APA Expands Gas Grid with $110M Reedy Creek Pipeline Deal

About APA Group Limited

APA Group (APA, the Group, ASX: APA) is one of Australia’s largest energy infrastructure companies, owning and operating natural gas pipelines, storage facilities, and renewable energy assets. Listed on the ASX and part of the ASX 50, APA plays a critical role in the transportation and delivery of gas and power across Australia. On June 18, 2025, APA announced the acquisition of the Atlas to Reedy Creek Gas Pipeline in Queensland’s Surat Basin, expanding its footprint in a key production region.

Strategic Expansion of East Coast Gas Grid

The 100% acquisition of the Atlas to Reedy Creek Gas Pipeline, announced Thursday, continues APA’s strategic investment in infrastructure underpinning East Coast energy security. The fully operational 50-kilometre pipeline connects Senex Energy’s Atlas gas production to the existing Reedy Creek infrastructure and forms a key component of the broader East Coast Gas Grid.

The purchase price of $110 million will be funded from APA’s existing balance sheet capacity, requiring no new equity or debt issuance. This financial approach reflects APA’s ongoing commitment to disciplined capital management while expanding its core asset base. The asset will be incorporated into APA’s existing East Coast operations, where it can leverage synergies with other APA-owned pipelines and storage facilities.

The pipeline is secured under a 20-year take-or-pay agreement with Senex Energy, providing long-term revenue visibility and insulation from short-term market volatility. The deal is projected to generate approximately $12 million in EBITDA annually from FY26 and exceed APA’s internal investment hurdle rates, signalling attractive long-term returns.

APA’s Managing Director and CEO Adam Watson described the acquisition as a “natural fit” for the Group’s portfolio and a demonstration of APA’s confidence in the future of natural gas as part of the broader energy transition. The pipeline provides enhanced access to firm gas transport capacity, supports domestic gas supply, and enables flexible storage and dispatch options — especially relevant as coal-fired power is phased out and intermittent renewable generation increases.

The acquisition also aligns with APA’s broader Gas Grid Expansion Plan, which seeks to optimise and integrate the East Coast pipeline network in anticipation of future supply-demand shifts. The Surat Basin has emerged as a key strategic production hub, and APA’s increased presence supports the long-term reliability of gas delivery to industrial and residential customers.

Acquisition Bolsters APA’s Role in Transition Infrastructure Amid Demand for Inflation-Protected Returns

APA’s acquisition of the Atlas to Reedy Creek pipeline occurs within a context of broader infrastructure investment and rationalisation across Australia’s energy sector. In the past 12 months, firms across the gas, electricity, and renewable segments have been repositioning portfolios in response to policy shifts, demand volatility, and the national energy transition plan.

With core operations generating stable returns, APA has focused on expanding its infrastructure footprint while maintaining capital discipline. The Group has previously communicated its intention to deploy capital into regulated and contracted assets with long-term revenue visibility. The Reedy Creek transaction aligns with this strategy, particularly given the inflation-linked, contract-based revenue it provides.

In a broader market sense, this acquisition reinforces the role of gas infrastructure as a transition enabler. While renewable generation capacity is growing, firm dispatchable supply remains essential for grid stability. APA’s continued investment in firm transport and storage assets may position it as a pivotal infrastructure provider during this transitional decade.

No immediate regulatory hurdles were noted in the announcement, and the transaction is expected to close promptly given its private nature and operational status. Future investor updates may provide further detail on operational integration, cost synergies, or potential storage upgrades in the region.

This acquisition contributes to APA’s long-term growth platform, positioning it as a leading participant in both energy reliability and transition infrastructure. As investment trends increasingly favour infrastructure with predictable, inflation-protected returns, APA’s expansion strategy may continue to attract investor interest across institutional and ESG-aligned portfolios.