APA Group (ASX:APA) executed agreements with CS Energy to acquire a majority stake in the Brigalow Peaking Power Plant, a 400 megawatt gas power station in Queensland, with total project cost expected at AU$1.27 billion, according to a Wednesday Australian bourse filing.

The company said APA will own 80% of the project, contributing about AU$1.02 billion funded from existing balance sheet capacity, and will lead delivery under a construction management agreement, with CS Energy to operate and maintain the plant and retain a 20% ownership interest once complete.

The project will generate returns supported by an inflation-linked, 25-year hedge offtake agreement with CS Energy, limiting APA's exposure to wholesale electricity prices, with the agreement also incorporating a small portion of variable revenue, the filing added.

The project forms part of APA's AU$3.5 billion organic growth pipeline and is expected to deliver returns consistent with its hurdle rate, APA added.

The company's shares fell 1% in recent Wednesday trade.