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Compensation plans
 12 Months Ended
Dec. 31, 2021
Share-based Payment Arrangement [Abstract]  
Compensation plans
Note 9
Compensation plans
a.Equity Incentive Plan
The Equity Incentive Plan provides for the granting of incentive awards in the form of restricted stock awards, stock option awards, performance share awards, outperformance share awards, performance unit awards, phantom unit awards and other awards. On June 1, 2020, in connection with the effectiveness of the reverse stock split and Authorized Share Reduction, the board of directors approved and adopted an amendment to the Equity Incentive Plan to proportionately adjust the limitations on awards that may be granted under the Equity Incentive Plan. Following the amendment, an aggregate of 1,492,500 shares may be issued under the Equity Incentive Plan. See Note 8.b for additional discussion of the reverse stock split and Authorized Share Reduction. On May 20, 2021, the Company's stockholders approved an amendment to the Equity Incentive Plan to, among other things, increase the maximum number of shares of the Company's common stock issuable under the Equity Incentive Plan from 1,492,500 to 2,432,500 shares.
See Note 2.p for discussion of the Company's significant accounting policies for equity-based compensation awards.
Restricted stock awards
All service vesting restricted stock awards are treated as issued and outstanding in the consolidated financial statements. Per the award agreement terms, if employment is terminated prior to the restriction lapse date for reasons other than death or disability, the restricted stock awards are forfeited and canceled and are no longer considered issued and outstanding. If the termination of employment is by reason of death or disability, all of the holder's restricted stock will automatically vest. Restricted stock awards granted to employees vest in a variety of schedules that mainly include (i) 33%, 33% and 34% vesting per year beginning on the first anniversary of the grant date and (ii) full vesting on the first anniversary of the grant date. Restricted stock awards granted to non-employee directors vest immediately on the grant date.
The following table reflects the restricted stock award activity for the years presented:
(in thousands, except for weighted-average grant-date fair value)Restricted
stock
awards		Weighted-average
grant-date
fair value
(per share)
Outstanding as of December 31, 2018210 $198.20 
  Granted381 $65.20 
  Forfeited(178)$102.20 
  Vested(138)$178.40 
Outstanding as of December 31, 2019275 $85.80 
  Granted238 $16.54 
  Forfeited(48)$53.51 
  Vested(156)$71.25 
Outstanding as of December 31, 2020309 $44.88 
  Granted237 $38.86 
  Forfeited(42)$42.44 
  Vested(1)
(154)$57.37 
Outstanding as of December 31, 2021350 $35.57 
_____________________________________________________________________________
(1)The aggregate intrinsic value of vested restricted stock awards for the year ended December 31, 2021 was $7.3 million.
The Company utilizes the closing stock price on the grant date to determine the fair value of restricted stock awards. As of December 31, 2021, unrecognized equity-based compensation related to the restricted stock awards expected to vest was $7.2 million. Such cost is expected to be recognized over a weighted-average period of 1.94 years.
Stock option awards
The following table reflects the stock option award activity for the years presented:
(in thousands, except for weighted-average exercise price and weighted-average remaining contractual term)
Stock
option
awards
Weighted-average
exercise price
(per share)		Weighted-average
remaining contractual term
(years)
Outstanding as of December 31, 2018127 $253.80 5.99
Exercised(1)$82.00 
Expired or canceled(92)$271.00 
Forfeited(17)$172.20 
Outstanding as of December 31, 201917 $251.20 5.00
Expired or canceled(6)$238.38 
Outstanding as of December 31, 202011 $257.42 4.00
Exercised(2)$82.00 
Expired or canceled(2)$374.77 
Outstanding and exercisable as of December 31, 2021(1)
7 $275.88 3.24
_____________________________________________________________________________
(1)The vested and exercisable stock option awards as of December 31, 2021 had no intrinsic value.
