And it provides access to high-return international acquisition opportunities. Vermilion is unique in this strategy. Because of this advantaged business model, we’ve been able to return a significant portion of our capital to the investors over the years, over $40 a share in dividends. Past four years have been some of the more challenging years in the company’s history, and we’ve taken a relentless effort on reducing debt and high-grading the asset base. We have made significant progress on these measures, as we’ll talk today, but we do recognize there’s still more work to do. I do believe the company is much, much better positioned today with a stronger balance sheet and a stronger asset base, and we are much more resilient. I’m extremely proud of all the hard work our team has done through achieving these goals and repositioning the company for the next 30 years.
Well, the first quarter of 2024 was another strong quarter for Vermilion. We delivered strong operational results, which was above the upper end of our production guidance. Those are really driven by Germany and the U.S. We generated $431 million of fund flows, we invested $190 million of A&D capital, and we generated $241 million of free cash flow for the quarter. This free cash flow helped us to reduce debt by another $134 million and achieve our net debt target of $1 billion during the quarter. We finished the quarter with a net debt of $944 million, which is the lowest in over a decade. Reaching our net debt target was a key milestone and allowed us to accelerate our return of capital strategy, and we increased our allocation to 50% of excess free cash flow.
This was announced in Q4, and immediately after this announcement, we significantly increased the pace of our shareholder buybacks. We repurchased 1 million shares in the month of March, bringing the total for Q1 to 2.4 million shares. We’ve continued this pace into April, and we bought back another 1 million shares in the month of April as well. In addition to delivering strong production and financial results, we’ve also advanced all of our key growth projects, in particular in the Montney, the liquids-rich gas development, deep gas project in Germany and our Croatia gas development. I’ll expand on each of these projects in the following slides. So starting with our international operations. Production came in at 32,546 BOEs per day. In Germany, we successfully drilled our first deep gas exploration well and discovered gas in the targeted zone.
We plan to commence drilling the second well in Q2. We also made several discoveries in Croatia where we encountered hydrocarbons in multiple zones in the first three of the four wells we’ve drilled to date. Investments in these programs are quite key as they’re intended to support the longer-term free cash flow generation of the business, and we’re excited to test the results of these wells in Germany and Croatia in the second quarter. Also in Croatia, construction of our gas plant on the SA-10 block is nearing completion and is on schedule for midyear start-up. This will allow us to bring on 2,000 BOEs a day of gas that’s behind pipe that will help immediately increase our free cash flow. In Australia, we continue to see strong performance from that unit as well as strong pricing in Wandoo.
We generated the highest netback of our asset base with a $65 BOE netback. Now as a reminder, we have over 700,000 net acres of land in Germany. We’re targeting these deep gas exploration projects. And these prospects that we see, they’re on trend with Netherlands. We’ve been in the Netherlands for almost two decades. We’ve drilled wells during that period, and we have a success rate of about 70%. So we’re quite excited to apply those skills as we work on Germany. The first well as noted was successful, Osterheide, and we’re targeting that – while it was targeting the existing gas field, the well was drilled to a total depth of 5,000 meters where we discovered gas in the targeted zone. This is the deepest well that we’ve ever drilled in Germany and in Europe, for that fact, and it shows the strong operational team that we have in Europe.
We’re very pleased with these initial results, and we plan to test the well in the second quarter as we’re preparing for tie-in operations and getting that well on in early 2025. We’ll now start planning and drilling the second well, which is Wisselshorst. Now this well is a higher risk as we’re targeting a large prospect that we see on seismic. It’s going to take three or four months to drill, and we have a 60% working interest in the second well to help to manage the risk and capital associated with exploration drilling. We are in the early innings in Germany where we’re quite excited about the outlook and the opportunity we have in front of us. We have identified at least nine individual prospects, and many of these prospects are large enough to have multiple follow-up drilling associated with them.
So with success, we see the ability to more than double our Germany business unit over time. In Croatia, construction of the gas plant on the SA-10 block is nearing completion. The team is currently testing that facility and conducting the pre-commissioning start-up activities in preparation for a midyear start-up. On start-up, this unit will add 2,000 BOEs a day of European gas, which again is exposed to premium pricing in Europe. We expect it to have a netback over $50 per BOE. Initial production, as a reminder, is from the two successful exploration we drill – wells we drilled before. These wells were tested at 15 million and 17 million cubic feet per day previously. So we’re very excited to be nearing the point where we can get these wells on production.
