APA GROUP — Investor Presentation 2020

May 7, 2020

Australian Pipeline Ltd ACN 091 344 704 | Australian Pipeline Trust ARSN 091 678 778 | APT Investment Trust ARSN 115 585 441 Level 25, 580 George Street Sydney NSW 2000 | PO Box R41 Royal Exchange NSW 1225 Phone +61 2 9693 0000 | Fax +61 2 9693 0093 APA Group | apa.com.au

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8 May 2020

ASX ANNOUNCEMENT

APA Group (ASX: APA)

APA 2020 Virtual Investor Day

APA Group (ASX: APA) today provides the attached presentations from APA Group’s management team in relation to its 2020 Virtual Investor Day.

The Virtual Investor Day will be webcast live at 8:30am (Sydney time) today, Friday 8 May 2020. A replay of the webcast will be made available on APA’s website to view on demand for those unable to attend the live webcast. Further details are available on APA’s website in the investor reports and presentation section.

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Authorised for release by Nevenka Codevelle

Company Secretary Australian Pipeline Limited

For further information, please contact:

Investor enquiries: Media enquiries: Jennifer Blake Vanessa Puli Head of Investor Relations Head of Corporate Communications Telephone: +61 2 9693 0097 Telephone: +61 2 9228 8300 Mob: +61 455 071 006 Mob: +61 436 469 356 Email: jennifer.blake@apa.com.au Email: vanessa.puli@apa.com.au

About APA Group (APA)

APA is a leading Australian energy infrastructure business, owning and/or operating around $21 billion of energy infrastructure assets. Its gas transmission pipelines span every state and territory on mainland Australia, delivering approximately half of the nation’s gas usage. APA has direct management and operational control over its assets and the majority of its investments. APA also holds ownership interests in a number of energy infrastructure enterprises including SEA Gas Pipeline, SEA Gas (Mortlake) Partnership, Energy Infrastructure Investments and GDI Allgas Gas Networks.

APT Pipelines Limited is a wholly owned subsidiary of Australian Pipeline Trust and is the borrowing entity of APA Group.

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

APA Group investor briefing day 2020.

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Friday, 8 May 2020 Virtual event

Disclaimer

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

The information in this presentation does not contain all the information which a prospective investor may require in evaluating a possible investment in APA Group and should be read in conjunction with the APA Group’s other periodic and continuous disclosure announcements which are available at www.apa.com.au.

All references to dollars, cents or ‘$’ in this presentation are to Australian currency, unless otherwise stated.

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 seek professional advice if necessary.

Past performance: Past performance information should not be relied upon as (and is not) an indication of future performance.

Forward looking statements: This presentation contains certain forward looking information, including about APA Group, which is subject to risk factors. “Forward-looking statements” may include 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 and include, but are not limited to, forecast EBIT and EBITDA, operating cash flow, distribution guidance and estimated asset life.

APA Group believes that there are reasonable grounds for these forward looking statements and due care and attention have been used in preparing this presentation. However, the 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. 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 forwardlooking 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.

Non-IFRS financial measures: APA Group results are reported under International Financial Reporting Standards (IFRS). However, investors should be aware that this presentation includes certain financial measures that are non-IFRS financial measures for the purposes of providing a more comprehensive understanding of the performance of the APA Group. These non-IFRS financial measures include EBIT, EBITDA and other “normalised” measures. Such non-IFRS information is unaudited, however the numbers have been extracted from the audited financial statements.

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.

Non-GAAP financial measures: 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.

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8/05/2020 –APA Investor Briefing Day 2020 2
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Agenda

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8:30am		Jennifer Blake	10:20am	Darren Rogers	10:45am	Nevenka Codevelle
		Investor Relations		GE Operations		GE Governance &
		-welcome & logistics		-overview		External Affairs
8:33am		Rob Wheals CEO & Managing Director	10:28am	Craig Stallan Acting GE Strategy & Commercial		-working with stakeholders to create long term value
		-overview & growth		Kevin Lester	10:51am	Elise Manns
		opportunities		GE Infrastructure		GE People, Safety &
9:03am		Ross Gersbach President North American Development	10:36am	Development -Orbost project Peter Fredricson		Culture -unique environments & PSC focus areas
		-US update		Chief Financial	11:00am	Q&A roundup
9:21am		Hannah McCaughey GE Transformation & Technology		Officer -capital management	~11:30am	END
		-megatrends & energy
		transformation
9:33am		Q&A session
10:05am	15m	BREAK

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Ask a question

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At any time during the webcast, you can submit a question using the ASK A QUESTION box on the webcast dashboard:

3. To close the dashboard view at any time click the minus button at the top of the dashboard menu.

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Analysts using the teleconference facility dial *1

1. Select the ‘Ask a question’ 2. A question box will Q for Rob re: xxxxx xxxx box under ‘Interact’ on the pop-up where you can dashboard menu. type and submit your question. No need to include your details.

