APA Group (ASX:APA)

CMD 2020

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May 7, 2020

Welcome to APA Group's investor briefing event. I'm Jennifer Blake, Head of Investor Relations. FY 2020 has been a year like no other. In Australia, we commenced the new financial year in extreme drought, endured a devastating bushfire season lasting seven months, followed by flooding and cyclones in March. Today, the COVID-nineteen pandemic means the whole world is in some level of But given the importance of investor interaction, particularly in these uncertain times, we've embraced the virtual communication technology for today's event. Over the last couple of days, each APA executive has recorded presentation and all executives are live on the webcast call today from various remote locations across Sydney, Brisbane and Houston, Texas to answer your questions. The logistics for today are fairly simple and the agenda is up on the screen now. The event is split into two blocks of presentations with a 15 comfort break in between to stretch your legs and grab a coffee. We will run through the executive presentations in each block followed by a question and answer section at the end of each presentation block. You all have access to the Ask a Question icon at the bottom of your webcast screen and your questions will be put to the executive team during the two Q and A sessions either by myself or Yoko Kusugi, APA's GM of Investor Relations and Analysis. We have some analysts who have also dialed in, and they'll be able to ask their questions via our host operator, similar to results conference call. For those of you who need to leave the webcast at any time, it will also be available on demand to access at a later time via our corporate website. Hopefully, you have a coffee in hand as we commence the event with a short APA video. Our CEO and Managing Director, Rob Wills, will then kick off the presentations and introduce APA's new leadership team. At APA, we are creating the energy future from the strong foundations of our twenty year history. Under our new leadership, we are building on the high benchmarks we have already set and the strengths we are known and trusted for. Our confidence in the future comes from ongoing growth in the demand for energy, which is the most essential pillar of our civilization. We have the skills and capability to navigate changing environments and a low risk business model that is resilient through economic cycles. At APA, we understand the need to adapt to an ever changing future. As customer and community expectations evolve and technology changes, this will present us with new challenges and opportunities. Responding to the energy challenges of the future will require a holistic approach. Gas remains a key enabler for our future energy mix and APA stands ready to be part of that future. As the CEO of APA, that for me is about making sure of three things: above and beyond everything safety providing reliable, affordable energy for our customers and making a positive lasting difference to our customers and the communities we touch now and in the future. Hello everyone and thank you for joining this APA Investor Day webcast. I'm Rob Wheels, APA's Chief Executive Officer and Managing Director. I'll begin my presentation by giving an overview of APA and our success over the past twenty years, followed followed by a discussion on the changing energy landscape and the opportunities that we see for APA as the world adapts into the future. I'll touch also on our refreshed purpose and our vision and our company values as well as highlight the strategic alignment of our new operating model. This will be followed by commentary on the growth opportunities that we see in front of us and then I'll hand over to the rest of my executive team to take you through the business in a bit more depth. Today APA is a leading ASX top 50 energy infrastructure business. In fact, and I say this with great pride that APA has been one of the top 15 performing stocks on the ASX measured by total shareholder return on a relative basis over the past two decades. Our journey started back in June 2000 and today we are extremely proud of the extensive portfolio of energy infrastructure assets totaling some $21,000,000,000 that we either own and operate. Our asset footprint now includes more than 15,000 kilometers of high pressure gas transmission pipelines, noticeably our East Coast and West Coast grids. Gas fired power generation, gas storage, gas processing, and renewable energy both wind and solar, and of course also electricity transmission. The successive phases of our evolution are shown in the historical staircase on the slide and we have invested more than $14,000,000,000 into the Australian energy market. These phases include the acquisition strategies establish that East Coast gas grid that I referred to earlier, successful engagement of the LNG export boom and leveraging of our footprint to drive multiple areas of growth over the period of time. What's not shown is the disciplined asset recycling and portfolio management also undertaken during this time. A consistent theme is the transition of company to an energy infrastructure business. We're extremely proud of our track record, our strong track record of creating value for you, our security holders over the past twenty years. APA's distributions have increased every year for nearly two decades and recently we confirmed our distributions guidance for financial year 2020. And during this time total shareholder return has grown at a compound annual growth rate of some 17.2%. The question that I'm sure you would like me to address upfront is what will be the impact of the current COVID nineteen pandemic and low oil prices have on APA. While the broader human and economic toll of the current crisis is severe, because APA is a pivotal part of the supply chain that keeps all the essential sectors of the economy operating, our capacity contracts and our regulated revenues do offer some near term protection. Indeed I'm extremely proud of our employees who have ensured that we've continued to operate our assets safely and efficiently ensuring that there have been no disruptions to key regions and industries and consumers. Despite the delays associated with Orbost, which we'll cover in more detail later, this has enabled strong continuing results and the recent confirmation of our distributions guidance. But no business including APA is entirely immune from longer term economic downturn. APA is successful when our customers are strong and our growth is inextricably linked to our customers' growth. It is our expectation that the economic recovery will be a long u shape and possibly longer in some sectors. In this context, near term organic growth is likely to be impacted as customer financial investment decisions are either deferred or at best delayed. As we saw during crisis, that impact was not prolonged and the growth project soon gained momentum again once business confidence returned. I'll talk more on this later in my presentation. Another area that may be impacted is the timing of acquisitions, although it is possible too that the current market may create some unique opportunities for APA. As Peter will talk to you later, our balance sheet is extremely well positioned to see out any storm that may lie ahead with ample liquidity and available headroom within our credit ratings metrics. As I've said, APA is not entirely immune from the impacts of COVID-nineteen and the current low oil prices. However, the resilience of our low risk business model along with other key fundamentals which I'll refer to will continue to ensure that our long term success remains throughout the business cycles. These other key fundamentals include ongoing growth in global energy demand, our portfolio of long life and high quality assets, our strong internal skills to be able to navigate a changing world and a laser focus on operational safety excellence as well as importantly our financial strength and flexibility which enables maximize value. I'll now discuss the changing energy landscape and the opportunities we see for APA as the world adapts into the future. Let me start by elaborating on what underpins our confidence in the key fundamental I referred to earlier, which is that growing global energy market. Following a history of continuing growth, this chart shows that worldwide total energy demand is expected to continue to increase materially through to 2040 under both the International Energy Agency or policy scenario, which shows that energy demand will increase by some 34% from 2018 levels, and the stated policy scenario, which again shows energy levels energy demand increasing by 24% over the same period. Under the IEA's sustainable development policy scenario, which assumes that there's a globally concerted effort to meet the Paris Agreement, energy demand reduces slightly from twenty eighteen levels around 7% through to 02/1940. In summary, global primary energy demand remains strong and continues to grow under most future energy scenarios into the future. Despite varying ideologies and much emotion in the climate debate, The facts are that the energy transformation is already underway. Most significant is the coal to renewables transformation that's happening in Australia. Since 02/2012, 5.3 gigawatts of coal has left the national electricity market and solar now represents 13 gigawatts of capacity in that market. The take up of rooftop solar is a further aspect of this transformation, quite astonishing. Some 2,200,000 households now with rooftop solar and it's growing at around 20,000 new households per month. Consumers selling electricity back into the grid, electrification driven by electric vehicles as that cost curve comes down, and customers remotely controlling their energy use are further confirmation that this energy transformation is underway. This transformation presents both challenges and opportunities for an organization like APA. Today, 60 to 70% of electricity is produced from coal. That coal fleet is is aging and needs to be replaced by a suite of new generation. Renewable energy, while low cost, cannot support the entire load all day and every day. What I would describe is firming generation is the key challenge for the energy sector, and it's investment needs to flow. This transformation therefore represents an exciting opportunity ahead for APA with estimates of some $120,000,000,000 dollars of new generation investment required as we transition Australia's energy system into the future. As I'll touch on later in my presentation, gas and therefore investment to bring new gas supply to market is another emerging theme as is investment in new technologies. Transitioning our energy systems is doable, but needs an ambition and ambition to reduce emissions. But ambition alone without a plan is meaningless. As Angus Taylor, minister for energy and emissions reduction, in his February CEDAR address said, that is the worst part of the emissions debate. We've got to get the ideology out of this debate and get focused on the road map. I'm reminded of a statement by Bill Gates on the subject where he said we have two problems. We have those that deny climate and those people who think it's easy to fix and we actually need to educate both of these groups. This transformation will require a holistic approach, and we'll need to reframe the discussion so that it includes the impacts of costs, reliability and resilience in the system. Angus Taylor in the same February address said the world needs to go through rapid technology development adoption if we are to achieve substantial ongoing reductions in emissions on a global scale. On this point, I should note that the government as part of pursuing inclusive philosophy has ruled in gas based solutions as part of the future energy mix. So in summary, we need both industry and policymakers to continue to work together to arrive at the optimum energy future. Alternative policy approaches focusing on low through to deep decarbonization will result in varying levels of emissions reductions and new and different investment classes. What is clear though is that there's a full spectrum of opportunity in business or business opportunity for APA. That is no matter where the world lands on that decarbonization continuum, APA will have no shortage of investment opportunities that we can take advantage of because of our capabilities, just like we did over the last two decades, leveraging our core pipeline capability into developing into an energy infrastructure business of today. I talked earlier to the IEA's future global total primary energy demand scenarios. I'll now touch on the role of natural gas under those scenarios. In the IEA current policies and stated policy scenarios, worldwide natural gas usage is forecast to increase at levels greater than total energy demand, in fact up 4937% respectively as natural gas continues to be part and a critical part of our future energy mix. Under the IEA's sustainable development scenario however, natural gas usage declined slowly shown by the green line on this chart and it's an overall 2% decrease over the period but less than the total energy demand decline over that period, which was 7% if you might recall. Even so, it's anticipated that about a 110,000,000,000 will be need to be spent every year over the next ten years on natural gas and LNG infrastructure. Looking at the APAC region, is shown in red, you can see that gas remains a growing and key part of the energy mix in the decades ahead, and North American gas demand continues to remain strong. So in summary, natural gas is a key enabler of our future energy mix no matter which scenario plays out into the future. Whether that be to enable the decarbonization of electricity as I talked to earlier, support high value manufacturing processes that are difficult and costly to electrify, or indeed provide a cost efficient and low emissions energy source for the residential and commercial sectors of our economy. In regards to the latter point, as a guide, the use of natural gas in the residential and commercial sector currently contributes a relatively small 8.5% of total US emissions. It's at least twice more efficient as an energy source in the home and would be cost prohibitive to fully electrify, and that's assuming of course that the electricity source that replaces it is fully decarbonized. And Ross will talk more on this in his presentation. I'll now touch on our refreshed purpose and vision, our company values as well as highlight the strategic alignment of our new operating model. I indicated at the financial year 2019 results that I'd undertake a review of APA's business fundamentals. The aim being to ensure our operating foundations supported APA's future plans and strategy within that changing energy landscape which I described earlier. The review covered APA's purpose, that's why do we exist, our vision, what we aspire to be, our strategic imperatives, and our operating model. Importantly, APA's core strategy of investing in energy infrastructure has not changed. APA's purpose includes the words responsible energy, and by that we even in tough situations, creating value for all of our stakeholders, taking a long term view, being here for future generations, investing in new technologies and new energy, innovating for sustainable future. Our vision is to be world class where we are known for high integrity and and credibility, leadership in responsible energy, customer focus, operational capability, safety, and environmental performance where people are proud to work and we are known for making a positive impact communities. We also defined our six strategic imperatives, that is those things that we have to excel at in order to be world class and deliver on our purpose and are listed on this slide. The decision compass is a variation on something that's been in APA for some time. It sets out five core guiding principles for effective decision making at APA. These principles reflect the essence of what our decisions ought to be so we can successfully execute our strategy. The decision compass applies to every decision at APA, big or small, and by everyone from myself through to our frontline operations staff. Our values or stars have been part of APA for for a while now, and we we we apply these in the way we behave and in everything that we do. When it comes to making decisions, we think of the values as the heart and the, the decision compass as the head. And together we refer to them as the APA way. And the APA way really defines how we do things around here at APA. A customer promise is a commitment to our customers as to what they can and expect from us, and the red dot in the logo represents our customers and reminds all of our people to keep the customer at the center of everything that they do. The words customer promise were written by our APA people right across the organization and they were based on feedback from our customers and from feedback in the business on the way we provide a service to our customers. At APA we believe that what's good for the customer is good for business. And so we're undertaking positive and ongoing changes across the business to ensure that the customer always stays front of mind. As discussed at APA we're holding ourselves accountable for two world class standards in the way we provide energy solutions. And as such I've reorganized our operating model to support these efforts. I've streamlined APA's operations to support collaboration on customer service and outcomes to reflect the portfolio approach and to reflect the portfolio approach of our energy assets. The operating model supports our focus on a number of things including an ongoing safe efficient operations, our promise to our customers of delivering services