The first decision will please many investors, who have questioned the wisdom of trying to enter a highly competitive market, where many of the world’s largest energy companies and private equity firms are trying to solve the same climate problems facing Australia.
But Wheals’ sudden decision to resign and leave the company in just six weeks with no replacement in place is more puzzling.
Wheals insists there is no big mystery here: he has been considering his future for some time and the board’s (of which Wheals is a member) deep dive into US strategy became a catalyst for that process.
“The intensity of being in the top job, the 24/7 nature, made it more challenging for the energy market, to run a business remotely during the challenges of COVID, when I look at everything. that together, along with 14 really nice years. , I feel like now is the time,” she says.
Wheals doesn’t think the company’s new approach in Australia requires a change in leadership and says he’s proud of how APA is positioned to help drive an energy transition that he says will require a near-total rebuild of the national energy market and the country’s transmission infrastructure.
Rather, Wheals says the US decision represents a sensible point for him to step down.
“I’m a big long-distance runner and all runners need to know when they’ve run their race,” he says.
That seems fine to me. But what is very unusual here is the timing of this decision. APA shares are just below all-time highs. APA’s earnings (a preliminary snapshot of which was released Monday) are growing nicely, and the company is in a good position to grab a piece of the tens of billions of dollars that will be needed for the transition. energy works.
And the end of APA’s ambitions in the US is certainly good news: investors would prefer a company that tried something, realized it wouldn’t work, and changed course to one that kept going, blind to the challenges. .
The great service that Wheals has provided to APA makes the suddenness of his departure, with only six weeks notice and no established probate process, let alone a plan, all the more bizarre.
Fraser says that Wheals’ decision was his. But, with Wheals announcing his departure to the board, it was deemed prudent to announce it to the market ahead of the group’s results on Wednesday.
Chief Financial Officer Adam Watson will keep the CEO’s seat warm as the board launches the usual global search.
Fraser says that while the US market has remained extremely competitive since APA began considering its expansion strategy four years ago, the biggest changes have been in Australia, where the urgency of the energy transition has accelerated.
“We came back and said, where are our core competencies?” he says. “We looked at our competitive advantages, we looked at the size of our balance sheet and we said where we can best deploy our skills and balance sheet, and that is here in Australia.”
While the scale, size and cost of the energy transition will create opportunities for APA, Fraser is under no illusions about the challenges involved.
Money is one; Fraser says that however high your estimate of the cost of the transition is, it will probably end up being many multiples of that.
But Fraser also worries about social license. First, the transition must keep consumers on the sidelines.
“You can’t let the lights go out. Power cannot be allowed to become unaffordable. If he does, he loses the mandate on the way.”
But second, people need to see the benefits, for example by allowing the transmission infrastructure needed to support new renewable energy projects to run in rural areas.
“I’ve been beaten in my career trying to build wind farms,” he says. “I have been beaten and I have tried to build solar farms. I have been hit and trying to build pipelines and develop coal seam gas resources.
“The simple fact of the matter is that a lot of people just don’t want you in their backyard. So can Australia get there? I think social license will be one of the key issues.”