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Rob Wheals

CEO & Managing Director

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• Welcome & overview

• The changing energy landscape

• Purpose, vision & strategic imperatives

• Decision compass, values & customer promise

• Operating model and leadership team

• Growth opportunities

• Summary

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A leading Australian energy infrastructure business

our footprint

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Darwin
Northern
Territory
Mount
Isa
Queensland
Gladstone
Western
Australia
South Wallumbilla Brisbane
Australia Moomba
New
South
Wales
Perth
Sydney
Adelaide Victoria
Melbourne
Tasmania
Notes:
(1) Includes 100% of assets operated by APA Group, which form part of
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Gas transmission[(1)]

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• 15,425 km transmission pipelines

Market capitalisation

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• $12 billion (as at 1 May 2020)

Gas distribution[(2)]

• $0.6 billion (as at 30 Jun 2000)

• ~29,000 km gas mains & pipelines

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• ~1.4 million gas consumers

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Gas fired power

Assets owned/operated

generation[(1)]

~$21 billion

418 MW

Renewable energy generation[(1)]

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Credit ratings

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Moody’s: Baa2 (outlook Stable) S&P: BBB (outlook Stable)

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• 149.3 MW Solar 342 MW Wind

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Gas storage

Listed Employees S&P/ASX 50 ~1,800

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• 12,000 tonnes LNG 18 PJ gas

Register composition

• Gas processing 113 TJ/day[(3)] processing plants

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Securities on issue: 1,179.9 million Securityholders: ~75,000 Institutional/retail: 70:30 Domestic/international: 75:25

Electricity transmission 244 km HV

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• (1) Includes 100% of assets operated by APA Group, which form part of Energy Investments segment, including SEA Gas and EII.

• (2) Includes 100% of assets operated by APA Group in Queensland, New South Wales, Victoria and South Australia.

• (3) Includes Orbost Gas Processing Plant at 68 TJ/day nameplate capacity.

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Two decades of growth & adaptation

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of investment into the Australian energy market

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2000 Pipeline company

2020

Energy Infrastructure company

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20 years creating value for securityholders strong track record

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strong track record
TSR cents
APA’s distributions have increased every year for nearly two decades
2500 60.0
TSR: 2,140% [(1)] since listing
CAGR: 17.2% pa
50.0
2000 27.0
47.0
45.0
43.5
41.5 40.0
1500 38.0
34.4 35.0 35.5 36.3
32.8 30.0
31.0
29.5
28.0
1000
24.0
22.0 21.5 21.5 21.5 22.5 23.0 20.0
500
10.0
0 0.0
Distributions (RHS) APA TSR (LHS) ASX100 TSR (LHS) ASX 200 Utilities TSR (LHS)
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Note: 1) Indexed from 13 June 2000, the date of APA’s listing on the ASX to 31 December 2019 * Estimated distribution for 2H FY2020

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Covid-19 & oil prices

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• Pivotal part of essential service supply chain

• capacity contracts & regulated revenues protect against near-term volume risk

• but not entirely immune from longer term economic downturn

• Employees have responded to the challenge

• enabled continuing strong results & confirmation of distribution guidance

• Ample liquidity & available headroom with ratings metrics

• debt markets remained open to increase liquidity and reduce cost of debt

• Near term organic growth likely to be impacted in current environment

• base-case is U-shaped recovery, possibly extended, with some customer decisions deferred

• Optimal timing for acquisitions may be pushed out  although current market might create unique opportunity if right target identified

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Long-term success driven by fundamentals

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• Growth in global energy demand

• Resilience of our low risk business model through economic cycles

• Portfolio of high-quality long-life assets

• Strong skills and capability to navigate a constantly changing environment

• Operational and safety excellence

• Financial strength and flexibility

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Rob Wheals

CEO & Managing Director

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• Welcome & overview

• The changing energy landscape

• Purpose, vision & strategic imperatives

• Decision compass, values & customer promise

• Operating model and leadership team

• Growth opportunities

• Summary

global primary energy demand continues to grow under most scenarios

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Global Primary Energy Consumption Forecast Global Primary Energy Consumption
22,000 1920-2018, mtoe (IEA scenarios) 2018-2040, mtoe
20,000 +34%
18,000 +24%
16,000
14,000
-7%
12,000
+43%
10,000
8,000
6,000
4,000 +547%
2,000
0
1920 2000 2018 2025 2030 2035 2040
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Source: IEA World Energy Outlook 2019, Vaclav Smil (2017)

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The energy transformation is underway significant ongoing investment required

Transformation is underway

• Coal to renewables & gas

• Rooftop solar

• Consumers selling into grid

• Electrification e.g. EVs

• Customers & technology

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Challenges & opportunities

• Firming generation

• Market structure

• New gas supply

• New technologies

• Emotions versus economics

Significant ongoing investment in generation required ~ US$122bn[(1) ] for Australia

Source: (1) Bloomberg New Energy

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Transformation requires an holistic approach

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Ambition
to reduce
emissions
Decarbonise HOLISTIC Decarbonise
supply demand
APPROACH
Balancing
Power
costs and
conversion
technologies
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• Ambition needs to be supported by a plan

• Plan needs to include impact on costs, reliability and resilience

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A spectrum full of business opportunity for APA along the entire decarbonisation continuum

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low decarbonisation

Illustrative

deep decarbonisation

lowest investment

highest investment

Status quo Partial decarbonisation (~50% by 2050) Technology Transition decarbonisation (~75% by 2050) Net zero carbon (~100% by 2050)	Status quo Partial decarbonisation (~50% by 2050) Technology Transition decarbonisation (~75% by 2050) Net zero carbon (~100% by 2050)	Status quo Partial decarbonisation (~50% by 2050) Technology Transition decarbonisation (~75% by 2050) Net zero carbon (~100% by 2050)	Status quo Partial decarbonisation (~50% by 2050) Technology Transition decarbonisation (~75% by 2050) Net zero carbon (~100% by 2050)
• Economic transition from coal to gas & renewables • Some policy intervention • New technology where economical • Transition away from coal to gas and renewables • Partial EV • Energy efficiency • New technology through customer adoption • Carbon power offset • High EV take-up • Large-scale energy efficiency • Net zero carbon fuel & new technologies – Biogas; ren. methane – CCUS – Hydrogen – Batteries • 100% carbon power offset • Very high EV take-up • Liquid fuels transition to Hydrogen • Net zero fuels and other new technologies where electrification not feasible
		ease
	Historic asset classes New asset classes