that they value, our focus on developing a business in North America and Ross will talk to that shortly, responding to the disruptive forces and opportunities that decarbonization, decentralization and digitization will present, our commitment to sustainability, stakeholder and community engagement. The recruitment process for the group executive strategy in commercial is ongoing. Craig Stellan, who you'll hear from later when he gives you an update on the Orbost project, is currently acting in that position. And Craig has been involved with the Orbost project right from the beginning. He he led the negotiations with Cooper Energy, and he's been developing the operational capability to run the facility, and he'll remain accountable for or was until it is fully operational. As previously communicated, APA's long standing chief financial officer, Peter Fredrickson, announced his intention to retire during this year. Now I've had the privilege of working with Peter for more than ten years in his capacity as CFO. And as I said before, he is truly the steady hands on the rudder of the APA ship. And, the recruitment process is well underway for that role, and I thank Peter for accommodating a smooth transition during this calendar year. I'll now discuss in some more detail the growth opportunities that we see in front of us. I'll then make some concluding comments before handing over to the rest of my executive team to take you through the business in a bit more depth. As I discussed earlier, we are confident in the key fundamentals of a growing energy market. A hallmark of APA's success over the last twenty years or so has been being on what I call being on the front foot when identifying growth opportunities. That means understanding the market and engaging directly with our customers on an ongoing basis to meet their energy needs. This strategic approach underpinned our largest ever investment program of $1,500,000,000 over the last three years and we've seen the benefits flowing to our customers, our business and of course you, our security holders. I've grouped the growth opportunities in front of us into four buckets shown on the slide with the first three focused on domestic growth. As you will hear there are a large group of opportunities in front of us in our own backyard. In this regard we have line of sight to over $4,000,000,000 of growth opportunities over the next five to ten years. While not all these projects will get up, our experience is that while some projects don't go ahead, they get replaced by other projects over a period of time. As part of this $4,000,000,000 of line of sight that we have, as much as $1,000,000,000 of growth opportunities remain in active discussion with customers for delivery over the next two to three years. As I mentioned in my earlier part of the presentation, it is our expectation that due to the current economic downturn it's likely that some customer financial investment decisions may be deferred or best delayed. It is on this basis that we have changed our growth CapEx guidance from our previous guidance of around 300,000,000 to $400,000,000 per annum which is consistent with our long term average to around $1,000,000,000 of growth CapEx over the next two to three years. You might recall we provided similar guidance back in 2016 when we pointed to approximately $1,500,000,000 worth of growth projects, but where we were also uncertain as to the exact timing. That portfolio of growth projects became largest ever investment program. So on that basis we continue to be confident in the growth opportunities that are in front of us. I'll now talk to this in a little bit more detail. On the East Coast, it's well documented that more gas supply is needed to meet demand and put downward pressure on energy prices. In this regard, you'll see a number of new gas base and supply names mentioned on the slide. APA has in place a number of agreements that are subject to customer financial investment decisions and several memorandums of understanding that would help bring these new gas supplies into the East Coast market. Several of these arrangements are mentioned on this slide. The quickest way to get new gas to market is to connect it to the existing infrastructure and APA's 7,600 kilometers of extensive reach across the East Coast connects to all major demand centers on the East Coast. In the West of the country, there is demand for new infrastructure for new and existing mines seeking a reliable source of gas as a fuel source. The more we develop interconnected infrastructure like the Goldfields and Eastern Goldfields pipeline grids, the more interest and demand we get from these customers both existing and new. So we continue to see opportunities that enable us to expand that pipeline infrastructure both in terms of capacity and footprint. I talked earlier to the energy market transformation that is currently underway. As I said at the time, I believe that transitioning our energy systems is doable but will require a holistic approach. Regardless of policy approaches adopted as part of this transition, there will be new investment asset classes and significant new levels of investment required. This presents a range of opportunities for APA and we stand ready to play a leading role in the responsible energy transition. We're already assisting customers such as Origin, Alinta and Synergy with adding renewables into their energy portfolios through the Darling Downs Solar Farm, the Badgingarra Wind and Solar Farms and the Imi Downs Solar facilities which have been added to the existing wind farm. APA's proposed Dandenong Power Station was shortlisted by the government as just one of two of the first projects to be selected to proceed to agreement of key terms for the Yangi program, providing much needed firming generation into the NIM. And we're also investigating and investing in new energy technologies such as hydrogen energy and renewable methane. Gas is a critical part of The US energy mix and more investment in gas infrastructure continues to be required. So it makes sense for us to be looking at this market. We've articulated previously what we're looking at and why we're looking market outside of Australia. And none of that detail has changed. What's changed is that Ross, a senior executive, has now been on the ground looking at opportunities for us. You will get to hear from Ross shortly so I won't steal his thunder. As I've said, we will only proceed if an opportunity meets our investment criteria. We're pragmatic and based experience and expertise in the sector, we know what we're looking for. If we don't find what we're looking for, we're upstumps. That time frame will be determined at an appropriate time and lead us to say currently we don't have a definitive time frame. In conclusion, APA is a leading ASX top 50 energy infrastructure business. Over the last twenty years we've transitioned from a gas pipelines business to an energy infrastructure business. We're extremely proud of our strong track record of creating value for you, our security holders. As the energy market decarbonizes, we will continue to adapt as we have done over the last twenty years. We'll take full advantage of the opportunities in front of us and indeed there is a full spectrum spectrum of opportunity for APA. We remain focused on developing a business in North America. We're committed to working with government and industry and particularly our customers to create a cleaner energy future. And we will play our role to continue to invest in our assets, systems and people. I'll finish my part of today's presentation there. Before we go to our first Q session in around thirty minutes time, we'll hear from Ross Gersbach with an update on The U. S. And Hannah McGacki, APA's new Group Executive Transformation and Technology. Thank you. Good morning everyone. Today I'd like to update you on what we have been doing in The US, why we are doing it and where we are heading. There is obviously a lot of concern both on the health aspects of COVID-nineteen and its economic impact, including the difficulties arising from the fall in oil prices. By necessity, this presentation assumes a return to more normal conditions. But undoubtedly we need to consider the logistics of undertaking a transaction in this environment as well as the economic impacts on demand and supply. The way we are approaching the current dynamics, the pressure many of our pipeline peers are under may provide more opportunities, not necessarily bargains, as no doubt we aren't the only group looking to invest in this market. APA has a small but professional team based in Houston, albeit not in the one place under this current environment. So today I will refresh the heavies with our strategic rationale for The US, current industry trends, the regulatory environment, what we look for in an investment, how we see our competitiveness and the key due diligence area of decarbonisation. Moving to the next slide, the natural gas market overview. APO remains keen on The US for two key reasons: the abundance of low priced natural gas and the continued growth in natural gas demand. Today the price of gas is well below $2 gigajoule, which while very attractive for consumers is really too low for producers to make a reasonable margin and this is putting pressure on many of the shippers on the pipelines. The super cheap gas has been driven by almost gas being a by product of oil production in the South West of the country, in particular, Permian and Eagle Ford. Fortunately, increasing volumes earmarked primarily for LNG has absorbed much of this gas. But with the slowdown in the world economy, there's compounding pricing pressures on producers. The other main producing region is Marcellus Utica, which is the largest production region in The US, but it's mostly dry gas. And there is some speculation that with the reduced oil production and reduced by products of gas in the Permian that there could be a tick up in natural gas prices. But the Marcellus Utica is probably well positioned to take advantage of any of that. They mostly dry gas but are very efficient and will continue to provide abundant levels of gas supply at low prices to The US market. Cheap natural gas has resulted in significant new demand for power generation to replace coal and for new industry expanding and relocating to The US. The depth of The US gas infrastructure market and the strong growth oriented fundamentals continues to lead APA to the view that there should be attractive natural gas opportunities, natural gas infrastructure opportunities for us to pursue. Moving on to the next slide, target investment sectors. Which ones are we looking for? Well, clearly, it's a fairly straightforward answer. We look at what we do best and that is the ownership and operatorship of natural gas pipelines or gas networks. In The US, gas networks are referred to as LDCs or local distribution companies. These type of businesses are at the lower end of the risk spectrum and are consistent with the risk profile of APA's existing business. We have other expertise in renewables, gas processing and storage, but these would be considered once we have our platform and how those areas fit into that platform at the time. In turning to look at our screening criteria, the items here have been continued to refine as we've looked at different opportunities and understood the market more deeply over the last few years. Commercial environment clearly, it needs to be a risk consistent with what we have in Australia, either regulated or contracted with strong market fundamentals. Operational alignment, as I've said, it has to fit within our existing operational expertise and targeting gas pipelines or LDCs. Organizational structure, ideally when we acquire assets we also acquire a management team with a proven track record. The credit needs to be supportive of our existing credit ratings with minimal counterparty risk. And the financial returns of course need to be an acceptable IRR and we've previously talked about continuing to focus on making sure that in the first full year of operations we'll be OCF accretive. In terms of the investment size, we look at the size that are worthwhile to make the effort, but not of a scale to sort of bet the company. And finally environmental impacts, that it's got to be compatible with what our long term energy transition objectives are. In particular, we looking for an acquisition that will maintain its value as the stable region where it is located implements a change in the nature of energy supply. Due to the climate and political views, an investment in gas infrastructure in California is a lot different to an investment in cold climates away from the coast. I will talk about this more in a later presentation. One of the key differences in terms of regulatory environment is when looking at pipeline returns there is a positive onus on regulators in The US to ensure that sufficient capital can be attracted to industry to ensure there is continued investment and expansion. It's a framework that's been established over many years by court decisions that entitle infrastructure owners to returns that are competitive with other investments bearing the same level of risk. These court decisions tie the obligations to various provisions of The US constitution, indicating they are a part of the fundamental law of the country. As we've seen, the objective of the Australian Energy Regulator is much more focused on minimising tariffs rather than attracting capital into the industry. In pipelines, while ROEs are usually in the 13% to 15% range, of course there's no guarantees that level will be achieved. It would depend on the market position of that pipeline compared to competing pipeline tariffs. If returns exceed this range by an unreasonable amount, FERC or the shippers can commence a rate case. Although mostly they are a negotiated settlement without FERC needing to publish a determination. In terms of LTC's returns, they are set by individual State regulators with recent decisions generally being in the range of nine-ten percent equity returns based on equity comprising of around fifty-fifty 5% of the total capital. This is a level of returns that's been very sticky over long periods of time, even as interest rates have trended downwards. While they have drifted down over recent years, they've been remarkably stable and are still approximately double what can be earned in Australia. Moving on to the next slide. Current market trends and valuations in LDCs and pipelines. LDCs have benefited from significantly new CapEx programmes to renew and reinforce the asset base, supported by regulators on a safety basis. These programmes involve digging up and replacing old pipe, and in some cases there will have many years of work ahead of them until they are finished. A sustained period of declining natural gas prices enabled LEC's to recover this capital without lifting rates. On the other hand, pipeline operators have turned inward. The dislocation of twenty fourteen-twenty fifteen marked the end of a period of significant growth and forced a reassessment of leverage and corporate structures. Since then, changes in tax arrangements and the increasing recognition that many peers spent their available capital on liquids infrastructure as they saw higher returns from supporting the increase in oil production. This has reduced access to expansion capital as they have gone up the risk curve. Large greenfield gas projects under construction and recently placed in service have been built to facilitate delivery of by product gas produced from oil drilling in the Permian Basin. They are connecting West Texas to Eastern Texas market hubs, LNG export terminals and petrochemical facilities. Other greenfield projects are in the North East part of The US and continue to support the expansion in gas production from the Marcellus and Utica. However, the routes crossed some ecologically sensitive lands and faced significant opposition from environmental groups delaying their completion. APA sees opportunities for quality acquisitions in both the pipelines and LDC sectors. The COVID pandemic and oil price declines have forced many midstream operators to urgently re examine the balance sheets and strategic priorities and consider selling assets to raise capital. Given that many other strategics are grappling with similar problems, APA can differentiate itself to those sellers. On the LDC front, APA has seen asset sale processes initiated as current LDC owners look to crystallise current values supported by a positive long term. Moving on to the next slide, clearly there can be opportunities but for APA to be able to take advantage of it, it has to be competitive against its peers and other investors in the industry. I've got a couple of comments in that respect. Our US pipeline peers, they diversified into riskier businesses and as a result do have a higher cost of capital. So, at the strategic to strategic, competition, I think APA is well positioned. On the LDC front, our work undertaken to date suggests we have a very competitive cost of capital. Clearly, the likes of the Canadian pension funds super competitive, but, that type of investor generally lacks the operating capability to act independently. Overall, our stock over the past few months has traded very strongly relative to our US peers and that puts us in a good position to deploy capital. We clearly don't have an operating base and few synergies compared to the strategics in The US, and time will tell whether we can overcome that position. However, we have invested in excellent internal and external resources to understand the industry and capitalise on opportunities. This issue should resolve naturally after our first acquisition. One of the big topics in the gas industry is the