03:30 PM EST, 11/11/2024 (MT Newswires) -- APA's (APA) decision to cease its North Sea production by 2030 amid unfavorable UK regulations is weighing down the stock, RBC Capital Markets said in a note Monday.

The energy company will have a total net liability of $1.2 billion in regards to its North Sea operations, after accounting for roughly $2 billion in asset retirement obligations and $0.8 billion in deferred tax assets, according to the investment firm.

Payments for the liability will impact free cash flow available for shareholder returns, it said.

On a positive note, RBC Capital said APA's 2025 framework, which anticipates a 15% to 19% reduction in capital expenditure while supporting a slight increase in total adjusted production, "helps to reduce balance sheet leverage."

RBC has a sector perform on APA stock and cut its price target to $32 from $34, "reflecting elimination of future North Sea value and a lower than modeled pace in the Permian."

Price: 22.09, Change: +0.32, Percent Change: +1.45