APA Group (APA) Earnings Call Transcript

Well, good morning, everyone. Nice to see you all here again this year. My name is Michael Fraser, and I'm the Chairman of APA Group Limited, the responsible entity for APA Group, which comprises APA Infrastructure Trust and APA investment trust. On behalf of the Board, I'd like to welcome you to this joint annual meeting of each of those trusts. And given it's now past 10:30 a.m. and a quorum is present, I declare the 2026 Annual Meeting of APA security holders open. 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 the elders past and present and extend that respect to all our original and tolerate Islander people. Today's annual meeting is being held both in person and online. And before we move to the formal business, I'll briefly explain how security holders can participate. Questions may be asked from the floor through the webcast platform or by phone. Voting is available in person and online. And I now declare voting open on all items of business. Each resolution will be decided by poll and voting will remain open during the meeting. Online questions can be submitted at any time using the Ask a Question box. I'll address questions at the relevant time, and where appropriate, similar questions may be grouped or longer questions summarized. Nicole Lyons, our General Manager of company reporting, brand and reputation, who's off the back here. Where are you, Nicole, waving away. Thank you. Nicole will read questions from online security holders. In line with our practice for security holder meetings and to help us cover as many questions and comments as possible and ensure all security holders have an opportunity to participate, please limit questions to 2 per person and keep any comments brief at 1 to 2 minutes. We have also considered written questions received before the meeting and have sought to address many of them in today's remarks or under the relevant business item. [Operator Instructions]. The webcast of today's meeting will be recorded and posted on APA's website as soon as possible after the meeting. I'd now like to introduce my fellow directors. Joining me today in Sydney is David Lamont, Chair of the People and Remuneration Committee; Varya Davidson, over there. Nino Ficca; Sam Lewis, who is Chair of the Audit and Finance Committee; James Fazzino, who is Chair of the Safety and Sustainability Committee; and Rhoda Harrington, Chair of the Risk Management Committee. Also on stage with me this morning is Adam Watson, who you all should know, our Chief Executive Officer and Managing Director; and Bronwyn Weir, who you've just met, who's our Company Secretary. Sitting in the front row, I said it last year, all the good-looking people were a year older this year as our executive leadership team. And we're also joined by [ Harris Focus ] who was APA's audit partner at Deloitte for FY '26. On the screen is the agenda for today's meeting. The notice of meeting has been made available to all security holders and I'll take it as read. Adam and I will report on APA's performance for the 2026 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. Turning now to my formal address. The events of the past year have been a stark reminder of the importance of energy security to governments, businesses and communities around the world. Put simply, reliable and affordable energy cannot be taken for granted. At APA, we play a critical role supporting Australia's energy security and the transition to a low-carbon future. Every day, our infrastructure assets located right across the country helped generate, passport and store the energy that helps power homes, businesses and industry. We are proud of the role we play in the community and for our customers. We're also pleased with the outcomes we've delivered to you, our security holders over the past year. which Adam will talk to in more detail shortly. Of particular note, FY '26 marked APA's 22nd consecutive year of distribution growth. And we remain confident that the pipeline of growth opportunities we're currently progressing will position APA for success well into the future. Over the past 12 months, we've seen increasing recognition from governments, regulators and industry participants of the essential role that gas has to play in Australia's energy transition. As coal-fired generation retires, Australia requires reliable sources of energy to firm and support the continued growth of renewable generation while maintaining system stability and ensuring consumers continue to have access to affordable energy. Gas is critical to achieving that balance. As Federal Energy Minister, Chris Bowen has stated, gas will be a crucial energy source as we transition to renewables. Gas also remains vital to Australian industries and the production of key products such as fertilizers, steel, cement and glass. That's why APA welcomes progress on the domestic gas reservation. As the legislation moves through Federal Parliament, the government must ensure the policy supports both reliable and affordable gas for end users and long-term investment by producers to maintain a strong domestic and LNG export market. The question is not whether Australia needs gas, but how we ensure sufficient supply and the right infrastructure is available to support households, businesses and the economy as the energy system evolves. APA is uniquely positioned to meet this challenge. APA's long-term value creation continues to be underpinned by our sustainability road map. In August 2025, we released our third Annual Climate Report and our 2025 Climate Transition Plan, reconfirming our commitment to our headline 2030 targets and goals. Over the last year, we've made strong progress in reducing our gas infrastructure greenhouse gas emissions. This has included advancing our enhanced methane measurement program across our gas infrastructure network providing greater insights, transparency and capacity to identify and reduce emissions over time. We've also made good progress in reducing the emissions intensity of our power generation assets through operational improvements to both our renewable and our gas assets. In relation to today's meeting, I note that we have again received 3 security holder resolutions from a very small group of security holders led by market forces. This is the third year in a row that we've received such resolutions, and I'll say now that based on the proxies received ahead of today's meeting. The resolutions have been overwhelmingly rejected by security holders, so I won't spend any more time discussing them at this stage of the meeting. Finally, on behalf of the Board, I'd like to acknowledge the significant contribution and commitment of APA's leadership team and all our employees across the country over the last 12 months. It has been a very busy year and a good year for API. So thank you for your contribution. And I'll now invite our Chief Executive Officer, Adam Watson, to address the meeting.

