APA GROUP — Investor Presentation 2012

Jun 14, 2012

15 June 2012

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ASX RELEASE

The Manager

ASX Market Announcements Australian Securities Exchange 4[th] Floor, 20 Bridge Street Sydney NSW 2000

Electronic Lodgement

Dear Sir or Madam

Company Announcement

I attach the following announcement for release to the market:

• Presentation - Growth over the long term

Yours sincerely

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Mark Knapman Company Secretary

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ASX RELEASE

15 June 2012

For further information please contact:

Investor enquiries: Media enquiries: Chris Kotsaris David Symons Investor Relations APA Group Cato Counsel Telephone: (02) 9693 0049 Telephone: (02) 9212 4666 Mob: 0402 060 508 Mob: 0410 559 184 Email: chris.kotsaris@apa.com.au Email: david@catocounsel.com.au

About APA Group (APA)

APA is Australia’s largest natural gas infrastructure business, owning and/or operating more than $8 billion of gas transmission and distribution assets. Its pipelines and assets span every state and territory on mainland Australia, delivering 50% of the nation’s gas usage. Unique amongst its peers, APA has direct management and operational control over its assets and the majority of its investments. APA also holds minority interests in energy infrastructure enterprises including Envestra, SEA Gas Pipeline, Hastings Diversified Utilities Fund and Energy Infrastructure Investments.

For more information visit APA’s website, www.apa.com.au

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Growth over the long term

Ross Gersbach Chief Executive Strategy and Development

UBS Utilities Conference 15 June 2012

Disclaimer

This presentation has been prepared by Australian Pipeline Limited (ACN 091 344 704) the responsible entity of the Australian Pipeline Trust (ARSN 091 678 778) and APT Investment Trust (ARSN 115 585 441) ( APA Group ).

Summary information: This presentation contains summary information about APA Group and its activities current as at the date of this presentation. The information in this presentation is of a general background nature and does not purport to be complete. It should be read in conjunction with the APA Group’s other periodic and continuous disclosure announcements which are available at www.apa.com.au.

Not financial product advice: Please note that Australian Pipeline Limited is not licensed to provide financial product advice in relation to securities in the APA Group. This presentation is for information purposes only and is not financial product or investment advice or a recommendation to acquire APA Group securities and has been prepared without taking into account the objectives, financial situation or needs of individuals. Before making an investment decision, prospective investors should consider the appropriateness of the information having regard to their own objectives, financial situation and needs and consult an investment adviser if necessary.

Past performance: Past performance information given in this presentation is given for illustrative purposes only and should not be relied upon as (and is not) an indication of future performance.

Future performance: This presentation contains certain “forward‐looking statements” such as indications of, and guidance on, future earnings and financial position and performance. Forward‐looking statements, opinions and estimates provided in this Presentation are based on assumptions and contingencies which are subject to change without notice, as are statements about market and industry trends, which are based on interpretations of current market conditions.

This presentation contains such statements that are subject to risk factors associated with the industries in which APA Group operates which may materially impact on future performance. Investors should form their own views as to these matters and any assumptions on which any forward‐looking statements are based. APA Group assumes no obligation to update or revise such information to reflect any change in expectations or assumptions.

Investment risk: An investment in securities in APA Group is subject to investment and other known and unknown risks, some of which are beyond the control of APA Group. APA Group does not guarantee any particular rate of return or the performance of APA Group.

Not an offer: This presentation does not constitute an offer, invitation or recommendation to subscribe for or purchase any security.

APA Group: UBS Utilities Conference, June 2012

 2

APA is well positioned in a growing industry

Australia’s largest natural gas pipeline owners

 Unrivalled gas asset footprint

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DUET 1,480 km – 80% Dampier Bunbury Pipeline
Singapore 1,800 km –Eastern Gas Pipeline, Queensland Gas Pipeline, Jemena pipelines
Power
HDF 2,445 km – Epic Energy pipelines
APA 12,855 km [(1)]
2,000 4,000 6,000 8,000 10,000 12,000 14,000
Pipeline length (km)
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• Largest transporter of natural gas across Australia

• Integrated portfolio of assets

• Providing revenue and operating synergies

 Increasing gas supply

• Australian 2P conventional and unconventional gas reserves exceed 140,000 PJ[(1)]

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(1) Includes 100% of the pipelines operated by APA Group which form part of its APA energy investments
energy investments (excluding HDF) SEA GasEnvestra HDFEII
Source: APA & AER State of the Energy Market 2011
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 Increasing gas demand

• Forecast to almost double by 2030 to 2,565 PJ[(2)] with gas fired electricity generation a key growth driver

