Mr. Ken Berg reports

DIVERGENT ENERGY SERVICES ANNOUNCES THE RELEASE OF 2023 THIRD QUARTER RESULTS

Divergent Energy Services Corp. has released its financial results for the three and nine months ended Sept. 30, 2023. All amounts are in thousands (000s) of United States dollars, unless otherwise noted.

Highlights for the quarter

• The company delivered positive operating income of $63 in the third quarter of 2023 despite lower revenue compared with the prior year.
• Adjusted EBTIDA (earnings before interest, taxes, depreciation and amortization) of $155,000 in the third quarter of 2023 represents the 12th consecutive quarter of positive adjusted EBITDA.

Industry outlook

Global demand for oil remains constant as the world's major economies continue to rely on petroleum products in everyday life. Macroeconomic factors including continued inflationary pressures, extended voluntary production cuts by Saudi Arabia, continuing geopolitical tensions creating concerns for security of supply and record low North American oil inventory storage levels all point to continued strong oil pricing well into 2024. At these price levels the company anticipates fairly consistent oil field service activity levels as customers remain very positive on their current spending plans for 2023 and start to build budgets for 2024. The company continues to add new oil customers and, as such, a capital investment in oil field equipment was made in the third quarter of 2023 to increase the company's capacity to support a growing customer base.

While natural gas prices trended down and flattened out through the first quarter of 2023, the company's primary customer remained busy through the first quarter of 2023. However, during the second quarter of 2023, this same customer significantly reduced their activity levels, in part due to lower gas prices, but primarily due to two of their primary offtake pipelines being taken offline for repairs and recertification, which resulted in reduced revenue for the quarter. The repairs and recertification were completed midway through the third quarter of 2023. The company anticipates continued base level activity throughout the fourth quarters of 2023 while the customer works through a restructuring and sale process, the results of which are unknown. Market analysts are reporting that gas prices should remain flat in the fourth quarter of 2023 and into 2024 due to reduced gas-targeted drilling over the past year and increasing LNG (liquified natural gas) exports.

Over all, the demand for energy services and the ability for the sector to improve over the next few years is seen as highly likely. The structural shortfall in global energy supply will be difficult for the industry to overcome for some time. The company remains confident in the long-term viability of the oil and gas basins within its service region. These basins have significant future development opportunities that the company is well positioned to address. However, in the near term, the company will need to work through the challenges associated with the low activity levels of its largest customer as it works through its restructuring and sales process.

Financial and operating highlights -- nine months ended Sept. 30, 2023

Select financial information for the three and nine months ended Sept. 30, 2023, have been summarized herein. The attached table contains results for 2023 and 2022. Refer to the company's audited condensed consolidated financial statements and related management's discussion and analysis (MD&A) for a full description.

The company's complete set of Sept. 30, 2023, quarter-end filings have been filed on the SEDAR+ website and are also available on the company's website.

About Divergent Energy Services Corp.

Headquartered in Calgary, Alta., Divergent provides fluids management products and services for the water, gas and oil industries through its wholly owned subsidiary, Extreme Pump Solutions LLC.

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