The Company utilizes the Black-Scholes option pricing model to determine the fair value of stock option awards and recognizes the associated expense on a straight-line basis over the four-year requisite service period of the awards. Stock option awards granted to employees vest and become exercisable in four equal installments on each of the four anniversaries of the grant date, in accordance with the following schedule:
Full years of continuous employment following grant dateIncremental percentage of
option exercisable		Cumulative percentage of
option exercisable
Less than one— %— %
One25 %25 %
Two25 %50 %
Three25 %75 %
Four25 %100 %
Unless employment is terminated sooner, the vested stock option award will expire if and to the extent it is not exercised within 10 years from the grant date. The unvested portion of a stock option award shall forfeit upon termination of employment, and the vested portion of a stock option award shall remain exercisable for (i) one year following termination of employment by reason of the holder's death or disability, but not later than the expiration of the option period, or (ii) 90 days following termination of employment for any reason other than the holder's death or disability, and other than the holder's termination of employment for cause. The vested but unexercised portion of a stock option award shall expire upon the termination of the option holder's employment or service by the Company for cause.
Performance share awards
Performance share awards, which the Company has determined are equity awards, are subject to a combination of market, performance and service vesting criteria. For portions of awards with market criteria, a Monte Carlo simulation prepared by an independent third party is utilized to determine the grant-date (or modification date) fair value, and the associated expense is recognized on a straight-line basis over the three-year requisite service period of the awards. For portions of awards with performance criteria, the fair value is equal to the Company's closing stock price on the grant date (or modification date), and for each reporting period, the associated expense fluctuates and is adjusted based on an estimated payout of the number of shares of common stock to be delivered on the payment date for the three-year performance period.
These awards were granted in 2019 and 2018, and their market criteria consists of: (i) the relative three-year total shareholder return ("TSR") comparing the Company's shareholder return to the shareholder return of the peer group specified in each award agreement ("RTSR Performance Percentage"), and (ii) the Company's absolute three-year total shareholder return ("ATSR Appreciation"). The performance criteria for these awards consists of the Company's three-year return on average capital employed ("ROACE Percentage"). Any shares earned under performance share awards are expected to be issued in the first quarter following the completion of the respective requisite service periods based on the achievement of certain market and performance criteria, and the payout can range from 0% to 200%. Per the award agreement terms, if employment is terminated prior to the restriction lapse date for reasons other than death or disability, the performance share awards are forfeited and canceled. If the termination of employment is by reason of death or disability, and the market and performance criteria are satisfied, then the holder of the earned performance share awards will receive a prorated number of shares based on the number of days the participant was employed with the Company during the performance period.
The following table reflects the performance share award activity for the years presented:
(in thousands, except for weighted-average grant-date fair value)
Performance
share awards
Weighted-average
grant-date fair value
(per share)
Outstanding as of December 31, 2018172 $274.80 
Granted(1)
29 $50.40 
Converted from performance unit awards(1)(2)
78 $74.80 
Forfeited(87)$209.60 
Lapsed(3)
(77)$346.20 
Outstanding as of December 31, 2019115 $106.80 
Forfeited(10)$110.94 
Lapsed(4)
(8)$379.20 
Outstanding as of December 31, 202097 $84.06 
Forfeited(10)$74.70 
Vested(1)
(15)$184.43 
Outstanding as of December 31, 202172 $64.74 
_____________________________________________________________________________
(1)The amounts payable in the Company's common stock at the end of the requisite service period for the performance share awards granted on February 16, 2018, February 28, 2019 and June 3, 2019 were determined based on three criteria: (i) RTSR Performance Percentage, (ii) ATSR Appreciation and (iii) ROACE Percentage. The RTSR Performance Percentage, ATSR Appreciation and ROACE Percentage will be used to identify the "RTSR Factor," the "ATSR Factor" and the "ROACE Factor," respectively, which are used to compute the "Performance Multiple" and ultimately to determine the number of shares to be delivered on the payment date. In computing the Performance Multiple, the RTSR Factor is given a 25% weight, the ATSR Factor a 25% weight and the ROACE Factor a 50% weight. The performance share awards granted on February 16, 2018 had a performance period of January 1, 2018 to December 31, 2020 and, as their market and performance criteria were partially satisfied, resulted in a 43% payout. Based on such payout, the granted awards vested and were converted into 6,343 shares of the Company's common stock during the year ended December 31, 2021. The performance share awards granted on February 28, 2019 and June 3, 2019 had a performance period of January 1, 2019 to December 31, 2021 and, as their market and performance criteria were fully satisfied, resulted in a 107% payout. Based on such payout, the granted awards will be converted into shares of the Company's common stock during the first quarter of 2022.
