APA –1.51% today on a flurry of announcements relating to existing and prospective assets.
First up, the Australian Energy Regulator (AER) released their draft decision on APA’s Basslink transmission to convert pricing to a non-regulated provider at the start of FY26. Under the proposal, Basslink pricing will be subject to the spot market – according to the consumer modelling undertaken by the AER as part of the review, this leaves the consumer worse (circa. ~A$1.6bn) and APA better-off.
NB: This is contrary to APA’s 2022 request which sought a regulated contract, in collaboration with the Tasmanian government. As owners of APA, we like the certainty that regulated earnings provide so the move to market-pricing for this asset mildly reduces the appeal, though we don’t see the change (if approved) as highly material to earnings.
On the gas pipeline side, APA has entered into an agreement with up-and-coming gas producer Tamboran Resources (TBN) to deliver the Sturt Plateau Pipeline in the NT – TBN’s pilot program to deliver gas from 1H26.
The AER decision isn’t final and we’re still waiting on finer details of the TBN work, so lots to play out here. We continue to like the stock and hold it in both the Active Growth and Active Income portfolios.
MM is long and bullish APA
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