APA Group (APA) Earnings Call Transcript & Summary

[Presentation] Well, good morning, everyone. My name is Michael Fraser, and I'm the Chairman of APA Group Limited, which is the responsible entity for APA Group that comprises APA Infrastructure Trust and APA Investment Trust. On behalf of the Board, I'd like to welcome you all to this annual meeting of each of those trusts. Given it's now past 10:30 a.m. and a quorum is present, I declare the 2024 Annual Meeting of APA Securityholders open. In the spirit of reconciliation, I'd like to begin today by acknowledging the Gadigal people of the Eora Nation as the Traditional Custodians of the land where this meeting is taking place. We pay our respects to their Elders, past and present, and extend that respect to all Aboriginal and Torres Strait Islander people. Today's annual meeting is a hybrid meeting, which means it's being held both in person and online. So if you'll bear with me before we move to the formal aspects of the meeting, I'd like to outline how securityholders can participate in today's meeting. You can ask questions directly from the floor, via the webcast platform or by phone. You'll also be able to vote on items of business. On a procedural note, I now declare voting for all items of business open on the webcast platform and for those attending in person. All items will be determined by poll, and voting will remain open for the duration of the meeting. [Operator Instructions] Questions can be submitted online at any time. And I really encourage you to start submitting your questions now, and I'll address them at the relevant time in the meeting. Joining me today in Sydney up the back is Nicole Lyons, our General Manager for Brand and Reputation, and she will read out the questions from security holders who are joining us online. We'll aim to answer as many of your questions as possible today while ensuring we keep the meeting to a reasonable length. To that end, I'd ask securityholders, please ask no more than 2 questions and to keep your questions as short as possible. It may be necessary for us to group similar questions or summarize longer questions. A number of written questions have actually been received in advance of the meeting, and we have aimed to address many of these in the speeches with any others to be dealt with when we come to the relevant item of business. [Operator Instructions] If you need assistance, please refer to the detailed instructions in the virtual meeting online guide that is available on the webcast platform. The webcast of today's meeting will be recorded and posted on APA's website as soon as possible after the meeting. So having dealt with the logistics, I'd now like to introduce my fellow directors. Joining me in Sydney today is James Fazzino, the Chair of the Safety and Sustainability Committee; Rhoda Phillippo, Chair of the Risk Management Committee; Peter Wasow, Chair of the People and Remuneration Committee; Debbie Goodin, over there, Chair of the Audit and Finance Committee; and Nino Ficca, over there. And a special welcome to our 2 new Board members who are seeking your support for election today, Sam Lewis and David Lamont. Let me introduce -- also introduce you to some of APA's executive leadership team who are sitting with me on stage this morning. First of all, Adam Watson, our CEO and Managing Director. And I don't need to introduce her because she just introduced herself, but for those online, Amanda Cheney, Group Executive, Legal and Governance, which includes responsibility for the company secretariat. Also sitting in the front row and looking very sharp as they usually do is the rest of the APA executive leadership team. We're also joined by Jamie Gatt, who is our audit partner at Deloitte. There you are, Jamie, in the middle. Thank you. For FY '24. The slide up on the screen sets out the agenda for today's meeting. The notice of meeting has been made available to all securityholders, and I'll take it as read. Adam and I will report on APA's performance for the '24 financial year as well as our strategy and outlook for the current year. We'll then move to the items of business set out in the notice of meeting. We've also set aside time at the conclusion of the formal business to answer any general questions. So turning now to my formal address. FY '24 was another year of solid financial and operational performance for APA. Over the past year, we have again played a critical role in helping deliver reliable, affordable and lower emissions energy for our customers and Australia's energy consumers more broadly. Through the year, we achieved revenue, earnings and distribution growth and delivered new infrastructure to help meet Australia's energy needs. In FY '24, we were pleased to record our 20th consecutive year of distribution growth for our investors. Our performance in the past year enabled the Board to declare a final distribution of $0.295, taking the FY '24 distribution to $0.56 per security, which was in line with guidance. This represented an increase of 1.8% on FY '23 and has been delivered in parallel with ongoing investment in both our existing operations and establishing significant growth platforms for the business. In this context, it's important to acknowledge the underperformance of the APA security price over the last 12 months. Security price movements are influenced by a range of factors, including, among other things, interest rates, industry and economic conditions, company performance, regulatory processes, et cetera. And while it's impossible to say with any certainty how much any particular factor has influenced the security price, clearly, higher interest rates, along with a reduction in the rate of growth of our distributions and issues related to our regulatory environment have had an impact. That said, the Board remains confident in the outlook for APA and our ability to continue delivering growth in returns for securityholders. Over the past year, we've also undertaken a process of Board renewal, and we've recently announced changes to the composition of the Board. Samantha Lewis and David Lamont have been appointed as nonexecutive directors effective from 1 October this year. Both are standing for election at today's meeting, and you'll hear from each of them later in the meeting. Varya Davidson has also been appointed as a nonexecutive director effective from 1 March next year, and she'll stand for election at next year's annual meeting. Varya is with us in the audience today, down the front here. Put your hand up, Varya. Thank you. And we really look forward to her joining us once she's clear of her other commitments. Debbie Goodin and Peter Wasow will be retiring from the Board, Peter at the conclusion of today's meeting and Debbie at the end of February 2025. Debbie, who will be standing for reelection today, has agreed to stay on until February to ensure a smooth transition of her role as Chair of the Audit and Finance Committee, and we thank her very much for that. On behalf of the Board, I want to thank both Debbie and Peter for their valuable service to APA. Both of them have been very actively involved in helping APA navigate Australia's energy transition, and both have made very significant contributions to APA in their roles as committee Chairs. So thank you, Debbie, and thank you, Peter. Turning now to our strategy. In FY '24, we continued our focus on asset classes where we believe we have competitive advantages. These include contracted power generation, electricity transmission, gas transmission and storage and the transportation of future fuels. For APA, the opportunities for growth within these chosen markets are significant. As detailed in our FY '24 results presentation, we've estimated the addressable market across contracted power generation, electricity transmission and gas transmission alone is in excess of $90 billion. Our focus is on profitably growing our share of those markets to deliver strong returns for our securityholders and value for our customers and communities. There were several milestones achieved in FY '24 that we believe will underpin long-term value creation. The highlight was the acquisition and successful integration of our new Pilbara business, which was completed last November. This acquisition has created a significant new growth platform for APA as we look to deliver lower emissions, contracted power generation and electricity transmission infrastructure for major customers in the resource sector. We thank all our securityholders for their support of this transaction, and we look forward to updating you on milestones as we progress these growth projects in the Pilbara. Turning now to sustainability. Over the past 3 years, our Sustainability Roadmap has guided our actions across those areas that were identified as the most material for APA, including actions specific to our work with First Nations peoples, communities and on climate. This year, the APA Board has endorsed a refreshed Sustainability Roadmap covering our priorities for FY '25 through to FY '27. This will extend our focus into our priority areas and further embed sustainability across APA. Climate has been a significant part of our sustainability agenda, and APA is committed to actively supporting Australia's energy transition consistent with the objectives of the Paris Agreement. As I've said before, we want to be part of the solution, not part of the problem. We've also committed to transparency in the disclosure of climate-related information, and to this end, I really do commend to you our recent 2024 Climate Report, along with our Climate Data Book and our methodology disclosures. As you will see, we are very transparent about this information. It's encouraging to see that the central role of natural gas in ensuring energy security supporting the accelerated development of renewables and powering essential Australian industry is now widely acknowledged. This has been clearly reinforced by both the federal government's Future Gas Strategy and the Australian Energy Market Operator's 2024 Gas Statement of Opportunities. Our power generation, electricity transmission and gas infrastructure operations will support the timely retirement of coal and other more carbon-intensive fuels as the nation transitions to a cleaner energy future. In delivering these systemic benefits towards the overall reduction of Australia's carbon footprint, we do acknowledge that there's a potential impact on our own operational emissions as our gas assets play their essential role in ensuring reliability of supply to firm up the intermittent nature of renewables and provide energy for essential Australian industries. But this is in the interest of the whole community and the energy transition itself. We saw this in FY '24, where we delivered a 1.7% reduction in our gross emissions compared to what would have been an 8% reduction if we hadn't grown our asset base by investing in much-needed infrastructure to ensure the reliability of energy supplies. This brings me to 3 resolutions we've received from a small number of securityholders in relation to projects in the Beetaloo Basin that will be considered at today's meeting. The resolutions have been prompted by a group called Market Forces and are put forward by securityholders representing approximately 0.006% of the APA securities on issue. Based on the proxies received ahead of today's meeting, these resolutions are not supported by the vast majority of our securityholders. However, APA respects the rights of our investors to put forward resolutions, and we welcome ongoing engagement with investors and other stakeholders that have an interest in our business. We've engaged with Market Forces on their views about the development of the Beetaloo Basin, and we'll continue to consult and engage with securityholders and other stakeholders in the future. I'll also be making some further comments on these resolutions when we come to that item of business later in the meeting. But let me say now that the federal government's Future Gas Strategy is very clear, that new sources of natural gas will be required for Australia's transition to net 0, and we support that transition. Any potential new sources of gas, including the Beetaloo Basin, will be and are already subject to rigorous scientific environmental assessment and approval processes, as will any related pipeline infrastructure. We will respect those processes, as should everyone, and we will be open and transparent about the impact of any investment decisions on our emissions profile. In closing, on behalf of the Board, I wanted to say thank you to all our employees for their ongoing contribution to the success of APA, and thank you also to our investors and other stakeholders for their continuing positive engagement. I'll now invite CEO and Managing Director, Adam Watson, to address the meeting. Adam.

