Hello, and thank you for joining Gulf Keystone's 2022 half-year results. I'm joined today by Ian Weatherdon, Chief Financial Officer, who will be taking you through our financial performance. I'm also joined by Gabriel Papineau-Legris, Chief Commercial Officer, and Aaron Clark, Head of Investor Relations. We'll run through the slides before opening up the line for questions. Slide two, disclaimer. Before I start, I'd like to remind you that the presentation slides are available to view on our website. I will leave you to review the legal disclaimer in your own time. Slide three, half-year results highlights. We've delivered significant profitability and cash generation in the first half of 2022, driven by strengthening oil price and increased production from the Shaikan field.
As ever, a focus on safety and sustainability has underpinned our performance, and I am pleased to report we have been operating for 315 days without a lost time incident, even as our operational activity has increased. We also remain focused on delivering our broad sustainability strategy. Strong cash generation has enabled us to continue delivering against our strategic commitment to balancing investment in growth and shareholder returns. Regarding investment, we've been busy in the year to date, preparing our infrastructure for future growth and resuming drilling in August with the spud of Shaikan-16. We also continue to progress towards approval of the Field Development Plan and award of our gas management contract. Regarding returns, we are delighted to have paid $190 million of dividends to our shareholders in the year to date.
We are today increasing this total to $215 million with the announcement of an additional interim dividend of $25 million. I will now touch on our sustainability performance before reviewing our operational activity and preparation for future growth. Slide four, ESG. The safety and sustainability of our business is critical for Gulf Keystone. In the year to date, we've been delivering against our sustainability strategy and addressing the priorities that are material for our business and our stakeholders. Addressing climate risk remains very important, and we are pleased to be progressing the gas management plan tender process with execution of the project enabling us to more than halve our emissions intensity by 2025. We're also focused on achieving full compliance with the Task Force on Climate-related Financial Disclosures for our annual results next year.
We also continue to deliver against our other priorities, in particular, investing in local employment, suppliers, and community projects. We have completed a number of impactful community projects this year, including the funding and development of a hydroponic product facility, which you can see on the right, which will provide local farmers in the Shaikan area with food for their livestock. The fodder is grown without soil and with very little water. We are also supporting over 500 local farmers with the provision of enhanced grain to make up for lost yield in recent years. In addition, we are developing local skills and providing equipment for local business startups such as sewing machines and vehicle maintenance training. We are proud to be investing in Kurdistan and supporting the communities that enable us to produce from the Shaikan field. Turning now to the operational review and our production performance.
Slide six, production performance. Gross average production in the year to date has been around 45,000 barrels of oil per day, slightly higher than their full year 2021 average of 43,440 barrels of oil per day. Production has been supported by bringing Shaikan 13 and 14 online in January, and most recently Shaikan 15, which are offsetting the natural decline of the field. We continue to optimize our wells to avoid traces of water ahead of planned installation of water handling. We remain focused on achieving our production guidance of 44,000-47,000 barrels of oil per day by continuing to optimize production from existing wells, supported by well workover and intervention program. In the year to date, we have worked over two wells and are planning to complete further interventions in the remainder of the year. Slide seven, please.
2022 work program, sorry. Our operational activity in the year to date has focused on preparing the Shaikan field for future growth. We have been progressing the expansion of our production facilities as well as preparing well sites, including the pad for Shaikan 16 and Well N. Following the completion of Shaikan 15 in April, this activity has enabled us to resume drilling with the spud of Shaikan 16 in late August, which we are targeting to start up towards the end of the year. With the drilling of Shaikan 16 as well as procurement activities to progress the installation of water handling, we have increased our 2022 net CapEx guidance to $110 million-$120 million. Due to supply chain disruptions, the timing of water handling installation remains uncertain.
Once installed, we will be able to unlock additional production from our wells. Slide eight, field development plan update. As we continue to prepare the Shaikan field for growth, we are also progressing towards field development plan approval. While timing remains uncertain, we retain an active dialogue with the MNR and recently submitted a revised field development plan in response to their technical inquiries. Simultaneously, we are progressing the tendering process for the gas management contract. As we progress, we are monitoring the market environment and potential impact of global supply chain pressures and logistical challenges on the field development plan's cost and schedule. We are very excited about the project and continue to believe that a field development plan is an opportunity to create value for all our stakeholders, and particularly our investors and the people of Kurdistan.
