APA
ASX releases
2 min read
Impairment of Moomba Sydney Ethane Pipeline
Published on
03 July 2024
Share this post

APA Group (ASX:APA) today announces it expects to recognise a non-cash impairment of approximately $145 million (pre-tax) to the Moomba Sydney Ethane Pipeline (MSEP). The expected impairment would result in a full write down of the current book value of the MSEP, and it is intended to be recorded in APA’s financial statements for the year ended 30 June 2024 (FY2024), subject to the finalisation of results and completion of auditor review processes.

The impairment is non-cash, represents approximately 1% of APA’s market capitalisation, and has no impact on APA’s liquidity. There is no change to APA’s FY2024 distribution guidance or FY2024 Underlying EBITDA guidance.

The MSEP is a single user pipeline, configured to transport ethane to plastics manufacturer Qenos Pty Ltd (Qenos), which recently entered into Voluntary Administration and announced that it does not expect to restart its manufacturing facility. Qenos is the only likely customer with demand for ethane to be transported along the MSEP. The MSEP is APA’s only asset that transports ethane and APA’s only long-distance single user pipeline.

There are a range of potential alternative uses for the MSEP being assessed, including the possible conversion of the asset to transport and store natural gas, to service the growing demand for capacity on APA’s East Coast Gas Grid. However, it will take some time to fully assess the potential alternative uses of the MSEP. The accounting standards require an assessment of the carrying value of the asset to be finalised prior to completion of the FY2024 financial statements and, as such, APA has taken a conservative approach to assume the asset will not be utilised for the foreseeable future and therefore expects to impair the asset in full.