We maintain an attractive and deep inventory of development locations with approximately ten years or more of remaining drilling opportunities in each of our core assets. We remain committed to delivering stable production, maximizing free cash flow and further strengthening our balance sheet.
Our 2020 annual guidance is unchanged as we target production of 93,000 to 97,000 boe/d with exploration and development expenditures of $500 to $575 million. At the time of writing, our exploration and development program is expected to be fully funded from adjusted funds flow at the forward strip and we have the operational flexibility to adjust our spending plans based on changes in commodity prices.
We maintain a consistent approach to risk management and marketing, utilizing various financial derivative contracts and crude-by-rail to reduce the volatility in our adjusted funds flow. For 2020, we have entered into hedges on approximately 48% of our net crude oil exposure, largely utilizing a 3-way option structure that provides WTI price protection at US$58/bbl with upside participation to US$63/bbl. We are also contracted to deliver 11,500 bbl/d of our heavy oil volumes to market by rail.
Baytex's success is due to very engaged Board, management and employee group who are all strongly aligned and committed to driving value for shareholders. With the combined team, we are confident we have the skills, experience and focus that will create a more prosperous future.
We look forward to executing our plans in 2020 for the ongoing benefit of all stakeholders and we thank you for your continued support.
Sincerely,
Edward D. LaFehr
President and Chief Executive Officer