Thank you, Michael, and good morning, everyone. As we reflect on our performance during FY '26, I'll focus today on 4 areas that are key to our ongoing success, being the safety and care of our people and our communities, our operational performance, our financial performance and the delivery of our growth strategy. There is nothing more important than the safety and care of our people and our communities. I'm pleased to report that during FY '26, we continue to improve our overall safety performance. We achieved 0 serious harm incidents and Tier 1 gas transmission process safety incidents. We're proud of these results. We never take them for granted, and we are resolute in our ambition to always keep our people and our communities safe. Moving now to our operational highlights. Over the last year, our assets operated to the highest reliability standards, maximizing availability for our customers and our communities. We implemented a new customer-focused operating model. redesigning our business with key executives focused on our core customer segments. We also established a matrix structure to align our support functions, and we aligned our incentive structures across the enterprise. We delivered a 20.8% reduction in our gas infrastructure underlying emissions. We made positive progress with our reconciliation action plan. We further improved gender representation with women now 34.2% of our workforce. We're also proud to have delivered another strong financial performance in FY '26. Revenue was up 3.2% to $2.8 billion with our inflation-linked tariff escalation and contributions from newly commissioned assets, more than offsetting the revenue for [ Gan ] from the divestment of our Networks business. Complementing our revenue growth was our successful execution of our enterprise-wide cost reduction initiatives. And this helped support underlying EBITDA growth of 8.3% to $2.2 billion, exceeding the midpoint of our guidance range. We also exceeded our $50 million cost reduction target delivering $80 million in total cost reductions driven by our focus on business simplification and operational efficiency. And pleasingly, this all translated into EBITDA margins increasing by 370 basis points to 77.9%. You own a strong business, generating strong margins. Free cash flow was up 3.2%. Statutory net profit after tax increased 81.4% to $234 million. In FY '26, we also strengthened our balance sheet, raising $1.5 billion through the issuance of hybrid and senior unsecured debt. Evidence of our strong balance sheet and our strong business model has recently been communicated by both our rating agencies, S&P and Moody's. In addition to reaffirming our credit ratings, they reduced our FFO to debt threshold, thereby providing APA with additional debt headroom of around $1 billion. These outcomes have strengthened our capacity to invest and grow the business while continuing to deliver sustainable returns to security holders in the form of ongoing distribution growth. In FY '26, we made strong progress with the significant growth opportunities ahead of us. This included the February announcement to progress Stage 3 of our East Coast gas grid expansion plan. We have previously announced final investment decision to invest $260 million to deliver Stage 3A. And today, we're pleased to announce that we have reached financial investment decision on Stage 3B, the blue Interlink. The blue will help address projected north to south gas transport constraints and will be supported by a 5-year East Coast gas transport and storage agreement with Origin Energy, also announced today. These 3 Stage 3 projects are critical to long-term energy security and when complete, will deliver up to 30% of additional pipeline capacity for the East Coast gas grid. Our proactive investments are ensuring that pipeline capacity is not a constraint to energy security in Australia. We also progressed our work in the Beetaloo Basin. The Beetaloo has the potential to deliver Australia with significant long-term energy security, support our Asian trading partners with their own energy transition. And ensure Australia can capture the significant economic benefits that come from a strong LNG export market. Construction of APA's steady pipeline is now complete and delivering first gas from the Beetaloo to help keep the lights on in the Northern Territory. We're also progressing with the planning and approvals to develop our proposed Blue Darwin pipeline and our proposed Northeast Australia pipeline. During the year, our contracted power generation strategy also came to life with APA formalizing a partnership with CS Energy to deliver the Beetaloo peaking power plant. Once operational in 2029, the project will provide firming capacity for peak electricity demand to complement variable renewable energy. Our Remote grid strategy was progressed with the announcement with the announced development of the Sybella Creek solar and battery project in Mount Isa. This project will provide low emissions energy for our customer, Evolution Mining and be firmed by our existing Diamantina Power Station. And finally, we delivered our security holders and consumers in both Tasmania and Victoria with financial and energy stability by transitioning our Basslink electricity interconnector to operate as a regulated asset. APA's growth outlook continues to go from strength to strength. With our organic growth pipeline for the next 3 years, increasing to $3.5 billion. We have the capability to deliver and operate these new assets, and we have a strong balance sheet to fund them. On behalf of the APA leadership team, I'd like to thank the Board for their challenge and support over the past 12 months. It's been a big year. And I'd also like to thank our employees for their dedication and their hard work and ongoing contribution to APA's success. To our customers, communities and all of our stakeholders, thank you for entrusting APA to operate and deliver energy infrastructure solutions right across the country. And finally, thank you to all of our securityholders for your ongoing support. I'll hand it back to Michael.

