Please stand by. Good day, ladies and gentlemen, and welcome to your Gulfport Energy Corporation Second Quarter 2022 Earnings Call. All lines have been placed in a listen-only mode, and the floor will be open for your questions and comments following the presentation. If you should require assistance throughout the conference, please press star zero. At this time, it is my pleasure to turn the floor over to your host, Jessica Antle. Ma'am, the floor is yours.
Thank you, Melinda, and good morning. Welcome to Gulfport Energy Corporation Second Quarter 2022 Earnings Conference Call. I am Jessica Antle, Director of Investor Relations. Speakers on today's call include Timothy Cutt, Chief Executive Officer, and William Buese, Executive Vice President and Chief Financial Officer. I would like to remind everybody that during this conference call, the participants may make certain forward-looking statements relating to the company's financial condition, results of operations, plans, objectives, future performance, and business. We caution you that actual results could differ materially from those that are indicated in these forward-looking statements due to a variety of factors. Information concerning these factors can be found in the company's filings with the SEC. In addition, we may reference non-GAAP measures. Reconciliations to the comparable GAAP measures will be posted on our website.
An updated Gulfport presentation was posted yesterday evening to our website in conjunction with the earnings announcement. Please review at your leisure. At this time, I would like to turn the call over to Tim.
Thanks, Jessica, and good morning, and thank you for joining the call. I will begin this morning with a summary of the second quarter highlights, followed by an operational update before turning the call to Bill to discuss the financials. As you saw from our release, we had a strong quarter, delivering 960 million cubic feet equivalent per day of production and $80 million of free cash flow. We exited the quarter with a conservative leverage ratio of 0.8x and liquidity of $469 million. We made significant progress in our share repurchase program and have repurchased $189 million year to date, decreasing our outstanding shares by 8% and representing approximately 50% of full year 2022 expected free cash flow.
In addition, the board has recently approved an incremental $100 million of share repurchases, taking the program to $300 million in total. Turning to production, our strong second quarter results were driven by the continued outperformance of our 2021 development program, excellent uptime across our operations, and the robust productivity from our Scoop Nelda pad brought online in March 2022. Given the timing of our development program, we expect production to decline slightly in the third quarter before growing significantly in the fourth quarter. Following the casing remediation discussed last quarter in the Utica, we have successfully brought on the Charlotte pad and are within days of turning to sales the Clark pad.
The delays associated with these pads, along with the approximately 45-day knock-on effect to the timing of our subsequent completion program, have caused us to lower the high end of our 2022 production guidance range. This is strictly a timing issue. But for the timing shift, we would have expected to exceed the top end of our production guidance for 2022. We expect strong performance from the remaining Utica and Scoop turn-in-lines in the back half of the year. Our strong first half production results and expectations for the remainder of the year are clearly demonstrated on slide eight of the IR deck. As previously discussed, we continue to expect to grow production in 2023 by more than 5% over 2022.
Turning to our development program, during the second quarter, we turned in line three wells in the Utica and are projecting to bring seven gross wells online in the Utica and two gross wells in the Scoop during the third quarter. On page 10 of our IR deck, you can see how strong the five well development in the Scoop continues to perform, which is now expected to remain on flat-time production for over half of the year. The next page illustrates the significant improvement in development costs and well performance generated by these five wells and our 2021 program compared to historical development, driven by the team integrating learnings across both of our assets and focusing on optimizing value. We highlighted a similar slide for the Utica in early 2022, and those wells continue to perform well compared to historical development.
To improve the efficiency of our drilling program and mitigate the risk of releasing and picking up rigs in a tight market, we are implementing a continuous rig program in the Utica and anticipate doing the same in the Scoop in 2023. On the completion side, the market for frack units is also tight. To create a more continuous frack schedule, we are evaluating the opportunity to add a tophole rig in the Utica during the fourth quarter of 2022, accelerating our drilling program entering 2023. We would plan to continue running the tophole rig alongside our current rig for the first half of the year and expect this activity level could enable us to execute a continuous eight month frack program in the Utica starting in January of 2023.
