Stock-Based Compensation Plans (Tables)

9 Months Ended

Sep. 30, 2013

Allocation of Stock-Based Compensation by Functional Category

The following table details the allocation of stock-based compensation that is allocated to functional expense categories (in thousands):

	Three Months Ended September 30,				Nine Months Ended September 30,
	2013		2012		2013		2012
Operating expense	$	699	$	598	$	2,056	$	1,647
Brokered natural gas and marketing expense		531		452		1,310		1,313
Exploration expense		983		1,126		3,013		3,048
General and administrative expense		11,031		10,057		34,600		30,755
Total	$	13,244	$	12,233	$	40,979	$	36,763

Stock Option and SARs Activities

We have two active equity-based stock plans, the 2005 Plan and the Director Plan. Under these plans, incentive and non-qualified stock options, SARs, restricted stock units and various other awards may be issued to non-employee directors and employees pursuant to decisions of the Compensation Committee, which is comprised of only non-employee, independent directors. Of the 2.6million grants outstanding at September 30, 2013, all are grants relating to SARs. Information with respect to SARs activity is summarized below:

	Shares		Weighted Average ExercisePrice
Outstanding at December31, 2012	3,433,362		$	52.52
Granted	470,617			75.82
Exercised	(1,205,186	)		53.78
Expired/forfeited	(50,974	)		53.69
Outstanding at September 30, 2013	2,647,819		$	56.00

Weighted Average Grant Date Fair Value of SARs

During first nine months 2013, we granted SARs to officers and non-officer employees. The weighted average grant date fair value per share of these SARs, based on our Black-Scholes-Merton assumptions, is shown below:

	NineMonths Ended September30, 2013
Weighted average exercise price per share	$	75.82
Expected annual dividends per share		0.21	%
Expected life in years		3.7
Expected volatility		35	%
Risk-free interest rate		0.6	%
Weighted average grant date fair value per share	$	20.20

Restricted Stock and Restricted Stock Units Outstanding

In first nine months 2013, we granted 406,300 shares of restricted stock Liability Awards as compensation to employees at an average price of $75.45 with vesting generally over athree-year period and 18,300shares were granted to non-employee directors at an average price of $77.26 with immediate vesting. In the same period of 2012, we granted 365,000 shares of Liability Awards as compensation to employees at an average price of $63.88 with vesting generally over a three-year period and 14,700shares were granted to non-employee directors at an average price of $64.35 with immediate vesting. We recorded compensation expense for Liability Awards of $16.0 million in first nine months 2013 compared to $15.2 million in the same period of 2012. Substantially all of these awards are held in our deferred compensation plan, are classified as a liability and are remeasured at fair value each reporting period. This mark-to-market adjustment is reported as deferred compensation expense in our consolidated statements of operations (see additional discussion below). A summary of the status of our non-vested restricted stock and restricted stock units outstanding at September 30, 2013 is summarized below:

	Equity Awards						Liability Awards
	Shares			Weighted AverageGrant DateFairValue		Shares				Weighted AverageGrant DateFairValue
Outstanding at December 31, 2012		349,156		$	59.08			423,478		$	58.91
Granted		394,053			71.13			424,624			75.53
Vested		(235,580	)		62.30			(267,621	)		62.07
Forfeited		(45,589	)		65.32			(21,704	)		57.31
Outstanding at September 30, 2013		462,040		$	67.11			558,777		$	70.09