Thank you, Michael, and good morning, everyone. I also want to acknowledge the Gadigal people of the Eora Nation, the Traditional Owners of the land in which I'm speaking today. I'm going to cover 2 topics today. First, I'll talk to the work we've done to reset and progress our strategy. I'll then provide an overview of FY '24 financial and operational performance, including an update on our regulatory environment. Over the past 2 years, we've reset our strategy with a clear ambition, to be the partner of choice for the delivery of energy infrastructure solutions across Australia. To support our strategy, we are focused on 4 asset classes: contracted power generation, electricity transmission, gas transmission and storage and the transportation of future fuels. As Michael mentioned, the size of the market opportunity across these asset classes is in the many billions of dollars. And with these asset classes clearly defined, we're now firmly focused on our customers and on leveraging our competitive advantages to execute successfully and create value. Examples of how we're executing our strategy are the recent acquisitions of our Pilbara Energy business and the Basslink electricity transmission interconnector. Pleasingly, these 2 recent acquisitions have both been fully integrated and are performing in line with their business cases. We also see significant value being created through the delivery of our organic growth opportunities, including the recently announced pipeline and storage project for CS Energy in Queensland. Our new purpose, securing Australia's energy future, brings to life the unique role APA plays as an energy infrastructure partner. It reminds us all at APA of the essential role we play to deliver reliable, affordable and lower emissions energy for our customers, Australia's industries and our communities. It's been pleasing to see APA once again deliver a solid financial and operational performance over the past 12 months. Total statutory revenue, excluding pass-through revenue, was $2.59 billion, up 7.9%. Statutory profit for FY '24 was $998 million. This was in part driven by the remeasurement of APA's preexisting 88.2% interest in the Goldfields Gas Pipeline as we moved to full ownership of that asset as part of the Pilbara acquisition. This more than offset the noncash $144 million pretax impairment of the Moomba Sydney Ethane Pipeline, which was recognized due to our customer ceasing operations. Underlying earnings before interest, tax, depreciation and amortization of $1.89 billion represented a 9.7% increase on the previous year. On a reported EBITDA basis, earnings were up 3% to $1.73 billion. Distributions were up 1.8% to $0.56 per security. We invested $833 million of capital in organic growth projects, and we successfully refinanced all of APA's near-term debt maturities, including raising $2.2 billion of new facilities in recent months. This means we don't have any debt maturing until March 2027. I'm pleased to update today that underlying EBITDA guidance for FY '25 is reaffirmed at between $1.96 billion and $2.02 billion. FY '25 distribution guidance is also reaffirmed at $0.57 per security. Financially, we're in good shape. In FY '24, we continue to focus on improving our safety performance and building the skills and culture required to execute our strategy. Our total recordable injury frequency rate improved significantly with a 35% decrease against last year. In well-being, we undertook a psychosocial risk review and commenced the implementation of a psychosocial risk protocol, which we will embed over the coming year. Employee engagement also improved with our annual culture and engagement survey showing engagement score of 72%. We've continued to invest in the diversity of our employees. Representation of women across our total workforce increased to 32.4%, and women in senior leadership roles increased to 39.2%. Improving diversity in early careers remains a focus, and we continue to take action to build a pipeline of talent for future leadership. This has helped us achieve a 63% representation of women in our 2024 graduate and internship programs. Our 2024 Apprenticeship Program comprise 44% women, which is more than double what we had only 2 years ago. We're making a positive difference for our people. Delivering operational excellence goes to the heart of our social license and underpins our ongoing financial results. In this regard, we've continued to improve our systems and processes, including the delivery of Workday, a business-wide platform for APA's financial and people data and ERP, and we delivered that on time and on budget. We've progressed our environmental improvement program to enhance our waste, soil and water management practices. Michael spoke to our earlier -- spoke earlier to our many climate-related initiatives during the year, so I won't repeat those. And we continue to make strong progress with our Reconciliation Action Plan commitments. So again, we're delivering on our social and environmental commitments. Turning now to regulation. And earlier this month, we confirmed that the Australian Energy Regulator has released a draft decision following its review of the form of regulation to apply to the Southwest Queensland pipeline. The draft decision recommends that the SWQP should not be subject to full price regulation and that the existing light regulation should remain in place. We welcome the AER's draft decision to maintain the current form of regulation. And this decision, if confirmed, creates confidence for us to make the necessary investment in our East Coast Gas Grid to support energy security for our customers and for consumers. Now while the AER is yet to reach a final decision, the draft decision is certainly a step in the right direction, particularly given the projected future gas supply shortfalls on the East Coast. APA's East Coast Gas Grid expansion plans are well progressed, and we expect further consideration of our initiatives to be made over the coming months. To close, I'd like to thank the Board for their guidance, challenge and support. And to Peter and Debbie, again, on behalf of management, thank you for your support for many, many years. To the executive leadership team, for your focus and for delivering the exceptional outcomes I mentioned today. I'd also like to thank our customers and our partners for entrusting APA as Australia's energy infrastructure partner. And to all our employees, thank you for your hard work, your ingenuity and your commitment to APA's success and your commitment to securing Australia's energy future. With that, I'll now hand you back to the Chairman.

