APA GROUP — Investor Presentation 2015

Jul 28, 2015

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Connecting opportunities Midstream spotlight: Connecting resources to markets

Rob Wheals, Group Executive Transmission 2015 DUG Australia Conference, Brisbane 29 July 2015

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 nor does it contain all the information which a prospective investor may require in evaluating a possible investment in APA Group. 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 can generally be identified by the use of forward-looking words such as, 'expect', 'anticipate', 'likely', 'intend', 'could', 'may', 'predict', 'plan', 'propose', 'will', 'believe', 'forecast', 'estimate', 'target', 'outlook', 'guidance' and other similar expressions within the meaning of securities laws of applicable jurisdictions and include, but are not limited to, forecast EBITDA, operating cashflow, distribution guidance and estimated asset life. 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 and are subject to risk factors associated with the industries in which APA Group operates. Such forward-looking statements, opinions and estimates are not guarantees or predictions of future performance and involve known and unknown risks and uncertainties and other factors, many of which are beyond the control of APA Group, and may involve significant elements of subjective judgement and assumptions as to future events which may or may not be correct. There can be no assurance that actual outcomes will not materially differ from these forward-looking statements, opinions and estimates. A number of important factors could cause actual results or performance to differ materially from such forward-looking statements, opinions and estimates.

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. In particular, this presentation does not constitute an offer to sell, or a solicitation of an offer to buy, any securities in the United States. Securities may not be offered or sold, directly or indirectly, in the United States or to persons that are acting for the account or benefit of persons in the United States, unless they have been registered under the U.S. Securities Act of 1933, as amended (the U.S. Securities Act), or are offered and sold in a transaction exempt from, or not subject to, the registration requirements of the U.S. Securities Act and any other applicable state securities laws.

Financial data: Investors should be aware that certain financial data included in this presentation are "non-GAAP financial measures" under Regulation G of the U.S. Securities Exchange Act of 1934, as amended. These measures are EBITDA, normalised EBITDA and statutory EBITDA. The disclosure of such non-GAAP financial measures in the manner included in the presentation may not be permissible in a registration statement under the U.S. Securities Act. These non-GAAP financial measures do not have a standardised meaning prescribed by Australian Accounting Standards and therefore may not be comparable to similarly titled measures presented by other entities, and should not be construed as an alternative to other financial measures determined in accordance with Australian Accounting Standards. Although APA Group believes these non-GAAP financial measures provide useful information to users in measuring the financial performance and condition of its business, investors are cautioned not to place undue reliance on any non-GAAP financial measures included in this presentation.

APA’s national footprint

S&P/ASX 50 ASX RANK

$9.8 B MARKET CAP

AS AT 24 JUL 15

Moody’s: Baa2

(outlook Stable)

S&P: BBB

(outlook Stable) CREDIT RATINGS

~ $19 billion

Assets owned and/or operated

Gas transmission 14,744[(1)] km transmission pipelines

Underground & LNG gas storage

Gas distribution

27,100 km gas network pipelines 1.3 million gas consumers

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Other energy infrastructure 585 MW power generation 244 km HV electricity transmission Gas processing plants

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Employees More than 1,600

Australian gas transmission pipeline ownership by length (km)

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Source: AER State of the Energy Market Dec 2014 ; IMO Gas Market Statement of Opportunities Dec 2014; and APA data as at 1 Jan 2015

• (1) Includes 100% of the pipelines operated by APA Group which form part of its energy investments including Ethane Pipeline Income Fund, SEA Gas and EII. Does not include APA’s Eastern Goldfields Pipeline (292 km) currently under construction in WA. 

Today’s topic

Value Flexibility for customers & the industry

More Solutions Operational Midstream Connections delivery excellence integration Connect more resources to Responsive, valuable Leverage asset Midstream energy more markets by further solutions for customers management, infrastructure expanding the East & development & West Coast Grids operational capabilities Case study: NT Link & Armour Case study: Multi asset GTA

Solid foundation – Risk management culture & internal management Allows APA to continue to provide and expand its infrastructure and services Case Study: Eastern Goldfields Pipeline

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Connecting opportunities

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• East Coast Grid – interconnecting major east coast resources to all major markets and customers

• Victorian/NSW Interconnect expansion – continued expansion to deliver gas northward

• Bi-directional capability – most of the pipelines flow gas in both directions

• Wallumbilla Gladstone Pipeline – access to export LNG market, provides access for gas resources not necessarily developed for export LNG

• NT Link – possible interconnect to the east coast

• West Coast Grid – providing cost effective fuel options to resources sector in the West (eg. EGP)

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Leads to commercialisation of undeveloped resources

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Connecting resources to markets and markets to resources across Australia
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Case study – Connecting untapped resources

