Good afternoon, everyone. A warm welcome to you all of you here in Oslo, and to those of you listening in on the webcast. It's great to see that so many people are joining us here in the room, and we have quite an exciting agenda ahead of us, where we will demonstrate how Vår Energi will deliver growth, value, and resilient returns towards 2030 as a pure-play E&P company focusing solely on the Norwegian continental shelf. Our CEO, Nick Walker, will lead the way, followed by presentations by several members from our leadership team. Following the presentations, we will open up for questions. First, a short video introduction to Vår Energi before we're welcoming Nick to the stage. Thank you.
Oil and gas will remain an important part of the energy mix for decades to come. Reliable and affordable access to energy is the foundation for economic growth, social welfare, and value creation for local communities, shareholders, and society at large. Vår Energi is one of the world's fastest-growing E&P companies. We are a team of highly dedicated people, on track to nearly double our production by end of 2025, and we are the second-largest exporter of gas from Norway. Millions of Europeans and countless businesses depend on our ability to explore, develop, and produce energy every day. The future belongs to those who can produce hydrocarbons with the lowest emissions and at low cost. Vår Energi has a leading ESG position with a clear plan to decarbonize our operations.
The Norwegian continental shelf has an enormous resource base with a stable political environment and framework conditions, making it one of the most attractive regions for investing in oil and gas in the world. Our strategy to meet the world's energy needs is simple: we are a pure-play Norwegian oil and gas company. We are a reliable provider of energy to Europe, produced safely and responsibly, ensuring growth and value creation for all stakeholders long into the future.
Ida, thank you very much, and good afternoon to everyone, and welcome to Vår Energi's 2024 capital markets update. It's really great to see so many friendly faces here in Oslo, and also a big welcome to all of you who are joining us online. Now, we closed the acquisition of Neptune Energy Norge in January, and today we'll give you an overview of the combined company in some detail. We're also the fastest-growing E&P company globally, and I'm excited for the outlook for Vår Energi and our ability to deliver on our strategy for growth and value creation also beyond 2025. First, I'll provide an overview of our key messages today, and then my colleagues will give more detail to give confidence in how we'll deliver on our strategy and goals, and as Ida says, we'll then open up for your questions at the end.
The film that we've just seen was a great introduction to my first few slides. I want to provide some context to the business environment we're working in, as I think it informs how we see our strategy. The energy transition's progressing, but it's also clear the journey's complex, and it's important that as the world transitions, that we all have access to secure, reliable, and affordable energy. The unstable world we live in demonstrates the importance of this. The chart here shows the latest IEA energy forecast under current-stated government policies. Demand for energy continues to grow with population and economic growth, and you can see that demand for oil and gas will remain close to current levels towards 2050. We also see that gas is a critical transition fuel.
So in any scenario, oil and gas will be essential for world energy supply for decades, not just as an energy source, but also to sustain the growing demand for petrochemical products. Preventing production decline as fields are depleted requires investment in new exploration and developments. But the world also needs to decarbonize to meet the Paris Agreement, and this will take action from every sector and will take time to achieve. The challenge is on all of us to decarbonize energy systems while continuing to meet demand for reliable energy the world needs. Decarbonizing our industry is absolutely fundamental. We believe that those who can produce hydrocarbon with as little emissions and with low cost as possible will have competitive advantage and be the preferred supplier.
We also believe that the Norwegian continental shelf is one of the best places in the world to invest in oil and gas. As you can see from this chart, the NCS is characterized by low costs, low emissions, in fact, Norway is leading the world in this, with a reliable framework and fiscal regime, and importantly, large remaining resource base. That's why we're a pure-play NCS E&P company, and we will stay so. In summary, oil and gas has a long future. The winners will be those who produce with low cost and low emissions, and Norway is one of the best oil and gas regions in the world. So in this context, our strategy is really very simple. It's to ensure growth and value creation for all our stakeholders over time.
It's to be a reliable and secure supplier of energy to Europe, and it's to be a pure-play Norwegian oil and gas company. Importantly, it's to be safe and responsible in the way we conduct our business. Enabling all of this, we must deliver on the goals and targets that we set. Through the presentation this afternoon, we'll show you how we're going to deliver growth. We're going to show you how we sustain production, how we unlock future value, while at the same time accelerating decarbonization to allow us to deliver sustainable and resilient returns to shareholders over time. Vår Energi has a strong heritage, having been created by putting four companies together: Point Resources, the Norwegian businesses of E&I and ExxonMobil, and just recently, Neptune Energy Norge.
In the five years since the company's inception, we've established a strong track record of value creation, building the third-largest operator on the NCS. You can see achieving significant production and reserve growth at the same time as delivering strong financials and returning $2.2 billion to shareholders since the IPO two years ago. And all of this at the same time as positioning the company for material further growth and value creation, which I'll come to in a moment. Now, I firmly believe that success is driven by people working as a team with a clear and simple strategy, and we have all of that, and common values that guide how we work. It's about fostering an entrepreneurial mindset where everyone can make a difference to contribute to value creation.
With the Neptune acquisition, we welcome 300 highly motivated and experienced new colleagues to our team, and we're working at pace to integrate the two companies. By May 1st, we will be one team pulling together to deliver on our strategy and goals. Our heritage of combining 4 companies to create Vår Energi gives us interest in around half the producing fields on the NCS and involvement in much of the infrastructure. Not only does this mean we have a diversified asset base with lots of optionality, it also means we have deep and unique NCS expertise, only exceeded by Equinor. As we'll discuss in a moment, we have a strong exploration track record. We have a highly experienced team, but we're also leveraging the expertise of E&I, our major shareholder, who are probably the most successful explorer amongst the majors.
And finally, partnerships are also key to our success. We draw on the capability and expertise of our major shareholders, E&I, and HitecVision. We have strong relationships with our licensed partners, in particular Equinor, and we rely strongly on the relationships with our suppliers, among the best in their field, to deliver a success for us. And if we now look at the business, we were excited to close the Neptune acquisition. This is a value accretive deal that adds scale, diversification, and longevity to our portfolio, and as we say, is the perfect fit. The Neptune assets are cost-efficient, with low emissions, with limited near-term CapEx, making the deal highly cash-accretive and strengthening future dividend capacity. And you can see what the combined business looks like. We have around 200 licenses on the NCS, of which about one-third are operated.
We have shares in 47 producing fields across four hub areas, and the deal cements our position as a leading independent E&P company. We expect to yield significant synergies from the transaction, increased to around $500 million post-tax over time, well above the previous guidance of over $300 million. This comes from a robust development and exploration portfolio, improved asset utilization, and commercial optimization of gas sales, and we'll provide more details on this in the coming presentations. So we have a large, diversified portfolio with involvement in all the areas of the NCS and much of the infrastructure, and provide significant optionality for growth and value creation looking forward. Never has Norway played a more important role as a reliable provider of gas to Europe than now, and that importance, in my view, will remain despite the current weaker prices.
Vår Energi plays a significant part in this, with gas making up 35% of our production today. From our main gas-producing assets, we deliver into the key markets in the UK, France, Netherlands, Belgium, and Germany. The Neptune deal provides greater scale, and Vår Energi is now the second-largest exporter of gas from Norway. We've deployed a flexible gas sales strategy to capture the upside, with different pricing mechanisms combined with an ability to switch between the exit points, and we can maximize value through this. This sales strategy delivered gas sales revenue in 2023 of around $1 billion above spot pricing. So Vår is a significant and predictable supplier of gas to Europe, and it's a key element of our value creation.
As a company, I think we have an amazing portfolio with lots of optionality and growth opportunities, and we're working to move this forward at pace. Combined Vår Energi plus Neptune 2P reserves at end 2023 stand at 1.24 billion barrels, which underpins our growth profile and I think what people see in terms of value. For the first time, we've announced our 2C contingent resources, which stand at around 750 million barrels. These are discovered resources, but where there is no defined development plan. During this year, we plan to de-risk or move forward around two-thirds of these resources, and we've identified over 20 early-phase projects that we are starting to progress.
On top of this, we have a very exciting exploration portfolio of over 1 billion barrels net risked resources, and we're stepping up our activity with around 60 wells planned over the next four years. When you put all this together, we have over 3 billion barrels of resource potential in the portfolio. It is this portfolio that will organically sustain our production towards 2030, and we now need to move the activity forward at pace to realize the opportunity. Looking now at our near-term production growth outlook, from 2023 average production of 213,000 barrels a day, we're set to almost double production to around 400,000 barrels a day by end 2025. We're already halfway there, with production year-to-date of around 300,000 barrels a day.
This is as a result of the ramp-up of new production towards the end of last year and the addition of Neptune assets from January. We've guided 2024 full-year production in the range of 280,000-300,000 barrels a day. Eight new projects in development, with the main ones being Balder X and Johan Castberg, will add significant new volumes and will dispose of some non-core assets to high-grade the portfolio. When you put this together, it means we'll grow to around 400,000 barrels a day by the end of 2025. We're on track to deliver significant production growth and create value. We're stepping up the pace of activity to realize the value upside in our portfolio. We've already initiated over 20 early-phase projects with net resources of around 400 million barrels.
These are all tie-back developments, close to existing infrastructure, and with short time to market. To realize the value of our significant exploration position, we're doubling the pace of drilling over last year and have around 60 wells planned over the next four years. We'll be drilling in all of our hub areas with the majority of prospects close to existing infrastructure. In 2024, we'll be involved in over 100 wells in development and exploration. This is a huge number in an offshore context. What I know is we do not increase production or find more oil unless we drill, and we're doing just that. Capital discipline is also key. We're focused on doing projects that are value accretive with break-evens of around $35 a barrel and rates of return over 25%.
With this quality portfolio with significant upside, when we reach 400,000 barrels a day by the end of 2025, we can then sustain production organically at 350,000 to 400,000 barrels a day towards 2030. We'll achieve this by firstly maximizing recovery and infill drilling in our high-quality assets, adding over 30,000 barrels a day annually. Secondly, by moving at pace our early-phase project portfolio towards sanction, with, as I say, over 20 projects targeting around 400 million barrels. Finally, drilling out our exciting near-field and high-impact exploration program. This will deliver sustainable production towards 2030. We'll continue to take an opportunistic approach to further M&A. Where there's a strategic fit and we can create value, we have the track record and financial capacity to do more. Importantly, we do not need acquisitions to meet our goal.
