UPDATE: AGL Energy Sells Gas Pipeline To APA For A$82.6 Million

AGL Energy Ltd. (AGK.AU) said Friday it has sold a gas pipeline in Queensland state to APA Group (APA.AU) for A$82.6 million as it builds a war chest to spend on wind farm developments and power assets being privatized in New South Wales state.

The 112 kilometer, 16-inch, Berwyndale-to-Wallumbilla pipeline was built to transport gas from fields now owned by BG Group PLC (BG.LN) in the Surat Basin in the state's south to the Wallumbilla hub near Roma in central Queensland.

AGL and APA have also signed a 17-year gas transportation agreement in relation to the pipeline, under which AGL will be provided with "competitively priced" transport services by APA. The agreement includes an option for increased capacity, which if triggered would result in APA paying another A$21 million to AGL, and could be extended to 27 years.

Sydney-based AGL said it will book a A$2.0 million pretax profit on the A$82.6 million sale.

"Now that we have a long-term transportation agreement in place, ownership of this pipeline is no longer core to our integrated strategy," AGL Managing Director Executive Michael Fraser said in a statement.

APA Managing Director Mick McCormack said the pipeline connects to three major coal seam gas pipelines, including APA's Roma-to-Brisbane pipeline. "This acquisition allows us to join our existing assets to one of the most promising coal seam gas regions in the country," McCormick said.

The acquisition is expected be accretive to APA by 2014, with that length of time typical for any pipeline in startup phase, McCormick said.

-By Ross Kelly, Dow Jones Newswires; 61-2-8272-4692; ross.kelly@dowjones.com

APA (ASX:APA)
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