The proprietary work we are currently progressing, such as the construction of well pads and facilities expansion activity that you can see in the photos here, will enable us to hit the ground running once we obtain approval. With that, I now hand you over to Ian for the financial review. Ian?
Thanks very much, Jon. As Jon mentioned, we delivered strong first half financial results driven by strengthening oil prices, increase in production, and our relentless focus on cost control and capital discipline. Adjusted EBITDA and profit after tax in the first six months of the year were more than double the first half of 2021 and almost equal to the full year, 2021. We continued to deliver on our strategic commitment to balance investment in profitable growth with rewarding our shareholders. Dividends declared this year are more than double last year, translating into a sector-leading dividend yield. We have increased CapEx guidance by $25 million to a range of $110 million-$120 million, with the addition of drilling Shaikan-16 and water handling facilities procurement activity. Moving to slide 11, Adjusted EBITDA.
Looking at the underlying cash generation from our business, Adjusted EBITDA more than doubled to $209 million. We are leveraged to increases in oil prices. Weighted average dated Brent was up about 65%, which drove an almost doubling of our realized price for our crude sales to $84.30 a barrel. Also, gross average production in the first half was up 3% to 44,941 barrels per day versus the prior period. Operating costs and other G&A were up slightly with increased production and activity. We also saw an increase in share option expense due to the final exercise entitlements by former directors under the legacy Value Creation Plan. We expect share option expense to be lower in future periods now that the Value Creation Plan has been terminated. Moving to slide 12, cash flow.
The significant increase in Adjusted EBITDA underpins strong cash flow generation in the first half. Net CapEx was $42 million, reflecting the drilling of Shaikan-15 and activity to prepare well sites and production facilities for future growth. Free cash flow in the first half of the year was $177 million, almost triple the prior period. This enabled us to pay $115 million of dividends in the first half of the year, and in July, an additional $75 million of dividends. Also, since the end of June, we redeemed our outstanding bond of $100 million, leaving us debt-free. Moving to slide 13, operating costs and G&A. We remain focused on strict cost control as operational activity continues to increase.
Gross OPEX per barrel increased in the first half of the year to $2.90, at the lower end of our $2.90-$3.30 per barrel guidance range. We remain on track to achieve guidance. Other G&A expenses also increased to manage higher activity as we position for future growth. Moving to slide 14, cash receipts. We received net $272 million in the first half of the year from the KRG, including payments for both crude oil sales and arrears. With the February 2022 invoice, we were pleased to recover the outstanding revenue arrears balance that related to the end of 2019 and early 2020. We have so far received net $82 million in the second half of the year for the April and May invoices. Moving to slide 15, balance sheet.
Maintaining a robust balance sheet is a strategic priority for us, providing resilience through the commodity cycle and flexibility to execute our strategy. A robust liquidity position enables us to manage downside risks, including those associated with operating in Kurdistan. While our operations currently remain unaffected, we continue to monitor the potential impact of the February 2022 Federal Supreme Court of Iraq ruling, stemming from the long-running dispute between the federal Iraqi government and the KRG on the management of oil and gas assets in Kurdistan. Strong free cash flow generation to date has enabled us to reward shareholders and redeem our outstanding $100 million bond, leaving us debt-free with significant financial capacity. Moving to slide 16, shareholder returns. We have a demonstrated track record of allocating capital to achieve profitable growth and reward our shareholders.
In the past, we announced an ordinary dividend of at least $25 million, and with free cash flow generation, we are committed to maximizing distributions. In taking distribution decisions, we consider a number of criteria, including future investment levels and maintaining an adequate level of liquidity to protect the downside. This year, we have paid $190 million of dividends and are pleased today to declare a $25 million interim dividend. This brings total dividends declared to $215 million, translating into a sector-leading dividend yield of around 36%. Assuming timely payment of invoices and continuing strong oil prices, we expect strong free cash flow generation. This would provide flexibility to fund future CapEx and consider further shareholder distributions while preserving adequate liquidity.
As we progress towards FTP implementation, we will firm up future CapEx investment requirements and review our dividend policy. With that, I'd like to now hand it back to you, Jon.