Historic asset classes

New asset classes

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Gas is a key enabler of the future energy mix regardless of future scenario

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Total forecast worldwide natural gas usage

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7,000
+49%
6,000
+37%
5,000
4,000 -2%
3,000
2,000
1,000
-
2018 2025 2030 2035 2040
North American APAC
Other regions Stated Policies Scenario
Current Policies Scenario Sustainable Development Scenario
BCM
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The future of gas

• Electricity – decarbonising & firming

• Industrial – key energy source

• Residential & Commercial – cost efficient and small emissions contribution

• Growth in our target regions

Source: International Energy Agency (IEA 2019), "World Energy Outlook 2019", IEA, Paris https://www.iea.org/reports/world-energy-outlook-2019

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Rob Wheals

CEO & Managing Director

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• Welcome & overview

• The changing energy landscape

• Purpose, vision & strategic imperatives

• Decision compass, values & customer promise

• Operating model and leadership team

• Growth opportunities

• Summary

APA - embracing change – adapting and leading

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Purpose: why we exist

We strengthen communities through responsible energy

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Vision: what we aspire to To be world class in energy solutions

By responsible energy we mean:

As world class we want to be known for:

• Doing the right thing, even in tough situations

• High integrity & credibility

• Creating value for all our stakeholders

• Leadership in responsible energy

• Taking a long term view, being here for future generations

• Investing in new technologies & new energy

• Customer focus

• Operational capability, safety & environmental performance

• Innovating for a sustainable future

• Where people are proud to work

• Making a positive impact on communities

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Our Strategic Imperatives

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Strategic imperatives

(Where we aspire to be world class)

People & Culture	• Empower employees to make decisions. • Foster robust governance. • Reward the right behaviours.
Operational Excellence	• Leverage our expertise to drive value.
Customer Centric	• Provide single point of accountability. • Allow us to provide the right solution every time.
Financial Strength	• Optimise value, efficiency and effectiveness. • Ensure costs are controlled and justifiable.
Growth & Innovation	• Position us for future growth and success.
Stakeholder Relationships	• Enable us to build strong internal and external relationships.

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Our Decision Compass, Values & Customer Promise

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Our Decision Compass:

Our Purpose is we strengthen communities through responsible energy.

• Do things safely.

• Take a long-term focus.

• Manage APA money as if our own.

Our Vision is to be world class in energy solutions.

• Do what we say we’ll do.

• Know our reputation matters.

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Our Customer Promise is to deliver service you value.

We will…

• Listen to understand.

• Enable our people to respond.

• Do what we say we'll do.

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Our STARS values: Safe. Trustworthy. Adaptable. Results. Service.

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Operating model & leadership team strategic alignment

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CEO & MD
Rob Wheals
Corporate Functions: Govern & Support Business Units: Execution
People, Governance Transformation Strategy & Infrastructure North
Safety & Finance & External & Technology Commercial Development Operations America
Culture Affairs
Elise Peter Nevenka Hannah Process Kevin Darren Ross
Manns Fredricson Codevelle McCaughey Underway Lester Rogers Gersbach
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Rob Wheals

CEO & Managing Director

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• Welcome & overview

• The changing energy landscape

• Purpose, vision & strategic imperatives

• Decision compass, values & customer promise

• Operating model and leadership team

• Growth opportunities

• Summary

growth strategy playing a leadership role in a responsible energy environment

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APA’s strategy:

• Deliver services our customer value consistent with our Customer Promise

• Grow our pipelines and midstream portfolio

• Expand renewable and gas power portfolio

• Secure North American investment

• Deep exploration into technology transformation of energy

• Maintain BBB/Baa2 credit ratings

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Line of sight to over $4bn of growth opportunities

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Prospective & Active
Track record of growth capex investment:
5-10 years
>$400 m pa average over the last 5 years
>$4bn >$300 m pa average over the last 10 years
A$m
$800m
$700m 743
$600m
Active $500m
$400m 463
2-3 years 402 ~250
373
$300m 346 FY20e
~$1bn 285 281 272
$200m 225
182
$100m 155 145
121
$0m
FY08 FY09 FY10 FY11 FY12 FY13 FY14 FY15 FY16 FY17 FY18 FY19 1H FY20
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Connection to new gas supply - East

• Southern basins in accelerated decline, additional volumes required 2021

• New supply required to meet existing demand

• Western Slopes Pipeline

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East Coast Australia gas supply and demand

• Frontier basin opportunities including:

• Beetaloo / McArthur

• Galilee (MoU Comet Ridge & Vintage Energy)

• Bowen (MoU Blue Energy)

• Nicholson

• Offshore NT

• Gippsland basin (MoU Emperor Energy)

• LNG import terminals:

• Multiple options considered, with Crib Point (AGL) and Port Kembla (AIE) ahead in terms of timetable

Source: AEMO GSOO 2020

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Demand growth - West

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16,830 PJ
45,669 PJ
TGP
PPS NGP
Western
GGP Australia
MP AL GPS
YGP
MGPSF MMGP EGP
EDWSF
848 PJ
BWSF KKP
Perth PGP
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734 PJ
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• Available and affordable supply

• Prospective Perth basin

• Resource outlook remains strong with new connection demand continuing

Iron ore

Gold, Silver

Nickel, Cobalt, Manganese, Vanadium Copper

Lithium, Magnesium Bauxite

Rare earth

Source: Major Mines and Mineral Deposits in Australia, Geoscience Australia

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Energy transformation

planning for an orderly transition

“…the only way to meet the energy needs of the future without sacrificing standards of living, or undermining the economy, is by planning for an orderly transition that embraces science and technology as the stepping stones to the future we want.”