focus on decarbonisation, both in the energy chain and economy in general. APA has invested a lot of time and money in understanding the potential impacts on the gas infrastructure sector, including the specific question around the electrification of LDCs. There is no single federal policy, around this issue, but many states and cities have implemented fairly aggressive emissions reduction controls. Some follow the general framework of Paris, that is an 80% reduction in emissions by 2,050, while others go further and aim to eliminate all net carbon emissions by that time. In terms of LDCs, the bulk of their revenue is from residential and commercial sector, which represents around about 8.5% of total US CO2 emissions. This is a relatively small amount of emissions compared to other sectors like power generation, transportation, agriculture. But under the policy adopted by some states, the more aggressive policies, natural gas emissions from these sectors will still need to be reduced. This effectively requires that natural gas use in homes and business be replaced by renewably generated electricity to meet that goal. And how realistic is this? Well, Bloomberg is forecasting, today is still forecasting a 48% increase in gas fired power generation capacity to be installed by 2050 over and above existing levels. This is required to address the well known issues around wind and solar intermittency and will continue to be a difficult problem to solve effectively. Also, the energy efficiency of natural gas delivered to the homes or business is three times more efficient than natural gas burned as electricity. So unless that electricity is being generated by renewables, then there's a real chance that the electrification of the LDCs would actually result in increased CO2 emissions, which I think policy makers are only slowly beginning to understand at this particular issue. If you ignore whether it's actually going to increase or decrease CO2 emissions by electrifying LDCs. The cost of electrification, particularly in the colder climates, is much higher as compared to warmer climates such as California. About half of the population lives in a part of the country that experiences very cold temperatures and relies on gas for space heating. Utilities in these areas, with the massive amounts of new renewable generation support peak demand, as well as upgrades to the transmission and distribution infrastructure. Even setting aside the economics, over reliance in these cold regions on one single energy source for heating creates a real risk given ice storms and the potential for the electricity network to be down. So the massive generation investment that would be required to support electrification, plus the cost of switching home appliance from natural gas to electricity, combined to make residential electrification a massively expensive option for reducing carbon. This graph compares various decarbonisation methods on a cost per tonne of CO2 removed basis. It starts on the left with the use of electric cars, which can actually save money for society, and also shows other policy and technical approaches that have been used in the past. It even includes projects at the demonstration stages, such as direct CO2 removal from the atmosphere. As the graph shows, residential electrification is more than three times as costly as any other method. This graph actually understates the true cost because it does not include the cost of electrifying commercial buildings, nor the additional cost of improving the electricity distribution infrastructure to support more load. Finally, to discuss the decarbonisation impacts on gas pipelines. Again, there are some regional differences, but we see an important role to pipeline infrastructure in any event. The LDCs and colder regions will continue to require natural gas. Petrochemicals and plastics will continue to require it for feedstock. LNG will continue to be exported. Poplin capacity will be required for peaking capacity at gas fired power plants. Utility scale batteries seem many, many years away. The challenges of providing reliable, clean energy infrastructure for The US is immense. Indeed, the electricity and gas industries are working together to understand the role that natural gas pipelines can play in that increasingly volatile power sector. And as we investigate pipeline acquisitions, we review the market based on the fundamentals today, but also examine how the fundamentals might change over time based on decarbonisation trends and of course many other measures. To conclude, overall despite the unprecedented disruption from COVID-nineteen, we still see strong long term fundamentals for The US gas infrastructure market. We are unquestionably aware of and respectful of the movement towards decarbonisation in The US. However, the incredible climatic and political variations across regions of The US means that a single approach cannot realistically work nationwide. Something that works in California may not work in Kansas. Rather, we see states and regions charting their own paths, subject to their own particular technical, financial and political limitations. As such, we do not see decarbonisation as a reason to fundamentally change our investment objectives. We still see many opportunities for us to transact and operate from our position to value financial strength. Thank you very much. Group Executive for Transformation and Technology here at APA. I'm here to lead APA's response to decarbonization and digitization. I've already started looking at new energy opportunities and our tech road map. Taking my fifteen years of experience in global energy companies and marrying it with deep expertise and capability here at APA. At APA, we recognize the energy transformation is underway. We understand the trends and the changes that are driving energy growth, and we're getting ready for the future that's coming. We had the foresight many years ago to step out into new adjacencies such as solar and wind. And even more fundamentally, we've moved from being a pipeline business to an energy infrastructure business. And now with the advent of digital and data technology, we can move from being an energy infrastructure business to an energy solutions business. I'm not in a position today to tell you all the outcomes of our thinking. What I am going to share is how we're going about our thinking. And I'm really interested in how this world of energy growth is going to play out and benefit our fantastic infrastructure position. So first, the trends. The energy sector is responding to megatrends around the globe. Our population is growing. By 02/1950, we'll have another 2,000,000,000 people on this planet, and they need energy to fuel their lives and grow the economy around them to live happier, healthier lives. These people are going to live in cities. So today, half the world's population lives in cities. By 02/1950, that will be 70%. The demand for energy infrastructure is huge. We are part of that megatrend. But the next thing we need to look at is climate change. And our challenge is to decouple this energy growth from emissions growth. And we're already seeing this being possible. And when we look at the developments around us, we see that it's not a single technology that provides a single magical bullet to our energy challenges. It's a range of technologies. It's a portfolio of options They're going to take us to this future where we can serve our communities, keep them growing and decarbonize our future to keep us safe and, happy. What I want to do is actually look at these trends a bit more in practice, and in particular, look at the role of energy in interconnecting different types of markets and different types of technologies. So there's four energy transformations I'd like to look at today that are already playing out: LNG, shale gas, renewables and firming. LNG is essentially a revolution in the way we transport and store energy. It has transformed markets from being diverse, divergent and driving convergence. We look today, Japan is the biggest importer of natural gas, and gas is the largest source of power generation in Japan today. In 2019, 65,000,000,000 of infrastructure was put in place backed by long term contracts to make this market transformation possible. And then we have shale, particularly in The U. S, incredible the impact that's had on The U. S. Economy. In 02/2008, gas production in The U. S. Increased by 81% on the back of shale technologies. And what's very interesting is just like LNG, these technologies were around at the beginning of the century, but took years and investment in government policy to enable these technologies to come to life and drive the incredible benefits. One of the big benefits of the shale revolution in America has been the decarbonization from coal to gas switching. So from 2010 to 2019, colder gas switching as a result of cheap gas in America took out 300 megatons of CO2 from the atmosphere. These are energy transformations that are still playing out. The other one that we have to touch on is the renewables phenomenon. In the last ten years, the cost of electricity from solar and from wind has decreased by 8050% respectively. The deep cost reductions in these renewable energy projects is driving a phenomenon around electrification. It's driving thinking around zero cost electricity. And the cost of these technologies is forecast to fall further. By 02/1950, there's estimates that solar could be 60% cheaper again and wind another 50% cheaper. But our renewables phenomenon has spawned another phenomenon, which is intermittency. So these technologies produce great energy when the sun is shining, when the wind is blowing, but when they're not, how will the system cope? So we see a phenomenon around firming technologies. And fundamentally, gas is stepping in and playing this role. Last year, in South Australia, 51% of the electricity output was renewable, one of the highest in the world. But the other 47% was gas, gas filled that and made that renewable production possible. So we see this marrying of technologies coming together to provide the system stability that we need. We think there are other firming technologies that are also worth looking at. We're looking at the lithium ion batteries driven primarily by interest in electrifying transport, but now having more interest in the power sector at grid scale. But even though these lithium ion batteries have huge potential, they only play very well in the two to three hour firming slot. And so we see they're complementary, but not the whole story in the firming revolution. I worked in The UK for thirteen years, seven of which were at Centrica. And I witnessed firsthand the changes in these technologies to the system. In 1990, coal was 75% of The UK's electricity. By 2019, it was 2%. In that same period, renewables had increased from 2% to 30% and gas fired power generation from zero to 39. These are fundamental changes that are happening in our energy system today. And we're starting to see green shoots around the next energy transformation. Green hydrogen is clearly one of these. And this has been spawned from the very low cost of renewable energy, because if you can make energy very cheaply and at zero marginal cost, you can use that in an electrolyzer to create hydrogen. And hydrogen is a fantastic way to store and transport energy. So what are all these different technologies mean for APA and its privileged infrastructure footprint? First of all, gas remains a fantastic way to store and transport energy. We see gas playing a very important role in our nation. But ultimately, if those methane molecules are created in a different way, APA is very supportive. If we think about new export businesses and the government is saying that a hydrogen export business could be worth $11,000,000,000 by 2050 and create 8,000,000 new jobs. Clearly, that would be good for the Australian economy and good for the APA infrastructure network. But more than that, we see a role for APA and our technology in firming, in transportation and industrial use. As we said, renewables will continue to rise. We're very proud of our renewables. We're the fourth largest corporate holder of renewables in Australia, and we see renewables being an increasing phenomenon. But we're ready to provide the firming that is needed to keep the system stable. We also see batteries can play a role in that, but we see a holistic solution with gas being a part of it. Transportation, we've already touched on the phenomenon of electric vehicles, and no doubt this will drive further electrification of our economy. But there is recognition that electric batteries are unlikely to be the solution in long haul transport, primarily due to their weight and their time to recharge. So there are some fascinating developments around LNG in transport or compressed natural gas, again providing a lower emissions source of fuel to that of oil and other petroleum products. So the world of transport is one that we see changing and gas and new technologies stepping in. Then finally, industrial use. Electrification will be more of our economy. Gas fired power stations will be more of that electrification. But electrification cannot fill some areas in industrial use around cement, around steel. And so we're very closely looking at developments in that area, but we recognize the critical role that gas plays in these sectors. So overall, from my fifteen years of successive transformations in power generation, in retail, in distribution, in transmission, I've learned there is no silver bullet. It's a thousand silver pellets. Thank you for your time today. Thank you. We'll now move to the first of our Q and A session. If you have a question, you can submit using the ask a question button on your screen. And for those analysts that have dialed in, you can press star one. I'll hand over to Rachel to, start the questions from the analyst. Okay. Your first question comes from Rob Ko from MS. Please go ahead. Good morning. Thank you very much for a really interesting long range presentation this morning. It's been really fantastic. Just first question, I guess, on the near term growth prospects. And I think we know well enough that if APA has got a growth pipeline that, that will happen over time. But just wondering, in the near term, if there's any discussion with government on maybe stimulus projects bringing forward some of the works? Rob, Rob Weals here. And thank you for your question and your kind comments. I think the thing that we're most focused on and I made mention of it in my commentary that given the, if you like, business confidence and other effects flowing through from COVID-nineteen and more generally economic downturn. The thing that will be most beneficial in stimulating growth and positivity is getting projects approved. And so what we've done and are continuing to do most first and foremost is engage with government along the lines of ensuring that the approval processes for projects that are already in flight aren't adversely impacted. And if they are, then we can work together constructively to ensure that those projects do continue through their approval processes. Clearly, kicking off new projects is another area of focus. But to get the most benefit in near term, the focus is on ensuring that projects that are already developed in terms of concept are already defined and going through their approval processes don't get slowed down as they go through that approval process. Okay. Your next question comes from Ian Myles from Macquarie. Please go ahead. Good morning, guys. Thanks for the presentation. A couple of questions. Could you maybe just give you talked about that $10,000,000,000 of opportunity in growth. Maybe break it down between what you see as core pipeline activity, maybe midstream and also electricity or renewables as such? Oh, yeah. It's Peter Fred here. I I think the number was greater than 4,000,000,000 on the presentation slide. So Sorry. 