Responsible operations are also key to our license to operate, and we aim to be the safest operator. We have a good trend on improving safety performance. Overall, last year, we showed about 50% improvement across a range of safety metrics. And we had zero serious incidents, zero process safety incidents, and no material environmental incidents. But we need to go further, and this requires focus every day. We're also getting recognition for our ESG leadership. You can see being a top-ranked company by Sustainalytics, A-plus ranking with Position Green , and a strong ranking on CDP. And only last week, it was announced that Vår Energi is to be included in the OBX ESG Index as the only E&P company . The index includes the 40 top companies on the Oslo Exchange with the best ESG ratings. I think this is leveraging how the company is viewed.
Our belief is it's important to position the company for the energy transition, to maintain relevance and investability long-term. We're doing just that by accelerating our decarbonization plan. We're making good progress and have a clear path to over 50% Scope 1 operational emissions reduction from our portfolio by 2030. We're targeting methane emissions in 2024 to be near zero. All of this is driven by a focus on investments in reducing emissions and electrification of our key assets. This is good business, as the projects generate reasonable returns and secure our long-term license to operate. On Scope 2 emissions, which is our purchased electricity, we'll make sure this comes from renewable sources and have zero emissions in 2024. For our own use Scope 3 emissions, we'll provide high-quality offsets. We're assessing the potential for CCS, where we received a license through the Neptune acquisition.
This is an option on the future if we can find a way to create value. We're discussing a partnership with E&I to integrate along the value chain. Today, we're already in the top quartile of industry performance on emissions intensity, and it's my hope that we can find ways to further accelerate the path to Scope 1 net zero emissions. Ellen's going to provide further background on our plans later. Our high-quality portfolio provides a strong foundation to deliver sustainable value to shareholders. As outlined, we'll sustain production of 350,000-400,000 barrels a day towards 2030. Our high margin barrels mean that the business is free cash flow neutral at around $45 per barrel.
You can see we generate strong free cash flow in the range of $4.5 billion to $8 billion over the period 2024 to 2028, and with a price range of $70 to $90 per barrel. We have a strong investment-grade balance sheet. This allows us to pay attractive and predictable dividends. Our dividend guidance is 20%-30% of cash flow from operations after tax, and for 2024, we've guided approximately 30% of CFFO. We have the capital flexibility to do it all, to provide attractive and predictable dividends, to maintain an investment-grade balance sheet, and to fund growth. I want to summarize the key messages I wish to leave you with. Vår Energi is positioned to deliver growth, value, and resilient shareholder returns.
We're one of the fastest-growing E&P companies globally, and we're on track to double production to around 400,000 barrels a day by end 2025. We can organically sustain production at 350,000 to 400,000 barrels a day towards 2030. This is supported by high-value projects with break-evens of around $35 per barrel. We will decarbonize our operations by over 50% by 2030, and I think making this relevant and investable long-term. Our business is resilient, delivering strong free cash flow in the range of $4.5 to $8 billion over the next five years, which supports attractive and predictable shareholder returns. Today, we're trading at a dividend yield of around 14%. So I see significant upside in the share price if we can trade in line with our peers. These are the reasons to be invested in Vår Energi.
And with that, I'll now hand over to Torger, who's going to provide further details on how we'll deliver on this growth plan. So thank you. Thank you.
Nick. And good afternoon, all. It's good to see you here again on our capital market update. It's a great pleasure. And, yes, I'm going to talk about delivering growth. And as entrepreneurs and value creators, that is in our DNA here in Vår Energi. I'm going to talk about delivering growth, sustaining production, and unlocking future value. I like to say that the numbers are 10, 20, and 60. We are having more than 10, or we are having 10 projects in execution that are going to deliver around 400,000 barrels by end 2025. Further, we are at the moment maturing more than 20 early-phase projects that will give us a sustained production of 350,000-400,000 barrels towards 2030.
Further, we're going to unlock future value by stepping up our exploration activity. We are going to participate in around 60 wells the next four years. This is going to be my red thread in my presentation. The bottom line is simple. We are going to take our reserves and resources to the market. We are going to take our discoveries to dollars, and we're going to do more and faster. Let's then first move to 2024. Growth is underway. Our 2024 key priorities are as follows. We are going to deliver on our key projects. We are going to integrate Neptune, as Nick talked about, well underway to do that, and we're going to be one company May 1st, ensuring more than 90% production efficiency and focusing on well deliveries. Our production guidance is 280,000 to 300,000 barrels with a gas share of 35%.
We are already at around 300,000 barrels per day, as you can see from our year-to-date. Also, I guess some of you are looking at the chart and wondering what's happening in Q3. That is when the turnaround season starts in Norway. And this is specifically related to the turnaround at Kårstø and associated fields, including Åsgard. And then you see from there, we are stepping up our production when our projects are coming to completion and starting up. So that is 2024. Growth is really underway. Then I would like to zoom in on our projects in execution. We have 10 projects in execution that are going to deliver around 400,000 or above 400 million barrels. And just to bridge this to the eight projects that Nick was talking about, we are going to conclude, start up five projects this year of those 10, three next year.
That takes us to the 8. And then it is 2 of these projects that are post-2025. And there are some keywords when it comes to our product portfolio in execution. It's quality. It's diversified. Here, it's no one single asset dependency. It's robust. You can see that from the economic numbers. You know, high rate of return, a break-even in around $35, as well as having a short payback time around 2 years. Also, it is de-risked. 7 out of these 10 projects are more than 50% complete. And you can see how well it is distributed across our key hub areas. So that is our projects in execution. Then I would like to zoom in and talk about some of our key projects, starting with Balder X. And I have to say, I'm really happy that Balder X is nearing first oil.
I can say it first and foremost, there is no news and new updates when it comes to Balder X compared to what we presented in our Q4 update. So really, what is Balder X about? It is about extending the lifetime beyond 2045, really ensuring production for decades in the Balder area. That means that you're bringing a modern production capacity of 80,000 barrels to the area with a very competitive production cost. That is what the Balder X is about. So then you're thinking, what about the project? And for the Balder X project, we are also here. We are progressing well on all fronts. And what does that mean? When it comes to the subsea, all major equipment is installed. Further, to the drilling, we have completed 10 wells, and we are planning to have all 14 producers completed by startup.
Then to the Jotun FSO, which is on the critical path. As you can see, we are more than 90% complete, and we are working really hard to ensure that we are able to start up in Q4. This follows some conditions. One, we have to be done with the planned work, make us able to sail away within end August so we're able to, install the FSO within the weather window. Here, we are saying that the P90 is a startup in end Q2. Here, I would like to reiterate and remind you all what we said in Q4. Even though the startup might slip from Q4, or if it's slipping from Q4 into 2025, this will have no impact on our production guidance for 2024. And also, our production of 400,000 barrels by end 2025 remains unchanged.
So bottom line here, Balder X is nearing first oil, and it is going to bring production for decades to the very important Balder area. Then I move on to Johan Castberg, and Johan Castberg is on track. I have to say that it's really impressive. I visited it in the yard a few weeks back, and it is going to be the giant of the north. I don't know if some of you remember a big vessel that visited Oslo last year. That was the Gerald Ford, you know, the biggest aircraft carrier in the world. Do you remember? Is there someone from Oslo here? Yeah? You're nodding your head. Johan Castberg is just as big, with its 313 meters length, a height of 86 meters, width of 60, and a 90,000 tons weight. It is just as big as the U.S. Gerald Ford.
That is the giant of the north. More important, it brings 190,000 barrels of production capacity, a huge reserve base between 450-650 million barrels, and very competitive production costs in the area of $4. And it is really going to bring and capture long-term value. Already now, we are working together with the operator Equinor to develop Cluster One and Cluster Two that are going to extend the production on the Castberg. Progressing towards first oil in Q4 2024. I move on, and I will talk about operational excellence, being one of our priorities. This picture reminds me what operational excellence is all about. It's about teamwork. Here you see the process technicians at our Gjøa platform working together to ensure operational excellence. We have had a significant focus on our production efficiency. I said our target is to be above 90% this year.
You can see that we have a solid development from in the area of 87% to 90% for 2023, and then targeting above 93% by 2025 and onwards. Here we have specific and concrete action plans for each of our assets to improve the production efficiencies. To boil it down to these actions, it's about reliability improvement program, efficient maintenance execution, and optimal spare part strategy. Hard work continues. Another area where we had significant focus and working hard and diligent is related to production cost. Here, we have set a target of $8 real 2021. This number you see here is 10, equals to 8 because we have inflated it to real 2025 numbers. You see our guidance. It is $13.5 to $14.5 per barrel this year. How are we going to get to the $10 real 2025?
Number one is the new projects, the projects in execution that are coming on stream, very competitive with an average production cost of around $4. Further, we are doing a portfolio optimization. One example is the Brage investment we did last year, as well as driving improvements and synergies. These are the keys to bring us down to the $10 in production cost going forward by end 2025. So Nick talked about if you're going to produce, you have to drill. And we are really stepping up the activity this year when it comes to our well deliveries. We are, through our development projects, participating in 50 development wells starting up this year. Further, we are working on around 40 infills wells, and we're going to participate in 16 exploration wells. Also, we are setting an all-time high when it comes to operated well lines.
We are going to have 5 rig lines in operation simultaneously for Vår Energi. That is an all-time high, and it will give us solid well deliveries. Talking about well deliveries, well deliveries is something we have been working hard and diligently on. Our capabilities within drilling and well, we have worked hard to really step up. We have done that through secured high-performing rigs, unlocking reserves through multilateral wells. We have been data and technology-driven, and we have been building strong capabilities. So how is this paying off? You see that on the right side of this slide. We have improved our drilling efficiencies. The first is meters per day, from 80-100 meters. Further, we have also been delivering and completing significant more wells. 4 in 2022, 11 in 2023. Then we are talking about production wells.
Further, what is really important for us is that we have also improved our personal best quite significantly when it comes to completion length in the Balder area. Before 2023, our personal best was around 850 meters. Now, our personal best is around 1,600 meters. So what does that mean? That means more meters in the reservoir, more drainage points, and more reserves. That is why it is so important for us. So then I would like to point to where everything comes together. And Nick talked about it. And I have to like almost recall, you know, the 23rd of June last year because it was really a proud moment when we announced the Neptune deal. It being the perfect deal, being the perfect fit. And we talked about creating a value, a creative deal. I think here is really the proof. Nick said it.
You know, we have increased our synergies from around 300, communicated at the day of our announcement. And now we are saying, around 500. So significant improvement. Then I'm proud to also say that, you know, we see when it comes to the operational synergies, we see that there we are going to realize more than $300 million alone. And where is that happening? It's happening through our project maturation, unlocking projects, specifically in the Njord, Snorre, and Njord area. It is driving operational excellence and economy of scale. So here, this is really a concrete example on how we are doing value-accretive M&A in Vår Energi. So really, we can't wait to get Neptune Energy fully integrated in our company, creating even more value going forward. And Stefano, I know it, he will cover the financial part in his presentation later, this afternoon.
