2.	Stock-Based Compensation

As more fully discussed in Note 6 to the Consolidated Financial Statements included in EOG's 2012 Annual Report, EOG maintains various stock-based compensation plans. Stock-based compensation expense is included on the Consolidated Statements of Income and Comprehensive Income based upon the job function of the employees receiving the grants as follows (in millions):

	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2013		2012		2013		2012

Lease and Well	$	7.2	$	9.9	$	25.4	$	26.4
Gathering and Processing Costs		0.3		0.3		0.9		0.8
Exploration Costs		6.7		7.4		20.6		20.3
General and Administrative		31.3		28.3		56.3		53.8
Total	$	45.5	$	45.9	$	103.2	$	101.3

At the 2013 Annual Meeting of Stockholders, EOG's stockholders approved the Amended and Restated EOG Resources, Inc. 2008 Omnibus Equity Compensation Plan (2008 Plan). As more fully discussed in the 2008 Plan document, the 2008 Plan, among other things, authorizes an additional 15,500,000 shares of EOG common stock for grant under the 2008 Plan and extends the expiration date of the 2008 Plan to May 2023.

The 2008 Plan provides for grants of stock options, stock-settled stock appreciation rights (SARs), restricted stock, restricted stock units, performance units, performance stock and other stock-based awards. At September 30, 2013, approximately 16.6 million common shares remained available for grant under the 2008 Plan. EOG's policy is to issue shares related to the 2008 Plan from either previously authorized unissued shares or treasury shares to the extent treasury shares are available.

Stock Options and Stock-Settled Stock Appreciation Rights and Employee Stock Purchase Plan. The fair value of stock option and SAR grants is estimated using the Hull-White II binomial option pricing model. The fair value of Employee Stock Purchase Plan (ESPP) grants is estimated using the Black-Scholes-Merton model. Stock-based compensation expense related to stock option, SAR and ESPP grants totaled $19.2 million and $16.5 million during the three months ended September 30, 2013 and 2012, respectively, and $40.0 million and $37.8 million during the nine months ended September 30, 2013 and 2012, respectively.

Weighted average fair values and valuation assumptions used to value stock option, SAR and ESPP grants during the nine-month periods ended September 30, 2013 and 2012 are as follows:

	Stock Options/SARs						ESPP
	Nine Months Ended						Nine Months Ended
	September 30,						September 30,
	2013			2012			2013			2012

Weighted Average Fair Value of Grants	$	54.68		$	37.94		$	30.13		$	25.17
Expected Volatility		35.86	%		39.68	%		29.89	%		41.04	%
Risk-Free Interest Rate		0.78	%		0.45	%		0.11	%		0.11	%
Dividend Yield		0.40	%		0.60	%		0.60	%		0.60	%
Expected Life	5.5 yrs			5.6 yrs			0.5 yrs			0.5 yrs

EOG RESOURCES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

(Unaudited)

Expected volatility is based on an equal weighting of historical volatility and implied volatility from traded options in EOG's common stock. The risk-free interest rate is based upon United States Treasury yields in effect at the time of grant. The expected life is based upon historical experience and contractual terms of stock option, SAR and ESPP grants.

The following table sets forth stock option and SAR transactions for the nine-month periods ended September 30, 2013 and 2012 (stock options and SARs in thousands):

	Nine Months Ended					Nine Months Ended
	September 30, 2013					September 30, 2012
				Weighted					Weighted
	Number of			Average		Number of			Average
	Stock			Grant		Stock			Grant
	Options/SARs			Price		Options/SARs			Price

Outstanding at January 1		6,219		$	85.81		8,374		$	70.01
Granted		1,117			167.32		1,223			111.91
Exercised ⁽¹⁾		(1,824	)		69.03		(2,044	)		53.52
Forfeited		(84	)		96.76		(124	)		89.95
Outstanding at September 30 ⁽²⁾		5,428		$	108.06		7,429		$	81.11

Vested or Expected to Vest ⁽³⁾		5,199		$	107.26		7,184		$	80.57

Exercisable at September 30 ⁽⁴⁾		2,491		$	88.05		4,315		$	69.87

(1)

The total intrinsic value of stock options/SARs exercised for the nine months ended September 30, 2013 and 2012 was $134.2 million and $110.8 million, respectively. The intrinsic value is based upon the difference between the market price of EOG's common stock on the date of exercise and the grant price of the stock options/SARs.

(2)

The total intrinsic value of stock options/SARs outstanding at September 30, 2013 and 2012 was $332.3 million and $231.1 million, respectively. At September 30, 2013 and 2012, the weighted average remaining contractual life was 4.8 years and 4.1 years, respectively.

