Stock-Based Compensation

9 Months Ended

Sep. 30, 2014

Stock-Based Compensation [Abstract]

Stock-Based Compensation

(13) STOCK-BASED COMPENSATION

The Company recognized the following amounts in employee stock-based compensation costs for the three and nine months ended September 30, 2014 and 2013:

	For the three months ended				For the nine months ended
	September 30,				September 30,
	2014		2013		2014		2013
	(in millions)
Stock-based compensation cost – expensed	$	4	$	3	$	13	$	9
Stock-based compensation cost – capitalized	$	4	$	3	$	13	$	9

As of September 30, 2014, there was $64 million of total unrecognized compensation cost related to the Company’s unvested stock option grants, restricted stock grants, and performance units. This cost is expected to be recognized over a weighted-average period of 3 years.

The following table summarizes stock option activity for the nine months ended September 30, 2014 and provides information for options outstanding and options exercisable as of September 30, 2014:

		Weighted
		Average
	Number	Exercise
	of Options	Price
	(in thousands)
Outstanding at December 31, 2013	3,313	$	35.70
Granted	90		46.55
Exercised	(279)		32.07
Forfeited or expired	(102)		38.42
Outstanding at September 30, 2014	3,022		36.27
Exercisable at September 30, 2014	1,844	$	35.39

The following table summarizes restricted stock activity for the nine months ended September 30, 2014 and provides information for unvested shares as of September 30, 2014:

		Weighted
		Average
	Number	Grant Date
	of Shares	Fair Value
	(in thousands)
Unvested shares at December 31, 2013	1,771	$	37.55
Granted	25		45.81
Vested	(22)		36.62
Forfeited	(117)		37.94
Unvested shares at September 30, 2014	1,657	$	37.66

The following table summarizes performance unit activity to be paid out in Company stock for the nine months ended September 30, 2014 and provides information for unvested units as of September 30, 2014.The performance units includea market condition based on Relative Total Shareholder Return (“TSR”) and a performance condition based on the Company's Present Value Index (“PVI”). The fair value of the TSR market condition of the performance units is based on a Monte Carlo model and is amortized to compensation expense on a straight-line basis over the vesting period of the award. The fair value of the PVI performance condition of the performance units is based on the closing price of the Company's common stock at the grant date and amortized to compensation expense on a straight line basis over the vesting period of the award.

		Weighted
		Average
	Number	Grant Date
	of Units	Fair Value
	(in thousands)
Unvested units at December 31, 2013	–	$	–
Granted	359		40.44
Vested	–		–
Forfeited	(25)		40.44
Unvested units at September 30, 2014	334	$	40.44

Liability-Classified Performance Units

Certain employees were provided performance units vesting equally over three years.  The payout of these units is based on certain metrics, such as total shareholder return and reserve replacement efficiency, compared to a predetermined group of peer companies and Company goal.  At the end of each performance period, the value of the vested performance units, if any, is paid in cash.  As of September 30, 2014 and December 31, 2013, the Company’s liability under the performance unit agreements was $48 million and $45 million, respectively.