Then, to summarize the delivering growth part, we are one of the fastest-growing E&P companies in the world. We are doubling our capacity, our production, compared to 2023 from around 213,000 to around 400,000 barrels by end 2025. Then I'm going to start focusing on sustaining production because that will also require operational excellence and improved recovery, a high-value project portfolio, leading exploration capacity, and who knows, maybe some value-accretive M&A. But as Nick said, the targets we are going to present here today, the sustained production, do not, we can do on an organic basis. So then I will start talking about sustained production. And sustained production and longevity on NCS, that goes more or less hand in hand. NCS is about sustained production. It is about longevity. And I would like to share with you three rules of thumb when it comes to longevity on NCS.
1, big fields are typically getting bigger. We're able to do that through technology, infrastructure-led developments, continuous infill drilling, and lifetime extensions. 2, it is a significant resource base yet to be developed, just around 50%. And as a small curiosity, I have been in this business for around 25 years, a little bit more, you could see. And as long as I have been in this business, it's always been around 50% remaining. I think that is saying something about our ability to replenish, our ability to discover more and develop more. And then rule of thumb number 3. Guess what? Vår Energi, we are perfectly positioned to take part in all of this. We have access to a significant amount of infrastructure. We have ownership in more than 50% of the NCS fields.
Through this, we are going to participate in around 40% of all the exploration wells on the NCS. And also, as you can see on the map to the left, we are part of significant infrastructure. And to give you an example, more than 9,000 kilometers of pipelines that are bringing our energy to the UK and to Europe. So that is really a good starting point for Vår Energi. Also, we have secured a capacity to sustain production and stepping up our activities. Being a partner of choice is important for Vår Energi. And we have been working hard to really build capabilities together with the best suppliers. That means way of working, competence, and capacity. And as you can see on the slide here, we are working with the best within subsea, within drilling, and topside and modifications.
This means improved safety, shorter time to market, cost-efficient solutions, low emissions, and also standardized solutions and standardized developments. So this forms the basis for us to mature and develop more than 20 early-phase projects. And you can see it. This is specific and concrete projects that are currently being matured, and they all fit well into our hub areas. These are all subsea tie-backs. That means lower risk. Further, we are going to build on simplification and standardizations. And I can ensure you, and Nick said it, we are going to be disciplined. This is a project that is going to have a low break-even, high rate of return, and creating a lot of value. It's going to be robust. And also, we are seeing that at the moment, there is a high activity level in Norway, but that is going to go down.
Then we are going to really utilize the counter-cyclical opportunity to get these projects placed in the market. Of course, as you could understand from my previous slide, we are going to leverage strategic partnerships. Again, let's zoom in. I'm talking about more than 20 projects around bringing more around 400 million barrels. Again, the keywords are a bit the same: quality, diversified, no single asset dependency, robustness, and well-diversified, and low risk. Also, they are all close to existing infrastructure, and they bring a short time to market. You can see also here how they are distributed. As I said, being concrete, projects being worked. Then we are talking about a significant value potential. This slide here is really amplifying what Nick said.
I have now been explaining how we are going to pursue these 1.2 billion 2P reserves through our 10 projects in development that are going to bring us to the 400,000 barrels by end 2025. Further, I've been talking about the 2C contingent resources that are giving us these more than 20 projects in maturation that will ensure that we are sustaining our production between 350,000-400,000 barrels toward 2030. Then I'm going to put my focus on the 1 billion net risked resources that we have related to prospective resources. That is what we are going to hunt through our exploration activities. Before I talk more about that, I want you to have a look on this movie. So please follow.
Vår Energi is a leading player in the Barents Sea. Over time, we have built a unique position. 30% of our reserves are here.
We have equity stakes in most licenses and all assets in production or in development. Goliat, a highly sophisticated asset, electrified with renewable power from shore. Snøhvit and the strategically important Melkøya LNG plant. Johan Castberg, the next oil field to come on stream later this year. With a dedicated team in Hammerfest, we strongly believe in the future of the region. We aim to realize the true potential of the Barents Sea. Success can only be achieved by people working together, sharing the same vision and strategy. When you have a world-class team combined with great assets, the result you can achieve is extraordinary. In Vår Energi, we have both, with the capabilities to find and develop more, creating more value. Our track record in the Barents Sea speaks for itself.
6 discoveries in the last 3 years, including Lupa, the largest discovery on the Norwegian continental shelf in 2022. With an attractive exploration portfolio of 3 billion barrels of net unrisked resources, we will increase the exploration pace. We plan to drill 5 wells per year in the coming period near Goliat, Johan Castberg, and in less explored areas. We're exploring to find more oil and gas, to further utilize existing infrastructure, and at the same time, seeking to realize our ambition to build more gas export capacity. Our ambition is to create more value and more growth in the Barents Sea. And to do that, we need to have an entrepreneurial mindset and collaboration with other operators and other industries, partners, authorities, and the local community. Unlocking the potential for the Barents Sea is within reach.
We are ready with a concrete plan and with a highly motivated team for busy times with lots of fun.
Busy times and lots of fun. That is what you like, all of us, I guess, in Vår Energi. As you can see, we have a very strong foundation. I have to say, when I'm looking at the movie, I get a bit of both goosebumps and excitement. I get always moist hands when we are talking about exploration. We have a significant exploration portfolio. We are talking about exploiting our 200 licenses and more than 5 billion barrels in net unrisked prospective resources. Out of this, around 40% is gas. When we are talking about exploration in Vår Energi, we like to say that we are in good shape and we have a plan.
So maybe I should start with the shape part and say, OK, why do we why do we state that we are in good shape? And as you also heard on the movie, we have a proven exploration track record. And the shape is defined by the benchmark by Rysta. And if I'm going to do it very simple, it's saying that we are discovering more. We are doing it with less cost and with higher value than what average. 65% more per discovery, 33% lower cost, $1 in unit exploration cost, and then with a value per dollar spent, 50% higher. Also, I would like to draw your attention to the discovery rate, which is for the last four years, above 50%. But the average on the NCS is around 29%. So that is really saying that we are in good shape.
We are going to utilize our competence and our capability going forward. So what is the plan? The plan is to really double our exploration wells in 2024. We are going to participate in 16 wells, where eight of them are operated by Vår Energi. And also, we are going to do two high-impact wells included in these 16. Both of those are operated by Vår Energi. It is the Venus well that we are planning to spud in Q2 and the Elgol, both of them in the Barents area. So we are here hunting net-risked resources of 150 million barrels. And our exploration expenditure is around $300 million. So if I'm then zooming out and saying, OK, what's our plans for the next four years?
We are planning to participate in 16 exploration wells for the next 4 years, predominantly near field, 11-14 every year, but also some high-impact wells, up to 3 per year. From the map, you can see that they are well distributed in our hub areas where we have knowledge and insight and competence and a lot of infrastructure. By that, I would like to summarize. We are on track to deliver 400,000 by end 2025. We are going to sustain our production between 350,000 and 400,000 barrels towards 2030. We are stepping up our exploration activities to unlock future value. That means sustained value creation. By that, I'm keen and happy to pass on the word to Rune Oldervoll that is going to give us further insight in our hubs and how we are going to sustain production there.
So, Rune, the word is yours.
Hello, everyone. I will give you a little bit more insight into our key areas and into our plans for growth and continued value generation. I'll start with the Balder area. Here, I need to provide some history. It was here we saw the very first license in Norway, license 001, being awarded back in 1965. Two years later, the first discovery was also made here, and it was named Balder. It took another 30 years to reach first oil. Since then, the reserves and resource base have been growing and growing like many other large fields on the NCS. We have no intention of stopping the growth now. Later this year, the Jotun FPSO will arrive at the field, and we will be set up with continued value generation for decades.
With the joint electrification project together with Grane, which is yielding synergies and driving down costs, this is a low-emission hub fit for the future. I will go deeper into the plans on the next slide. But first, I'd like you to show you another video.
It all started nearly 60 years ago with production license 001, the first ever awarded in the Norwegian continental shelf. The very first oil discovery back in 1967, it was the Balder field. Since production commenced, we have produced over 500 million barrels, which is four times the original estimates. Now, with the Balder X project, we are extending the life of the field way into the 2040s. Beyond Balder X, we see a vast potential. This is one of the most prolific areas on the Norwegian shelf, our backyard. No one knows it better.
We have identified more than 70 drilling opportunities in the area. The team is deploying machine learning and the latest and most advanced subsea and multilateral drilling technology, partnering with the best suppliers. By combining machine learning with improved seismic imaging, we are changing the game, allowing us to identify reservoir targets faster and with greater certainty. By reducing risks, time, and capital spend on turning resources into reserves and barrels, we are improving time to market and maximizing value creation. Balder has created value for us for many years. But what excites us is the journey ahead. We got the heritage and the entrepreneurial people with the will, the knowledge, and the technology to make things happen. The future of Balder is bright. The future of Balder is bright. OK, great movie.
I'd like you to pay attention to the blue small light blue small polygons on the map behind me, to the right behind me. These are Balder infield targets. More than 70 of them. They are close to existing infrastructure. They're well within tie-back distance, and some even suited as redrills from existing templates. Some are matured to a stage where projects have been initiated, and some are yet to be matured because they are in quite an early stage. So the Balder Phase VI project will develop some of these targets as subsea tie-backs to the Jotun FPSO. And our aim is to bring this project to funding in less than a year and run it as a fast-track project with our strategic suppliers. And following Balder Phase VI, we will launch future infield drilling programs as capacity and as infrastructure becomes available.
We are also working to realize the value of recent discoveries in the area. The King discovery, that was appraised earlier this year, and we now have sufficient information to initiate a development project. As we speak, we're also drilling the Ringhornen North exploration well. And we keep on finding oil. Right now, this looks promising, and we are drilling sidetrack to appraise the extent of this recent discovery. To summarize the Balder area, the reserves and resources have been steadily growing for decades. And we are convinced it will continue to do so in decades to come. And we are set up with long-lasting infrastructure to produce high-value, low-emission barrels for a long, long time. The Barents Sea is another core area for us.