In order to create the option for a tophole rig program and stay ahead of our current continuous rig program, we have increased our 2022 land capital by $10 million. We are still evaluating all available options for 2023, and if we choose to proceed with this plan, we will discuss the costs and the benefits of this opportunity during our next call. On capital, we continued to experience inflationary pressure and now expect inflation to be up 20%-25% this year, an increase from 15%-20% discussed last quarter. This, along with the additional $10 million in land capital, takes the midpoint of our capital guidance to $425 million for 2022. Despite these impacts, our guidance for free cash flow remains unchanged.
We continue to focus on improving our total per-unit operating costs and are actively identifying efficiencies across the company. We continue to optimize the reuse of water in our frack operations in the Utica, and we released all winter maintenance rental equipment during the quarter, resulting in second-quarter LOE of $0.16 per Mcfe, down 16% from the first quarter of 2022. In summary, we remain focused on cost-effective production, capital discipline, and delivering peer-leading development costs per Mcfe. We have implemented wider spacing and more intensive completion designs, which continue to deliver exceptional results. Our low leverage, along with significant free cash flow, will allow us to organically grow the business while returning significant capital to our shareholders. Our commitment to returning capital to shareholders is further demonstrated by the board's $100 million increase to the share repurchase program.
I'll now turn the call over to Bill to discuss the financial results.
Thanks, Tim, and good morning, everyone. As Tim just discussed, we delivered another strong quarter on both the operational and financial fronts. I will now spend the next few minutes providing a high-level overview of our second quarter financial results, liquidity position, and return of capital initiatives before opening the call up for Q&A. We reported net income of $257 million and generated $205 million of Adjusted EBITDA during the second quarter of 2022. Net cash provided by operating activities totaled $130 million during the second quarter, and we generated free cash flow of $80 million for the same period. We utilized the vast majority of this free cash flow to fund our common share repurchase program during the quarter.
On the derivative front, we focused our attention on layering on derivative contracts for 2024 during the second quarter, and we currently have natural gas swap contracts totaling approximately 55 million cubic feet per day at an average price of $3.98 per Mcf, and natural gas collar contracts totaling approximately 60 million cubic feet per day at an average floor price of $3.50 per Mcf and an average ceiling price of $7.49 per Mcf. Please see our Form 10-Q for additional details on our derivative portfolio.
Turning to our balance sheet, at the end of the second quarter, total assets were approximately $2.4 billion, while total gross debt was approximately $674 million, consisting of $124 million outstanding under our credit facility and $550 million of outstanding senior notes. We also had $7 million of cash on hand and $113 million of letters of credit outstanding at the end of the quarter. On the liquidity front, we exited the second quarter with $469 million of total liquidity, consisting of the $7 million of cash and $462 million of borrowing capacity under our revolver.
Moving on to our return of capital initiatives, we made significant progress executing on our common share repurchase program during the second quarter, during which we repurchased approximately 1.4 million common shares at an average price of $90.03 for the total cost of $127.5 million. Since the inception of our share repurchase program in March 2022, we have repurchased approximately 2.2 million common shares at an average price of $86.59 for a total cost of $189.3 million, which represents over 8% of our outstanding common shares. As Tim mentioned in his comments earlier, the board authorized an additional $100 million to be added to our common share repurchase program.
With this increase, we now have authorization to repurchase a total of $300 million of our common shares, which is expected to be fully funded with the free cash flow generated in 2022. We will continue to repurchase shares opportunistically, and as was the case with the earlier authorizations, the timing and amount of any share repurchases continues to be subject to available liquidity, market conditions, credit agreement restrictions, legal requirements, as well as any other applicable factors. We will continue to evaluate all return of capital options, including additional share repurchases and instituting a common dividend in future quarters. Moving on to guidance, for the reasons Tim mentioned in his comments earlier, we now forecast a capital investment range of $410 million-$440 million in 2022, which includes $35 million of capital for leasehold.
Our updated 2022 total production guidance is 975- 1,000 million cubic feet equivalent per day, and we continue to expect 2023 production volumes to grow more than 5% over 2022. In addition to these updates to guidance, we have also updated guidance for our GP&T expense per Mcfe for the year, which is detailed in our IR deck on slide 15. Despite these adjustments, we maintained our free cash flow guidance of $375 million-$425 million for the full year 2022. In summary, we continued generating significant free cash flow during the quarter, which allowed us to return a significant amount of capital to shareholders through our share repurchase program.
