APA Group pays $5bn for BG Group’s QCLNG pipeline

10th December 2014 By: Esmarie Iannucci - Creamer Media Senior Deputy Editor: Australasia

APA Group pays $5bn for BG Group’s QCLNG pipeline

Photo by: Bloomberg

PERTH (miningweekly.com) – ASX-listed gas infrastructure giant APA Group has purchased the Queensland Curtis liquefied natural gas (QCLNG) pipeline from the BG Group for $5-billion.

The QCLNG project would deliver about 8.5-million tonnes a year of capacity, with the Phase 1 project budgeted at $20.4-billion. First LNG shipments were scheduled for this month.

The QCLNG pipeline transports gas from various fields in the Surat basin to the QCLNG export facility, at Gladstone, and consists of 543 km of transmission pipeline, three laterals, interconnections with the Gladstone LNG and Australia Pacific LNG project transmission pipelines.

Under gas transportation agreements, the QCLNG pipeline revenues were fully contracted with BG Group entities and China National Offshore Oil Corporation owned entities, on a 20-year take-or-pay basis.

APA told shareholders on Wednesday that the acquisition represented an earning before interest, taxes, depreciation and amortisation (Ebitda) multiple of around 13 for the 2016 financial year, and was operating cash flow security accretive, in the order of some 10%, from the first full year of ownership.

For the first full financial year to the end of June 2016, the QCLNG pipeline was expected to contribute about $383-million in Ebitda and an additional operating cash flow of around $200-million to $221-million.

“The acquisition of the QCLNG pipeline further enhances APA’s position as Australia’s largest owner of gas transmission pipelines and builds on APA’s strategy of expanding its revenue base and east coast grid,” said APA MD Mick McCormack.

APA would raise about A$1.8-billion through a one-for-three fully underwritten pro-rata accelerated entitlement offer, to partly fund the acquisition. The balance of the consideration would be funded from a $4.1-billion syndicated bank bridge debt facility.