Thank you. Thank you, Adam. I'd like to turn now to the formal business of the meeting. Securityholders and proxyholders attending the meeting online can vote through the online platform by clicking on the Get a Voting Card box at the bottom of the webcast. For those attending in person, you must be holding a yellow card to vote at this meeting. Please mark your yellow card on each of the resolutions. If you hold securities jointly with another person, only the person holding the yellow card may vote. Your cards will be collected at the end of the meeting. Only those holding yellow or blue cards are entitled to ask questions at this meeting. Visitors holding red cards are welcome but not entitled to ask questions. If anyone has not yet registered or has not been given a colored card, please identify yourself now to a representative of our registry, Link Market Services, so that we can register you and issue you with the appropriate card. The resolutions for today's meeting are displayed on the screen. In addition to the ordinary resolutions in items 1 to 6, as I mentioned earlier, we also have 3 special resolutions, which have been requisitioned by a group of securityholders led by Market Forces. Resolutions 7a and b require at least 75% of the votes cast by securityholders to be passed. Resolution 7c is a conditional advisory special resolution also requiring at least 75% of the votes. However, it will only be put to the meeting if resolution 7a and b are passed by the required majority. And based on the proxies lodged ahead of the meeting, this will not occur, and so resolution 7c will not be put to the meeting. Finally, resolution 8 is a conditional spill resolution and has been included because the first strike was received on APA's remuneration report at last year's annual meeting. The conditional spill resolution is only put to the meeting if more than 25% of the votes cast by securityholders on item 1 are against the adoption of the remuneration report. And again, based on the proxies lodged ahead of the meeting, APA will not receive a second strike. And accordingly, the conditional spill resolution in resolution 8 will not be put to the meeting. Securityholders will be able to ask questions specific to each resolution to be put to the meeting before voting on the resolution. Questions in relation to general business will be taken at the end of the meeting. For those securityholders who are here in person and wish to ask a question or make a comment on a particular resolution, I will invite you at the appropriate time to ask your questions, standing at these microphones -- the standing microphones located in each aisle. For those securityholders who are unable to come to the microphone, please raise your card, and we will have an attendant come to you. Once I have addressed questions from securityholders here in person, I'll then take questions from the webcast platform and phone. So the first item of business today is the adoption of the remuneration report for the year ended 30th of June 2024. The remuneration report is included in the Directors' Report section of the annual report and details remuneration received by directors and APA's key management personnel for the year ended 30th of June 2024. Resolution 1 is an ordinary resolution and will be passed if more than 50% of the votes cast by securityholders entitled to vote are in favor of the resolution. We have listened to the concerns of securityholders following the first strike on the remuneration report at last year's meeting. We trust the 2024 remuneration report clearly demonstrates the alignment of remuneration outcomes with company performance and delivering value to our securityholders. As I noted earlier, based on the proxies lodged ahead of the meeting, it's clear that the votes on resolution 1 will not meet the 25% against threshold for APA to receive a second strike on the remuneration report. The votes on this resolution 1, therefore, will not trigger a conditional spill resolution. I'd now like to invite questions or comments on resolution 1, and we'll start with any questions from the floor. If you have a question or comment, please make your way to the phone or otherwise raise your card.

My name is [ Martin Mansfield ]. I'm a shareholder, which I inherited, in fact, from my mom and dad who were investors with APA for a very long time. I'm pleased to see that APA's latest remuneration report continues to prioritize total shareholder returns as part of its long-term incentive plan. However, last Friday, our share price fell more than 6%, wiping $628 million from our market capitalization. This was following news that our largest shareholder, UniSuper, has decided to sell $500 million worth of APA securities. Clearly, this sale has hurt investor returns. My question is, did UniSuper communicate to APA why they made the sale? And were these losses for shareholders a result of APA's involvement in the development of the Beetaloo Basin?

Look, I'm not entirely sure that, that question relates to the remuneration report. I know you put it there. But look, I will answer it now, but I'd ask other people to please ask questions relevant to the remuneration report. So what UniSuper -- it's a matter for them to say what they want to say publicly, but my understanding is the APA holding is held in their defined benefit fund. They are still a significant securityholder of APA, and they were simply rebalancing that portfolio. And as I understand it, that's the reason that they sold the shares -- securities, sorry, I should say. Any other questions on the remuneration report? No. Are there any questions, Nicole? Any questions or comments from the platform or phone?

No, Chairman. There are no questions on the platform, but we'll now go to the phones. Operator, are there any questions from the phones?

There are no phone questions for this item of business.

Right. Thank you. The details of the total valid proxies for this agenda item are displayed on the screen. Now the next 4 items of business relate to the election and reelection of directors on the Board of the responsible entity, APA Group Limited, those directors being Sam Lewis, David Lamont, Debbie Goodin and myself. Under the company's constitution, at each annual meeting of the company, 1/3 of the directors and those who've held office for 3 years since election must retire from offers. They are, however, eligible for reelection. On this basis, 2 directors are required to retire by rotation as directors this year, namely Debbie and myself, both of us being eligible for reelection. The nominations for Sam and David for election are to fill casual vacancies on the Board. The company's constituent documents require that APA securityholders approve the candidates for each -- for nomination as a director. Now in the interest of time, we intend to have each director up for election or reelection address the meeting before inviting any questions or comments from securityholders on any of these resolutions. And as I am one of the directors seeking reelection, I'll hand over now to James Fazzino to chair the meeting in relation to those resolutions. Thank you, James.

Thank you, Michael, and good morning to securityholders. Resolution 2 is the approval of the Board-endorsed nomination of Sam Lewis for election as director of APA Group Limited. Sam was appointed on 1st of October 2024 and has been determined by the Board to be an independent director. The notice of meeting sets out some biographical material about Sam, and it is intended that she will take over the role of Chair of the Audit and Finance Committee when Debbie retires as a director in February. I'll now ask Sam to address the meeting.

Thanks, James, and good morning to you all. It's a privilege to be here today standing for election to the APA Group Board. APA plays a significant role in the energy sector. In Australia, we play a critical role in the transition in the years ahead. My connection to APA goes back many years, having worked on the initial spin-out of APA from AGL during my career at Deloitte. APA was a very different organization back then, and I followed the progress and growth of APA with interest ever since. During my professional career, which included 14 years as a partner at Deloitte and my subsequent career as a nonexecutive director, I've worked with companies across a cross-section of industries, including infrastructure and regulated businesses such as Aurizon Holdings and APAC, the owner of Melbourne Airport. I have extensive experience chairing audit committees and as a director overseeing significant capital expenditure, transformation, capital management and M&A. As well as my responsibilities as a director of the APA Group, I'm currently the nonexecutive director on 3 other organizations. I'm committed to serving your interest diligently and with integrity. And I really look forward to contributing positively to APA's journey over the years ahead. Thank you.

Thank you, Sam. Resolution 3 is the approval of the Board-endorsed nomination of David Lamont for election as a director of APA Group Limited. David was appointed on the 1st of October 2024 and has been determined by the Board to be a nonindependent director. The notice of meeting sets out some biographical material about David, and it is intended that he will take over the role of Chair of the People and Remuneration Committee following Peter's retirement from the Board at the conclusion of today's meeting. I'll now ask David to address the meeting.

Thank you, James. Good morning. My name is David Lamont. Today, I seek your support as I stand for election to serve as a member of the APA Group Board of Directors. My professional qualifications and work experience are detailed in the notice of meeting. In support of my nomination, I would like to take a moment to outline why I believe I can contribute strongly to the ongoing success of your company. I have been a securityholder of APA since 2021. I believed then and still do today that APA has a strong business model focused on energy infrastructure operations and development, a portfolio of energy infrastructure assets, especially in gas transmission, that will play a central role in the Australian economy and a balance sheet able to fund both healthy distributions while also investing in the energy transition. This energy transition brings uncertainty that creates both opportunities and risks. Over my working life, I have gained significant senior executive experience across a diverse range of geographies and sectors. This has enabled me to form a broad perspective on strategy, operations, financial and risk management and a deep understanding of what drives a successful business. I have extensive experience in the allocation of capital, delivering major capital works while also ensuring strong financial discipline and reward to shareholders and securityholders. I believe these skills are complementary to those of the current Board and executive team. My commitment is that I will use my values, experience and capabilities to help APA to both manage its current assets but also its future portfolio in the best interest of all securityholders. I thank you again for your consideration and look forward to your support.

Thank you, David. Resolution 4 is the approval of the Board-endorsed nomination of Michael Fraser for reelection as a director of APA Group Limited. Michael was appointed a director in September 2015 and Chairman in October 2017. He's been determined by the Board to be an independent director. The notice of meeting sets out some biographical material about Michael. I will now ask Michael to address the meeting.

