Share Based Compensation

9 Months Ended

Sep. 30, 2016

Disclosure of Compensation Related Costs, Share-based Payments [Text Block]

4. SHARE BASED COMPENSATION:

Valuation and Expense Information
			Three Months				Nine Months
			Ended September 30,				Ended September 30,
			2016		2015		2016		2015
	Total cost of share-based payment plans	$	1,706	$	3,963	$	5,756	$	8,247
	Amounts capitalized in oil and gas properties
	and equipment	$	442	$	1,283	$	1,789	$	2,738
	Amounts charged against income, before
	income tax benefit	$	1,264	$	2,680	$	3,967	$	5,509
	Amount of related income tax benefit
	recognized in income before valuation allowance	$	503	$	1,120	$	1,579	$	2,303

Changes in Stock Options and Stock Options Outstanding

The following table summarizes the changes in stock options for the nine months ended September 30, 2016 and the year ended December 31, 2015:

		Weighted
	Number of	Average
	Options	Exercise Price
	(000's)	(US Dollars)
Balance, December 31, 2014	690	$	25.68	to	$	98.87
Expired or forfeited	(171)	$	25.68	to	$	75.18
Balance, December 31, 2015	519	$	49.05	to	$	98.87
Expired or forfeited	(109)	$	50.48	to	$	75.18
Balance, September 30, 2016	410	$	49.05	to	$	98.87

Performance Share Plans:

Long Term Incentive Plans. The Company offers a Long Term Incentive Plan (“LTIP”) in order to further align the interests of key employees with shareholders and to give key employees the opportunity to share in the long-term performance of the Company when specific corporate financial and operational goals are achieved. Each LTIP covers a performance period of three years.

Under each LTIP, the Compensation Committee establishes a percentage of base salary for each participant that is multiplied by the participant’s base salary at the beginning of the performance period and individual performance level to derive a Long Term Incentive Value as a “target” value. This “target” value corresponds to the number of shares of the Company’s common stock the participant is eligible to receive if the participant is employed by the Company through the date the award vests and if the target level for all performance measures are met. In addition, each participant is assigned threshold and maximum award levels in the event the Company’s actual performance is below or above the target levels.

Time-Based Measure and Performance-Based Measures. For each LTIP award, the Committee establishes time-based and performance-based measures at the beginning of each three-year performance period. For the LTIP awards in 2015 and 2014, the Committee established the following performance-based measures: return on capital employed, debt level, and reserve replacement ratio. The fair value of the time-based and performance-based component of the LTIP award is based on the average high and low market price of the Company’s common stock on the date of award.

Market-Based Measure. LTIP awards granted to officers during 2015 and 2014, include an additional performance metric, Total Shareholder Return. The grant-date fair value related to the market-based condition was calculated using a Monte Carlo simulation.

Valuation Assumptions

The Company estimates the fair value of the market condition related to the LTIP awards on the date of grant using a Monte Carlo simulation with the following assumptions:

	2015 LTIP	2014 LTIP
Volatility of common stock	40.1%	39.0%
Average volatility of peer companies	46.5%	n/a
Average correlation coefficient of peer companies	0.454	n/a
Risk-free interest rate	1.02%	0.66%

Stock-Based Compensation Cost:

For the nine months ended September 30, 2016, the Company recognized $3.3 million in pre-tax compensation expense related to the 2014 and 2015 LTIP awards of restricted stock units as compared to $4.7 million during the nine months ended September 30, 2015 related to the 2013, 2014 and 2015 LTIP awards of restricted stock units. The amounts recognized during the nine months ended September 30, 2016 assume that performance objectives between less than threshold and up to maximum are attained for the 2014 and 2015 LTIP plans. If the Company ultimately attains these performance objectives, the associated total compensation, estimated at September 30, 2016, for each of the three year performance periods is expected to be approximately $9.3 million and $10.1 million related to the 2014 and 2015 LTIP awards of restricted stock units, respectively.

Based on the Company’s achievement relative to the 2013 LTIP’s performance-based measures, and based on the continued employment with the Company by those participants who received a payment in connection with the 2013 LTIP relative to the 2013 LTIP’s time-based measures, during the first quarter of 2016 the Compensation Committee approved payment of the 2013 LTIP. This was the first payment of an LTIP since our LTIPs were modified in 2013 to include time-based and performance-based measures. As such, the Compensation Committee elected to pay the time-based portion of the LTIP awards in cash at the award value and the performance-based portion of the LTIP awards in shares of our common stock. The 2013 LTIP award of restricted stock units was paid in shares of the Company’s stock to employees during the first quarter of 2016 and totaled $3.8 million (132,843 net shares).