Common Stock Common Stock (Notes)

9 Months Ended

Sep. 30, 2021

Equity [Abstract]

Common Stock

NOTE 12 - COMMON STOCK

Stock-Based Compensation Plans

2018 Equity Incentive Plan. In May 2020, our stockholders approved an amendment to increase the number of shares of our common stock reserved for issuance pursuant to our long-term equity compensation plan for employees and non-employee directors (the “2018 Plan”) from 1,800,000 to 7,050,000 shares. As of September 30, 2021, there were 4,175,129 shares available for grant under the 2018 Plan.

2010 Long-Term Equity Compensation Plan. Our Amended and Restated 2010 Long-Term Equity Compensation Plan, which was approved by stockholders in 2013 (the “2010 Plan”), remains outstanding and we may continue to use the 2010 Plan to grant awards. No awards may be granted under the 2010 Plan on or after June 5, 2023. As of September 30, 2021, there were 313,477 shares available for grant under the 2010 Plan. 

2015 SRC Equity Incentive Plan. SRC PSUs were granted in connection with the closing of the SRC Acquisition. For the nine months ended and as of September 30, 2021, there were no changes to the 2015 SRC Equity Incentive Plan and there were no shares available for grant.

The following table provides a summary of the impact of our outstanding stock-based compensation plans on the results of operations for the periods presented:

	Three Months Ended September 30,				Nine Months Ended September 30,
	2021		2020		2021		2020
	(in thousands)
General and administrative expense	$	5,479	$	5,171	$	16,420	$	16,632
Lease operating expense	300		234		874		809
Total stock-based compensation expense	$	5,779	$	5,405	$	17,294	$	17,441

Restricted Stock Units

The following table presents the changes in non-vested time-based RSUs to all employees, including executive officers, for the nine months ended September 30, 2021:

	Shares	Weighted-Average Grant Date Fair Value per Share
Non-vested at beginning of period	1,150,970	$	20.14
Granted	647,453	33.48
Vested	(531,759)	25.04
Forfeited	(82,693)	22.36
Non-vested at end of period	1,183,971	25.08

The weighted-average grant date fair value of restricted stock units was $33.48 and $12.00 for the nine months ended September 30, 2021 and 2020, respectively. Total compensation cost related to non-vested time-based awards and not yet recognized on our condensed consolidated statements of operations as of September 30, 2021 was $21.6 million. This cost is expected to be recognized over a weighted-average period of 1.83 years.

Performance Stock Units

The Compensation Committee awarded a total of 207,655 market-based PSUs to our executive officers during the nine months ended September 30, 2021. In addition to continuous employment, the vesting of these PSUs is contingent on a combination of absolute stock performance and our total stockholder return (“TSR”), which is essentially our stock price change, including any dividends, over a three-year period ending on December 31, 2023, as compared to the TSR of a group of peer companies over the same period. The PSUs will result in a payout between zero and 250 percent of the target PSUs awarded.

The grant-date fair value was estimated using a Monte Carlo valuation model. The Monte Carlo valuation model is based on random projections of stock price paths and must be repeated numerous times to achieve a probabilistic assessment. The expected term of the awards was based on the requisite service period. The risk-free interest rate was based on the U.S. Treasury yields in effect at the time of grant and extrapolated to approximate the life of the award. The expected volatility was based on our common stock historical volatility.

The following table summarizes the key assumptions and related information used to determine the grant-date fair value of performance stock units awarded during the periods presented:

	Nine Months Ended September 30,
	2021	2020
Expected term of award (in years)	3	3
Risk-free interest rate	0.2%	1.4%
Expected volatility	84.6%	46.6%
Weighted-average grant date fair value per share	$54.01	$33.52

SRC Performance Stock Units. The terms of the SRC PSUs are substantially the same as those of the PDC PSUs, except that the SRC PSUs do not require continuous employment and the performance period associated with the awards of January 1, 2019 through December 31, 2021 predates the grant date. The fair value of the SRC PSU awards was determined on the grant date of January 13, 2020 using the Monte Carlo pricing model using the following assumptions:

	Nine Months Ended September 30, 2020
Expected term of awards (in years)	2
Risk-free interest rate	1.6%
Expected volatility	56.9%
Weighted-average grant date fair value per share	$33.35

The expected term of the awards is based on the number of years from the grant date through the end of the performance period. The risk-free interest rate was based on the U.S. Treasury yields in effect at the time of grant, extrapolated to approximate the life of the awards. The expected volatility was based on our common stock historical volatility, as well as that of our peer group.

The following table presents the change in non-vested market-based awards, including SRC PSUs, during the nine months ended September 30, 2021:

	Shares	Weighted-Average Grant Date Fair Value per Share
Non-vested at beginning of period	499,547	$	38.66
Granted	207,655	54.01
Non-vested at end of period	707,202	43.17

Total compensation cost related to non-vested market-based awards not yet recognized on our condensed consolidated statements of operations as of September 30, 2021 was $12.8 million. This cost is expected to be recognized over a weighted-average period of 1.42 years.

Stock Appreciation Rights

All outstanding SARs as of September 30, 2021 have vested and the related compensation cost has been fully recognized. During the nine months ended September 30, 2021, 17,701 SARs were exercised at a weighted-average exercise price of $30.19 and 34,551 SARs expired with a weighted-average exercise price of $52.15. As of September 30, 2021, there were 158,423 SARs outstanding and exercisable which have a weighted-average exercise price of $51.01 and an average remaining contractual term of 3.52 years. Outstanding and exercisable SARs have $0.5 million intrinsic value as of September 30, 2021.

Preferred Stock

We are authorized to issue 50,000,000 shares of preferred stock, par value $0.01 per share, which may be issued in one or more series, with such rights, preferences, privileges, and restrictions as shall be fixed by our board of directors from time to time. Through September 30, 2021, no shares of preferred stock have been issued.

Stock Repurchase Program

In April 2019, the board of directors approved the repurchase of up to $200 million of our outstanding common stock (the “Stock Repurchase Program”). Effective upon the closing of the SRC Acquisition, our board of directors approved an increase and extension to the Stock Repurchase Program from $200 million to $525 million. Repurchases under the Stock Repurchase Program can be made in open markets at our discretion and in compliance with safe harbor provisions, or in privately negotiated transactions. The Stock Repurchase Program does not require any specific number of shares to be acquired, is subject to market conditions and can be modified or discontinued by our board of directors at any time. Pursuant to the Stock Repurchase Program, we repurchased 2.7 million and 1.3 million shares of outstanding common stock at a cost of $108.3 million and $23.8 million during the nine months ended September 30, 2021 and 2020, respectively. We suspended the program in March 2020 due to adverse market conditions but reinstated it in February 2021. Repurchases may extend until December 31, 2023. As of September 30, 2021, $238.5 million of our outstanding common stock remained available for repurchase under the currently approved program.

Dividends

During the second and third quarters of 2021, our board of directors declared and paid a quarterly cash dividend of $0.12 per share of common stock. For the nine months ended September 30, 2021, our dividends paid totaled $0.24 per share of common stock or $23.6 million. All RSUs and PSUs receive a dividend equivalent per unit, recognized as a liability included in other liabilities on our condensed consolidated balance sheets, until the recipients receive the equivalents upon vesting. Dividends declared were recorded as a reduction of additional paid-in capital as there were no retained earnings as of the date of declaration. Future dividend payments must be approved by our board of directors and will depend on our liquidity, financial requirements, and other factors considered relevant by our board.