Thank you, James. 2024 marks my 40th year of involvement in the energy industry. And I guess that apart from anything else, that qualifies me as an industry veteran, certainly qualifies me as an old bloke. The energy industry is something that I'm very passionate about. And I'm also very passionate about APA and its future, particularly the critical role we have to play in Australia's energy transition, helping not only our customers but the industry and the country more broadly to decarbonize while at the same time seeking to keep energy supplies both reliable and affordable. I've gained experience across most aspects of Australia's energy markets through a variety of roles, some of which are outlined in today's notice of meeting. I believe my background and experience leaves me well placed to contribute to the APA Board, and I'd be honored to be reelected by securityholders this morning. Thank you.

Thank you, Michael. Resolution 5 is the approval of the Board-endorsed nomination of Debbie Goodin for reelection as a director of APA Group Limited. Debbie was appointed a director in September 2015. She has been determined by the Board to be an independent director. Debbie is due to stand for reelection as she's held the office for 3 years since her last election and must retire from office, however -- must retire from office, however, is eligible for reelection. As mentioned earlier, Debbie is standing for election today to ensure an orderly transition of her role of Chair of the Audit and Finance Committee before she retires from the Board at the end of February next year. I'll now hand over to Debbie to address the meeting.

Thanks, James. Good morning, ladies and gentlemen. It's my great privilege to be before you today standing for reelection as a director of APA Group. I'm not intending to speak through my qualifications and experience as this is clearly set out in the notice of meeting. I have been a director of APA Group for the past 9 years and for most of this time have been the Chair of the Audit and Finance Committee and prior to that the Audit and Risk Committee. I have also served on all of the other committees that APA has had in place over this past 9 years. APA has transitioned from a mainly pure-play gas transmission company when I joined the Board back in 2015 to now be a diversified energy company well positioned to fully participate in Australia's energy transition. I am proud of this repositioning of the business as well as APA's environmental, social and governance commitments that have been well progressed but with lots more work to be done. As you will see -- have seen in the notice of the meeting, this is my last AGM as a director of your company. It has been announced that I will be resigning at the end of February and have agreed to stay for the next 4 months to ensure an orderly transition as a part of the Board renewal. I am proud to have served the company during the past 9 years, and you have my full commitment until my retirement at the end of February. I am proud that I will be leaving a strong and successful company and that APA is well positioned for future growth. I look forward to your support today for my reelection.

Thank you, Debbie. I would now like to invite questions or comments on any of these 4 resolutions relating to the election or reelection of directors, and we'll start with questions from the floor. If you have a question or comment, please make your way to a microphone, or otherwise, raise your hand with your card. Thank you.

Mr. Chair, I'd like to introduce Lewis Gomes of the Australian Shareholder Association.

Acting Chairman, I'd like to speak in relation to 2 of the directors. I'll perhaps do one at a time. It might be easier. Mr. David Lamont, we strongly welcome him to the Board. He's very well known to us in his former Chief Financial Officer roles with BHP and CSL. I think he spent many, many years with BHP, a fantastic company with fantastic assets but also fantastic capital management and fantastic dividend policies. He then went, I think, briefly to CSL. And listening to one of his investor presentations, I was very impressed by how quickly he had come to grasp the many wheels within CSL. Both BHP and CSL are very complex companies, and Mr. Lamont came to grips with CSL, I thought, remarkably quickly. So to have that sort of intellect on this Board, I think, is a tremendous asset. There's another reason why we support Mr. Lamont given his financial background, and I'm not for one moment doubting the capability of the financial expertise on the Board and within the executive, and I'll come to that under general business. But I think with Mr. Lamont's experience with companies like BHP and CSL, companies with low debt, companies that pay dividends out of after-tax profits, I think he will bring another perspective. I won't say a different perspective, but I think he will bring another set of experiences to APA. And I'm sure the Board discussions are very open around these matters, but we think Mr. Lamont will contribute significantly to those discussions. And if I may share a brief conversation I had with Mr. Fraser, I did ask him how did he manage to secure Mr. Lamont on this Board. And he said, "Well, I got in early." Thanks to Mr. Fraser for getting in early, and thanks for Mr. Lamont for accepting the offer. Thank you.

Thank you, Lewis.

Mr. Chair, I'd like to introduce Charlie Kingston.

Charlie Kingston from K Capital. Just a question. I think we got 4 resolutions. But for, I suppose, 3 of the directors, and I'd appreciate a comment from each. But I suppose it primarily regards the poor shareholder returns over the past 10 years now that the APA shares are currently trading at a 10-year low, which is a bit strange because it's an infrastructure stock. And you would have thought that in a highly inflationary period, where you want to hide is infrastructure given that it's essential and you can pass on some of those costs. But nevertheless, we are trading at a 10-year low. And I understand that there may be an ESG discount applied for gas and what have you, but clearly, if you look at Origin, AGL, they've done very well over recent years. So I'm not sure that, that ESG issue would be fair. And I accept there's been a lot of turnover at the CEO level. But nevertheless, if you look just over the past 5 years, free cash flow per share has hardly moved. And to be honest, free cash flow is a fairly subjective metric. It's before a lot of the supposed growth CapEx, which has been significant. Our debt has gone -- it's increased $3 billion over the past 5 years. So there's been a lot of CapEx spent. Particularly, there's been a recent acquisition whereby you raised money at $8.50. The stock was above $9. Prior to that acquisition, there was some that suggested that was an overpriced acquisition given you paid, I think it was, 13x EBITDA, a lot more expensive than what APA was trading on. And I know you said it was accretive and what have you. But again, that seems a bit subjective. But if we look at reported EBIT, that's down 20% over 5 years, and that's obviously before interest. So we can't attribute that to the rising cost of debt. But -- so clearly, there's been a lot going on within APA. But again, over 10 years, the share price is down, which is a fairly disappointing outcome. But just hoping to get, I suppose, the new directors' thoughts as to why APA is being rated so poorly by the market. I think, Samantha, you are on the Board of Aurizon, which -- similar story, an infrastructure company that's performed very poorly. It's down heavily over the past 10 years. I think, Michael, you were also on the Board of that. So maybe any lessons from why Aurizon has performed so badly given APA is also an infrastructure stock. So any lessons there would be appreciated. And then maybe on the M&A point. Again, we spent a lot of money, but it doesn't seem like that's getting reflected in the actual earnings of the company. Maybe it's yet to come. But any lessons? I think, Samantha, you're also on the Board of Orora. It's certainly been topical given the recent M&A. And they raised money and they're trading a lot below that price. Michael, I believe you're on the Board of that as well. Seems like lots of common directorships. But I suppose to summarize, if, Samantha, you could touch on why you think APA has performed so poorly over the past 10 years. What are the lessons from Aurizon given the similarities? Likewise, Michael, given I think you've been on the APA Board since 2015, has the growth CapEx not worked? Why are our financials going backwards given all the acquisitions? Has the M&A not worked? Maybe a comment on other learnings from Orora, et cetera. And I did have a question for Debbie, but I've forgotten it. But I'll come back to that. I don't want to exclude you. But yes, maybe a comment from -- please from Samantha and Michael on those critical issues. Why is APA rated so poorly given we've spent a lot of money? Why are our earnings going back? And just any learnings from the other Boards that you sit on?

Well, thank you, Charlie, for your message. The Board believes free cash flow is the right metric. And as you say, that is steadily gone up. And we're very comfortable with the acquisition and metrics. Michael, I might let you just make a few comments. What we're not going to comment on is what's happened in other places. If you want to ask questions there, the appropriate venue is those other places. Michael?

