million loan repayment by December 6, 2017. This amount has been reclassified to current as at September 30, 2017.
Operations Update and Outlook
The improvement in West Texas Intermediate oil prices in the later part of 2017 is expected to have a positive impact on capital spending by the industry going into 2018. With the increase in M&A activity and recent announcements of equity and debt financings, access to capital also seems to be improving for our clients leading us to view Q4 2017 and next year in a more favourable light. Divestco diligently monitors its operating expenses which has resulted us in reducing our costs by over 50% since 2014. We will continue to adjust our expenses based on activity levels.
Mr. Stephen Popadynetz, CEO and President commented: “While Q3 had lower activity then we previously expected, much of this activity was just delayed and commenced in our fourth quarter. In fact, our services division is now operating at full capacity and we now have more contracted projects in hand then we have billed in the previous four quarters. Our continued strategy of developing international markets is paying increased dividends and with a better outlook for our domestic markets, we are beginning to realize a significant turnaround in our services division. We remain well positioned throughout the company to take advantage of the uptick in activity levels and capital spending plans. With an efficient cost structure and additional financial flexibility, Divestco is poised for a vastly improved 2018.”
About the Company
Divestco is an exploration services company that provides a comprehensive and integrated portfolio of data, software, and services to the oil and gas industry. Through continued commitment to align and bundle products and services to generate value for customers, Divestco is creating an unparalleled set of integrated solutions and unique benefits for the marketplace. Divestco’s breadth of data, software and services offers customers the ability to access and analyze the information required to make business decisions and to optimize their success in the upstream oil and gas industry. Divestco is headquartered in Calgary, Alberta, Canada and trades on the TSX Venture Exchange under the symbol “DVT”.
Additional information on the Company is available on its website at Divestco.com and on SEDAR at sedar.com.
For more information please contact:
Divestco Inc. (www.divestco.com)
Mr. Stephen Popadynetz CEO and President Tel 587-952-8152
Mr. Danny Chiarastella CFO Tel 587-952-8027
Neither TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this news release.
This press release contains forward-looking information related to the Company’s capital expenditures, projected growth, view and outlook with respect to future oil and gas prices and market conditions, and demand for its products and services. Statements that contain words such as “could’, “should”, “can”, “anticipate”, “expect”, “believe”, “will”, “may” and similar expressions and statements relating to matters that are not historical facts constitute “forward-looking information” within the meaning applicable by Canadian securities legislation. Although management of the Company believes that the expectations reflected in such forward-looking information are reasonable, there can be no assurance that such expectations will prove to have been correct because, should one or more of the risks materialize, or should the assumptions underlying forward-looking statements or forward-looking information prove incorrect, actual results may vary materially from those described in this press release as intended, planned, anticipated, believed, estimated or expected. Readers should not place undue reliance on forward-looking statements or forward-looking information. All of the forward-looking statements and forward-looking information of the Company contained in this press release are expressly qualified, in their entirety, by this cautionary statement. Except where required by law, the Company does not assume any obligation to update these forward-looking statements or forward-looking information if conditions or opinions should change.
In particular, this press release contains forward-looking statements pertaining to the following: Company’s ability to keep debt and liquidity at acceptable levels, improve/maintain its working capital position and maintain profitability in the current economy; availability of external and internal funding for future operations; relative future competitive position of the Company; nature and timing of growth; oil and natural gas production levels; planned capital expenditure programs; supply and demand for oil and natural gas; future demand for products/services; commodity prices; impact of Canadian federal and provincial governmental regulation on the Company; expected levels of operating costs, finance costs and other costs and expenses; future ability to execute acquisitions and dispositions of assets or businesses; expectations regarding the Company’s ability to raise capital and to add to seismic data through new seismic shoots and acquisition of existing seismic data; treatment under tax laws; and new accounting pronouncements.
These forward-looking statements are based upon assumptions including: future prices for crude oil and natural gas; future interest rates and future availability of debt and equity financing will be at levels and costs that allow the Company to manage, operate and finance its business and develop its software products and various oil and gas datasets including its seismic data library, and meet its future obligations; the regulatory framework in respect of royalties, taxes and environmental matters applicable to the Company and its customers will not become so onerous on both the Company and its customers as to preclude the Company and its customers from viably managing, operating and financing its business and the development of its software and data; and that the Company will continue to be able to identify, attract and employ qualified staff and obtain the outside expertise as well as specialized and other equipment it requires to manage, operate and finance its business and develop its properties.
These forward-looking statements are subject to numerous risks and uncertainties, certain of which are beyond the Company’s control, including: general economic, market and business conditions; volatility in market prices for crude oil and natural gas; ability of Divestco’s clients to explore for, develop and produce oil and gas; availability of financing and capital; fluctuations in interest rates; demand for the Company’s product and services; weather and climate conditions; competitive actions by other companies; availability of skilled labour; failure to obtain regulatory approvals in a timely manner; adverse conditions in the debt and equity markets; and government actions including changes in environment and other regulation.