(3)

The total intrinsic value of stock options/SARs vested or expected to vest at September 30, 2013 and 2012 was $322.5 million and $227.3 million, respectively. At September 30, 2013 and 2012, the weighted average remaining contractual life was 4.7 years and 4.0 years, respectively.

(4)

The total intrinsic value of stock options/SARs exercisable at September 30, 2013 and 2012 was $202.4 million and $182.7 million, respectively. At September 30, 2013 and 2012, the weighted average remaining contractual life was 3.5 years and 2.7 years, respectively.

At September 30, 2013, unrecognized compensation expense related to non-vested stock option, SAR and ESPP grants totaled $115.5 million. This unrecognized expense will be amortized on a straight-line basis over a weighted average period of 2.9 years.

Restricted Stock and Restricted Stock Units. Employees may be granted restricted (non-vested) stock and/or restricted stock units without cost to them. Stock-based compensation expense related to restricted stock and restricted stock unit grants totaled $19.2 million and $23.1 million for the three months ended September 30, 2013 and 2012, respectively, and $55.5 million and $57.2 million for the nine months ended September 30, 2013 and 2012, respectively.

EOG RESOURCES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

(Unaudited)

The following table sets forth restricted stock and restricted stock unit transactions for the nine-month periods ended September 30, 2013 and 2012 (shares and units in thousands):

	Nine Months Ended					Nine Months Ended
	September 30, 2013					September 30, 2012
				Weighted					Weighted
	Number of			Average		Number of			Average
	Shares and			Grant Date		Shares and			Grant Date
	Units			Fair Value		Units			Fair Value

Outstanding at January 1		3,818		$	91.06		4,240		$	82.93
Granted		642			151.85		757			112.13
Released ⁽¹⁾		(617	)		105.77		(977	)		72.97
Forfeited		(80	)		95.39		(106	)		88.36
Outstanding at September 30 ⁽²⁾		3,763		$	98.93		3,914		$	90.91

(1)

The total intrinsic value of restricted stock and restricted stock units released for the nine months ended September 30, 2013 and 2012 was $89.2 million and $110.7 million, respectively. The intrinsic value is based upon the closing price of EOG's common stock on the date restricted stock and restricted stock units are released.

(2)

The total intrinsic value of restricted stock and restricted stock units outstanding at September 30, 2013 and 2012 was $637.0 million and $438.6 million, respectively.

At September 30, 2013, unrecognized compensation expense related to restricted stock and restricted stock unit grants totaled $171.8 million. Such unrecognized expense will be amortized on a straight-line basis over a weighted average period of 2.7 years.

Performance Units and Performance Stock. EOG grants performance units and/or performance stock to its executive officers. The fair value of the performance units and performance stock is estimated using a Monte Carlo simulation. Stock-based compensation expense related to performance unit and performance stock grants totaled $7.1 million and $6.3 million for the three months ended September 30, 2013 and 2012, respectively, and $7.7 million and $6.3 million for the nine months ended September 30, 2013 and 2012, respectively.

Weighted average fair values and valuation assumptions used to value performance unit and performance stock grants during the nine-month periods ended September 30, 2013 and 2012 are as follows:

	Nine Months Ended
	September 30,
	2013			2012

Weighted Average Fair Value of Grants	$	200.68		$	134.09
Expected Volatility		33.63	%		36.39	%
Risk-Free Interest Rate		0.79	%		0.39	%

Expected volatility is based on the term-matched historical volatility over the simulated term, which is calculated as the time between the grant date and the end of the performance period. The risk-free interest rate is based on a 3.26 year zero-coupon risk-free interest rate derived from the Treasury Constant Maturities yield curve on the grant date.

EOG RESOURCES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

(Unaudited)

The following table sets forth performance unit and performance stock transactions for the nine-month periods ended September 30, 2013 and 2012 (shares and units in thousands):

	Nine Months Ended				Nine Months Ended
	September 30, 2013				September 30, 2012
			Weighted				Weighted
	Number of		Average		Number of		Average
	Shares and		Grant Date		Shares and		Grant Date
	Units		Fair Value		Units		Fair Value

Outstanding at January 1		71	$	134.09		-	$	-
Granted		60		200.68		71		134.09
Released		-		-		-		-
Forfeited		-		-		-		-
Outstanding at September 30 ⁽¹⁾		131	$	164.36		71	$	134.09

(1)

The total intrinsic value of performance units and performance stock outstanding at September 30, 2013 and 2012 was $22.1 million and $8.0 million, respectively.

At September 30, 2013, unrecognized compensation expense related to performance unit and performance stock grants totaled $7.1 million. Such unrecognized expense will be amortized on a straight-line basis over a weighted average period of 2.7 years.