Yes. Look, as I said in my formal address, there are a number of issues. I mean one of the things when you -- particularly when you look over a 10-year period, there is no question about the correlation between interest rates and APA's stock price. It's just heavily correlated. And when interest rates were at their lowest is when our stock price was at the highest. So that clearly has had an influence. We have also -- and I said this last year, and we've been saying it to our investors through the year. We're at a period where we're balancing the rate of growth in our distributions, which as I've said in the formal part of my presentation that they've risen for 20 years now. But the rate of growth of our distributions has pared back as we as a Board look at the opportunities that we have ahead of us and trying to balance continuing that growth for our securityholders because we know it is highly valued but at the same time making sure that we've got the balance sheet in good shape for the significant growth opportunities that we have ahead of us. Again, as I also said, there are regulatory issues that have been around over the last 6 months, 12 months, in particular. Adam talked to those around the AER. Now that seems to be heading in the right direction now, but we'll wait until that gets there with the final decision. So there are a number of reasons, and you overlaid the whole question, obviously. We have been pivoting our strategy. We have also had to invest very heavily to set APA up for success. And you've obviously been through our results presentations. You will see it outlined there by management. We have invested heavily in the business over the last few years in systems, processes, people, the whole capability set of the organization. In part, that's because we had underinvested for a number of years. But it's also because we're going into new part -- new areas of business around electricity transmission as one kind of very obvious example versus our traditional gas transmission business. So there's a number of reasons. It's why I acknowledged it upfront in my formal presentation. And the Board is very focused on trying to resolve those issues, see continued growth and see recovery in the security price.

Thank you, Michael. And Sam, do you have anything to add?

No. Well, I would just add, as a new director, I think one of the things that's really important is actually you're not anchored to the past. So both David and I are really focused on the opportunities in the future. We had the opportunity of attending our first Board meetings recently. And the company is clearly focused on delivering on the strategy that Adam outlined, and it's really encouraging as a new director to see the amount of time invested and the caliber of the executives that are really focusing on the opportunities in front of us. And I think that's the best direction for the company to go in. And they're focusing on the things that they can control. As Michael mentioned earlier, there are many reasons that can influence the share price, and the executive and the Board of the organization are focusing on the things that we can control and we can deliver.

Thank you, Sam. Charlie, I believe you have one more question for Debbie.

I suppose you said it's not appropriate. I was going to ask about the experiences from other companies. Debbie, I think you're on the Board of Atlas, which is also another infrastructure company that has done a lot of M&A, and that was very topical at the time. But the stock, same as APA, is trading well below the issue price. But I was just going to ask for the learnings on that one because I do think it is relevant to ask about other Boards and recent experiences because there's a common trend where you've all done equity issuances for supposed accretive acquisitions. And based on the share price today, it hasn't worked for any of those companies. So it's -- that's why I was just trying to understand if there are any learnings that you could share and why, going forward, they are going to work because you raised money at $8.50, trading at $7.20. The stock was above $9 before that. Acquisitions, it is a disappointing result. And that certainly is within the Board's control. You decided to make that transaction. So that's not interest rates. That's not debt. That's a Board decision. So that was going to be my question for Debbie. But if you didn't want to answer that one, that's okay. And I would just add that free cash flow, again, as I said, yes, it's gone up a couple of percent over 5 years. But again, it's subjective. There's lots of one-offs that you've excluded from that measure, but the one-offs do seem to keep occurring. And that is obviously before all the growth CapEx, which is yet to deliver for shareholders.

Okay. Charlie, so thank you for those questions, and we'll take -- we'll move on to another securityholder. Are there other questions from the floor?

Mr. Chair, there is a follow-on question from Lewis Gomes again.

Chairman, I'm not sure whether I said it. I think I perhaps forgot to mention that I'm here today representing just over 300 securityholders who collectively own around 3 million securities. I wanted to talk just briefly with regard to Mr. Fraser as -- in his role as Chairman and just acknowledge the tremendous access we've had with Mr. Fraser and his team, including yourself, over many years. I think the last meeting we had with Michael, there were 6 people from APA, including Mr. Fraser, and just 2 of us from a little old ASA. So we really do value that, the time Mr. Fraser and other executives and directors give us. We don't always agree, and I'll come to that under general business, but I found Mr. Fraser always willing to listen. He's a good listener, as are the other directors, and I want to acknowledge that here. And also, he did touch on matters relating to climate transition. And I think he's personally driven a lot of that from within APA. It's a very important topic. We're going to have some differences with some of the attendees later today, I think. But there's no doubting in my mind that Mr. Fraser is very committed to doing what APA can to help that energy transition along.

And Lewis, we always appreciate the dialogue we have with the ASA. Meeting with the ASA is always a great meeting. And I would absolutely agree with your comments on Michael. He's an outstanding Chair. Are there any other comments or questions from the floor? Okay. So that appears to be it from here. Nicole, are there questions or comments from the platform or the telephone?

Chair. There are no questions from the platform, but we'll now go to the phones. Operator, are there any questions on the phones?

Chair, we have a question from [ Chun Kiat Tan ].

Obviously, I think share price at 10-year low, distribution at all-time high, albeit a slower growth. But really, I think somehow -- I hate to say this, but I've actually spoken to a fund manager friend recently. And his question is, is the company actually sitting on a portfolio of stranded assets? That's one. And then also the other thing really, how do we actually balance up between APA's role to deliver the critical gas and also the government's exclusion of gas under the Capacity Investment Scheme? And really, obviously, we have been investing a lot to transition this company. And when are we really going to see the returns? Yes. So really, I mean I surely believe the company has actually gone through some sort of like medium-term, 5- to 10-year term modeling and see how secured the existing cash flow is and also what are -- whether acquisitions can actually make a difference. So I really want to hear, given the share price at 10-year low, is the market telling us that our company quality is critical but it's not being acknowledged and there is something that the market doesn't see that the Board doesn't see? Would you care to comment on that?

So look, thank you for your question. The question doesn't relate specifically to the election of directors. The Chairman, Michael, will make some comments with regard to your questions in general business. Can we now move to other questions on the phone, please?

Operator, are there any further questions on the phones?

There are no further questions on the phone at this time.

Excellent. So let's move on. The details of the total valid proxies for each of these agenda items are displayed on the screen. I'll now hand back to our Chair, Michael, to chair the rest of the meeting. Thank you.

Thank you very much, James. Resolution 6, which is the next item of business, is the approval for the grant of performance rights to the Chief Executive Officer and Managing Director, Adam Watson, under the APA Group long-term incentive plan. APA Group Limited is seeking securityholder approval for the grant of 287,284 performance rights to the CEO as part of his annual long-term incentive award for FY '25. I'd now like to invite questions or comments on resolution 6, and we'll start with any questions from the floor. If you have a question or comment, please make your way to the microphone, or otherwise, raise your card.

Mr. Chair, we have a question from shareholder [ Charles Weeks. Mr. Weeks ].

Mr. Chairman, I cannot support this approval of these grants. You mentioned -- before I get on to that, could you please ask the secretary in future reports, the first item should be the inflation over the last previous 12 months covered by the report. Here, we have our income. Shareholders' income has gone up by 1.8%, yet inflation is 4.6%. To me, that means the shareholders' return had come back by 2.8%. Is that not correct?

In real terms, looking at the way you have, yes.

Yes, in real terms. We've gone backwards. And you want to give him performance grants for going backwards. I can't understand.

Yes. Look, just to be clear, these are performance grants that get tested against -- and we've laid it out there. There are a number of measures. They get tested in 3 years' time against those measures. So these grants are forward looking, and they will only be of any benefit to Adam if the measures, which are around TSR and return on capital, meet the hurdles that are set and they are achieved in 3 years' time. So nothing to do with where we are today. This is a forward-looking grant.

Well, perhaps you should have gone backwards a couple of years ago.

Well, I'd just say to you under this year's long-term incentive component, that was tested. The payout on that on total shareholder return, which is what you're talking about effectively, was 0. So he received nothing.

So he should be.

Which -- yes. Thank you. Which I think when you see the votes on the -- well, you've seen the votes on the rem report, so -- all right. Are there any other questions from the floor? If not, Nicole, are there any other questions or comments from the platform or the phones?

Chairman, there are no questions from the platform. We'll now go to the phones. Operator, are there any questions on the phones?