Here, we are solidly planted in all the key assets where we know there is oil and gas and where there is infrastructure, the Goliath area, the Johan Castberg area, and now also the Snøhvit area. Through the Neptune acquisition, we doubled our production from the area. When Johan Castberg comes online, we will grow another 2.5 times to about 85,000 barrels a day. With a contingent resource base of more than 270 million barrels, we are also well positioned to continue the growth into the 2030s. Here, we also carry a material prospective resource base with more than 650 million barrels, and we are intensifying our exploration efforts. We will explore for oil in and around our hubs, and we will explore for gas. We believe there is a material untapped gas potential in the Barents.
Together with other operators, we want to build a resource base that is large enough to expand gas evacuation from the north. We are targeting more than 100 million barrels in early-phased projects in the Barents, well positioned to grow and sustain production throughout this decade, starting with Goliath. The Goliath gas project unlocks material resources by tying into the nearby Snøhvit gas pipeline. And at the same time, it adds flexibility to optimize drainage from Goliath and nearby reservoirs. The project passed concept select last year and is approaching final investment decision this year. The Countach discovery, last year, it opened up a trend of prospects towards Goliath, all within tie-back distance. We will already this year appraise Countach and drill nearby exploration prospect to gather the information that is required to initiate a development project. Goliath started up in 2016, so it's new. It's fully electrified.
It's built robust and has a significant technical lifetime. Our plan is to utilize this capacity for decades to come. Moving to Johan Castberg, a range of discoveries have been made near Castberg, and several of these are now worked as early-phased projects. These are to be tied in to Johan Castberg to extend the plateau. First out is what we call Cluster One. Next is what we call Cluster Two. Beyond this, an active exploration campaign or program with more than two wells or more per year in the area that will fill up Castberg also beyond 2030. Finally, we are very pleased to have ownership in the strategically important Snøhvit field and the LNG plant at Melkøya. This will secure a stable cash-generating base towards 2015. With the electrification of Melkøya, the operations up there will transform into a low-emission LNG hub.
It's really fit for the future. So as mentioned, we carry a material prospective resource base, more than 650 million barrels in the Barents Sea. And we are intensifying our exploration efforts. We have been sharing a rig with Equinor and in Q2, we will bring this rig to drill high-potential or potential high-impact wells for us, testing out the new play in the Western Barents Sea. And in August this year, we will bring another rig up to the Barents Sea to drill production and exploration wells for the next couple of years. And also, this rig will be shared between Vår Energi and Equinor. We will explore around existing infrastructure. We will explore in new areas. And we will also explore for gas. The Barents Sea is expected to hold the largest undiscovered gas resources on the NCS, but the area has limited export capacity.
We plan to change this. We want to build a resource base which can support an expansion of the gas evacuation system. This is not something Vår Energi will do on its own. So we are collaborating closely with other industry players and premise providers to unlock the value from gas resources in the Barents. So to summarize the Barents area, we see continued growth, significant upside in and around the established infrastructure. And we see the potential for unlocking gas resources. Then moving to the North Sea. The North Sea is the most mature area on the NCS, but it continues to deliver as big fields tend to get bigger. As part of the Neptune acquisition, the Gjøa asset was added to our portfolio. Gjøa is an operated asset with several existing tie-backs and recent discoveries nearby. The platform started up in 2010, so it's relatively new.
It's partly electrified and operates with lower-than-average emissions and costs. And hence, this is a perfect host for developing existing and future discoveries in the area. The broader Norwegian or North Sea portfolio consists of more than 20 fields, and it produces more than 100,000 barrels a day. And we plan to maintain this well into the 2030s through infield drilling, through a phased project portfolio, and through more exploration. The North Sea fields are typically centered around key asset clusters, some new such as Gjøa, but also legacy giants such as Ekofisk and Snorre that has production profiles extending beyond 2050. And these giant fields continue to play a big role on the NCS, both for continued developments of the large remaining resource base, but also as hosts for future developments.
Even though this is a mature area, there is more value to be unlocked, and key to this is exploration. Therefore, also here, we are intensifying exploration activities to move things forward and to ensure that we maximize the value of the infrastructure already in place. On the previous slide, I showed a wrap-up of the reserves and the resources in the North Sea area. Out of the 240 million barrels contingent resources, we have concrete plans to mature more than 150 of these into reserves over the next few years. The majority are linked to the project displayed on the map behind me here, where Fram Sør, Dugong, Ofelia and Garentiana are the main contributors. In parallel, life extension and improved recovery activities across the various fields are ongoing to increase recovery and maximize value.
As mentioned, we are intensifying exploration to ensure we replenish our resource base with new attractive development opportunities. We are planning approximately 15 wells in the North Sea over the next four years with a main focus on near-field exploration. To summarize the North Sea area, we're strengthening our position through the EURA operatorship. We're sustaining 100,000 barrels through 2030. And we are stepping up exploration near existing infrastructure to generate quick returns. Moving on to the Norwegian Sea. The Norwegian Sea area has historically been the largest producer in our portfolio and the largest gas producer and is now delivering more than 100,000 barrels a day. We are present in all the key producing assets, and we are engaged in 6 development projects which will come on stream within a few years' time.
Looking beyond, we are also engaging in several early-phase developments, generating value from the material contingent resource base that I just showed. On the exploration side, we continue in a steady pace to secure longer-term production. We carry several firm wells in our program, both operated wells as well as non-operated wells. With Åsgard and Ormen Lange, we have a strong gas position in the Norwegian Sea. This will be enforced by the Kristin South project, which is starting up later this year, and the Halten East and the Ormen Lange Phase III projects starting up next year, followed by the Åsgard LP Phase III project in 2026. Beyond these, work is ongoing to mature developments of Tyrihans North, the Åsgard Ultra Low Pressure, and the Hyme Extension Projects.
The acquisition of Neptune gave us access to the Njord asset in an area where we already have a very strong presence with Fenja, Hyme, and Bauge. North of Njord, there are several discoveries, including the operated Calypso discovery. These are all likely to be developed as tie-backs to the Njord hub. Supported by the already sanctioned electrification project on Njord, we see Njord as a low-emission production hub fit for the future. We plan to drill 2-3 exploration wells per year in the Norwegian Sea. Next year, 2 of these will be operated by us. So we continue to be forward-leaning also in exploration in this area. So to conclude on the Norwegian Sea, we have a portfolio of projects in execution supporting near-term growth. We are progressing several early-phase developments, and we continue to explore.
Then to sum it all up, our plan is to sustain production at 350,000-400,000 barrels towards 2030. In the Balder area, we are setting up for low-emission production for decades. In the Barents Sea, we see growth and significant value to be captured. And in the Norwegian Sea, we have high-value assets in production and high-value projects in the pipeline. In the North Sea, we have a substantial portfolio sustaining production through 2030. All in all, we have a very diverse portfolio. We see a large opportunity space across the entire NCS. And now, we will take a 15-minute break before Ellen will come back and talk about accelerated decarbonization. Thank you.
Good afternoon, everyone, and welcome back. We have ambitious targets to minimize our climate impact while creating value, and we have solid plans to deliver. We are in the top quartile of the global industry on our emissions intensity and have a value-driven approach to reduce emissions both from our operations and in the value chain. Our decarbonization targets are simple, with a clear pathway to reduce emissions in alignment with the ambitions of the Paris Agreement, Norway's commitments, and the oil and gas industry in Norway. Our goal for Scope 1 is to reduce emissions by more than 50% by 2030, to be near zero by 2050, and to be near zero on methane emissions already this year. On Scope 2, we will ensure that 100% of our purchased electricity comes from renewable sources, neutralizing our Scope 2 emissions.
Scope 3 consists of emissions from supply chain, upstream and downstream transportation, and the use of our products. While maximizing reduction in the value chain, we will utilize quality offsetting for our own use in the upstream and downstream transportation. We already have low emissions from oil and gas production on the NCS, and we have a broad alignment to drive reductions further down. Our target for carbon intensity is below 6 kg of CO2 per barrel in 2030. Reducing our methane emissions is also a key part of Vår Energi's decarbonization plan. As part of this commitment, we've just applied to become a member of the Oil and Gas Methane Partnership, the OGMP, and we're already a signatory to the Oil and Gas Climate Initiative, the OGCI. But I want to highlight some key decarbonization deliveries from our operations that you see on the right-hand side.
We have the Goliath, EURA, and Ormen Lange that are already electrified. In 2023, energy management delivered CO2 reductions of 22,000 tons, which represent approximately 10% of our emissions from our operations. As a partner in the Snorre license, we are proud of the Hywind Tampen Wind Farm that delivers annual CO2 reductions of 200,000 tons. We continue to evaluate up to 30% on ESG in our contract awards, which our latest low-emission rig awards are a great example of. And last year, we established a collaboration with Equinor targeting more efficient logistics operations. And this is with regards to time, cost, safety, and emissions. And already, this project delivers around 20% reductions of CO2 emissions connected to our vessel operations. So as you understand, decarbonization is a part of everything we do.
We have a robust and concrete plan to reduce our Scope 1 emissions with more than 50% towards 2030. There are three main levers to this: it's electrification, portfolio optimization, and energy management. Electrification contributes to approximately 80% of our emission reductions between today and 2030. Portfolio optimization refers to the retirement of the Balder FPU, which will have a positive impact on both emissions and on our operating costs. In addition, we target 5%-10% annual reductions through continuous energy management efforts in the years to come. We have a value-driven approach when it comes to electrification. What do I mean by that? We regard emission reductions as a license to operate long-term. As you've seen, electrification is key to decarbonizing our operations. Therefore, we are electrifying assets in our core hubs with positive economics.
This includes benefits of around $2.5 billion from increased gas sales, higher production efficiencies, and reduced environmental costs. In 2030, 70% of our net production will be electrified. As you can see, some of our electrification projects on the right-hand side. Goliath, Johan, Ormen Lange that I mentioned are already electrified. Then we have Snøhvit, Njord, and Sleipner projects that are committed. When it comes to our planned electrification projects, we have Heidrun, Åsgard, and Kristin in the Halten area, Snorre that will secure additional power from shore, and not least our own core hub, Balder, that will electrify Jotun, Ringhorn, and Grane. With the investments in electrification, we are cementing our position for long-term value creation on the Norwegian continental shelf.
We believe that CCS will play a key role going forward and that the NCS will be instrumental with its huge storage capacity of more than 80 gigatons. Just to put this number in perspective, it's the same as EU's accumulated emissions for 25 years. As a pure-play E&P company, we have a value-driven approach to everything we do. It is our ability to create value that will define how we pursue CCS going forward. With the Neptune acquisition, we are now a partner in the TrTrudvang license with a potential gross storage capacity of 225 million tons. This alone equals four times the annual emissions from Norway. We are focusing on our core competence, which is within underground storage, and are currently targeting more acreage. A robust CCS value chain requires strong partnerships. With E&I, we are exploring strategic collaborations along this value chain.
