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CAPITAL STOCK (Tables)
 12 Months Ended
Dec. 31, 2012
Common Stock Outstanding

Common Stock Outstanding

 

     2012      2011      2010  

Balance, beginning of year

      384,117,643        382,391,742        336,436,972  

Shares issued for stock-based compensation plans:

         

Treasury shares issued

      60,767        144,313        363,263  

Common shares issued

      1,189,693        1,581,588        1,864,498  

Cordillera consideration

      6,272,667        —        —  

Equity offering (BP acquisitions)

      —        —        26,450,000  

Mariner consideration

      —        —        17,277,009  
  

 

 

     

 

 

     

 

 

  

Balance, end of year

      391,640,770        384,117,643        382,391,742  
  

 

 

     

 

 

     

 

 

  
Net Income Per Common Share

A reconciliation of the components of basic and diluted net income per common share for the years ended December 31, 2012, 2011, and 2010 is presented in the table below.

 

     2012      2011      2010  
     Income      Shares      Per Share      Income      Shares      Per Share      Income      Shares      Per Share  
     (In millions, except per share amounts)  

Basic:

                           

Income attributable to common stock

    $ 1,925        389      $ 4.95      $ 4,508        384      $ 11.75      $ 3,000        352      $ 8.53  
        

 

 

           

 

 

           

 

 

  

Effect of Dilutive Securities:

                           

Mandatory Convertible Preferred Stock

    $ —        —         $ 76        14         $ 32        5     

Stock options and other

      —        2           —        2           —        2     
  

 

 

     

 

 

        

 

 

     

 

 

        

 

 

     

 

 

     

Diluted:

                           

Income attributable to common stock, including assumed conversions

    $ 1,925        391      $ 4.92      $ 4,584        400      $ 11.47      $ 3,032        359      $ 8.46  
  

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

  
Description of Stock Based Compensation Plans and Related Costs

based on the nature of each employee’s activities. A description of the Company’s stock-based compensation plans and related costs follows:

 

     2012      2011      2010  
     (In millions)  

Stock-based compensation expensed:

         

General and administrative

    $ 104      $ 69      $ 98  

Lease operating expenses

      63        44        66  

Stock-based compensation capitalized

      67        42        71  
  

 

 

     

 

 

     

 

 

  
   $ 234      $ 155      $ 235  
  

 

 

     

 

 

     

 

 

  
Summary of Stock Options Issued Under Stock Option Plans

A summary of stock options issued and outstanding under the Stock Option Plans and the Omnibus Plans is presented in the table and narrative below:

 

     2012  
     Shares
Under Option		     Weighted Average
Exercise Price		  
     (In thousands)        

Outstanding, beginning of year

      6,092     $ 91.96  

Granted

      2,072       82.65  

Exercised

      (311 )      56.15  

Forfeited or expired

      (280 )      102.90  
  

 

 

    

Outstanding, end of year(1)

      7,573       90.47  
  

 

 

    

Expected to vest(1)

      2,900       96.23  
  

 

 

    

Exercisable, end of year(1)

      3,922       85.55  
  

 

 

    

Available for grant, end of year

      15,498    
  

 

 

    

Weighted average fair value of options granted during the year

    $ 26.41    
  

 

 

    

 

(1)

As of December 31, 2012, the weighted average remaining contractual life for options outstanding, expected to vest, and exercisable is 6.7 years, 8.6 years, and 5.0 years, respectively. The aggregate intrinsic value of options outstanding, expected to vest, and exercisable at year-end was $19 million, $0, and $19 million, respectively. The weighted-average grant-date fair value of options granted during the years 2012, 2011, and 2010 was $26.41, $42.20, and $34.12, respectively.
Risk-Free Rate Based on the U S Treasury Yield Curve

The risk-free rate is based on the U.S. Treasury yield curve in effect at the time of grant.

 

     2012     2011     2010  

Expected volatility

      34.94 %      34.47 %      35.02 % 

Expected dividend yields

      0.82 %      0.47 %      0.60 % 

Expected term (in years)

      5.5       5.5       5.5  

Risk-free rate

      0.78 %      1.95 %      2.31 % 
Restricted Stock

$114 million, $85 million, and $69 million, respectively. A summary of restricted stock activity for the year ended December 31, 2012, is presented below.