There are no phone questions for this item of business.

Thank you. The details of the total valid proxies for this agenda item are displayed on the screen. All right. Moving to resolution 7a, b and c. These are resolutions requisitioned by a group of securityholders led by Market Forces, as I talked about before. This group represents less than 0.01% of APA securities on issue. Resolution 7a and b are special resolutions seeking to amend the constitutions of APA Infrastructure Trust and APA Investment Trust, respectively. As mentioned earlier, resolution 7c is conditional on 7a and b being passed by 75% of securityholders and is also a special resolution. As I also mentioned earlier, based on the proxies received ahead of the meeting, resolution 7a and b will not be passed by the required majority. Resolution 7c requests that APA Group Limited, in its capacity as responsible entity, prepares and publishes a report analyzing the consistency of APA Group's planned capital expenditure with our climate commitments and a Paris-aligned scenario in which global energy emissions reach net 0 by 2050. The Board's response to these resolutions is set out in the notice of meeting. In addition to our response in the notice of meeting and as I mentioned in my formal address, further information on APA's climate-related plans, activities, progress and climate-related data are contained in the climate report on our website. And if you have an interest in this, I suggest you go and look at it because we are very transparent. As I indicated earlier, resolution 7c will not formally be put to the meeting. However, I will invite questions on all 3 resolutions together. Before I open to questions on these resolutions, I'd also like to make some additional remarks in relation to potential future gas infrastructure projects, including Beetaloo, and our climate-related disclosures. Since we released our climate transition plan in 2022, we've engaged extensively with our security holders in relation to it. We've detailed in our climate reports for both 2023 and 2024 the feedback that we've received from security holders and our responses to that feedback. So we have listened and we have responded, I believe, responded appropriately, including with enhanced disclosures. We already disclosed a gross estimate for Scope 1 and 2 emissions related to growth from projects that we have reached a final investment decision -- on which we've reached the final investment decision. But in line with our approach of enhancing disclosures in future climate reports, we will include a more granular breakdown to specifically show the impacts of individual major capital investments, which have reached a final investment decision. This would include Beetaloo-related projects if they occur. We will also enhance our disclosures of Scope 3 emissions in future climate reporting to provide estimates of Scope 3 emissions for major investments that have reached a final investment decision. In relation to APA's planned future capital expenditure and its consistency with the Paris-aligned scenario, I'd like to show you this slide from our 2024 annual results presentation. Now this slide shows estimates of the size of the addressable markets relating to Australia's energy transition that we are pursuing into the future. The thing that should stand out apart from the overall scale of what needs to be spent on these segments of Australia's energy transition is that gas transmission and storage are less than 10% of the markets we are pursuing. So it's clear that if we're successful in executing our strategy, our future capital expenditure will overwhelmingly be non-gas transmission related. How successful we will be is obviously for the future. I'd now like to invite questions or comments on resolution 7a to 7c, and we'll start with questions from the floor. If you have a question, please make your way to the microphone. Take the first question over here.

Mr. Chairman, I would like to introduce you to [ Jeff Maddox ], please.

Mr. Chairman, yes, my name is [ Jeff Maddox ]. I'm a small shareholder and self-funded retiree. My question actually is for the auditors. APA's latest annual report states all gas infrastructure and electricity generation and transmission assets have a maximum useful life end date of financial year 2060 and financial year 2057, respectively. Will these assets be fully depreciated by 2060 regardless of when they were constructed?

I'll repeat the -- Jamie's answer, and the answer is yes.

And a follow-up one. Does this apply to both new and existing assets? For example, would the large-scale Beetaloo pipelines only have approximately a 30-year useful life if they were completed in 2030?

Well, look, I'll answer that. And that's obviously a matter for the future, and I'll say it now, there is a real lack of clarity about what future infrastructure there may be in the Beetaloo. It is very, very early on. There is a lot of work that needs to be done by the upstream players, the people, the gas producers, people intending to produce the gas before we have any idea about exactly -- and we're talking about large scale here. There was a small-scale pipe we're involved in at the moment. But just to answer this question because you're obviously thinking about larger projects, there's a lot of work that needs to happen before we have any real definition around that and could make any reliable comment to you on that.

Right. So realistically, they -- if they're built, they won't be finished by 2030. So the useful life would be even shorter than 30 years.

As I said, there is a real lack of definition at this stage of any large-scale projects. Take -- is there a question over on this side?

Yes. Mr. Chair, I have a question from [ Adam Very ].

I'm one of the 128 shareholders who filed this resolution, representing a combined investment of around about $600,000, which is not a small amount of investment in the company. While the APA Group should be recognized for diversifying its business to be more focused on electricity transmission and renewables, further steps into the gas industry involve considerable risk for the company and its shareholders. The response from the company to these resolutions suggests that the company EBIT does not understand the full extent of the risks of the proposed expansion into the Beetaloo Basin or that it is unwilling to share those risks with its shareholders. Without adequate reporting to its shareholders, as outlined in the resolution, the company is transferring those risks to its shareholders. In particular, shareholders who have their own commitments and obligations around climate and net 0 require APA Group to understand and be committed to meeting its own climate and emission reduction targets. In the last week, we've seen APA Group's largest shareholder halve its investment in the company, and without a demonstrated commitment to the company's own climate plans, we were seeing more significant investors turn away from the company. Institutional investors like superfunds have a fiduciary duty to their own clients and needing to ensure their assets match their own climate commitments could find APA Group to be incompatible with the expectations of their members and their own climate goals. As someone who has led an investment committee at a superannuation fund and sat on numerous other investment committees, the level of reporting requested by the resolution meets the basic expectations of investors and should not be onerous to the company that has a commitment to meeting its own climate goals. As shareholders, we need adequate reporting to ensure that the company's assets aren't at risk of becoming stranded and to ensure that shareholders aren't the ones sitting with the risk of greenwashing.

Look, in response to that, as I have said just now, actually, we are very transparent about this. The issue is that we don't have definition around what any future project -- large-scale project may be. As I said, we already disclosed, and that's why I'm saying to folk, if you have an interest in it, go and have a look at our climate report. There's a climate report, there's a climate data book with all the data, and then there's a methodology about how we've made our calculations. So we're very transparent. We have a section in there, which I acknowledge this morning, we talk about growth in our emissions from growth projects. And what I have said is that, again, this morning, we will break that down further so that you can see what growth in emissions may come from what projects when they reach a final investment decision. That's when we've got definition around it. And we will disclose the Scope 1, Scope 2 and Scope 3 emissions, and we will disclose our plans about how we will manage those emissions. So perhaps if I can just -- it's probably worth expanding on it now. So there is -- as I said, there's a real lack of definition about a large-scale project out of the Beetaloo Basin. Everybody understands that there is a lot more exploration work that needs to be done to prove up the resource, to find the resource and then for the upstream parties to ultimately decide which markets they want to target and whether they can do that economically or not. The only part of the development of the Beetaloo that has any real definition at the moment is a pilot -- related to the pilot wells that they've built. For our other security holders who may not be aware, the Northern Territory currently gets 88% of its electricity from gas-fired generation. It is dependent on gas for keeping the lights on in the Northern Territory. And what has happened, their source of supply was a field called Black Tip offshore up of the territory, that has failed to meet its contractual requirements. They've also been now -- then because it's been failing to meet its requirements, they've been using what's called tail gas, basically the tail end of the Bayu-Undan field, which has also reached the end of its life as an LNG project. And what the Northern Territory government has done is it has contracted with 2 proponents of the Beetaloo Basin, upstream producers, Tamboran and another organization called Empire, to buy gas from them from 2026. And Tamboran, which is where we're involved at the moment, we'll end up supplying 60% of the Northern Territory's gas supplies. And as I said, 88% of their electricity comes from gas generation. So we are involved in a -- in terms of our business, it doesn't get much smaller in terms of pipelines. It's a 35-kilometer simple lateral to connect their wells into the main pipeline that runs up into Darwin to help keep the lights on in the territory come 2026. So that, we have definition on, but even that, we have not reached a final investment decision. But we will disclose and we will talk about how we will manage those emissions when we get to that point in time. The other thing that I would say just on this question because I know we've got a lineup of people here, so I may as well get this all on the table and answer a lot of the questions as we can. What we also know about any upstream project and any pipeline project for that matter is it's going to be subject to significant rigorous scientific environmental assessment and approval processes. And as I said before, we respect those processes, and I think others should also respect those processes. I also know that from our perspective, any new pipelines that we build will be to the highest engineering standards, engineering out as far as possible the emissions associated with it. And I was just in a presentation from APA management yesterday afternoon talking about some of the key stuff that we can do. You wouldn't -- today, you will build a new pipeline differently from what you did 20 years ago. You can engineer out a lot of the emissions. So that will be done. Look, I think I'll leave it there and go to another question on this side. Thank you.