Thanks very much, Adam. So turning now to the formal business of the meeting. Online security holders and proxies can vote by selecting get a voting card. Those attending in person should mark a yellow card, which 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 that are not entitled to ask questions. The resolutions for today's meeting are displayed on the screen. Items 1 to 4 are ordinary resolutions Resolution 5A and 5B, a special resolution requisition by a group of security holders led by market forces and require at least 75% of votes cast to be in favor. Resolution 5C is conditional and will only be put to the meeting if resolution 5A and 5B are passed by the required majority. And as I said earlier, based on the proxies lodged ahead of the meeting, which are overwhelmingly against the resolutions. This will not occur and so Resolution 5C will not be put to the meeting. Securityholders may ask questions on each resolution when it's considered and general business questions will be taken at the end. For questions from the room, please raise your card and wait for a microphone, then state your name before speaking. The first item of business today is the adoption of the remuneration report for the year ended 30 June 2026. The remuneration report forms part of the directors' report and detailed remuneration for directors and APA's key management personnel or FY '26. The details of the total valid properties for this agenda item are displayed on the screen. You can see them there. Nicole, are there any online or telephone questions for this item?

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

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

Okay. Are there any questions from the floor in relation to this resolution? It appears to be, take that then. Thank you. The next 2 items relate to the reelection of Nino Ficca and David Lamont as Directors of APA Group Limited. Each retires by rotation under the company's constitution and being eligible offers himself for reelection. Each director will address the meeting before questions are taken on these resolutions. Resolution 2 is the approval of the Board-endorsed nomination of Nino Ficca for reelection as a Director of APA Group Limited, and I'll now ask Nino to address the meeting.

Good morning, everybody. My name is Nino Ficca, and it's been a privilege to represent securityholders over the last 3 years, not only is a nonexecutive director but is a very passionate member of the safety and sustainability, risk management and people and remuneration committees. I've been directly involved in the energy sector for over 40 years. And there's never been a more challenging but rewarding period of change that I can recall. I believe my industry leadership, critical understanding of technical regulatory energy markets and commercial matters. We'll continue to serve the interest of all security holders, but also retain an unwavering and deep commitment to the care and safety of all our people, our partners and our communities. At this time of rapid transition in the energy sector, APA has a great opportunity to make a significant contribution to the Australian communities, including our First Nations people, customers, energy consumers and the broader Australian economy. I continue to have the energy and passion to work with my fellow directors, APA's leadership team and great employees to create ongoing value for all security holders over the coming years. I humbly request your support as I seek reelection to the Board of APA at this annual meeting. Thank you.

Thanks very much, Nino, and thank you for your contribution over the last year. Resolution 3 is the approval of the Board-endorsed nomination of David Lamont for reelection as a Director of APA Group Limited. I'll now ask David to address the meeting.

Thank you, Michael, and good morning, everyone. Today, I seek your support as I stand for reelection to the APA Group Board of Directors. My professional qualifications and experience are set out in the notice of meeting. Over my career, I've gained significant exposure to a diverse range of geographies and industry sectors. This experience has given me a broad perspective on strategy, operations and financial and risk management. a deep understanding of what drives a successful business while also ensuring sound governance is maintained, and extensive experience in capital allocation and the delivery of major capital works, underpinned by strong financial discipline. APA has a strong business model and a clear strategy, and I am enjoyed contributing to the success over the past 2 years. I believe my skills complement those of the current Board and will help the executive team deliver APA's investment in Australia's energy transition while also maintaining a healthy distribution to securityholders. My commitment, if reelected, is that I will continue to draw my values, experience and capabilities to help APA deliver its strategy in the best interest of all stakeholders. Thank you for your consideration, and I look forward to your ongoing support.