We regard CCS as a potential enabler for large-scale emission reductions that may lay the basis for further value creation and jobs in an industry with great capabilities and technological advancements towards a future low-carbon society. So trying to summarize, we're already in the top quartile of the industry on our emissions intensity, and we have strong ESG performance. We have clear targets and a value-driven approach to reduce our emissions, both from operations and in the value chain. And you heard Nick saying it earlier today, those who can produce hydrocarbons with low emissions and low cost will have competitive advantage and be the preferred partner for decades to come. And as you've also heard today, Vår Energi is uniquely positioned for the future. So with that, I will pass the word to Stefano, who will talk about our sustainable returns.
Thank you, Ellen, and good afternoon, everyone. I'd like to start by quickly repeating the strong foundation we have for sustainable value creation and sustainable shareholder returns over time, as mentioned by Nick earlier. We are set to doubling our production by the end of 2025, and we will sustain the production between a range of 350,000-400,000 barrels a day towards 2030. Throughout this period, we will deliver high-margin barrels with a free cash flow neutrality of around $45, that's between $24 to $28, and high production. And low cost are the perfect combination to deliver strong and resilient free cash flow in a range that is expected between $4.5 billion to $8 billion over the next five years. We maintain committed to attractive and predictable shareholder returns, and our dividend policy remains unchanged since the IPO. All of this is underpinned by an investment-grade balance sheet.
Also, let me say, if consistency in the dividend policy has been the case, capital allocation framework also remains unchanged. We have a clear and balanced capital allocation framework in place to ensure resilience, growth, and distributions, starting with sustaining production on existing fields and funding CapEx on existing developments, which are the fuel of our production growth and new value-creating projects. Our CapEx policy is flexible and built on the ambition of average portfolio break-even of around $35 per barrel. We are committed to maintain our strong investment-grade balance sheet and a robust credit profile while paying dividends according to our stated policy. Additional free cash flows will be used for extra shareholder distributions and debt repayment.
We also have a clear criteria for any M&A activity focused on the NCS, like the recent Neptune Norway acquisition, with a very selective and disciplined approach designed to exploit synergies around our existing operations. But the most important thing for us is really to drive value. Let me say regarding this last point, on the time of announcing the Neptune transaction, we communicated potential synergies of $300 million NPV. After having closed the transactions and having had time to dig into the combined portfolio a bit more, we have raised the potential value realization to around $500 million. And Torger Widvey went already through the operational part of the synergies. Let me now go a little more into the details of the financial targeted value realizations. And these amounts to around $170 million post-tax and will be realized mainly in two areas.
One is optimizing finance and tax, and this accounts for around $110 million out of the $170 million. As a combined company, we see that we are able to optimize cost, to optimize cost allocation, and G&A. A combined, stronger company with an investment-grade rating allows us to have an even better access to capital markets and reduced cost of debt. We have, in addition, potential tax benefits, especially on the onshore tax regime. We will be able to optimize the insurance energy package by consolidating the activities and the risks to be insured. Another big area of financial synergies is the value capture from an enhanced portfolio. This accounts for around $60 million out of the $170 million. By adding significantly more gas resources, we are able to do more in terms of creating additional value from our successful gas sales strategy.
I will come to that in the next slide. We will have more volumes to deliver to key hubs in Europe and more value realization coming from optimizing gas deliveries around exit points, arbitrage opportunities, and also flexible gas sales with the possibility to choose among different indexations. This demonstrates the scale, diversity, and robustness the transaction adds, making us an even stronger pure-play E&P. Building a bit more on the gas sales, we are the second-largest exporter of gas to Europe after Equinor, and we have a robust gas sales strategy. Our flexible sales arrangement allows us for arbitrage between delivery points in Europe. We are actively capturing upsides and ensuring robust pricing for our products while, at the same time, managing volatility. We have long-term off-take contracts in place with reliable investment-grade buyers. Some have been spanning for over 30 years.
With Neptune, we are adding diversity, scale, and synergies to our gas sale portfolio with more volumes and LNG coming into the mix. In 2023 alone, we realized additional sales revenues of almost $1 billion, and we realized almost $40 per barrel above spot on average throughout the year. We also see that so far this year, our gas sale strategy is giving us protection with the recent weakness in gas prices. So far this quarter, we have realized $15 per barrel above spot, given that around 17% of our volumes are sold on the gas year-ahead contract, which is around $130 per barrel. And we will continue to sell around 17% of the total gas production on these prices until the end of Q3. This is including volumes also from the former Neptune Norway.
Despite the combination of a warm winter and high storage in Europe, we still believe that the gas market will remain relatively tight in the next couple of years. Let me also add that upon the time of nomination for the gas year-ahead from Q4, we saw a weakening in the forward curve, not necessarily representing a potential tighter market as we enter the winter next year. We have, therefore, chosen to have a higher exposure to spot going into the winter, and we will use other instruments like fixed price or quarter-ahead to catch windows of opportunities when they will present and keep maintaining robust pricing for our volumes. Looking at the next five years, we are well positioned to deliver attractive and reliable shareholder distribution during a relatively high investment period in the near term.
In the period 2024-2028, we are expecting to generate accumulative free cash flow in the range of $4.5 billion to $8 billion, assuming a Brent of $70 to $90, which will be available for shareholder distribution and further debt repayment. As you can see in the waterfall representation, these cash flow estimates include non-committed investments on which the company has a higher degree of flexibility and include also the exploration CapEx as per guidance, but not the potential future revenues and associated development CapEx from exploration resources. Cash flow resilience of the company is well represented in this slide, where you can appreciate robust cash generation across various price scenarios, ensuring resilient dividend capacity going forward. As investments are starting to flatten and decline beyond 2025, we are expecting high cash flow generation, and that's a nice combination.
Toward 2030, we rapidly have greater flexibility with regards to CapEx as we mature our portfolio of new development projects. We will be disciplined in what we bring to investment decision in accordance with our return and break-even requirements for the portfolio. Let me repeat those that are IRR above 25% and break-even around $35 per barrel. This underpins our resilient dividend capacity in both the short, medium, and longer term. Looking more closely at the CapEx, we expect investment to peak in 2024 with between $2.7 billion to $2.9 billion, mainly tied to the major development projects Balder X and Johan Castberg. For the following years, we are introducing a split between committed and non-committed investments. Committed investments mainly represent the sanctioned portfolio that will take us to the year-end target of 400,000 barrels per day by the end of 2025.
As Nick mentioned previously, our target is to sustain this production level at 350,000-400,000 barrels in the long term. To achieve this, we will unlock our contingent resources, which is represented by the non-committed investments in the graph. These investments are related to early-phase non-sanctioned projects, and this brings some flexibility in the CapEx phasing, which is also illustrated by the shading. An important feature of operating on the NCS is the stable fiscal framework. The tax system allows for immediate deduction against the special petroleum tax, and this makes it investment-friendly, as you can see in the graph. Now, let's look at the tax guidance for 2024. For the first semester of 2024, including Neptune Energy Norge, we plan to pay NOK 15 billion, which is approximately $1.5 billion. These are related to the remaining 50% taxes of 2023 results.
At mid-year, we will update the tax estimates for 2024, and in the second half of this year, we will be paying approximately 50% of the 2024 estimated profits. We have included a tax sensitivity for the second half of 2024 at different price scenarios, and hopefully, this can provide some guidance on tax going forward. Important to state that also these tax sensitivities include the Neptune acquisition. Turning to our financing, we have a strong balance sheet supporting a solid investment-grade rating. We have deleveraged significantly over the past few years with net debt to EBITDA reduced from 3.2 at the end of 2020 to 0.5 at the end of 2023. This is well below our leverage target through the cycle of 1.3. We have a prudent approach to risk management, where we actively seek to protect the downside while maintaining the upside.
This supports our capital allocation framework, allows us to have predictability in investment plans and shareholder distributions. For this year, we hedged 100% of our post-tax crude production. This also includes the added volumes from Neptune, and we plan to continue to do so also going forward. Our gas sale strategy gives us predictability. We have a robust insurance policy in place, which is also including loss of production income, and we have long-term off-take agreements with investment-grade counterparties in Europe. So underpinning this is our commitment to maintain our investment-grade rating. Our Baa3 rating from Moody's and BBB rating from S&P were reconfirmed in 2023, both with a stable outlook. The strong financial position lays a solid foundation for continued material shareholder distribution and growth, and this is a unique investment proposition that Vår Energi offers.
Vår Energi has a strong track record of delivering value to our shareholders. Since the IPO, we have returned around $2.2 billion in dividend, and over the last eight quarters, we have paid a stable dividend of around $250-$300 million. Our strong and resilient financial performance in 2023 continues to support attractive and predictable dividends. We paid out $1.1 billion in dividends relating to 2023 and 2022. The dividend guidance for the first quarter of 2024 is $270 million, despite a continued volatile commodity price environment showing the commitment and resilience of the company to attractive shareholder distribution. We maintain our dividend policy in a range between 20% to 30% of the CFFO after tax going forward, but with 2024 being in the higher range at approximately 30% of the CFFO post-tax.
Vår Energi is at an inflection point positioned for material value creation in the years to come, here illustrated by the outlook towards 2025. Our production is set to almost double, resulting in a significant step up in EBITDA and CFFO generation. To sum up, we are well positioned to deliver on our growth and sustained value creation, and we will continue to pay attractive and predictable dividends in the years to come. Finally, let me summarize our key 2024 and long-term guidance. For 2024, our production guidance is in a range between 280,000-300,000 barrels a day, which will increase to 400,000 barrels per day by the end of 2025. Further, we want to sustain 350,000-400,000 barrels a day until 2030.
Production costs are expected to come in in a range between $13.5 to $14.5 per barrel, with a target to bring it down towards $10 per barrel by the end of 2025. This is equivalent to previous guidance inflation-adjusted. CapEx is expected to come in in a range between $2.7 billion to $2.9 billion in 2024, going down to $1.5 billion to $2.5 billion after. Exploration expenses and ABEX will be in the range of $200 million-$300 million and $50 million-$100 million, respectively. And dividends, as already mentioned, are expected. We gave guidance of $270 million for Q1, and we expect to pay out approximately 30% of the CFFO for 2024. With that, I hand it back to Nick for the concluding remarks.
