APA Group

ASX:APA

APA Group

ASX:APA
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$9.32 (-0.2%)
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Forum Topics APA APA Bull Case

Pinned straw:
edgescape
Added 8 months ago

One I'm currently researching on as it has largely escaped the recent market rout and because of the recent talk on "Gas Reservation" during the election

Here's a report extract from RBC. Mainly got gas assets on the East Coast and a couple of small renewable projects in the Pilbara which are not significant to the top line right now.

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Maybe someone here with Gas and Energy experience can shed some light on APA and whether this is hidden gem or a "value trap".

My only concern is future gas supply on the east coast (Melb and Syd) which seems to be running out int eh distant future. They will need to tap new supply from "somewhere". Perhaps Queensland or, highly unlikely, the west.
Mujo
Added 8 months ago

It sold off a lot on the concern around the cost of expanding into transmission lines and think it's really just rebounding - part on being 'defensive' and the lower bond yield.

Not sure the gas reservation policy would even help APA as a pipeline operator, but I doubt the libs are going to get in at this stage in any case.

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edgescape
Added 8 months ago

@Mujo There is mention of storage but is not for another few years and it is for power generation.

Doesn't look like it is for gas reservation as you you mentioned but also not sure if there is any indirect relation between the two (gas for consumers vs power generation).

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Mujo
Added 8 months ago

Sorry thought you were indicating the gas reservation policy was the bull case for APA - long week.

You're right it was for the below:

 APA ECG expansion, stage 3 at $0.8-1.0bn adds ~40PJ of capacity to market at a cost of $2.15-2.40/GJ, slightly below the current haulage cost. Importantly, we see it helps AEMO avoid market intervention required for an import terminal to be economic near term. APA captures the benefit of growing peak capacity, but additional off peak to fill storage, and medium-term cover fall in Longford production. The latter potentially enables revenue growth above CPI as utilisation of the MSP increases from ~50%.

Irrespective of who forms government post election, neither party wants gas import pricing parity. APA's approach ensures Qld/NT can supply southern demand, which when combined with government policy avoids import parity. This is a distinct advantage to an import terminal.

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