Mr. Chairman, I would like to introduce [ Kate Wiley ].

My name is Dr. [ Kate Wiley ]. I'm a medical doctor. Thank you for the opportunity to ask my question. So climate change is already having negative impacts on Australia's health. I want the room to be aware that climate change is the greatest health problem facing humanity according to the World Medical -- World Health Organization. So the black summer bushfires of 2020 and repeated flooding in 2022 have overwhelmed emergency management and health systems and have led to considerable acute and chronic health impacts and death. Fracking from the Beetaloo Basin will release 1.1 billion tonnes of CO2, making climate change and the health impacts worse. I've signed on with 17,000 Australians across the country who are calling on APA not to enable dangerous fracking in the Northern Territory. Will you commit today to shareholders that you will not go ahead with these plans and recognize your ethical responsibility to protect human health?

Look, a couple of comments. So first of all, we won't make that commitment. The second thing I'd say, again, for the benefit of people in relation to the question of fracking. First of all, APA is not a producer. So be clear about that, we don't undertake any fracking ourselves. There is a whole body of evidence that with the proper regulation safeguards in place, fracking is completely safe. I'll just give you a quote from former Australian Chief Scientist, Alan Finkel, to start with. The former Chief Scientist says, "The evidence is not there that it's dangerous. In fact, the evidence is that if properly regulated, it's completely safe." There is also a study which was done by the CSIRO, ANSTO, Macquarie University and the University of Queensland Research that found little to no impacts on air quality, soils, groundwater and waterways. I'd also make a couple of other -- well, actually, one other point there in the Northern Territory, around the Beetaloo and the development of shale gas. They had a scientific inquiry chaired by Justice Pepper, which found that the project can be developed safely with a series -- if a series of recommendations that they made implemented. The other thing I would say, again, for the benefit of others here today is that in Australia, fracking has been going on for 60-odd years now. And again, as I said earlier, projects in the Northern Territory are not going to go ahead unless they get approved following rigorous scientific, environmental approval processes. We will respect that process. We will respect the work that the scientists and the experts do when they make those assessments, and I think others should. The other thing that I would say is it's very clear that there are more gas supplies needed for Australia to make the transition. If the gas suppliers aren't there, really the consequence of that, and we talk about health impacts, the consequence of that is the coal-fired power stations continue to run. And we've seen that already. People may well be aware, the Victorian Government has reached deals. They don't disclose the details of it, but it's very -- everyone knows. They've done a deal with Yulon. They've done a deal with Loy Yang, and the New South Wales Government has been very open about the deal that it's done with Eraring, 3 of the largest coal-fired power stations in the country to keep running because we're not ready to make that transition. And it's very clear, the future gas strategy says it, AEMO says it, the ACCC says it, we need more gas suppliers to help the economy transition.

I do note that a lot of your responses were around fracking. My question was really around climate change. And so the health impacts of climate change are well understood. They're very well researched, and there's vast academic evidence around that. We have a national health and climate strategy directly to respond to that. So anything that you do that facilitates further gas expansion, and that's what a pipeline will do, is directly going to impact on climate change, impacting on the health of communities. And I think as a company, that's something that we'd like to see you address.

So first of all, can I say I absolutely agree with you about the health impacts of climate change. Sorry, I didn't address that in my response, but we're absolutely on the same page. And as I said in my formal address, we want to be part of the solution, not part of the problem. I think the difference -- and I'll use this example because it's actually come out in the last couple of days. I'll use this example. The problem with what you're suggesting is that any new gas just means it's worse for the environment. Whereas, what I'm saying to you is that new gas is needed so we can get a better environment. And the example I'll use is BlueScope at a conference the other day talked about they use coal in their steel works at Port Kembla. The major opportunity they have to reduce their emissions is to replace that coal with natural gas unless they shut down their operations. That's the major opportunity that they have. They've talked about it being 30 to 40 petajoules of gas a year. Now for everybody, that's huge. That would be far and away the biggest load in Australia. There aren't currently uncontracted gas suppliers that are available to meet that. The problem with your argument is that there's a great example where our emissions could go up if we transported that gas to Port Kembla, but the net result for the community, the net result for climate, the net result for the whole transition is that we get there a whole lot quicker and we can take coal out of the system quicker. That's the problem with the argument. So we're on the same page. We agree with you. We want to get there as quickly as we can, and we will do our bit to get there as quickly as we can. But we do want to keep the lights on. We want to keep energy affordable, and we want to keep -- yes, we want to get there as quickly as we can. Okay. Thank you. Thank you. Do we have another question over this side?

Mr. Chair, we also have a question from [ Whinnie Fu ], a shareholder.

So you mentioned Empire and Tamboran resources. I want to ask. So multiple reports have highlighted environmental and cultural heritage breaches by Empire Energy and Tamboran. For instance, Empire failed to inform the heritage regulators about aboriginal stone tools found near a well, which were subsequently moved. And similarly, Tamboran instructed contractors to spray contaminated drill rig water at its well sites. So -- and in a recent Senate inquiry, Tamboran CEO also refused to confirm whether the company has received fines from Northern Territory regulators for its operations. Given these breaches, is APA concerned about the reputational risk of partnering with Empire and Tamboran?

I'm not aware of those issues. But obviously, from our perspective, their issue is they need to get their approvals. We would obviously be concerned in ending up dealing with someone who wasn't compliant with what they -- what their obligations were under any approvals that they get. And so that's something we'll take into account if and when we get to any investment decisions, which, as I said, apart from that 35-kilometer pipeline, we're a long, long way away from doing. We have another question over this side.

Mr. Chairman, we have a question from [ Rachel Lee ].

Great. My name is [ Rachel ], and I work for Market Forces. Market Forces and { Six ] have cofiled a shareholder resolution calling for enhanced disclosures on the alignment of APA's capital expenditure with its existing climate commitments and the Paris Agreement. APA continues to progress discussions with Tamboran Resources and Empire Energy for the development of several large-scale gas pipelines, which will enable fracking in the Beetaloo Basin. Due to the scale of these proposed pipelines, we are concerned that they will be incompatible with APA's 2030 emission targets and claims Paris alignment in limiting global warming to 1.5 degrees to prevent catastrophic climate change. The issues facing APA's existing carbon abatement efforts indicate that Beetaloo pipelines would markedly increase APA's already high reliance on carbon offsets. This offset use is particularly concerning following analysis of peer-reviewed academic research in which we found that the offsets APA surrendered in FY '22 and '23 resulted in no genuine carbon abatement. Simply put, Resolution 7 is a disclosure resolution. It calls on APA to provide security holders with information about the proposed pipelines, namely estimates of emissions and APA's plans to mitigate these emissions. We believe that enhanced disclosure and greater transparency will allow APA investors to make more informed decisions. In response to our resolution, APA has claimed that it would be inappropriately speculative. We disagree with this assertion considering APA's partners, Tamboran and Empire have already disclosed a significant level of detail to the market regarding these proposed pipelines, including proposed volumes and routes. Again, our resolution only calls for estimates, and we recognize there is still uncertainty surrounding these pipelines. APA also discusses the risk of greenwashing as a reason why our resolution was inappropriate. By contrast, we believe our resolution would enhance APA's greenwashing risk as it would reassure investors that APA has plans to manage emissions from these pipelines without increasing reliance on offsets. We believe that APA's current strategy is highlighting greenwashing risk by publicly maintaining a commitment to its emission targets while progressing large polluting gas pipelines behind closed doors. We call on investors to vote for our resolutions to enhance disclosure regarding APA's strategy and to manage the emissions from proposed large-scale pipelines and ensure the integrity of its climate commitments. And I do have 2 follow-up questions, please. So you have mentioned a few times that you feel comfortable with fracking. I just wanted to ask if APA is concerned about the reputational risks of enabling the fracking of the Beetaloo basin, considering the practice has been outlawed in Victoria and Tasmania as well as France, Germany, Spain and the United Kingdom? And does the board have any concerns about the overwhelming lack of support from landholders, traditional owners and the potential delays that may result in this?