“… we need an energy companion today that can react rapidly to changes in solar and wind output. An energy companion that is itself relatively low in emissions , and that only operates when needed…. natural gas will play that critical role .”

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• Renewables – for APA’s gas customers

• Firming gas generation

• New technologies

• Renewable methane demonstration plant - underway

Dr Alan Finkel AO, Australia’s Chief Scientist, 12 Feb 2020

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US due diligence

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NORTH
AMERICA
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• Gas industry dynamics

• Significant reserves, >30 years

• Conservative pricing

• Increasing domestic & export demand

• Cost of electrification in colder regions is prohibitive & counterproductive from an emissions perspective

• Diversity of opportunities

• Political stability

• Appropriate risk/return environment

• Supportive regulatory environment

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Summary

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	Summary	Summary
	Growth with Reasonable Yield			Strong business fundamentals			Capability to navigate a
							constantly changing world
	●	High quality asset footprint		●	Long term contracts
							●	Highly experienced team
	●	Long term & low risk		●	Creditworthy
		growth capex			counterparties		●	Operational & safety
								excellence
	●	Steady & growing		●	Regulated assets
		distributions
				●	Interest rate / inflation
					protection
				●	Financial strength

Resilience through all phases of the economic cycle

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Ross Gersbach President North American Development

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• US natural gas market overview

• Current market trends – LDCs and pipelines

• Economic & regulatory environment

• Screening criteria & target sectors

• US decarbonisation considerations

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U.S natural gas market overview shale plays providing abundant, low-priced natural gas

Current daily average dry gas production by region ( December 2019, bcf/d)

Bakken 2.0

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U.S. natural gas proved reserves & Henry Hub price (tcf & USD) ( December 2019, bcf/d)
2.0
$10.5 600
$9.0 500 proved Marcellus/Utica
$7.5 400 reserves 31.1
$6.0 300 39% of gas
$4.5
200 production
$3.0
price
$1.5 100
$0.0 0
2008 2010 2012 2014 2016 2018
Woodford Fayetteville
5.8 1.2
U.S. projected natural gas consumption (tcf) Niobrara
3.8
1400 Barnett
1200 2.2 Haynesville
9.4
Permian
1000
11.4
800
600 Eagle Ford
400 Gas production in the Southwest is 4.5
200 associated with crude oil from Permian,
0 Eagle Ford and SCOOP/STACK basins;
2017 2018 2025E 2030E 2035E 2040E Northeast production is primarily dry gas
price
proved reserves
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Source: U.S. EIA: Annual Summary of Natural Gas Production ; IEA

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Target sectors APA is focussing on lower risk businesses

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Screening criteria APA’s experience to date has revealed a preference for the following asset characteristics

#1

• Commercial environment

• Regulated and/or contracted businesses

• Supportive regulatory environment

• Geographic advantages and availability of follow on transactions

#2

• Operational alignment

• Existing operational expertise that fits with current APA businesses

Organisational #3 structure

• Transparent and quantifiable performance record and / or existing infrastructure management team with proven track record

#4

• Credit

• Supportive of credit rating targets based on S&P/Moody’s criteria

• • Minimal counterparty risk

#5

Financial returns

• Acceptable IRR

• OCF accretive in first full fiscal year

#6

• Investment size

• Appropriate size for initial investment

• Meaningful size but not “betting” the company

#7

• Environmental impacts

• Compatible with long-term energy transition objectives

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8/05/2020 –APA Investor Briefing Day 2020

Economic & regulatory environment

US regulators have different objectives than Australian regulators

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Pipelines

• Returns are significantly higher in the US than in Australia, due to differing objectives among the regulators

• US Federal Energy Regulatory Commission (FERC) has a positive obligation to encourage investment through an attractive rate of return

LDC’s

• LDC returns are set by State based regulators and often set as part of a “black box” negotiation

• Recent allowed ROEs have been in the range of 9-10%

• Equity is usually 50-55% of total capital

• Mandated by the law and court decisions[(1)]

– Australian Energy Regulator (AER) wants low prices

• Allowed ROEs are usually in the 13-15% range. Rate cases are not usually initiated unless shippers see that earned ROEs are >15% and they see a scope for rate reduction

• Pipelines’ revenue is determined by contractual arrangements set as either foundation contracts or on contract renewal.

• Generally, competition among pipelines is a larger determinant of returns than FERC allowances

(1) Example : FPC v. Hope Natural Gas Co., 320 U.S. 591 (1944); Bluefield Water Works & Improvement Co. v. Public Service Comm'n, 262 U.S. 679 (1923). Source: S&P Global

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8/05/2020 –APA Investor Briefing Day 2020

Current market trends in US LDCs & pipelines estimated asset class of approximately USD 450 billion at the end of 2019[(1)]

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• LDCs investing heavily in reliability, modernisation & integrity programs, often pre-approved by regulators & with favourable returns on equity, to replace bare-steel & unsuitable plastic pipelines

  • Opportunities exist for APA to participate in asset sale processes today

    • Highly levered midstream companies may put

    • assets on the market to raise capital

• Pipeline operators have turned inward to rework their balance sheets & corporate structures after the dislocation of 2014-2015

• Most greenfield projects focused on connecting the Permian Basin to eastern Texas market hubs, as well as LNG export terminals & petrochemical facilities