Well, thanks, Stefano. I've just got one slide before we open up to questions, and I just want to reinforce the messages that I left you with earlier. I'm super excited by the outlook for Vår Energi. I think we're positioned to deliver growth, deliver value, and resilient returns to shareholders. As I mentioned earlier, one of the fastest-growing E&Ps globally, and we're on track to double production to 400,000 barrels a day by the end of 2025. And that's a huge step up. I mean, doubling production when you're a small company is quite easy, but doubling production when you're going from 200-400 is huge. And as we've tried to get across today, we're set up to be able to sustain our production at 350,000-400,000 barrels a day to 2030. And we have a strong, resilient, broad portfolio that's going to support that.
And underpinning this, we have high-value projects with break-evens around $35 per barrel. And as Ellen's got across, we're going to decarbonize our operations by over 50% by 2030, making us relevant and investable long term. And there's more to look at here because I want to go further and faster, and we're working on that. And as Stefano's got across very well, we have a really resilient business. We're delivering strong free cash flow in the range of $4.5 billion to $8 billion over the next five years, which supports attractive and predictable shareholder returns. And these are the reasons, I think, to be invested in Vår Energi. It's a great outlook for the company, and it's very exciting, and we're committed to delivering on it. And with that, we'd now like to open up for your questions.
We're going to invite Torger and Stefano to come back on stage, and Ida's going to lead us through the process. We look forward to answering your questions, and thank you.
Thank you. Just a few practicalities. We'll take questions from the room first, and then we will move over to questions coming in on the phone, and then we'll take the written questions at the end. So we'll start here in Oslo. We'll start with Jørgen. It's great if you can introduce yourself and also try to stick to two questions at a time. Thank you.
Thank you, Jørgen. The microphone will just pick up.
It's coming.
Thank you.
Thank you, Jørgen Bråseth from Nordea Markets. A question on dividends. I appreciate that you're sticking to your guidance in terms of payout in percentage of operating cash flow, but looking at the current debt position and balance sheet, is there any particular reason why we shouldn't expect 100% of the free cash flow that you're outlining here today to be returned to shareholders as dividends? First question, and second question may be on M&A. If you're to touch upon a couple of the typical screening parameters you would be looking for in doing M&A in the current environment with the current portfolio, what's sort of the key aspects you're looking for for attractive deals as the company looks now? Thank you.
Okay. Maybe, Stefano, you get the first one.
Yes. And let me say, on dividends, we are actually continuing, let's say, on the path of what has been distributed over the past. And I think the macro has definitely, especially on the gas side, definitely deteriorated. Why we can afford to do so and can maintain the upper range of the, let's say, of the dividend, approximately 30%, so the upper range of it. And the answer is we have actually additional production that is coming also from Neptune. That has been a cash accretive deal from day one. It's additional cash flow and production. We actually have a resilient cash flow generation within the company, where we also have in place, especially for gas, some fixed pricing mechanism, which is helping also the realized price for gas.
Let me say we are quite proud for five consecutive quarters in a row to be the best in terms of gas price realization. Furthermore, I think it's important to zoom out a little bit and look a little bit beyond this year, where you see that the company in 2025 is then coming to a point where we have 400,000 barrels a day of production, so very material production, and CapEx that are flattening to then declining. So then the cash flow generation would be quite substantial, and the deleveraging as well.
Thank you. And then if I might try and cover the M&A question. I mean, I think what we tried to get across today is that we can sustain organically 350,000-400,000 barrels a day out to 2030 and perhaps beyond. And so whilst M&A is part of our DNA, we don't need it to deliver that. And what we're looking at in terms of M&A, it has to be a strategic fit for us. It has to fit with our portfolio, and it has to have quality in it. We need assets. We're not looking for late-life assets with little value and high cost and high carbon. We're looking at things that can improve strategically our business.
And if we can find assets that meet that requirement and they're available and we can do them at a price we can create value at, then we've got both the financial capacity, the capability, and a drive from the board to do it. But I see this as opportunistic. I mean, you're never quite sure when the right thing comes along, and you have to be open to that. But the important thing is we don't need it to deliver on the goals that we've set out. Thank you very much.
Next question from Lydia, Barclays.
Thank you. It's Lydia Sherwood from Barclays. And again, two questions, if I could. Nick, what does success look like for you? And I'm talking about, obviously, you've given ranges of 350,000-400,000 barrels a day. If we sat here in 2028 and you're at 350,000 barrels a day, is that disappointing for you? So basically, what does success look like from that side? And then secondly, if I could just come to the cost side. And obviously, you talked about costs coming down towards the $10, and I get that's inflation-adjusted. But are we really okay with just accepting that inflation, or is there anything you can do outside of that? Because obviously, that is still quite a big step up.
It's a really good question, Lydia. And success for me is about delivering what we say we're going to do. And anyone who knows me, I've had a track record of doing that. And I'm determined that we set a set of targets that we can deliver, and we work really hard to make it happen. And if possible, we do a bit better. And that's the focus. Now, we've set out 350,000-400,000. I would hope that over time, we can mature that and make it better. But what we can see today ahead of us is something that we can deliver as 350,000-400,000. And we'll see with success. There's lots of upside and opportunity in our asset base.
If we just have a moderate amount of, you'll see from the chart, there's no exploration, really, in that target, just a moderate amount of success on exploration, and we can perhaps change that materially. So let's see. But what we've set out is something that we can deliver from what we have in front of us today, and that's really important for me. In terms of costs, maybe, Thorhild, you want to try that?
Yeah. Thank you. No, just to be clear, as I said, we set a target as part of the APO that we were going to have a production cost of $8, that it was real terms, 2021. And then to simplify that, we said, "Okay, we would like to inflate this," so that $10 is the same number. And we are, let's say, working hard and chasing that. And as I said, really, we see that we have the ingredients, so to speak, to get there. And then, of course, we are happy that we're going to put a lot of modern production on stream. We mentioned those that the big one is Castberg, Balder X is already there, and then Balder X, adding more production. And then also, of course, we are, let's say, working hard on our own improvements, which I also mentioned there.
And then, of course, we also see the effect of incorporating Neptune to the synergies, bringing down the operational or the infrastructure cost and also operational excellence. So that is what we're going to work. And as I said, we really believe that we are there, we are going to get there, so to speak. And of course, there is something we can impact and influence. That is what we are going to focus. There is something we can't impact and influence, and that is more the global market and what's happening outside the Vår Energi buildings, so to speak. So we will see where that takes us, but at least we are going to take, let's say, realize over-opportunities within those areas. And then, yeah, we will get there.
I think, just if I might add, there's two parts to that equation, volume and cost. We're driving both. I believe there's opportunity to take costs out, but I also believe there's opportunity, if we work hard, to push the volumes up. Both of those influence the outcome.
Of course, we would like to pursue both. I think you saw that also from Rune Oldervoll's presentation, that we are, in a way, in all the hubs. Then, of course, bringing down the cost then and keeping the production or take it up, that will have a nice combination.
Good. Next question from Teodor SpareBank 1. Can we get a microphone across? Sorry.
TheTeodor Nielsen, SpareBank 1 Markets. I thank you for a very extensive presentation. Very useful. Two questions. First, you talked a lot about the Barents Sea and the gas potential. How much more gas do we need to discover in the Barents Sea before it makes sense to build a pipeline? Second question, that is on hedging. On the current gas forward curve, which is, of course, much lower than before, are you still selling gas forward, or should we expect that more gas will be sold on spot prices over the next few quarters, given where the forward price currently sits?
Yeah. I can start on the Barents. Maybe if I'm basing that on what Gassco said, because a little bit more than a year back, Gassco was releasing their study when it comes to area solutions for the Barents. And they said that to be able to realize our area solution for the Barents, they believe that you need in the range of 100 billion standard cubes of gas. That is their social economics. Of course, we would like to see it corporate economics, but I think that is in that range is what you need to be able then to, let's say, lift additional gas evacuation capacity. And I think that is now what we are pursuing. And then when we are realizing this, then we also will assess what is the best area solution and then make the right concept select, so to speak.
I guess maybe your follow-up question is, so where are we at the moment? I think we are in the range of 50-70, also based on the same report that they presented, and that is based on the I don't know what it's called anymore, but it was called NPD until last New Year, so to speak, their resources assessment and, of course, also the input from us as operators.
Okay. So we just interpret your answer. We need like 40%-50% more undeveloped gas to have a CA pipeline decision.
Yeah, in that range. And then also, of course, given the program that we are pursuing now as Vår Energi, as other operators, of course, that could be within reach when, if we are successful on those prospects we're going to drill this year and onwards. So like Venus and Elgol could add significant resources to that number.
Stefano?
Yes.
Yes?
So on the gas, Theodor, let me say, if we look at the gas indexation we have today, including Neptune, how we're going to sell gas, then 15% is fixed price mechanism with the EUR 130 that we showed. Roughly 35% is month ahead, and 50% is really spot or day ahead. Now, if you see from the graph we showed, only 5% has a fixed price mechanism in Q4. And the reason was exactly what you were mentioning. We believe that the forward curve is a bit low. Now, this composition that I was just mentioning doesn't mean that we remain the same throughout the year, right?
If we think that there is a window of opportunity at a certain point in time to increase the fixed price mechanism, then it's something we will evaluate and potentially do when we think is the right moment to do it. Maybe an important also element to add is also the fact that the gas that we have acquired, the gas production we have acquired from Neptune, half of it had hedging in place, which currently is in the money because we were providing protection below EUR 35 megawatt and GBP 0.80 therm. So that is also something that is helping the gas price realization and protecting the downside. So it looks like you're betting on slightly higher gas prices going forward, at least compared to the forward curve.
We believe that currently is undervalued. We think, overall, there are a lot of volatility. Currently, the low gas prices are mainly due to the mild weather and the high storage. But a new winter will come. We will see additional volatility. In general, we believe that, let's say, the structural elements that brought the gas spikes, which were the war in Ukraine and the no gas coming from Russia, I think there is consensus on the fact that this will not be solved anytime soon.
That's useful. Thank you.
Next question from Kate at JP Morgan.
Hi. Thank you for taking my questions. First one is, you've spoken a lot about how having low-carbon fuel is a big differentiator for you. How close are we for that to translate into the price that you get for it? And if you did manage to get a higher price for that kind of fuel, would that then accelerate your ambitions in terms of carbon capture? Because I know you've said before that it needs to be a financial decision. Can you maybe sort of outline what that would have to, what that basically means? And then the second question is on how much, in terms of your rig services capacity, have you already got contracted? And is that a risk you see later in the decade, given it's a relatively tight market? Thanks.