Also in Croatia, we drilled two of our four-well program in Q1, and subsequent to the quarter, we drilled our third well. All three of these wells in discrete structures have discovered hydrocarbon in multiple zones. We’ve had both oil and gas shows in the zones, and it looks very promising given the thickness of some of these zones. We don’t know the full extent of the development. We’re still early days as we’ll be testing these wells in the next quarter. But having consecutive exploratory success is very exciting on this block, and we’re awaiting the test results of these wells as we move into the second quarter. Production from our North American operations averaged 52,959 BOEs a day in Q1. Most of that capital was allocated to the Montney development.
We’ve drilled 13 and completed 13 wells, and we brought nine wells on production. As well in the U.S., even though we didn’t have operated wells this quarter, we did participate in some non-operated wells in a formation called a Parkman. That’s an oil zone. Those wells came online in the quarter and helped to grow production in our U.S. business unit quarter-over-quarter. Construction of the BC Montney battery is progressing as per plan as well as we tied in the six wells on the first pad in our Montney position. The slide on – picture on Slide 20 shows this battery. It’s a 16,000-BOE/d battery that we’re currently constructing. It is nearing the completion, and we’re expecting to start this unit up in late Q2. This battery will more than double our infrastructure capacity in the Montney, and we look to fill that capacity in the upcoming years.
Further expansions will be required as we debottleneck this facility by adding compression. Ultimately, we are targeting a production rate of 28,000 BOEs per day on our Montney asset. We recently tied in the first six wells as noted, and we’re flowing those wells through our existing bottleneck infrastructure. But the early results of the wells are quite encouraging, in line with the strong wells that we drilled in 2023, which you can see the results on this slide. We’ll be able to produce those wells at higher rates once we are able to get our battery up and running. In summary, these results are very positive, and we continue to validate the quality of our BC acreage in the Montney. We’ve also drilled the next five wells of our program. We’ll look to frac those, complete them in the next quarter and bring them online in Q3.
On the cost side, we continue to optimize our drilling and completion activities, which has resulted in cost savings per well of 50%. This is compared to our 2023 program. Our 2024 program used 17% less water, which reduces cost, but it also reduces the environmental impact. As well, we’re further optimizing our well design and our completion activities. In addition to this, we are piloting different completion strategies, and we’re also piloting tighter well spacing. We think the combination of these learnings will allow us to improve the efficiency in which we operate and develop this asset for decades to come. In summary, it’s a very key year for us in the Montney as we get the infrastructure in place, start up this next pad, and we’re quite excited about the cash flow that this asset will generate for us for decades to come.
On the outlook side, we expect to see continued operational momentum as we go into Q2. We’ll remain focused on these key growth projects that we’ve talked about earlier. That’s completion of the start-up of the BC Montney battery, completion and commissioning of the SA-10 gas plant in Croatia as well as testing the successful wells that we drilled in Germany and Croatia. Full-year guidance remains intact for production, and we expect Q2 production to be in the 83,000 to 85,000 BOE a day range. Commodity prices as well continue to be supportive, and our financial outlook remains very strong. Looking at the financial forecast for 2024. We’re currently forecasting approximately $1.3 billion of fund flow and free cash flow of approximately $700 million.
We’ve also included our preliminary 2025 outlook, which anticipates modest production growth and with fund flows based on backwardation and strip pricing. As well as adjusting for lower hedge gains relative to 2024, we’re forecasting about $1.1 billion of fund flow for 2025. But as you can see as well, those red bars will continue to reduce debt and continue to strengthen the balance sheet through 2024 and 2025 as we continue to reduce debt and return 50% of our capital to our investors. With that accelerated return of capital payout target of 50% of our excess free cash flow, we would expect to have a robust share buyback program for the balance of the year. Based on the current forecast, we’re projecting the return of approximately 10% of our market cap to shareholders.
And that will be through a combination of fixed base dividend and the share buybacks, which we’re currently undertaking. Well, we’ve made a lot of progress over the past few years. I’m actually very excited that – we’re looking at the company as we go forward, we’ve got a very strong balance sheet now. We’ve got the lowest debt to cash flow in over a decade. We continue to build operational momentum with another strong quarter in Q1. We’ve got strong run times in our legacy assets, and we’ve talked about the Australia unit, which is back online, performing quite well. And we continue to progress our key growth projects in the Montney, in Croatia and in Germany. Our near-term return on capital framework provides investors with a growing base dividend and meaningful share buybacks, which we look to augment with modest production growth and opportunistic international acquisitions.
We will continue to focus on operational excellence and executing our 2024 plan while maintaining financial discipline. We believe this will set the future for profitable growth as we position the company for the next 30 years. We look forward to providing updates on these key growth projects in the months ahead.
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Dion Hatcher: So in closing, I would like to thank our shareholders for your continued confidence in Vermilion. And thank you to our Board of Directors. Thank you to our employees, our contractors and our service providers for helping us execute our strategy and for your contributions.