(2)On May 16, 2019, the board of directors elected to change the form of payment from cash to common stock for the awards granted on February 28, 2019. This change in election triggered modification accounting, and the awards, formerly accounted for as liability awards, were converted to equity awards and, accordingly, new fair values were determined based on the May 16, 2019 modification date.
(3)The performance share awards granted on May 25, 2016 had a performance period of January 1, 2016 to December 31, 2018 and, as their market criteria were not satisfied, resulted in a TSR modifier of 0% based on the Company finishing in the ninth percentile of its peer group for relative TSR. As such, the granted units lapsed and were not converted into the Company's common stock during the first quarter of 2019.
(4)The performance share awards granted on February 17, 2017 had a performance period of January 1, 2017 to December 31, 2019 and, as their market criteria were not satisfied, resulted in a TSR modifier of 0% based on the Company finishing in the 15th percentile of its peer group for relative TSR. As such, the granted units lapsed and were not converted into the Company's common stock during the first quarter of 2020.
As of December 31, 2021, unrecognized equity-based compensation related to the performance share awards expected to vest was $0.3 million. Such cost is expected to be recognized over a weighted-average period of 0.16 years.
The following table presents (i) the fair values per performance share and the assumptions used to estimate these fair values per performance share and (ii) the expense per performance share, which is the fair value per performance share adjusted for the estimated payout of the performance criteria, for the outstanding performance share awards as of December 31, 2021 for the grant dates presented:
June 3, 2019
February 28, 2019(1)
Market Criteria:
25% RTSR Factor + 25% ATSR Factor:
Fair value assumptions:
Remaining performance period on grant date2.58 years2.63 years
Risk-free interest rate(2)
1.78 %2.14 %
Dividend yield— %— %
Expected volatility(3)
55.45 %55.01 %
Closing stock price on grant date$51.80 $69.80 
Grant-date fair value per performance share $49.00 $79.61 
Expense per performance share as of December 31, 2021$49.00 $79.61 
Performance Criteria:
50% ROACE Factor:
Fair value assumptions:
Closing stock price on grant date$51.80 $69.80 
Grant-date fair value per performance share $51.80 $69.80 
Estimated payout for expense as of December 31, 2021160 %160 %
Expense per performance share as of December 31, 2021(4)
$82.88 $111.68 
Combined:
Grant-date fair value per performance share(5)
$65.94 $95.65 
Expense per performance share as of December 31, 2021(6)
$65.94 $95.65 
______________________________________________________________________________
(1)The fair value assumptions of the performance share awards granted on February 28, 2019 are based on the May 16, 2019 modification date. The total incremental compensation expense resulting from the modification of $1.0 million, which will be recognized over the life of the awards, is calculated utilizing (i) the difference between the March 31, 2019 fair value and the May 16, 2019 fair value and (ii) the outstanding quantity of the converted performance share awards as of June 30, 2019. Such expense excludes the estimated payout component for expense for the 50% ROACE Factor as this is redetermined at each reporting period and the expense will fluctuate accordingly.
(2)The remaining performance period matched zero-coupon risk-free interest rate was derived from the U.S. Treasury constant maturities yield curve on the grant date for each respective award, with the exception of the awards granted on February 28, 2019, which used the modification date of May 16, 2019.
(3)The Company utilized its own remaining performance period matched historical volatility in order to develop the expected volatility.
(4)As the 50% ROACE Factor is based on performance criteria, the expense fluctuates based on the estimated payout and is redetermined each reporting period and the life-to-date recognized expense for the respective awards is adjusted accordingly.
(5)The combined grant-date fair value per performance share is the combination of the fair value per performance share weighted for the market and performance criteria for the respective awards.
(6)The combined expense per performance share is the combination of the expense per performance share weighted for the market and performance criteria for the respective awards.
