APA Group (ASX: APA) provided an update to its FY20 earnings guidance yesterday, in light of delays in commissioning of the Orbost Gas Processing Plant – along with a Covid-19 update. APA has not yet completed the performance test required to meet commercial operations under the agreement with Cooper Energy, and thus revenues have been delayed. The revised EBITDA guidance is now $1635 – 1655m (a 2% downward revision to midpoint). Following this announcement, the market is still expecting $1664m.

APA Group’s liquidity remains strong, with a cash position of $1.2 billion and committed undrawn facilities ($9.3 billion) available to assist the ongoing funding if needed.

The business notes it is able to reliably and safely operate assets and deliver its service with minimal impact due to Covid-19. To us, APA remains a stable and low-risk business.

The downward revision caused a sell off, with APA’s share price falling 4% at market open, however the stock has continued to recover throughout the day and is down 1.8% as at midday.


 

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April 22, 2020