  • Pandemic and fall in oil prices have caused substantial balance sheet pressure

• LDC owners are looking to take advantage of current valuation levels

• Some greenfield projects connecting the Marcellus/Utica gas producing regions to east coast market centres; however, those are facing significant opposition from environmental groups

Notes : (1) Estimated asset class based on rate base for FERC-regulated interstate pipelines, gas utilities and gas plant value within diversified utilities Source: S&P Global

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8/05/2020 –APA Investor Briefing Day 2020

Price cycles APA’s currency relative to US gas LDC & pipeline peers has been quite favourable

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----- Start of picture text -----

20.0x NTM enterprise value / EBITDA multiple – last 10 years
17.0x
APA
12.6x
14.0x
+25%
Gas LDCs
11.0x 12.5 x
+46%
8.0x Pipeline
7.4x
5.0x (24%)
Mar-10 Mar-11 Mar-12 Mar-13 Mar-14 Mar-15 Mar-16 Mar-17 Mar-18 Mar-19 Mar-20
16.0x NTM enterprise value / EBITDA multiple – 2020 YTD
APA
13.0x (3%)
Gas LDCs
10.0x
(8%)
Pipeline
7.0x (9%)
4.0x
1-Jan 16-Jan 31-Jan 15-Feb 1-Mar 16-Mar 31-Mar 15-Apr 30-Apr
Gas LDC peers include ATO, CPK, NI, NJR, NWN, OGS, SJI, SR and SWX; Pipeline peers include TRP-CA, ENB-CA, ET, KMI, EPD and WMB Source: FactSet as of 30 April 2020
----- End of picture text -----

Note: Gas LDC peers include ATO, CPK, NI, NJR, NWN, OGS, SJI, SR and SWX; Pipeline peers include TRP-CA, ENB-CA, ET, KMI, EPD and WMB

8/05/2020 –APA Investor Briefing Day 2020

36

US decarbonisation considerations significant regional variation in cost and feasibility

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• No US federal policy on economy-wide CO2 emissions reduction

• Unlikely one will be enacted in the near term given the political environment

• Some states have set aggressive emissions-reduction targets requiring contributions from all sectors

• includes the residential and commercial buildings served by LDCs,(only 8.5% of total US CO2 emissions)

• Assumes that natural gas usage is replaced by renewable electricity

• Local climate is also an important consideration as winter space heating is a key driver of natural gas use

• 46% of the US population lives in climates with cold winters

• Colder climates have much higher peak usage

• Requires more new renewable generation and distribution infrastructure → substantially higher cost

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Source: NOAA

(1) Defined as states with >5,000 mean total heating degree days per year (blue, pink, purple regions on the map)

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8/05/2020 –APA Investor Briefing Day 2020

GHG emission reduction options electrification of residential heating the most costly option for decarbonisation

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----- Start of picture text -----

(USD / mt of CO2e removed)
Figures in real 2016 USD
$900 $572 to $806
$800
• Does not include the significant cost of infrastructure modifications to
$700 accommodate residential electrification
• Does not include cost of commercial building electrification
$600
$500
$400
$300
$94 to $232
Up to $188
$200
Up to $123
Up to $100
$4 to $42 to $72
$100
($345) to $5 $16 < $26
$0
($300)
transportation power sector policy-driven social cost of renewable transportation natural gas atmospheric resResidential ential
fuel efficiency GHG credits coal carbon natural gas low carbon demand side CO2 removal electrificationElectrification
measures (2018) generation fuel standard management
retirement
8/05/2020 –APA Investor Briefing Day 2020 Source: Implications of Policy-Driven Residential Electrification, American Gas Association, July 2018 38
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US decarbonisation & gas pipelines

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continued uses of natural gas will require pipeline transportation for years to come

• Natural gas has uses in the U.S. not impacted by stateimposed emissions mandates or goals

• Petrochemicals and plastics, LNG exports and exports to Mexico

• LNG exports projected at 16.8 PJ/d by 2040, up from 7.4 PJ/d today

• Even with decarbonisation, many natural gas power plants will remain needing reliable and consistent access to fuel

• Bloomberg projects 703 GW of natural gas power generation to be in service in the U.S. in 2050, comprising 36% of power generation capacity

• Also, natural gas utilities will need reliable and consistent access to natural gas in order to meet their service obligations

• The geographic diversity of these uses of gas, and the concentration of low-cost gas production in a few discrete supply basins, can moderate the impact of decarbonisation on pipelines

  • Weather, local politics and other geographic and market-specific considerations are crucial value drivers

• 46% increase from the 481 GW installed today

Source: The Role of Natural Gas in a Transition to a Lower-Carbon Economy, The INGAA Foundation, Inc., May 2019; Bloomberg New Energy Finance

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8/05/2020 –APA Investor Briefing Day 2020

Hannah McCaughey GE Transformation & Technology

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• The energy transformation is underway

• Key technology transformations in play today and new waves emerging

• Gas is a key enabler of energy decarbonisation

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8/5/2020 – APA Investor Briefing Day 2020

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Transformation of energy is reshaping our world clear trends are emerging

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Key Trends
Decarbonisation is underway – significant investment already made and more required
A portfolio of technology solutions will be required to meet the energy trilemma
Data and technology will transform large infrastructure into smart infrastructure
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8/05/2020 –APA Investor Briefing Day 2020

Four major energy technology transformations from recent decades that are still playing out

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LNG (and floating LNG) has created new markets and further developments in technology will increasingly drive price convergence.

Shale gas has changed the economics of US industry and global energy markets and significant reduced emissions from power industry.