Thanks very much, David. And again, thank you for your contribution over the last year. The details of the total valid proxies for each of these agenda items are displayed on the screen. Nicole, are there any online or telephone questions on these items?

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

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

Okay. Do we have any questions from the floor, gentlemen here?

Yes, my name is Pito Zee, I represent the city publishing. I just want to ask the 2 gentlemen. What about the -- what are you going to do when you elected? What do you see APA should be in the future, what you can contribute make APA a better company? What area APA should be improved it?

Nino, I might let you say very briefly.

We have an amazing leadership team at APA, which we've got a very clear and articulated forward-looking strategy. we have a great future. And we understand the market and the evolution of the energy transition very well. So I'm very confident that we're heading along a very well interested path. And as David mentioned, the execution of that is going to be pretty important. So I think that's what the clear focus is.

David?

Yes. I'll just add and Adam touched on this in his presentation as well. There's a large capital investment that's needed as the company moves forward and delivers on the strategy, which, again, will just help security holders in ensuring that they get a good balance between their distributions and the reinvestment back into the business. So I think the focus is about that execution. It's very clear what needs to be done and what the strategy is. And I think myself plus the rest of the Board has the right degree of challenge with management to ensure that, that is actually delivered. .

Thanks very much. And as everyone see, as everyone can see, the votes are overwhelmingly in favor of their reelection. Are there any other questions from the floor? Okay. If not, I'll move to Resolution 4. Resolution 4 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. The details of the total valid proxies for this agenda item are displayed on the screen. And again, Nicole, are there any online or telephone questions on this item?

There are no questions on the platform. We'll now go to the phones. Are there any questions from the phones?

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

Okay. I'll now take over there any questions from the floor in relation to this item. Again, we don't appear to have any. So thank you. I'll now move to Resolution 5B and C, which I had said before, have been requisitioned by a group of security holders. Resolution 5A and 5B seek amendments to the constitutions of APA Infrastructure Trust and APA Investment Trust and require approval as special resolutions. Resolution 5C is conditional on Resolution 5A and 5B being passed by the required 75% majority. The Board's response to these resolutions is set out in the notice of meeting. Based on the proxy votes and votes represented at the meeting, Resolution 5A and 5B has not been passed by the required 75% majority. Accordingly, Resolution 5C will not be put to the meeting. transparency of the valid proxy votes received before the meeting on Resolution 5C are displayed along with those Resolutions 5A and 5B. I'll now invite questions or comments on Resolution 5 for completeness. Nicole, are there any online or telephone questions on these items?

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

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

Then I'll move to the floor. Are there any questions, comments from the floor. This gentleman over here again.

I mean, look, on the voting results and more than 90% of people against it. So can I get some perspective from the management? Why that's the case? If that's the case, why you put these formats.

So let's be clear. As I said, this hasn't been put forward by management. This has been put forward by a very small sub less than 1% of securityholds. In fact -- well, let's leave it at less than 1%, very small group headed up by market forces. They've put the resolutions to the meeting. in a valid way. And we, therefore, have put those resolutions to the meeting. And as you've seen, with the votes coming in security holders more than 90% against those resolutions. So it isn't management. We have any other questions on these matters? Up the back there. Thank you.

So in the FY '26 sustainability report, APA reported that 0% and $0 of its business activities are vulnerable to climate-related transition risk. As you would be aware, under Section 180 of the Corporations Act, directors have a duty to exercise care and diligence, including making rational and informed assessments or risks. There's also a recent legal opinion by the leading Barristers Higgins SC, Bush and Robinson that examined the Landmark International Court of Justice about opinion on climate change and its implications for directors' duties. It highlights that directors may face heightened exposure to personal liability if they approved major capital expenditure on fossil fuel infrastructure that later becomes stranded assets. particularly whether foreseeable risks have not been properly considered or disclosed. So given gas pipelines are a significant part of APA's business, does the Board genuinely believe that 0% of APA business activity are vulnerable to climate-related transition risk and are you 100% satisfied that the Board of Directors have taken all reasonable steps to ensure that the sustainability report is in accordance with the Corporations Act?