4,000,000,000. My mistake. Yeah. No pressure. Pressure. $10,000,000,000, isn't it? You know, we talked about this in August 2018 when we released our results in the middle of the CKI offer, and we see then around $4,200,000,000 of proceeds over the next five to ten years, and we see $2,400,000,000 of those were made up by pipelines alone. We were talking then about the Crib Point Pakenham pipeline, the Western Slopes pipeline. We're talking about Bigeloo. We're talking about the Galilee Basin. So that's our sort of our wet finger in the ear type estimate in the context of all that. We haven't really broken it down beyond that. The thing that Rob made most reference to is the fact that projects come and projects go and add to that number. So over the longer term, we are talking about a pretty interesting time frame there of five or ten years. So that's about as much as we've got in respect to that or much as we want to put on the table, to be fair. Ian, just one other comment I would add to what Peter has already said is that and as you've heard us say many times before, so I'm saying what you have heard many times is that we don't create the market. We invest alongside our customers based on their requirements. And so that mix of projects is always going to be dependent upon what our customers are looking for as part of their energy portfolios. But if you look at those general themes that I pointed to during the course of my presentation with new gas required to be brought into the market on the East Coast, the off the back of that, there's a mixture of gas pipelines and processing, potentially import terminals, so anything that brings new supply to the market and that mix of pipelines and processing covers the range of the pipelines and midstream sectors that you were referencing earlier. And clearly, the other big theme is around new generation to support that energy transition. So we would expect to see ourselves playing some sort of a role in that firming generation part of the market going forward. Alongside investing in renewable generation where it makes sense for us to do so. Is it possible to give you a few more color around how you see play in firming, given most firming participants are active take active market risk in the electricity market or writing PPAs and trying to provide and internally managing that risk. How do you see your position in firming? Ian, you sort of rightly summarized what our position is, is that we don't enter the market and take merchant risk. But we do see a role for ourselves participating in the market alongside our customers where we can provide but we can invest the capital in that and operate those facilities and where we've got the skills and capability and obviously the balance sheet, cost effective cost of capital that makes it attractive to our customers. And I'm sorry to persist on this. Are you seeing much interest about that? Because when you talk to the the retailers who are participating firming, they typically balk at a third party owning a gas plant because decisions about turning gas plants on and off and how you operate them actually have real maintenance cost implications to make it very difficult to set up a typical type planning contract. That is true, Bien. I think the thinking where we are at the moment is that our typical model is that we would build, own and operate. But if that means if we if it means that we build and own but we come to an arrangement where it makes more sense for the end customer to operate, for all the reasons you've just described, that's something that we certainly feel is part of our operating model. Okay. That's great. And look, can I ask one more question? Just on look. In The US, really interesting presentation. Interesting how you view the political risk because we're we're in a political world where Trump policies are quite extreme. Unless the republic the democrat policies are are probably somewhat extreme on the other side, does that influence the timing of when you might consider investing in in in the the assets in The US? Ian, I'll make some general comments around that, and then I'll throw it to Ross. He's I think it's his daily entertainment watching the election process unwind in The US, and so he'll be able to make some more on the ground comments. But I think the point to note is that we're a business that invests over the long term. And so as I made reference in my presentation, through different economic cycles but also different political cycles with different in the case of Australia, different Prime Ministers and I've lost count how many we've had over the last ten years. The point is that we have to look through that, look past it and look at the fundamentals as we make our decisions, not being, I guess, too focused on what one particular individual might have to say or be leaning towards. But I'll point I'll throw it to Ross now, he'll be able to make some more specific comments as he's been watching that election process unfold in The US. Ross? Thanks, Rob. I suppose there's two levels. A lot of the, the political decision that impact on the industry is taken at the state level and which causes considerable frustration for the federals. But I also should say that, certainly, Biden being apparently the going to be the Democratic nominee takes away some of the extreme policies that were being discussed. From a pipeline perspective, I think, you know, if the Democrats were reelected, then it makes will be it will make things more difficult for greenfield pipeline opportunities. But I don't see much impact on the early seed front. Certainly from the from where we sit here today, they're very much focused on a state by state policy position. Okay. That's great. Guys. Thanks, Ian. Thank you. Your next question comes from James Byrne from Citigroup. Please go ahead. Good morning, guys. I wanted to ask about, I think, Slide fifteen and sixteen, a spectrum full of business opportunity for APA. And I do appreciate your remarks on the outlook for energy transition and the role of gas in that. But I think that gas as a transition fuel is not necessarily a given and I'm certainly finding more and more fund managers are bringing in pretty healthy skepticism to that viewpoint as well. Now on that slide that I mentioned, you've looked at the different technologies to invest in given a different spectrum of decarbonization. But when I looked at those technologies, batteries, hydrogen, etcetera, I would have thought that batteries makes more sense for network operators and generators. For something like hydrogen, I think that makes more sense for those that actually have a greater depth of operational expertise in processing gas in much more complicated plants than APA owned and operated. So the question really is why is hydrogen batteries in the life your expertise and not better done by someone else? Thanks, James. Well, probably the first thing I'd say is and I forget which slide it was, but just in terms of the theme that the IEA outlooks all point to growth in energy demand, so this strong growth in energy demand, all except the sustainable development scenario, which has its decreasing marginally over that twenty year horizon through to 02/1940. And as I said when I pointed to the role of gas in that transition over the next twenty years, gas has a significant and important role to play in that. So I suppose the first point I wanted to make is that as we look at that decarbonization continuum, gas has an important role to play no matter where you sit on that. And so from a point of view of APA continuing to invest in that space, we still see a positive outlook, and that's supported by a number of people focused on the sector, Allen Finkel. The second I'd say is that as we look at the how that future unfolds, there's a number of different futures. There may be a future and there's a lot of talk about how hydrogen might play a role in that energy future going forward. Clearly, to have hydrogen flowing around a system, it's going be transported. There may be a role for ADA's assets in that instance. But importantly, the generation of hydrogen in the first instance is very, very energy intensive. And if we want to have hydrogen developed in a low carbon way that requires significant investment in renewable technologies because hydrogen is a very intensive or the development of hydrogen and therefore and then the storage is very, very energy intensive. So that in itself presents an opportunity. You might have seen today that we announced the approval and funding from Arena to support the development of what we're calling renewable methane, where not only do we take the step of using energy to create hydrogen, but then we then take carbon from the air and convert that hydrogen into methane so that it can actually flow in our pipeline. So that's a trial project to prove, one, the technical capability, but then secondly, also the economics of it on more industrial scale. That again, if that proves itself up, that presents a significant opportunity going forward in that space. But to move on from, let's call it, cleaner molecules to a future where there may be more electrification required as part of that decarbonization. Clearly, there's a cleaner generation, and we've talked about the requirement for firming generation as part of that energy mix. But also, you pointed to and noted on the slide, we talk about the role of batteries in that. Now that might be a place that the network operator might participate, but batteries on a large scale, we see no difference in terms of significant investment required in energy infrastructure. So look, think the fact remains that as this energy market transitions, it's going to require significant investment, whether it's in the generation capacity. I talked about the coal fleet aging and needing to be replaced with a suite of new generation. That presents an opportunity. My comments on that particular at that particular juncture in relation to that slide were in relation to the full suite of opportunities as the synergy market decisions, which is why we remain very positive and confident about our role in that going forward. Makes sense. Do you think though that future, whatever it looks like, will be increasingly crowded? If I take the European super majors as an example, the shelves and hotels in the world, they are continuing to increase the amount of capital they allocate into, let's call it, new energy quite significantly. I think Total was out the other day with a big new target for CapEx by 02/1930. Now the reality is that they don't yet know where the economic rent lies in a fully electric world, but they're allocating capital across the spectrum there. So do you think the returns in the future are implicated at all by competition? Do you think that APA's cost of capital is really competitive enough in the same vein that you talked about having an advantage when you look at The U. S. As a parallel? Yes, think you've sort of almost answered your own question there. I think there's always going to be competition. We compete already today in today's market and we run up against others in many different processes. We don't win all of those processes. We think that we've got not only the strength of balance sheet and cost of capital, but also the skills and capability. And as you've heard both myself and also Hannah McGankey talk about transition where we're actively bringing those skills into our business to start to think more actively around what that energy future is. And so will we when you look at that energy transformation that's inevitably going to happen over the next twenty to thirty years, we, like others, are going to compete in that space. So we don't see ourselves necessarily having a distinct competitive advantage nor a distinct competitive disadvantage. We'll compete alongside all the other players. Okay. Thanks for that. Thank you. Our next question comes from Tom Allen from UBS Investment Bank. Please go ahead. Hey. Percent to 55% equity. It's obviously a higher equity component than we see in Australia. Is that a regulatory requirement in The U. S? Or should we continue to expect The U. S. Acquisition would adopt a similar capital structure to what you did for the Warrumbilla Gladstone Pipeline acquisition? Ross, do you want to take that question? Certainly, at the asset level, the regulators generally insist on that 55%. We may, up to chain, put our gearing against that. That 50% to 55% is at the asset level. Okay. That makes sense. And then for the capital structure for the entire acquisition, should we still be thinking about that as being similar to what you applied for the Waimbele and Gladstone Pipe? I think the answer to that question is that is yes. The short answer is yes. The longer answer is that as we acquire anything, when we acquire anything, we're very committed to maintaining the BBB, Baa2 metrics at the group level. And so that does clearly give us an ability, once we consolidate through an acquisition that might have that 50 fiveforty five type of a structure, to add a little bit of at the parent company level to support that. So we'll always look to the metrics at the parent company level as the overall driver. Yes. That makes sense, Peter. And can you just share a little bit more color on what you consider an acceptable IRR for an investment of this risk profile in The U. S? Rob Weals here. Look, we've talked about, before the sorts of equity returns that we see for regulated assets here in Australia. And obviously, when we look to invest in non regulated assets in Australia, we'd always look to take an appropriate return in excess of that low risk regulatory return commensurate with the risks that we'd be taking. And that typically ends up in the 9% to 11% range and clearly sometimes more depending on the type of assets and the counterparty and development risk, etcetera. In terms of North America, I think we've been clear before that from a regulatory return perspective, and I think Ross talked to it in his presentation, that we see certainly in the LDC space that $0.09 $0.11 equity returns typical. And on the pipeline space, sometimes a little bit more than that, again dependent upon the asset and dependent upon the risk. And that we would see as an acceptable return given the risks that we're taking on in that market. Sure. Thanks, Rob. That's clear. And then just one last question, if I may, just on that growth spectrum in your presentation, Rob, a bit earlier. I noticed one of the items there was offshore intake. I'm just interested in if you can share a bit more color on whether that will affect the Barossa or Ichthys. And then also, Beetaloo has obviously remained a bigger opportunity onshore going forward. Anything you can share on how the, I guess, COVID or the collapse in the oil price might have impacted the timeline for that project? And what's your updated sort of route to market plans are? Just commenting specifically on I think you picked up under our list of frontier basins based on opportunities. Clearly, the as offshore Northern Territory develops further resources, if those resources need to be either a process or then taken to a domestic market, we'd be looking to participate and support in that process the same way as we would for any onshore development. So that's just providing some clarity around their comments. My apologies, if you could repeat the second part of your question, Tom. It was just an update on how, I guess, COVID-nineteen and the collapse in the oil price might have impacted your online for Betelu, I guess, and what an updated route to market might look like? Yes. Look, I think my comments earlier around the fact that we invest we don't create the market, we invest alongside our customers. I think it's a public knowledge that those projects and the proponents of those projects have actually relook at the CapEx spend in the context of low oil prices. So I think back to my comments earlier around customers potentially deferring some of their decision making in regards to that project or other projects is really the key point I was making there. Do we have an exact timetable? No, because the development timetable is going to be driven by those proponents, the same true for any other project. Okay. Short term. Thanks a lot, the team. Appreciate it. Thank you. Okay. We have some further telephone questions from analysts. But for participants wanting to ask a question through the webcast, please use the Ask Webcast function on the webcast screen. We now have questions from Peter Wilson from Credit Suisse. Please go ahead. Brad, thank you. Good morning. A few questions on The U. S. Actually and the growth on the profile there. So to start with demand on some of these LDCs you're looking at, can you just us an idea of what the recent trends are in terms of demand and then what you're assuming what you're putting in your models going forward? Thanks, Peter. I'll just make one comment and then ask Ross to address that question. I think the I'm guessing your reference to demand is in reference to the current COVID-nineteen situation. Look, it's actually I kind of just meant the underlying demand. Okay. Well, I'll get you into a different question, then I might just hand over to Ross. It's fair to say that demand has been fairly constant, fairly flat over recent years. What's been driving the growth in the revenues has been a very significant capital expenditure program to renew and refresh a lot of the pipelines within those LDCs, but not expecting demand to increase over the, if you like, the growth in gas itself. Perfect. And given that flat demand outlook, what is your expectation going forward in terms of this organic growth in assets? Well, the organic growth will match population growth, but also there are depending on the state and the LDC, there's still a lot of money to spend on renewing the LDC, but it's very much different from LDC to LDC. I guess another way to ask it is, if you look at the, I guess, the Australian business, next ten years, I guess the pitch is that you continue to spend 300 to $400,000,000 which is 2% to 3% asset growth per annum. Do you think these LDCs in The U. S. Are going to be higher than this 2% to 3% or lower than 2% to 3%? Definitely there are quite a few out there that are higher. They've been growing at just 5% recently. So but again, it depends on the region, the colder the region, the more fundamental demand there is compared to the warmer regions. Okay. And flat demand, I guess part of your presentation was the fact that I guess your opinion that the electrification of residential heating is not viable. I mean, in Australia, reverse cycle air conditioners have displaced gas as the cheapest form of residential heating. Is there anything different about The US market? A fundamental difference is just the temperature, winters, and the costs that get allocated by household to their heating, to switch across to that would have to be significantly more expensive and less effective is a fundamental difference. Okay. And I think you I guess you're you're talking about to switch from an existing gas appliance as as opposed to the, you know, the cost differential of a new gas appliance? Yeah. I mean, it's the actual cost of the energy as such. Electricity is much more expensive than gas in this part of the world, and there would be their annual bills would be significantly higher to switch from their gas heating across to electric heating, ignoring the cost and the appliance itself. Okay. And just one last one. So some of the LDCs in The US, I understand, are more vertically integrated. That's in the have responsibilities for things