Outperformance share award
An outperformance share award was granted during the year ended December 31, 2019, in conjunction with the appointment of the Company's President, and is accounted for as an equity award. If earned, the payout ranges from 0 to 50,000 shares in the Company's common stock per the vesting schedule. This award is subject to a combination of market and service vesting criteria and, therefore, a Monte Carlo simulation prepared by an independent third party was utilized to determine the grant-date fair value with the associated expense recognized over the requisite service period. The payout of this award is based on the highest 50 consecutive trading day average closing stock price of the Company that occurs during the performance period that commenced on June 3, 2019 and ends on June 3, 2022 ("Final Date"). Of the earned outperformance shares, one-third of the award will vest on the Final Date, one-third will vest on the first anniversary of the Final Date and one-third will vest on the second anniversary of the Final Date, provided that the participant has been continuously employed with the Company through the applicable vesting date. Per the award agreement terms, if employment is terminated prior to any vesting date for reasons other than death or disability, then any outperformance shares that have not vested as of such date shall be forfeited and canceled. If the participant's employment is terminated prior to any vesting date by reason of death or disability, and the market criteria is satisfied, then the participant will receive a prorated number of shares based on the number of days the employee was employed with the Company during the performance period.
The total fair value of the outperformance share award and the assumptions used to estimate the fair value of the outperformance share award as of the grant date presented are as follows:
June 3, 2019
Performance period3.00 years
Risk-free interest rate(1)
1.77 %
Dividend yield— %
Expected volatility(2)
55.77 %
Closing stock price on grant date$51.80 
Total fair value of outperformance share award (in thousands)$670.0 
_____________________________________________________________________________
(1)The performance period matched zero-coupon risk-free interest rate was derived from the U.S. Treasury constant maturities yield curve on the grant date.
(2)The Company utilized its own performance period matched historical volatility in order to develop the expected volatility.
As of December 31, 2021, unrecognized equity-based compensation related to the outperformance share award expected to vest was $0.2 million. Such cost is expected to be recognized over a weighted-average period of 1.78 years.
Performance unit awards
Performance unit awards, which the Company has determined are liability awards since they are settled in cash, are subject to a combination of market, performance and service vesting criteria. For portions of awards with market criteria, a Monte Carlo simulation prepared by an independent third party is utilized to determine the fair value, and is re-measured at each reporting period until settlement. For portions of awards with performance criteria, the Company's closing stock price is utilized to determine the fair value and is re-measured on the last trading day of each reporting period until settlement and, additionally, the associated expense fluctuates based on an estimated payout for the three-year performance period. The expense related to the performance unit awards is recognized on a straight-line basis over the three-year requisite service period of the awards, and the life-to-date recognized expense is adjusted accordingly at each reporting period based on the quarterly fair value re-measurements and redetermination of the estimated payout for the performance criteria.
For performance unit awards granted in 2021, the market criteria consists of: (i) annual relative shareholder return comparing the Company's shareholder return to the shareholder return of the E&P companies listed in the Russell 2000 index ("Relative TSR") and (ii) annual absolute total shareholder return ("Absolute Return"), together the "PSU Matrix". The performance criteria for these awards consists of: (i) earnings before interest , taxes, depreciation, amortization and exploration expense ("EBITDAX") and three-year total debt reduction (the "EBITDAX/Total Debt Component") and (ii) growth in inventory (the "Inventory Growth Component"). Any units earned are expected to be paid in cash during the first quarter following the
completion of the requisite service period, based on the achievement of certain market and performance criteria, and the payout can range from 0% to 250% for the market criteria and 0% to 200% for the performance criteria.
For performance unit awards granted in 2020, the market criteria consists of: (i) the RTSR Performance Percentage and (ii) the ATSR Appreciation. The performance criteria for these awards consists of the ROACE Percentage. Any units earned, are expected to be paid in cash during the first quarter following the completion of the requisite service period, based on the achievement of certain market and performance criteria, and the payout can range from 0% to 200%, but is capped at 100% if the ATSR Appreciation is zero or less.
Per the award agreement terms, if employment is terminated prior to the restriction lapse date for reasons other than death or disability, the performance unit awards are forfeited and canceled. If the termination of employment is by reason of death or disability, and the market and performance criteria are satisfied, then the holder of the earned performance unit awards will receive a prorated payment based on the number of days the participant was employed with the Company during the performance period.