 

      Shares     Weighted-
Average Grant-
Date Fair Value		  
     (In thousands)        

Non-vested at January 1, 2012

      2,115     $ 109.63  

Granted

      1,220       85.67  

Vested

      (1,053 )      107.76  

Forfeited

      (118 )      102.82  
  

 

 

    

Non-vested at December 31, 2012

      2,164       97.34  
  

 

 

    
Conditional Restricted Stock

conditional restricted stock units. The weighted-average remaining life of the unvested conditional restricted stock units is approximately 2.4 years.

 

      Shares     Weighted-
Average Grant-
Date Fair Value(1)		  
     (In thousands)        

Non-vested at January 1, 2012

      1,019     $ 115.10  

Granted

      852       70.30  

Vested

      (1 )      100.81  

Forfeited

      (564 )      132.45  
  

 

 

    

Non-vested at December 31, 2012

      1,306       78.40  
  

 

 

    

 

(1)

The fair value of each conditional restricted stock unit award is estimated as of the date of grant using a Monte Carlo simulation with the following assumptions used for all grants made under the plan: (i) a three-year continuous risk-free interest rate; (ii) a constant volatility assumption based on the historical realized stock price volatility of the Company and the designated peer group; and (iii) the historical stock prices and expected dividends of the common stock of the Company and its designated peer group.
Number of Shares Contingently Issuable

A summary of the number of shares contingently issuable as of December 31, 2012, 2011, and 2010 for each plan is presented in the table below:

 

     Shares subject to
Conditional Grants		  
     2012     2011     2010  
     (In thousands)  

2008 Share Appreciation Program

       

Outstanding, beginning of year

      1,372       1,485       2,592  

Granted

      —       —       25  

Forfeited or cancelled

      (1,372 )      (113 )      (1,132 ) 
  

 

 

    

 

 

    

 

 

  

Outstanding, end of year(1)

      —       1,372       1,485  
  

 

 

    

 

 

    

 

 

  

Weighted-average value of grants outstanding(2)

    $ —     $ 71.28     $ 71.16  
  

 

 

    

 

 

    

 

 

  

2005 Share Appreciation Plan

       

Outstanding, beginning of year

      —       400       1,103  

Issued(3)

      —       (398 )      (678 ) 

Forfeited or cancelled

      —       (2 )      (25 ) 
  

 

 

    

 

 

    

 

 

  

Outstanding, end of year

      —       —       400  
  

 

 

    

 

 

    

 

 

  

Weighted-average value of grants outstanding(4)

    $ —     $ —     $ 21.64  
  

 

 

    

 

 

    

 

 

  

 

(1)

Represents shares issuable upon target achievement and vesting of awards related to the $216 and $162 per share price goals of zero shares at December 31, 2012; 1,372,190 and zero shares, respectively, at December 31, 2011; and 1,485,210 and zero shares, respectively, at December 31, 2010.

 

(2)

The fair value of each Share Price Goal conditional grant is estimated as of the date of grant using a Monte Carlo simulation with the following weighted-average assumptions used for all grants made under the plan: (i) risk-free interest rate of 2.98 percent; (ii) expected volatility of 28.31 percent; and (iii) expected dividend yield of .54 percent.

 

(3)

The total fair value of these awards vested during 2011 and 2010 was approximately $9 million and $18 million, respectively.

 

(4)

The fair value of each Share Price Goal conditional grant is estimated as of the date of grant using a Monte Carlo simulation with the following weighted-average assumptions used for all grants made under the plan: (i) risk-free interest rate of 3.95 percent; (ii) expected volatility of 28.02 percent; and (iii) expected dividend yield of .57 percent.
Summary of Amounts Recognized as Expense and Capitalized Cost for Each Plan

Plan and had no unamortized costs remaining. A summary of the amounts recognized as expense and capitalized costs for each plan are detailed in the table below:

 

     For the Year Ended December 31,  
     2012      2011      2010  
     (In millions)  

2008 Share Appreciation Program

         

Compensation expense

    $ 22      $ 8      $ 49  

Compensation expense, net of tax

      14        5        31  

Capitalized costs

      12        5        27  

2005 Share Appreciation Plan

         

Compensation expense

      —      $ 1      $ 6  

Compensation expense, net of tax

      —        1        4  

Capitalized costs

      —        1        3