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Compensation Plans | 9 Months Ended
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Sep. 30, 2013
Compensation Related Costs [Abstract] |
Compensation Plans | Note 7 - Compensation Plans Cash Bonus Plan During the first nine months of 2013 and 2012, the Company paid $16.0 million and $24.0 million, respectively, for cash bonuses earned during the 2012 and 2011 performance years, respectively. The general and administrative (“G&A”) expense and exploration expense line items in the accompanying statements of operations include $5.8 million and $4.3 million of accrued cash bonus plan expense for the three-month periods ended September 30, 2013, and 2012, respectively, and $16.7 million and $13.6 million for the nine-month periods ended September 30, 2013, and 2012, respectively, related to the respective performance year. Restricted Stock Units Under the Equity Incentive Compensation Plan The Company grants restricted stock units (“RSUs”) as part of its equity compensation program. Each RSU represents a right to one share of the Company’s common stock to be delivered upon settlement of the award at the end of the specified vesting period. Expense associated with RSUs is recognized as G&A expense and exploration expense over the vesting period of the award. Total expense recorded for RSUs for the three-month periods ended September 30, 2013, and 2012, was $3.7 million and $3.9 million, respectively, and $10.0 million and $6.5 million for the nine-month periods ended September 30, 2013, and 2012, respectively. As of September 30, 2013, there was $22.7 million of total unrecognized compensation expense related to unvested RSU awards, which is being amortized through 2016. A summary of the status and activity of non-vested RSUs for the nine-month period ended September 30, 2013, is presented in the following table:
| RSUs |  | Weighted-Average Grant-Date Fair Value
Non-vested at beginning of year | 496,244 |  |  | $ | 51.81 |
Granted | 329,939 |  |  | $ | 60.01 |
Vested | (206,509 | ) |  | $ | 49.73 |
Forfeited | (29,487 | ) |  | $ | 54.02 |
Non-vested at end of quarter | 590,187 |  |  | $ | 57.02 |
The fair value of the RSUs granted during the first nine months of 2013 was $19.8 million. These RSUs will vest 1/3 rd on each of the next three anniversary dates of the grant. During the first nine months of 2013, the Company settled 206,509 RSUs that related to awards granted in previous years. The Company and the majority of grant participants mutually agreed to net share settle the awards to cover income and payroll tax withholdings as provided for in the plan document and award agreements. As a result, the Company issued 138,807 net shares of common stock. The remaining 67,702 shares were withheld to satisfy income and payroll tax withholding obligations that occurred upon delivery of the shares underlying those RSUs. Performance Stock Units Under the Equity Incentive Compensation Plan The Company grants performance share units (“PSUs”) as part of its equity compensation program. PSUs are structurally the same as the previously granted performance share awards. The number of shares of the Company’s common stock issued to settle PSUs ranges from zero to two times the number of PSUs awarded and is determined based on the Company’s performance over a three-year measurement period. The performance criteria for the PSUs are based on a combination of the Company’s annualized total shareholder return (“TSR”) for the measurement period and the relative measure of the Company’s TSR compared with the annualized TSRs of a group of peer companies for the measurement period. Expense associated with PSUs is recognized as G&A expense and exploration expense over the vesting period of the award. Total expense recorded for PSUs for the three-month periods ended September 30, 2013, and 2012, was $3.5 million and $5.1 million, respectively, and $13.2 million for both of the nine-month periods ended September 30, 2013, and 2012. As of September 30, 2013, there was $22.7 million of total unrecognized compensation expense related to unvested PSUs to be amortized through 2016. A summary of the status and activity of non-vested PSUs for the nine-month period ended September 30, 2013, is presented in the following table:
| PSUs (1) |  | Weighted-Average Grant-Date Fair Value
Non-vested at beginning of year | 669,308 |  |  | $ | 63.91 |
Granted | 274,831 |  |  | $ | 64.13 |
Vested | (343,307 | ) |  | $ | 59.99 |
Forfeited | (22,371 | ) |  | $ | 69.50 |
Non-vested at end of quarter | 578,461 |  |  | $ | 66.13 |
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(1) | The number of awards assumes a one multiplier. The final number of shares of common stock issued may vary depending on the three-year performance multiplier, which ranges from zero to two.