• Internally managed and operated business

• Highly skilled and experienced workforce, with internal capability to expand and integrate portfolio

• Attractive growth opportunities

• Expanding and enhancing asset portfolio to meet increasing gas demand

• (1) EnergyQuest May 2012

• (2) Australian Energy Resource Assessment, July 2010

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Australian gas consumption
3,000
2,565 PJ
2,000
1,000
1970 1980 1990 2000 2010 2020 2030
Source: Australian Energy Resource Assessment, July 2010
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APA Group: UBS Utilities Conference, June 2012

 3

Developing a national energy infrastructure footprint

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June 2000
Transporting 25% of gas used
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June 2012
Transporting 50% of gas used
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Over 12 years … APA has developed an interconnected energy infrastructure portfolio and responded to a growing domestic energy market

• Increasing ownership of key assets

• Acquiring interconnected assets

• Constructing new pipelines and energy assets

• Expanding pipeline capacity

• Developing energy investments business

• Adding energy infrastructure assets

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APA Group: UBS Utilities Conference, June 2012

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Future growth

APA’s growth opportunities over the … satisfying APA’s key investment next decade … criteria

• Pipeline infrastructure for power generation and mining projects

• Strategic – investment fit and ability to extract synergies with APA’s assets, expertise and customer relationships

• Infrastructure to optimise energy delivery and security in  Economic – cash flow and investment dynamic regional markets returns appropriate to risk

• Energy developments that leverage existing APA infrastructure, expertise and relationships

• Risk – maintain low‐risk level with revenue and operating security

• Customers – long term relationship focus

• Energy investments that leverage and enhanced total service offerings internal operating and management  Funding – options that at a minimum

• capability maintain investment grade credit rating

Building APA with disciplined, targeted investment in energy infrastructure

APA Group: UBS Utilities Conference, June 2012

 5

Increasing demand for gas, driven by electricity generation

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3,000 Outlook for gas consumption 36%
2,500 30%
Primary consumption (PJ)
Share of total (%)
2,000 24%
PJ 1,500 18%
1,000 12%
500 6%
0 0%
Outlook for Australian
150 40%
gas‐fired electricity generation
120 32%
Electricity generation (TWh)
Share of total (%)
90 24%
TWh
60 16%
30 8%
0 0%
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(1) ABARE, “Australian energy projections to 2029‐30”, March 2010

 Growth in gas volumes[(1)]

• Average annual growth rate of 3.4% pa over the next 20 years (compared with 1.4% for primary energy)

– 1,240 PJ in 2007‐08, doubling to 2,570 PJ in 2029‐30

 Factors influencing gas demand increase

• Investments in new gas‐fired electricity generation

• Mining sector (gas mainly used for electricity generation)

• Government policies supporting gas uptake as relatively clean energy source

• Population growth of 1.3% pa and GDP growth of 2.9% pa

 Growth in gas‐fired electricity generation[(1)]

– Average growth rate of 5% pa

• Share of total generation: 19% in 2007‐08 increasing to 37% in 2029–30.

APA infrastructure is ideally positioned to participate in gas growth through the sale of transport, load shaping and storage services  6

APA Group: UBS Utilities Conference, June 2012

Good reasons for gas‐fired generation

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 Reduced carbon emissions

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• Produces 30% to 50% of the emissions produced by current coal technologies in generating electricity

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 Quick start generation

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• Suitable for managing peak demand

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• Provides ‘natural hedge’ for electricity retailers

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Capital cost ‐ electricity generation
6,000
5,000
4,000
3,000
2,000
1,000
0
Gas Gas SC SC USC USC IGCC USC USC Nuclear
CCGT OCGT black brown black brown CCS CCS
coal coal coal coal black brown
coal coal
$/kW (2009$)
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• Provides back‐up power for intermittent wind generation

• Mature technology, competitive capital cost

• Proven performance

• Lower capital cost and construction lead time

Natural gas is the optimum transition fuel for lower carbon emissions

Source: ACIL Tasman, "Fuel resource, new entry and generation costs in the NEM”, April 2009

APA Group: UBS Utilities Conference, June 2012

 7

Well positioned infrastructure for gas‐fired generation

 APA infrastructure benefit for generators

– Incrementally expand pipeline capacity

• Deliver gas from multiple sources

• Supply security

Generation (MW)	Eastern market	WA & NT market
Gas generation
Existing ‐ network	9,824	3,812
Existing ‐ non network	818	1,593
Recently completed/
under construction/	3,810	832
planned
Proposed	12,976	618
Wind generation
Existing ‐ network	621	191
Existing ‐ non network	998	‐
Recently completed/
under construction/	11,868	1,040
planned/proposed