So the assets of the last part is, yes, we're actually very satisfied that we've taken all reasonable steps. And look, I'll just go to what you've raised. And this is, quite frankly, it's a definitional issue we, in discussions with the people who set the standards, they've asked us about it. They don't currently have a definition of vulnerable that is under the act. It's up to each entity who's covered by these regulations to come up with a definition of vulnerable. As we have -- and we've suggested to them, it would be a very good idea for them to define what is meant by vulnerability. We're very clear as to how we've defined vulnerability. And it is as where there is a short-term impairment risk or where there is a moderate risk under long-term scenario analysis of a 15% to 25% or greater reduction in the value of the asset -- of the asset. So when you apply that lens of a short-term impairment risk, or a longer-term risk with, call it, above 15% reduction in value, then under our definition, those assets would be vulnerable. If there isn't that risk, which is what the testing showed they're not vulnerable, which is why we described it as 0% risk. We do acknowledge, as you would have read in the sustainability report, I think we've described the risk as s negligible. So there's a definitional issue there. We agree when you look at it at first blush, but you need to look at the detail. As I say, we have in discussions raise this as an issue that should be a definition should be put in place. Sorry, just your microphone will just need to wait another question. Second question, yes? Is your mic working?

Thank you. while I appreciate that APA has applied its own methodology to arrive at that figure. I suppose, reporting a headline figure of -- vulnerability to climate risk could be I guess, understanding the company's exposure. And so I appreciate this might be an uncomfortable question. How has the Board satisfied itself that directors are protected from potential personal liability if those climate risks materialize, which, of course, could result in significant financial losses for the company?

Well, it goes to -- it really goes to the due diligence that we put into the decisions that we make. And I guess I would say, for yourself for securityhold just generally, look at the amount of detail that's included in our corporate reporting from the sustainability report of the data book, et cetera, we are extremely transparent about APA, about our operations, about our goals and our targets about what we achieve and what issues we need to look into. When it comes then to decision-making, and we've talked about it, we do our climate resilience testing on a portfolio basis. We've described how we make major investment decisions. It's there on the sustainability report on Page 100 of the annual report, the process that we go through. We look at, i.e., international energy agency data, IPCC, data, AEMO data. We stress test the business case that's put up. We don't just accept -- you'll always have a base case that's put up. We look at the upside, but we also absolutely stress test the downside. In fact, we did it just yesterday, Adam talked about the final investment decision on the next stage of expansion of the East Coast grid absolutely run through our models and stress tested. So there is a lot of due diligence that goes into the decision making. We are, as a Board, acutely aware of our responsibilities as to how we allocate your capital whether that's by distributions back to yourself for investing further in the business. We guard it as if it was our own money. So we are very conscious of doing the right due diligence that's how we satisfy ourselves.

Yes. We're -- I'm not just concerned about 8 years transition risk. I'm concerned for the directors as well for the Board here. Yes, thank you. I'll leave it there.

Are there any other questions on this resolution? One over here. Thank you.

When APA's proposed Northeast Australia pipeline reaches the end of its life in the 2070s, I will be in my 60s, but you, the Board members in this room won't be here to live with consequences of the decisions you're making today, but my generation will be. We know we're experiencing the climate crisis. We saw floods and nice we're experiencing catastrophic climate impacts here in Australia but APA is pursuing a pipeline to unlock potentially over 1 billion emissions from the Beetaloo Basin. My question is really simple. In 2070, this pipeline could still be polluting. You won't be here to live with what you built but I will. How do you morally justify building infrastructure that trades my generation's future for short-term corporate growth?

Yes. Look, there is a bigger picture here. And let's just start with some basic things that we are in agreement with your sentiment about trying to decarbonize and go to a low-carbon future. Probably where we differ is that we have a responsibility to ensure that there is energy security, the lights stay on and that energy remains affordable. And again, part of you step back to the big picture here, it's actually the plant that we're trying to save that you're talking about trying to reduce the impacts of climate change. And to put that in perspective for you, because this gas -- if it's developed from the Beetaloo basin, and I can come back to that. But if it does end up being developed, it's very likely it won't just be for Australia. In fact, almost certainly, it will be for our regional trading partners. And just to put it into perspective, about the role of gas say versus coal. And as you would know, gas generation, power generation has about half the emissions of coal. China last year commissioned just short of 4x in new coal-fired generation, so installed it started it up, commissioned it just under 4x the size of the entire Australian coal fleet, 4x that. In addition to that, they added the equivalent of Australia's entire generation fleet, again, net the entire generation fleet. They added that in gas by generation. Japan, Korea, Taiwan, India, you name it around the world, there is a large demand for reliable, affordable energy. And you need reliability to back up renewables and it is much preferred that you would have it be gas than you would have it be coal. Just another thing to consider when you're thinking about the development of gas and I agree, it's not perfect, I agree that it has emissions and agree if the technology was there to be able to do something different, then we and everybody else would be doing it. We are with respect to renewables. But at the end of the day, gas plays an absolutely critical role. The other thing to consider is that just under 50% of the world's fertilizer is dependent on natural gas. That will be gas produced from the Beetaloo basin in the future. Just under 50% of the world's fertilizer. So I ask you the question, yes, there are risk comes, obviously, but what's better gas or starvation. So when we look at this, we look at the bigger picture as to what's going on. We agree with the direction that the world needs to heading, where the country needs to head and where APA is heading. But we also have to play -- we have a fundamental role to play in ensuring reliability and affordability in energy suppliers. All right. Do we have any other questions? Sorry, we'll just wait for -- is the mic back on?

