Pipeline impairment weighs on APA shares
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More news: Shares in APA Group were down more than 1% to $7.87 in early trading after the gas transmission major said it would take a profit hit of $145 million.
This was to write down the value of its Moomba-Sydney Ethane pipeline in NSW after its sole customer Qenos entered voluntary administration.
APA said it is assessing potential alternative uses for the MSEP.
APA Group flags $145m impairment for NSW pipeline
The news: Gas transmission giant APA Group has flagged a non-cash impairment against its Moomba-Sydney Ethane Pipeline (MSEP) after key client Qenos entered voluntary administration.
The numbers: APA said it will record an impairment of $145 million in its FY24 results to fully write down the book value of the MSEP. It said there would be no impact on the group’s liquidity position or its full-year distribution guidance, it said.
Over the past 12 months APA's shares have plunged 19.04%.
The context: The company said the writedown follows plastics manufacturer Qenos, which was the sole consumer for the pipeline, recently entering voluntary administration and announcing that it does not expect to restart the manufacturing facility.
APA Group said it was taking a conservative accounting approach to write down the value even though it was assessing potential alternative uses for the MSEP, including the possible conversion of the asset to transport and store natural gas, to service the growing demand for capacity on APA’s east coast Gas Grid.
The source: ASX announcement