The following table reflects the performance unit award activity for the years presented:
(in thousands)Performance units
Outstanding as of December 31, 2019— 
Granted(1)
123 
Forfeited(24)
Outstanding as of December 31, 202099 
Granted(2)
110 
Outstanding as of December 31, 2021209 
______________________________________________________________________________
(1)The amounts potentially payable in cash at the end of the requisite service period for the performance unit awards granted on March 5, 2020 will be determined based on three criteria: (i) RTSR Performance Percentage, (ii) ATSR Appreciation and (iii) ROACE Percentage. The RTSR Performance Percentage, ATSR Appreciation and ROACE Percentage will be used to identify the "RTSR Factor," the "ATSR Factor" and the "ROACE Factor," respectively, which are used to compute the "Performance Multiple" and ultimately to determine the final value of each performance unit to be paid in cash on the payment date per the award agreement, subject to withholding requirements. In computing the Performance Multiple, the RTSR Factor is given a 1/3 weight, the ATSR Factor a 1/3 weight and the ROACE Factor a 1/3 weight. These awards have a performance period of January 1, 2020 to December 31, 2022.
(2)The amounts potentially payable in cash at the end of the requisite service period for the performance unit awards granted on March 9, 2021 will be determined based on three criteria: (i) the PSU Matrix, (ii) the EBITDAX/Total Debt Component and (iii) the Inventory Growth Component. These criteria are used to compute the "Performance Multiple" and ultimately to determine the final value of each performance unit to be paid in cash on the payment date per the award agreement, subject to withholding requirements. In computing the Performance Multiple, the PSU Matrix is given a 50% weight, the EBITDAX/Total Debt Component a 25% weight and the Inventory Growth Component a 25% weight. These awards have a performance period of January 1, 2021 to December 31, 2023.
The following tables present (i) the fair values per performance unit and the assumptions used to estimate these fair values per performance unit and (ii) the expense per performance unit, which is the fair value per performance unit adjusted for the estimated payout of the performance criteria, for the outstanding performance unit awards as of December 31, 2021 for the grant dates presented:
March 5, 2020
Market criteria:
1/3 RTSR Factor + 1/3 ATSR Factor:
Fair value assumptions:
Remaining performance period1.00 year
Risk-free interest rate(1)
0.39 %
Dividend yield— %
Expected volatility(2)
86.17 %
Closing stock price on December 31, 2021$60.13 
Fair value per performance unit as of December 31, 2021$195.77 
Expense per performance unit as of December 31, 2021$195.77 
Performance criteria:
1/3 ROACE Factor:
Fair value assumptions:
Closing stock price on December 31, 2021$60.13 
Fair value per performance unit as of December 31, 2021$60.13 
Estimated payout for expense as of December 31, 2021130.00 %
Expense per performance unit as of December 31, 2021(3)
$78.17 
Combined:
Fair value per performance unit as of December 31, 2021(4)
$91.31 
Expense per performance unit as of December 31, 2021(5)
$91.31 
______________________________________________________________________________
(1)The remaining performance period matched zero-coupon risk-free interest rate was derived from the U.S. Treasury constant maturities yield curve on December 31, 2021.
(2)The Company utilized its own remaining performance period matched historical volatility in order to develop the expected volatility.
(3)As the 1/3 ROACE Factor is based on performance criteria, the expense fluctuates based on the estimated payout and is redetermined each reporting period and the life-to-date recognized expense for the award is adjusted accordingly.
(4)The combined fair value per performance unit is the combination of the fair value per performance unit weighted for the market and performance criteria for the award.
(5)The combined expense per performance unit is the combination of the expense per performance unit weighted for the market and performance criteria for the award.
March 9, 2021
Market criteria:
50% PSU Matrix Component:
Fair value assumptions:
Remaining performance period2.00 years
Risk-free interest rate(1)
0.73 %
Dividend yield— %
Expected volatility(2)
135.42 %
Closing stock price on December 31, 2021$60.13 
Fair value per performance unit as of December 31, 2021$121.72 
Expense per performance unit as of December 31, 2021$121.72 
Performance criteria:
25% EBITDAX/Total Debt Component + 25% Inventory Growth Component
Fair value assumptions:
Closing stock price on December 31, 2021$60.13 
Fair value per performance unit as of December 31, 2021$60.13 
Estimated payout for expense as of December 31, 2021100.00 %
Expense per performance unit as of December 31, 2021(3)
$60.13 
Combined:
Fair value per performance unit as of December 31, 2021(4)
$90.92 
Expense per performance unit as of December 31, 2021(5)
$90.92 
______________________________________________________________________________
(1)The remaining performance period matched zero-coupon risk-free interest rate was derived from the U.S. Treasury constant maturities yield curve on December 31, 2021.