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Renewables , specifically, cost of electricity from solar has dropped 85% and wind has fallen 49% and increasingly are price setting technology

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New suites of firming and storage technology are emerging to support

renewables including gas reciprocating, batteries and platforms

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8/05/2020 –APA Investor Briefing Day 2020

Gas is a key enabler of the energy decarbonisation roadmap

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8/05/2020 –APA Investor Briefing Day 2020

Q&A – session 1

Use the ASK A QUESTION button to submit a question.

For those dialled in, press *1 & wait for the operator before asking your question.

• 15min BREAK – stay logged into webcast -teleconference participants can hang up & dial in again pre-next session

Next session: 10:20am Darren Rogers – Operations

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8/05/2020 –APA Investor Briefing Day 2020

Darren Rogers GE Operations

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• Operations – leverage scale & efficiency

• Customer focus

• Integrated Operations Centre

• Operational excellence

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8/05/2020 –APA Investor Briefing Day 2020

Operating model - operations

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Purpose

APA has brought together its Power, Transmission, Midstream and Network assets to safely drive . efficiency and effectiveness by leveraging its scale to deliver value for its customers

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Strategic imperatives
Operational Customer People & Stakeholder Financial Growth &
excellence centric culture relationships strength Innovation
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8/05/2020 –APA Investor Briefing Day 2020

Operations overview

Assets

• Transmission Pipelines: + 15,000km , +250 Receipt & Delivery

• 74 compressors, + 30 operating bases across every state & territory

• 357 MW of renewable energy, 377 MW gas fired generation

• Storage: Dandenong LNG ~12,400 Tonnes, Mondarra: ~18PJ

• Mid stream assets Kogan North, DLNG & Mondarra safe operations for + 10 yrs

People skills – senior management

• • 210 yrs industry experience in senior team

Customers

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Operations Capability

1250 FTE – 1500 Contractors

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• Diverse industry backgrounds:

• Gas Transmission and Networks

• Upstream & Downstream Oil & Gas

• Power Generation

• Renewable Energy

• Commercial & Market Operations

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8/05/2020 –APA Investor Briefing Day 2020

Customer centric - IOC

central point of contact for all national customers (scheduling, control and payment)

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• Recently incorporated power & mid stream capability

• Scale delivers benefits – technology investment has paid off

• 7.5m kilometres driven every year, all monitored through IVMS

• Controls & monitors 74 compressors at 34 sites

• Remotely monitors ~156,000 SCADA points responding to over 340,000 alarms p.a.

• Schedules, allocates & invoices over 6,500 shipper nomination points each day

• Generates and sends over 10,500 market and regulatory reports each year

• Central emergency response 107,000 calls to the IOC each year

● Covid 19 – technology investment benefits realised

• Critical services provided throughout the pandemic with little operational impact to customers

• Back up control rooms, social distancing and remote access to sites maintained

IOC – essential operations practising social distancing requirements

• Investment by APA in the IOC remote control and monitoring technology has paid off

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8/05/2020 –APA Investor Briefing Day 2020

Operational excellence- process safety

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• Process Safety - The safe operation of APA’s assets such that there is no major accident event as a result of a harmful substance release.

• APA framework based off international best in class

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• Final stages of a 2 year implementation

• KPI & dashboard to drive performance and compliance with senior management review

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Alarms per hour
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8/05/2020 –APA Investor Briefing Day 2020

Integrity and reliability

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Integrity Maintenance

Comprehensive program to ensure the integrity of our assets including

• Intelligent pigging, direct excavation and inspection of pipelines

• Integrity program for above ground facilities

• Key contributor to Australian standard updates Share industry best practice in USA/Canada and Australia

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8/05/2020 –APA Investor Briefing Day 2020
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Risk Based Inspection (RBI)

Systematic approach based on risk to concentrate effort on most important integrity work

Reliability Centred Maintenance (RCM) Right tasks, right equipment at the right time

50

Craig Stallan Acting GE Strategy & Commercial

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Kevin Lester GE Infrastructure Development

• Orbost Gas processing plant

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7/05/20208/5/2020 – APA Investor Briefing Day 2020

5151

Orbost gas processing plant – project background

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• acquired by APA from Cooper Energy in 2017

• extensive upgrade of the plant by APA

• Multi Year Gas Processing Agreement + Options

● Former Patricia Baleen Gas Plant

• Commissioned 2003

• Process Patricia Baleen Gas, export to EGP

• Upgraded for Longtom Gas in 2008/9

• Mercury Recovery Unit Upgrades in 2009/10

• Longtom field shut-in January 2015

• Plant in care & maintenance

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Plant comparison

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original

current

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8/05/2020 –APA Investor Briefing Day 2020

Transaction & project timeline

Cooper Energy commenced Sole Project detailed design APA Due diligence of gas plant & development project APA acquired Orbost gas plant from Cooper Energy

• Jan 2017

• Q1 2017

• Q2 2017

• Conditional agreements with Cooper for plant, project & processing

• ● 1 Jul 2017

• APA takes control of onshore development project Transaction completion

• Oct 2017

• Jan 2017 – Jan 2019

• Detailed design & procurement activities

• Construction

• Aug 2017 – Jan 2020

• Sept 2019 – Feb 2020

• Pre-commissioning Commissioning First gas exported

• Nov 2019 - ongoing

• ● Mar 2020

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• Commercial operations as soon as practicable

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8/05/2020 –APA Investor Briefing Day 2020

Orbost supply

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The Longtom gas field was developed and connected to Orbost following depletion of Patricia/Baleen fields.

Emperor Energy own the Judith gas field located between Longtom and Manta. APA have an MoU with Emperor to assist with the concept development work.

