Is APA evolving into an ASX-listed hydrogen share on this $260m news?

Worker inspecting oil and gas pipeline.Worker inspecting oil and gas pipeline.

The APA Group (ASX: APA) share price may be sliding on Monday, but hopes are likely lifting among ASX hydrogen fans.

The S&P/ASX 200 Index (ASX: XJO) energy infrastructure company has agreed to develop a major pipeline. And it’s making sure the infrastructure can be used to blend hydrogen.

But news of the project — and the announcement of the sale of the company’s Orbost Gas Processing Plant — hasn’t been enough to bolster the company’s stock today.

At the time of writing, the APA share price is $11.22, 0.36% lower than its previous close.

Let’s take a closer look at the latest from the increasingly hydrogen-focused company.

APA share price slumps despite $264m project

The APA share price is lower on Monday amid the company releasing significant news to the market.

APA announced an agreement with Snowy Hydro that will see it develop a 20-kilometre hydrogen-blend ready gas pipeline and 70 terajoule gas storage facility.

The pipeline – named Kurri Kurri Lateral – will run between the Sydney to Newcastle Pipeline and the Hunter Power Project. The gas storage facility will service the Hunter Power Project.

The project’s construction cost is estimated to be around $264 million. It’s expected to be finished by late 2023.

It’s not the first time the company has looked towards blending and transporting hydrogen in its gas pipelines.

APA has previously found sections of existing gas pipelines in Western Australia can be used to transport hydrogen. It has also proposed to test if Victoria’s high-pressure gas transmission system can be used to blend the low-emissions energy commodity.

The company also announced it’s agreed to sell its Orbost Gas Processing Plant to Cooper Energy Ltd (ASX: COE) this afternoon.

The sale will bring in between $270 million and $330 million. The buyer will pay in four instalments within 36 months of completion – expected to be in late July.

According to APA, the book value of the plant is $236 million. The sale’s proceeds will likely exceed both the book value and the plant’s remaining forecast capital expenditure.

Proceeds will be put towards APA’s organic growth pipeline and, potentially, towards repaying debt.

The post Is APA evolving into an ASX-listed hydrogen share on this $260m news? appeared first on The Motley Fool Australia.

Wondering where you should invest $1,000 right now?

When investing expert Scott Phillips has a stock tip, it can pay to listen. After all, the flagship Motley Fool Share Advisor newsletter he has run for over ten years has provided thousands of paying members with stock picks that have doubled, tripled or even more.* Scott just revealed what he believes could be the “five best ASX stocks” for investors to buy right now. These stocks are trading at near dirt-cheap prices and Scott thinks they could be great buys right now

See The 5 Stocks
*Returns as of January 12th 2022

(function() {
function setButtonColorDefaults(param, property, defaultValue) {
if( !param || !param.includes(‘#’)) {
var button = document.getElementsByClassName(“pitch-snippet”)[0].getElementsByClassName(“pitch-button”)[0];[property] = defaultValue;

setButtonColorDefaults(“#43B02A”, ‘background’, ‘#5FA85D’);
setButtonColorDefaults(“#43B02A”, ‘border-color’, ‘#43A24A’);
setButtonColorDefaults(“#fff”, ‘color’, ‘#fff’);

More reading

Motley Fool contributor Brooke Cooper has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has positions in and has recommended APA Group. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

from The Motley Fool Australia

Leave a Reply

Fill in your details below or click an icon to log in: Logo

You are commenting using your account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s