NT Link

Armour Energy Heads of Agreement

 Signed June 2013, non-binding

 NT has potential reserves of approximately 240 TCF across 6 basins

(Source: NT Government media release 19 February 2014)

 Seamless transport between Timor Sea, Bass Strait, Sydney and Gladstone

• Connection to:

• Existing APA infrastructure

• APA’s 7,500 km East Coast Grid

 Will facilitate development of Armour’s Northern Area Gas Scheme (NORGAS) Project

 Will require construction of a new 350 km link from Burketown to the Carpentaria Gas Pipeline in Mount Isa

 Potential for up to 330 PJ per annum to be transported to markets in Mount Isa, Sydney and Queensland

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APA is one of four shortlisted entities - final bids due September 2015
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Delivering new and innovative solutions

• Past: Point to point delivery of energy

• Now: Holistic energy delivery solution encompassing:

• Multi receipt points

• Multi delivery points

• Storage

• Interruptible haulage and storage services

One GTA

• Enabled by the development and installation of:

• Bi-directional capabilities

• – Customer Management System

Service flow including receipt and delivery points

• Integrated Operations Centre (‘IOC’)

APA’s Integrated Operations Centre, Brisbane

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Flexibility of APA’s infrastructure means flexibility for our customers in managing their energy portfolios dynamically
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Case study – Multi asset GTA

An example:

• Combinations of services (and types of services) across almost all of APA’s East Coast Grid

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Mount Isa
As
Available Firm
Moomba Ballera Wallumbilla Brisbane
Interruptible
Pressure Services
Pressure Services
Redirection Services
to SWQP, MAPS
Sydney
Culcairn
VIC
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• Under a single transportation agreement

• Flows in various directions -

• flexibility provided by bi-directional pipelines

• Services include non-firm services and pressure services

• Managed through APA’s new Integrated Operations Centre (‘IOC’)

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New and innovative solutions add value to the industry
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Focus on operational excellence

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Enhancing infrastructure operations and maintenance
–
Consolidating pipeline control and monitoring operations to
ensure high reliability
–
Improving asset maintenance management systems and processes
across the portfolio
–
Progressively adopting asset management best practice
LTIFR [(1) ]
7.3
6.1  Health and safety
4.9
–
Long-term safety goal of Zero Harm –
2.2 2.1 a program of continuous improvement
0.7
0.3
–
Second year of 3 year HSE Strategic Improvement Plan
FY09 FY10 FY11 FY12 FY13 FY14 1HY15 (1) Loss Time Injury Frequency Rate
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 Enhancing infrastructure operations and maintenance

Looking after our people and assets improves service safety and reliability, operational efficiency and

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Future opportunities – Australian midstream sector APA will continue to consider investment opportunities in the midstream sector

• North American oil and gas industry has distinct upstream and midstream sectors

• Opportunities for the Australian upstream sector to pursue a similar approach  APA already has a long history of developing, owning and operating midstream gas assets

• Moomba and Wallumbilla compressor facilities

• − Mondarra gas storage facility

• Gas processing plants at Tipton West and Kogan North

Mondarra gas storage facility

Moomba compressor station

Wallumbilla compressor station

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Midstream sector is a potential area of additional opportunities for APA
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Midstream assets and services

Pipeline capacity trading

Pipeline construction & servicing

Processing Compression

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Gas Source

Metering

Gas storage solutions

• LNG

• Underground

• In-pipe

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Gas Markets

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APA offers a range of midstream assets and services
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Risk/return balance

APA’s Risk Management Philosophy

Case study: Eastern Goldfields Pipeline (EGP)

• Target strong BBB/Baa2 investment grade ratings

• Greenfield, 292 km

• Target gearing of 65 – 68%

• Minimise effects of market risk, credit risk and liquidity risk through natural hedges and derivatives

• long term GTAs with AngloGold

• GTA utilises 3 interconnected APA pipelines

• Appropriate monitoring of counterparty risk and contract renewal risk

 APA focuses on:

• replace liquid fuels with gas (long term logistics and cost savings)

• customer needs

• long term value for the customer

• worked with AngloGold to finalise a ‘win-win’ solution

• our ability to fund the development

• completion due Jan 2016

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APA works with customers to achieve common goals
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APA – Connecting Resources to Markets

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Largest gas infrastructure portfolio in Australia in terms of scale and geographic diversity

Unrivalled, interconnected footprint with sustainable growth opportunities

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Stable and predictable cash flow from regulated assets and long term contracts with quality customers

Quality assets with long expected lives requiring a relatively low level of maintenance capital expenditure

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Strong balance sheet and prudent capital management

Integrated in-house management and experienced executive management team

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For further information contact Delivering Australia’s Energy Yoko Kosugi Head of Investor Relations, APA Group Tel: +61 2 9693 0049 E-mail: yoko.kosugi@apa.com.au

or visit APA’s website www.apa.com.au