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SHARE-BASED COMPENSATION PLANS
 12 Months Ended
Dec. 31, 2017
Share-Based Payment Arrangements [Abstract]  
SHARE-BASED COMPENSATION PLANS
SHARE-BASED COMPENSATION PLANS 
The following tables provide a summary of the Company’s share-based compensation expense (recovery) for the years ended December 31, 2017 and December 31, 2016:
($000s)
2017

2016

Share options expense
$
1,074

$
2,565

Deferred share units expense (recovery)
(583
)
834

Restricted awards expense (recovery)
178

241

Performance awards expense (recovery)
(137
)
144

Share-based compensation expense included in general and administrative expense
$
532

$
3,784

Share-based compensation expense included in operating expense
$
167

$
152

Total share-based compensation expense
$
699

$
3,936


The following tables provide a summary of the Company’s share options expense for the years ended December 31, 2017 and December 31, 2016:
($000s)
2017

2016

Share options expense
$
1,074

$
2,565

Share options expense capitalized
600

1,147

Gross share option expense
$
1,674

$
3,712


The following table provides a summary of the Company’s share-based compensation liability balances within accounts payable and accrued liabilities:
($000s)
Deferred
Share Units

Restricted
Awards

Performance
Awards

Total

Liability balance, December 31, 2017
$
1,212

$
754

$
457

$
2,423

Liability balance, December 31, 2016
$
2,360

$
1,038

$
751

$
4,149

a.
Share Option Plan
Bellatrix has a share option plan whereby the Company may grant share options to its officers, employees, consultants, and other service providers. Under this plan, the exercise price of each share option is not less than the volume weighted average trading price of the Company’s share price for the five trading days immediately preceding the date of grant. The maximum term of an option grant is five years. Option grants are non-transferable or assignable except in accordance with the share option plan and the holding of share options shall not entitle a holder to any rights as a shareholder of Bellatrix. Share options, entitling the holder to purchase common shares of the Company, have been granted to officers, employees, consultants, and other service providers of Bellatrix. One third of the initial grant of share options normally vests on each of the first, second, and third anniversary from the date of grant.
The fair values of all share options granted are estimated on the date of grant using the Black-Scholes option-pricing model. The weighted average fair market value of share options granted during the years ended December 31, 2017 and 2016, and the weighted average assumptions used in their determination are as noted below:
 
2017

2016

Inputs:
 

 

Share price
$
4.27

$
5.10

Exercise price
$
4.55

$
5.10

Risk free interest rate (%)
0.9

0.6

Option life (years)
2.8

2.8

Option volatility (%)
71

73

Results:
 

 

Weighted average fair value of each share option granted
$
1.87

$
2.35


Bellatrix calculates volatility based on historical share price. Bellatrix incorporates an estimated forfeiture rate between 3% and 10% (2016: 3% to 10%) for stock options that will not vest, and adjusts for actual forfeitures as they occur.
The following tables summarize information regarding Bellatrix’s Share Option Plan:
Share Options Continuity
 
 
 
Weighted Average
Exercise Price

Number

Balance, December 31, 2015
$
28.45

2,569,273

Granted
$
5.10

581,820

Forfeited
$
30.43

(287,735
)
Expired
$
26.03

(290,334
)
Balance, December 31, 2016
$
23.22

2,573,024

Granted
$
4.55

185,000

Forfeited
$
35.10

(877,956
)
Expired
$
17.12

(257,936
)
Balance, December 31, 2017
$
15.62

1,622,132


As of December 31, 2017, a total of 4,937,803 common shares were reserved for issuance on exercise of share options, leaving an additional 3,315,671 available for future share option grants.
Share Options Outstanding, December 31, 2017
 
 
 