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(1)
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Source: APA data; ESAA, “Electricity Gas Australia 2011 Report”

APA Group: UBS Utilities Conference, June 2012

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Developing energy infrastructure

Developing energy infrastructure that leverages APA’s existing infrastructure, expertise and customer relationships

• Strong energy infrastructure service provision

 Understanding the market and our customers to develop a suite of tailored services

 Investing in power generation that enhances or leverages APA’s assets

 Maintaining APA’s risk profile with long term secure revenue contracts

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APA Group: UBS Utilities Conference, June 2012

Diamantina Power Station – a low‐risk investment

An APA and AGL Energy power generation development to supply energy users in Mt Isa and surrounding regions

 Energy efficient

• 242 MW combined cycle plant, with high energy efficiency of 55% (compared with 35% for coal fired)

• Local generation, with no transmission losses

 Cost efficient

• Use existing gas and electricity transmission infrastructure

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• Ideally suited to expand in line with regional growth

• Significantly lower cost and lower carbon impact than state grid alternative

 Enhancing APA’s portfolio

• Secures future value for Carpentaria Gas Pipeline

• long term gas transportation agreement

• Attractive returns from Diamantina Power Station

• long term electricity supply agreement

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APA Group: UBS Utilities Conference, June 2012

Infrastructure provider in WA energy precinct

Emu Downs wind farm acquisition

• Acquired at attractive multiples

• FY12 EBITDA multiple of approx. 8.5 times

• Includes 130 MW wind farm development rights on an adjacent site

• Delivering secure earnings

• Long term revenue contracts for black and green products from the existing wind farm

• Servicing APA’s existing customer

• Located adjacent to APA assets

• Wind farm and potential new gas‐fired generation near APA’s gas pipeline and gas storage facility (Parmelia Gas Pipeline and Mondarra Gas Storage Facility)

• Access to existing electricity infrastructure

• Proposed expansion of transmission line capacity accommodates new generation

Developing seamless infrastructure services for customers

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Source: APA, Western Power (Mid West Energy Project)

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APA Group: UBS Utilities Conference, June 2012

Developing gas storage ‐ Mondarra expansion

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MONDARRA
GAS STORAGE
PARMELIA FACILITY
PIPELINE
PERTH
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Interconnected gas storage provides for supply and demand balancing, as well as supply security

Mondarra Gas Storage Facility (Western Australia)

• Underground gas storage (depleted gas reservoir) connected to Parmelia Gas Pipeline (APA) and Dampier Bunbury Pipeline

• Drivers for expansion

• Increasing demand for gas storage services for downstream Western Australian market – power generation and peak gas supply

• Recent gas supply interruptions highlighted vulnerability of supply – gas storage capacity will mitigate potential future interruptions

• Anticipated demand from gas users for temporary storage services – market arbitrage / users operations changes / gas portfolio management

Developing infrastructure and service offerings to meet customers’ unique storage requirements

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APA Group: UBS Utilities Conference, June 2012

Developing APA’s energy investment business

APA’s energy investments leverage internal capabilities, both people and systems

• Co‐investing in secure, relatively low growth energy infrastructure assets and businesses, together with …

Providing a mix of asset management, operations and maintenance and corporate functions under long term operating agreements

 Benefits include

• Reinvest capital in higher growth assets

• Receive asset returns plus management fee

• Long term security – revenue, operations and partnerships

 APA created energy investments

• 2008: Energy Infrastructure Investments (APA 19.9%) – power generation, pipelines, gas processing and HV electricity transmission

• 2009: EII2 (APA 20.2%) – wind farm

• 2011: GDI (EII) (APA 20.0%) – Allgas gas distribution network

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APA Group: UBS Utilities Conference, June 2012

Conclusion

 APA is well positioned in a growing market

• Continuing to expand and enhance our energy infrastructure portfolio across Australia in line with increasing demand for gas and energy

• Focused growth for the long term

• Developing opportunities that leverage APA’s infrastructure, expertise and relationships

• Maintaining consistent, strategic investment approach and risk profile

• Creating value for the long term

• Preserving and increasing the value of APA’s energy infrastructure portfolio

• Developing responsive energy infrastructure and service solutions to meet the

• requirements of our customers in a dynamic energy market

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APA Group: UBS Utilities Conference, June 2012

APA asset and investment portfolio

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APA Group: UBS Utilities Conference, June 2012

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For further information contact

Delivering Australia’s energy

Chris Kotsaris Investor Relations, APA Group Tel: +61 2 9693 0049 E‐mail: chris.kotsaris@apa.com.au

or visit APA’s website www.apa.com.au