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Cooper Energy developments

Judith Gas Field (Emperor Energy)

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Orbost Gas Processing Plant was originally built to process gas from the Patricia / Baleen fields. Cooper Energy developed the Sole Gas field with two wells and constructed a 65km pipeline connecting the field to Orbost. Cooper Energy also own the Manta gas field. APA has a development and processing agreement with Cooper Energy.

Longtom Gas Field (Seven Group Holdings)

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8/05/2020 –APA Investor Briefing Day 2020

APA upgrade project scope

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• Plant upgrades to process sour gas to meet sale gas specification

• Design specification - sour gas containing up to 3000ppm H2S at 68TJ/d

• Upgrade and modification to the existing Orbost Gas Plant:

• Subsea control interfaces

• Inlet metering & quality monitoring

• Inlet separation

• Mercury removal

• Sulphur removal and handling

• Dew point control unit modifications

• Relocated flare facilities

• Integration of OGP into APA communications and controls systems

• Integrity works to reinstate the plant to fit-for-service operation and compliance

• New major hazardous facility plant licencing

• Inspection and assessment of design life for sale gas pipeline reinstatement

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Flow & process of gas at Orbost

8/05/2020 –APA Investor Briefing Day 2020

Highlights & challenges

• Sole and Orbost Gas Plant will supply 10% of Victoria’s gas demand

• HSE performance – 1.4 million man hours and 20 months of construction and commissioning with zero LTIs (TRIFR = 2), no reportable environmental incidents and zero community complaints

• APA is a significant employer and supporter of the local community

• Ecologically sensitive area with stringent EPA requirements on noise, emissions, water discharge and sulphur waste disposal

• Worksafe assessment as Major Hazardous Facility (MHF)

• Construction and commissioning challenges with hot and inclement weather, bush fires, subsequent smoke and COVID19

• Regional Industrial Relations

• Engineering delays impacting procurement processes and construction contracting strategy

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----- Start of picture text -----

Source: Snowy River Rovers Football and Netball Club
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Orbost – March 2020

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Peter Fredricson Chief Financial Officer

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• Capital management

• Debt maturity profile & EMTN outcome

• Contract & counterparty creditworthiness

• FY20 Guidance

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7/05/20208/5/2020 – APA Investor Briefing Day 2020

60 60

Strong liquidity & debt position

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overview

credit ratings

Cash and committed Moody’s Baa2 undrawn facilities of (outlook Stable, confirmed Feb 2020) around $2.2 bn as at 30 April 2020 to meet the S&P BBB continuing needs of the business (outlook Stable, confirmed Feb 2020)

Key capital ratios:

• distribution policy

• Fully covered by operating cash flow  Grow generally in line with operating cash flow

• Sustainable over the long term  Considered in the context of the capital needs of the business and economic conditions

Metrics(1) current Dec 2019 Jun 2019 Funds From Operations to Debt(1) 10.9% 11.2% 10.7% Funds From Operations to Interest(1) 3.1 times 3.1 times 3.0 times Average interest rate applying to drawn debt(2) 5.2% 5.35% 5.53% Interest rate exposure fixed or hedged 97% 99% 100% Average maturity of senior facilities 6.5 years 6.5 years 6.8 years	current	Dec 2019	Jun 2019

Notes: (1) APA Calculation as at 31 March 2020.

(2)For the purpose of the calculation, drawn debt has been kept in USD (rather than AUD) and is in a designated hedge relationship with USD revenue, has been nominally exchanged at AUD/USD exchange rates of 0.7772 for Euro and GBP MTN issuances and 0.7879 for the US144A notes at respective inception dates

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8/05/2020 –APA Investor Briefing Day 2020

Debt maturity profile – post Euro MTN

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APA’s debt maturity profile as at 30 April 2020

EUR 600 million 10.2 year Medium Term – 24 April 2020

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----- Start of picture text -----

$1,600m
Headroom (bank borrowings)
$1,400m Bank borrowings(1) ● Maturity date of 15 July 2030
Sterling MTN
$1,200m ● Fixed coupon rate of 2.0% p.a.
Euro MTN
$1,000m US 144A Notes ● All-in fixed rate of 3.866%
Japanese MTN (principal and interest obligations
$800m hedged into AUD dollars)
Australian MTN
$600m $300m AMTNmaturing July US Private Placement Notes ● Average portfolio term 6.5 years
2020 [(1)] USD denominated
obligations [(2)]
$400m ● Reduced APA’s average cost of
debt to around 5.2% (annualised)
$200m
● Continued strong support from the
$0m global debt capital markets
----- End of picture text -----

• Continued strong support from the global debt capital markets

Notes:

(1) Proceeds from recent €600m EMTN to be used to repay (a) $270m bank debt in May 2020 and (b) $300m AMTN in July 2020.

(2) USD denominated obligations translated to AUD at the prevailing rate at inception (USD144A - AUD/USD=0.7879, Euro and Sterling - AUD/USD=0.7772).