like sending out fields. In terms of the assets you're looking at, can you confirm, I guess, what level of vertical integration those assets would have? Well, indeed, most of them are vertically integrated, but most of them in terms of also running a retail operation, etcetera. But, again, depending on the state, a lot of those have got protection over what their cost of gas is and a flow through that a flow through to the end user. So they may take a bit of volume risk, but in terms of medium term risk in pricing, that gets passed on to the end consumer. It's just a different model, and it's a model that works pretty well. Okay. Are you worried at all about retail accessibility over the very long term? Not in The States that we're looking at. No. Okay. Perfect. Thank you. Thanks, Peter. Thank you. Your next question comes from Daniel Butcher from CLSA. Please go ahead. Yes. Hi, everyone. Thanks for the extra data on The U. S. Just a couple more questions on that, please. You mentioned the 145 LEC targets and 169 LEC pipeline targets. Just curious what sort of percentage of those, firstly, meet API's criteria in terms of size of things that you're looking at? And secondly, I think we just we're trying to understand the big disconnect between the seemingly amazing equity returns of, you know, right now, you're saying 9% above the government bond rate for pretty low risk assets, And it's a reconcile that you're willing to say the last three and a half years of looking to actually push them up and buy one. And obviously, pretty rosy picture behind the presentation. I'm just trying to work out why they've got some time to beat up in terms of price to end up lower returns in the final analysis. Well, if we were looking four or five years ago, I have to say LDCs were a lot cheaper than what they are today. I think that value and that gap between the the cost of funds versus what they're able to charge is is pretty reflected is reflected in their values. And that is one of the challenges that we are looking at, that's to make sure that they can still justify our returns and debate the work that we have done. We believe that we can be competitive. In terms of the number of targets there, certainly not all of those targets aren't on the market. But I would say a good portion would satisfy our criteria. I don't have the precise number, but at the same token by the same token, we are not taking a scabbard gun approach. We are selecting those key opportunities that make sense and and pick most of the boxes and concentrate on those. So I don't have a precise answer on that percentage of those targets. Thank you. Your next comes from Rob Coe from. Please go ahead. Good day again, guys. Yeah. I'll no. I did have a good day. Day. I did have a few questions at the start. I wasn't just gonna offer you a softball. If I can maybe direct the question to Mr. Gersbach about Slide 38, which is which is not the APA research, that's the Gas Association of America's residential study from 2018. Just wondering if you can give us some color on what kind of electricity cost assumptions have gone into that study because wind and solar costs in The U. S. Have like halved over the last year. And you did also mention that the key difference for gas and electricity in the home is the weather. And clearly, Australia doesn't have the brutal winters of much of The U. S. Does, but Europe does. And Europe has quite a strong trend towards residential electrification. So just wondering if you can give us bit of color on that front. Thanks. I think in terms of I can't give you precise assumptions within that study, but I will say that we are doing our own internal studies and we're part way through to critique ourselves for those sort of outcomes just to understand how they got to those numbers and to make sure that we're comfortable with those numbers. The nature of the I think the North America has got an entirely different culture in terms of their willingness to switch across from gas to electricity compared to Europe. And it's fascinating. The State of New York tried to but because they weren't approving new expansions coming into that state, the utility started to restrict new connections and there was an uproar from the community that they still wanted gas. So even in the coastal regions, are much more pro new energy, there is still an ongoing demand for natural gas and a desire to keep it especially for its base heat. Okay. Thank you. So my last question, and perhaps a more of a longer term question given the tone of the introductory presos. So can you talk to some of the longer term, I guess, terminal value type scenarios in the way that the company thinks about its investment? Like are there alternate uses for the steel pipelines? Is there progress on steel embrittlement with hydrogen? Is there a point where the kind of twenty to forty year investment framework just gets too close to a net zero twenty fifty that the company needs to pivot towards a bigger transformation? Rob, that's a good question which is probably not easily answered in a couple of minutes, but I'll just give you some thoughts and perspectives. The first is that you made reference to a net zero by 02/1950, and I think the important word in all of that is net zero. So as our energy markets transition and you've heard the commentary from both myself and Hana today, referencing not just our own views but also that of other experts, where gas is going be a key enabler of the energy transformation going forward. So that's the first important point to note in this discussion. I think that as we look at and I think you made through a question around pipeline embrittlement and so forth. I think that might have been in reference to the ability for high pressure transmission pipelines to be able to transport future fuels like hydrogen. We're an active participant in those research studies through the Future Fuels CRC and actively not only participating but also funding that work. That's going to play out over a number of years, there's no doubt. But I think the bigger question is as we look at every new investment, whether that be in renewable space or whether it be in the pipelines gas pipeline space, any investment decision always looks at what assumptions we need to make about beyond the contract period. I'll point to renewables. You sign a long term renewables contract to underpin a renewables investment. The views have to be taken as to what the future price of electricity is going to be. And so when we're looking at pipeline investment, we have to make decisions around how what the demand and the supply and the use of natural gas will be in beyond that contract period. So difficult to be able to answer specifically, Rob, but those decisions and thought processes are very much alive as part of anything we do no matter the investment class. Okay. Many thanks so much, Raj. That's it for me. Thanks, Rob. Thank you. There are no further phone questions at this time. I'll now hand over to Jen. Thanks very much. Look, to stay on schedule, we'll take a short ten minute break now, and come back, at 10:20. So that's in ten minutes time, and there will be a timer on your webcast screen that you can, follow. Thank you. Thank you. Good morning. I am Darren Rogers, the Group Executive for Operations. This morning, I'll step you through four key areas. Firstly, APA's ability to leverage scale and efficiency to deliver value, our ongoing customer focus, how the integrated operations center has been integral to the safe operation of our assets in the COVID-nineteen environment and lastly, how APA thinks about operational excellence. The new operating model brings together power, midstream, transmission and network assets under one group, who will safely drive efficiency and effectiveness by leveraging our scale. The operations leadership team consists of senior asset managers, market specialists, operations and maintenance line leaders, direct health and safety professionals and our networks leadership team. This combined effort is all about delivering value for our customers. The strategic imperatives that Rob mentioned earlier resonate well with operations and that we are executing these imperatives day to day, month to month in the frontline, delivering for our customers and stakeholders. Operations consists of around twelve fifty full time APA employees and 1,500 contractors across Australia working together for a responsible energy future. APA's asset base continues to grow with Gruyere Power Station, Darling Down Solar Farm, Badger Gara Wind and Solar Farms and the Moomba to Sydney capacity expansion, all added in the past eighteen months. As a business, we continue to evolve and think about how we best meet our customer needs and operate our assets. All of these new assets are meeting expectations and have been integrated into APA's operating model. Our customer base remains diverse with utility, energy, resources and, of course, industrial customers continuing to do business with APA. The key strategic pillar for APA is operational excellence. We've continued to ensure we have the right people with the specialized industry experience to operate our assets as efficiently and safely as possible for our customers. APA is very fortunate to have a senior operations management team who have an excess of two hundred years operational and commercial experience across transmission, networks, midstream and power assets. Alongside this management team is a diverse group of asset managers, technicians, engineers, commercial operations and professional line leaders who look after our assets on a day to day basis and continually look over the horizon at what our customers require and how we can meet their needs. APA is a geographically spread business across Australia and so is our workforce. During the COVID-nineteen border closures, APA has seamlessly continued to deliver essential services for these customers. APA has in excess of 700 field technicians, engineers and line leaders in the field, in city centers and the regions continuing to manage and operate our business over the past few months. And I'd personally like to thank these employees in particular for their professional and committed approach to delivering energy across Australia. Being a customer centric organization, the central point of contact, which is our integrated operating center, has proven itself in the past few months, enacting our business continuity plans and providing a coordinated operational control, gas scheduling, market operations and commercial settlement for all of our operating regions and customers. APA's operating model further supports collaboration on customer service and outcomes. We now have a portfolio approach to energy assets with several of our power assets now integrated into the Integrated Operations Centre. All customer accounts and commercial operations are now included in the IOC model of operation. To give you a sense of scale, the IOC monitors 7,500,000 kilometers of driving every year through our vehicle monitoring program, controls and monitors 70 plus compressors, which includes 156,000 control points. The IOC processes 6,500 shipper nomination points each day, reliably delivering energy to where our customers require it. Our phones never stop ringing with 107,000 phone calls from the field, customers and various hotlines every year. The investment in the IOC and technology has enabled the safe operation of all of our assets for our customers over the past few months. This investment in technology stretches to our engineers being able to remotely troubleshoot assets from various locations, compile big data across our assets and utilize international specialists to provide additional remote troubleshooting where required. The control measures implemented during the COVID-nineteen period have included separation of the grid controllers into two teams working from two different locations, as well as implementing work from home arrangements for commercial operations and support functions. This has all been supported through the use of technology. Our control rooms participated in virtual fly through assessments by leading industry medical professionals to ensure we had implemented the very best controls for the protection against COVID-nineteen. Health and work controls have been implemented for our field and office employees and contractors. To date, this has been very successful. The safety of our people, plant and equipment is of paramount importance to all of us at APA. An area of outstanding performance in the last two years has been our continued improvement and sophistication of our process safety implementation. At APA, we take safety seriously, and we've built an improved safety program on best in class standards, a two year implementation plan that is focused on process, equipment and importantly, the cultural elements of process safety. We've upskilled our technical and operating teams with employees who have specialist experience in process safety. This upskilling has allowed us to drive a process safety program that I know we are all very proud of at APA. We now have key measures in place that drive decision making and performance from the field all the way through to reporting key safety process metrics to our Board. We will remain vigilant in this area and continue to drive safety improvement as part of the way we work. A key technology plank in the way we operate our assets is utilizing leading integrity and reliability programs to continuously improve the way we operate and maintain our assets. Our integrity maintenance program includes intelligent pigging of our pipelines, direct inspection of our facilities and pipelines, and importantly, APA employees remain key contributors to many Australian Standard technical committees, which are well regarded worldwide. Our risk based inspection program ensures we concentrate our resources where they matter and importantly, where the asset requires it. Our efficiency drive is underpinned by a comprehensive reliability maintenance program, which will remain a key area of continuous improvement as we refine our maintenance efforts to continuously meet customer needs. This program is all aimed at getting the right tasks on the right equipment at the right time. In closing, APA's new operating model leverages scale and efficiency by integrating all of our assets into the way we work. We do remain customer focused and have demonstrated the benefit of technology in continuing to supply essential energy for our customers over the past few months, something we are very proud to have been involved in. And lastly, APA is fortunate to have a diverse and experienced skill set across power, midstream, pipelines and our networks assets. We will continue to pursue operational excellence across the business. Thank you for your time today, and I'll be happy to take any questions in the Q and A session later today. Hi, I'm Craig Stallon. I'm the Acting Group Executive of Commercial and Strategy for APA. I will be spending the next few minutes with Kevin Lester talking you through the Orbost Gas Processing Plant. APA acquired the Orbost Gas Plant from Cooper Energy in 2017. As part of this acquisition, APA entered into a development agreement which documented the respective scopes of work and how Cooper Energy and APA would work together during the development phase. A gas processing agreement was also agreed for the multi year gas processing phase. The original plant was constructed and commissioned in 2003 for the Patricia And Ballin gas fields, which are now depleted. The Long Tom Gas field was connected to the facility in 02/2008, and a mercury recovery unit was installed. The facility was eventually shut in in 2015, where the plant was put into care and maintenance mode. This slide shows the current plant in comparison to the original plant that was purchased in 2015. The top left hand side being the 2015 photo, and the bottom right hand showing the current status of the plant. As can be seen, APA has made significant upgrades. APA stepped into the project during detailed design and has taken accountability from finishing the design all the way through to commissioning. The plant is currently in commissioning and has successfully delivered on spec gas from Seoul, exported through the Eastern Gippsland Pipeline to market. During commissioning, a problem has been encountered with the foaming in absorbers, which has restricted the plant from achieving its design throughput, and the commencement of the plant performance test. A methodical root cause analysis is currently underway with our technology partners and Cooper Energy to isolate the cause and determine the most effective solution. The facility will be shut down next week to make a number of improvements. The results of these modifications will inform the team on what, if any, additional changes will be required to achieve the design throughput. Orbost is currently connected to a number of supply sources, including the original depleted gas fields, Patricia Ambelline, owned by Cooper Energy. The facility also remains connected to the Long Tom gas fields, owned by Seven Group. Our understanding is that Seven Group remain 2P reserves in Long Tom, and have a number of appraisal and near field exploration opportunities. The Solgas field is connected to Orbost through a 65 kilometer pipeline connecting Newt Field to Orbost's facility. Cooper Energy also owns the Manta Gas field that APA has a development and processing agreement with Cooper Energy. Finally, Emperor Energy, who own the Judith gas field located between the Long Tom and Manta fields, is where APA have recently signed and announced a Memorandum of Understanding with Emperor Energy to develop the concept work for this field. I'll now hand over to Kevin who will take you through