Yeah. I mean, I think it's a good question. I mean, I do personally feel at some point, people are going to start buying barrels because people are driving the carbon down. It's not the case today, but you see it in other areas like aluminum and other things you can buy low-carbon. But I think investors require it. And to be invested in an oil company, we see that in the ESG ratings. We've just gotten the ESG index here in Norway. I mean, we wouldn't have been in there unless it was for our ESG position. And I think that brings value in a different perspective. And for me, it's most definitely the right thing to do. I think it's a license to operate long term, certainly a license to operate here in Norway. And we have to pursue that.
I think the value will come in various ways. As far as CCS, it's very unclear how you create value out of that today. I see this as an option on the future. We have one license. We are going to look at securing some other licenses. We have a capability as a company to put gas into the ground as well as take it out, I think. We could do that piece of the technology. To create value from that, you actually have to link up the emitter with transportation and the storage. Then you have to say, how do I create value out of all that? There's some places in the world or in Europe where that's starting to happen. Today, the landscape to do that is not clear.
But what I do know is that Vår on our own is not going to be able to compete. And we are discussing with Eni and I about how we collaborate along the full value chain. And as I say, it's something for the future. It's not something you're going to see us put a lot of money in today. But yes, we're going to put some money in to move it forward and position ourselves because I think Norway is a big position, potential opportunity here to create value and be a store for carbon for Europe. So it's sort of, let's see where it goes. And it's amazing how the world changes and how quickly it changes. And I think we have to step forward and be part of that if we want to be successful long term. And that's how I see it.
Maybe Torger can answer the question about rig capacity and capability.
No, no, I can. I almost tempted to answer on the CO2 as well because I think at least just real quickly there, because I think the value drivers for us so far, and Alan talked to it, is really the carbon taxes that is already in place in Norway to avoid those. And then also, we get more gas that we can sell. So that is at least the two main drivers, I think, from our side. And then, of course, if we could get our ecological oil, where we get more money for it as well, that would be great. But then answering what they should be answering, that on rig, that was part of the message I had earlier today. We have secured capacity, and we are really working close with our key suppliers. And that goes particularly for rigs.
We have been working very, let's say, diligent the last couple of years to secure rig capacity. So those 5 rig lines I mentioned, that is secured with optionality for long time, so to speak, with what we really regard as competitive rates. And also, as was mentioned, I think it was from Rune, our ability to collaborate with Equinor in this regard is also adding flexibility. Of course, from south to north, it's a long distance. And then making us say, and then also, we are sharing the bill, so to speak. And then collaborating is better, both in terms of transporting rigs, CO2 emissions, time it takes, and also not, let's say, competing against ourselves, so to speak. So yes, we have secure capacity. And it was a question about what success looks like.
Of course, if we have great success, then it might be that we need more rigs to develop all our discoveries. But what we know about now, yes, we have a capacity.
Thank you, Kate. Next question from Sasi at Morgan Stanley, if we could just pass on the mic down. Thank you.
Hi. It's Sasikanth Chilukuru from Morgan Stanley. I just wanted to understand the impact of the 3P reserves on the production. It seems like there's already a range that's beginning to come up from 2024. I was just wondering whether the 280-300, is that still in that range, or is it above that guidance range? And is there any CapEx associated with that as well for you to unlock it, or is it more towards operational efficiency?
Yeah. Maybe if I can try. I mean, the 2024 range is around the guidance range we gave of 280-300. And of course, 3P is mostly upsides on reservoir performance, and it generally doesn't come with very much capital, if much at all. So we just show the range on there. And of course, that's why it widens as you go out. But I mean, we get back to the big fields getting bigger. And they've generally got bigger. And we continue to see those opportunities. So there is a range of outcomes around our resource base, which sort of caters for that eventuality.
Sure. The second one was mostly coming back to gas again. What's the average proportion of gas within that production profile that you've kind of highlighted? And slightly related to that, you mentioned hedges for the Neptune. How long do they stay? Are they on for next year as well?
Do you want to get that one?
Yeah. No, I think the gas average, I think, was shown to be 35%. And then as the new projects come on stream, which are mainly oil, then we go down to 30%, so less gassy. This is, of course, including Neptune. The hedging that I was mentioning earlier is in place for this year. Yeah. And then let me say what will happen, because that is also probably important to say, what will happen next is that from Q4, we will be able actually to include the gas production of Neptune within our contracts. And therefore, this is also where we will be able to get all the flexibility that we currently have with the different indexations also on that additional gas portion. Thank you very much.
Thank you. Next question from Vidar, and then we'll take Mark afterwards.
Vidar Lyngvær, Danske Bank. I wanted to touch upon the same subject as Theodor mentioned in the Barents. We know there were some well integrity issues in Goliath in 2022. The reservoir quality in the Barents, is there reason to be concerned about that? And then going further with this pipeline that was mentioned, any chance that that cost will be split by the operators and the government?
Torger, do you want to?
Yeah. Yeah. And I think the first question was a bit mixed because you talked about well-integrity issues in Goliath wells, and then you talked about reservoir, let's say, integrity. When it comes to the Goliath, yes, we had some issues that we call tubing issues. That is pretty common. And that means that it was two things that we did. We cleaned the gas that we have in the well. So we got less corrosion. And then we did, let's say, well intervention to repair it. That is something that we do on a pretty regular basis along the Norwegian continental shelf. So yes, that is something that we have to do on a regular basis. First, we have our inspection program. So we know the integrity of these wells. We have a very solid, well integrity program in Vår Energi. And I have full control on all our wells.
Then if we see some degradation, then we fix it. That was what we also did on Goliath. We also fixed the root cause so we don't get that type of corrosion again. Then I know I'm talking a little bit based on old knowledge because yes, there are some reservoirs in the Barents that have low overburden. But we are not part of, and we are not doing exploration in any of those that have this lower overburden as such. But also, in general, and that is more what I learned at school, is that in the Barents, there is a natural seepage of gas and oil because of the lower overburden in the Barents. So that is also a little bit also the nature of the, it's part of nature, so to speak. But we are not part of this low overburden.
But also, I would like to say that, of course, you know the regulations in Norway is very strict. And the operators have a big competence there. So we will not do those kinds of activities if we don't have full integrity and full understanding of how this is working. So that was specific to us. And then it was more the general, let's say, barriers on lower overburden.
Thank you. And the pipeline cost, any chance that that is going to be part of the development cost, or could there be some support from the government for that?
No, I think first and foremost, we are going to do what we are doing now. We have a Barents as a very prospective area. We are going to explore, to find, and try to realize this future value. Then we realize, as I said, together with other operators there, see, okay, what do we need as an area solution? Then we are doing that, making a concept select. And then, of course, that might be, of course, it's two candidates in my mind, maybe. It's a pipeline or it's additional LNG capacity. And then, of course, we have to see what kind of, let's say, conditions and who will be part of funding, things like that. It's a bit early to speculate, I feel, on that.
Let's ensure that we have a solid basis to create a lot of money and value on this before we speculate too much on that.
Thank you.
Thank you, Vidar. Then we got Mark from Jefferies.
Yeah. Thank you. It's Mark Wilson from Jefferies. First question is just a it's actually more clarification on the non-committed CapEx projection out to the end of the decade. So I understand that correctly, that's actually related to the 20 projects that you could bring on out of the existing contingent resources. If we could just confirm that and just remind me what those contingent resources associated with the 20 are. I appreciate some exploration might come in and kick some out, depending on success. But as I read it, none of those would require any new surface facilities such as an FPSO or anything. So this is all theoretically you can deliver that range via tie-backs. Those are my first clarifications.
Yeah. No, that's clear. I mean, the 750 million barrels of contingent resource we have is all actually associated with tie-back type developments. And the 20 projects that we've highlighted account for 400 million barrels of it. And the capital that you've got in there, non-committed, is associated with that. What we've assumed in those outlooks is that we spend the money on the exploration, but we have no success. So we haven't put any basis of exploration capital in, but we've put the cost in for drilling it.
I think that's great. Then to bring it back to where we are now, and if you like, the final surface facility you're putting out there before we get into that, the Jotun FPSO, you clearly highlighted the end of August. It's 90% complete. Could you just give us some of the important points that have to be done before August that keep it on the critical path and have to be completed? Thank you.
Maybe I can try to start with and then Torger can fill in the gaps where I get it wrong. We're over 90% complete. We can see the end. It's all about the FPSO. All the materials are there. All the equipment's there. And it's about completing it. And actually, never before have we had a level of activity and delivery than we have today. The challenge has been getting things completed and allowing us to get into commissioning. And we're still taking action to speed that up. And that's why we're still targeting getting this done for Sailaway in August. And it feels like we're moving in the right direction today, but there is a risk around it. And that's why we've said that there's a risk that if we don't meet August, then we'll know in months whether we get there.
If we're still on path, it's probably sort of harder to tell than if we're off track, to be honest. So the fact that we're still saying it's sort of on track for that time frame is good. But there is a risk, as I say, and if we don't get it done in time to get it installed before the winter, then the potential is that this goes to a spring installation next year. That's why we set a P90 startup in end of Q2 next year. Now, the reality is it doesn't impact our guidance for this year of production. It doesn't have a material impact on cost because most of the cost is spent. We've got flexibility around the installation activities. It doesn't impact on our ability to achieve 400,000 barrels a day by the end of next year.
It doesn't impact on our viewpoint on how we look at dividends either. So to me, what we'll do is we'll update the market as we know more. And I think the next point to sort of check in would be our Q1 results. And we can probably update where we're at at that point. But Thorhild, do you want to?
It's not much more to be added. I think, as I said also, we're going to have it complete in accordance to the set plans. And we have to make the weather windows too so we get it properly installed offshore on top of what Nick said. And we are also driving it extremely hard with, and we see significant progress. And then we will see where it takes us.
I think the point is you can see the end. I mean, we're over 90% done. Every day, it gets further. You can't undo that. It's getting there. There's a lot of motivation to get it done and a lot of drive to do it.
Good. Question from Victoria at RBC.
Thanks very much. Victoria McCulloch at RBC. Just one from me. Nick, you talked about a desire to accelerate. You clearly outlined 20 projects. Can you talk about how you rank these, either geographically, oil versus gas? What constraints are there in relation to your partners? And how much of the phasing do you require either partners to commit to, or do you see an ability to accelerate alongside them?
No, it's a good question. There's a complex issue, really. I mean, it's about, first of all, de-risking the project and getting to a place of wanting to do it and ready to go and make it happen. It's also aligning partnerships and ambitions. Some of these, we operate, and we have clearly more control in that circumstance. Some, we don't operate. Some of you will have attended the Equinor Capital Markets Day. They talked about a lot of projects that they're trying to move forward. Actually, the story is very similar. We have a lot of overlapping joint interests in that program. The reality is, I think the relationship between us and Equinor is extremely strong. We're here to help support them, move them forward, and push them as quickly as we can.