Thanks, Ian. Slide 17, outlook. We're excited about the remainder of this year and remain focused on delivering our production guidance, maintaining our low cost base, and continue to invest in the Shaikan field to position for sustainable growth. We are pleased to have resumed drilling and are targeting startup of Shaikan-16 towards the end of the year. We are also continuing to execute our program of well workovers and interventions to optimize production and further advancing activity to prepare our infrastructure for future growth. We also remain focused on moving towards Field Development Plan approval and gas management contract award. At the same time, we remain committed to balancing investment in growth with best-in-class shareholder returns while maintaining a robust balance sheet. We have today announced an incremental $25 million interim dividend, taking total dividends declared in 2022 to $215 million.
With continuing strong cash flow generation, we will assess further opportunities for dividends as well as funding future CapEx and maintaining adequate liquidity. With that, I now hand you back to the operator for questions. Thank you.
Thank you. Ladies and gentlemen, if you wish to ask a question at this time, please signal by pressing star one on your telephone keypad. Please make sure the mute function on your phone is switched off to allow your signal to reach our equipment. Again, it is star one to ask a question. Our first question comes from the line of Werner Riding from Peel Hunt. Please go ahead.
Good morning, everybody.
Morning.
Yeah. I guess on geopolitics, I saw some comments yesterday in the press, from the U.S., which I guess were supportive for the standing of Kurdish PSCs. But notwithstanding this, there's reports of service companies also like Halliburton and Baker Hughes, stepping back from tenders and contracts because of Iraq's decision to brand the PSCs unconstitutional. I was wondering if you're seeing any impact on your activities, are all the services you need still available? Is that gonna filter through for, you know, cost inflation on ultimately on your operations?
Okay. Werner, thank you. I'm not quite sure what prompted the U.S. sort of letter in the press yesterday. I'm not really sure what drives that as we're not, well, we're not party to that. Similarly, you know, we understand from the media that our service contractors potentially have received a letter requesting them to stop working in Kurdistan if they want to continue to work in Iraq. Again, we're also not party to that. Currently, our operations are unaffected by that, and we continue to discuss with our subcontractors and contractors around their continued working for us. That's the current situation.
Okay. Has there been any shift or any signs of inflation coming through in costs, as a result of some of these sorts of issues or?
I'm not sure. Sorry. We've seen pressure on costs and on scheduled delivery times, just with the world supply chain disruption.
Yeah.
Oil price obviously increasing, putting up the manufacturing costs, and that is coming through, well, where we don't have term agreed rates in some of our contracts, which means we're not seeing pressure in all areas. But we've not seen pressure on costs from the dispute between the governments, I would say. It's for other reasons.
Okay.
It's not to do with the Baghdad-Erbil quarrel.
Yeah. Understood. All right. Thanks.
Thank you.
Charlie Sharp from Canaccord. Please go ahead. Your line is open.
Yes, good morning. Thanks for taking my question. Just two small questions, if I may. Firstly, on the water handling, what's the critical path item or items that we should be sort of on the lookout for in terms of the timing to have that work completed? And then secondly, on the Field Development Plan, are there any sticking points? It seems as though in the past you've been quite close to getting approval. I just wonder if there are any sort of particular outstanding issues.
Right. Okay. The first one on critical path for water handling. We're kind of pursuing two routes with that. One is, we're looking at getting an existing unit that was basically produced for somebody else who then decided they didn't want it. That, that's an existing piece of equipment. However, that's only one part of a kinda processing train, we also have to look at water heaters to heat the oil so that we can effect separation. Also there's a whole bunch of utilities that go with that. I would say in that particular path, the critical path is through the water heater and the utilities and not the actual physical pieces of equipment.
The second path we're going for is we've gone out to tender for new build items, a new build water handling package. That critical path is through the tendering and construction process once we've selected somebody. Hopefully that answers that question.
Yep.
Your second question was around, are there any particular sticking points within the FDP?
Mm.
I don't actually think so. I think we're just working towards a kind of an agreed level of activity with the state. Essentially, it's like it's refinement points. I wouldn't say that we don't think we can close out on the agreed scope for the first phase of the Field Development Plan. I don't think there's any particular sticking points. I think we will get there.
That's great. Thank you.
Okay.
Thank you. As a reminder, to ask a question, please signal by pressing star one. We'll pause for just a moment to allow you to signal.
Great. Thank you.
As there are no further questions in the queue, I'd like to hand the call back over to our speakers for any additional or closing remarks.
Okay. Thank you very much for joining us today. I hope you agree we've had, well, I think a very, very good year so far. We've had sector-leading distributions to shareholders, and we'd like to continue to thank them for their support of the company. Thank you. Ian?
Oh, that's very good.
Okay, great. Thanks very much.