further details on the project. Thanks, Craig. My name is Kevin Lester, Group Executive of Infrastructure Development. The Orbost Gas Plant is designed to remove hydrogen sulfide from the sole raw gas stream, which can be up to 3,000 parts per million at 68 terajoules per day. The process uses Thyra Pak proprietary technology to achieve this. Scope of the APA plant upgrade included a complete new front end to manage and process the sole gas stream, which included new inlet metering and quality monitoring, new gas separation equipment, mercury removal unit, sulfur removal and handling equipment, dew point control unit, additional power from new gas generators, and relocated flare facilities. The work included subsea control interfaces with the Sol field and integration of the gas plant into the APA communications and control systems. Major integrity works on the existing plant were carried out, including overhaul of the compressors and replacement of instruments and other equipment as required. As can be seen on the slide, gas comes in from the sole field offshore into the front end of the plant. There are some initial steps to capture bulk water, to remove any sour liquid hydrocarbons, and to scrub the gas stream for mercury before the gas arrives at the absorber towers. The gas is flowed through the Thiopac solution in the absorber towers where the solution absorbs hydrogen sulfide, cleaning it from the gas stream. The gas stream is then processed to move remove any water before arriving at the compression shed. This is where the gas is pressurized to be above the Eastern gas pipeline pressure. The gas leaves the plant through the export pipeline up to the meter station for measurement before entering the Eastern gas pipeline which is approximately 10 kilometers west of the plant where it's then delivered to customers. The hydrogen sulphide that was absorbed in the firepack solution is sent to the bioreactors where the biological material consumes the hydrogen sulfide converting it into elemental sulfur. The clean solution is then sent back to the absorbers ready to absorb more hydrogen sulfide. A side stream is also sent to the materials handling area where the sulfur is concentrated and extracted from the solution before being trucked off-site. The Orbost Gas Facility, when at full production, supplies approximately 10% of Victoria's gas demand. The facility is classified as a major hazardous facility, and all approvals, including strict requirements around noise and emissions, water discharge, and sulphur disposal were all managed by APA. During construction, a number challenges have been experienced. APA took over a number of contracts already in place with Cooper Energy, including the firepack technology contract, engineering contract, and a number of large supply items. APA used a number of smaller local suppliers to deliver earthworks, piling, civils, and water supply to allow engineering to be sufficiently advanced toward a single structural mechanical piping electrical and instrumentation contract. There were delays with engineering which flowed into procurement and together with industrial relations, which was the responsibility of the principal contractor, all contributed to a delay in construction. The bushfires in the East Gippsland area caused some delays at the end of construction and during commissioning, where the facility was evacuated twice and the team needed to manage hazardous smoke conditions. The team also needed to manage the site during the imposed restrictions as a result of the coronavirus crisis in recent months. APA and Cooper Energy continue to work well together, and the project has had a very positive impact on the local community. The project has delivered significant employment in the region. We support the local community, sponsoring local events and sporting teams. Although the construction of the facility has had its delays, it has been done with an excellent safety record whilst delivering a high quality facility that will be a significant asset within our portfolio for many years to come. We will take questions on the Orbost plant during the upcoming Q and A session. Thank you very much. Welcome everyone and again thanks for taking the time to listen to us all today. My name is Peter Fredrickson, I'm the Chief Financial Officer at APA Group. I'm going to go over very quickly how capital management and the balance sheet are integral to what we do at APA. There have been very few changes to this over the past eleven years, and much of what I will say will not be news to anyone who knows the company well. As Rob pointed out, at the very beginning of the day, we are a low risk business and steps we take to reduce risk allow us to manage the balance sheet and capital of the business in in a way that keeps our cost of capital as low as is reasonably possible. The bedrock to that is the long term nature of the contracts that we have in place with a small group of highly creditworthy counterparties. This gives us confidence that we will see stability in operating cash flows over the longer term. This in turn gives us further confidence to issue longer term debt and grow distributions to security holders from operating cash flows in a sustainable, albeit relatively conservative manner. The ability to fund organic growth in SOA CapEx and increasing distributions from operating cash flow gives both the company and our stakeholders confidence over the longer term prospects for increasing investment returns. All the metrics on this slide are positive and have remained so for a number of years. We've always maintained an appropriate level of liquidity, primarily through undrawn but committed syndicated and bilateral bank facilities. As I noted in the opening, full funding of of growth in SRP CapEx and growing distributions has for the last five years enabled us to rely on the undrawn bank funding as our only real source of immediate flex. In the current environment, we like others have looked at what a COVID-nineteen and low oil price environment might deliver. Whilst it is almost impossible to determine definitively a likely outcome, it was clear to us early on that liquidity was important for the longer term insurance purposes. The €600,000,000 long term ten year bond issue that we have undertaken and completed within the last two weeks provided us with a number of positive outcomes. First, confirmation that we continue to be well supported in the most liquid global debt capital markets and for volume at very competitive pricing. Second, a liquidity position that ensures that we can roll through the current market disruptions with a level of stability that enables us to run the business without extraneous distractions of where we will be funding impending I. E. July 2020 or any other debt repayments. And third, confidence that we do not have any debt to refinance for at least two more years, and even if we wanted to address some of that debt funding earlier, we could with the liquidity that we are now carrying. The Moody's and Standard and Poor's ratings are very important to us. They are our line in the sand, and everything we do is measured against the implications for those two ratings. We continue to operate at the upper end of strong range for both ratings, further ensuring that we are insulated against the worst that the market can throw at us in uncertain times. The metrics continue to strengthen, and as we have said many times in the past, will offer us ongoing support in the context of any future acquisition. Whilst we fully expect that any significant acquisition will be supported by an appropriate amount of equity raised, the balance sheet today remains fully capable of funding organic growth and any lower level investment opportunities that might present themselves in the current environment. The debt portfolio continues to support the longer term nature of both our assets and our contracts with customers. The recent euro issue allowed us to push the average tenor of the debt portfolio out to six point five years and reduce the annualized interest costs across the portfolio to around 5.2%. The more important aspect of the issue is that we will repay the AMTN that we issued in July 2010 at 7.75% with funding that is costing us 3.86%. An annual saving on that $300,000,000 alone of $11,700,000 As you'll see from the debt maturity profile, our next maturity beyond July is not until 2022 when we have some USPPs and our initial euro issue from 2015 due. Our current strategy is to see how the economic environment immediately in front of us plays plays out with cash in the bank and thereafter when we are more confident of what's ahead more generally, we'll see how we manage the balance sheet and any excess liquidity at that point in time. This slide epitomizes the low risk nature of APA's business, that around 90% of our revenues come from take or pay capacity charges or regulated assets, and that in excess of 93% of our revenues come from highly creditworthy counterparties with investment grade credit ratings is paramount to our understanding the certainty around our revenues. The average outstanding length of our contracts with customers remains in excess of twelve years at the 12/31/2019 and assists us in providing the market with confidence around expected financial outcomes, subject only to the very rare events like the recently announced delay in the commercial operations of an asset like the Orbost gas processing plant. All in all, the update we provided to the market in terms of guidance on April 21 is what we remain comfortable with today. The delayed commercial operations of the Orbost Gas Processing Plant is the only material contributor to adjustment. The important point to note is that at the bottom end of the range accommodates no revenue from Orbost Plant in FY 2020. Even at this bottom end of the range, the result is still expected to deliver an outcome that is some 3.8% ahead of FY 2019. It is in that context and in the context that operating cash flow outcomes for FY 2020 reflect that growth and indeed fund a lower level of growth CapEx coming off the back of the recent $1,500,000,000 program that we feel comfortable with maintaining the estimated full year distribution at $0.50 per security. As always, and in line with our distribution policy, the distribution will be fully funded from operating cash flow, is inclusive of growth that is generally in line with the growth in operating cash flow and takes into consideration both the needs of the business to fund that growth and the economic conditions that we are trading in today. With that, I'll presentation there, and I'm happy to take questions in the Q and A session. Thank you. Name is Nivenka Kodavelle, and I'm Group Executive of Governance and External Affairs at APA. APA's purpose, which goes to the heart of why we exist, is to strengthen communities through responsible energy. This means we have to create value for all our stakeholders. It also means that we need to take a long term view and be here for future generations. We recognise that APA is part of an interconnected system within the energy industry, the broader economy and also the community. What we do impacts others and what others do impacts us. Understanding and managing these interconnected relationships is absolutely critical for APA to be able to deliver on its purpose and create a sustainable business for the longer term. Turning first to our customers. They are the reason we exist and they are at the center of what we Last year, we launched and rolled out our customer promise. That is to listen to understand, to enable our people to respond, and to do what we say we'll do. These commitments were developed not only with our own people but in consultation and collaboration with our customers. The customer promise is supported by the Red Dot Program which comprises specific initiatives aimed at improving the customer experience and overall customer outcomes. APA was a founding member of the energy industry's energy charter. This was launched last year and the charter brings together the energy industry, recognizing that the whole system, the whole energy system is required to be aligned in order to deliver better customer outcomes. As well as disclosing performance against specific customer principles, energy charter signatories are involved in a number of better together initiatives aimed at delivering tangible customer outcomes through coordinated action across the supply chain. This includes streamlining connection processes, delivering tariff relief for vulnerable customers and also improved information disclosure. Constructive engagement with consumers has become increasingly important for all parts of the energy supply chain, including for APA. While we are primarily a B2B business, consumer sentiment of the energy industry as a whole affects policy and regulatory settings, including those that directly impact APA. APA has been actively engaging with consumer groups to better understand their issues and their perspectives. Last year we set up on a voluntary basis our first consumer reference group to get consumer views on the proposed access arrangement for the Amadeus gas pipeline. We are currently doing the same for the Roma to Brisbane pipeline and will continue to adopt that approach for regulatory reset processes for other transmission pipelines. And we are also actively involved in the energy charter initiatives working closely with an end user consultative group to really understand where the consumer voice is coming from. We have also expanded our focus on delivering value and supporting local communities. Addition to community investment as part of our infrastructure development projects such as Orbost, APA contributes through its continuing community investment program as well as specific programs including bushfire and COVID-nineteen relief. Looking now at governments and regulators. Governments and regulators are critically important stakeholders for APA. And consumers, customers and the community are critically important stakeholders for government and regulators. This is reflected in the way policy is set and in regulatory determinations. In addition to our regulatory reset processes which I just discussed, we now actively seek out broader stakeholder views as part of policy development processes as well. This includes the current government's review regulatory impact statements on information transparency and on pipeline regulation. As well as creating value for our stakeholders, delivering on our purpose means taking a long term view. We are guided in that by our risk management system which looks over the horizon well and truly beyond the here and now. We also focus on culture and non financial as well as financial risk. APA was an early adopter of culture and non financial risk thinking and recommendations including those of APRA in its review of the Commonwealth Bank and the fourth edition of the ASX's corporate governance principles and recommendations. In relation to climate risk, last year APA committed to the recommendations of the Task Force on Climate Related Financial Disclosure or TCFD. We conducted our first climate scenario analysis last year concluding that APA is expected to be resilient to climate risk to 2,030 given our weighted average contract tenure of in excess of twelve years. Building on the work that was done last year, we will be conducting further climate scenario analysis with extended time frames and an extended scope. Recently published climate change position statement principles and have developed and are implementing a carbon management plan. We understand that adopting a whole of business integrated approach to climate and ESG risk is an important part of ensuring a sustainable business for the longer term. And that is absolutely integral to delivering on our purpose. That concludes my presentation. I'd like to thank you for listening and I'm happy to take questions at the appropriate time. My name is Elise Manns and I am APA's Group Executive for People Safety and Culture. I've also most recently been the leader of APA's Crisis Management Team during the COVID-nineteen pandemic. So my presentation today will talk you through at a high level what APA has been doing to continue to deliver for its customers during these unprecedented times, as well as an overview of the key focus areas with respect to APA's people programs, their safety and our culture. Let's start with COVID-nineteen. COVID-nineteen came at us off the back of managing a long summer of bushfires, floods and cyclones impacting several of our assets and our people, but thankfully with no significant interruptions Preparations and actions throughout this crisis have always had two key principles in mind: keeping our people and our contractors safe and healthy and keeping our assets and services delivering for our customers and for the communities that we work in. As an essential service, our business continuity plans were activated in late February on multiple levels. At this time, proactive stakeholder management commenced with customers, government regulators and key suppliers. Operational plans were also established especially for critical sites and processes and capacity planning with respect to IT services and equipment were escalated. By sixteen March, our crisis management team was established with daily check ins with management representatives from across the country. And just over a week later, over 1,000 normally office based APA employees and contractors were working remotely from home. Whilst the situation is far from over and there have been many challenging issues to deal with, to date there are also many successful and positive stories and outcomes from COVID-nineteen. We've had no material safety or operational incidents. Social distancing