“An abundance of opportunities” as APA’s $3 billion pipeline targets the AI power boom

Please note this interview was filmed Friday, 20th February 2026.

APA Group (ASX: APA) sits at the centre of Australia’s energy transition, moving gas across the east coast and building power assets that underpin grid reliability as coal-fired power stations are phased out.

Its first half result was in line, but it highlighted momentum, with higher earnings, stronger margins and confidence in exceeding the midpoint of full-year guidance. What caught my eye was the upgrade to its organic growth pipeline to $3 billion, from $2.1 billion. The stock has also rallied since its 1H25 result, up 49% since February 2025.

When I sat down with CEO Adam Watson, we unpacked the key numbers behind the result before turning to what they mean for the next phase of growth. Watson has led APA since 2022, having previously served as CFO, giving him a detailed understanding of the balance sheet and the business's strategic direction.

What followed was a deeper look at how APA plans to deploy capital, expand its footprint and position itself for rising structural energy demand.

“It is a number [$3 billion pipeline] that’s growing and we’re really proud of that. When you look at the opportunities in our sector in the energy market, there is an abundance of opportunities.”

From east coast gas expansion to behind-the-meter power solutions for data centres, APA is positioning for a more capital-intensive growth phase.

Interview Summary

Earnings momentum and margin discipline

Watson describes the half as broadly strong across all major metrics. 

“Revenue is up, earnings were up, statutory profit was up, free cashflow was up, margins were up, distributions were higher. So all of those key metrics were going in the right direction.”

He is particularly proud of the 7.6% lift in underlying EBITDA. 

“Underlying EBITDA was up 7.6%, really just holds true to the strength of our business and the underlying earnings that we generate period on for our security holders.”

Watson links that growth to both contractual resilience and asset delivery.

“Our business is basically providing energy infrastructure solutions for customers who are looking for long-term supply arrangements and reliability of suppliers critical to them.”

Growth was supported by new assets coming online. 

“If we can add new assets to the fleet in addition to the underlying inflation-linked revenues, we’re consistently getting good returns." Pointing to the Karratha Lateral Pipeline, the Atlas to Reedy Creek pipeline and the Port Hedland solar and battery project.

Beyond revenue growth, APA has actively reshaped its cost base.

“We’ve taken a lot of cost out of the business as well and trying to drive a much leaner, much more simplified business." 

The group divested non-core assets, reduced external spend and applied AI to improve maintenance and scheduling. 

Watson is confident the improvements will be long-term. 

“We’re very confident it’s sustainable and the ambition is to keep that cost base lean and efficient and constantly grow the business from a revenue perspective.”

The $3 billion pipeline

APA’s organic growth pipeline now sits at $3 billion and, according to Watson, it continues to expand.

“It is a number that’s growing and we’re really proud of that… when you look at the opportunities in our sector in the energy market, there is an abundance of opportunities.”

The opportunity set spans two core areas: gas transmission and storage, and power generation.

“Our core business is in two areas. One is gas, transportation and storage… and then on the power generation side, we’re looking at solar wind batteries and gasified power generation to support the removal of coal from our energy markets or diesel if you are up in the remote regions.”

One example is its project in Queensland for CS Energy. 

“We’re providing them with a gas fired power generator to enable them to remove coal from their fleet. So it's very positive. We're really proud of where we're at”

For Watson, these projects are not only commercially disciplined, but are importantly strategically aligned with the energy transition underway in Australia.

East Coast Gas Grid expansion

The most significant milestone announced with the result was progress on the East Coast Gas Grid expansion. APA has reached financial investment decision on Stage 3A, which involves additional compression across the network.

“That’s a really efficient utilisation of capital not only for APA and our investors, but also for the customer.”

The expansion is designed to increase capacity ahead of tightening seasonal supply conditions.

“That will address the winter gas shortfalls for the southern market by winter 2028. So a really big tick for consumers and for industry right across the east coast.”

Stage 3B involves constructing a new pipeline from Queensland into New South Wales, allowing gas from northern supply basins to reach southern demand centres. Equipment has been ordered, but FID has not yet been taken.

“We feel really confident about how that will play out because the government’s draft has been very positive about the role of natural gas and domestic gas in Australia,” Watson said, explaining the decision to wait for the National Gas Review before proceeding.

Competitive edge in a constrained system

For Watson, APA’s competitive advantage lies in its ability to debottleneck the transmission system and match new supply with industrial demand.

“The way that we try to support them is by incrementally addressing bottlenecks in the transmission system and try and match demand and supply."

He highlights that the majority of gas consumed in Australia is used by industrial customers such as steel mills, ammonia plants and glass manufacturers. These users need reliable, affordable supply, and APA’s role is to connect new gas fields to demand centres efficiently.

“It’s a very efficient way to deploy capital,” he adds, reinforcing the disciplined approach to growth.

The next horizon: data centres

Looking ahead, Watson has his eye on two strategic pillars. 

“Our focus over the next 12 months is twofold. One is we want to continue to execute our cost out program… and the second one is the execution of these growth projects.”

Beyond that, one emerging opportunity stands out.

“Data centres consume an enormous amount of energy… and quite frankly, there’s just not enough power available on the grid."

APA is exploring “behind the meter” solutions, similar to those deployed in mining regions. 

“Think of a solution where you’ve got an industrial park where we could build a gas-fired power generator, a solar farm, a battery, and be able to have that data centre operate on that piece of land.”

Such projects could allow data centres to operate 24/7 without drawing power from the grid, easing supply constraints and limiting cost pressures on consumers.

“Could be a really interesting one to watch."