We are confident that our strong asset base will continue to support our ability to generate positive free cash flow in future quarters at a wide range of commodity prices.
Allowing us to continue to return capital to shareholders, all while maintaining a strong financial position, including our leverage ratio below 1x. With that, we will now open the call up for questions.
Thank you. If you'd like to ask a question, please signal by pressing star one on your telephone keypad. If you're using a speakerphone, please make sure your mute function is turned off to allow your signal to reach our equipment. Again, press star one to signal for a question. We do go into our first question from Neal Dingmann with Truist Securities. Please go ahead.
Good morning, all. Thanks for the time. Tim, my first question, it's really just, and maybe I'll just tie right into my second one, they're kinda tied together. That is my first question is on your overall free cash flow strategy. I'm just wondering, now, given where you are sort of in the restructuring, well past that, you all have done a great job there. Just wondering specifically, do you all continue to believe that material shareholder returns largely through buybacks are just sort of more prudent than using the cash to build scale at this point? You know, I guess maybe as I mentioned, my second question is also tied to this.
I'm just wondering specifically, you know, in the same vein, do you all believe that you can achieve efficiencies with the one rig in each operating area and, you know, is there any plans to reallocate this capital regionally speaking?
I'll take that first question on scale versus the buybacks. I think the good news, Neal, is we can do both. We've, you know, the board has approved the extra $100 million. When you look at our third quarter, you know, a little bit tighter on cash flow, we're doing a lot of our completions that were deferred slightly in the third quarter, and then it starts dropping off. We generate a lot of cash in the fourth quarter, and that continues on into next year. The good news is we can do both.
As far as, you know, growing scale, one of the things we're doing with our land budget and also looking at this second rig in the Utica, we call it a tophole rig, but it drills the entire vertical section of the well, and then we bring in the larger rig to drill the curve and the horizontal. With that, this gives us the optionality for some additional growth if the prices support that growth. We're just trying to make sure we set the stage to where we can be very continuous in our program, both drilling and very importantly on fracking. It's getting very difficult in a tight market to let a frack rig unit go, try and pick that back up.
If we can, you know, execute against the tentative plan for the tophole rig, we think we could do, you know, we could frack continuously for eight or nine months next year, which will, you know, lead to some growth like we've talked about, but also start setting the stage for a more continuous and a more efficient program going forward. Then the second part of the question?
Letting you know.
Yeah.
This second part, kinda just hit on just what it was more just on regionally speaking right now, you know, you talked, you mentioned about the tophole rig. You know, any thoughts about just having all activity in the Utica or, you know, whatever, maybe after those eight or nine months, having all activity in the Scoop or would you continue to have? I think right now we're gonna do about maybe 75-25 split. I'm just wondering if that'll kinda continue to be the split.
Yeah. I mean, over the long term, it kinda has to be the split because that's how our inventory lays out. In the near term, with the results we're seeing in the Scoop, we're quite encouraged, and that's why we haven't come out with definitive 2023 guidance yet. We wanna see how we can maximize what's going on in the Scoop. You know, we believe going to a continuous rig is the right thing to do, but we also wanna bring as many of these good wells online as quickly as we can. That's what we're gonna be doing over the next few months. When we come out next quarter, we'll provide guidance for ultimately what we're gonna do in the Utica.
We feel like we're getting one step in the Utica, and the program we've described should lead to efficiencies in the Scoop, just by the nature of where that is and the amount of inventory we have and the activity level. It's hard to think we'd get to a continuous fracking program there. Certainly, moving to a more continuous drilling program could be very helpful.
Well said. Thanks, Tim.
There are no further questions. We turn back to Tim Cutt for closing remarks.
All right. Thank you very much. We appreciate the interest today. Neal, thanks for the questions. Of course, like always, if you have further questions, please reach out to Jessica and our investor relations team. Thank you very much, and that concludes the call.
Thank you. This concludes today's teleconference. We thank you for your participation. You may disconnect your lines at this time. Have a great day.