Mr. Ken Berg reports

DIVERGENT ENERGY SERVICES ANNOUNCES RELEASE OF Q1 INTERIM RESULTS

Divergent Energy Services Corp. has released its financial results for the three months ended March 31, 2016, and provided the following highlights.

First quarter 2016 financial and operating highlights

Divergent's submersible pump business in Gillette, Wyo., set record sales of $2.1-million (U.S.) for that division, beating the previous record quarter of $1.9-million (U.S.) set in the third quarter of 2010. The Gillette business also increased gross profit to $441,000 (U.S.) in the first quarter of 2016, as compared with $411,000 (U.S.) in the first quarter of 2015 and $321,000 (U.S.) in the first quarter of 2015.

Select financial information for the three-month period ending March 31, 2016, is summarized in the attached table.

           SELECTED CONSOLIDATED FINANCIAL INFORMATION                                
     (in thousands of U.S. dollars, unless otherwise stated)

                                            For the three months  
                                                  ended March 31,
                                               2016         2015 

Revenue                                     $ 2,119      $ 1,367
Cost of sales                                (1,678)        (797)
Gross profit                                    441          570
Selling and administrative expense             (768)        (825)
Product development                            (178)        (204)
Provision for bad debts                        (768)      (1,602)
Settlement of contingent consideration            -         (238)
Stock-based compensation                        (58)        (122)
Net finance expense                            (841)        (242)
                                             (2,613)      (3,233)
(Loss) before income taxes                   (2,172)      (2,663)
Income tax recovery (expense)                   (29)         276
Net (loss) for the period                    (2,201)      (2,387)
Net (loss) per share -- basic               $ (0.02)     $ (0.03)

The corporation's complete set of March 31, 2016, financial statements and corresponding management discussion and analysis have been filed on SEDAR and are also available on the corporation's website.

Further information can be accessed on the company's website.

Outlook

The corporation's success in the submersible pump business continues and set an all-time quarterly revenue record for the Gillette, Wyo., operation. The company's business is focused on production optimization and reducing operating expenses in mature fields (existing wells) and is therefore not directly affected by fluctuations in drilling activity. For 2016, the company anticipates continued growth from its Gillette, Wyo., operation and the commercialization of the corporation's linear electric submersible pump.

The most recent shipment of linear pumps arrived on May 12, 2016, and one of the pumps was successfully installed on May 17, 2016, and is currently operating in a client well in southeast Saskatchewan. This shipment of linear pumps represents many years of engineering and testing and is expected to be the final commercial version of the pump. Additional installations are expected to follow with other interested clients.

The corporation's cost controls and streamlining of operations, highlighted by the January shutdown of an underperforming division (Karlington), reduced costs by $100,000 (U.S.) during the first quarter. The corporation expects to realize continued savings in 2016 of $250,000 (U.S.) as part of continuing initiatives.

The outlook for 2016 in each operating division is as follows.

Pump sales and services

• New revenues from the commercialization of the linear pump, both in Canada and the United States;
• Increased revenue in the Powder River basin in Wyoming; the company is currently the largest provider of ESP (electrical submersible pump) products and services for gas producers in the region, and the company is aggressively leveraging that reputation to enter the larger and more lucrative oil well ESP market; the company's success and growth have attracted skilled and motivated people that increase the depth of the company's service offering.

Pipe sales and installation

• The corporation is not pursuing any future work from this segment.

Project management and financing

• The corporation is not pursuing any future work from this segment.
• The company continues to pursue the collection of outstanding receivables that amount to $1.6-million (U.S.).

The corporation's long-term strategy is to focus on emerging opportunities within the artificial lift segment of the energy industry, a segment that is estimated to grow from a market of $11.2-billion in 2014 to $17.7-billion in 2019. Currently the most active geographic market is North America, which accounted for 45.55 per cent of total global artificial lift sales. The commercialization of the linear pump will provide oil companies with the opportunity to reduce operating expenses and capital costs, while providing Divergent with differentiation within a competitive and growing market. The company will also continue to grow the company's core submersible pump business in Gillette, which will position Divergent for expanded geographical presence throughout the United States and Canada.

We seek Safe Harbor.