That's the 2 questions?

No, that's my first question. Then I just have one more question. I just wanted to speak to the resolution.

All right. So that's your first question then?

That's right.

Right. Okay. So look, we're obviously concerned about APA's reputation. And I think that's in part why I made the comment, it's very pleasing to see that anybody who knows anything about it is now very supportive about -- and recognizes the role of natural gas in the energy transition. And as I said before, we're on the same page. We want to get there as quickly as we can, but nobody is going to forgive us. Nobody is going to forgive the politicians. Nobody is going to forgive anybody if the lights go out. Energy costs continue to escalate as we make that transition. So we have a very unique role as an infrastructure, energy infrastructure investor. We've got a unique role to play. So yes, we're concerned about our reputational issues. And as I said, the upstream players have got to go through a very rigorous process. They've got to get their landholder agreements in place. They've got to get their traditional owner agreements in place. They have to go through both state and federal approval processes, which I'm sure yourselves and others will make submissions to. So we will await the outcome of that. The other point I would make just in your earlier comment, be crystal clear, as I said, we are extremely transparent. And as I've said, when we know what we're talking about, terms of investments and what the emissions will be, we will disclose them. Next question?

Great. And my second question is have investors raised concerns with APA regarding the proposed construction of the large-scale pipelines to the Beetaloo Basin?

Look, we've -- our Investor Relations folk are here. I've had, I don't know, how many meetings. Maybe over the course of this year, we've probably had 30, 40, I don't know how many, meetings with security holders, proxy advisers, et cetera. Obviously, through the last round of those, particularly since the Notice of Meeting went out and your resolutions were there, obviously, that was a topic for much discussion. I think -- and as I've said, your resolutions won't be passed and we'll see the numbers shortly. I think the numbers will speak for themselves as to how comfortable or not people are at with the approach that we're taking. And certainly, the vast majority of our security holders do recognize the role that APA plays, do recognize the importance of gas, do recognize that new supplies are needed for the transition and just want to make sure that we're doing the right thing and making our disclosures as we have been. In fact, we get great compliments from most of our security holders about the level of transparency that we have in our report. I'll go over to this side.

So we have another question from Mr. [ Louis Gomez ].

Mr. Chairman, I'd just like to put an alternative view forward, if I may. Our friends from Market Forces and other organizations are, no doubt, well intentioned. We all want a cleaner, healthier climate for our one and only planet. There's no question about that. But I think we need to face up to the realities of where we are today. And Mr. Chairman, you've outlined some of those realities. I think when the Paris accords were developed, I wasn't there, so I don't have the details, but I think it was at a time when there was perhaps more optimism that the transition to renewables would be easier and cheaper and less complicated. Obviously, it's become a lot more expensive and a lot more complicated. We all know that from daily news reports. But I just wanted to emphasize the point that you made, Mr. Chairman, about the importance of gas to our economy and to our living standards here in Australia, let alone elsewhere in the world. Now one of the great skeptics of gas and great supporters of renewables, indeed, is our Federal Minister for Environment, Mr. Chris Bowen. And he's recently highlighted -- he's had obviously an epiphany. He's highlighted in recent times that the Australian gas market is facing a cumulative gas supply-demand deficit of 3,300 petajoules by 2025. Now let's not try and work out what a petajoule is. But according to this article, that's equivalent to 10 years' worth of total gas demand currently in New South Wales and Victoria. And I think you mentioned BlueScope was 30 or 40 petajoules annual demand. We're talking about 3,300 being the shortfall over a 10-year period. That's, say, 300 petajoule shortfall each and every year. The national energy market has also identified these concerns as has the ACCC and the ACCC reminded us again last month, in fact, Victoria and New South Wales face peak period gas shortages from next winter. That's 2025. AEMO, the Australian Energy Market Operator, estimates that demand for gas power will be almost double today's levels, double, by 2043-'44. That's 20 years away. That might seem like a long way off, but it will be here before we know it. And what they have predicted is that flexible gas will require 13 gigawatts of new gas power generation to be built by 2050. Now apologies for all these big words. 13 gigawatts is a hell of a lot of power. If you look at Eraring, it's just under 3 gigawatt power generator. We're talking about 4x to 5x an Eraring power station. And this was needed to support renewable energy. This renewable energy can't do it on its own. We all know that. You know that. James knows it. The industry in Australia, what's left of it, almost 40% of the gas provided in Australia is used by industry. They can't flick a switch and go over to electricity. If you're running brick kilns, you can't switch to electricity. You need gas. And if the gas isn't available here, what do they do? They'll just go elsewhere, won't they? So while our friends from Market Forces are, no doubt, well intentioned, I think they live in a world that simply isn't real. It may have been a pleasant aspiration to have had 10 years ago, but it just ain't real. It ain't where we are. And for that reason, the ASA will definitely be voting against resolution 7a and 7b.

Thanks very much, [ Louis ]. I'll take that as a statement. Do we have another question over here?

Mr. Chairman, we have a question from [ Hugh Von ].

Mr. Chair, my name is [ Hugh Von ]. I'm a proxy representing a shareholder. You've said a couple of times in your remarks earlier that you don't have a lot of definition about the Beetaloo project yet, and I accept and understand that. What we do have a pretty good estimate of though is the scale of the project and the scale of the emissions from it. Estimates based on production, from production forecast or expectations of Tamboran and Empire, combined with the processing distribution and the end user emissions would put the total at 2.3 billion gigatonnes -- sorry, 1 billion tonnes over a 25-year period. So my question -- my first question to you is, is APA concerned about the end-user emissions it would enable by developing the large-scale pipelines for Tamboran Resources and Empire Energy?

Look, if the end -- I'll just go back to what I said before. So first of all, I'd just say to you -- well, let me go the first thing about the scope of it. You're reading off the stuff that's been put out there by Empire and Tamboran and just to give you -- actually, for the benefit of other security holders, they're competing projects at the moment in the Beetaloo Basin but they have crossed -- there are some cross shareholding. What [ Hugh ] is referring to is they've both got proposals that say, well, it might go north to offshore to Asia as an LNG project, it might come south to the East Coast of Australia, 2 separate pipelines. And when I say we don't have definition, so they don't know -- first of all, they don't know exactly how much gas they've got yet. They then don't know which way they're basically options that they've got to go either way. And the third thing I would say is anybody who's been around the industry for any point of time would know the last thing that will happen is 2 pipelines coming to the East Coast. You would rationalize as you would, I would suggest probably see a rationalization of the ownership of the upstream resource because if it is developed at any kind of scale, that's going to require very big balance sheets. So that's why I say there's a -- you've been around the industry and I said I've been around for 40 years. These things take time. And typically, they get rationalized before they happen, and they're not going to happen until they get approved.

So it doesn't really matter where the gases burn...