The fair value of the PSUs granted during the first nine months of 2013 was $17.6 million. These PSUs will fully vest on the third anniversary of the date of the grant. During the first nine months of 2013, the Company settled PSUs that were granted in 2010, which earned a 1.725 times multiplier, by issuing a net 387,461 shares of the Company’s common stock in accordance with the terms of the PSU awards. The Company and the majority of grant participants mutually agreed to net share settle the awards to cover income and payroll tax withholdings as provided for in the plan document and award agreements. As a result, the Company withheld 200,050 shares to satisfy income and payroll tax withholding obligations that occurred upon delivery of the shares underlying those PSUs. Stock Option Grants Under the Equity Incentive Compensation Plan A summary of activity associated with the Company’s Stock Option Plan for the nine months ended September 30, 2013, is presented in the following table:
| Shares |  | Weighted- Average Exercise Price |  | Aggregate Intrinsic Value (in thousands)
Outstanding, at beginning of year | 267,846 |  |  | $ | 14.95 |  |  | $ | 9,983 |
Exercised | (177,995 | ) |  | $ | 13.89 |  |  | $ | 8,753 |
Forfeited | — |  |  |  |  |  |
Outstanding, at end of quarter | 89,851 |  |  | $ | 17.01 |  |  | $ | 5,407 |
Vested and exercisable, at end of quarter | 89,851 |  |  | $ | 17.01 |  |  | $ | 5,407 |
As of September 30, 2013, there was no unrecognized compensation expense related to stock option awards. Director Shares During the nine months ended September 30, 2013, and 2012, the Company issued 28,169 and 30,486 shares, respectively, of its common stock from treasury to its non-employee directors, under the Company’s Equity Incentive Compensation Plan. The Company recorded no compensation expense related to these awards for the three months ended September 30, 2013, and $147,000 of compensation expense related to these awards for the three months ended September 30, 2012. The Company recorded $1.4 million and $1.3 million of compensation expense related to these awards for the nine months ended September 30, 2013, and 2012, respectively. All shares of common stock issued to the Company’s non-employee directors are earned over the one-year service period following the date of grant. Employee Stock Purchase Plan Under the Company’s Employee Stock Purchase Plan (“ESPP”), eligible employees may purchase shares of the Company’s common stock through payroll deductions of up to 15 percent of eligible compensation, without accruing in excess of $25,000 in value from purchases for each calendar year. The purchase price of the stock is 85 percent of the lower of the fair market value of the stock on the first or last day of the purchase period, and shares issued under the ESPP have no restriction period. The ESPP is intended to qualify under Section 423 of the Internal Revenue Code. The Company had 1.3 million shares available for issuance under the ESPP as of September 30, 2013. The Company issued 44,437 and 37,124 shares under the ESPP during the first nine months of 2013 and 2012, respectively. The fair value of ESPP grants is measured at the date of grant using the Black-Scholes option-pricing model. Net Profits Interest Bonus Plan Cash payments made or accrued under the Company’s Net Profits Interest Bonus Plan (“Net Profits Plan”) that have been recorded as either G&A expense or exploration expense are presented in the table below:
| For the Three Months Ended September 30, |  | For the Nine Months Ended September 30,
| 2013 |  | 2012 |  | 2013 |  | 2012
| (in thousands)
General and administrative expense | $ | 4,302 |  |  | $ | 4,083 |  |  | $ | 11,531 |  |  | $ | 12,177 |
Exploration expense | 329 |  |  | 403 |  |  | 1,026 |  |  | 1,421 |
Total | $ | 4,631 |  |  | $ | 4,486 |  |  | $ | 12,557 |  |  | $ | 13,598 |
Additionally, the Company accrued or made cash payments under the Net Profits Plan of $274,000 for the three-month period ended September 30, 2012, and $2.6 million and $2.0 million for the nine-month periods ended September 30, 2013, and 2012, respectively, as a result of divestiture proceeds. There were insignificant cash payments made or accrued relating to divestiture proceeds for the three-month period ended September 30, 2013. These cash payments are accounted for in the loss on divestiture activity line item in the accompanying statements of operations. The Company records changes in the present value of estimated future payments under the Net Profits Plan as a separate line item in the accompanying statements of operations. The change in the estimated liability is recorded as a non-cash expense or benefit in the current period. The amount recorded as an expense or benefit associated with the change in the estimated liability is not allocated to G&A expense or exploration expense because it is associated with the future net cash flows from oil and gas properties in the respective pools rather than results being realized through current period production. If the Company allocated the change in liability to these specific functional line items, based on the current allocation of actual distributions made by the Company, such expenses or benefits would predominately be allocated to G&A expense. The amount that would be allocated to exploration expense is minimal in comparison. Over time, less of the amount distributed relates to prospective exploration efforts as more of the amount distributed is paid to employees that have terminated employment and do not provide ongoing exploration support to the Company.

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