(2)The Company utilized its own remaining performance period matched historical volatility in order to develop the expected volatility.
(3)As the 25% EBITDAX/Total Debt Component and 25% Inventory Growth Component are based on performance criteria, the expense fluctuates based on the estimated payout and is redetermined each reporting period and the life-to-date recognized expense for the award is adjusted accordingly.
(4)The combined fair value per performance unit is the combination of the fair value per performance unit weighted for the market and performance criteria for the award.
(5)The combined expense per performance unit is the combination of the expense per performance unit weighted for the market and performance criteria for the award.
As of December 31, 2021, unrecognized equity-based compensation related to the performance unit awards expected to vest was $10.8 million. Such cost is expected to be recognized over a weighted-average period of 1.86 years.
Phantom unit awards
Phantom unit awards, which the Company has determined are liability awards, represent the holder's right to receive the cash equivalent of one share of common stock of the Company for each phantom unit as of the applicable vesting date, subject to withholding requirements. Phantom unit awards granted to employees vest 33%, 33% and 34% per year beginning on the first anniversary of the grant date. Per the award agreement terms, if employment is terminated prior to the restriction lapse date for reasons other than death or disability, the phantom unit awards are forfeited and canceled. If the termination of employment is by reason of death or disability, all of the holder's phantom unit awards automatically vest.
The following table reflects the phantom unit award activity for the year ended December 31, 2021:
(in thousands, except for weighted-average fair value)Phantom units
Outstanding as of December 31, 2019— 
Granted75 
Outstanding as of December 31, 202075 
Granted5 
Forfeited(22)
Vested(1)
(25)
Outstanding as of December 31, 2021(2)
33 
______________________________________________________________________________
(1)On March 5, 2021, the vested phantom unit awards were settled and paid out in cash at a fair value per unit of $34.24 based on the Company's closing stock price on the vesting date.
(2)The fair value per unit of outstanding phantom unit awards as of December 31, 2021 was $60.13.
The Company utilizes the closing stock price on the last day of each reporting period to determine the fair value of phantom unit awards and the life-to-date recognized expense is adjusted accordingly. As of December 31, 2021, unrecognized equity-based compensation related to the phantom unit awards expected to vest was $1.2 million. Such cost is expected to be recognized over a weighted-average period of 1.34 years.
Equity-based compensation
The following table reflects equity-based compensation expense for the years presented:
Years ended December 31,
(in thousands)202120202019
Equity awards:
Restricted stock awards$7,594 $8,839 $13,169 
Performance share awards1,482 2,545 (1,250)
Outperformance share award175 174 101 
Stock option awards7 77 740 
Total share-settled equity-based compensation, gross$9,258 $11,635 $12,760 
Less amounts capitalized (1,583)(3,418)(4,470)
Total share-settled equity-based compensation, net$7,675 $8,217 $8,290 
Liability awards:
Performance unit awards$7,480 $749 $— 
Phantom unit awards1,238 404 — 
Total cash-settled equity-based compensation, gross$8,718 $1,153 $— 
Less amounts capitalized(365)(163)— 
Total cash-settled equity-based compensation, net$8,353 $990 $— 
Total equity-based compensation, net$16,028 $9,207 $8,290 
See Note 17 for discussion of the Company's organizational restructurings and the related equity-based compensation reversals during the years ended December 31, 2021, 2020 and 2019.
b.401(k) plan
The Company sponsors a 401(k) plan that is a defined contribution plan for the benefit of all employees at the date of hire. The plan allows eligible employees to make pre-tax and after-tax contributions up to 100% of their annual eligible compensation, not to exceed annual limits established by the federal government. The Company makes matching contributions of up to 6% of an employee's compensation and may make additional discretionary contributions for eligible employees. Employees are 100% vested in the employer contributions upon receipt.
The following table presents the contributions expense recognized for the Company's 401(k) plan for the years presented:
 Years ended December 31,
(in thousands)202120202019
Contributions$1,652 $1,649 $1,742