APA Completes $4.6B Acquisition of Australia's QCLNG Pipeline from BG

APA Group, Australia’s largest natural gas infrastructure business, disclosed Thursday that it completed the acquisition from BG Group of the Queensland Curtis LNG (QCLNG) Pipeline June 3. The final acquisition price is $4.6 billion and the first full year EBITDA (earnings before interest, taxes, depreciation and amortization) contribution is expected to be around $355 million. The transaction was announced Dec. 10, 2014.

As part of the completion process, APA has renamed the pipeline to the Wallumbilla Gladstone Pipeline (WGP).

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 4,660 miles (7,500 kilometers) 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.”

The final acquisition price and tariffs were determined upon the finalization of several parameters including U.S. Producer Price Index – Industrial Commodities (U.S. PPI), which resulted in their decrease from that indicated at the time of initial announcement of the transaction Dec. 10, 2014.

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 U.S. dollar income net of U.S. dollar interest cost is expected to be in the range of $193.2 million (AUD 250 million) to $197 million (AUD 255 million) in APA’s first full year of ownership to June 30, 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 June 30 to be in the range of $971.5 million (AUD 1.257 billion) to $983.1 million (AUD 1.272 billion). Normalized continuing business EBITDA is expected to be in the range of $626 million (AUD 810 million) to $637.7 million (AUD 825 million). This guidance is inclusive of an expected contribution from the newly acquired WGP during FY15 of approximately $27 million (AUD 35 million) (at an assumed AUD/USD exchange rate of 0.77).

There is no change to APA’s guidance in respect of net interest cost which is expected to be in a range of $247.4 million to  $274.4 million (AUD 320 million to AUD 355 million).


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