AGL to sell pipeline for $82.6m
AGL Energy Limited (AGK) said it has entered into an agreement to sell the Berwyndale to Wallumbilla Pipeline (“BWP”) for $82.6 million to APA Group (APA). The company said it has also entered into a 17 year Gas Transportation Agreement (“GTA”) with APA in relation to the BWP.
AGL said the sale would result in a pre-tax profit to AGL of approximately $2 million after transaction costs.
”The parties intend to complete the transaction as soon as practicable with proceeds to be applied to reduce AGL’s bank debt,” AGL said.
The company said it constructed the BWP to transport gas from Queensland Gas Company Limited’s gas fields in the Surat Basin to the Wallumbilla hub, with the pipeline commissioned in February 2009 and commenced operation in April 2009.
AGL said the GTA includes an option for increased capacity which, if triggered by AGL, would see APA make an additional payment to AGL of up to $21 million.
The company also has options to extend the term of the GTA up to 10 years.
AGL managing director, Michael Fraser, said the development of the BWP was necessary to allow AGL to deliver gas to market because options then available did not provide a suitable solution.
”Now that we have a long-term transportation agreement in place, ownership of this pipeline is no longer core to our integrated strategy,” Mr Fraser said.
APA managing director, Mick McCormack, said along with the Roma-to-Brisbane Pipeline, the assets are linked to the Wallumbilla hub.
“This acquisition allows us to join our existing assets to one of the most promising coal‐seam gas regions in the country,” Mr McCormack said.
“We expect a growth in demand for gas transmission services to move this gas into east coast markets and APA’s assets will continue to play a key role in providing this service.”
As at 1127 AEDT, AGL shares were up 4c to $15.01, while APA shares were up 1c to $3.46.
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