APA Group completes LNG pipeline acquisition

APA Group, Australia’s largest natural gas infrastructure business, has completed the acquisition from BG Group of the Queensland Curtis LNG (QCLNG) Pipeline.

The final acquisition price is US$4.6 billion and the first full year EBITDA contribution is expected to be around US$355 million. The transaction was announced on 10 December 2014.

As part of the completion process, APA has renamed the pipeline to the Wallumbilla Gladstone Pipeline (WGP). The WGP is a 1.05 m diameter and 543 km length, high pressure pipeline connecting gas fields in Queensland's Surat Basin to the Queensland Curtis LNG (QCLNG) export facility on Curtis Island, near Gladstone. It was one of Australia's largest capital infrastructure projects, involving US$20.4 billion of investment from 2010-14.

APA Managing Director, Mick McCormack said,

“We are very pleased to have completed this acquisition which extends the footprint of our east coast gas grid to over 7,500 km across eastern Australia and represents APA’s largest ever pipeline acquisition. We have also gained two significant global customers in BG Group and China National Offshore Oil Corporation (‘CNOOC’) as part of this transaction and we look forward to further developing our relationship with each of them.”

APA has executed forward hedges for the period to financial year end 2016 and will execute further hedges going forward at an appropriate time and on a rolling basis. As a result, net operating cashflow to APA from US$ income net of US$ interest cost is expected to be in the range of A$250 million to A$255 million in APA’s first full year of ownership to 30 June 2016.

As a result, APA updates its FY15 guidance in respect of EBITDA and net interest cost. Based on currently available information and operating plans, APA expects statutory EBITDA for the full year to 30 June 2015 to be in the range of A$1,257 million to A$1,272 million.