COMMON AND PREFERRED STOCK

6 Months Ended

Jun. 30, 2012

COMMON AND PREFERRED STOCK [Abstract]

COMMON AND PREFERRED STOCK

NOTE 5    COMMON AND PREFERRED STOCK

The Company's Articles of Incorporation authorize the issuance of up to 100,000,000 shares.  The shares are classified in two classes, consisting of 95,000,000 shares of common stock, par value $.001 per share, and 5,000,000 shares of preferred stock, par value $.001 per share.  The board of directors is authorized to establish one or more series of preferred stock, setting forth the designation of each such series, and fixing the relative rights and preferences of each such series.  The Company has neither designated nor issued any shares of preferred stock.

Common Stock

The following is a schedule of changes in the number of common stock during the six months ended June 30, 2012 and the year ended December 31, 2011:

	Six Months Ended June 30, 2012			Year Ended December 31, 2011
Beginning balance		63,330,421			62,129,424
Stock options exercised		7,000			3,500
Restricted stock grants (Note 6)		501,188			947,891
Warrants exercised		-			300,000
Other Surrenders		(226,257	)		(50,394	)
Ending balance		63,612,352			63,330,421

2012 Activity

In January 2012 and April 2012, a director of the Company exercised 3,500 shares of stock options granted to him in 2007.

In January 2012, 47,140 shares of common stock were surrendered by certain executives of the Company to cover tax obligations in connection with their restricted stock awards.  The total value of these shares was approximately $1.2 million, which was based on the market price on the date the shares were surrendered.

During 2012, the Company's compensation committee of the board of directors adopted a bonus plan that includes a matrix of performance goals that will be used to determine 2012 bonuses for executive officers.  For 2012, the annual performance goals will include metrics related to production, Adjusted EBITDA, acreage position, acreage development, stock performance and specified milestones relating to the successful execution of the Company's business plan and completion of key projects.

For the six month period ended June 30, 2012, the Company had accrued bonuses of approximately $1.7 million based on the year to date results of operations in comparison to year-end bonus performance goals.  During the six and three months ended June 30, 2012, the Company expensed approximately $800,000 and $475,000, respectively, in compensation related to this bonus accrual and capitalized the remaining into the full cost pool.  The Company had accrued bonuses of approximately $1.4 million for the six months ended June 30, 2011, approximately $423,000 were expensed in share-based compensation for the six months ended June 30, 2011 and capitalized the remaining into the full cost pool