Outstanding
 

Exercisable
Exercise Price
At December 31, 2017

Weighted
 Average
Exercise Price

Weighted
Average
Remaining
Contractual Life

At December 31, 2017

Weighted Average Exercise
Price


$3.85

-
$4.47
125,000


$3.85

4.5

—

—


$4.48

-
$5.55
494,832


$5.10

3.6

234,944


$5.10


$5.56

-
$18.70
76,400


$7.78

3.9

10,928


$14.30


$18.71

-
$19.52
624,000


$18.75

2.4

469,327


$18.75


$19.53

-
$27.48
118,600


$20.30

1.9

118,600


$20.30


$27.49

-
$37.95
67,800


$36.66

0.9

67,800


$36.66


$37.96

-
$45.78
26,700


$39.01

1.0

26,700


$39.01


$45.79

-
$50.20
88,800


$46.28

1.5

88,800


$46.28


$3.85

-
$50.20
1,622,132


$15.62

2.8

1,017,099


$19.86

b.
Deferred Share Unit Plan 
Under Bellatrix’s Deferred Share Unit Plan, the Company may grant to non-employee directors, deferred share units (“DSUs”). Each DSU is a right to receive, on a deferred payment basis, a cash payment equivalent to the volume weighted average trading price of the Company’s common shares for the five trading days immediately preceding the redemption date of such DSU. Participants of the DSU Plan may also elect to receive their annual remuneration in the form of DSUs. Subject to TSX and shareholder approval, Bellatrix may elect to deliver common shares from treasury in satisfaction, in whole or in part, of any payment to be made upon the redemption of the DSUs. The DSUs vest immediately and must be redeemed by December 1st of the calendar year immediately following the year in which the participant ceases to hold all positions with Bellatrix or earlier if the participant elects to have the DSUs redeemed at an earlier date (provided that the DSUs may not be redeemed prior to the date that the participant ceases to hold all positions with Bellatrix).
DSU Continuity
 
 
Number

Balance, December 31, 2015
202,927

Granted
184,823

Exercised
(10,083
)
Balance, December 31, 2016
377,667

Granted
260,381

Exercised
(120,150
)
Balance, December 31, 2017
517,898

c.
Award Plan
Bellatrix has an Award Incentive Plan (“Award Plan”) where the Company may grant Restricted Awards (“RAs”) and Performance Awards (“PAs”) to officers, employees, and other service providers. During 2016, the shareholders and the TSX approved the issuance of common shares on settlement of RAs and PAs under the Award Plan. As a result, awards under the Award Plan may be settled in cash, in common shares of the Company, or a combination thereof. In the case of PAs, settlement is subject to a “payout multiplier” (the payout multiplier shall be based on such corporate performance measures as determined by the Board of Directors (or the Compensation Committee) of the Company) and may range between zero and two times.
RAs granted to employees vest in equal annual amounts over the course of three years. Each RA entitles its holder to receive a cash payment equal to the weighted average trading price of the Company’s shares trading on the TSX for the five trading days preceding its vesting date. Unvested RAs are forfeited at the time the holder’s employment with the Company ends, except on death in which case they vest immediately. Bellatrix incorporates an estimated forfeiture rate between 3% and 10% for RAs that will not vest, and adjusts for actual forfeitures as they occur. Outstanding RAs are revalued at each financial reporting date to their fair market value at that time, determined by the weighted average trading price of the Company’s shares on the TSX for the five trading days preceding period end.
RA Continuity
 
 
Number of RAs

Balance, December 31, 2015
318,762

Granted
284,771

Exercised
(113,457
)
Forfeited
(63,681
)
Balance, December 31, 2016
426,395

Granted
652,740

Exercised
(175,833
)
Forfeited
(79,815
)
Balance, December 31, 2017
823,487


PAs vest on the third anniversary date of their issuance. Each PA entitles its holder to receive a cash payment equal to the weighted average trading price of the Company’s shares trading on the TSX for the five trading days preceding its vesting date, multiplied by a payout multiplier determined by the Company’s Board of Directors based on determined corporate performance measures. Unvested PAs are forfeited at the time the holder’s employment with the Company ends. Bellatrix incorporates an estimated forfeiture rate of 5% for PAs that will not vest, and adjusts for actual forfeitures as they occur. Outstanding PAs are revalued at each financial reporting date to their fair market value at that time, determined by the weighted average trading price of the Company’s shares on the TSX for the 5 trading days preceding period end.
PA Continuity
 
 
Number of PAs

Balance, December 31, 2015
249,240

Granted
145,085

Exercised
(70,430
)
Forfeited
(20,560
)
Balance, December 31, 2016
303,335

Granted
370,000

Exercised
(61,920
)
Forfeited
(38,360
)
Balance, December 31, 2017
573,055