practices, new travel arrangements and revised operational protocols are in place to allow all our assets to continue to operate safely and minimise the risks to the more than 700 employees continuing to work on critical sites or in the field. Employees have embraced our new technology and ways of working to adapt to remote working and continue to be productive to deliver support to our customers and to our frontline employees. Cross functional groups have been established to identify and assist our vulnerable customers, distressed suppliers and vulnerable employee groups. And our leaders have stepped up and learned new skills to continue to lead their teams remotely and demonstrate the innovation, agility and collaboration required during these challenging circumstances. Right now we are focused on continuing to perform whilst preparing for an eventual and phased return to our workplaces, but we want to capture the best parts of this crisis and build them into how we will continue to work going forward. I'd like now to cover some of the other areas focused on in the PSC function. In health, safety and environment, last year in October we signed off a new three year HSC strategic plan with six key foundational themes which you can see on the next slide. Each of these areas are critical to APA to live up to our vision of caring for our people, communities, the environment and our assets. And each has targeted interventions to improve the performance, governance and capability with shared ownership of these areas across the business and the HSEH functions. Right now, unfortunately, our TRIFR performance is not where we would want it to be, especially with respect to our contractors. However, our lost time injury performance remains on target. There have been no material safety or environmental regulatory breaches and whilst this is pleasing, strong compliance is only a ticket to the game and not the overall objective. Recently, we have made some changes to the operating structure that has placed more of our health and safety resources directly with our operational frontline teams. And they are supported by a small, capable corporate team to deliver the necessary standards, systems and initiatives for a safe and healthy workplace. I'd like to move on now to talk about people and culture at APA and some of the key areas of focus in that part of our business. As Rob talked about earlier today, the refreshed purpose and vision for APA has been fundamental and core to everything that we do, as are our values, and they continue to be strong in all that we do in relation to our culture. We are also looking through our new organisational model and the new ways of working to enhance aspects of our culture, specifically to become more customer centric, to have empowered people and decision making, greater collaboration and increased innovation in the way that we operate our business. Another key area of focus at the moment is the digital strategy that we have in relation to people. At the beginning of FY21, APA will introduce for the first time an integrated human resource information system that will provide simplified and improved people processes across the business, as well as giving our leaders access to people data to assist them in their decisions in the way that they manage their teams and their business. Also, we are reshaping the recognition and reward programs throughout our organisation to increase the level of recognition and to ensure that we are supporting the performance and culture that we desire at APA. And finally, the leadership and results that have been demonstrated recently throughout the crises that APA have managed, along with lots of other businesses, in recent has really demonstrated the effectiveness of the development programs put in place at APA over recent years and ones that we continue to roll out and develop for our people. Developing, attracting, retaining our talent is key to what we want at APA in relation to our people and our culture. The final slide here in my presentation is an overview of the HSE strategic plan for FY20 through to FY22. As you can see from this slide, these are the six key foundational areas that we're looking to focus on over the three year period to improve and grow our capability with respect to health, safety, environment and heritage at APA. Thank you for listening to my section of the presentation. I'm more than happy to answer any questions in the Q and A section that's coming up shortly. Thank you. Good morning. I'm Yoko Katsuji, GM Investor Relations and Analytics. Before I hand over to the operator for the on the phone questions from analysts, I just wanted to remind everybody that there is a function for you to be able to ask questions through the webcast. There should be a button at the bottom of your Thank the line. Thank you. You. Your first question comes from James Byrd from Citigroup. Please go ahead. Thanks for taking my question. I wanted to understand to date and I understand that they've got a cap on them. But what about the exposure to performance liquidated damages during more normal operating conditions? Thanks for your question. Look, the first thing that I'd say is that the contract and the terms of the contract between APA and Cooper Energy are obviously commercial in confidence. And the second thing I can say is that all costs and revenues associated with the Orbost project are reflected in our revised guidance through which we put to the market on the April 21. We are confident, and I think Kevin and Craig talked to where things are at with the plant. We are confident that the plant will achieve full production as we work through the various steps of the root cause analysis. Bear in mind that the plant is based on a proprietary technology that removes the hydrogen sulfide and it's actually all the plant and equipment is in place. We're working through the process of balancing that chemistry, working constructively with Cooper Energy and also with our proprietary technology partner. So like I said, the arrangements between ourselves and Cooper Energy are commercially confident, but we're confident that will achieve the full production, bearing in mind that of course we are producing gas at spec and it's been exported into the Eastern Gas Pipeline as we speak. Appreciate your confidence in being able to resolve it, but from a risk perspective, what's the is there a potential exposure to future earnings beyond FY 2020? Have I thought about I asked about performance liquidated damages, that's typically a big check-in the mail that's calculated as the NPV of foregone revenue to Cooper Energy, but you can't get the plant to spec, for example. And I don't presume that, that would be reflected in FY 'twenty guidance. So no, the I think your question is saying are we not going to get the plant up and running to spec. Well, that's in the full extent of the guidance that we provided, we've reflected a range which reflects either some revenues from the Orbost gas processing plant all the way through to no revenues associated with that, including the impact of liquidated damages. So it's all is all reflected in our financial year 2020 guidance. Okay. I'll leave that one there and maybe take it offline. But in the prior Q and A, I might ask you about your deferral of CapEx from the outlook from lower oil prices. So let's suppose that CapEx is indeed back weighted relative to your two to three year outlook, perhaps don't buy anything in The U. S. Question for Peter is, do you just book that balance sheet headroom and leave it until a point where you can pay the CapEx? Or if you or would you consider perhaps a higher distribution in the short term? James, we've never really looked at as an organization, you'll be aware of this, and you'll have seen it from all of our presentations over the years, our distributions have been categorized as sustainable over the longer term. We've never whipsawed our distributions based on extra cash being available and then sort of dropped our distributions back at a point in time when we've had more capital to fund. So the answer is that our current our distribution policy wouldn't see that happening. Our distribution policy would continue to see us paying distributions that we believe are sustainable at that level over the longer term, and that number today is $0.50 per security. If we continue to see growth in operating cash flow, then shareholders are likely to see growth in distributions if indeed the long term sustainability of that increase is achievable. And so that's where we come from. The liquidity management into the longer term is very much dependent on what the market is doing and how the market is looking. And we've said in the past that we're seeing about $1,000,000,000 of operating cash flow come in the door today. We're spending about $600,000,000 of that on payments to security holders by way of that distribution. And $400 to $500,000,000 on growth in Standard Business CapEx. We don't see those numbers being materially different into the longer term. If you see $150,000,000 $160,000,000 Standard Business CapEx, you're probably seeing $240,000,000 to $340,000,000 of growth CapEx. It's sort of $400 to $500,000,000 We don't see this as being a material issue. What we see is what we've obviously done in the last little while, is put a significant amount of liquidity into the business by way of the €600,000,000 issue that we did two weeks ago, primarily because, a number of security holders have asked us over the past, sort of six weeks. As we've moved into a COVID nineteen and a low oil environment, whether or not we had liquidity and whether or not the banks would withdraw the committed undrawn facilities that we have. We don't believe they will, but nevertheless, we felt that it was an important step to take to ensure that liquidity was was put front and center, and people saw that that that funding was there. That funding will be used to manage the balance sheet rather than to increase distributions that may subsequently be reduced. That's very clear. That's all from me, but I should say congratulations on raising that bond. Actually, that was very good to see in this current environment. James, I might take the opportunity to answer the one question that's on the webcast at this point in time because now that you've raised it, the question is what's the likelihood that APA will be tapping the MAP market for additional capital via erasing? And I think what that question relates to is an equity raising. And it's one of the things that we thought about through the process, and we said, we need equity here or can we access a very cost effective debt? And at the time and today and based on everything we see in front of us, we're very comfortable with our rating metrics. And you'll see from the presentation here today and the presentations at the half year result and the presentation that we put up in respect to that fundraising or that bond issue, you'll see they remain very strong BBB and Baa2 rating metrics, and we're very comfortable with that. That's what drives our need for equity, and we continue to see that strength going forward. So what we felt was the liquidity could come from the debt capital markets. And as I said in the presentation, the support that we got, we saw €4,500,000,000 bid into our book of when we were looking to raise 600,000,000 it gave us a lot of confidence. And the pricing, again, was very good, so thank you for that. But from our perspective, we don't see the need for raising equity as at this point in time. But we have said again that we would support a reasonable sized acquisition with equity, as we've always said. Thank you. Your next question comes from Tom Allen from UBS Investment Bank. Please go ahead. Good morning, again all. And thanks, Craig and Kevin, for the additional detail at Orbost. And also just following up James, had a few follow-up questions on Orbost. Hope you don't mind me stepping into a bit further detail. Firstly, where the Diepak process is currently applied across the world, does it currently knock out hydrogen sulfide at that 3,000 parts per million at design for sol? Or is it the current use at lower levels? Thanks, Tom. I might just have Craig and or Kevin answer that question. I'll jump in. So two points there, Craig here. One, the gas we actually receive from Sol is not at 3,000 pounds per million. We actually are receiving gas somewhere between 2,200 pounds So the plant is designed for that full 3,000 feet stop. There certainly are facilities around the world that operate with much higher levels than the 1,000 to 1,200 parts per million. And I suppose the comment I would also make is that one of the reasons we're confident that we can achieve the full objective is that we actually do the the process actually does work. We're just a little bit rate restricted at the moment. Alright. Thanks, Craig. So on the rate, and you referred to foaming in the absorbers, I understand that foaming in the absorbers is an issue that has come up with Thiapac has been used during the commissioning phase in The US. Do you know how those issues were overcome and what additional time and cost was required to get those plants online and overcome the phobia? I don't think I can comment on processes done on other facilities. We certainly have spoken to a number of people that own this technology to assist in the root cause analysis for our particular challenges. Kevin, did you want to add anything more to that? I think we've got a process we're working through, and we're confident we'll get there at the end of the day. Okay. Sure. Last one. And you mentioned that APH will go over the BiPAP contract in Cooper. Are there any warranties in place that you believe give you complete protection or full recourse to the to the license owners if Orbost can't knock out H2S at the levels required for them sold? Think as I said, any agreement we have with Cooper's commercial competence. Haribo, you Yes. Was just gonna say the same thing, Kevin. That's going to level of detail around the commercial constructs and arrangements we have with, not only Cooper, but also the our technology partner. Thank you. Your next question comes from Rob Ko from MS. Please go ahead. Good morning, guys. Can I ask a question perhaps of Mr? Rogers about the kind of ongoing efficiency and effectiveness of the maintenance programs. Just wondering if you're monitoring any kind of new things that might give you a step change in effectiveness and or efficiency, things like drone inspection or use of AI with all the data coming in? Yeah. Darren here. Thanks for the question. We cast down that pretty broadly. So we have, in the last twelve months, actually looked at where drone technology might fit into our right of way inspection programs just as one example. AI technology does fit in our technology review, particularly in the integrated operations center. So we do actually use a couple of bots now within the IOC, we'll continually keep appraised of that technology and see what we can draw into the business to improve our efficiency. K. Great. And if I can ask one more, question, please, of Ms. Manns on the people and culture side. And I do also want to say that I appreciate the stars feature of the culture. That's also a the all stars, very important part of the culture. Just wondering if we could get a comment on how you're thinking about diversity within the organization, please? Yes. Thank you. Yes, Diversity Inclusion is a strong program within IPA. We're just in the process of renewing that strategy at the moment as well. And we have a range of gender targets, which we're also reviewing to look to increase over what we've currently got. We have a number of working groups that work across a couple of areas of particular interest such as improving our flexibility, which has been given a huge nudge recently with all the working remotely, but also inclusiveness and also around our age demographics. And finally, we have a working group around employer of choice. So yeah, it is a key focus in part of as part of our program that, again, has sponsorship right across the organization. Okay, fantastic. And then just, I guess, a more general question. If there's any because there's obviously been a lot of work practice adaptations, just if there are any kind of learnings for efficiency going forward once we recover from the current situation? Certainly. I think probably the two key areas that we have seen significant changes that we want to take advantage of is definitely the remote working. While there's clearly people who were looking forward to being able to return to the office, we are at the moment looking at ways that we can take advantage of what we have learned and the ability to work more remotely that gives people more flexibility, increased productivity, and also may, in time, have a look at the way that we establish our offices. The other piece is the way that we deliver some of that training. We have quite a large amount of technical training that we need to deliver ongoing to our field employees in particular to ensure that they stay current with their accreditations and competencies. And we've been able to fast track some of the work we were thinking of doing around delivering that in a way remotely and found it to be quite effective. I don't think it will replace all of our training, but it's certainly going to give us a way of delivering training in a more cost effective and timely way. So they're probably two of the key ones at the moment. Great. Sounds great. Thanks very much. Thank you. Your next question comes from James Niven from RBC. Please go ahead. Thank you. I just have a question in relation to the uses of capital. And just around I don't understand better just the risks around the growth CapEx guidance, so around $1,000,000,000 over the next two to three years. And like if that's probability weighted, so maybe do you have like visibility over something like $1,500,000,000 over the next two to three years, but maybe you think only $1,000,000,000 of that will reach FID? Or does it mean that your actual total projects you're looking at is about $1,000,000,000 And if there's further kind of deferrals in those, CapEx could actually come in below that? James, I think the guidance, if you want to call it that, is very similar to what we did in 2016. When we talked about $1,500,000,000 over the next three years. We just weren't sure of the timing. And when the timing is at the behest of customers reaching FID for their projects, we can't be certain about their timing. And so we can't be certain about our timing. So our view is that the $1,000,000,000 over the next two to three years are projects that we are you know, in deep discussions and, you know, advanced work with customers on. And there are things like, you know, to to give you a couple of examples, the Crib Point, the Pakenham Pipeline, which is AGL the AGL Crude Point LNG terminal, for instance, West The Slopes Pipeline, which is the transaction where we're working with Santos on, a pipeline to bring the Narrabri gas into the East Coast markets. So it's those sorts of projects that we are talking about, but we're just not certain and can't be certain today about what the FID progress might be of those. Now our expectation is that two to three years is a good number. But yes, there's a possibility that that $1,000,000,000 could be at the end of year three. There's also the possibility, as occurred in 2016, that, you know, we had $1,200,000,000, pretty much signed up within about six months of or six to eight months of that whole of that whole that whole guidance. So it's as much as that, to be fair. The only other thing I would add to that is on that chart that we referred to where we said we had visibility or line of sight of in excess of $4,000,000,000 worth of projects over the next five to ten years, and that certainly comes from a much bigger list. We probably weighted that. And in regards to your question, is the $1,000,000,000 that we're talking about in the next two to three years, is it an exact list that adds up to exactly $1,000,000,000 No, it's not. There's some projects that the full list is in excess of that, but we take your views to likelihood. Thank you. Before we go to the next question, I understand there might be an issue with the webcast Q and A button if you are on Microsoft Edge. So, in order to sort of take questions, trying to take questions live, if, anyone who's on Microsoft Edge or having difficulty, please email them through to irapa dot com. Au. That's irapa dot com. Au. We will obviously try to get to it, during the webcast. If not, we will, respond as soon as we can. Thank you. Operator? Thank you. Your next question comes from Ian Myles from Macquarie. Please go ahead. Good morning, guys, again. Just one on Orbost. You talked about a lot of the additional opportunities at Orbost. Given the challenge you're having with the Solgas, does that constrain or how does that influence the ability to grow the business? Look, I think it's Rob here. And Ian, thanks for your question. Our first priority, obviously, and clearly is to get the Orbost plant operating at its full nameplate capacity. And I think we've signaled before that we've had it successfully running at around 40 terajoules a day out of its nameplate of 68. So that's first priority. And we're certainly not going to be putting any focus or attention on the next growth opportunity beyond that until we have that sorted, and our focus is to make that happen as soon as practicable. But clearly, over and beyond that, once we have that better down, our focus will then shift to what those other future opportunities might be and how they might be able to take how we might be able to take advantage of the footprint that we will have developed and proven in the Orbost gas processing plant. So maybe just to extend that a little further. On that East Coast pipeline, you talked about the falling amount of gas volumes coming out of the Victorian markets. How much would it actually cost the industry, I guess, principally API, to actually make the pipes big enough from Queensland down to New South Wales and Victoria to actually replace that lost volume? That's a question which is not that straightforward to answer. But what I would say is the short answer to that, Ian, is and you've probably heard us say that many times before, there's no end to the ability to be able to expand our infrastructure. Right now, that infrastructure is running at near full capacity in terms of bringing gas from Queensland down into Southern markets. There is some limited amount of available capacity as we speak, but we're at constant dialogue with all those parties up in the North that have available gas, and we've always got plans ready to go should we need to be able to execute on them. So simple answer is no limit on our ability to be able to bring that gas to Southern markets. And we've got a fairly attractive tariff out there in the market, which a number of parties have been taking advantage of, and then we just Yes. Listed on our Okay. On the West Coast, was interested, Fluidscooter at our conference yesterday was talking a lot about how their technology is changing and they're putting in more renewables, batteries, reducing the amount of gas. They're still using gas. So I was curious to understand how has that influenced the demand on your pipe? And how many of the participants along your pipe can actually have renewable solutions added to their processes and change the demand profile? And I guess the extension, can you participate in it? Ian, and that's a good observation. Look, first thing I'd say is that our Eastern Goldfields and Goldfields gas pipeline grid, as we're starting to call it, is at full capacity. And we have a long list of customers that we're talking to who are looking to want to participate and support an expansion of that system, which we're currently looking at. What we tend to find is customers will look to have a reliable gas supply source for twenty fourseven as their primary source of energy, but we'll look to more and more, we're starting to see them want to complement that some form of renewable energy. And we've got skills and capability in that space. We've got people on the ground to support that, We're actively engaged in those conversations as well. So we see them as quite complementary. But first and foremost, if you've got a 24x7 minutee site, you need 24x7 energy supply. Okay. Look. That's great. And one other question just associated with The US, which I forgot to ask. The LDC and even the pipelines, how exposed are they to recessions and bad debts? Because, obviously, Australian network don't suffer that and you've got high quality credit up around system. Ross, do you want to take that question? Yes. That's certainly our focus at the moment. They will have to be impacted in the short term. Now with what today, 33,000,000 people now unemployed, it's got to impact them and we'll look with great interest at the quarterly updates next time around. Guys. Thanks, Ian. Your next question comes from Peter Wilson from Credit Suisse. Ahead. Just put a question to Novenka. Just on the regulatory impact statement, it's very broad in scope. I'm just wondering if you had any thoughts at this stage about potential outcomes from that review or maybe just some focus areas. Great. Thanks, Peter. Yes. So you know there are two regulatory impact statements, one on information transparency and a decision has already come out, and it's really just waiting for COAG to give effect to that. The other one on pipeline regulation, it's been a really interesting process. It's been a very comprehensive look at pipeline regulation. And I think all in all there were about 30 submissions received. Probably a very detailed read, what was really interesting I think in the submissions was that there were some key themes of consensus that came out across the board. And I think one of them was that there was widespread generally widespread support for the negotiate arbitrate model, so the Part 23 model that the non regulated pipelines are currently operating under. And the other thing was that there was not a great appetite for increased heavy regulations across pipelines. And the third aspect, I think, is the general consensus that the light regulation regime is one that's now been superseded and can be dropped. So I think in terms of outcomes, we'll see how it goes. And our expectation is, I think, the July timeline that the government has set for finalization of that process may be a little ambitious given COVID and disruptions. But I suppose in terms of looking into the future, where we would expect things to land, I'd probably look to the areas of consensus of the stakeholders as giving a point to where I think the process may go. Okay. And your comment there on the consensus around the regular arbitrate model. The consensus is that that model is working, is it? Yes. I think there will obviously be a few differences among the 30 submissions. But generally speaking, there was support for maintaining that negotiate commercial arbitrate model because it provided flexibility. And as a general theme, as I said, there'll be some variance around the edges. But as a whole, there was support for the Part 23. Okay. That's good. That's all for me. Thank you. Thank you. Your next question comes from Nathan Lead from Morgan Financial. Please go ahead. Hi. Thanks for your presentations today, guys. Really good stuff. Just couple of questions, if I could. Just first up, just in the context of Slide 63, where you talk about your revenue quality, 90% of revenues from take or pay are regulated. Now over 90% of your revenue is from investment grade counterparties. Just interested to how to marry up your initial comments, Rob, right at the start of the presentation where you said take or pay and regulated revenues offering some near term protection. Am I looking too far into that? It seems like you're more cautious than you you really need to be, or is there something we need to know about on that front? Nathan, I think maybe you're looking at my words too closely. I think that what I'm trying to say there or communicate is that in the long, long term, if there's a long term economic downturn, I don't think we can all anybody can today predict exactly how and when we're going to recover, what the shape of that recovery is going to be. I made some comments about it being, in our view, our base case being a long U shape. But to the extent that there is a very long economic downturn, I don't think any business that I can think of on this planet is going to be protected. As customers have contracts to come up for renewal, they'll be thinking about how and when they that needs to be part of their portfolio going forward. So those comments were in particular in relation the near term to the medium term. Clearly, the long term, it's an uncertain world we're all living. Okay. I suppose on that front, can you make any comment or provide any data about the level of contracted capacity utilization? What I can say is, for the most part, all of our infrastructure is 100% contracted or close to and fully utilized. We have a commercial team whose job it is every day to be making sure they're engaging with customers about recontracting. And without going into lots of detail, there is information on our website that does show the capacity outlook for all of our assets, which if you've got some time and inclination, you can have a look at. Okay. And that's very difficult to give that sort of detail on any given day. If you think about Boliville and Gladstone pipeline, which is going to Gladstone for a couple of customers, we've got 100% take or pay on 1,500 terajoules a day. And I don't know the exact numbers today, but you could probably imagine that that is not moving 1,500 terajoules of gas today. And might have yesterday, but it probably didn't the day before just because of what we know about where prices are on stuff, but we're getting paid. Sometimes it's not a question that's that relevant to us in that context. The other thing I'd just add to that, Nathan, is in terms of our business and we've been looking at volumes over, let's say, the last six or eight weeks as compared with the same period last year. And there's always differences for lots of different reasons. But generically or generally speaking, our Western Australian volumes look to be holding up fairly fairly strongly as compared with what we've seen in the past. If you think about our exposure there, it's predominantly to the resources mining sectors and they need that energy to keep running. If I take our Victorian business as a proxy for our retail and commercial sectors, we're seeing strong utilization in volumes. And again, nothing to point to that says things have shifted and changed. And then more generally across the East Coast grid, there's always movements up and down for varying different reasons, gas going north or gas going south and so forth. But again, nothing to point to that's leading us to reach conclusion that there's been a significant impact on the way our customers are using volumes. And again, we've got to look at who are our customers. As I said in my presentation, we provide a pivotal part of the essential service supply chain. So whether we've got large car creditworthy customers providing essential services in the form of AGL origin customers like that to end consumers, whether we've got manufacturing sectors or miners using energy as a key part of their processing. And then also as we see in the LNG sector where despite the fact oil prices are where they're at, I think there is enough market evidence out there that suggests that given what they've managed to do with their cost structures that they're still managing to if only just produce LNG above the short run marginal cost. So all of those factors give us some confidence, notwithstanding the fact that the economy is impacted and there's no doubt. I think the Treasurer the other day pointed to the significance of the downturn as compared with the GFC. And I think we've to look at it in that light. Yes. And just a final one for Peter's on capital management. If we're looking at the Wallumbilla to Gladstone pipeline, it's about a third of your earnings. And that initial contract term season in, what, fifteen years, how do we think about how you're running capital management in the context of that decline in earnings that could come through? Within that self funding model, are you sort of thinking about debt repayments today to sort of to meet or to to to assist the credit metrics beyond that 2035 period? Well, first and foremost, Nathan, it's a long way away. And there's a there's a lot of water to go under the bridge before we get there. And I think we've had this discussion generally in the past. Our models continue to show that if we've got growth in the business, we continue to fund that growth with the debt profile and the debt portfolio that we have. To the extent that we don't have growth, we do generate a significant amount of cash between now and then that enables us to repay debt in an appropriate way. So we've not set ourselves today to the exact strategy in 02/1935. We're mindful of it, and we're mindful of what we think may happen in our business between now and then, and it goes one way or the other. It goes a lot of growth, which generates a lot more revenue and a lot more income that replaces it over the longer term, or it generates less growth and the cash flow enables us to repay debt. So there's two different scenarios that we continue to monitor. Fair enough. Peter, just the other thing. The bond issue, does that mean you've enough liquidity there, you sort of pull back on your undrawn bank facilities or you leave those in place? No, no. We'll leave them in place. They're cost effective for us and being in place. I think the syndicated debt facility, we've got two tranches of that, a $500,000,000 in June 2023. And at $500,000,000 December 2023, they're very well priced. You know, we don't need to remove them at this point. We don't need to do anything with them at this point. But, you know, at the end of the day, what we'll do as we see a bit more we see we'll get more visibility out the back of, what we're dealing with globally in the COVID nineteen scenario, we'll we'll start to think about whether or not we need to maintain as much cash as we've currently got, and that that becomes the next exercise, if you like. Great. Thanks for your responses, guys. Appreciate it. Thank you. Thanks, Nathan. Thank you. There are no further questions at this time. I'll now hand back to Yoko. Thank you. And there are no further questions that have come through from the web, so I will hand over to Rob for closing comments. Thanks, Yoko. And well, first of all, a very big thank you to all of you for joining us today on our Investor Day webcast and Q and A. And given the current environment, I hope that you found this useful, albeit a different way to share information with you on APA and how things are tracking. I wanted to say a big thank you to the executive my executive team for all their hard work and preparation presentations and also to our Investor Relations team who've been pushing us hard to make sure that we're ready for today. So that's very much appreciated. If you have any further questions that you haven't been able to answer today or ask today or get answered, please make sure that you contact our investor relation relations team. Thank you once again. Keep well.

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