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8/05/2020 –APA Investor Briefing Day 2020

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Contract & counterparty creditworthiness

1H FY20 Energy Infrastructure revenue split: Revenue Type

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• APA’s assets deliver energy to markets, often long distances from where gas is produced

• Energy remains an essential input into our daily lives

• APA has not seen material & unusual changes to energy volumes going through our assets over the last 6 weeks

• Contractually, we note that:

Customer Credit Rating

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• Majority of our revenues are derived from long term contracts, based on capacity reserved

• Majority of our customers have investment grade credit ratings

• We continue to work with our customers’ and monitor their credit & liquidity positions

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8/05/2020 –APA Investor Briefing Day 2020

FY20 guidance – 21 April 2020	FY20 guidance – 21 April 2020
	1H FY2020 results	Revised 21 April 2020	Revised vs
			FY2019 results
			+3.8% to +5.2%
EBITDA	$1,660 - $1,690 million	$1,635 - $1,655 million	($1,574 million)
Distribution per security	In the order of 50.0 cents per security	Unchanged	+6.4% (47.0cps)

• EBITDA reflects the full range of possibilities of timing of commercial operations at the Orbost Gas Processing Plant

• DPS – potential for further franking credits to be allocated to the final distribution

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8/05/2020 –APA Investor Briefing Day 2020

Nevenka Codevelle GE Governance & External Affairs

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Working with our stakeholders to create long term value

• Stakeholder value creation

• Consumers and communities

• Government and regulators

• Sustainable growth – a long term view

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7/05/20208/5/2020 – APA Investor Briefing Day 2020

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65

Stakeholder value creation

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A purpose-led organisation

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----- Start of picture text -----

communities
regulators customers
strengthening
government communities consumers
through
responsible
energy
investors employees
energy
industry
----- End of picture text -----

Driving change and shaping our internal and external environment through:

• strategic focus on APA’s role in an interconnected energy system

• strengthened relationships with all stakeholders, including with customers, regulators and Government

• collaboration across the value chain to drive stakeholder shared value

• embedding a mature risk culture

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Customers and energy industry getting it right

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Customer Promise

Keeping the customer at the centre of everything we do.

Red Dot Program

Focus on corporate culture enhancement, measurement and improvement initiatives.

The Energy Charter

Founding signatory to The Energy Charter, lead and contribute to #BetterTogether initiatives

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Consumers and communities new ways of working

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Increased focus on the people who use the energy we deliver for the lives they live

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Engaging with, and listening to consumers and the communities we operate in – Consumer Reference Groups established for key projects

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Community Investment Program connecting our business and our people to the communities where we work

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Understanding and communicating our value proposition for consumers and communities

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Government and regulators collaborating for common goals

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Evolving ways of working…

• Strengthen relationship with regulators and Government

• Collaborative approach, co-design for mutually beneficial outcomes

• Broadening range of stakeholder understanding and engagement

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to drive better outcomes

• Engaging with customers, consumer groups in lead up to regulatory engagement

• Participating in broader policy development as well as regulatory resets

• Understanding and communicating our value proposition for all stakeholder groups

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Taking a long term view making risk-based decisions today to deliver sustainable growth for the future

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Risk maturity: frameworks, measures and metrics. Embedding risk culture.

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Corporate governance framework, early adoption of standards.

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Understanding emerging risks, including non-financial risk.

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Developing ESG capability, integrated approach.

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ESG spotlight: Responding to the risks and opportunities of climate change

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Understand

Act

Communicate

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Scenario analysis

Carbon management plan

Climate change position statement

• Second climate-related scenario analysis in flight

• Enterprise-wide carbon management plan

• APA Climate Change Position Statement published

• Building and improving on 2019 analysis

• Results published in TCFD-aligned disclosures in annual reporting suite

• Focussing on both strategic and tactical actions

• Four guiding principles that articulate our position and inform decision-making

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Elise Manns GE People, Safety & Culture

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• Operating under unique circumstances

• Focus areas

• HSE Strategic Plan FY20-FY22

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8/5/2020 – APA Investor Briefing Day 2020

72

Our people are our strength from raging bush fires, floods and a global Pandemic, this year has been like no other

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Our focus has been on:

• Keeping our people and our contractors safe and healthy everyday;

• Proactively managing our business through business continuity plans with a focus on our customers’ and employees’ experience;

• Embracing a de-centralised and digitally enhanced operating model to deliver industry leading support at the front line;

• Leveraging our culture of care and diversity to provide inclusive leadership in trying times.

• Ensuring there is no material impact to the safe and reliable operation of our assets & services

• Being agile, flexible and responsive in changing the way we work especially in a COVID 19 world;

• Collaborative stakeholder relations to support communities in the short and long term

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Key Areas of Focus

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Safety and Environment :

• FY 2020 TRIFR rate is disappointing but LTIR remains low

• New HSE Strategy with targeted health, safety and wellbeing interventions

• Organisational structural changes to put expertise in the font-line

• Building greater governance and capability

• No material Safety or Environmental regulatory breaches

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Our STARS values: Safe. Trustworthy. Adaptable. Results. Service.

People :

• Our Purpose and Values are the core component in everything we do

• New organisational design delivering new ways of working – customer centric, empowered, collaborative and innovative

• Digital people strategy taking shape for implementation across FY21

• Recognition and rewards programs reshaped to support performance & culture

• Leadership & results through multiple crisis’s demonstrates the effectiveness of our development programs

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HSE Strategic Framework: FY20 – FY22

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Caring for people, communities, the environment and our assets

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HSE leadership and culture

Contractor management

Health and wellbeing

Technology systems and analytics

Environment and heritage management

Process safety

Creating a proactive HSE culture with empowering leadership and strong enabling behaviours

Critical to

operational excellence – accountable, streamlined, performing

Caring for the whole person – at work and beyond

Increasing efficiency and simplicity of HSE processes, data and analytics

Delivering on our Clear responsibilities to ownership by the environment the business and and integrated communities – processes to past, present support and future operational excellence

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Final Q&A session

Use the ASK A QUESTION button to submit a question.

For those dialled in, press *1 & wait for the operator before asking your question.

Contact: Jennifer Blake – Head of Investor Relations E Jennifer.blake@apa.com.au +61 455 071 006

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8/05/2020 –APA Investor Briefing Day 2020