With respect, Chairman. I also have a question for you. Would you prefer livable plant or an unlivable planet. We know that we don't need we need to reach that net zero by 2035. 2070 is 35 years after that and 1 billion emissions is just not good enough. And I'm personally just asking about your moral conscience whether you feel comfortable trading by generation's future for this...

Well, as I think I indicated with my response, I don't believe on trading in the future. We believe we have a responsibility. And yes, I have a very clear conscience on that. And when you look at APA, you just look at -- and Adam talked in part about it in his presentation. We invest in energy infrastructure. We're developing a new solar farm, new battery up at Sybella Creek in Mount Isa. Yes, we're expanding our gas transmission network, and we're also building gas-fired generation. And when you move, and I respect your sentiment, but when you know what goes on in terms of the engineering, what is actually required for reliability of supply, what's achievable. We're making excellent progress, and Adam went through the numbers and you would have seen them in the sustainability report. So yes, clear conscience very much. All right. Do we have another question from anyone? There's people over there. Thank you. Thank you.

My name is Angela antigen. I'm a proxy holder here representing the security holders who have put forward this resolution. Earlier this year, your CEO, Adam Watson stated that Beetaloo is principally going to be an LNG export play. In 2025, we saw a record-breaking LNG export capacity reached a final investment decision, primarily in the U.S. Global LNG export capacity is forecast to increase by more than 70% by 2030. And this build-out would require production in line with the International Energy Agencies 2.5 to 3 degrees warming scenarios in order to be economically viable. APA's North to East Australia pipeline and it's goals in the Beetaloo would be additional to this build-out. And so there are really only 2 options in relation to this project. First, either APA is confident that the gas from B2 will displace other sources of LNG or APA is projecting that all this new LNG will find new demand, including do -- so my question is which out of those 2 options either.

Look, I guess, I'd just back up a little bit. We are 2 to 3 years away from making a final investment decision with respect to the Beetaloo. And just for everybody's benefit, so we're all on the same page, where is the Beetaloo at. The first production wells have just started to flow in September. We connected a 33 kilometer, 35-kilometer pipeline across to the Amadeus pipeline. And that's currently keeping the lights on in the territory. The data is at the upstream players. So this isn't our side of it, is the upstream players, the people who are drilling in the Beetaloo. They will need to see what the flow rates are from those wells, those development wells. They'll need to see what the decline rates are -- they've got to prove up that, that gas can be produced economically and at scale. So that's the first thing that's got to happen. The second thing ultimately for us before we would get to would be where we were at with customers for the pipelines, whether it was the need that you referred to or a pipeline going north to Darwin to feed LNG facilities there. And I note that in tax, one of the -- is a player in the LNG industry and a key player in the Japanese energy industry and supplier of gas to Japan have actually bought into the upstream side of it. So the upstream players need to get happy about the economics of that. We would then need to get happy about what was the contracting arrangements. And did we feel, as I talked about with our East Coast investment. We need to get very comfortable about what the strength of the cash flows, the balance sheet, what the future demand looks like at that point in time. And if the numbers don't add up, if we can't get ourselves comfortable with the risk, then we wouldn't take FID. So we'll wait and see.

Just a follow-up on that. So obviously, yes, again, as I said, there are kind of 2 options, either there will be new demand and the company is very confident that there will be new demand for this gas and LNG and domestically? Or it will be replacing that existing demand and somehow become more cost competitive. And given this is such a giant CapEx decision, we're talking potentially over in over 4x the company's annual expenditure. This is a huge investment of investor money. This is a huge capital expenditure decision. I think investors deserve to know and have a right to have a bit more clarity that FID is reached. So again, my question is, could you provide more clarity? Which one is it?