And I think there's a lot of alignment around that. And I think broadening the portfolio to bring Neptune in creates more of that alignment for us between us and Equinor and, of course, other partners as well. So we would like to do all of these as quickly as possible. Of course, then there becomes a capacity factor in here. But I don't see any issues at the moment. And we're going to just move them all forward as quickly as we possibly can. And then if we reach a crunch, we'll have to prioritize at that stage. But we're not there today. To me, it's more quickly is the message about everything in this company. And that's what we've got to do.
Yeah. If I may add a few words here because, as Nick said, if you are listening to the Norwegian part of or the Norwegian continental shelf part of Equinor's Capital Markets Update, you hear a lot of the same. And we are very aligned. And we have a lot of overlaps where we operate and where they are operators. And we are talking together, so to speak, and want this to happen. That was one. And two, it's also about concept. Yes, it's subsea tie-backs. But sometimes we can actually utilize existing infrastructure also on the subsea side and the tie-back side. That should go fast. And that is also where we are, in a way, hunting and pursuing now. We are looking into this and say, okay, where are we having good prospect prospects? And where do we have existing infrastructure where we can do it very fast?
The last is related to that as well. It's standardization. I talked about that on one of my slides. Actually, when it comes to and this is a bit detailed, but when it comes to the Christmas trees, the wellheads, and so on, it's standard. In Norway now, the big operators, us and Equinor, among others at least, we are using the same equipment. That means that we also can pick the slots, get it going, and we can utilize it. So those are the things that are going to drive the speed. They are clear alignment, looking at the concepts, and then utilizing the standard solutions that are well established.
Thanks very much. Question here from Quirijn ING.
Yeah. Quirijn Mulde r from ING. I have two questions. One question is especially with regard to the 350-400 target. You give some sort of average, in my view. Let me say, is it possible that you, let me say, slow down, let me say, 2026 to almost 350 in 2027, and then moving up somewhat because you have some development plans which are picking up in 2027, 2028? Is that maybe the possibility there in terms of production?
I mean, let's see where it goes. But we grow to 400 by the end of 2025. And you can see from the chart that we can sustain it a few years, and then it declines. Our aim is not to see any decline. Our aim is to try and keep this at 400. We're just guiding 350-400. We're going to do everything we can to bring forward projects that we can fill that gap.
The second question is then about, let me say, your efforts towards the $8 per barrel. One of the elements named, besides, let me say, the mixed improvement with new developments and M&A, etc., you also mentioned portfolio management. Can you give an update on that?
Yeah. I mean, we said at the end of last year that we were going to rationalize the portfolio. If you've followed, we disposed of our Brage asset at the end of last year. And it's a typical type of asset that we would like to sell. So we have a few things in our portfolio that are late life with limited upside that are high cost, high carbon. And we'd like to move those out of the portfolio. And we have a process going that we will try and do that. And we will appreciate that we don't sort of talk about M&A activity as it's happening. We will inform the market when it's done. And so it is our intention. And there is quite a lot of interest in the market. So let's just see where we get to come through this year.
That's definitely our intent to do that.
Thank you.
In fact, actually, what you will see is we would go over 400,000 barrels a day by the end of next year if we don't do something. So if you do the sums, we do go above it. And that's why we're saying approximately 400,000 because there is an assumption in that target that we've disposed of something.
Good. Next question from Stefan at DNB.
Thank you. Steffen Evjen from DNB Markets.
Looking at your price deck, gas prices in your assumptions are a lot higher than the current spot market and the forward curve. Could you elaborate to what extent is there downside risk to production outlook if gas prices stay at current levels or turn lower?
Stefano, would you?
Yeah. No, in terms of price deck, I think that is an indicative price deck. That was for the sake of providing the info. We are also on top of this. If you see in the appendix, we are providing a kind of sensitivity on how the metrics change if, let's say, gas or oil prices change as well. Hopefully, that will provide some additional help in finding out the outcome.
As far as gas profile goes, I don't think it changes it because all of the projects that we do to increase production are very significantly economic. And so even at low prices, these things will work. And bulk of our gas production is from current ongoing operations that are producing. But there is incremental to that. And that incremental comes with very strong economics.
Thank you.
One more question from Mark at Jefferies.
Yeah. Mark Wilson again from Jefferies. The 60 exploration wells, obviously, you don't have all of those matured up. But you've got 2024 and probably got a view on some in 2025. So possibly, you could talk about maybe your top three prospects within that? It'd be interesting.
For the next 60 wells? For the ones you've got? I can take a few here. And maybe we can, say, do our. We'll see whether we agree. Yeah. Do our workshop on it. We mentioned already for this year Venus and Elgol, which is operated by ourselves. Then, of course, it's exciting what's going to happen around Goliath with Sagat and these wells that are also coming. Then if I'm looking a little bit into 2025, there are two wells that come to my mind which are operated from us. That is the Lavrans and the Vitsyn that are going to come. And then I think also what is always good and important is, of course, what happens around our key hubs. And that is, of course, like Castberg as well. That is always good to build production there.
I'm looking at what Nick has been putting on his list. No, so that's at least a few there. And then also, there are some other prospects that we have in our mind. And of course, also, maybe as Rune mentioned that we are ongoing with our well now in the Ringhorn area. That is also exciting to see what that brings to us there. So of course, that is the closest one that makes me a little bit moist in my hands.
I think the way I look at this is it's a program. We're going to drill 16 wells this year. And we can get drawn into I like this one better than that one. But the reality is even some of the ones that might be relatively small size that can be extremely economic and perhaps more so than some of the ones that are a bit further afield and might feel bigger. So I think the whole program is fantastic. What we try to do is to balance risk here. What I was struck coming into the company was the quality and depth of the portfolio. There's clearly been a lot of work going on to build the portfolio and the opportunity set. Now we have the opportunity to drill this out. That's what we're going to do.
I think we've got a very diverse portfolio with a range of risks across all of our basins. And that spreads risk and gives you portfolio sort of effect around this. And I think there's a great opportunity to create some value out of this.
Thank you. Last one from Lydia. And then we're going to take the chat. Thank you.
Thank you. Just to come back to, I didn't realize I could have asked a second question. Sorry, Willie. But just coming back to the investment case for Vår Energi. If I think about what you've outlined today, it's resilient dividends. And that's payable in a lower oil price environment than we are today and with lower gas prices. In terms of the upside to that, does that come from the higher price from the exploration activity you've talked about and possibly from the disposals? So I'm just trying to think about where the growth in the investment case comes from.
Well, I think one is sustaining production long-term delivers long-term free cash flow. And I think perhaps that's the visibility that we haven't provided so far in the past. And that should be able to support dividend stream long-term. And of course, higher prices gives us more capacity to pay more. And so I think that's one element of it. I think the other side of this is the further upside in our resource space. We've got 750 million barrels of contingent resources. In that profile, you saw there's only 400 million barrels of it being moved forward. And we need to try and move the rest of it forward. And I think our exploration portfolio is going to deliver value. There's no doubt about it. I don't know where it's going to come. But we've got such optionality in there.
So, I think there's, and when you look at it, most of it is tie-back type development. So, it's all incremental, quick cycle times. We can do it at a pace we can control. And so, to me, there's a lot of upside in all of this.
Perfect. Thank you.
Thank you. And then we'll take the next question from Matt Smith of Bank of America. It's two questions. Is the early-phase project production outlook risked? Or do you have sufficient confidence in progressing the individual projects it contains? Second question is, equally, what level of confidence do you have over the corresponding CapEx estimates to deliver these early-phase projects given recent observable trends on the NCS? How would you characterize the supply chain environment?
Torger, do you want to try?
I can start at least. When it comes to our early-phase projects, as I said, or as we said, they are specific. They are concrete. They are starting to be defined. So we haven't been risking those. We are talking here about our 2C contingent resources above 400. We talked about what we are moving now is around 400 million barrels out of 750. And of course, they will be matured. We will develop the concepts and solutions. And our plan is, of course, to make the business case better as such. And then it's also supply chain.
Correct. How would you characterize the current supply chain environment?
I think it's a good question because then we might use the opportunity to emphasize a few things. There is no doubt that there is, I would say, a high activity level in Norway. I think we are ahead of the game in a way because our current project in executions are coming towards the end. There is another wave of projects that was just sanctioned in 2022. If you take the normal lead time here, between 3 and 4 years in execution, you will see that the capacity so that means there's a high capacity now. But with the lead time, 4 years plus 2022, you are coming to start seeing, I would say, a decline in activity in the 2026-2027 range.
That is why we said that we believe we actually can have a very good timing of these projects because it is when the capacity starts freeing up or the activity goes down. So we actually see our window of opportunity. That means that we will have an industry in Norway, a subsea industry as well, that have been working hard and really been fine-tuning the machinery. And then we are coming with our, I would say, new projects that should be fitting the curve that when activity starts freeing up. So that's a bit how we see it. And I already said in this presentation that we have secured the capacity for when it comes to the step-up in activity that we are planning now when that comes to the rigs, service, and so on.
We think we are in a good position both when it comes to timing and the capacity we have secured.
I think if I come to the first question again, I think rather than risk, there's also lots of upside. And that's the thing to get across. So if I take an example, we made the Countach discovery near Goliath last year. It's actually on the same ridge. And we've got Goliath up here. And we've got Countach down here. And we have a string of prospects in between. They're not in our contingent resource. But they're exploration prospects. We're going to drill all of them in the next year. And actually, the real opportunity in there is as much reserve as being developed originally in Goliath. So the scale of the possibility in there is quite significant. And I think you see that in a lot of places in our portfolio. Balder is exactly the same.
The wells that Rune showed, 70 locations, we don't have that in a plan in that profile. But are we going to get it in the plan? Yes.
Yeah. And just the last word on that because what our point is that the improvements are yet to be done. That is what we are doing as part of the maturation phase. That is when we are putting the clever people together through the value chain, from subsurface to drilling to facilities to operations, and saying, "OK, how can we do this?" And that work is what is really initiated as part of this maturation phase. So yeah, so that is representing what Nick said, the opportunities and upsides that we are chasing here.
Good. Another comment or?
No, no.
That concludes the Q&A and our Capital Markets Day for 2024. Thank you so much for joining us here and also on the webcast. Any concluding remarks from you, Nick?
No, I'd just say thanks for coming. I think we've got a fantastic outlook for the business. It's going to drive growth and sustainable value and deliver a lot of value to shareholders. Hopefully, you can see that in it. We thank you for participating. Thank you.